1
EXHIBIT 10.21
===============================================================================
ENSTAR INCOME PROGRAM IV-1, L.P.
LOAN AGREEMENT
As of September 30, 1997
===============================================================================
2
TABLE OF CONTENTS
Page
1. DEFINITIONS........................................................................... 1
2. THE CREDITS........................................................................... 1
2.1. The Revolving Credit.......................................................... 1
2.1.1. Maximum Amount of Credit.............................................. 1
2.1.2. Loan Account; Promissory Notes........................................ 2
2.1.3. Interest; Maturity.................................................... 2
2.2. Application of Proceeds....................................................... 2
2.2.1. Revolving Credit...................................................... 2
2.2.2. Specifically Prohibited Applications.................................. 2
2.3. Lender's Credit Agreement..................................................... 2
3. INTEREST; PRICING OPTIONS; FEES....................................................... 2
3.1. Interest...................................................................... 2
3.1.1. Certain Definitions................................................... 3
3.2. Commitment Fee................................................................ 3
3.3. The Offshore Loans............................................................ 3
3.3.1. Certain Definitions................................................... 3
3.3.2. Election of the Offshore Rate......................................... 3
3.3.3. Selection of Interest Periods......................................... 3
3.4. Computation of Interest....................................................... 3
3.5. Reimbursement of Certain Expenses............................................. 4
4. CONDITIONS TO MAKING LOANS............................................................ 4
4.1. Notes......................................................................... 4
4.2. Security Documents............................................................ 4
4.3. Partner's Certificate......................................................... 4
4.4. Proper Proceedings............................................................ 4
4.5. Required Consents and Approvals............................................... 4
4.6. Legality, etc................................................................. 5
4.7. Legal Opinions................................................................ 5
4.8. Insurance Policies............................................................ 5
4.9. General....................................................................... 5
5. PAYMENT PROVISIONS.................................................................... 5
5.1. Payment on Maturity........................................................... 5
5.2. Contingent Required Prepayments............................................... 5
5.2.1. Excess Loans.......................................................... 5
5.2.2. Mandatory Prepayments From Net Proceeds............................... 5
5.2.3. Debt Issuance......................................................... 5
5.2.4. Mandatory Prepayments From Excess Cash Flow........................... 6
5.2.5. Voluntary Prepayments................................................. 6
6. LOAN SECURITY......................................................................... 6
6.1. Security Interests............................................................ 6
6.1.1. Tangible Personal Property............................................ 6
6.1.2. Rights to Payment of Money............................................ 7
6.1.3. Intangibles........................................................... 7
6.1.4. Pledged Securities.................................................... 7
6.1.5. Other Property........................................................ 7
6.1.6. Proceeds and Products................................................. 7
6.2. Additional Security........................................................... 7
6.3. Representations, Warranties and Covenants
With Respect to Loan Security................................................. 8
6.3.1. Pledged Stock......................................................... 8
6.3.2. Affiliate Pledged Indebtedness........................................ 8
6.3.3. Other Pledged Indebtedness............................................ 8
6.3.4. Specified Liens....................................................... 8
6.3.5. Location of Accounts.................................................. 8
6.3.6. Name for Conducting Business.......................................... 9
- i -
3
6.3.7. Location of Tangible Property......................................... 9
6.3.8. Insurance............................................................. 9
6.4. Perfection of Loan Security................................................... 9
6.5. Indemnity..................................................................... 9
6.6. Administration of Loan Security............................................... 10
6.6.1. Accounts.............................................................. 10
6.6.2. The Pledged Securities................................................ 10
6.6.3. Use of Loan Security.................................................. 11
6.6.4. Custody of Loan Security.............................................. 11
7. GENERAL COVENANTS..................................................................... 11
7.1. Taxes, etc.................................................................... 11
7.2. Conduct of Business, etc...................................................... 11
7.2.1. Types of Business..................................................... 11
7.2.2. Maintenance of Properties; Compliance With Franchises, etc............ 12
7.2.3. Statutory Compliance.................................................. 12
7.2.4. Transactions With Affiliates.......................................... 12
7.3. Insurance..................................................................... 12
7.4. Financial Statements.......................................................... 12
7.4.1. Annual Statements..................................................... 12
7.4.2. Quarterly Statements.................................................. 13
7.4.3. Other Reports; Information Returns.................................... 13
7.4.4. Regulatory or Other Action; Defaults.................................. 14
7.4.5. Other Information..................................................... 14
7.5. Restrictions on Indebtedness.................................................. 14
7.6. Restrictions on Guarantees.................................................... 14
7.7. Restrictions on Liens......................................................... 15
7.8. Investments................................................................... 16
7.9. Distributions................................................................. 16
7.10. Certain Financial Tests....................................................... 16
7.10.1. Maximum Leverage Ratio................................................ 16
7.10.2. Minimum Interest Coverage............................................. 17
7.10.3. Minimum Fixed Charge Coverage Ratio................................... 17
7.11. Limitation on Lease Obligations............................................... 17
7.12. Merger, Consolidation and Sale of Assets...................................... 17
7.13. Partnership Agreement; Management Agreement................................... 17
7.14. Pension Plans................................................................. 17
7.15. Indebtedness.................................................................. 18
7.16. Plan Assets................................................................... 18
7.17. Use of Proceeds............................................................... 18
7.18. Payment of Obligations........................................................ 18
7.19. Compliance With Laws.......................................................... 18
7.20. Compliance With ERISA......................................................... 18
7.21. Environmental Laws............................................................ 18
7.22. Further Assurances............................................................ 18
7.23. Contingent Obligations........................................................ 19
7.24. Joint Ventures................................................................ 19
7.25. Subsidiaries.................................................................. 19
8. REPRESENTATIONS AND WARRANTIES........................................................ 19
8.1. Organization and Business..................................................... 19
8.1.1. The Company........................................................... 19
8.1.2. Enstar Communications................................................. 19
8.1.3. Qualification......................................................... 20
8.2. No Contravention.............................................................. 21
8.3. Governmental Authorization.................................................... 21
8.4. Binding Effect................................................................ 21
8.5. Financial Statements.......................................................... 21
8.6. Licenses, etc................................................................. 21
8.6.1. Franchises; Licenses.................................................. 21
8.6.2. FCC and Other Matters................................................. 21
8.7. Changes in Condition.......................................................... 21
8.8. Assets........................................................................ 21
8.9. Litigation.................................................................... 21
8.10. Tax Returns................................................................... 22
- ii -
4
8.11. No Legal Obstacle to Agreement................................................ 22
8.12. Defaults...................................................................... 22
8.13. Certain Obligations........................................................... 22
8.14. Government Regulation; Margin Stock........................................... 22
8.14.1. Government Regulation................................................. 22
8.14.2. Margin Stock.......................................................... 23
8.15. Pension Plans................................................................. 23
8.16. Insurance..................................................................... 23
8.17. Disclosure.................................................................... 23
8.18. Plan Assets................................................................... 23
9. DEFAULTS.............................................................................. 23
9.1. Events of Default............................................................. 25
9.2. Annulment of Defaults......................................................... 25
9.3. Waivers....................................................................... 25
9.4. Course of Dealing............................................................. 25
9.5. Right to Realize Upon Loan Security........................................... 25
9.5.1. Marshaling, etc....................................................... 25
9.5.2. Sales of the Loan Security............................................ 26
9.5.3. Application of Proceeds............................................... 26
9.6. Governmental Regulation....................................................... 26
10. DEFINITIONS........................................................................... 26
11. EXPENSES; INDEMNITY; FEES............................................................. 33
12. NOTICES............................................................................... 34
13. PAYMENTS.............................................................................. 34
14. AMENDMENTS............................................................................ 35
15. LIMITED RECOURSE AGAINST GENERAL PARTNERS............................................. 35
16. SURVIVAL OF COVENANTS................................................................. 35
17. WAIVER OF JURY TRIAL.................................................................. 35
18. DEFEASANCE............................................................................ 35
19. SERVICE OF PROCESS.................................................................... 35
20. SUCCESSORS AND ASSIGNS................................................................ 36
21. MISCELLANEOUS......................................................................... 36
- iii -
5
CREDIT AGREEMENT
Enstar Finance Company, LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Gentlemen:
In connection with the loans provided for herein, the undersigned Enstar
Income Program IV-1, L.P., a Georgia limited partnership (the "Company"), hereby
agrees with you (sometimes referred to herein as the "Lender") as follows:
1. DEFINITIONS. Certain terms are used in this Agreement as specifically
defined herein. These definitions are set forth or referred to in Section 10
hereof.
2. THE CREDITS. Subject to all of the terms and conditions hereof,there is
hereby established the Revolving Credit referred to below:
2.1. The Revolving Credit. Subject to all the terms and conditions
hereof and so long as there shall exist no Default, on September 30, 1997 (the
"Initial Closing Date"), and thereafter on such dates prior to August 31, 2001,
as the Company may request by 10:00 a.m. (Los Angeles time) not less than four
(or, if no part of the requested loan is to be subject to an Offshore Rate, two)
Business Days' prior written notice to you (which dates, together with the
Initial Closing Date, are called "Closing Dates"), you will lend to the Company
such amounts (in integral multiples of $50,000) as the Company may from time to
time request in such notice (each loan hereunder shall be considered an
"Advance"); provided, however, that the aggregate principal amount of all such
loans at any one time outstanding shall not exceed the Maximum Amount of Credit.
The proceeds of each such loan shall be applied only as provided in Section 2.2
below. In connection with each loan hereunder, you shall have received a
certificate dated the applicable Closing Date in substantially the form of
Exhibit 4.3 hereto.
2.1.1. Maximum Amount of Credit. The aggregate principal amount
of all loans evidenced by the Loan Account shall at no time exceed $3,331,833
(or such lesser amount being an integral multiple of $50,000 as the Company
shall have irrevocably specified from time to time by written notice to the
Lender) (the "Maximum Amount of Credit").
2.1.2. Loan Account; Promissory Notes. The Lender will
establish on its books a loan account for the Company (the "Loan Account") which
shall be administered as follows: the Lender shall debit to the Loan Account,
and the Loan Account shall evidence, the principal amount of all loans from time
to time made by the Lender pursuant to Section 2 hereof, and the Lender shall
credit to the Loan Account all payments made on account of the Indebtedness
evidenced by the Loan Account. The aggregate principal amount of the loans
evidenced by the Loan Account from time to time is referred to herein as the
"Loans". The Loans made hereunder shall be evidenced by one or more Notes, in
addition to the Loan Account. The Lender shall endorse on the schedules annexed
to the Note(s) the date, amount and maturity of each Loan and the amount of each
payment of principal made by the Company with respect thereto. The Lender is
irrevocably authorized by the Company to endorse its Note(s) and the Lender's
record shall be conclusive absent manifest error; provided, however, that the
failure of the Lender to make, or an error in making, a notation on the Notes or
the Loan Account or other records maintained with respect thereto with respect
to any Loan shall not limit or otherwise affect the obligations of the Company
hereunder or under any such Note to the Lender.
6
2.1.3. Interest; Maturity. The Loans shall bear interest at the
rates specified in Section 3 hereof, and shall be payable and prepayable as set
forth in Section 5 hereof. The stated maturity of the Loans is August 31, 2001.
2.2. Application of Proceeds. The Company covenants that it will
apply the proceeds of the Loans only as follows:
2.2.1. Revolving Credit. The Company shall apply the proceeds
of the Loans made to it pursuant to Section 2 hereof on the Initial Closing Date
to pay in full the principal amount of its Indebtedness to ▇▇▇▇▇▇ Bank, Ltd.,
outstanding on such date together with all accrued and unpaid interest thereon
as of such date, and, subject to Section 2.2.2 hereof, the Company shall apply
the proceeds of all other Loans made to it pursuant to Section 2 hereof on or
after the Initial Closing Date for the purposes set forth in Section 7.17.
2.2.2. Specifically Prohibited Applications. The Company will
not directly or indirectly apply any part of the proceeds of any Loan made
pursuant to this Agreement for the purposes of purchasing or carrying of any
"margin stock" within the meaning of Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System, or any regulations, interpretations or
rulings thereunder, all as from time to time in effect, or to the refunding of
any loan incurred for such purpose.
2.3. Lender's Credit Agreement. The obligation of the Lender to make
the Loans set forth in Section 2 is subject to the Lender's compliance with the
provisions of its Credit Agreement dated as of September 30, 1997 with Banque
Paribas, as Administrative Agent, Bank of America National Trust and Savings
Association, as Documentation Agent, and the other financial institutions party
thereto attached hereto as Exhibit 2.3 (the "Lender's Credit Agreement"). If for
any reason (including without limitation the occurrence or continuation of an
"Event of Default" under the Lender's Credit Agreement (as defined therein) or
the failure of the Lender to satisfy any condition required to borrow under the
Lender's Credit Agreement), the Lender is unable to, or not permitted to, borrow
under the Lender's Credit Agreement, the obligation of the Lender to make Loans
hereunder shall terminate.
3. INTEREST; PRICING OPTIONS; FEES.
3.1. Interest. The Loan shall accrue and bear daily interest at a
rate per annum which shall at all times equal the Applicable Rate. Prior to any
stated or accelerated maturity of the Loan the Company will, on the last
Business Day of each March, June, September and December of each year (each a
"Payment Date"), beginning on the first such date after the Initial Closing
Date, pay to you the accrued and unpaid interest on the portion of the Loan
which was not subject to an Offshore Rate. Prior to any stated or accelerated
maturity of the Loan, on the last day of each Interest Period for each Offshore
Rate Loan or on any earlier termination of any Offshore Rate Loan, the Company
will pay to you the accrued and unpaid interest on the portion of the Loan which
was subject to the Offshore Rate which expired or terminated on such date;
provided, however, that if any Interest Period is longer than three months, the
Company will pay to you the accrued and unpaid interest on the portion of the
principal amount of the Loan (i) at three-month intervals, the first such
payment to be made on the last Business Day of the three-month period which
begins on the first day of such Interest Period, and (ii) on the last day of
such Interest Period. On any stated or accelerated maturity of the Loan, all
accrued and unpaid interest on a Loan shall be immediately due and payable,
including without limitation any accrued and unpaid interest on any portion of
the Loan which is subject to an Offshore Rate. In addition, the Company will, on
demand, pay to you interest on any overdue installments of principal and, to the
extent not prohibited by applicable law, on any overdue installments of
interest, and fees and other amounts owed to you hereunder at a rate per annum
which is at all times equal to the sum of 2% plus the Applicable Rate then in
effect; provided, however, that on and after the expiration of any
2
7
Interest Period applicable to any Offshore Rate Loan outstanding on the date of
occurrence of any Event of Default or acceleration, the principal amount of such
Loan shall, during the continuation of such Event of Default or after
acceleration bear interest at a rate per annum equal to the Base Rate plus 2%.
3.1.1. Certain Definitions. For purposes of this Agreement:
(a) The term "Applicable Rate" shall mean, on any
day:
(i) with respect to any portion of the Loan
which is at the time subject to an effective Offshore Rate, the
Offshore Rate plus 1.875%;
(ii) with respect to any other portion of the
Loan, the sum of 0.625% plus the Base Rate.
(b) The term "Base Rate" shall mean for any day, the
higher of: (a) 0.50% per annum above the latest Federal Funds Rate; and
(b) the rate of interest in effect for such day as publicly announced by
Banque Paribas in Los Angeles as its "base rate". Any change in the Base
Rate shall take effect at the opening of business on a day specified in
the public announcement of such change.
3.2. Commitment Fee. In consideration of Lender's commitment to make
the loans provided for in Section 2 hereof, while such commitment is
outstanding, the Company will pay to you, on each Payment Date, commencing on
the first Payment Date after the Initial Closing Date, a fee equal to 1/2% per
annum on the amount by which (i) the average daily Maximum Amount of Credit
exceeded (ii) the average daily principal amount of the Loan outstanding during
the three-month period or portion thereof ending on such Payment Date; provided,
however, that the commitment fee payable on the first such Payment Date shall be
for the period from the Initial Closing Date through such Payment Date.
3.3. The Offshore Loans.
3.3.1. Certain Definitions. For purposes of this Agreement, the
terms "Offshore Rate" and "Interest Period" shall have the meanings ascribed to
such term in the Lender's Credit Agreement.
3.3.2. Election of the Offshore Rate. Subject to all the terms
and conditions hereof and so long as there exists no Default, the Company may,
by irrevocable notice to you received not less than four Business Days prior to
the commencement of the Interest Period selected in such notice, elect to have
all or such portion of the Loan as the Company may specify in such notice accrue
and bear daily interest during the Interest Period so selected at a per annum
rate equal to the Applicable Rate computed on the basis of the Offshore Rate for
such Interest Period; provided, however, that no such election shall become
effective if, prior to the commencement of such Interest Period, you in your
sole discretion determine that you are unable to obtain a corresponding loan at
the Offshore Rate under the Lender's Credit Agreement; and provided, further,
that no such election shall be made with respect to any portion of the Loan
which is less than $100,000.
3.3.3. Selection of Interest Periods. Interest Periods shall be
selected so that (i) there are no more than two (2) Interest Periods in effect
and (ii) no Interest Period shall expire later than August 31, 2001.
3.4. Computation of Interest. All computations of interest for Base
Rate Loans shall be made on the basis of a year of 365 or 366 days, as the case
may be, and actual days elapsed. All other computations of fees and interest
shall be made on the basis of a 360-day year and actual days elapsed (which
results in more interest being paid than if computed on the basis of a 365-day
year). Interest and fees shall accrue during each period during which interest
or such fees are computed from the first day thereof to the last day
3
8
thereof.
3.5. Reimbursement of Certain Expenses. To the extent the Lender is
required to make any payments pursuant to Sections 3.1, 3.2, 3.3 or 3.4, of the
Lender's Credit Agreement, and such payments relate to any actions of the
Company or relate to loans of the Lender which were used to fund any part of or
all of the Loans outstanding hereunder, the Company shall pay to the Lender its
pro rata share of all such reimbursements. The Lender shall determine, in its
reasonable discretion, the Company's pro rata share of such reimbursements which
shall be conclusive in absence of manifest error. To the extent reimbursements
relate to Offshore Rate Loans, the Company's pro rata share shall be its portion
of all Offshore Rate Loans then made by the Lender; to the extent the
reimbursements relate to Base Rate Loans, the Company's pro rata share of such
expenses shall be the Company's pro rata share of all Base Rate Loans then
borrowed by the Lender. In addition, if the Lender is required under the
Lender's Credit Agreement to enter into Swap Contracts (as defined in the
Lender's Credit Agreements) with respect to any amounts outstanding under the
Lender's Credit Agreement, the Company shall pay its pro rata share of the net
costs incurred by the Lender with respect to such Swap Contracts. The Company's
share of such expenses shall be based upon the principal amount of the Loans
then outstanding to the Company over the principal amount of all loans made by
the Lender to the Company and other borrowers.
4. CONDITIONS TO MAKING LOANS. Your obligation to make any Loan pursuant to
this Agreement shall be subject to compliance by the Company with its agreements
herein contained, subject to Section 2.3 and to the satisfaction, at or before
the making of such Loan, of the following further conditions:
4.1. Notes. The Company shall have executed and delivered the Note(s)
evidencing the Loans.
4.2. Security Documents. The Company shall have (i) duly authorized,
executed, acknowledged, delivered, filed, registered, recorded such security
agreements, mortgages, notices, financing statements and other instruments as
you may have requested in order to perfect the security interests and
encumbrances purported or required to be created in the Loan Security and (ii)
caused Enstar IV/PBD Systems Venture, a Georgia general partnership, to deliver
a Security Agreement substantially in the form of Exhibit 4.2 hereof..
4.3. Partner's Certificate. The representations and warranties
contained in Sections 6.3 and 8 hereof shall be true and correct on and as of
each Closing Date with the same force and effect as though made on and as of
such Closing Date; no Default shall exist prior to or after giving effect to the
extension of credit to be made on such Closing Date; between June 30, 1997 and
such Closing Date, neither the business nor the assets nor the condition,
financial or otherwise, of the Company shall have been materially and adversely
affected as the result of any fire, flood, explosion, accident, drought, strike,
lockout, riot, sabotage, confiscation, condemnation or purchase of any property
by governmental authority, activities of armed forces, acts of God or the public
enemy, new or amended legislation or regulation, regulatory order, judicial
decision or other event or development whether or not related to those
enumerated above; and you shall have received on such Closing Date a Partner's
Certificate to these effects and to the effect that each of the conditions set
forth in this Section 4.3 to be satisfied on or prior to such Closing Date has
been satisfied in substantially the form of Exhibit 4.3 hereto signed by the
president, vice president or the chief financial officer of the Corporate
General Partner at the time in office.
4.4. Proper Proceedings. All proper partnership and corporate
proceedings shall have been taken by the Company and the Corporate General
Partner to authorize this Agreement, each other Loan Agreement and the
transactions contemplated hereby and thereby.
4.5. Required Consents and Approvals. All necessary consents,
approvals and authorizations of any Person (including without limitation any
4
9
governmental or administrative agency) to or of any of the transactions
contemplated by this Agreement or any other Loan Agreement shall have been
obtained and shall be in full force and effect.
4.6. Legality, etc. The making of the requested loan shall not
subject you to any penalty or special tax, shall not be prohibited by any law or
governmental order or regulation applicable to you or to the Company, and shall
not violate any voluntary foreign credit restraint program of the executive
branch of the government of the United States of America, the Board of Governors
of the Federal Reserve System or any other governmental or administrative
agency.
4.7. Legal Opinions. You shall have received an opinion of Weinstein,
Boldt, Racine, Halfhide & Camel dated as of the Initial Closing Date addressed
to you substantially in the form of Exhibit 4.7.
4.8. Insurance Policies. You shall have received standard lenders'
payable endorsements with respect to the insurance policies or other instruments
or documents evidencing insurance coverage on the properties of the Company in
accordance with Section 7.3.
4.9. General. All instruments and legal, partnership and corporate
proceedings in connection with the transactions contemplated by this Agreement
or any other Loan Agreement shall be satisfactory in form and substance to you
and the Banks under the Lender's Credit Agreement and you and the Banks under
the Lender's Credit Agreement shall have received copies of all documents,
including without limitation records of partnership and corporate proceedings
and opinions of counsel, which you may have reasonably requested in connection
therewith, such documents where appropriate to be certified by proper
partnership, corporate or governmental authorities.
5. PAYMENT PROVISIONS. The Company covenants that so long as you shall be
committed to extend credit under this Agreement and so long as any Loan
Obligations are outstanding:
5.1. Payment on Maturity. On the Termination Date or any accelerated
maturity of the Loans, the Company will pay to you an amount equal to the entire
outstanding principal amount of the Loans, together with all accrued and unpaid
interest with respect thereto and, upon any accelerated maturity of the Loans,
any other Loan Obligations then outstanding. The "Termination Date" shall be the
earlier of (i) August 31, 2001, (ii) the date occurring on the four year
anniversary of the Initial Closing Date, or (iii) the "Termination Date" under
and as defined in the Lender's Credit Agreement.
5.2. Contingent Required Prepayments.
5.2.1. Excess Loans. If at any time the aggregate principal
amount of the Loans exceeds the Maximum Amount of Credit, the Company will
promptly pay to you the amount of such excess.
5.2.2. Mandatory Prepayments From Net Proceeds. Within three
(3) days from (i) the date of any Disposition or (ii) an Event of Loss, the
Company will pay to you, without premium (except as provided in Section 3.5
hereof), as a mandatory prepayment on account of the principal amount of the
Loans, the lesser of (i) an amount equal to 100% of the Net Proceeds received by
the Company with respect to such Disposition or Event of Loss, as the case may
be, or (ii) such principal amount of the Loans as may then be outstanding. The
principal amount of the Loans prepaid pursuant to this Section 5.2.2 may not be
reborrowed and shall reduce the Maximum Amount of Credit.
5.2.3. Debt Issuance. If the Company enters into any
transaction pursuant to which the Company incurs Indebtedness, the Company shall
promptly notify you of the amount of such Indebtedness. Promptly upon, and in no
event later than one day after, receipt by the Company of any amounts in respect
of such Indebtedness, the Company shall prepay, without premium
5
10
(except as provided in Section 3.5 hereof) the Loans in an aggregate amount
equal to the amount of such Indebtedness. The principal amount of the Loans
prepaid pursuant to this Section 5.2.3 may not be reborrowed and shall reduce
the Maximum Amount of the Credit.
5.2.4. Mandatory Prepayments From Excess Cash Flow. So long as
the Company's Maximum Leverage Ratio for any Fiscal Quarter is greater than
4.25:1.00, then at the time of furnishing the financial statements required by
Section 7.4.2, 7.4.2 hereof with respect to any Fiscal Quarters of the Company
and in any event within 60 days after the end of each such Fiscal Quarter of the
Company, commencing with the Fiscal Quarter ending December 31, 1997, the
Company will pay to you, without premium (except as provided in Section 3.5
hereof), as a mandatory prepayment on account of the principal amount of the
Loans, the lesser of (i) an amount equal to 100% of the Excess Cash Flow as of
the end of each such Fiscal Quarter, or (ii) the principal amount of the Loans
as may then be outstanding. The principal amount of the Loans prepaid pursuant
to this Section 5.2.4 may not be reborrowed and shall reduce the Maximum Amount
of Credit.
5.2.5. Voluntary Prepayments. Upon not less than two (2)
Business Days' prior notice to you, the Company may at any time or from time to
time prepay, without premium (except as provided in Section 3.5 hereof), all or
any portion of the outstanding principal amount of the Loans in integral
multiples of $50,000. Notice of prepayment having been given in accordance with
this Section 5.2.5, the amount specified to be prepaid shall become due and
payable on the date specified for prepayment and from and after such date
(unless the Company shall fail to make payment thereof) interest thereon shall
cease to accrue. The principal amount of the Loans prepaid pursuant to this
Section 5.2.5 may be reborrowed pursuant to Section 2 hereof, subject to the
limitations thereof.
6. LOAN SECURITY. The payment and performance of the Loan Obligations shall
at all times be secured as follows:
6.1. Security Interests. This Agreement secures, and the Loan
Security is collateral security for, the prompt payment or performance in full
when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including the payment of amounts that would
become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C. Section 362(a)), of all obligations and
liabilities of every nature of the Company now or hereafter existing under or
arising out of or in connection with, the Loan Obligations, this Agreement and
the other Loan Agreements, now or hereafter existing, and all extensions or
renewals thereof, whether for principal, interest (including without limitation
interest that, but for the filing of a petition in bankruptcy with respect to
the Company, would accrue on such obligations), fees, expenses, indemnities or
otherwise, whether voluntary or involuntary, direct or indirect, absolute or
contingent, liquidated or unliquidated, whether or not jointly owed with others,
and whether or not from time to time decreased or extinguished and later
increased, created or incurred, and all or any portion of such obligations or
liabilities that are paid, to the extent all or any part of such payment is
avoided or recovered directly or indirectly from the Lender as a preference,
fraudulent transfer or otherwise (all such obligations and liabilities being the
"Secured Obligations"). The Company hereby assigns to you for your benefit and
the benefit of the holders from time to time of the Notes, and hereby grants to
you for your benefit and the benefit of the holders from time to time of the
Notes, a security interest in, to and under all of the Company's right, title
and interest in and to the following, in each case whether now or hereafter
existing or in which the Company now has or hereafter acquires an interest and
wherever the same may be located (the "Loan Security"):
6.1.1. Tangible Personal Property. All of its goods, machinery,
equipment, inventory and all other tangible personal property of any nature
whatsoever, wherever located, including without limitation antennae, microwave
and other receivers and transmitters, earth stations, studio and head
6
11
end equipment, computers, computer equipment, converters, decoders, power
supplies, electronic equipment, mechanical fittings, signal processors, wire,
cable of all types (including without limitation coaxial and fiber optic cable),
amplifiers, filters, traps, connectors, anchors, radio, television, motion
picture and video tape equipment, including camera, recorders and players, tools
and lifts.
6.1.2. Rights to Payment of Money. All accounts and other
rights to receive the payment of money, including without limitation,
receivables, rights to receive the payment of money under present or future
contracts or agreements (whether or not earned by performance) and rights to
receive payments from cable television subscribers (all such accounts and other
such rights being referred to herein as "Accounts").
6.1.3. Intangibles. To the extent that the valid and
enforceable terms thereof or any valid and enforceable law or regulation
applicable thereto does not prohibit their being subjected to a security
interest, all Franchises, rights under agreements with public utilities and
microwave transmission companies, distribution and exhibition rights, common law
and statutory copyrights and rights in literary property and rights and licenses
thereunder, contracts, licenses and agreements (including without limitation
pole rental, attachment or use agreements) and all rights thereunder (to the
extent not included in Section 6.1.2 hereof), trade names, goodwill, patents and
patent rights, inventions, processes, licenses (including FCC Licenses), leases,
royalties, chattel paper, documents, permits, negotiable and non-negotiable
instruments, judgments, chooses in action and all other general intangibles and
intangible property and all rights thereunder (to the extent not included in
Section 6.1.2 hereof).
6.1.4. Pledged Securities.
(a) (i) All Shares of capital stock or membership
interests, as the case may be, in any Person which is a corporation or a limited
liability company, (ii) all limited partnership interests in any Person which is
a limited partnership and (iii) all warrants, options and similar rights to
acquire such shares, membership interests or such limited partnership interests.
All such capital stock, limited partnership interests, membership interests,
warrants and other rights are collectively referred to herein as the "Pledged
Stock".
(b) All rights to receive profits or surplus of, or
other Distributions by way of income, return of capital or liquidating
distributions from, any person that is a partnership, including without
limitation any distributions to general partners. All such rights are
collectively referred to herein as the "Pledged Rights".
(c) All Indebtedness from time to time owing to the
Company from any Person, including without limitation all Investments permitted
by Section 7.8 hereof, together with all security held by the Company with
respect to such Indebtedness (all such Indebtedness being referred to herein as
the "Pledged Indebtedness"). The Pledged Stock, the Pledged Rights and the
Pledged Indebtedness are collectively referred to herein as the "Pledged
Securities".
6.1.5. Other Property. All other personal property, assets and
things of value of every kind and nature, tangible or intangible, absolute or
contingent, legal or equitable, of which the Company may be possessed of or
entitled to or which are now owned or may be hereafter acquired by the Company.
6.1.6. Proceeds and Products. All proceeds (including insurance
proceeds) and products of the items of Loan Security described in Sections 6.1.1
through Section 6.1.5 hereof.
6.2. Additional Security. As additional Loan Security, the Company
covenants that it will from time to time upon your request mortgage or assign
7
12
to you and create in you a security interest in, all of its right, title and
interest in and to such of the real and immovable property and fixtures,
leasehold interests and easements, permits, rights, licenses, benefits and other
interest of any kind or nature whatsoever in or in respect of real and immovable
property as you may from time to time specify by notice to it, whether now owned
or hereafter acquired, and the proceeds (including insurance proceeds) and
products thereof, subject to Liens permitted by Section 7.7.2 hereof. Upon your
request, the Company (i) will furnish you with a title insurance policy insuring
your interest in any real property mortgaged hereunder in such amounts as you
may reasonably request, (ii) will provide you with an engineer's or other
appropriate certification as to whether any property which is to be mortgaged
hereunder is in a flood plain and whether federal flood insurance is available
for such property, and (iii) if federal flood insurance is so available, will
obtain such insurance.
6.3. Representations, Warranties and Covenants With Respect to Loan
Security. The Company hereby represents, warrants and covenants that:
6.3.1. Pledged Stock. The Pledged Stock constituting capital
stock, membership or limited partnership interests is and shall be at all times
duly authorized, validly issued, fully paid and nonassessable. The Company will
deliver to you certificates representing any of the Pledged Stock accompanied by
a stock transfer power executed in blank and, if you so request, with the
signature guaranteed, all in form and manner satisfactory to you. If the
interests in any Pledged Stock are not evidenced by certificates but are
registered on transfer books or other records maintained for purposes of
registration or transfer of such interests, such Pledged Stock is and shall be
registered in your name, as pledgee, on such transfer books or records.
6.3.2. Affiliate Pledged Indebtedness. All Pledged Indebtedness
owed by any Subsidiary of the Company shall, if you request, be secured by the
assets of the Subsidiary issuing such Indebtedness. All Pledged Indebtedness
owned by any Subsidiary of the Company or by any other Affiliate of the Company
shall, if you request, be evidenced by or embodied in a promissory note or other
instrument, which note or instrument shall be delivered to you after having been
endorsed in blank. Unless you shall so request, the Pledged Indebtedness owed by
each Subsidiary of the Company or such Affiliate shall be on open account and
shall not be evidenced by a note or any other instrument. The Company will
forthwith upon the receipt thereof, deliver to you any promissory note or
similar instrument representing any other Pledged Indebtedness, after having
endorsed such promissory note or instruments in blank.
6.3.3. Other Pledged Indebtedness. Your security interest in
each instrument evidencing Pledged Indebtedness constituting Investments
permitted by Section 7.8 shall be perfected by delivery to you of such
instrument in bearer form or endorsed in blank, by delivery of such instrument
to another Person acceptable to you as your pledgeholder, or by such other
method as you may in your sole discretion approve.
6.3.4. Specified Liens. All Loan Security is and shall be free
and clear of any Liens and restrictions on the transfer thereof except for (i)
restrictions on transfer of the Pledged Stock imposed by state, federal or other
applicable securities laws, and (ii) Liens on tangible property permitted by
Section 7.7.2.
6.3.5. Location of Accounts. The Company does and shall at all
times keep its records concerning the Accounts at its chief executive offices
and chief place of business, which offices and place of business shall be at the
address specified in Exhibit 12 hereof, or at such other address as the Company
may specify by notice actually received by you not less than ten (10) Business
Days prior to such change of address and so long as the Company takes all steps
requested by you to perfect your security interest in the Loan Security with
respect to such change in location.
8
13
6.3.6. Name for Conducting Business. The Company will not adopt
or do business under any name other than a name specified in Exhibit 8.1.1 B
hereto or any other name specified by notice actually received by you not less
than ten (10) Business Days prior to the conduct of business under such other
name and so long as the Company takes all steps requested by you to perfect your
security interest in the Loan Security with respect to such change in name.
6.3.7. Location of Tangible Property. The Company shall not at
any time keep tangible personal property in any jurisdiction other than one in
which a financing statement satisfactory to you has theretofore been filed, a
jurisdiction previously furnished in writing to you or in such other
jurisdictions as it may specify by notice actually received by you not less than
ten (10) Business Days prior to moving such tangible personal property into such
other jurisdiction and so long as the Company takes all steps requested by you
to perfect your security interest in the Loan Security with respect to such
other jurisdiction.
6.3.8. Insurance. Each policy of insurance insuring against
loss or damage to the Loan Security shall name you as loss payee for amounts in
excess of $250,000 and shall not be cancelable or subject to termination or
reduction in amount or scope of coverage until after at least thirty (30) days'
prior notice to you. At least thirty (30) days prior to the expiration of any
such policy of insurance for any reason, the Company shall furnish you with
evidence of a renewal or replacement policy and evidence of payment of the
premiums therefor.
6.4. Perfection of Loan Security. Before the making of any loans
pursuant to this Agreement and upon your written request from time to time
thereafter, the Company will make, execute, acknowledge and deliver, and file
and record in the proper filing and recording places, all such instruments,
including without limitation appropriate financing statements, and take all such
action as you or your special counsel may reasonably deem necessary or advisable
to carry out the intent and purposes of this Agreement or for assuring and
confirming to you the Loan Security provided for hereunder and under the Loan
Agreements. Without limiting the generality of the foregoing sentence: (i) the
Company will, from time to time upon your request, cause its accounting books
and records to be marked with such legends or segregated in such manner as you
may specify, and take or cause to be taken such other action and adopt such
procedures, including the appointment of trustees, the institution of depositary
account, or collateral lock box collection or other revolving credit procedures
as you may reasonably specify, to give notice of or to better assure the
security interest in the Loan Security intended to be created hereby or by any
other Loan Agreement; (ii) the Company will from time to time execute such
mortgages, deeds of trust, security deeds or other security documents relating
to the real property or interests therein constituting Loan Security as you may
request; (iii) the Company will from time to time execute such other security
documents relating to the motor vehicles constituting Loan Security as you may
request and make notations concerning any Liens on certificates of title
relating to such motor vehicles; (iv) the Company will use its best efforts to
obtain any necessary consents of any Person to the creation of the security
interests in the Loan Security listed in Section 6.1.3 hereof; and (v) the
Company will use its efforts to exclude from any Franchises, contracts, licenses
or agreements to which it hereafter becomes a party provisions which prevent a
change in the control of the Franchisee or the creation of a security interest
in the ownership of the franchisee or the rights under such Franchises,
contracts, licenses or agreements or the property which was acquired under such
Franchises, contracts, licenses or agreements.
6.5. Indemnity. The Company will indemnify and save and hold you
harmless from and against any and all claims, damages, loss, liability or
judgments which may be incurred or sustained by you or asserted against you,
directly or indirectly, in connection with the existence of or the exercise of
any of the security rights with respect to the Loan Security; provided, however,
that the foregoing shall not extend to actions not taken in good
9
14
faith. The covenants contained in this Section 6.5 shall survive the termination
of the other provisions of this Agreement.
6.6. Administration of Loan Security. The following provisions shall
govern the administration of all the Loan Security, and in case of the
occurrence of an Event of Default, the provisions of Section 9 hereof with
respect to your rights to realize upon the Loan Security shall govern.
6.6.1. Accounts. You are hereby given full power and authority
to ask for, demand, take, collect, ▇▇▇ for and receive all payments in respect
of the Accounts which the Company, except for the execution hereof, could ask
for, demand, take, collect, ▇▇▇ for and receive for its own use, and in
connection therewith to enforce all rights and remedies thereunder which the
Company could enforce if this Agreement had not been made; and the Company
hereby ratifies any action which you shall lawfully take to enforce your rights
hereunder. In connection with the above, you are hereby authorized and empowered
to enforce the payment of each Account, either in the name of the Company or in
your own name, and to endorse the name of the Company on all checks, drafts,
money orders and other instruments tendered to or received in payment of any
such Account. The Company hereby authorizes you to notify any and all obligors
with respect to the Accounts of the existence of the security interest created
hereby, and, after the occurrence of an Event of Default, to cause all payments
in respect thereof thereafter to be made directly to you. Whether or not you
shall have so notified any obligors, the Company shall at its expense render all
reasonable assistance to you in collecting such items and in enforcing claims
thereon. You hereby constitute the Company your attorney-in-fact to notify any
and all obligors with respect to the Accounts of the existence of the security
interest created hereby and to ask for, demand, take, collect, ▇▇▇ for and
receive all payments made in respect of such Accounts and to enforce all rights
and remedies thereunder; provided, however, that such appointment of the Company
as such attorney-in-fact may be revoked by you at any time after the occurrence
of an Event of Default, and shall be automatically revoked upon the occurrence
of an Event of Default under Section 9.1.9 hereof; and provided, further, that
until the occurrence of an Event of Default and such appointment as
attorney-in-fact is so revoked, your power and authority under the foregoing
provisions of this Section 6.6 shall be exercised only by the Company as your
attorney-in-fact. From and after the occurrence of an Event of Default, all sums
collected or received and all property recovered or possessed by the Company in
connection with the Accounts shall be received and held by the Company in trust
for and on your behalf, and shall be segregated from the assets and funds of the
Company. Upon receipt of any such sums, the Company shall forthwith deliver the
same to you, or upon your order, for application to the payment of the Loan
Obligations in such order and such manner as you in your sole discretion may
determine. In connection with the Company obligations under this Section 6.6,
the Company agrees to execute such instrument (including without limitation
applications to governmental authorities for the delivery of mail through an
agent) and to take such other steps as you may from time to time request to
provide for the direct collection by you of amounts due under the Accounts.
6.6.2. The Pledged Securities. Until there shall occur an Event
of Default, the Company shall (i) be entitled to receive all dividends, interest
and other Distributions or payments on or with respect to the Pledged Securities
(other than dividends, Distributions or payments constituting Pledged
Securities) and (ii) be entitled to vote or consent with respect to the Pledged
Securities in any manner not inconsistent with the terms of the Loan Agreements
(and you will, if so requested, execute appropriate revocable proxies therefor).
All Distributions constituting Pledged Securities made or paid on the Pledged
Securities will be retained by you (or if received by the Company or a
Subsidiary of the Company shall be
10
15
held by such Person in trust and shall be forthwith delivered by it to you in
the original form received, endorsed in blank) and held by you as a part of the
Loan Security. If there shall have occurred an Event of Default, all dividends,
interests and other Distributions and payments with respect to Pledged
Securities shall be retained by you (or if received by the Company or a
Subsidiary of the Company shall be held by such Person in trust and shall be
forthwith delivered by it to you in the original form received, endorsed in
blank) and held by you as part of the Loan Security or applied by you to the
payment of the Loan Obligations in such order and in such manner as you may
determine in your sole discretion, and, if and to the extent that you shall so
notify the Company in writing, only you shall be entitled to vote or consent or
take any other action with respect to the Pledged Securities (and the Company or
the appropriate Subsidiary of the Company will, if so requested, execute or
cause to be executed appropriate proxies therefor). You at your option shall at
all times have the right to transfer at any time into your name or that of your
nominee any or all of the Pledged Securities.
6.6.3. Use of Loan Security. Until there shall have occurred an
Event of Default or so long as you do not request otherwise in order to perfect
your security interest in the Loan Security pursuant to Section 6.4 hereof, the
Company may use, commingle and dispose of all or part of the Loan Security
described in Section 6 hereof and the proceeds thereof in the ordinary course of
its business, all subject to the provisions of Section 7.12 hereof.
6.6.4. Custody of Loan Security. Except as provided by
applicable law which cannot be waived, you shall not have any duty as to the
custody and preservation of the Loan Security, the collection of any part
thereof or of any income thereon, or the preservation or exercise of any rights
pertaining thereto beyond the use of reasonable care in the custody and physical
preservation of any Loan Security in your possession.
7. GENERAL COVENANTS. The Company covenants that until all of the Loan
Obligations shall have been paid in full and so long as you shall be committed
to extend credit under this Agreement, it will comply with such of the following
provisions as are applicable to it:
7.1. Taxes, etc. The Company will duly pay and discharge, or cause to
be paid and discharged, before the same shall become in arrears, all taxes,
assessments and other governmental charges or levies, imposed upon it and its
properties, sales and activities, or any part thereof, or upon the income or
profits therefrom, as well as all claims for labor, materials or supplies which
if unpaid might by law become a Lien upon any of its property; provided,
however, that any such tax, assessment, charge, levy or claim need not be paid
if the validity or amount thereof shall currently be contested in good faith by
appropriate proceedings and if the Company shall have set aside on its books
adequate reserves with respect thereto in accordance with GAAP; and provided,
further, that the Company will pay all such taxes, assessments, charges, levies
or claims forthwith upon the commencement of proceedings to foreclose any Lien
which may have attached as security therefor to the extent necessary to stay
such proceedings. The Company will promptly pay when due, or in conformance with
customary trade terms, all other Indebtedness incident to the operations of the
Company; provided, however, that any such Indebtedness need not be paid if the
validity or amount thereof shall currently be contested in good faith and if the
Company shall have set aside on its books adequate reserves with respect thereto
in accordance with generally accepted accounting principles.
7.2. Conduct of Business, etc.
7.2.1. Types of Business. The Company will engage only in the
business of developing, acquiring, constructing, improving, owning and operating
the Cable Systems and such other Systems as the Company may acquire in
accordance with the terms of this Agreement, and other businesses incidental
thereto (a) in respect of areas presently covered by the Franchises currently
held by the Company and in respect of areas for which a Franchise is not
required for operation of a cable television system, and (b) in areas covered by
such other Franchises as the Company may acquire in accordance with the terms of
this Agreement.
7.2.2. Maintenance of Properties; Compliance With Franchises,
etc. The Company (i) will keep its properties in such repair, working order and
11
16
condition and will from time to time make such repairs, renewals, replacements,
additions and improvements thereto as its management deems necessary and
appropriate, and will comply at all times in all material respects with the
provisions of all Franchises and FCC Licenses, leases and other material
agreements to which it is a party so as to prevent any loss or forfeiture
thereof or thereunder unless compliance therewith is being at the time contested
in good faith by appropriate proceedings, and (ii) will do all things necessary
to preserve, renew and keep in full force and effect and in good standing its
legal existence and authority necessary to continue such business.
7.2.3. Statutory Compliance. The Company will comply in all
material respects with the Communications Act and the Copyright Act, including
without limitation the rules and regulations of the FCC relating to the carriage
of television signals, and with all other valid and applicable statutes,
ordinances, zoning and building codes, and other rules and regulations of the
United States of America, of the states thereof and their counties,
municipalities and other subdivisions and of any other jurisdiction applicable
to it, except where compliance therewith shall at the time be contested in good
faith by appropriate proceedings.
7.2.4. Transactions With Affiliates. The Company shall not
effect any transaction with any Affiliate on a basis less favorable to the
Company than would be the case if such transaction had been effected with a
non-Affiliate provided, however, that the Company may, subject to Section 7.9
hereof, perform all of its obligations under the Management Agreement or
Partnership Agreement.
7.3. Insurance. The Company will keep its assets which are of an
insurable character insured by financially sound and reputable insurers against
loss or damage by fire, explosion or hazards insured against by extended
coverage in amounts sufficient to prevent it from becoming a co-insurer and not
in any event less than eighty percent (80%) of the insurable value of the
property insured (other than overhead and buried cable or amplifiers, tap-off
devices, cables, house drops and other components of its cable television
distribution systems which are actually affixed to overhead or buried cable),
and maintain with financially sound and reputable insurers, insurance against
liability for defamation, libel, slander and invasion of privacy and other
hazards and risks and liability to persons and property to the extent and in the
manner customary for companies in similar businesses similarly situated;
provided, however, that it may effect workers' compensation insurance or similar
coverage with respect to operations in any particular state or other
jurisdiction through an insurance fund operated by such state or jurisdiction or
by meeting the self-insurance requirements of such state or jurisdiction. The
Company shall cause each policy of insurance insuring against loss or damage to
the Loan Security to name the Lender (or its designee) as loss payee for amounts
in excess of $250,000 and the Company shall ensure that such policies of
insurance are not cancelable or subject to termination or reduction in amount or
scope of coverage until after at least 30 days prior notice to the Lender. The
Company shall not (i) increase the $250,000 threshold referred to above and (ii)
cause the Lender or its designee to be removed as a loss payee from any such
policy of insurance.
7.4. Financial Statements. The Company will maintain a standard
modern system of accounting in which full, true and correct entries will be made
of all dealings and transactions in relation to its business and affairs in
accordance with GAAP. The fiscal year of the Company will end on December 31 of
each year.
7.4.1. Annual Statements. The Company will furnish to you as
soon as practicable after the end of each fiscal year, and in any event within
one hundred five (105) days thereafter, the balance sheet of the Company as of
the end of such year, and the statements of income, cash flows and of Partners'
capital of the Company for such year, setting forth in each case in comparative
form the figures for the previous fiscal year, all in reasonable detail and
accompanied by a report and opinion on financial statements of Ernst & Young
12
17
LLP or other independent certified public accountants of recognized national
standing selected by the Company and satisfactory to you, together with (a)
computations by the Company substantially in the form of Exhibit 7.4.1 hereto
demonstrating, as of the close of such fiscal year, compliance with Sections
7.5.2, 7.5.4, 7.10.1, 7.10.2, 7.10.3, 7.11.2 and 7.15 hereof, (b) a Partner's
Certificate signed by the president, vice president, chief financial officer or
controller of the Corporate General Partner of the Company (i) stating that such
person has reviewed this Agreement and has made, or caused to be made under its
supervision, a review of the transactions and conditions of the Company during
such year, and (ii) stating that such review has not disclosed the existence
during such year (and that such signer does not have knowledge of the existence,
as of the date of such Certificate) of any Default, or, if any such Default
existed or exists, specifying the nature and period of existence thereof and
what action the Company has taken, is taking or proposes to take with respect
thereto, and (c) a certificate by such accountants (i) stating that such
financial statements were prepared in accordance with generally accepted
accounting principles applied on a consistent basis and fairly present the
financial condition of the Company at the dates thereof and the results of its
operations for the periods covered thereby, and (ii) stating whether or not in
the course of the examination upon which their opinion on such financial
statements was based (which shall include a review of the relevant provisions of
this Agreement but need not include any special or additional audit procedures)
they became aware of the existence, at the end of the fiscal year covered by
such financial statements, of any Default under Sections 7.5 through 7.12
hereof, and, if their examination has disclosed such a Default, specifying the
nature and period of the existence thereof.
7.4.2. Quarterly Statements. The Company will furnish to you as
soon as practicable after the end of each of the first three (3) Fiscal Quarters
of each fiscal year of the Company, and in any event within forty (40) days
thereafter, the balance sheet of the Company as of the end of such period and
statements of income of the Company and cash flows for the period from the
beginning of the current fiscal year to the end of such quarter and internally
prepared quarterly operating statements of the Company by operating regions for
the portion of the fiscal year of the Company then ended, setting forth in each
case in comparative form the figures for the corresponding period of the
previous fiscal year, all in reasonable detail and accompanied by (i) a
Partner's Certificate signed by the president, vice president, chief financial
officer or controller of the Corporate General Partner of the Company stating
that such statements are complete and correct, subject only to normal changes
resulting from year-end audit adjustments, have been prepared in accordance with
GAAP applied on a consistent basis and fairly present the financial condition of
the Company at the dates thereof and the results of its operations for the
periods covered thereby, (ii) computations by the Company substantially in the
form of Exhibit 7.4.1 hereto demonstrating, as of the close of such fiscal
quarter, compliance with Sections 7.5.2, 7.5.4, 7.10.1, 7.10.2, 7.10.3, 7.11.2
and 7.15 hereof, (iii) a Partner's Certificate signed by the president, vice
president, chief financial officer or controller of the Corporate General
Partner of the Company (a) stating that each signer has reviewed this Agreement
and has made, or caused to be made under its supervision, a review of the
transactions and conditions of the Company during the accounting period covered
by such financial statements, and (b) stating that such review has not disclosed
the existence during such accounting period (and that such signer does not have
knowledge of the existence, as of the date of such certificate) of any Default,
or, if any such Default existed or exists, specifying the nature and period of
existence thereof and what action the Company has taken, is taking or proposes
to take with respect thereto.
7.4.3. Other Reports; Information Returns. The Company will
furnish to you as soon as available (i) all reports furnished by the Company or
made available by the Company to the General Partners or limited partners, and
(ii) all appraisals of the fair market value of the Company's Systems which the
Company may from time to time obtain. From time to time upon request of you, the
Company will furnish you with a copy of the annual information return filed by
the Company with the Internal Revenue Service.
13
18
7.4.4. Regulatory or Other Action; Defaults. The Company will
furnish to you notice in writing thereof promptly upon the happening of (i) the
Company's becoming aware of the issuance by the issuer of any of the Franchises
now or hereafter held by the Company of a notice of default under, or of
proceedings threatening the suspension, termination or amendment of, any
Franchise or the taking of any other action by any such issuer of which the
Company learns and which may affect your or the Company's interest in a
materially adverse manner; (ii) the Company's becoming aware of any lapse,
suspension or termination of any mandatory FCC certification, license or permit
issued to the Company; (iii) any refusal by the FCC to extend or renew any such
certification, license or permit, (iv) the issuance by the FCC of any notice to
the Company of any formal or informal proceedings threatening the suspension,
termination or refusal to extend or renew any such certification, license or
permit; (v) receipt of any notice of termination of any material pole rental,
attachment or use agreement; or (vi) any litigation or any administrative or
arbitration proceedings to which the Company may hereafter become a party which
may involve any risk of any material judgment which after giving effect to any
applicable insurance may result in any material adverse change in the business
or assets or in the condition, financial or otherwise, of the Company. Promptly
upon acquiring knowledge thereof, the Company will notify you of the existence
of any Default, specifying the nature thereof and what action the Company has
taken, is taking or proposes to take with respect thereto.
7.4.5. Other Information. From time to time upon your
reasonable request, the Company will furnish to you such other information
regarding the business, affairs and condition, financial or otherwise, of the
Company, including operational and financial information on a regional basis.
Your authorized officers and representatives shall have the right during normal
business hours to examine the books and records of the Company, to make copies,
notes and abstracts therefrom, and to make an independent examination of its
books and records for the purpose of verifying the accuracy of the reports
delivered by the Company pursuant to this Section 7.4 or otherwise and
ascertaining compliance with this Agreement or any other Loan Agreement.
7.5. Restrictions on Indebtedness. The Company will not create,
incur, assume or guarantee, either directly or indirectly, or otherwise become
or remain liable with respect to any Indebtedness except the following:
7.5.1. Indebtedness in respect of the Loan Obligations.
7.5.2. Indebtedness of the Company, all to the extent permitted
by Section 7.7.2 hereof; provided, however, that the aggregate principal amount
of all Indebtedness permitted by this Section 7.5.2 shall not exceed $50,000 at
any one time outstanding.
7.5.3. Indebtedness in respect of Guarantees permitted by
Section 7.6 hereof.
7.5.4. Indebtedness in respect of judgments or awards not in
excess of $100,000 in aggregate principal amount at any one time outstanding
which have been in force for less than the applicable appeal period so long as
execution is not levied thereunder or in respect of which the Company shall at
the time in good faith be prosecuting an appeal or proceedings for review and in
respect of which a stay of execution shall have been obtained pending such
appeal or review.
7.6. Restrictions on Guarantees. The Company will not become or
remain liable with respect to any Guarantee of any obligation except the
following:
7.6.1. Guarantees to governmental authorities in respect of
performance under Franchises and to obligors upon letters of credit or
indemnity, performance or similar bonds made in the ordinary course of business,
not involving Guarantees of Indebtedness for money borrowed; provided, however,
that the aggregate principal amount of all Guarantees
14
19
permitted by this Section 7.6.1 shall not exceed $50,000 at any one time
outstanding.
7.6.2. Endorsements for collection or deposit in the ordinary
course of business.
7.7. Restrictions on Liens. The Company will not, directly or
indirectly, (i) create or incur or suffer to be created or incurred or to exist
any encumbrance, mortgage, pledge, lien, charge or other security interest of
any kind upon any of its property or assets of any character, whether now owned
or hereafter acquired, or upon the income or profits therefrom; or (ii) enter
into or permit to exist any arrangement or agreement which prohibits it from
creating such encumbrances, mortgages, pledges, liens, charges or other security
interests; or (iii) transfer any of such property or assets for the purposes of
subjecting the same to the payment of Indebtedness or performance of any other
obligation in priority to payment of its general creditors; or (iv) acquire or
agree or have an option to acquire any property or assets upon conditional sale
or other title retention agreement, device or arrangement (including a
Capitalized Lease); or (v) suffer to exist for a period of more than thirty (30)
days after the same shall have been incurred any Indebtedness against it which
if unpaid might by law or upon bankruptcy or insolvency, or otherwise, be given
any priority whatsoever over its general creditors; or (vi) sell, assign, pledge
or otherwise transfer for security any of its accounts, contract rights, general
intangibles, or chattel paper, with or without recourse (the foregoing items or
actions listed in clauses (i) through (vi) above being sometimes referred to
collectively herein as "Liens"); provided, however, that the Company may create
or incur or suffer to be created or incurred or to exist the following Liens,
which shall be "Permitted Liens":
7.7.1. Liens which secure the Loan Obligations.
7.7.2. With respect to property of the Company existing or
created at the time of acquisition thereof, and the renewal, extension and
refunding of any such Lien in an amount not exceeding the amount thereof
remaining unpaid immediately prior to such renewal, extension or refunding;
provided, however, that the principal amount of Indebtedness (including
Indebtedness in respect of Capitalized Lease Obligations) secured by each such
Lien in each item of property shall not exceed the cost (including all such
Indebtedness secured thereby, whether or not assumed) of the item subject
thereto and such Lien shall attach solely to the particular item of property so
acquired; and provided, further, that the aggregate principal amount of all such
Indebtedness shall not exceed the amount permitted by Section 7.5.2 hereof.
7.7.3. Deposits or pledges made in connection with, or to
secure payment of, indemnity, performance or similar bonds permitted by Section
7.6.1 hereof.
7.7.4. Liens to secure taxes, assessments and other
governmental charges or claims of carriers, warehousemen, mechanics and
materialmen and similar claims for labor, material or supplies to the extent
that payment thereof shall not at the time be required to be made in accordance
with Section 7.1 hereof.
7.7.5. Deposits or pledges made in connection with, or to
secure payment of, workers' compensation, unemployment insurance, or in
connection with contests to the extent that payment thereof shall not at that
time be required to be made in accordance with Section 7.1 hereof.
7.7.6. Liens in respect of judgments or awards to the extent
that such judgments or awards are permitted as Indebtedness by Section 7.5.4
hereof.
7.7.7. Encumbrances in the nature of zoning restrictions,
easements, rights or restrictions of record on the use of real property and
15
20
landlord's and lessor's liens under leases of movable and immovable property,
liens of utilities under pole rental and similar agreements on cables and other
property affixed to poles, restrictions on the transfer of Franchises and
restrictions under state and federal securities laws on the transfer of
securities, which do not materially detract from the value of such property or
impair the use thereof in the business of the Company.
7.8. Investments. The Company will not have outstanding or acquire or
commit itself to acquire or hold any Investment, including without limitation
any Subsidiary, except:
7.8.1. Investments of the Company consisting of the Cable
Systems.
7.8.2. Investments in: (i) negotiable certificates of deposit,
time deposits and bankers' acceptances issued by you or any United States bank
or trust company having capital and surplus and undivided profits aggregating at
least $100,000,000; (ii) short-term corporate obligations rated Prime-1 by
▇▇▇▇▇'▇ Investors Service, Inc. or A-1 by Standard & Poor's Corporation; and
(iii) any direct obligation of the United States of America or any agency or
instrumentality thereof (a) which has a remaining maturity at the time of
purchase of not more than two years or (b) which is subject to a repurchase
agreement exercisable within two years with one of the banks or trust companies
referred to in clause (i) hereof.
7.8.3. Investments in Enstar IV/PBD Systems Venture, a Georgia
general partnership, and Enstar Cable of Macoupin County, a Georgia general
partnership.
7.9. Distributions. The Company shall not make any Distribution,
except that:
7.9.1. So long as immediately after giving effect thereto (i)
there shall exist no Default and (ii) the Maximum Leverage Ratio is 4.00:1.00 or
less, the Company may, as provided in the Management Agreement, make payments to
Enstar Cable in respect of direct expenses incurred pursuant to the Management
Agreement and the Partnership Agreement and management fees (including any
accrued but theretofore unpaid management fees and reimbursed expenses) in
accordance with the Management Agreement as in effect on the date hereof;
provided, however, that the aggregate amount of such management fees paid with
respect to any fiscal year of the Company shall not exceed 5% of Gross Revenue
for such fiscal year.
7.9.2. So long as immediately after giving effect thereto (i)
there shall exist no Default and (ii) the Maximum Leverage Ratio is 4.00:1.00 or
less, the Company may, as provided in the Partnership Agreement, make
Distributions (other than the Distributions described in Section 7.9.1 hereof)
to its partners in accordance with the Partnership Agreement as in effect on the
date hereof.
7.10. Certain Financial Tests.
7.10.1. Maximum Leverage Ratio. The Company shall not at any
time and as of any date of calculation permit the ratio of (i) Total Debt of the
Company (as of the date of calculation) to (ii) Pro Forma Annualized EBITDA of
the Company as of the last day of any Fiscal Quarter ("Maximum Leverage Ratio")
on or preceding such date of calculation to exceed the indicated correlative
ratio:
16
21
Calculation Date Occurring Maximum Leverage Ratio
Initial Closing through July 31, 2000 4.75:1.00
August 1, 2000 through December 31, 2000 4.50:1.00
January 1, 2001 through July 31, 2001 4.25:1.00
August 1, 2001 and thereafter 4.00:1.00
7.10.2. Minimum Interest Coverage. The Company shall not permit
the ratio of (i) EBITDA of the Company to (ii) Cash Interest Expense of the
Company for any four (4) consecutive Fiscal Quarter periods to be less than
2.00:1.00.
7.10.3. Minimum Fixed Charge Coverage Ratio. The Company will
not permit the ratio of (i) EBITDA of the Company to (ii) Fixed Charges of the
Company for any four (4) consecutive Fiscal Quarter periods to be less than
1.20:1.00.
7.11. Limitation on Lease Obligations. The Company will not enter into
any arrangement, directly or indirectly, whereby the Company shall sell or
transfer any property owned by it in order then or thereafter to lease such
property or to lease other property which the Company intends to use for
substantially the same purpose as the property being sold or transferred. The
Company will not be or become obligated as lessee under any lease except:
7.11.1. Capitalized Leases permitted by Section 7.5.2 hereof.
7.11.2. Lease, other than Capitalized Leases; provided, however,
that the aggregate fixed rental obligations for any fiscal year of the Company
under all such leases (including payments required to be made by the lessee in
respect of taxes and insurance,whether or not denominated as rent, but excluding
rental payments made by the Company under pole attachment or use agreements,
leases of microwave services, maintenance contracts and payments under
programming agreements) shall not exceed $50,000.
7.12. Merger, Consolidation and Sale of Assets. The Company will not
become a party to any merger or consolidation or sell or otherwise dispose of
any property, except that:
7.12.1. The Company may sell or otherwise dispose of assets in
the ordinary course of its business; provided, however, that (i) the Net
Proceeds received with respect to all such sales or other dispositions from the
date hereof shall not exceed $50,000 and (ii) immediately after giving effect to
such sale or disposition, no Default shall have occurred or be in existence.
7.12.2. The Company may sell or otherwise dispose of assets, the
net cash proceeds of which are applied to the prepayment of the Loan and the
reduction in the Maximum Amount of the Loan pursuant to Section 5.2.2 if
immediately after giving effect to such sale or disposition, no Default shall
have occurred or be in existence.
7.13. Partnership Agreement; Management Agreement. The Company will
comply in all material respects with its Second Amended and Restated Partnership
Agreement dated as of August 1, 1988 (the "Partnership Agreement") and the
Amended and Restated Management Agreement dated as of December 9, 1993 (the
"Management Agreement") between the Company and Enstar Cable to the extent not
inconsistent with the provisions of this Agreement or any other Loan Agreement.
The provisions of the Partnership Agreement and the Management Agreement shall
not be amended, modified, waived or terminated without your prior written
consent.
7.14. Pension Plans. Neither the Company, nor any Subsidiary of the
17
22
Company, will create, maintain, participate in or make contributions to any Plan
(including any Multiemployer Plan) without your prior written consent.
7.15. Indebtedness. The Company will not permit at any time
Indebtedness to exceed one-third of Adjusted Capital.
7.16. Plan Assets. The Company will not take any action, issue any
partnership interests in the Company or permit any transfers of partnership
interests in the Company if such action, issuance or transfer would result in
the Company's assets being deemed to be "plan assets" as such term is defined
under ERISA (the "Plan Assets").
7.17. Use of Proceeds. The Company shall not use any portion of the
proceeds of the Loans, directly or indirectly, for any purpose other than (i) to
pay in full the principal amount of Indebtedness outstanding on the Initial
Closing Date (together with all accrued and unpaid interest thereon as of the
such date), (ii) to pay management fees and reimbursed expenses, including
programming expenses, to the Corporate General Partner and its Affiliates, (iii)
to pay for capital expenditures otherwise permitted by this Agreement, (iv) to
pay the fees and expenses described in Section 11 hereof, or (v) to make
Distributions permitted under Section 7.9.
7.18. Payment of Obligations. The Company shall pay and discharge as
the same shall become due and payable, all their respective obligations and
liabilities, including:
(a) all tax liabilities, assessments and governmental
charges or levies upon it or its properties or assets, unless the same are being
contested in good faith by appropriate proceedings and adequate reserves in
accordance with GAAP are being maintained by the Company;
(b) all lawful claims which, if unpaid, would by law become
a lien upon its property; and
(c) all indebtedness, as and when due and payable, but
subject to any subordination provisions contained in any instrument or agreement
evidencing such Indebtedness.
7.19. Compliance With Laws. The Company shall comply in all material
respects with all Requirements of Law of any Governmental Authority having
jurisdiction over it or its business (including the Federal Fair Labor Standards
Act), except such as may be contested in good faith or as to which a bona fide
dispute may exist.
7.20. Compliance With ERISA. The Company shall, and shall cause each
of its ERISA Affiliates to: (a) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code and other federal or
state law; (b) cause each Plan which is qualified under Section 401(a) of the
Code to maintain such qualification; and (c) make all required contributions to
any Plan subject to Section 412 of the Code.
7.21. Environmental Laws.
(a) The Company shall conduct its operations and keep and
maintain its property in compliance with all Environmental Laws.
(b) Upon your written request, the Company shall submit to
you, at the Company's sole cost and expense, at reasonable intervals, a report
providing an update of the status of any environmental, health or safety
compliance, hazard or liability issue identified by the Company, that could,
individually or in the aggregate, result in liability in excess of $50,000.
7.22. Further Assurances.
(a) The Company shall ensure that all written information,
exhibits and reports furnished to you do not and will not contain any untrue
18
23
statement of a material fact and do not and will not omit to state any material
fact or any fact necessary to make the statements contained therein not
misleading in light of the circumstances in which made, and will promptly
disclose to you and correct any defect or error that may be discovered therein
or in any Loan Agreement or in the execution, acknowledgment or recordation
thereof.
(b) promptly upon your request, the Company shall do,
execute, acknowledge, deliver, record, re-record, file, re-file, register and
re-register, any and all such further acts, deeds, conveyances, security
agreements, mortgages, assignments, estoppel certificates, financing statements
and continuations thereof, termination statements, notices of assignment,
transfers, certificates, assurances and other instruments you may reasonably
require from time to time in order (i) to carry out more effectively the
purposes of this Agreement or any other Loan Agreement, (ii) to subject to the
liens created by any of the Loan Agreements any of the properties, rights or
interests covered by any of the Loan Agreements, (iii) to perfect and maintain
the validity, effectiveness and priority of any of the liens intended to be
created thereby, and (iv) to better assure, convey, grant, assign, transfer,
preserve, protect and confirm to you the rights granted or now or hereafter
intended to be granted to you under any Loan Agreement or under any other
document executed in connection therewith.
7.23. Contingent Obligations. The Company shall not create, incur,
assume or suffer to exist any Contingent Obligations except:
(a) endorsements for collection or deposit in the ordinary
course of business;
(b) obligations pursuant to Section 3.5 hereof.
7.24. Joint Ventures. The Company shall not enter into any Joint
Venture except Enstar IV/PBD Systems Venture, a Georgia general partnership, and
Enstar Cable of Macoupin County, a California general partnership.
7.25. Subsidiaries. The Company shall not form, acquire, own, make an
Investment in or permit to exist any Subsidiary except Enstar IV/PBD Systems
Venture, a Georgia general partnership, and Enstar Cable of Macoupin County, a
Georgia general partnership.
8. REPRESENTATIONS AND WARRANTIES. In order to induce you to enter into
this Agreement and to extend credit to the Company hereunder, the Company hereby
represents and warrants that:
8.1. Organization and Business.
8.1.1. The Company. The Company is a duly organized and validly
existing limited partnership in good standing under the laws of the State of
Georgia with powers adequate for the making and performing of this Agreement and
all other Loan Agreements executed in connection herewith, for the issuance of
the Loan Obligations, for securing the Loan Obligations with the Loan Security,
for owning its properties and for carrying on its business as now conducted or
proposed to be conducted by it. The name of each general partner of the Company
and the interests of each in the Company are set forth on Exhibit 8.1.1 A
hereto. Each of the Company and each General Partner has taken all action
required to make all the provisions of this Agreement and all Loan Agreements
executed in connection herewith the valid and enforceable obligations they
purport to be. The Company has filed the Partnership Agreement in all places
where such filing is required and has made all requisite filings under
fictitious name or similar statutes. Exhibit 8.1.1 B hereto sets forth each name
under which the Company conducts or proposes to conduct its business and the
jurisdictions in which such name is used.
8.1.2. Enstar Communications. Enstar Communications Corporation
("Enstar Communications") is a duly organized and validly existing corporation
in good standing under the laws of the State of Georgia with powers
19
24
and authorizations adequate for the making and performing of the Partnership
Agreement, for acting as a general partner of the Company and for executing and
delivering this Agreement and each other Loan Agreement on behalf of the
Company. Certified copies of the charter and by-laws of Enstar Communications
have been previously delivered to you and are true, accurate and complete.
Enstar Communications has taken all action required to make all of the
provisions of the Loan Agreements the valid and enforceable obligations they
purport to be.
8.1.3. Qualification. Each of the Company and Enstar
Communications is duly qualified and in good standing as a foreign limited
partnership or corporation or has filed all necessary documents to become
qualified to do business as a foreign limited partnership or corporation in each
jurisdiction in which such qualification is required and each of the Company and
Enstar Communications is duly authorized, qualified and licensed under all laws,
regulations, ordinances or orders of public authorities or otherwise to carry on
its business in the places and in the manner presently conducted.
8.2. No Contravention. The execution, delivery and performance by the
Company of this Agreement and each other Loan Agreement to which the Company is
party, and do not and will not:
(a) contravene the terms of any of the Company's Partnership
Agreements;
(b) conflict with or result in any breach or contravention
of, or the creation of any lien under, any document evidencing any contractual
obligation to which such Person is a party or any order, injunction, writ or
decree of any Governmental Authority to which such Person or its property is
subject; or
(c) violate any Requirement of Law.
8.3. Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority (except for recordings or filings in connection with the
liens granted to you hereunder is necessary or required in connection with the
execution, delivery or performance by, or enforcement against the Company of the
Agreement or any other Loan Agreement).
8.4. Binding Effect. This Agreement and each other Loan Agreement to
which the Company is a party constitute the legal, valid and binding obligations
of the Company, enforceable against the Company in accordance with their
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally or by equitable principles relating to enforceability.
8.5. Financial Statements. The Company has previously furnished you
its audited and unaudited financial statements dated December 31, 1996 and June
30, 1997, respectively, and the related statements of operations, partners'
equity (deficit) and cash flows for the Fiscal Year and the six month period
ended on such respective dates. Such financial statements (i) were prepared in
accordance with GAAP consistently applied throughout the period covered thereby,
except as otherwise expressly noted therein, subject in the case of unaudited
statements to the absence of footnotes and to ordinary good faith year-end
adjustments; (ii) fairly present the financial condition of the Company as of
the date thereof and results of operations for the period covered thereby; and
(iii) show all material Indebtedness and other liabilities, direct or
contingent, of the Company including liabilities for taxes, material commitments
and contingent liabilities.
8.6. Licenses, etc. The Company has all patents, patent applications,
patent licenses, patent rights, trademarks, licenses, including without
limitation Franchises, FCC Licenses and cable television licenses, permits,
authorizations and other rights, including without limitation agreements with
20
25
public utilities and microwave transmission companies, pole use, access or
rental agreements and utility easements, as are necessary for the conduct of the
business of the Company and the operation of its Franchises and Systems. All of
the foregoing are in full force and effect, and the Company is in substantial
compliance with the foregoing without any known conflict with the valid rights
of others which could affect or impair in a material manner the business or
assets or financial condition of the Company. No event has occurred which
permits, or after notice or lapse of time or both would permit, the revocation
or termination of any such license, any Franchise or other right, or materially
and adversely affect the rights of the Company thereunder. There is no
litigation or other proceeding or dispute with respect to the validity or, where
applicable, the extension or renewal of any of the foregoing to which the
Company is a party, and to the best of the Company's knowledge, there is no
other such litigation or other proceeding or dispute with respect to the
validity or, where applicable, the extension or renewal of any of the foregoing.
8.6.1. Franchises; Licenses. Attached hereto as Exhibit 8.6.1
is a schedule which identifies all the Franchises of the Company and all the
cable television and microwave Systems which relate thereto, specifying the
franchisee holding each Franchise, the termination date of each Franchise and
the extent to which consent of the grantor of the Franchise is necessary for the
creation of a security interest therein or for the sale thereof pursuant to the
power of sale granted to you pursuant to Section 9.5 hereof. Exhibit 8.6.1
hereto also identifies each FCC License of the Company. Each such Franchise and
FCC License held by the Company is validly issued, and the Company is not in
violation of the terms of any of its Franchises or FCC Licenses so as to affect
or impair in any material manner the business or assets or condition, financial
or otherwise, of the Company.
8.6.2. FCC and Other Matters. The Company has duly and timely
filed all cable television registration statements and other filings which are
required to be filed by the Company under the Communications Act. The Company is
in all material respects in substantial compliance with the Communications Act,
including without limitation the rules and regulations of the FCC relating to
the carriage of television signals. The execution, delivery and performance by
the Company of this Agreement does not require the approval of the FCC and will
not result in any violation of the Communications Act. The Company has recorded
or deposited with and paid to the United States Copyright Office, the Register
of Copyright and the Copyright Royalty Tribunal all notices, statements of
account, royalty fees and other documents and instruments required under Title
17 of the United States Code and all rules and regulations thereunder
(collectively and as from time to time in effect, the "Copyright Act"),
including without limitation such of the foregoing required by Section 111(d) of
the Copyright transmission subject to compulsory licensing pursuant to the
provisions of Section 111(c) of the Copyright Act. The Company is in compliance
with the provisions of the Copyright Act applicable to any secondary
transmission by it to the public of a primary transmission and the Company is
not liable to any Person for copyright infringement under the Copyright Act as a
result of its cable television or other business operations.
8.7. Changes in Condition. Since December 31, 1996, there has been no
material adverse change in the business or assets or in the condition, financial
or otherwise, of the Company or of Enstar Communications.
8.8. Assets. The Company has good and marketable title to all assets
necessary for or used in the operation of its business and reflected in the
balance sheet contained in the Financial Statements referred to in Section 8.5,
or acquired subsequent to such date, subject to no Liens except for those
permitted by Section 7.7 hereof and except for assets disposed of as permitted
by Section 7.12 hereof.
8.9. Litigation. There is no litigation, at law or in equity, or any
proceeding before any federal, state, provincial or municipal court, board or
other governmental or administrative agency or any arbitrator pending or to the
knowledge of the Company threatened which may involve any material risk of any
21
26
final judgment or liability which, after giving effect to any applicable
insurance, would result in any material adverse change in the business or assets
or in the condition, financial or otherwise, of the Company, or which seeks to
enjoin the consummation of, or which questions the validity of, any of the
transactions contemplated by this Agreement or any other Loan Agreement, and no
judgment, decree or order of any federal, state, provincial or municipal court,
board or other governmental or administrative agency or arbitrator has been
issued against the Company, which has, or is likely to have, any material
adverse effect on the business or assets or on the condition, financial or
otherwise, of the Company.
8.10. Tax Returns. Each of the Company and Enstar Communications has
filed all tax returns which are required to be filed and has paid, or made
adequate provision for the payment of, all taxes which have or may become due
pursuant to such returns or to assessments received. Neither the Company nor
Enstar Communications knows of any material additional assessments or basis
therefor. Each of the Company and Enstar Communications has made adequate
provision for all current taxes.
8.11. No Legal Obstacle to Agreement. Neither the execution and
delivery of this Agreement or any other Loan Agreement, nor the making by the
Company of any borrowings hereunder, nor the consummation of any transaction
herein or therein referred to or contemplated hereby or thereby, nor the
fulfillment of the terms hereof or thereof or other agreement or instrument
referred to in this Agreement or any other Loan Agreement has constituted or
resulted in or will constitute or result in a breach of the provisions of any
contract or any Franchise to which the Company is a party or by which it is or
will be bound or of the Partnership Agreement or the Charter or By-laws of
Enstar Communications or the violation of any law, judgment, decree or
governmental order, rule or regulation application to the Company or any of the
General Partners, or result in the creation under any agreement or instrument of
any Lien upon any of the assets of the Company. No consent, approval,
authorization, order, or other action by any governmental authority or unit or
any other Person is required to be obtained by the Company or any of the General
Partners in connection with the execution, delivery and performance of this
Agreement or any other Loan Agreement, or the transactions contemplated hereby
or thereby including the creation of a security interest in the Loan Security
pursuant to Section 5.2.5 hereof, or the making of any borrowing by the Company
hereunder.
8.12. Defaults. The Company is not in default under any provision of
the Partnership Agreement, any Loan Agreement, Franchise, agreement relating to
the borrowing of money, or other material agreement, lease or other instrument
to which it or its property is a party or by which it is bound or of any law,
judgment, decree, governmental order, rule or regulation so as to affect
adversely in any material manner its business or assets or its financial
condition.
8.13. Certain Obligations. The Company is not a party to or bound by
any Franchise, agreement, deed, lease or other instrument, or subject to any
partnership agreement or certificate, charter, by-law or other similar
restriction which, in the opinion of the Company, will in the foreseeable future
materially and adversely affect or impair the condition, financial or otherwise,
of the Company. The Company does not presently anticipate that future
expenditures needed to meet the provisions of any federal or state statutes,
orders, rules or regulations will affect or impair in a materially adverse
manner the condition, financial or otherwise, of the Company.
8.14. Government Regulation; Margin Stock.
8.14.1. Government Regulation. Neither the Company nor any
Person controlling the Company or under common control with the Company is
subject to regulation under the Public Utility Holding Company Act of 1935, the
Investment Company Act of 1940, the Interstate Commerce Act or any statute or
regulation which regulates the incurring by the Company of Indebtedness for
borrowed money.
22
27
8.14.2. Margin Stock. The Company does not own any "margin
stock" within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System, or any regulations, interpretations or rulings
thereunder.
8.15. Pension Plans. Neither the Company, nor any Subsidiary of the
Company, within six (6) years preceding the date on which this representation is
made, maintained, made contributions or participated in any Plan (including a
Multiemployer Plan).
8.16. Insurance. The properties of the Company (other than its trunk
and distribution system and drops and cables) are insured with financially sound
and reputable insurance companies not Affiliates of the Company, in such
amounts, with such deductibles and covering such risks as are customarily
carried by companies engaged in similar businesses and owning similar properties
in localities where the Company operates.
8.17. Disclosure. Neither this Agreement nor any agreement, document,
certificate or statement furnished to you by or on behalf of the Company in
connection with the transactions contemplated hereby contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein not misleading. There
is no fact known to the Company which materially and adversely affects or in the
future may (so far as the Company can now foresee) materially and adversely
affect the business, operations, assets, properties, affairs or condition,
financial or otherwise, of the Company, except to the extent that they may be
affected by future general economic conditions.
8.18. Plan Assets. None of the Company's assets are Plan Assets.
9. DEFAULTS.
9.1. Events of Default. If any one or more of the following events
(herein termed "Events of Default") shall happen, that is to say:
9.1.1. The Company shall fail to make any payment in respect of
principal of any of the Loan Obligations as the same shall become due, whether
at maturity or by acceleration or otherwise; or
9.1.2. The Company shall fail to make any payment in respect of
interest or any fee on or other amounts in respect of any of the Loan
Obligations as the same shall become due and such Default shall continue for a
period of three (3) days; or
9.1.3. The Company shall fail to perform or observe any of the
provisions of Sections 7.1 through 7.16 hereof; or
9.1.4. Either the Company or Enstar Communications shall fail
to perform or observe any other covenant, agreement or provision to be performed
or observed by the Company or Enstar Communications under this Agreement or any
other Loan Agreement, and such failure shall not be rectified or cured to your
satisfaction within thirty (30) days after the occurrence thereof; or
9.1.5. Any representation or warranty of the Company or of
Enstar Communications to you in connection with this Agreement or any other Loan
Agreement or any amendment to either shall prove to have been materially false
on the date as of which it was made; or
9.1.6. The Company shall fail to make any payment with respect
to any Indebtedness for money borrowed (other than Indebtedness constituting
Loan Obligations) or arising under notes, debentures or other instruments or in
respect of any Capitalized Lease or other purchase money obligation, or to
perform or observe the terms of any agreement or mortgage relating to such
Indebtedness, and such failure or condition shall continue, without having been
23
28
duly cured, waived or consented to, beyond the period of grace, if any, therein
specified, or if any such Indebtedness shall have become due or payable prior to
its stated maturity for any reason whatsoever, or if any Lien on any property of
the Company securing any such Indebtedness shall be enforced; or
9.1.7. (i) Any Franchise held by the Company shall be
terminated, which termination has or could have, individually or in the
aggregate with other Franchises previously held by the Company that have been
terminated, a material adverse effect on the business, operations, assets or
financial condition of the Company, or (ii) the Management Agreement shall be
terminated or if Enstar Cable shall fail to provide any of the financial,
management, supervisory or marketing services to the Company to be provided
under the Management Agreement; or
9.1.8. The Company shall be dissolved, whether pursuant to the
provisions of the Partnership Agreement or otherwise; or the Corporate General
Partner shall cease to be a General Partner of the Company; or
9.1.9. The Company or the Corporate General Partner shall:
(a) commence a voluntary case under Title 11 of the
United States Code as from time to time in effect, or authorize, by
appropriate proceedings of its board of directors or other governing
body, the commencement of such a voluntary case;
(b) have filed against it a petition commencing an
involuntary case under said Title 11;
(c) seek relief as a debtor under any applicable
law, other than said Title 11, of any jurisdiction relating to the
liquidation or reorganization of debtors or to the modification or
alteration of the rights of creditors, or consent to or acquiesce in
such relief; or
(d) have entered against it an order by a court of
competent jurisdiction (i) finding it to be bankrupt or insolvent, (ii)
ordering or approving its liquidation, reorganization or any
modification or alteration of the rights of its creditors, or (iii)
assuming custody of, or appointing a receiver or other custodian for,
all or a substantial portion of its property; or
(e) make an assignment for the benefit of, or enter
into a composition with, its creditors, or appoint or consent to the
appointment of a receiver or other custodian for all or a substantial
portion of its property;
then and in each and every such case, you may proceed to protect and enforce
your rights by suit in equity, action at law and/or other appropriate proceeding
either for specific performance of any covenant or condition contained in this
Agreement or any other Loan Agreement or in any instrument or assignment
delivered to you pursuant to this Agreement or any other Loan Agreement, or in
aid of the exercise of any power granted in this Agreement or any other Loan
Agreement or any such instrument or assignment, and (unless there shall have
occurred an Event of Default under Section 9.1.9 hereof, in which case the
unpaid balance of the Loan Obligations shall automatically become due and
payable) may by notice in writing to the Company declare all or any part of the
unpaid balance of the Loan Obligations then outstanding to be forthwith due and
payable, and thereupon such unpaid balance or part thereof shall become so due
and payable without presentation, protest or further demand or notice of any
kind, all of which are hereby expressly waived, your obligation to make further
loans hereunder shall terminate, and you may proceed to enforce payment of such
balance or part thereof in such manner as you may elect, and you may offset and
apply toward the payment of such balance or part thereof any Indebtedness from
you to the Company or to the Corporate General Partner or any other obligor on
the Loan Obligations, including without limitation any Indebtedness represented
by deposits in any security for the Loan Obligations, and you shall have no duty
to determine the adequacy of any
24
29
such security in connection with any such offset.
9.2. Annulment of Defaults. An Event of Default shall not be deemed
to be in existence for any purpose of this Agreement if you shall have waived
such event in writing or stated in writing that the same has been cured to your
reasonable satisfaction, but no such waiver shall extend to or affect any
subsequent Event of Default or impair any of your rights upon the occurrence
thereof.
9.3. Waivers. The Company hereby waives to the extent not prohibited
by applicable law (i) all presentments, demands for performance, notice of
nonperformance (except to the extent required by the provisions hereof or of any
other Loan Agreement), protests, notices of protest and notices of dishonor,
(ii) any requirement of diligence or promptness on your part in the enforcement
of your rights under the provisions of this Agreement or any other Loan
Agreement, (iii) any and all notices of every kind and description which may be
required to be given by any statute or rule of law and (iv) any defense of any
kind (other than payment) which it may now or hereafter have with respect to its
liability under this Agreement or under any other Loan Agreement.
9.4. Course of Dealing. No course of dealing between the Company and
you shall operate as a waiver of any of your rights under this Agreement or any
other Loan Agreement or with respect to any of the Loan Obligations. No delay or
omission on your part in exercising any right under this Agreement or any other
Loan Agreement or with respect to any of the Loan Obligations, shall operate as
a waiver of such right or any other right hereunder. A waiver on any one
occasion shall not be construed as a bar to or waiver of any right or remedy on
any future occasion. No waiver or consent shall be binding unless it is in
writing and signed by you. The making of a loan hereunder during the existence
of a Default shall not constitute a waiver thereof.
9.5. Right to Realize Upon Loan Security. Except to the extent
prohibited by applicable law which cannot be waived, the following provisions
shall govern your right to realize upon the Loan Security if an Event of Default
hereunder shall have occurred, in addition to any rights and remedies available
at law or in equity, and in addition to the provisions contained in any other
Loan Agreement (in case of a conflict between the provisions of this Section 9.5
and any other Loan Agreement, the provisions of this Section 9.5 shall govern):
9.5.1. Marshaling, etc. You shall not be required to make any
demand upon or pursue or exhaust any of your rights with respect to the payment
of the Loan Obligations, or to pursue or exhaust any of your rights or remedies
with respect to any of the Loan Security therefor, or any direct or indirect
Guarantee thereof. You shall not be required to marshal the Loan Security or any
Guarantee of the Loan Obligations or to resort to the Loan Security or any such
Guarantee in any particular order and all of your rights hereunder and under all
other Loan Agreements shall be cumulative. The Company hereby agrees to waive,
and does hereby absolutely and irrevocably waive and relinquish the benefit and
advantage of, and does hereby covenant not to assert against you, any valuation,
stay, appraisement, extension or redemption laws now existing or which may
hereafter exist which, but for this provision, might be applicable to any sale
made under the judgment, order or decree of any court, or privately under the
power of sale conferred by this Agreement or otherwise based on this Agreement
in respect of any Loan Security. Without limiting the generality of the
foregoing, the Company hereby agrees that it will not invoke or utilize any law
which might cause delay in or impede the enforcement of your rights under this
Agreement, and hereby waives the same. In addition, the Company hereby waives
any right to prior notice (except to the extent expressly provided in this
Agreement) or judicial hearing in connection with the taking possession or the
disposition of any of the Loan Security, including without limitation any such
right which the Company would otherwise have under the Constitution of the
United States of America, or any state or territory thereof. Upon your request,
the Company agrees to assemble the Loan Security and otherwise make it available
to you.
25
30
9.5.2. Sales of the Loan Security. Any item of the Loan
Security may be sold for cash or other value in any number of lots at public or
private sale without demand, advertisement or notice (except only that you shall
give the Company ten (10) days' prior written notice of the time and place of
any public sale, or the time after which a private sale may be made, which
notice the Company and you hereby agree to be reasonable). At any sale or sales
of the Loan Security (except to the extent prohibited by applicable law which
cannot be waived) you or any of your officers acting on your behalf or assigns
may bid for and purchase the whole or any part of the property and rights so
sold and upon compliance with the terms of such sale may hold, exploit and
dispose of such property and rights without further accountability to the
Company except for the proceeds of such sale or sales. The Company will execute
and deliver, or cause to be executed and delivered, such instruments, documents,
assignments, waivers, certificates and affidavits and supply or cause to be
supplied such further information and take such further action as you shall
require in connection with such sale.
9.5.3. Application of Proceeds. The proceeds of all sales and
collections, and any other moneys (including any cash contained in the Loan
Security), the application of which is not otherwise herein provided for, shall
be applied as follows:
First, to the payment of the costs and expenses of such
sale or sales and collections, and the reasonable compensation of you
and your counsel;
Second, any surplus then remaining to the payment of the
Loan Obligations in such order and manner as you may in your sole
discretion determine;
Third, any surplus then remaining shall be deposited in
the account of the Company, subject, however, to the rights of the
holder of any then existing Lien of which you have actual notice.
9.6. Governmental Regulation. To the extent that Loan Security shall
include Investments in or assets of a Person holding an FCC License or a
Franchise, then, notwithstanding anything else herein contained to the contrary,
no action, shall be taken by you with respect to such FCC License, Franchise or
assets unless and until all requirements of the Communications Act and of
applicable state law, and any applicable rules and regulations thereunder,
requiring the consent to or approval of such action by the FCC or of any
governmental or other authority have been satisfied. The Company covenants that
upon your request it will file or cause to be filed such applications and take
such other action as you may request to obtain consent or approval of the FCC or
of any governmental or other authority which has granted any Franchise to the
Company to any action contemplated by this Agreement and to give effect to your
security interests, including without limitation the execution of an application
for consent by the FCC to an assignment or transfer involving a change in
ownership or control pursuant to the provisions of the Communications Act. You
are hereby irrevocably appointed the true and lawful attorney of the Company, in
its name and stead, to execute and file all necessary applications with the FCC,
to the extent permitted by the FCC's rules and regulations, and with any
governmental or other authority. The Company acknowledges that your remedies at
law for failure by it to comply with the preceding sentence would be inadequate
and that such failure would not be adequately compensable in damages, and the
Company therefore agrees that the covenants contained in this Section 9.6 may be
specifically enforced.
10. DEFINITIONS. For purposes of this Agreement:
10.1. The following terms defined elsewhere in this Agreement in the
Sections set forth below shall have the respective meanings therein defined:
Term Definition
26
31
"Accounts" Section 6.1.2.
"Advances" Section 2.1.
"Applicable Rate" Section 3.1.1.(a)
"Base Rate" Section 3.1.1.(b)
"Closing Dates" Section 2.1.
"Commitment" Section 3.2.
"Company" Preamble
"Copyright Act" Section 8.3.2.
"Enstar Communications" Section 8.1.2.
"Events of Default" Section 9.1.
"Initial Closing Date" Section 2.1.
"Interest Period" Section 3.3.1.
"Lender's Credit Agreement" Section 2.3.
"Liens" Section 7.7.
"Loan" Section 2.1.2.
"Loan Account" Section 2.1.2.
"Loan Security" Section 6.1.
"Management Agreement" Section 7.13.
"Maximum Amount of Credit" Section 2.1.1.
"Maximum Leverage Ratio" Section 7.10.1.
"Offshore Rate" Section 3.3.1.
"Partnership Agreement" Section 7.13.
"Payment Date" Section 3.1.
"Permitted Liens" Section 7.7.
"Plan Assets" Section 7.16.
"Pledged Indebtedness" Section 6.1.4.(c)
"Pledged Rights" Section 6.1.4.(b)
"Pledged Securities" Section 6.1.4.(c)
"Pledged Stock" Section 6.1.4.(a)
"Secured Obligations" Section 6.1
"Swap Contracts" Section 3.5
The term "Adjusted Capital" shall mean the sum of (i) aggregate
Partners' capital contributions to the Company, minus (ii) the aggregate amount
of cash and any other property that has been distributed (or deemed distributed)
as distributions of Partners' capital by the Company to the Partners from the
proceeds of sales of the Systems as determined by the Corporate General Partner.
The term "Affiliate" shall mean any Person directly or
indirectly controlling, controlled by or under direct or indirect common control
with the Company or other specified Person and shall include (i) any officer,
director or partner of the Company, of the Corporate General Partner or of such
specified Person and (ii) any Person of which the Company or such specified
Person or an Affiliate (as defined above) of the Company or such specified
Person shall, directly or indirectly, either beneficially own at least 10% of
the outstanding equity securities having the general power to vote or constitute
at least a 10% participant or be a general partner.
The term "Business Day" shall mean any day other than a Saturday
or Sunday or other day on which banks in New York City or Los Angeles are
authorized or required by law to close, and if the applicable Business Day
relates to any Offshore Rate Loan, means such a day in which dealings are
carried on in the applicable offshore dollar inter-bank market.
The term "By-laws" shall include all written rules, regulations,
procedures and by-laws and all other documents, relating to the management,
governance or internal regulation of a Person other than an individual, or
interpretive of the Charter of such person, each as from time to time amended or
modified.
The term "Cable Systems" shall mean the Systems owned by the
Company on the date hereof.
The term "Capitalized Lease" shall mean any lease which is or
27
32
should be capitalized on the balance sheet of the lessee in accordance with
generally accepted accounting principles and Statement No. 13 of the Financial
Accounting Standards Board.
The term "Capitalized Lease Obligations" shall mean the amount
of the liability reflecting the aggregate discounted amount of future payments
under all Capitalized Leases calculated in accordance with generally accepted
accounting principles and Statement No. 13 of the Financial Accounting Standards
Board.
The term "Cash Interest Expense" shall mean, for any Person and
for any period, total interest expense (including that portion attributable to
Capitalized Leases in accordance with GAAP and capitalized interest) of such
Person and its Subsidiaries on a consolidated basis with respect to all
outstanding Indebtedness of such Person and its Subsidiaries payable in cash
during such period, including, all commissions, discounts and other fees and
charges owed with respect to letters of credit and banker's acceptance
financing.
The term "Charter" shall include the articles or certificate of
incorporation, statute, constitution, joint venture or partnership agreement or
articles or other charter of any Person other than an individual, each as from
time to time amended and modified.
The term "Communications Act" shall mean the Communications Act
of 1934 and the rules and regulations thereunder, as from time to time in
effect.
The term "Contingent Obligation" shall mean as to any Person,
any direct or indirect liability of that Person, whether or not contingent, with
or without recourse, (a) with respect to any Indebtedness, lease, dividend,
letter of credit or other obligation (the "primary obligations") of another
Person (the "primary obligor"), including any obligation of that Person (i) to
purchase, repurchase or otherwise acquire such primary obligations or any
security therefor, (ii) to advance or provide funds for the payment or discharge
of any such primary obligation, or to maintain working capital or equity capital
of the primary obligor or otherwise to maintain the net worth or solvency or any
balance sheet item, level of income or financial condition of the primary
obligor, (iii) to purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation, or (iv)
otherwise to assure or hold harmless the holder of any such primary obligation
against loss in respect thereof (each, a "Guaranty Obligation"); (b) with
respect to any Surety Instrument issued for the account of that Person or as to
which that Person is otherwise liable for reimbursement of drawings or payments;
(c) to purchase any materials, supplies or other property from, or to obtain the
services of, another Person if the relevant contract or other related document
or obligation requires that payment for such materials, supplies or other
property, or for such services, shall be made regardless of whether delivery of
such materials, supplies or other property is ever made or tendered, or such
services are ever performed or tendered, or (d) in respect of any Swap Contract.
The amount of any Contingent Obligation shall, in the case of Guaranty
Obligations, be deemed equal to the stated or determinable amount of the primary
obligation in respect of which such Guaranty Obligation is made or, if not
stated or if indeterminable, the maximum reasonably anticipated liability in
respect thereof, and in the case of other Contingent Obligations other than in
respect of Swap Contracts, shall be equal to the maximum reasonably anticipated
liability in respect thereof.
The term "Corporate General Partner" shall mean each of Enstar
Communications and any other Person, other than an individual, which shall
become a General Partner of the Company.
The term "Default" shall mean an Event of Default as defined in
Section 9.1, or an event or condition which with the passage of time or giving
of notice, or both, would become such an Event of Default.
28
33
The term "Disposition" shall mean the sale, lease, conveyance or
other disposition of property, other than sales or other dispositions expressly
permitted under Section 7.12.1.
The term "Distribution" shall mean (i) any payment of any type
by the Company to any Partner or other Affiliate of the Company whether in
respect of a partnership interest in the Company or in respect of Indebtedness
owed by the Company to such Affiliate or otherwise; (ii) any payment by the
Company to Enstar Cable under the Management Agreement; (iii) any direct or
indirect payment by the Company on or with respect to a partnership interest in
the Company of a partnership interest in the Company, (iv) any payment on any
Indebtedness that by its terms is subordinated in any way to payment of any of
the Loan Obligations.
The term "EBITDA" shall mean, with respect to any Person and
with respect to any period, net income for such period, plus income tax expense
for such period, plus gross interest expense for such period, plus depreciation
and amortization expense for such period, plus losses on sales of fixed assets
during such period, plus other non-cash charges, minus gains on sales of fixed
assets during such period, minus extraordinary gains for such period, and minus
non-operating income for such period, all determined in accordance with GAAP.
The term "Enstar Cable" shall mean Enstar Cable Corporation, a
Georgia corporation.
The term "Environmental Laws" shall mean all federal, state or
local laws, statutes, common law duties, rules, regulations, ordinances and
codes, together with all administrative orders, directed duties, requests,
licenses, authorizations and permits of, and agreements with, any Governmental
Authorities, in each case relating to environmental, health, safety and land use
matters; including the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 ("CERCLA"), the Clean Air Act, the Federal Water Pollution
Control Act of 1972, the Solid Waste Disposal Act, the Federal Resource
Conservation and Recovery Act, the Toxic Substances Control Act, the Emergency
Planning and Community Right-to-Know Act, the California Hazardous Waste Control
Law, the California Solid Waste Management, Resource, Recovery and Recycling
Act, the California Water Code and the California Health and Safety Code.
The term "ERISA" means, collectively, the Employee Retirement
Income Security Act of 1974 (or any successor statute) and the rules and
regulations thereunder, all as from time to time in effect.
The term "ERISA Affiliate" shall mean any trade or business
(whether or not incorporated) under common control with the Company within the
meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the
Code for purposes of provisions relating to Section 412 of the Code).
The term "Event of Loss" shall mean, with respect to any
property, any of the following: (a) any loss, destruction or damage to such
property; (b) any pending or threatened institution of any proceedings for the
condemnation or seizure of such property or for the exercise of any right of
eminent domain; or (c) any actual condemnation, seizure or taking, by exercise
of the power of eminent domain or otherwise, of such property, or confiscation
of such property or the requisition of the use of such property.
The term "Excess Cash Flow" for any period shall mean the
amount, if any, by which EBITDA for such period, exceeds the sum of (a) the
aggregate principal amount of prepayments paid pursuant to Sections 5.2.2 and
5.2.5 hereof during such period, plus (b) the aggregate amount paid pursuant to
Section 3.1 hereof during such period in respect of the Loan Obligations, plus
(c) the aggregate amount of payments made or incurred by the Company during such
period with respect to Capitalized Lease Obligations, plus (d) the aggregate
amount of payments made by the Company during such period to be reflected in
their consolidated fixed assets account in accordance with GAAP in
29
34
respect of (1) the construction, improvement, replacement or betterment of
assets or leaseholds, and (2) to the extent related to and not included in
clause (1) above, expenditures on account of materials, contract labor and
direct labor (excluding expenditures properly chargeable to repairs and
maintenance in accordance with GAAP).
The term "FCC" shall mean the Federal Communications Commission
and any successor governmental agency.
The term "FCC License" shall mean any broadcasting community
antenna television or relay systems, earth station, business radio, microwave
and other license relating to a System issued by the FCC under the
Communications Act.
The term "Federal Funds Rate" shall mean for any day, the rate
set forth in the weekly statistical release designated as H.15(519), or any
successor publication, published by the Federal Reserve Bank of New York
(including any such successor, "H.15(519)") on the preceding Business Day
opposite the caption "Federal Funds (Effective)"; or, if for any relevant day
such rate is not so published on any such preceding Business Day, the rate for
such day will be the arithmetic mean as determined by the Agent of the rates for
the last transaction in overnight Federal funds arranged prior to 9:00 a.m. (New
York City time) on that day by each of three leading brokers of Federal funds
transactions in New York City selected by the Agent.
The term "Fiscal Quarter" shall mean a Fiscal Quarter of the
Fiscal Year of the Company ending on the last day of March, June, September and
December of each calendar year.
The term "Fixed Charges" shall mean, for any period, the sum of
(i) gross interest expense payable in cash during such period, (ii) scheduled
principal payments during such period on Indebtedness described in clauses (a),
(b), (c), (d), (e), (f) and (g) of the definition of Indebtedness, (iii) expense
for taxes paid during such period, and (iv) the amount of capital expenditures
during such period for maintenance (as opposed to upgrade) of cable systems and
other fixed assets.
The term "Franchise" shall include any franchise, permit,
license or other authorization granted by any governmental unit or authority for
the construction and operation of a System or for the reception and transmission
of signals by microwave.
The term "GAAP" shall mean generally accepted accounting
principles set forth from time to time in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board (or agencies with similar functions of comparable stature and
authority in the United States' accounting profession) which are applicable to
the circumstances as of the Initial Closing Date.
The term "General Partner" shall mean each of Enstar
Communications, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., and any other Person which shall become a
general partner of the Company.
The term "Governmental Authority" shall mean any nation or
government, any state or other political subdivision thereof, any central bank
(or similar monetary or regulatory authority) thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
The term "Gross Revenue" for any period shall mean the gross
revenue of the Company determined in accordance with generally accepted
accounting principles.
30
35
The term "Guarantee" shall include (i) any guarantee of the
payment or performance of any Indebtedness or other obligation of any obligor,
(ii) any other arrangement whereby credit is extended to one obligor on the
basis of any promise or undertaking of another Person, whether that promise or
undertaking is expressed in terms of an obligation to pay the Indebtedness of
such obligor, or to purchase an obligation owed by such obligor, or to purchase
or lease assets under circumstances that would enable such obligor to discharge
one or more of its obligations or to maintain the capital, working capital,
solvency or general financial condition of such obligor, whether or not such
arrangement is disclosed in the balance sheet of such other Person or is
referred to in a footnote thereto, and (iii) any liability as a general partner
of a partnership in respect of Indebtedness of other obligations of such
partnership.
The term "Indebtedness" of any Person shall mean, without
duplication, (a) all indebtedness for borrowed money; (b) all obligations
issued, undertaken or assumed as the deferred purchase price of property or
services (other than trade payables entered into in the ordinary course of
business on ordinary terms and accrued expenses); (c) all non-contingent
reimbursement or payment obligations with respect to surety instruments; (d) all
obligations evidenced by notes, bonds, debentures or similar
instruments,including obligations so evidenced incurred in connection with the
acquisition of property, assets or businesses; (e) all indebtedness created or
arising under any conditional sale or other title retention agreement, or
incurred as financing, in either case with respect to property acquired by the
Person (even though the rights and remedies of the seller or bank under such
agreement in the event of default are limited to repossession or sale of such
property); (f) all obligations with respect to Capitalized Leases; (g) all
indebtedness referred to in clauses (a) through (f) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any lien upon or in property (including accounts
and contract rights) owned by such Person, even though such Person has not
assumed or become liable for the payment of such Indebtedness; and (h) all
obligations under Guarantees in respect of indebtedness or obligations of others
of the kinds referred to in clauses (a) through (g) above.
For all purposes of this Agreement, the Indebtedness of any
Person shall include all recourse Indebtedness of any partnership or joint
venture or limited liability company in which such Person is a general partner
or a joint venturer or a member.
The term "Investment" shall include (i) any share of capital
stock, evidence of Indebtedness or other security issued by any other Person,
(ii) any loan, advance, contribution to capital or extension of credit or
commitment therefor to any other Person,including without limitation the
Guarantee of Indebtedness of any other Person, (iii) any purchase of the
business or integral part of the business of any other Person, (iv) any System,
(v) any commitment or option to make a purchase described in the foregoing
clauses (iii) or (iv) if, in the case of an option, the consideration therefor
exceeds $100, and (vi) any other investment, and any of the foregoing shall be
considered an Investment whether such investment is acquired by purchase,
exchange, issuance of securities, merger, reorganization or any other method;
provided, however, that the term "Investment" shall not include (a) current
trade and customer accounts receivable for services rendered in the ordinary
course of business and payable in accordance with customary trade terms, (b)
advances to employees for travel expenses, drawing accounts and similar
expenditures in the ordinary course of business, (c) stock or other securities
acquired in connection with the satisfaction or enforcement of Indebtedness or
claims due or owing to the Company or as security for any such Indebtedness or
claim, or (d) demand deposits in banks or trust companies. The amount of an
Investment outstanding at any time shall be determined in accordance with
generally accepted accounting principles; provided, however, that no Investment
shall be increased as the result of an increase in the undistributed retained
earnings of the Person in whom an Investment was made or decreased as a result
of an equity in the losses of any such Person.
31
36
The term "Joint Venture" shall mean a single-purpose
corporation, partnership, limited liability company, joint venture or other
similar legal arrangement (whether created by contract or conducted through a
separate legal entity) now or hereafter formed by the Company with another
Person in order to conduct a common venture or enterprise with such Person.
The term "Loan Agreements" shall include this Agreement, and any
other present or future agreement from time to time entered into between the
Company or any of the General Partners and you relating to this Agreement or
which is stated to be a Loan Agreement within the meaning of this Agreement,
each as from time to time amended or modified, and all statements, reports or
certificates delivered by the Company or any of the General Partners to you in
connection herewith or therewith.
The term "Loan Obligations" shall mean all present and future
obligations and Indebtedness of the Company owing to you under this Agreement or
under any other Loan Agreement, as from time to time amended or modified,
including without limitation the obligation to pay the Loan and to pay interest,
commitment fees, fees provided for in Section 11 hereof, indemnification and any
other fees and charges from time to time owed hereunder or under any other Loan
Agreement.
The term "Loan Security" shall mean all assets now or from time
to time hereafter encumbered or subjected to a security interest or charge (or
intended or required so to be pursuant to this Agreement or any other Loan
Agreement) to secure the payment or performance of any of the Loan Obligations,
including without limitation the assets described or referred to in Sections 6.1
and 6.2 hereof.
The term "Multiemployer Plan" means any Plan which is a
multiemployer plan as defined in Section 4001(a)(3) of ERISA.
The term "Net Proceeds" shall mean, as to any Disposition by a
Person, proceeds in cash, checks or other cash equivalent financial instruments
as and when received by such Person, net of: (a) the direct costs relating to
such disposition excluding amounts payable to such Person or any Affiliate of
such Person, (b) sale, use or other transaction taxes paid or payable by such
Person as a direct result thereof, and (c) amounts required to be applied to
repay principal, interest and prepayment premiums and penalties on Indebtedness
secured by a Lien on the asset which is the subject of such Disposition. "Net
Proceeds" shall also include proceeds paid on account of any Event of Loss, net
of: (i) all money actually applied to repair or reconstruct the damaged property
or property affected by the condemnation or taking, (ii) all of the costs and
expenses reasonably incurred in connection with the collection of such proceeds,
award or other payments, and (iii) any amounts retained by or paid to parties
having superior rights to such proceeds, awards or other payment.
The term "Note" shall mean a promissory note executed by the
Company in favor of Lender pursuant to Section 2.1.2, in substantially the form
of Exhibit 2.1.2.
The term "Partner" shall mean any partner of the Company, and
shall also include any other Person which shall become the owner of a
partnership interest in the Company.
The term "Partner's Certificate" shall mean a certificate signed
on behalf of Enstar Communications as a General Partner of the Company.
The term "Person" shall mean a corporation, association,
partnership, joint venture, trust, organization, business, individual or
government or any governmental agency or political subdivision thereof.
The term "Plan" means, at any time, any pension plan (as
defined in Section 3(2) of ERISA), subject to Title IV of ERISA which the
Company sponsors or maintains or to which the Company makes, is making, or is
obligated
32
37
to make contributions, or in the case of a Multiemployer Plan has made
contributions at any time during the immediately preceding five (5) plan years.
The term "Pro Forma Annualized EBITDA" shall mean, for any
Fiscal Quarter, (i) EBITDA of the Company for such Fiscal Quarter, multiplied by
(ii) 4.
The term "Requirement of Law" shall mean as to any Person, any
law (statutory or common), treaty, rule or regulation or determination of an
arbitrator or of a Governmental Authority, in each case applicable to or binding
upon the Person or any of its property or to which the Person or any of its
property is subject.
The term "Subsidiary" shall mean any Person of which the Company
(or other specified Person) shall at the time own, directly or indirectly
through one or more Subsidiaries, more than 50% of the outstanding shares of
capital stock (or other shares of beneficial interest) entitled to vote
generally, or holds more than 50% of the partnership or similar interests, or is
a general partner.
The term "Surety Instruments" shall mean all letters of credit
(including standby and commercial), banker's acceptances, bank guaranties,
shipside bonds, surety bonds and similar instruments.
The term "System" shall mean any cable television system.
The term "Total Debt" shall mean, as of any date of
determination, the sum of (i) the aggregate stated balance sheet amount of all
Indebtedness of the Company determined in accordance with GAAP and (ii) the
amount of any past due payables to Enstar Cable Corporation with respect to
management fees and reimbursable expenses.
11. EXPENSES; INDEMNITY; FEES.
(a) Whether or not the transactions contemplated hereby shall be
consummated, the Company will bear (i) all expenses (including the fees and
disbursements of your special counsel) in connection with the preparation and
duplication of this Agreement, each other Loan Agreement, and the transactions
contemplated hereby and thereby and any amendment or modification hereof and
thereof and operations hereunder and thereunder, (ii) all taxes, including
recording and filing fees and transfer and documentary stamp and similar taxes
at any time payable in respect of this Agreement or any other Loan Agreement or
the incurrence of the Loan Obligations, and (iii) all expenses incurred by you
in connection with the enforcement of any rights hereunder or under any Loan
Agreement, including without limitation costs of collection and reasonable
attorneys' fees and out-of-pocket expenses.
(b) The Company will indemnify you against and hold you harmless
from any liability, loss or damage resulting from the violation by the Company
of the provisions of Section 2.2 hereof. The Company will also indemnify you,
and your directors, officers, agent and employees and each Person, if any, who
controls you, and hold each of you and them harmless from and against any and
all claims, damages, liabilities and expenses (including without limitation all
fees and disbursements of counsel with whom you or them may consult in
connection therewith and all expenses of litigation or preparation thereof)
which you or they may incur or which may be asserted against you or them in
connection with any litigation or investigation involving the Company, any
officer, director or employee of the Company (including compliance with or
contesting of any subpoenas or other process issued against you or any director,
officer or employee of yours or any Person, if any, who controls you in any
proceeding involving the Company), other than litigation commenced by the
Company against you which (i) seeks enforcement of any of the Company's rights
hereunder or under any Loan Agreement and (ii) is decided adversely to you.
(c) On the Initial Closing Date the Company shall pay you a facility
33
38
fee in the amount of $33,903.
(d) The Company will pay to the Lender annually in advance a fee for
its services hereunder calculated at the rate of $3,867 per annum from the
Initial Closing Date.
(e) The covenants contained in paragraphs (a) and (b) of this
Section 11 shall survive the termination of this Agreement.
The Company hereby acknowledges that, pursuant to the Loan
Documents (as defined in the Lender's Credit Agreement), the Lender will assign
all of its rights, title and interest in, to and under this Agreement, the other
Loan Agreements, the Loan Obligations and the Loan Security to Bank of America
National Trust and Savings Association, as agent for the Banks under the
Lender's Credit Agreement (the "Documentation Agent"), and the Documentation
Agent will be the holder of the Notes for all purposes under this Agreement and
the Notes until payment in full of all Obligations under and as defined in the
Lender's Credit Agreement. The Company (i) hereby irrevocably consents to the
pledge and assignment of the Notes, this Agreement, the other Loan Agreements
and the Loan Security to the Documentation Agent pursuant to the Loan Documents
(as defined in the Lender's Credit Agreement) and to the exercise by the
Documentation Agent (and the Banks under the Lender's Credit Agreement) of all
rights and remedies under such agreements and (ii) acknowledges and agrees that
on and after the Initial Closing Date, the Documentation Agent and the Banks
under the Lender's Credit Agreement are third party beneficiaries of this
Agreement. The Company will execute and deliver such documents and instruments
and shall take such other action as the Documentation Agent may reasonably
request to carry out the provisions of this Agreement and the Loan Documents (as
defined in the Lender's Credit Agreement).
12. NOTICES.
(a) All notices, requests, consents, approvals, waivers and other
communications shall be in writing (including, unless the context expressly
otherwise provides, by facsimile transmission, provided that any matter
transmitted by the Company by facsimile (i) shall be immediately confirmed by a
telephone call to the recipient at the number specified on Exhibit 12, and (ii)
shall be followed promptly by delivery of a hard copy original thereof) and
mailed, faxed or delivered, to the address or facsimile number specified for
notices on Exhibit 12; or, if directed to the Company or you, to such other
address as shall be designated by such party in a written notice to the other
parties, and as directed to any other party, at such other address as shall be
designated by such party in a written notice to the company and you.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted in legible form by facsimile
machine, respectively, or if mailed, upon the third Business Day after the date
deposited into the U.S. mail, or if delivered, upon delivery; except that
notices pursuant to Section 2 to you shall not be effective until actually
received by you.
(c) Any agreement by you herein to receive certain notices by
telephone or facsimile is solely for the convenience and at the request of the
Company. You shall be entitled to rely on the authority of any Person purporting
to be a Person authorized by the Company to give such notice and you shall not
have any liability to the Company or other Person on account of any action taken
or not taken by you in reliance upon such telephonic or facsimile notice. The
obligation of the Company to repay the Loans shall not be affected in any way or
to any extent by any failure by you to receive written confirmation of any
telephonic or facsimile notice or the receipt by you of a confirmation which is
at variance with the terms understood by you to be contained in the telephonic
or facsimile notice.
13. PAYMENTS. All payments hereunder shall be made to you in immediately
available funds.
34
39
14. AMENDMENTS. This Agreement or any term or provision hereof may be
amended, modified, waived, charged, discharged or terminated, and compliance
with any representation, warranty, covenant or condition hereof may be waived or
modified only by a written instrument duly executed by you and the Company and
with the written consent of the "Agents" under (and as defined in) the Lender's
Credit Agreement.
15. LIMITED RECOURSE AGAINST GENERAL PARTNERS. The remedies of the holders
of the Loan Obligations, including without limitation any remedy which could be
exercised upon the occurrence of an Event of Default, shall be limited to the
extent that no General Partner shall have any personal liability as a general
partner of the Company with respect to the Loan Obligations, and in no event
shall a General Partner be personally liable as a general partner for any
deficiency judgment for any Loan Obligation; provided, however, that the
provisions of this Section 15 shall not impair the ability of any holder of any
Loan Obligation (i) to realize on the assets of the Company or on any other Loan
Security, including any personal property or partnership interests pledged to
secure the Loan Obligations or (ii) to pursue any remedy against any guarantor
of the Loan Obligations.
16. SURVIVAL OF COVENANTS. All covenants, agreements, representations and
warranties made herein or in any other Loan Agreement and in certificates
delivered pursuant hereto or thereto shall be deemed to have been material and
relied on by you, notwithstanding any investigation made by you or on your
behalf, and shall survive the execution and delivery to you hereof and thereof.
17. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW
WHICH CANNOT BE WAIVED, EACH OF THE COMPANY AND YOU HEREBY WAIVES, AND COVENANTS
THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY
RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND,
ACTION, OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, OR ANY
OTHER LOAN AGREEMENT OR THE SUBJECT MATTER HEREOF OR THEREOF OR ANY LOAN
OBLIGATION OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS
OF THE COMPANY OR YOU IN CONNECTION WITH ANY OF THE ABOVE, IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING AND WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE. THE COMPANY ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY YOU THAT THE
PROVISIONS OF THIS SECTION 17 CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH YOU
HAVE RELIED, ARE RELYING AND WILL RELY IN ENTERING INTO THIS AGREEMENT AND ANY
OTHER PRESENT OR FUTURE LOAN AGREEMENT. The Company or you may file an original
counterpart or a copy of this Section 17 with any court as written evidence of
the consent of each such Person to the waiver of its right to trial by jury.
18. DEFEASANCE. When all Loan Obligations have been paid and performed in
full, and if at the time you are no longer committed to make any loans to the
Company hereunder or under any other Loan Agreement, this Agreement shall
terminate; provided, however, that the covenants contained in paragraphs (a) and
(b) of Section 11 hereof and in Section 6.5 hereof shall survive the termination
of this Agreement.
19. SERVICE OF PROCESS. The Company by its execution hereof (i) hereby
irrevocably submits to the nonexclusive jurisdiction of the state courts of the
State of California and to the nonexclusive jurisdiction of the United States
District Court for the Southern District of California for the purpose of any
suit, action or other proceeding arising out of or based upon this Agreement or
any other Loan Agreement or the subject matter hereof and (ii) to the extent not
prohibited by applicable law, hereby waives and agrees not to assert, by way of
motion, as a defense or otherwise, in any such proceeding, any claim that it is
not subject personally to the jurisdiction of the above-named courts, that its
property is exempt or immune from attachment or execution, that any such
proceeding brought in one of the above-named courts is brought in an
inconvenient forum, that the venue of any such proceeding brought in one of the
above-named courts is improper, or that this Agreement or any other Loan
Agreement, or the subject matter hereof or thereof may not be enforced in or by
such court.
35
40
20. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns, including as such successors and assigns all holders of any Loan
Obligation, except that (i) the Company may not assign its rights or obligations
under this Agreement, and (ii) you shall be entitled to assign this Agreement
and/or the loans made hereunder.
21. MISCELLANEOUS. This Agreement is a Loan Agreement. This Agreement and
other Loan Agreements referred to herein constitute the entire understanding of
the parties with respect to the subject matter hereof and thereof and supersede
all prior and current understandings and agreements, whether written or oral.
The invalidity or unenforceability of any term or provision hereof shall not
affect the validity or enforceability of any other term or provision hereof. The
headings in this Agreement are for convenience of reference only and shall not
alter or otherwise affect the meaning hereof. This Agreement may be executed in
any number of counterparts which together shall constitute one instrument and
shall be governed by and construed in accordance with the laws of the State of
California (without giving effect to the conflict of law rules of any
jurisdiction) and shall bind and inure to the benefit of the parties hereto and
their respective successors and assigns, including as such successors and
assigns all holders of any Loan Obligation.
[Signature page follows.]
36
41
If the foregoing corresponds with your understanding of our agreement,
kindly sign this letter and the accompanying copies thereof in the appropriate
space below and return the same to the Company, whereupon this letter shall
become a binding agreement between you and the Company.
Very truly yours,
ENSTAR INCOME PROGRAM IV-1, L.P.,
a Georgia limited partnership
By: ENSTAR COMMUNICATIONS
CORPORATION,
its general partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Title: Chief Financial Officer
---------------------------
The foregoing is hereby accepted:
ENSTAR FINANCE COMPANY, LLC
By: ENSTAR COMMUNICATIONS CORPORATION,
its Manager
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Title: Chief Financial Officer
--------------------------------
37
42
TABLE OF EXHIBITS
Exhibit 2.1.2 Note
Exhibit 2.3 Lender's Credit Agreement dated September 30, 1997
Exhibit 4.2 Security Agreement
Exhibit 4.3 Request for Borrowing and Partner's Certificate
Exhibit 4.7 WBRHC Opinion Letter
Exhibit 7.4.1 Compliance Certificate
Exhibit 8.1.1 A General Partners
Exhibit 8.1.1 B Names and Jurisdictions
Exhibit 8.6.1 Franchises and FCC Licenses
Exhibit 12 Address for Notices
A - 1
43
EXHIBIT 2.1.2
FORM OF NOTE
September 30, 1997
FOR VALUE RECEIVED, the undersigned, Enstar Income Program IV-1, L.P., a
Georgia limited partnership (the "Borrower"), hereby promises to pay Enstar
Finance Company, LLC (the "Lender") or order, on the Termination Date (as
defined in the Loan Agreement referred to below), the aggregate unpaid principal
amount of the Loans made by the Lender to the Borrower pursuant to the Loan
Agreement. The Borrower promises to pay daily interest from the date hereof,
computed as provided in such Loan Agreement, on the aggregate principal amount
of such Loans from time to time unpaid at the per annum rate applicable to such
unpaid principal amount as provided in such Loan Agreement and to pay interest
on overdue principal and, to the extent not prohibited by applicable law, on
overdue installments of interest and fees at the rate specified in such Loan
Agreement, all such interest being payable at the time is specified in such Loan
Agreement, except that all accrued interest shall be paid at the stated or
accelerated maturity hereof or upon the prepayment in full hereof.
Payments hereunder shall be made to Lender at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other address as the holder of
this Note may designate.
All Loans made by the Lender pursuant to the Loan Agreement referred to
below and all repayments of the principal thereof shall be recorded by the
Lender and, prior to any transfer hereof, appropriate notations to evidence the
foregoing information with respect to each such Loans then outstanding shall be
endorsed by the Lender on the schedule attached hereto or on a continuation of
such schedule attached to and made a part hereof; provided, however, that the
failure of the Lender to make any such recordation or endorsement shall not
affect the obligations of the Borrower under this Note, or under the Loan
Agreement.
This Note evidences borrowings under, and is entitled to the benefits
and security of, and is subject to the provisions of, the Loan Agreement dated
as of September 30, 1997, as from time to time in effect (the "Loan Agreement"),
between the Borrower and Lender. The principal of this Note is prepayable in the
amounts and under the circumstances set forth in the Loan Agreement, and may be
prepaid in whole or from time to time in part, all as set forth in the Loan
Agreement. Terms defined in the Loan Agreement and not otherwise defined herein
are used herein with the meanings so defined.
In case an Event of Default shall occur, the entire principal of this
Note may become or be declared due and payable in the manner and with the effect
provided in the Loan Agreement.
44
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
(OTHER THAN THE CONFLICT OF LAWS) RULES OF THE STATE OF CALIFORNIA.
The parties hereto, including the Borrower and all guarantors and
endorsers, hereby waive presentment, demand, notice, protest and all other
demands and notices in connection with the delivery, acceptance, performance and
enforcement of this Note, except as specifically otherwise provided in the Loan
Agreement, and assent to extensions of time of payment, or forbearance or other
indulgence without notice.
ENSTAR INCOME PROGRAM IV-1, L.P.
By: ENSTAR COMMUNICATIONS
CORPORATION, its general
partner
By:______________________
Title:________________
2
45
LOAN AND PAYMENTS OF PRINCIPAL
--------------------------------------------------------------------------------
Amount of Unpaid
Amount Principal Principal Notation
Date of Loan Repaid Balance Made by
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
46
EXHIBIT 2.3
CREDIT AGREEMENT
Dated as of September 30, 1997
among
ENSTAR FINANCE COMPANY, LLC,
BANQUE PARIBAS,
as Administrative Agent,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Documentation Agent,
and
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
47
TABLE OF CONTENTS
SECTION PAGE
ARTICLE I
DEFINITIONS........................................... 1
1.01 Certain Defined Terms....................................................... 1
1.02 Other Interpretive Provisions............................................... 22
1.03 Accounting Principles....................................................... 23
ARTICLE II
THE CREDIT............................................ 24
2.01 Amounts and Terms of Commitments............................................ 24
2.02 Loan Accounts............................................................... 24
2.03 Procedure for Borrowing..................................................... 24
2.04 Conversion and Continuation Elections....................................... 25
2.05 Voluntary Termination or Reduction of Commitments........................... 27
2.06 Optional Prepayments........................................................ 27
2.07 Mandatory Prepayments of Loans; Mandatory Commitment Reductions............. 27
(a) Asset Dispositions................................................ 27
(b) Repayment of Partnership Loans.................................... 28
(c) Debt Issuance..................................................... 28
(d) Prepayment Due to Reduction of Commitments........................ 28
(e) General........................................................... 28
(f) Reduction of Commitment........................................... 28
2.08 Repayment................................................................... 29
2.09 Interest.................................................................... 29
2.10 Fees........................................................................ 30
(a) Arrangement, Agency Fees.......................................... 30
(b) Commitment Fees................................................... 30
2.11 Computation of Fees and Interest............................................ 30
2.12 Payments by the Company..................................................... 31
2.13 Payments by the Banks to the Administrative Agent........................... 32
2.14 Sharing of Payments, Etc.................................................... 32
2.15 Security.................................................................... 33
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY............................. 33
3.01 Taxes....................................................................... 33
3.02 Illegality.................................................................. 35
3.03 Increased Costs and Reduction of Return..................................... 35
3.04 Funding Losses.............................................................. 36
3.05 Inability to Determine Rates................................................ 37
3.06 Survival.................................................................... 37
i
48
SECTION PAGE
3.07 Substitution of Banks....................................................... 37
ARTICLE IV
CONDITIONS PRECEDENT....................................... 38
4.01 Conditions of Initial Loans................................................. 38
(i) Credit Agreement and Notes........................................ 38
(ii) Resolutions; Incumbency........................................... 38
(iii) Organization Documents; Good Standing............................. 38
(iv) Legal Opinions.................................................... 39
(v) Payment of Fees................................................... 39
(vi) Collateral Documents.............................................. 39
(vii) Insurance Policies................................................ 40
(viii) Certificate....................................................... 40
(ix) Other Documents................................................... 40
4.02 Conditions to All Borrowings................................................ 41
(a) Notice of Borrowing or Conversion/Continuation.................... 41
(b) Continuation of Representations and Warranties.................... 41
(c) No Existing Default............................................... 41
(d) No Future Advance Notice.......................................... 41
ARTICLE V
REPRESENTATIONS AND WARRANTIES................................. 42
5.01 Corporate Existence and Power............................................... 42
5.02 Corporate Authorization; No Contravention................................... 43
5.03 Governmental Authorization.................................................. 43
5.04 Binding Effect.............................................................. 43
5.05 Litigation.................................................................. 43
5.06 No Default.................................................................. 44
5.07 ERISA Compliance............................................................ 44
5.08 Use of Proceeds; Margin Regulations......................................... 45
5.09 Title to Properties......................................................... 45
5.10 Taxes....................................................................... 45
5.11 Financial Condition......................................................... 45
5.12 Collateral Documents........................................................ 46
5.13 Regulated Entities.......................................................... 46
5.14 No Burdensome Restrictions.................................................. 46
5.15 Copyrights, Patents, Trademarks and Licenses, etc........................... 46
5.16 Subsidiaries................................................................ 47
5.17 Insurance................................................................... 47
5.18 Solvency.................................................................... 47
5.19 Swap Obligations............................................................ 47
5.20 Full Disclosure............................................................. 47
ii
49
SECTION PAGE
ARTICLE VI
AFFIRMATIVE COVENANTS...................................... 48
6.01 Financial Statements........................................................ 48
6.02 Certificates; Other Information............................................. 50
6.03 Notices..................................................................... 51
6.04 Preservation of Corporate Existence, Etc.................................... 53
6.05 Maintenance of Property..................................................... 53
6.06 Insurance................................................................... 53
6.07 Payment of Obligations...................................................... 54
6.08 Compliance with Laws........................................................ 54
6.09 Compliance with ERISA....................................................... 54
6.10 Inspection of Property and Books and Records................................ 54
6.11 Environmental Laws.......................................................... 55
6.12 Use of Proceeds............................................................. 55
6.13 Enforcement of Enstar Partnership Loan Agreements........................... 55
6.14 Further Assurances.......................................................... 55
ARTICLE VII
NEGATIVE COVENANTS....................................... 56
7.01 Limitation on Liens......................................................... 56
7.02 Disposition of Assets....................................................... 57
7.03 Consolidations and Mergers.................................................. 57
7.04 Loans and Investments....................................................... 57
7.05 Limitation on Indebtedness.................................................. 58
7.06 Transactions with Affiliates................................................ 58
7.07 Use of Proceeds............................................................. 58
7.08 Contingent Obligations...................................................... 58
7.09 Joint Ventures.............................................................. 58
7.10 Lease Obligations........................................................... 59
7.11 Restricted Payments......................................................... 59
7.12 ERISA....................................................................... 59
7.13 Change in Business.......................................................... 59
7.14 Accounting Changes.......................................................... 59
7.15 Subsidiaries................................................................ 59
7.16 Financial Covenants......................................................... 59
7.17 Hedging Requirements........................................................ 60
7.18 Amendment of Enstar Partnership Loan Agreements............................. 60
ARTICLE VIII
EVENTS OF DEFAULT........................................ 61
8.01 Event of Default............................................................ 61
(a) Non-Payment....................................................... 61
(b) Representation or Warranty........................................ 61
(c) Specific Defaults................................................. 61
(d) Other Defaults.................................................... 61
iii
50
SECTION PAGE
(e) Cross-Default..................................................... 61
(f) Insolvency; Voluntary Proceedings................................. 62
(g) Involuntary Proceedings........................................... 62
(h) ERISA............................................................. 62
(i) Monetary Judgments................................................ 63
(j) Non-Monetary Judgments............................................ 63
(k) Change of Control................................................. 63
(l) Loss of Licenses.................................................. 63
(m) Adverse Change.................................................... 63
(p) Collateral........................................................ 63
8.02 Remedies.................................................................... 64
8.03 Specified Swap Contract Remedies............................................ 64
8.04 Rights Not Exclusive........................................................ 65
ARTICLE IX
THE AGENTS............................................ 65
9.01 Appointment and Authorization; "Agent"...................................... 65
9.02 Delegation of Duties........................................................ 65
9.03 Liability of Agent.......................................................... 65
9.04 Reliance by Agent........................................................... 66
9.05 Notice of Default........................................................... 66
9.06 Credit Decision............................................................. 67
9.07 Indemnification of Agent.................................................... 68
9.08 Agent in Individual Capacity................................................ 68
9.09 Successor Agent............................................................. 68
9.10 Withholding Tax............................................................. 69
9.11 Collateral Matters.......................................................... 70
ARTICLE X
MISCELLANEOUS.......................................... 71
10.01 Amendments and Waivers..................................................... 71
10.02 Notices.................................................................... 72
10.03 No Waiver; Cumulative Remedies............................................. 73
10.04 Costs and Expenses......................................................... 73
10.05 Company Indemnification.................................................... 74
10.06 Marshalling; Payments Set Aside............................................ 75
10.07 Successors and Assigns..................................................... 76
10.08 Assignments, Participations, etc........................................... 76
10.09 Confidentiality............................................................ 78
10.10 Set-off.................................................................... 79
10.11 Notification of Addresses, Lending Offices, Etc............................ 79
10.12 Counterparts............................................................... 79
10.13 Severability............................................................... 79
10.14 No Third Parties Benefited................................................. 79
10.15 Governing Law and Jurisdiction............................................. 80
10.16 Waiver of Jury Trial....................................................... 80
10.17 Entire Agreement........................................................... 81
iv
51
SCHEDULES
Schedule 2.01 Commitments
Schedule 5.18 Insurance Matters
Schedule 7.01 Permitted Liens
Schedule 10.02 Lending Offices; Addresses for Notices
EXHIBITS
Exhibit A Form of Notice of Borrowing
Exhibit B Form of Notice of Conversion/Continuation
Exhibit C Form of Compliance Certificate
Exhibit D Form of Legal Opinion of Company's Counsel
Exhibit E Form of Assignment and Acceptance
Exhibit F Form of Promissory Note
Exhibit G Form of ECC Pledge Agreement
Exhibit H Form of ECC Security Agreement
Exhibit I Form of Enstar Partnership Loan Agreement
Exhibit J Form of Falcon Pledge Agreement
Exhibit K Form of FHGLP Pledge Agreement
Exhibit L Form of Pledge Agreement
Exhibit M Form of Security Agreement
v
52
CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of September 30, 1997, among
Enstar Finance Company, LLC, a Delaware limited liability company (the
"Company"), the several financial institutions from time to time party to this
Agreement (collectively, the "Banks"; individually, a "Bank"), Banque Paribas,
as administrative agent for the Banks and Bank of America National Trust and
Savings Association, as documentation agent for the Banks.
WHEREAS, the Banks have agreed to make available to the Company a secured
revolving credit facility upon the terms and conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.01 Certain Defined Terms. The following terms have the following
meanings:
"Acquisition" means any transaction or series of related
transactions for the purpose of or resulting, directly or indirectly, in
(a) the acquisition of all or substantially all of the assets of a Person,
or of any business or division of a Person, (b) the acquisition of in
excess of 50% of the capital stock, partnership interests, membership
interests or equity of any Person, or otherwise causing any Person to
become a Subsidiary, or (c) a merger or consolidation or any other
combination with another Person.
"Administrative Agent" means Banque Paribas in its capacity as
administrative agent for the Banks hereunder, and any successor
administrative agent arising under Section 9.09.
"Administrative Agent's Payment Office" means the address for
payments set forth on Schedule 10.02 or such other address as the
Administrative Agent may from time to time specify.
"Affiliate" means, as to any Person, any other Person
1
53
which, directly or indirectly, is in control of, is controlled by, or is
under common control with, such Person. A Person shall be deemed to
control another Person if the controlling Person possesses, directly or
indirectly, the power to direct or cause the direction of the management
and policies of the other Person, whether through the ownership of voting
securities, membership interests, by contract, or otherwise.
"Agent" means the Administrative Agent or the Documentation Agent.
"Agent-Related Persons" means the Administrative Agent, the
Documentation Agent and any successor agent arising under Section 9.09,
together with their respective Affiliates, and the officers, directors,
employees, agents and attorneys-in-fact of such Persons and Affiliates.
"Aggregate Specified Swap Amount" means, at any time, the sum of all
Specified Swap Amounts owing to all Swap Providers.
"Agreement" means this Credit Agreement.
"Applicable Margin" means (i) with respect to Base Rate Loans,
0.625%; and (ii) with respect to Offshore Rate Loans, 1.875%.
"Assignee" has the meaning specified in subsection 10.08(a).
"Attorney Costs" means and includes all fees and disbursements of
any law firm or other external counsel, the allocated cost of internal
legal services and all disbursements of internal counsel.
"Authorized Officer" means, with respect to the Company the
Secretary or Assistant Secretary of its manager, with respect to ECC, its
Secretary or Assistant Secretary and with respect to Falcon, the Secretary
or Assistant Secretary of the general partner of its general partner.
"Bank" means the institutions specified in the introductory clause
hereto. Unless the context otherwise clearly requires, "Bank" includes any
such institution in its capacity as Swap Provider. Unless the context
otherwise clearly requires, references to any such institution as a "Bank"
shall also include any of such institution's Affiliates that may at any
time of determination be Swap Providers.
2
54
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978
(11 U.S.C. Section 101, et seq.).
"Banque Paribas" means Banque Paribas, Los Angeles Agency.
"Base Rate" means, for any day, the higher of: (a) 0.50% per annum
above the latest Federal Funds Rate; and (b) the rate of interest in
effect for such day as publicly announced from time to time by Banque
Paribas in Los Angeles, California, as its "base rate." (The "base rate"
is a rate set by Banque Paribas based upon various factors including
Banque Paribas' costs and desired return, general economic conditions and
other factors, and is used as a reference point for pricing some loans,
which may be priced at, above, or below such announced rate.) Any change
in the base rate announced by Banque Paribas shall take effect at the
opening of business on the day specified in the public announcement of
such change.
"Base Rate Loan" means a Loan that bears interest based on the Base
Rate.
"BofA" means Bank of America National Trust and Savings Association,
a national banking association.
"Borrowing" means a borrowing hereunder consisting of Loans of the
same Type made to the Company on the same day by the Banks under Article
II, and, in the case of Offshore Rate Loans, having the same Interest
Period.
"Borrowing Date" means any date on which a Borrowing occurs under
Section 2.03.
"Borrowing Enstar Partnership" means an Enstar Partnership that is a
party to an Enstar Partnership Loan Agreement under which there are
outstanding Advances or Loans (as each such term is defined in such Enstar
Partnership Loan Agreement) or any commitment of the Lender (as defined in
such Enstar Partnership Loan Agreement) to make any such Loan or Advance.
"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks in New York City or Los Angeles are
authorized or required by law to close and, if the applicable Business Day
relates to any Offshore Rate Loan, means such a day on which dealings are
carried on in the applicable offshore dollar interbank market.
"Capital Adequacy Regulation" means any guideline,
3
55
request or directive of any central bank or other Governmental Authority,
or any other law, rule or regulation, whether or not having the force of
law, in each case, regarding capital adequacy of any bank or of any
corporation controlling a bank.
"Cash Interest Expense" means, for any Person and for any period,
total interest expense (including that portion attributable to capital
leases in accordance with GAAP and capitalized interest) of such Person
and its Subsidiaries on a consolidated basis with respect to all
outstanding Indebtedness of such Person and its Subsidiaries payable in
cash during such period, including, all commissions, discounts and other
fees and charges owed with respect to letters of credit and banker's
acceptance financing and net costs under Swap Contracts.
"CERCLA" has the meaning specified in the definition of
"Environmental Laws."
"Change of Control" means any of the following events or
circumstances: (i) the failure of Falcon Holding Group, L.P. or Falcon
Holding Group Inc. to hold, directly or indirectly, in the aggregate 100%
of the membership interests of the Company, (ii) the failure of Falcon
Holding Group Inc. or Falcon Holding Group L.P. to hold, directly or
indirectly, in the aggregate 100% of the outstanding stock of ECC, (iii)
the failure of Falcon Holding Group Inc. to be the sole general partner of
Falcon Holding Group, L.P. and (iv) if any Person or Persons acting in
concert (other than Telecommunications, Inc. or an Affiliate of
Telecommunications Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ and/or any ▇▇▇▇▇▇▇▇▇ Family Trust), together with Affiliates
thereof, shall in the aggregate, directly or indirectly, control or own
(beneficially or otherwise) more than 25% of the issued and outstanding
stock of Falcon Holding Group Inc.
"Closing Date" means the date on which all conditions precedent set
forth in Section 4.01 are satisfied or waived by all Banks (or, in the
case of subsection 4.01(e), waived by the Person entitled to receive such
payment).
"Code" means the Internal Revenue Code of 1986, and regulations
promulgated thereunder.
"Collateral" means all property and interests in property and
proceeds thereof now owned or hereafter acquired by the Company or ECC or
Falcon and their respective Subsidiaries in or upon which a Lien now or
hereafter exists in favor of the Banks, or an Agent on
4
56
behalf of the Banks, whether under this Agreement, the Collateral
Documents or under any other documents executed by any such Person and
delivered to an Agent or Banks.
"Collateral Documents" means, collectively, (i) the Security
Agreement, the Pledge Agreement, the Falcon Pledge Agreement, the FHGLP
Pledge Agreement, the ECC Security Agreement, the ECC Pledge Agreement and
all other security agreements, mortgages, deeds of trust, patent and
trademark assignments, lease assignments, guarantees and other similar
agreements between the Company or ECC or Falcon and the Banks or an Agent
for the benefit of the Banks now or hereafter delivered to the Banks or an
Agent pursuant to or in connection with the transactions contemplated
hereby, and all financing statements (or comparable documents now or
hereafter filed in accordance with the Uniform Commercial Code or
comparable law) against the Company or ECC or Falcon as debtor in favor of
the Banks or an Agent for the benefit of the Banks as secured party, and
(ii) any amendments, supplements, modifications, renewals, replacements,
consolidations, substitutions and extensions of any of the foregoing.
"Commitment", as to each Bank, has the meaning specified in Section
2.01.
"Company" has the meaning specified in the introductory paragraph of
this Agreement.
"Compliance Certificate" means a certificate substantially in the
form of Exhibit C.
"Contingent Obligation" means, as to any Person, any direct or
indirect liability of that Person, whether or not contingent, with or
without recourse, (a) with respect to any Indebtedness, lease, dividend,
letter of credit or other obligation (the "primary obligations") of
another Person (the "primary obligor"), including any obligation of that
Person (i) to purchase, repurchase or otherwise acquire such primary
obligations or any security therefor, (ii) to advance or provide funds for
the payment or discharge of any such primary obligation, or to maintain
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency or any balance sheet item, level of
income or financial condition of the primary obligor, (iii) to purchase
property, securities or services primarily for the purpose of assuring the
owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation, or (iv) otherwise to assure or
hold harmless the holder of any such primary obligation against loss in
respect thereof (each, a
5
57
"Guaranty Obligation"); (b) with respect to any Surety Instrument issued
for the account of that Person or as to which that Person is otherwise
liable for reimbursement of drawings or payments; (c) to purchase any
materials, supplies or other property from, or to obtain the services of,
another Person if the relevant contract or other related document or
obligation requires that payment for such materials, supplies or other
property, or for such services, shall be made regardless of whether
delivery of such materials, supplies or other property is ever made or
tendered, or such services are ever performed or tendered, or (d) in
respect of any Swap Contract. The amount of any Contingent Obligation
shall, in the case of Guaranty Obligations, be deemed equal to the stated
or determinable amount of the primary obligation in respect of which such
Guaranty Obligation is made or, if not stated or if indeterminable, the
maximum reasonably anticipated liability in respect thereof, and in the
case of other Contingent Obligations other than in respect of Swap
Contracts, shall be equal to the maximum reasonably anticipated liability
in respect thereof and, in the case of Contingent Obligations in respect
of Swap Contracts, shall be equal to the Swap Termination Value.
"Contractual Obligation" means, as to any Person, any provision of
any security issued by such Person or of any agreement, undertaking,
contract, indenture, mortgage, deed of trust or other instrument, document
or agreement to which such Person is a party or by which it or any of its
property is bound.
"Conversion/Continuation Date" means any date on which, under
Section 2.04, the Company (a) converts Loans of one Type to another Type,
or (b) continues as Loans of the same Type, but with a new Interest
Period, Loans having Interest Periods expiring on such date.
"Default" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured or otherwise
remedied during such time) constitute an Event of Default.
"Disposition" means the sale, lease, conveyance or other disposition
of property, other than sales or other dispositions expressly permitted
under subsection 7.02(i).
"Dollars", "dollars" and "$" each mean lawful money of the United
States.
"EBITDA" means, with respect to any Person and with respect to any
period, net income for such period, plus
6
58
income tax expense for such period, plus gross interest expense for such
period (including net payments under Swap Contracts), plus depreciation
and amortization expense for such period, plus losses on sales of fixed
assets during such period, plus other non-cash charges, minus gains on
sales of fixed assets during such period, minus extraordinary gains for
such period, and minus non-operating income for such period, all
determined in accordance with GAAP.
"EBTDA" means, with respect to any Person and with respect to any
period, net income for such period, plus income tax expense for such
period, plus depreciation and amortization expense for such period, plus
losses on sales of fixed assets during such period, plus other non-cash
charges, minus gains on sales of fixed assets during such period, minus
extraordinary gains for such period, and minus non-operating income for
such period, all determined in accordance with GAAP.
"ECC" means Enstar Communications Corporation, a Georgia
corporation.
"ECC Pledge Agreement" means the pledge agreement, entered into by
ECC in favor of the Documentation Agent on behalf of the Banks,
substantially in the form of Exhibit G hereto, as it may be amended,
supplemented or otherwise modified from time to time.
"ECC Security Agreement" means the security agreement, entered into
by ECC in favor of the Documentation Agent on behalf of the Banks,
substantially in the form of Exhibit H hereto, as it may be amended,
supplemented or otherwise modified from time to time.
"Eligible Assignee" means (a) a commercial bank organized under the
laws of the United States, or any state thereof, and having a combined
capital and surplus of at least $100,000,000; (b) a commercial bank
organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development (the "OECD"), or a
political subdivision of any such country, and having a combined capital
and surplus of at least $100,000,000, provided that such bank is acting
through a branch or agency located in the United States; and (c) a Person
that is primarily engaged in the business of commercial banking and that
is (i) a Subsidiary of a Bank, (ii) a Subsidiary of a Person of which a
Bank is a Subsidiary, or (iii) a Person of which a Bank is a Subsidiary.
7
59
"Enstar Partnership" means any one of Enstar VII, a Georgia limited
partnership, Enstar X Ltd., a Georgia limited partnership, Enstar XI,
Ltd., a Georgia limited partnership, Enstar Income Program 1984-1, L.P., a
Georgia limited partnership, Enstar Income Program II-1, L.P., a Georgia
limited partnership, Enstar Income Program IV-1, L.P., a Georgia limited
partnership, Enstar Income Program IV-2, L.P., a Georgia limited
partnership, Enstar Income/Growth Program Five-A, L.P., a Georgia limited
partnership, Enstar Income/Growth Program Five-B, L.P., a Georgia limited
partnership, Enstar Income/Growth Program Six-A, L.P., a Georgia limited
partnership, Enstar Income/Growth Program Six-B, L.P., a Georgia limited
partnership and Enstar Cable of Cumberland Valley, a Georgia general
partnership.
"Enstar Partnership Loan" means any loan made by the Company to any
Enstar Partnership (other than Enstar Income/Growth Program Five-A, L.P.,
Enstar Income/Growth Program Five-B, L.P. and Enstar Income Program II-1,
L.P.) pursuant to an Enstar Partnership Loan Agreement.
"Enstar Partnership Loan Agreement" means a loan agreement between
the Company and an Enstar Partnership (other than Enstar Income/Growth
Program Five-A, L.P., Enstar Income/Growth Program Five-B, L.P. and Enstar
Income Program II-1, L.P.) (including the exhibits and schedules attached
thereto), substantially in the form of Exhibit I hereto, with such changes
as agreed to by the Majority Banks, all "Loan Agreements" (as defined in
such loan agreement) and all other documents delivered or entered into in
connection therewith and the transactions contemplated thereby, each as
they may be amended, supplemented, restated or otherwise modified from
time to time.
"Environmental Claims" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or
injury to the environment or threat to public health, personal injury
(including sickness, disease or death), property damage, natural resources
damage, or otherwise alleging liability or responsibility for damages
(punitive or otherwise), cleanup, removal, remedial or response costs,
restitution, civil or criminal penalties, injunctive relief, or other type
of relief, resulting from or based upon the presence, placement,
discharge, emission or release (including intentional and unintentional,
negligent and non-negligent, sudden or non-sudden, accidental or
non-accidental, placement, spills, leaks, discharges, emissions or
releases) of any Hazardous Material at, in, or from Property, whether
8
60
or not owned by the Company.
"Environmental Laws" means all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative orders, directed duties, requests,
licenses, authorizations and permits of, and agreements with, any
Governmental Authorities, in each case relating to environmental, health,
safety and land use matters; including the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 ("CERCLA"), the Clean Air
Act, the Federal Water Pollution Control Act of 1972, the Solid Waste
Disposal Act, the Federal Resource Conservation and Recovery Act, the
Toxic Substances Control Act, the Emergency Planning and Community
Right-to-Know Act, the California Hazardous Waste Control Law, the
California Solid Waste Management, Resource, Recovery and Recycling Act,
the California Water Code and the California Health and Safety Code.
"ERISA" means the Employee Retirement Income Security Act of 1974,
and regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Company within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code
for purposes of provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect to a Pension
Plan; (b) a withdrawal by the Company or any ERISA Affiliate from a
Pension Plan subject to Section 4063 of ERISA during a plan year in which
it was a substantial employer (as defined in Section 4001(a)(2) of ERISA)
or a cessation of operations which is treated as such a withdrawal under
Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the
Company or any ERISA Affiliate from a Multiemployer Plan or notification
that a Multiemployer Plan is in reorganization; (d) the filing of a notice
of intent to terminate, the treatment of a Plan amendment as a termination
under Section 4041 or 4041A of ERISA, or the commencement of proceedings
by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an
event or condition which might reasonably be expected to constitute
grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan or Multiemployer
Plan; or (f) the imposition of any liability under Title IV of ERISA,
other than PBGC premiums due but not delinquent under Section 4007 of
ERISA, upon the Company or any ERISA Affiliate.
9
61
"Eurodollar Reserve Percentage" has the meaning specified in the
definition of "Offshore Rate".
"Event of Default" means any of the events or circumstances
specified in Section 8.01.
"Event of Loss" means, with respect to any property, any of the
following: (a) any loss, destruction or damage of such property; (b) any
pending or threatened institution of any proceedings for the condemnation
or seizure of such property or for the exercise of any right of eminent
domain; or (c) any actual condemnation, seizure or taking, by exercise of
the power of eminent domain or otherwise, of such property, or
confiscation of such property or the requisition of the use of such
property.
"Exchange Act" means the Securities Exchange Act of 1934, and
regulations promulgated thereunder.
"Falcon" means Falcon Cablevision, a California limited partnership.
"Falcon Pledge Agreement" means the pledge agreement entered into by
Falcon in favor of the Documentation Agent on behalf of the Banks,
substantially in the form of Exhibit J hereto, as it may be amended,
supplemented or otherwise modified from time to time.
"FDIC" means the Federal Deposit Insurance Corporation, and any
Governmental Authority succeeding to any of its principal functions.
"Federal Funds Rate" means, for any day, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including
any such successor, "H.15(519)") on the preceding Business Day opposite
the caption "Federal Funds (Effective)"; or, if for any relevant day such
rate is not so published on any such preceding Business Day, the rate for
such day will be the arithmetic mean as determined by the Agent of the
rates for the last transaction in overnight Federal funds arranged prior
to 9:00 a.m. (New York City time) on that day by each of three leading
brokers of Federal funds transactions in New York City selected by the
Agent.
"Fee Letter" has the meaning specified in subsection 2.10(a).
"FHGLP Pledge Agreement" means the pledge agreement, entered into by
Falcon Holding Group, L.P. in favor of the
10
62
Documentation Agent on behalf of the Banks, substantially in the form of
Exhibit K hereto, as it may be amended, supplemented or otherwise modified
from time to time.
"Fiscal Quarter" means a fiscal quarter of the fiscal year of the
Company ending on the last day of March, June, September and December of
each calendar year.
"Fixed Charges" means, for any period, the sum of (i) gross interest
expense payable in cash during such period, (ii) scheduled principal
payments during such period on Indebtedness described in clauses (a), (b),
(c), (d), (e), (f) and (g) of the definition of Indebtedness, (iii)
expense for taxes paid during such period, and (iv) the amount of capital
expenditures during such period for maintenance (as opposed to upgrade) of
cable systems and other fixed assets.
"FRB" means the Board of Governors of the Federal Reserve System,
and any Governmental Authority succeeding to any of its principal
functions.
"Further Taxes" means any and all present or future taxes, levies,
assessments, imposts, duties, deductions, fees, withholdings or similar
charges (including, without limitation, net income taxes and franchise
taxes), and all liabilities with respect thereto, imposed by any
jurisdiction on account of amounts payable or paid pursuant to Section
3.01.
"GAAP" means generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board (or agencies with similar functions of comparable stature
and authority within the U.S. accounting profession), which are applicable
to the circumstances as of the Closing Date.
"Governmental Authority" means any nation or government, any state
or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions
of or pertaining to government, and any corporation or other entity owned
or controlled, through stock or capital ownership or otherwise, by any of
the foregoing.
"Guaranty Obligation" has the meaning specified in the definition of
"Contingent Obligation."
11
63
"Hazardous Materials" means all those substances that are regulated
by, or which may form the basis of liability under, any Environmental Law,
including any substance identified under any Environmental Law as a
pollutant, contaminant, hazardous waste, hazardous constituent, special
waste, hazardous substance, hazardous material, or toxic substance, or
petroleum or petroleum derived substance or waste.
"Indebtedness" of any Person means, without duplication, (a) all
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (other than
trade payables and accrued expenses entered into in the ordinary course of
business on ordinary terms); (c) all non-contingent reimbursement or
payment obligations with respect to Surety Instruments; (d) all
obligations evidenced by notes, bonds, debentures or similar instruments,
including obligations so evidenced incurred in connection with the
acquisition of property, assets or businesses; (e) all indebtedness
created or arising under any conditional sale or other title retention
agreement, or incurred as financing, in either case with respect to
property acquired by the Person (even though the rights and remedies of
the seller or bank under such agreement in the event of default are
limited to repossession or sale of such property); (f) all obligations
with respect to capital leases; (g) all indebtedness referred to in
clauses (a) through (f) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien upon or in property (including accounts and contracts rights)
owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness; and (h) all Guaranty
Obligations in respect of indebtedness or obligations of others of the
kinds referred to in clauses (a) through (g) above.
For all purposes of this Agreement, the Indebtedness of any Person shall
include all recourse Indebtedness of any partnership or joint venture or
limited liability company in which such Person is a general partner or a
joint venturer or a member.
"Indemnified Liabilities" has the meaning specified in Section
10.05.
"Indemnified Person" has the meaning specified in Section 10.05.
"Independent Auditor" has the meaning specified in
12
64
subsection 6.01(a).
"Insolvency Proceeding" means, with respect to any Person, (a) any
case, action or proceeding with respect to such Person before any court or
other Governmental Authority relating to bankruptcy, reorganization,
insolvency, liquidation, receivership, dissolution, winding-up or relief
of debtors, or (b) any general assignment for the benefit of creditors,
composition, marshalling of assets for creditors, or other, similar
arrangement in respect of its creditors generally or any substantial
portion of its creditors; undertaken under U.S. Federal, state or foreign
law, including the Bankruptcy Code.
"Interest Payment Date" means, as to any Offshore Rate Loan, the
last day of each Interest Period applicable to such Loan and, as to any
Base Rate Loan, the last Business Day of each Fiscal Quarter and each date
such Loan is converted into another Type of Loan, provided, however, that
if any Interest Period for an Offshore Rate Loan exceeds three months, the
date that falls three months after the beginning of such Interest Period
and after each Interest Payment Date thereafter is also an Interest
Payment Date.
"Interest Period" means, as to any Offshore Rate Loan, the period
commencing on the Borrowing Date of such Loan or on the
Conversion/Continuation Date on which the Loan is converted into or
continued as an Offshore Rate Loan, and ending on the date one, two, three
or six months thereafter as selected by the Company in its Notice of
Borrowing or Notice of Conversion/Continuation;
provided that:
(i) if any Interest Period would otherwise end on a day that
is not a Business Day, that Interest Period shall be extended to the
following Business Day unless, in the case of an Offshore Rate Loan,
the result of such extension would be to carry such Interest Period
into another calendar month, in which event such Interest Period
shall end on the preceding Business Day;
(ii) any Interest Period pertaining to an Offshore Rate Loan
that begins on the last Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the
last Business Day of the calendar month at the end of such Interest
Period; and
13
65
(iii) no Interest Period for any Loan shall extend beyond the
Termination Date.
"IRS" means the Internal Revenue Service, and any Governmental
Authority succeeding to any of its principal functions under the Code.
"Joint Venture" means a single-purpose corporation, partnership,
limited liability company, joint venture or other similar legal
arrangement (whether created by contract or conducted through a separate
legal entity) now or hereafter formed by the Company with another Person
in order to conduct a common venture or enterprise with such Person.
"Lending Office" means, as to any Bank, the office or offices of
such Bank specified as its "Lending Office" or "Domestic Lending Office" or
"Offshore Lending Office", as the case may be, on Schedule 10.02, or such other
office or offices as the Bank may from time to time notify the Company and the
Agents.
"Lien" means any security interest, mortgage, deed of trust, pledge,
hypothecation, assignment, charge or deposit arrangement, encumbrance,
lien (statutory or other) or preferential arrangement of any kind or
nature whatsoever in respect of any property (including those created by,
arising under or evidenced by any conditional sale or other title
retention agreement, the interest of a lessor under a capital lease, any
financing lease having substantially the same economic effect as any of
the foregoing, or the filing of any financing statement naming the owner
of the asset to which such lien relates as debtor, under the Uniform
Commercial Code or any comparable law) and any contingent or other
agreement to provide any of the foregoing, but not including the interest
of a lessor under an operating lease.
"Liquid Assets" means, as at any date of determination, (i) cash;
(ii) marketable securities, (a) issued or directly and unconditionally
guaranteed as to interest and principal by the United States Government or
(b) issued by any agency of the United States the obligations of which are
backed by the full faith and credit of the United States, in each case
maturing within one year after such date; (iii) marketable direct
obligations issued by any state of the United States of America or any
political subdivision of any such state or any public instrumentality
thereof, in each case maturing within one year after such date and having,
at the time of the acquisition thereof, the highest rating obtainable from
either Standard & Poor's Ratings Group ("S&P") or ▇▇▇▇▇'▇ Investors
Service, Inc. ("Moody's"); (iv) commercial paper maturing no more than one
year from the date of the creation
14
66
thereof and having, at the time of the acquisition thereof, a rating of at
least A-1 from S&P or at least P-1 from Moody's; (v) certificates of
deposit or bankers' acceptances maturing within one year after such date
and issued or accepted by any Bank or by any commercial bank organized
under the laws of the United States of America or any state thereof or the
District of Columbia that (a) is at least "adequately capitalized" (as
defined in the regulations of its primary federal banking regulator) and
(b) has Tier 1 capital (as defined in such regulations) of not less than
$100,000,000; and (vi) shares of any money market mutual fund that (a) has
at least 95% of its assets invested continuously in the types of
investments referred to in clauses (ii) and (iii) above, (b) has net
assets of not less than $500,000,000, and (c) has the highest rating
obtainable from either S&P or Moody's.
"Loan" means an extension of credit by a Bank to the Company under
Article II, and may be a Base Rate Loan or an Offshore Rate Loan (each, a
"Type" of Loan).
"Loan Documents" means this Agreement, any Notes, the Collateral
Documents, the Fee Letters, any documents evidencing or relating to
Specified Swap Contracts, and all other documents delivered to any Agent
or any Bank in connection with the transactions contemplated by this
Agreement.
"Majority Banks" means, at any time, Banks then holding at least 51%
of the then aggregate unpaid principal amount of the Loans, or, if no such
principal amount is then outstanding, Banks then having at least 51% of
the Commitments, or, if the Commitments have been terminated and no Loans
are then outstanding, Banks then owed a Specified Swap Amount at least 51%
of the Aggregate Specified Swap Amount.
"Margin Stock" means "margin stock" as such term is defined in
Regulation G, T, U or X of the FRB.
"Material Adverse Effect" means (a) a material adverse change in, or
a material adverse effect upon, the operations, business, properties,
condition (financial or otherwise) or prospects of the Company; (b) a
material impairment of the ability of the Company, ECC or Falcon to
perform under any Loan Document and to avoid any Event of Default; or (c)
a material adverse effect upon (i) the legality, validity, binding effect
or enforceability against the Company, ECC or Falcon of any Loan Document,
or (ii) the perfection or priority of any Lien granted under any of the
Collateral Documents.
15
67
"Multiemployer Plan" means a "multiemployer plan", within the
meaning of Section 4001(a)(3) of ERISA, to which the Company or any ERISA
Affiliate makes, is making, or is obligated to make contributions or,
during the preceding three calendar years, has made, or been obligated to
make, contributions.
"▇▇▇▇▇▇▇▇▇ Family Trust" means any inter vivos or testamentary
created by ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ or his spouse.
"Net Proceeds" means, as to any Disposition by a Person, proceeds in
cash, checks or other cash equivalent financial instruments as and when
received by such Person, net of: (a) the direct costs relating to such
Disposition excluding amounts payable to such Person or any Affiliate of
such Person, (b) sale, use or other transaction taxes paid or payable by
such Person as a direct result thereof, and (c) amounts required to be
applied to repay principal, interest and prepayment premiums and penalties
on Indebtedness secured by a Lien on the asset which is the subject of
such Disposition. "Net Proceeds" shall also include proceeds paid on
account of any Event of Loss, net of (i) all money actually applied to
repair or reconstruct the damaged property or property affected by the
condemnation or taking, (ii) all of the costs and expenses reasonably
incurred in connection with the collection of such proceeds, award or
other payments, and (iii) any amounts retained by or paid to parties
having superior rights to such proceeds, awards or other payments.
"Note" means a promissory note executed by the Company in favor of a
Bank pursuant to subsection 2.02(b), in substantially the form of Exhibit
F.
"Notice of Borrowing" means a notice in substantially the form of
Exhibit A.
"Notice of Conversion/Continuation" means a notice in substantially
the form of Exhibit B.
"Obligations" means all advances, debts, liabilities, obligations,
covenants and duties arising under any Loan Document owing by the Company
to any Bank, any Agent, or any Indemnified Person, whether direct or
indirect (including those acquired by assignment), absolute or contingent,
due or to become due, now existing or hereafter arising.
16
68
"Offshore Rate" means, for any Interest Period, with respect to
Offshore Rate Loans comprising part of the same Borrowing, the rate of
interest per annum (rounded upward to the next 1/16th of 1%) determined by
the Administrative Agent as follows:
Offshore Rate = LIBOR
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means for any day for any Interest
Period the maximum reserve percentage (expressed as a decimal,
rounded upward to the next 1/100th of 1%) in effect on such day
(whether or not applicable to any Bank) under regulations issued
from time to time by the FRB for determining the maximum reserve
requirement (including any emergency, supplemental or other marginal
reserve requirement) with respect to Eurocurrency funding (currently
referred to as "Eurocurrency liabilities"); and
"LIBOR" means the rate of interest per annum determined by the
Administrative Agent to be the arithmetic mean (rounded upward to
the next 1/16th of 1%) of the rates of interest per annum notified
to the Administrative Agent by each Reference Bank as the rate of
interest at which dollar deposits in the approximate amount of the
amount of the Loan to be made or continued as, or converted into, an
Offshore Rate Loan by such Reference Bank and having a maturity
comparable to such Interest Period would be offered to major banks
in the London interbank market at their request at approximately
11:00 a.m. (London time) two Business Days prior to the commencement
of such Interest Period.
The Offshore Rate shall be adjusted automatically as to all
Offshore Rate Loans then outstanding as of the effective date of any
change in the Eurodollar Reserve Percentage.
"Offshore Rate Loan" means a Loan that bears interest based on the
Offshore Rate.
"Organization Documents" means, for any corporation, the certificate
or articles of incorporation, the bylaws, any certificate of determination
or instrument relating to the rights of preferred shareholders of such
corporation, any shareholder rights agreement, and all applicable
resolutions of the board of directors (or any committee thereof) of such
corporation.
17
69
"Other Taxes" means any present or future stamp, court or
documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or from the
execution, delivery, performance, enforcement or registration of, or
otherwise with respect to, this Agreement or any other Loan Documents.
"Participant" has the meaning specified in subsection 10.08(d).
"PBGC" means the Pension Benefit Guaranty Corporation, or any
Governmental Authority succeeding to any of its principal functions under
ERISA.
"Pension Plan" means a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA which the Company sponsors, maintains,
or to which it makes, is making, or is obligated to make contributions, or
in the case of a multiple employer plan (as described in Section 4064(a)
of ERISA) has made contributions at any time during the immediately
preceding five (5) plan years.
"Permitted Liens" has the meaning specified in Section 7.01.
"Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture or Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which the Company sponsors or maintains or to which the Company
makes, is making, or is obligated to make contributions and includes any
Pension Plan.
"Pledge Agreement" means the pledge agreement entered into by the
Company in favor of the Administrative Agent on behalf of the Banks,
substantially in the form of Exhibit L hereto, as it may be amended,
supplemented or otherwise modified from time to time.
"Pledged Collateral" has the meaning specified in the Pledge
Agreement, the ECC Pledge Agreement, the Falcon Pledge Agreement and the
FHGLP Pledge Agreement.
"Pro Forma Annualized EBITDA" means, for any Fiscal Quarter, (i) the
sum of (a) the sum of EBITDA for each of the Borrowing Enstar Partnerships
for such fiscal quarter plus (b) EBTDA for the Company for such fiscal
quarter,
18
70
multiplied by (ii) 4.
"Pro Rata Share" means, as to any Bank at any time, the percentage
equivalent (expressed as a decimal, rounded to the ninth decimal place) at
such time of such Bank's Commitment divided by the combined Commitments of
all Banks.
"Reference Banks" means BofA and Banque Paribas.
"Reportable Event" means, any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder, other than any such event
for which the 30-day notice requirement under ERISA has been waived in
regulations issued by the PBGC.
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or
of a Governmental Authority, in each case applicable to or binding upon
the Person or any of its property or to which the Person or any of its
property is subject.
"Responsible Officer" means the chief executive officer, the
president or the chief operating officer of the Manager of the Company, or
any other officer having substantially the same authority and
responsibility; or, with respect to compliance with financial covenants,
the chief financial officer, vice president-finance/corporate development
or the corporate controller of the Manager of the Company, or any other
officer having substantially the same authority and responsibility.
"SEC" means the Securities and Exchange Commission, or any
Governmental Authority succeeding to any of its principal functions.
"Security Agreement" means the security agreement entered into by
the Company in favor of the Documentation Agent on behalf of the Banks,
substantially in the form of Exhibit M hereto, as it may be amended,
supplemented or otherwise modified from time to time.
"Senior Debt" means all Indebtedness of the Company that is not in
any manner subordinated in right of payment or security in any respect to
the Loans.
"Solvent" means, as to any Person at any time, that (a) the fair
value of the property of such Person is greater than the amount of such
Person's liabilities (including disputed, contingent and unliquidated
liabilities) as such value is established and liabilities evaluated for
purposes
19
71
of Section 101(31) of the Bankruptcy Code and, in the alternative, for
purposes of the California Uniform Fraudulent Transfer Act; (b) the
present fair saleable value of the property of such Person is not less
than the amount that will be required to pay the probable liability of
such Person on its debts as they become absolute and matured; (c) such
Person is able to realize upon its property and pay its debts and other
liabilities (including disputed, contingent and unliquidated liabilities)
as they mature in the normal course of business; (d) such Person does not
intend to, and does not believe that it will, incur debts or liabilities
beyond such Person's ability to pay as such debts and liabilities mature;
and (e) such Person is not engaged in business or a transaction, and is
not about to engage in business or a transaction, for which such Person's
property would constitute unreasonably small capital.
"Specified Swap Amount" means, at any time, in respect of Specified
Swap Contracts to which any Swap Provider is party, the Swap Termination
Value relating thereto.
"Specified Swap Contract" means any Swap Contract made or entered
into at any time, or in effect at any time (whether heretofore or
hereafter), whether directly or indirectly, and whether as a result of
assignment or transfer or otherwise, between the Company and any Swap
Provider which Swap Contract is entered into in accordance with Section
7.17, is or was intended by the Company to have been entered into, in part
or entirely, for purposes of mitigating interest rate risk relating to any
Offshore Loan (which intent shall conclusively be deemed to exist if the
Company so represents to the Swap Provider in writing), and as to which
the final scheduled payment by the Company is not later than the
Termination Date.
"Subsidiary" of a Person means any corporation, association,
partnership, limited liability company, joint venture or other business
entity of which more than 50% of the voting stock, membership interests or
other equity interests (in the case of Persons other than corporations),
is owned or controlled directly or indirectly by the Person, or one or
more of the Subsidiaries of the Person, or a combination thereof. Unless
the context otherwise clearly requires, references herein to a
"Subsidiary" refer to a Subsidiary of the Company.
"Surety Instruments" means all letters of credit (including standby
and commercial), banker's acceptances, bank guaranties, shipside bonds,
surety bonds and similar instruments.
20
72
"Swap Contract" means any agreement, whether or not in writing,
relating to any transaction that is a rate swap, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap
or option, bond, note or ▇▇▇▇ option, interest rate option, forward
foreign exchange transaction, cap, collar or floor transaction, currency
swap, cross-currency rate swap, swaption, currency option or any other,
similar transaction (including any option to enter into any of the
foregoing) or any combination of the foregoing, and, unless the context
otherwise clearly requires, any master agreement relating to or governing
any or all of the foregoing.
"Swap Provider" means any Bank, or any Affiliate of any Bank, that
is at the time of determination party to a Swap Contract with the Company.
"Swap Termination Value" means, in respect of any one or more Swap
Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Contracts, (a) for any date on or
after the date such Swap Contracts have been closed out and termination
value(s) determined in accordance therewith, such termination value(s),
and (b) for any date prior to the date referenced in clause (a) the
amount(s) determined as the ▇▇▇▇-to-market value(s) for such Swap
Contracts, as determined by the Administrative Agent based upon one or
more mid-market or other readily available quotations provided by any
recognized dealer in such Swap Contracts (which may include any Bank.)
"Tangible Net Worth" means, at any time, (i) the total assets of the
Company which would be shown as assets on the balance sheet of the Company
as of such time prepared in accordance with GAAP minus (ii) the total
liabilities of the Company which would be shown as liabilities on the
balance sheet of the Company as of such time prepared in accordance with
GAAP minus (iii) the net book amount of all assets of the Company (after
deducting any reserves applicable thereto) which would be shown as
intangible assets on the balance sheet of the Company as of such time
prepared in accordance with GAAP.
"Taxes" means any and all present or future taxes, levies,
assessments, imposts, duties, deductions, fees, withholdings or similar
charges, and all liabilities with respect thereto, excluding, in the case
of each Bank and the Agent, respectively, taxes imposed on or measured by
its net income by the jurisdiction (or any political subdivision thereof)
under the laws of which such Bank or the Agent, as the case may be, is
organized or maintains a lending office.
21
73
"Termination Date" means the earlier to occur of:
(a) August 31, 2002; and
(b) the date on which the Commitments terminate in
accordance with the provisions of this Agreement.
"Total Debt" means, as at any date of determination, the aggregate
stated balance sheet amount of all Indebtedness of the Company determined
in accordance with GAAP.
"Total Leverage" means, at any time, the ratio of (i) Total Debt of
the Company to (ii) Pro Forma Annualized EBITDA.
"Type" has the meaning specified in the definition of "Loan."
"UCC" means the Uniform Commercial Code as in effect in the State of
California.
"Unfunded Pension Liability" means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of
that Plan's assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the
applicable plan year.
"United States" and "U.S." each means the United States of America.
1.02 Other Interpretive Provisions. (a) The meanings of defined terms are
equally applicable to the singular and plural forms of the defined terms.
(b) The words "hereof", "herein", "hereunder" and similar words
refer to this Agreement as a whole and not to any particular provision of this
Agreement; and subsection, Section, Schedule and Exhibit references are to this
Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other
writings, however evidenced.
(ii) The term "including" is not limiting and means
"including without limitation."
22
74
(iii) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and
including"; the words "to" and "until" each mean "to but excluding", and
the word "through" means "to and including."
(iv) The term "property" includes any kind of property or
asset, real, personal or mixed, tangible or intangible.
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document, and (ii) references to any statute or regulation
are to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting the statute or
regulation.
(e) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
(f) This Agreement and other Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms. Unless otherwise expressly
provided, any reference to any action of an Agent or the Banks by way of
consent, approval or waiver shall be deemed modified by the phrase "in its/their
sole discretion."
(g) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Administrative
Agent, the Documentation Agent, the Company and the other parties, and are the
products of all parties. Accordingly, they shall not be construed against the
Banks, the Administrative Agent or the Documentation Agent merely because of the
Administrative Agent's, the Documentation Agent's or the Banks' involvement in
their preparation.
1.03 Accounting Principles. (a) Unless the context otherwise clearly
requires, all accounting terms not expressly defined herein shall be construed,
and all financial computations required under this Agreement shall be made, in
accordance with GAAP, consistently applied.
(b) References herein to "fiscal year" and "fiscal quarter" refer
to such fiscal periods of the Company.
23
75
ARTICLE II
THE CREDIT
2.01 Amounts and Terms of Commitments. Each Bank severally agrees, on the
terms and conditions set forth herein, to make loans to the Company from time to
time on any Business Day during the period from the Closing Date to the
Termination Date, in an aggregate amount not to exceed at any time outstanding
the amount set forth on Schedule 2.01 (such amount as the same may be reduced
under Section 2.05 or as a result of one or more assignments under Section
10.08, the Bank's "Commitment"); provided, however, that, after giving effect to
any Borrowing, the aggregate principal amount of all outstanding Loans shall not
at any time exceed the combined Commitments. Within the limits of each Bank's
Commitment, and subject to the other terms and conditions hereof, the Company
may borrow under this Section 2.01, prepay under Section 2.06 and reborrow under
this Section 2.01.
2.02 Loan Accounts. (a) The Loans made by each Bank shall be evidenced by
one or more loan accounts or records maintained by such Bank in the ordinary
course of business. The loan accounts or records maintained by the
Administrative Agent and each Bank shall be conclusive absent manifest error of
the amount of the Loans made by the Banks to the Company and the interest and
payments thereon. Any failure so to record or any error in doing so shall not,
however, limit or otherwise affect the obligation of the Company hereunder to
pay any amount owing with respect to the Loans.
(b) Upon the request of any Bank made through the Administrative
Agent, the Loans made by such Bank may be evidenced by one or more Notes,
instead of or in addition to loan accounts. Each such Bank shall endorse on the
schedules annexed to its Note(s) the date, amount and maturity of each Loan made
by it and the amount of each payment of principal made by the Company with
respect thereto. Each such Bank is irrevocably authorized by the Company to
endorse its Note(s) and each Bank's record shall be conclusive absent manifest
error; provided, however, that the failure of a Bank to make, or an error in
making, a notation thereon with respect to any Loan shall not limit or otherwise
affect the obligations of the Company hereunder or under any such Note to such
Bank.
2.03 Procedure for Borrowing. (a) Each Borrowing shall be made upon the
Company's irrevocable written notice delivered to the Administrative Agent in
the form of a Notice of Borrowing (which notice must be received by the
Administrative Agent prior
24
76
to 11:00 a.m. (Los Angeles time) (i) three Business Days prior to the requested
Borrowing Date, in the case of Offshore Rate Loans and (ii) one Business Day
prior to the requested Borrowing Date, in the case of Base Rate Loans,
specifying:
(A) the amount of the Borrowing, which shall be in an
aggregate minimum amount of $500,000 or any multiple of $100,000 in
excess thereof;
(B) the requested Borrowing Date, which shall be a Business
Day;
(C) the Type of Loans comprising the Borrowing; and
(D) the duration of the Interest Period applicable to such
Loans included in such notice. If the Notice of Borrowing fails to
specify the duration of the Interest Period for any Borrowing
comprised of Offshore Rate Loans, such Interest Period shall be
three months.
(b) The Administrative Agent will promptly notify each Bank of its
receipt of any Notice of Borrowing and of the amount of such Bank's Pro Rata
Share of that Borrowing.
(c) Each Bank will make the amount of its Pro Rata Share of each
Borrowing available to the Administrative Agent for the account of the Company
at the Administrative Agent's Payment Office by 11:00 a.m. (Los Angeles time) on
the Borrowing Date requested by the Company in funds immediately available to
the Administrative Agent. The proceeds of all such Loans will then be made
available to the Company by the Administrative Agent by wire transfer in
accordance with written instructions provided to the Administrative Agent by the
Company of like funds as received by the Administrative Agent.
(d) After giving effect to any Borrowing, unless the
Administrative Agent shall otherwise consent, there may not be more than six
different Interest Periods in effect.
2.04 Conversion and Continuation Elections. (a) The Company may, upon
irrevocable written notice to the Administrative Agent in accordance with
subsection 2.04(b):
(i) elect, as of any Business Day, in the case of Base Rate
Loans, or as of the last day of the applicable Interest Period, in the
case of Offshore Rate Loans, to convert any such Loans (or any part
thereof in an amount not less than $500,000, or that is in an integral
multiple of $100,000 in excess thereof) into Loans of any other Type; or
25
77
(ii) elect, as of the last day of the applicable Interest
Period, to continue any Loans having Interest Periods expiring on such day
(or any part thereof in an amount not less than $500,000, or that is in an
integral multiple of $100,000 in excess thereof);
provided, that if at any time the aggregate amount of Offshore Rate Loans in
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than $500,000, such Offshore Rate Loans shall
automatically convert into Base Rate Loans, and on and after such date the right
of the Company to continue such Loans as, and convert such Loans into, Offshore
Rate Loans shall terminate.
(b) The Company shall deliver a Notice of Conversion/Continuation
to be received by the Administrative Agent not later than 11:00 a.m. (Los
Angeles time) at least (i) four Business Days in advance of the
Conversion/Continuation Date, if the Loans are to be converted into or continued
as Offshore Rate Loans and (ii) one Business Day in advance of the
Conversion/Continuation Date, if the Loans are to be converted into Base Rate
Loans, specifying:
(A) the proposed Conversion/Continuation Date;
(B) the aggregate amount of Loans to be converted or
continued;
(C) the Type of Loans resulting from the proposed conversion
or continuation; and
(D) other than in the case of conversions into Base Rate
Loans, the duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable to
Offshore Rate Loans, the Company has failed to select timely a new Interest
Period to be applicable to such Offshore Rate Loans, or if any Default or Event
of Default then exists, the Company shall be deemed to have elected to convert
such Offshore Rate Loans into Base Rate Loans effective as of the expiration
date of such Interest Period.
(d) The Administrative Agent will promptly notify each Bank of its
receipt of a Notice of Conversion/Continuation, or, if no timely notice is
provided by the Company, the Administrative Agent will promptly notify each Bank
of the details of any automatic conversion. All conversions and continuations
shall be made ratably according to the respective outstanding principal amounts
of the Loans with respect to which
26
78
the notice was given held by each Bank.
(e) Unless the Majority Banks otherwise consent, during the
existence of a Default or Event of Default, the Company may not elect to have a
Loan converted into or continued as an Offshore Rate Loan.
(f) After giving effect to any conversion or continuation of
Loans, unless the Administrative Agent shall otherwise consent, there may not be
more than six different Interest Periods in effect.
2.05 Voluntary Termination or Reduction of Commitments. The Company may,
upon not less than five Business Days' prior notice to the Agents, terminate the
Commitments, or permanently reduce the Commitments by an aggregate minimum
amount of $100,000 or any multiple of $50,000 in excess thereof; unless, after
giving effect thereto and to any prepayments of Loans made on the effective date
thereof, the then-outstanding principal amount of the Loans would exceed the
amount of the combined Commitments then in effect. Once reduced in accordance
with this Section, the Commitments may not be increased. Any reduction of the
Commitments shall be applied to each Bank according to its Pro Rata Share. All
accrued commitment fees to, but not including the effective date of any
reduction or termination of Commitments, shall be paid on the effective date of
such reduction or termination.
2.06 Optional Prepayments. Subject to Section 3.04, the Company may, at
any time or from time to time, upon not less than one Business Days' irrevocable
notice to the Administrative Agent, ratably prepay Loans in whole or in part, in
minimum amounts of $100,000 or any multiple of $50,000 in excess thereof. Such
notice of prepayment shall specify the date and amount of such prepayment and
the Type(s) of Loans to be prepaid. The Administrative Agent will promptly
notify each Bank of its receipt of any such notice, and of such Bank's Pro Rata
Share of such prepayment. If such notice is given by the Company, the Company
shall make such prepayment and the payment amount specified in such notice shall
be due and payable on the date specified therein, and, in the case of Offshore
Rate Loans, together with accrued interest to each such date on the amount
prepaid and any amounts required pursuant to Section 3.04.
2.07 Mandatory Prepayments of Loans; Mandatory Commitment Reductions. (a)
Asset Dispositions. If the Company or any Borrowing Enstar Partnership shall at
any time or from time to time make or agree to make a Disposition, or shall
suffer an Event of Loss, then (i) the Company shall promptly notify the Agents
of such proposed Disposition or Event of Loss (including the amount of the
estimated Net Proceeds to be received by the
27
79
Company or such Borrowing Enstar Partnership in respect thereof) and (ii)
promptly upon, and in no event later than three days after, receipt by the
Company or the Borrowing Enstar Partnership of the Net Proceeds of such
Disposition or Event of Loss, the Company shall prepay Loans in an aggregate
amount equal to the amount of such Net Proceeds, and the Commitments shall
thereupon be permanently reduced by the amount of such prepayment.
(b) Repayment of Partnership Loans. Promptly upon the payment
(whether by optional or mandatory redemptions or prepayments, scheduled
prepayments, acceleration or otherwise) of any Enstar Partnership Loan, and in
no event later than one day thereafter, the Company shall prepay Loans in an
amount equal to the amount of the Enstar Partnership Loan so paid, and in the
case of any such prepayment (other than in connection with an optional
prepayment of an Enstar Partnership Loan) the Commitments shall thereupon be
permanently reduced by the amount of such prepayment.
(c) Debt Issuance. If the Company or any Borrowing Enstar
Partnership enters into any transaction pursuant to which the Company or any
Borrowing Enstar Partnership incurs Indebtedness, the Company shall promptly
notify the Agents of the amount of such Indebtedness. Promptly upon, and in no
event later than one day after, receipt by the Company of any amounts in respect
of such Indebtedness, the Company shall prepay the Loans in an aggregate amount
equal to the amount of such Indebtedness, and the Commitments shall thereupon be
permanently reduced by the amount of such prepayment.
(d) Prepayment Due to Reduction of Commitments. The Company shall
from time to time prepay the Loans to the extent necessary so that the aggregate
outstanding amount of the Loans shall not at any time exceed the Commitments
then in effect.
(e) General. Any prepayments pursuant to this Section 2.07 shall
be applied first to any Base Rate Loans then outstanding and then to Offshore
Rate Loans with the shortest Interest Periods remaining. The Company shall pay,
together with each prepayment under this Section 2.07, accrued interest on the
amount prepaid and any amounts required pursuant to Section 3.04.
(f) Reduction of Commitment. Upon the making of any mandatory
prepayment under this Section 2.07 (other than in connection with an optional
prepayment of an Enstar Partnership Loan), the Commitment of each Bank shall
automatically be reduced by an amount equal to such Bank's ratable share of the
aggregate of principal repaid, effective as of the earlier of the date that such
prepayment is made or the date by which such
28
80
prepayment is due and payable hereunder. On January 31, 2002, the Commitment of
each Bank shall automatically be reduced by an amount equal to such Bank's
ratable share of $5,000,000. All accrued commitment fees to, but not including
the effective date of any reduction or termination of Commitments, shall be paid
on the effective date of such reduction or termination.
2.08 Repayment. The Company shall repay to the Banks on the Termination
Date the aggregate principal amount of Loans outstanding on such date together
with all other Obligations under the Loan Documents.
2.09 Interest. (a) Each Loan shall bear interest on the outstanding
principal amount thereof from the applicable Borrowing Date at a rate per annum
equal to the Offshore Rate or the Base Rate, as the case may be (and subject to
the Company's right to convert to other Types of Loans under Section 2.04), plus
the Applicable Margin.
(b) Interest on each Loan shall be paid in arrears on each
Interest Payment Date. Interest shall also be paid on the date of any prepayment
of Loans under Section 2.07 (or Section 2.06 in the case of Offshore Rate Loans)
for the portion of the Loans so prepaid and upon payment (including prepayment)
in full thereof and, during the existence of any Event of Default, interest
shall be paid on demand of the Administrative Agent at the request or with the
consent of the Majority Banks.
(c) Notwithstanding subsection (a) of this Section, while any
Event of Default exists or after acceleration, the Company shall pay interest
(after as well as before entry of judgment thereon to the extent permitted by
law) on the principal amount of all outstanding Obligations, at a rate per annum
which is determined by adding 2% per annum to the Applicable Margin then in
effect for such Loans and, in the case of Obligations not subject to an
Applicable Margin, at a rate per annum equal to the Base Rate plus 2%; provided,
however, that, on and after the expiration of any Interest Period applicable to
any Offshore Rate Loan outstanding on the date of occurrence of such Event of
Default or acceleration, the principal amount of such Loan shall, during the
continuation of such Event of Default or after acceleration, bear interest at a
rate per annum equal to the Base Rate plus 2%.
(d) Anything herein to the contrary notwithstanding, the
obligations of the Company to any Bank hereunder shall be subject to the
limitation that payments of interest shall not be required for any period for
which interest is computed hereunder, to the extent (but only to the extent)
that contracting for or receiving such payment by such Bank would be contrary to
the provisions of any law applicable to such Bank
29
81
limiting the highest rate of interest that may be lawfully contracted for,
charged or received by such Bank, and in such event the Company shall pay such
Bank interest at the highest rate permitted by applicable law.
2.10 Fees. (a) Arrangement, Agency Fees. The Company shall pay a facility
fee and an agency fee to the Administrative Agent for the Administrative Agent's
own account, and shall pay a facility fee and an agency fee to the Documentation
Agent for the Documentation Agent's own account, as required by the letter
agreement ("Fee Letter") between the Company, the Administrative Agent and the
Documentation Agent dated July 29, 1997 and accepted and agreed by Falcon
Holding Group, L.P. on August 4, 1997.
(b) Commitment Fees. The Company shall pay to the Administrative
Agent for the account of each Bank a commitment fee on the average daily unused
portion of such Bank's Commitment, computed on a quarterly basis in arrears on
the last Business Day of each calendar quarter based upon the daily utilization
for that quarter as calculated by the Administrative Agent, equal to 0.50
percent per annum. Such commitment fee shall accrue from the Closing Date to the
Termination Date and shall be due and payable quarterly in arrears on the last
Business Day of each March, June, September and December, commencing on
September 30, 1997, through the Termination Date, with the final payment to be
made on the Termination Date; provided that, in connection with any reduction or
termination of Commitments under Section 2.05 or Section 2.07, the accrued
commitment fee calculated for the period ending on such date shall also be paid
on the date of such reduction or termination, with the following quarterly
payment being calculated on the basis of the period from such reduction or
termination date to such quarterly payment date. The commitment fees provided in
this subsection shall accrue at all times after the above-mentioned commencement
date, including at any time during which one or more conditions in Article IV
are not met.
2.11 Computation of Fees and Interest. (a) All computations of interest
for Base Rate Loans when the Base Rate is determined by Banque Paribas' "base
rate" shall be made on the basis of a year of 365 or 366 days, as the case may
be, and actual days elapsed. All other computations of fees and interest shall
be made on the basis of a 360-day year and actual days elapsed (which results in
more interest being paid than if computed on the basis of a 365-day year).
Interest and fees shall accrue during each period during which interest or such
fees are computed from the first day thereof to the last day thereof.
(b) Each determination of an interest rate by the
30
82
Administrative Agent shall be conclusive and binding on the Company and the
Banks in the absence of manifest error.
(c) If any Reference Bank's Commitment terminates (other than on
termination of all the Commitments), or for any reason whatsoever the Reference
Bank ceases to be a Bank hereunder, that Reference Bank shall thereupon cease to
be a Reference Bank, and the Offshore Rate shall be determined on the basis of
the rates as notified by the remaining Reference Banks.
(d) Each Reference Bank shall use its best efforts to furnish
quotations of rates to the Administrative Agent as contemplated hereby. If any
of the Reference Banks fails to supply such rates to the Administrative Agent
upon its request, the rate of interest shall be determined on the basis of the
quotations of the remaining Reference Bank(s).
2.12 Payments by the Company. (a) All payments to be made by the Company
shall be made without set-off, recoupment or counterclaim. Except as otherwise
expressly provided herein, all payments by the Company shall be made to the
Administrative Agent for the account of the Banks at the Administrative Agent's
Payment Office, and shall be made in dollars and in immediately available funds,
no later than the close of business (Los Angeles time) on the date specified
herein; provided that the Company shall at all times provide the Administrative
Agent at least one Business Day's prior written notice of any such payment. The
Administrative Agent will promptly distribute to each Bank its Pro Rata Share
(or other applicable share as expressly provided herein) of such payment in like
funds as received. Any payment received by the Administrative Agent later than
10:00 a.m. (Los Angeles time) shall be deemed to have been received on the
following Business Day and any applicable interest or fee shall continue to
accrue.
(b) Subject to the provisions set forth in the definition of
"Interest Period" herein, whenever any payment is due on a day other than a
Business Day, such payment shall be made on the following Business Day, and such
extension of time shall in such case be included in the computation of interest
or fees, as the case may be.
(c) Unless the Administrative Agent receives notice from the
Company prior to the date on which any payment is due to the Banks that the
Company will not make such payment in full as and when required, the
Administrative Agent may assume that the Company has made such payment in full
to the Administrative Agent on such date in immediately available funds and the
Administrative Agent may (but shall not be so required), in reliance upon such
assumption, distribute to each Bank on such due date an amount equal to the
amount then due such Bank. If
31
83
and to the extent the Company has not made such payment in full to the
Administrative Agent, each Bank shall repay to the Administrative Agent on
demand such amount distributed to such Bank, together with interest thereon at
the Federal Funds Rate for each day from the date such amount is distributed to
such Bank until the date repaid.
2.13 Payments by the Banks to the Administrative Agent. (a) Unless the
Administrative Agent receives notice from a Bank on or prior to the Closing Date
or, with respect to any Borrowing after the Closing Date, at least one Business
Day prior to the date of such Borrowing, that such Bank will not make available
as and when required hereunder to the Administrative Agent for the account of
the Company the amount of that Bank's Pro Rata Share of the Borrowing, the
Administrative Agent may assume that each Bank has made such amount available to
the Administrative Agent in immediately available funds on the Borrowing Date
and the Administrative Agent may (but shall not be so required), in reliance
upon such assumption, make available to the Company on such date a corresponding
amount. If and to the extent any Bank shall not have made its full amount
available to the Administrative Agent in immediately available funds and the
Administrative Agent in such circumstances has made available to the Company
such amount, that Bank shall on the Business Day following such Borrowing Date
make such amount available to the Administrative Agent, together with interest
at the Federal Funds Rate for each day during such period. A notice of the
Administrative Agent submitted to any Bank with respect to amounts owing under
this subsection (a) shall be conclusive, absent manifest error. If such amount
is so made available, such payment to the Administrative Agent shall constitute
such Bank's Loan on the date of Borrowing for all purposes of this Agreement. If
such amount is not made available to the Administrative Agent on the Business
Day following the Borrowing Date, the Administrative Agent will notify the
Company of such failure to fund and, upon demand by the Administrative Agent,
the Company shall pay such amount to the Administrative Agent for the
Administrative Agent's account, together with interest thereon for each day
elapsed since the date of such Borrowing, at a rate per annum equal to the
interest rate applicable at the time to the Loans comprising such Borrowing.
(b) The failure of any Bank to make any Loan on any Borrowing Date
shall not relieve any other Bank of any obligation hereunder to make a Loan on
such Borrowing Date, but no Bank shall be responsible for the failure of any
other Bank to make the Loan to be made by such other Bank on any Borrowing Date.
2.14 Sharing of Payments, Etc. If, other than as expressly
32
84
provided elsewhere herein, any Bank or Swap Provider shall obtain on account of
the Obligations in its favor any payment (whether voluntary, involuntary,
through the exercise of any right of set-off, or otherwise) in excess of its
ratable share (or other share contemplated hereunder), such Bank shall, and each
Bank that is an Affiliate of such Swap Provider shall cause such Swap Provider
to, immediately (a) notify the Agents of such fact, and (b) purchase from the
other Banks and Swap Providers such participations in the Loans made by them and
the Specified Swap Amounts owing to them as shall be necessary to cause such
purchasing Bank and Swap Provider to share the excess payment pro rata with each
of them; provided, however, that if all or any portion of such excess payment is
thereafter recovered from the purchasing Bank, such purchase shall to that
extent be rescinded and each other Bank and Swap Provider shall repay to the
purchasing Bank the purchase price paid therefor, together with an amount equal
to such paying Bank's and Swap Provider's ratable share (according to the
proportion of (i) the amount of such paying Bank's and Swap Provider's required
repayment to (ii) the total amount so recovered from the purchasing Bank) of any
interest or other amount paid or payable by the purchasing Bank in respect of
the total amount so recovered. The Company agrees that any Bank so purchasing a
participation from another Bank or Swap Provider may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
set-off, but subject to Section 10.10) with respect to such participation as
fully as if such Bank were the direct creditor of the Company in the amount of
such participation. The Administrative Agent will keep records (which shall be
conclusive and binding in the absence of manifest error) of participations
purchased under this Section and will in each case notify the Banks following
any such purchases or repayments.
2.15 Security. All obligations of the Company under this Agreement, the
Notes and all other Loan Documents shall be secured in accordance with the
Collateral Documents.
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 Taxes. (a) Any and all payments by the Company to each Bank or
either of the Agents under this Agreement and any other Loan Document shall be
made free and clear of, and without deduction or withholding for, any Taxes. In
addition, the Company shall pay all Other Taxes.
(b) If the Company shall be required by law to deduct
33
85
or withhold any Taxes, Other Taxes or Further Taxes from or in respect of any
sum payable hereunder to any Bank or either of the Agents, then:
(i) the sum payable shall be increased as necessary so that,
after making all required deductions and withholdings (including
deductions and withholdings applicable to additional sums payable under
this Section), such Bank or such Agent, as the case may be, receives and
retains an amount equal to the sum it would have received and retained had
no such deductions or withholdings been made;
(ii) the Company shall make such deductions and withholdings;
(iii) the Company shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in accordance
with applicable law; and
(iv) the Company shall also pay to each Bank or the
Administrative Agent for the account of such Bank, at the time interest is
paid, Further Taxes in the amount that the respective Bank specifies as
necessary to preserve the after-tax yield the Bank would have received if
such Taxes, Other Taxes or Further Taxes had not been imposed.
(c) The Company agrees to indemnify and hold harmless each Bank
and each of the Agents for the full amount of (i) Taxes, (ii) Other Taxes, and
(iii) Further Taxes in the amount that the respective Bank specifies as
necessary to preserve the after-tax yield the Bank would have received if such
Taxes, Other Taxes or Further Taxes had not been imposed, and any liability
(including penalties, interest, additions to tax and expenses) arising therefrom
or with respect thereto, whether or not such Taxes, Other Taxes or Further Taxes
were correctly or legally asserted. Payment under this indemnification shall be
made within 30 days after the date the Bank or such Agent makes written demand
therefor.
(d) Within 30 days after the date of any payment by the Company of
Taxes, Other Taxes or Further Taxes, the Company shall furnish to each Bank or
the Agents the original or a certified copy of a receipt evidencing payment
thereof, or other evidence of payment satisfactory to such Bank or the Agents.
(e) If the Company is required to pay any amount to any Bank or
any Agent pursuant to subsection (b) or (c) of this Section, then such Bank
shall use reasonable efforts (consistent with legal and regulatory restrictions)
to change the jurisdiction of its Lending Office so as to eliminate any such
34
86
additional payment by the Company which may thereafter accrue, if such change in
the sole judgment of such Bank is not otherwise disadvantageous to such Bank.
(f) Nothing contained in this Section 3.01 shall override any term
or provision of any Specified Swap Contract regarding withholding taxes relating
to Swap Contracts.
3.02 Illegality. (a) If any Bank determines that the introduction of any
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has asserted
that it is unlawful, for any Bank or its applicable Lending Office to make
Offshore Rate Loans, then, on notice thereof by the Bank to the Company through
the Administrative Agent, any obligation of that Bank to make Offshore Rate
Loans shall be suspended until the Bank notifies the Agents and the Company that
the circumstances giving rise to such determination no longer exist.
(b) If a Bank determines that it is unlawful to maintain any
Offshore Rate Loan, the Company shall, upon its receipt of notice of such fact
and demand from such Bank (with a copy to the Agents), prepay in full such
Offshore Rate Loans of that Bank then outstanding, together with interest
accrued thereon and amounts required under Section 3.04, either on the last day
of the Interest Period thereof, if the Bank may lawfully continue to maintain
such Offshore Rate Loans to such day, or immediately, if the Bank may not
lawfully continue to maintain such Offshore Rate Loan. If the Company is
required to so prepay any Offshore Rate Loan, then concurrently with such
prepayment, the Company shall borrow from the affected Bank, in the amount of
such repayment, a Base Rate Loan.
(c) If the obligation of any Bank to make or maintain Offshore
Rate Loans has been so terminated or suspended, the Company may elect, by giving
notice to the Bank through the Administrative Agent that all Loans which would
otherwise be made by the Bank as Offshore Rate Loans shall be instead Base Rate
Loans.
3.03 Increased Costs and Reduction of Return. (a) If any Bank determines
that, due to either (i) the introduction of or any change (other than any change
by way of imposition of or increase in reserve requirements included in the
calculation of the Offshore Rate) in or in the interpretation of any law or
regulation or (ii) the compliance by that Bank with any guideline or request
from any central bank or other Governmental Authority (whether or not having the
force of law), there shall be any increase in the cost to such Bank of agreeing
to make or making, funding or maintaining any Offshore Rate Loans, then the
35
87
Company shall be liable for, and shall from time to time, upon demand (with a
copy of such demand to be sent to the Agents), pay to the Administrative Agent
for the account of such Bank, additional amounts as are sufficient to compensate
such Bank for such increased costs.
(b) If any Bank shall have determined that (i) the introduction of
any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy
Regulation, (iii) any change in the interpretation or administration of any
Capital Adequacy Regulation by any central bank or other Governmental Authority
charged with the interpretation or administration thereof, or (iv) compliance by
the Bank (or its Lending Office) or any corporation controlling the Bank with
any Capital Adequacy Regulation, affects or would affect the amount of capital
required or expected to be maintained by the Bank or any corporation controlling
the Bank and (taking into consideration such Bank's or such corporation's
policies with respect to capital adequacy and such Bank's desired return on
capital) determines that the amount of such capital is increased as a
consequence of its Commitment, loans, credits or obligations under this
Agreement, then, upon demand of such Bank to the Company through the
Administrative Agent, the Company shall pay to the Bank, from time to time as
specified by the Bank, additional amounts sufficient to compensate the Bank for
such increase.
3.04 Funding Losses. The Company shall reimburse each Bank and hold each
Bank harmless from any loss or expense which the Bank may sustain or incur as a
consequence of:
(a) the failure of the Company to make on a timely basis any
payment of principal of any Offshore Rate Loan;
(b) subject to Section 3.05, the failure of the Company to borrow,
continue or convert a Loan after the Company has given (or is deemed to have
given) a Notice of Borrowing or a Notice of Conversion/ Continuation;
(c) the failure of the Company to make any prepayment in
accordance with any notice delivered under Section 2.06;
(d) the prepayment (including pursuant to Section 2.07) or other
payment (including after acceleration thereof) of an Offshore Rate Loan on a day
that is not the last day of the relevant Interest Period; or
(e) the automatic conversion under Section 2.04 of any Offshore
Rate Loan to a Base Rate Loan on a day that is not the last day of the relevant
Interest Period;
36
88
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its Offshore Rate Loans or from fees payable
to terminate the deposits from which such funds were obtained. For purposes of
calculating amounts payable by the Company to the Banks under this Section and
under subsection 3.03(a), each Offshore Rate Loan made by a Bank (and each
related reserve, special deposit or similar requirement) shall be conclusively
deemed to have been funded at the LIBOR used in determining the Offshore Rate
for such Offshore Rate Loan by a matching deposit or other borrowing in the
interbank eurodollar market for a comparable amount and for a comparable period,
whether or not such Offshore Rate Loan is in fact so funded.
3.05 Inability to Determine Rates. If any Reference Bank determines that
for any reason adequate and reasonable means do not exist for determining the
Offshore Rate for any requested Interest Period with respect to a proposed
Offshore Rate Loan, or that the Offshore Rate applicable pursuant to subsection
2.09(a) for any requested Interest Period with respect to a proposed Offshore
Rate Loan does not adequately and fairly reflect the cost to such Bank of
funding such Loan, the Administrative Agent will promptly so notify the Company
and each Bank. Thereafter, the obligation of the Banks to make or maintain
Offshore Rate Loans hereunder shall be suspended until the Administrative Agent
upon the instruction of the Majority Banks revokes such notice in writing. Upon
receipt of such notice, the Company may revoke any Notice of Borrowing or Notice
of Conversion/Continuation then submitted by it. If the Company does not revoke
such Notice, the Banks shall make, convert or continue the Loans, as proposed by
the Company, in the amount specified in the applicable notice submitted by the
Company, but such Loans shall be made, converted or continued as Base Rate Loans
instead of Offshore Rate Loans.
3.06 Survival. The agreements and obligations of the Company in this
Article III shall survive the payment of all other Obligations.
3.07 Substitution of Banks. Upon the receipt by the Company from any Bank
(an "Affected Bank") of a claim for compensation under Section 3.01, Section
3.02 or Section 3.03, the Company may: (i) request the Affected Bank to use its
best efforts to obtain a replacement bank or financial institution satisfactory
to the Company and to the Agents (or the other Agent of the Affected Bank is
also an Agent) (a "Replacement Bank") to acquire and assume all or a ratable
part of all of such Affected Bank's Loans and Commitment, and if such Affected
Bank or any Affiliate thereof is a Swap Provider, all Specified Swap Contracts
of such Affected Bank and Affiliate; (ii) request one more of the other Banks to
acquire and assume all or part of
37
89
such Affected Bank's Loans and Commitment; or (iii) designate a Replacement
Bank. Any such designation of a Replacement Bank under clause (i) or (iii) shall
be subject to the prior written consent of the Agents (or the other Agent if the
Affected Bank is also an Agent), which consent shall not be unreasonably
withheld.
ARTICLE IV
CONDITIONS PRECEDENT
4.01 Conditions of Initial Loans. The obligation of each Bank to make its
initial Loan hereunder is subject to the following conditions:
(a) the Agents shall have received on or before the Closing Date
all of the following, in form and substance satisfactory to each Agent and each
Bank, and in sufficient copies for each Bank:
(i) Credit Agreement and Notes. This Agreement and the Notes
executed by each party thereto;
(ii) Resolutions; Incumbency. (1) Copies of the resolutions
of the Members of Company, the board of directors of ECC and the partners
of Falcon authorizing the transactions contemplated hereby and by the Loan
Documents, certified as of the Closing Date by the Secretary or an
Assistant Secretary of such Person; and
(2) A certificate of the Secretary or Assistant
Secretary of each of the Company, ECC and Falcon certifying the names and
true signatures of the officers of the Company, ECC or Falcon authorized
to execute, deliver and perform, as applicable, this Agreement, and all
other Loan Documents to be delivered by it hereunder;
(iii) Organization Documents; Good Standing. Each of the
following documents:
(1) the certificate of formation, certificate of
limited partnership, limited liability company agreement, partnership
agreement, articles or certificate of incorporation and the bylaws, as
applicable, of each of the Company, ECC and Falcon as in effect on the
Closing Date, certified by the Authorized Officer of the Company, ECC or
Falcon as of the Closing Date; and
(2) a good standing and tax good standing (or similar)
certificate (to the extent such types of
38
90
certificates are available from the applicable jurisdiction) for the
Company, ECC and Falcon from the Secretary of State (or similar,
applicable Governmental Authority) of its state of incorporation and each
state where the Company or ECC is qualified to do business as a foreign
corporation as of a recent date, together with a bring-down certificate by
facsimile, dated the Closing Date;
(iv) Legal Opinions. An opinion of Weinstein, Boldt, Racine,
Halfhide & Camel, counsel to the Company and addressed to each Agent and
the Banks, substantially in the form of Exhibit D;
(v) Payment of Fees. Evidence of payment by the Company of
all accrued and unpaid fees, costs and expenses to the extent then due and
payable on the Closing Date, together with Attorney Costs of the Agents to
the extent invoiced prior to or on the Closing Date; including any such
costs, fees and expenses arising under or referenced in Sections 2.10 and
10.04;
(vi) Collateral Documents. The Security Agreement, the Pledge
Agreement, the ECC Security Agreement, the ECC Pledge Agreement, the
Falcon Pledge Agreement and the FHGLP Pledge Agreement, each executed by
the Company, ECC, Falcon and/or Falcon Holding Group, L.P., as the case
may be, in appropriate form for recording, where necessary, together with:
(1) acknowledgment copies of all UCC-l financing
statements filed, registered or recorded to perfect the security interests
of the Documentation Agent for the benefit of the Banks, or other evidence
satisfactory to the Agents that there has been filed, registered or
recorded all financing statements and other filings, registrations and
recordings necessary and advisable to perfect the Liens of the
Documentation Agent for the benefit of the Banks in accordance with
applicable law;
(2) written advice relating to such Lien and judgment
searches as either of the Agents shall have requested, and such
termination statements or other documents as may be necessary to confirm
that the Collateral is subject to no other Liens in favor of any Persons
(other than Permitted Liens);
(3) all certificates and instruments representing the
Pledged Collateral, transfer powers executed in blank with signatures
guaranteed as either of the Agents or the Banks may specify;
(4) evidence that all other actions necessary or, in
the opinion of either of the Agents or the Banks,
39
91
desirable to perfect and protect the first priority security interest
created by the Collateral Documents have been taken;
(5) funds sufficient to pay any filing or recording
tax or fee in connection with any and all UCC-1 financing statements;
(6) evidence that all other actions necessary or, in
the opinion of either of the Agents or the Banks, desirable to perfect and
protect the first priority Lien created by the Collateral Documents, and
to enhance the Documentation Agent's ability to preserve and protect its
interests in and access to the Collateral, have been taken;
(vii) Insurance Policies. Standard lenders' payable
endorsements with respect to the insurance policies or other instruments
or documents evidencing insurance coverage on the properties of the
Company in accordance with Section 6.06;
(viii) Certificate. A certificate signed by a Responsible
Officer, dated as of the Closing Date, stating that:
(1) the representations and warranties contained in
Article V are true and correct on and as of such date, as though made on
and as of such date;
(2) no Default or Event of Default exists or would
result from the initial Borrowing; and
(3) there has occurred since June 30, 1997, no event
or circumstance that has resulted or could reasonably be expected to
result in a Material Adverse Effect; and
(ix) Other Documents. Such other approvals, opinions,
documents or materials as either of the Agents or any Bank may request.
(b) On or before the Closing Date Falcon Holding Group, L.P. shall
have made a capital contribution to the Company in cash in an amount not less
than $250,000.
(c) On or before the Closing Date ECC shall have assigned to the
Company deferred management fees owed to ECC by the Enstar Partnerships in an
amount at least equal to $1,000,000 and such Enstar Partnerships shall have
agreed to pay such amount to the Company on terms satisfactory to the Agents.
(d) Each of the Agents shall have completed their due diligence
review of the Company, its Subsidiaries, Falcon Holding Group, L.P., ECC, Falcon
and the Enstar Partnerships to
40
92
such Agent's satisfaction, and such review shall have provided each of the
Agents with results and information which, in their sole opinion, are
satisfactory to making the Loans and entering into this Agreement and
consummating the transaction contemplated herein.
(e) On or before the Closing Date, the partnership agreement for
Enstar Income/Growth Program Five-A shall have been amended, in form and
substance satisfactory to the Agents, to clarify the definition of "Permanent
Financing" set forth therein, and the Agents shall have received a legal opinion
from Weinstein, Boldt, Racine, Halfhide & Camel, in form and substance
satisfactory to the Agents, as to the validity and effectiveness of such
amendment.
4.02 Conditions to All Borrowings. The obligation of each Bank to make
any Loan to be made by it (including its initial Loan) or to continue or convert
any Loan under Section 2.04 is subject to the satisfaction of the following
conditions precedent on the relevant Borrowing Date or Conversion/ Continuation
Date:
(a) Notice of Borrowing or Conversion/Continuation. The
Administrative Agent shall have received (with, in the case of the initial Loan
only, a copy for each Bank) a Notice of Borrowing or a Notice of
Conversion/Continuation, as applicable;
(b) Continuation of Representations and Warranties. The
representations and warranties in Article V shall be true and correct on and as
of such Borrowing Date or Conversion/ Continuation Date with the same effect as
if made on and as of such Borrowing Date or Conversion/Continuation Date (except
to the extent such representations and warranties expressly refer to an earlier
date, in which case they shall be true and correct as of such earlier date);
(c) No Existing Default. No Default or Event of Default shall
exist or shall result from such Borrowing or continuation or conversion; and
(d) No Future Advance Notice. None of the Agents or the Banks
shall have received from the Company any notice that any Collateral Document
will no longer secure on a first priority basis future advances or future Loans
to be made or extended under this Agreement.
(e) Enstar Partnership Loan. Prior to or at the time of the making
of such Loan (i) the Company shall have entered into an Enstar Partnership Loan
Agreement with an Enstar
41
93
Partnership (other than Enstar Income/Growth Program Five-A, L.P. and Enstar
Income/Growth Program Five-B, L.P. which are general partners of Enstar Cable of
Cumberland Valley, which shall be the borrower under the applicable Enstar
Partnership Loan Agreement), (ii) all of the conditions precedent set forth in
such Enstar Partnership Loan Agreement shall have been satisfied and such Enstar
Partnership Loan Agreement shall be in full force and effect, (iii) the Company
shall immediately loan the proceeds of such Loan to one or more Enstar
Partnerships pursuant to such Enstar Partnership Loan Agreement(s), and (iv)
each of the Agents and their counsel shall have reviewed such Enstar Partnership
Loan Agreement(s) and all related documents (including, without limitation, each
security agreement and similar agreement) and all UCC or comparable filings, and
shall have been satisfied with such documents and filings and that all actions
necessary or desirable to perfect and protect the security interests purported
to be created thereby have been taken. The Partnership Loan Agreement for Enstar
II-I shall provide that no loans shall be made thereunder until June 1, 1998 and
that all loans made thereunder shall be due and payable within one year (and
shall not be refinanced with other loans made thereunder).
Each Notice of Borrowing and Notice of Conversion/Continuation submitted by the
Company hereunder shall constitute a representation and warranty by the Company
hereunder, as of the date of each such notice and as of each Borrowing Date or
Conversion/Continuation Date, as applicable, that the conditions in this Section
4.02 are satisfied.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to each Agent and each Bank that:
5.01 Corporate Existence and Power.
(a) (i) The Company is a limited liability company duly formed and
validly existing and in good standing under the laws of Delaware, (ii) ECC is a
corporation duly organized, validly existing and in good standing under the laws
of Georgia and (iii) Falcon is a limited partnership duly organized, validly
existing and in good standing under the laws of California;
(b) Each of the Company, ECC and Falcon has the power and
authority and all governmental licenses, authorizations, consents and approvals
to own its assets, carry on its business
42
94
and to execute, deliver, and perform its obligations under the Loan Documents;
(c) Each of the Company, ECC and Falcon is duly qualified as a
foreign limited liability company, corporation or limited partnership, as the
case may be, and is licensed and in good standing under the laws of each
jurisdiction where its ownership, lease or operation of property or the conduct
of its business requires such qualification or license; and
(d) is in compliance with all Requirements of Law.
5.02 Corporate Authorization; No Contravention. The execution, delivery
and performance by the Company, ECC and Falcon, as the case may be, of this
Agreement and each other Loan Document to which such Person is party, have been
duly authorized by all necessary corporate, limited liability company or
partnership action, as applicable, and do not and will not:
(a) contravene the terms of any of such Person's Organization
Documents;
(b) conflict with or result in any breach or contravention of, or
the creation of any Lien under, any document evidencing any Contractual
Obligation to which such Person is a party or any order, injunction, writ or
decree of any Governmental Authority to which such Person or its property is
subject; or
(c) violate any Requirement of Law.
5.03 Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority (except for recordings or filings in connection with the
Liens granted to the Documentation Agent under the Collateral Documents) is
necessary or required in connection with the execution, delivery or performance
by, or enforcement against, the Company, ECC or Falcon of the Agreement or any
other Loan Document.
5.04 Binding Effect. This Agreement and each other Loan Document to which
the Company, ECC or Falcon is a party constitute the legal, valid and binding
obligations of such Person, enforceable against such Person in accordance with
their respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of creditors'
rights generally or by equitable principles relating to enforceability.
5.05 Litigation. There are no actions, suits, proceedings, claims or
disputes pending, or to the best knowledge of the
43
95
Company, threatened or contemplated, at law, in equity, in arbitration or before
any Governmental Authority, against the Company, ECC or Falcon or any of such
Person's properties which:
(a) purport to affect or pertain to this Agreement or any other
Loan Document, or any of the transactions contemplated hereby or thereby; or
(b) if determined adversely to the Company, ECC or Falcon, as the
case may be, would reasonably be expected to have a Material Adverse Effect. No
injunction, writ, temporary restraining order or any order of any nature has
been issued by any court or other Governmental Authority purporting to enjoin or
restrain the execution, delivery or performance of this Agreement or any other
Loan Document, or directing that the transactions provided for herein or therein
not be consummated as herein or therein provided.
5.06 No Default. No Default or Event of Default exists or would result
from the incurring of any Obligations by the Company or from the grant or
perfection of the Liens of the Agents and the Banks on the Collateral. As of the
Closing Date, the Company is not in default under or with respect to any
Contractual Obligation in any respect which, individually or together with all
such defaults, could reasonably be expected to have a Material Adverse Effect,
or that would, if such default had occurred after the Closing Date, create an
Event of Default under subsection 8.01(e).
5.07 ERISA Compliance.
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal or state law. Each
Plan which is intended to qualify under Section 401(a) of the Code has received
a favorable determination letter from the IRS and to the best knowledge of the
Company, nothing has occurred which would cause the loss of such qualification.
The Company and each ERISA Affiliate has made all required contributions to any
Plan subject to Section 412 of the Code, and no application for a funding waiver
or an extension of any amortization period pursuant to Section 412 of the Code
has been made with respect to any Plan.
(b) There are no pending or, to the best knowledge of Company,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan which has resulted or could reasonably be expected to
result in a Material Adverse Effect. There has been no prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan which
has resulted or could reasonably be expected to
44
96
result in a Material Adverse Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected to
occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither
the Company nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability under Title IV of ERISA with respect to any Pension Plan
(other than premiums due and not delinquent under Section 4007 of ERISA); (iv)
neither the Company nor any ERISA Affiliate has incurred, or reasonably expects
to incur, any liability (and no event has occurred which, with the giving of
notice under Section 4219 of ERISA, would result in such liability) under
Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v)
neither the Company nor any ERISA Affiliate has engaged in a transaction that
could be subject to Section 4069 or 4212(c) of ERISA.
5.08 Use of Proceeds; Margin Regulations. The proceeds of the Loans are
to be used solely for the purposes set forth in and permitted by Section 6.12
and Section 7.07. The Company is not generally engaged in the business of
purchasing or selling Margin Stock or extending credit for the purpose of
purchasing or carrying Margin Stock.
5.09 Title to Properties. The Company has good record and marketable
title in fee simple to, or valid leasehold interests in, all real property
necessary or used in the ordinary conduct of their respective businesses, except
for such defects in title as could not, individually or in the aggregate, have a
Material Adverse Effect. As of the Closing Date, the property of the Company is
subject to no Liens, other than Permitted Liens.
5.10 Taxes. The Company has filed all Federal and other material tax
returns and reports required to be filed, and have paid all Federal and other
material taxes, assessments, fees and other governmental charges levied or
imposed upon it or its properties, income or assets otherwise due and payable,
except those which are being contested in good faith by appropriate proceedings
and for which adequate reserves have been provided in accordance with GAAP.
There is no proposed tax assessment against the Company that would, if made,
have a Material Adverse Effect.
5.11 Financial Condition. (a) The audited and unaudited financial
statements of each of ECC and each Enstar Partnership dated December 31, 1996
and June 30, 1997, respectively, and the related statements of income or
operations, shareholders' equity and cash flows for the fiscal year and quarter
ended on such respective dates:
(i) were prepared in accordance with GAAP
45
97
consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein, subject in the case of unaudited
statements to the absence of footnotes and to ordinary, good faith year
end audit adjustments;
(ii) fairly present the financial condition of ECC and each
Enstar Partnership, as the case may be, as of the date thereof and results
of operations for the period covered thereby; and
(iii) except as specifically disclosed in Schedule 5.11, show
all material indebtedness and other liabilities, direct or contingent, of
ECC and each Enstar Partnership, as the case may be, as of the date
thereof, including liabilities for taxes, material commitments and
Contingent Obligations.
(b) Since June 30, 1997, there has been no Material Adverse
Effect.
5.12 Collateral Documents. (a) The provisions of each of the Collateral
Documents are effective to create in favor of the Documentation Agent for the
benefit of the Banks, a legal, valid and enforceable first priority security
interest in all right, title and interest of the Company and ECC in the
collateral described therein; and financing statements have been filed in the
offices in all of the jurisdictions listed in the Security Agreement and the
Pledge Agreement.
(b) All representations and warranties of the Company and ECC
contained in the Collateral Documents are true and correct.
5.13 Regulated Entities. Neither the Company nor any Person controlling
the Company, or any Subsidiary, is an "Investment Company" within the meaning of
the Investment Company Act of 1940. The Company is not subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, any state public utilities code, or any other Federal
or state statute or regulation limiting its ability to incur Indebtedness.
5.14 No Burdensome Restrictions. The Company is not a party to or bound
by any Contractual Obligation, or subject to any restriction in any Organization
Document, or any Requirement of Law, which could reasonably be expected to have
a Material Adverse Effect.
5.15 Copyrights, Patents, Trademarks and Licenses, etc. The Company owns
or is licensed or otherwise have the right to use all of the patents,
trademarks, service marks, trade names,
46
98
copyrights, contractual franchises, authorizations and other rights that are
reasonably necessary for the operation of their respective businesses, without
conflict with the rights of any other Person. To the best knowledge of the
Company, no slogan or other advertising device, product, process, method,
substance, part or other material now employed, or now contemplated to be
employed, by the Company infringes upon any rights held by any other Person. No
claim or litigation regarding any of the foregoing is pending or threatened, and
no patent, invention, device, application, principle or any statute, law, rule,
regulation, standard or code is pending or, to the knowledge of the Company,
proposed, which, in either case, could reasonably be expected to have a Material
Adverse Effect.
5.16 Subsidiaries. The Company has no Subsidiaries and has no equity
investments in any other corporation or entity.
5.17 Insurance. Except as specifically disclosed in Schedule 5.18, the
properties of the Company are insured with financially sound and reputable
insurance companies not Affiliates of the Company, in such amounts, with such
deductibles and covering such risks as are customarily carried by companies
engaged in similar businesses and owning similar properties in localities where
the Company operates.
5.18 Solvency. The Company is Solvent.
5.19 Swap Obligations. (a) The Company has not incurred any outstanding
obligations under any Swap Contracts, other than Specified Swap Contracts. The
Company has undertaken its own independent assessment of its consolidated
assets, liabilities and commitments and has considered appropriate means of
mitigating and managing risks associated with such matters and has not relied on
any Swap Provider or any Affiliate of any Swap Provider in determining whether
to enter into any Swap Contract.
(b) The Company has not entered into any master agreement relating
to Swap Contracts and under which termination values resulting from Swap
Contracts that are Specified Swap Contracts are nettable against termination
values resulting from Swap Contracts that are not Specified Swap Contracts,
unless only Specified Swap Contracts are outstanding under such master
agreement.
5.20 Full Disclosure. None of the representations or warranties made by
the Company, ECC or Falcon in the Loan Documents as of the date such
representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate furnished
by or on behalf of the Company, ECC or Falcon in connection with the Loan
47
99
Documents (including the offering and disclosure materials delivered by or on
behalf of the Company to the Banks prior to the Closing Date), contains any
untrue statement of a material fact or omits any material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they are made, not misleading as of the time when made
or delivered.
ARTICLE VI
AFFIRMATIVE COVENANTS
So long as any Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, unless the Majority Banks
waive compliance in writing:
6.01 Financial Statements. The Company shall deliver to each Agent, in
form and detail satisfactory to each Agent and the Majority Banks, with
sufficient copies for each Bank:
(a) as soon as available, but not later than 120 days after the
end of each fiscal year (commencing with the fiscal year ended December 31,
1997), a copy of the audited balance sheet of the Company as at the end of such
year and the related consolidated statements of income or operations,
shareholders' equity and cash flows for such year, setting forth in each case in
comparative form the figures for the previous fiscal year, and accompanied by
the opinion of Ernst & Young LLP or another nationally-recognized independent
public accounting firm ("Independent Auditor") which report shall state that
such consolidated financial statements present fairly the financial position for
the periods indicated in conformity with GAAP applied on a basis consistent with
prior years. Such opinion shall not be qualified or limited because of a
restricted or limited examination by the Independent Auditor of any material
portion of the Company's records; and
(b) as soon as available, but not later than 45 days after the end
of each of the first three fiscal quarters of each fiscal year (commencing with
the fiscal quarter ended September 30, 1997), a copy of the unaudited
consolidated balance sheet of the Company and its Subsidiaries as of the end of
such quarter and the related consolidated statements of income, shareholders'
equity and cash flows for the period commencing on the first day and ending on
the last day of such quarter, and certified by a Responsible Officer as fairly
presenting, in accordance with GAAP (subject to ordinary, good faith year-end
audit adjustments), the financial position and the results of operations of the
Company and the Subsidiaries;
48
100
(c) As soon as available, but no later than one hundred five (105)
days after the end of each fiscal year, the balance sheet of each Borrowing
Enstar Partnership as of the end of such year, and the statements of income,
cash flows and of Partners' capital of such Borrowing Enstar Partnership for
such year, setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail and (with the exception of Enstar
VII, a Georgia limited partnership whose financial statements may be prepared
internally) accompanied by a report and opinion on financial statements of Ernst
& Young LLP or other independent certified public accountants of recognized
national standing selected by such Borrowing Enstar Partnership and satisfactory
to the Agents, together with (a) computations by such Borrowing Enstar
Partnership demonstrating, as of the close of such fiscal year, compliance with
Sections 7.5.2, 7.5.4, 7.10.1, 7.10.2, 7.10.3, 7.11.2 and 7.15 of the Enstar
Partnership Loan Agreement relating to such Borrowing Enstar Partnership, (b)
either a supplemental schedule or an appropriate footnote disclosure, together
with such annual audited financial statements, which provides in reasonable
detail, a statement setting forth the amount of direct reimbursable expenses of
the Borrowing Enstar Partnerships on a consolidated basis pursuant to the
respective management agreements to which such Borrowing Enstar Partnerships are
a party, (c) a certificate signed by the president, vice president, treasurer or
controller of the Corporate General Partner of such Borrowing Enstar Partnership
(i) stating that such person has reviewed the Enstar Partnership Loan Agreement
relating to such Borrowing Enstar Partnership and has made, or caused to be made
under its supervision, a review of the transactions and conditions of such
Borrowing Enstar Partnership during such year, and (ii) stating that such review
has not disclosed the existence during such year (and that such signer does not
have knowledge of the existence, as of the date of such certificate) of any
Default (as defined in such Enstar Partnership Loan Agreement), or, if any such
Default existed or exists, specifying the nature and period of existence thereof
and what action such Borrowing Enstar Partnership has taken, is taking or
proposes to take with respect thereto, and (d) a certificate by such accountants
(i) stating that such financial statements were prepared in accordance with
generally accepted accounting principles applied on a consistent basis and
fairly present the financial condition of such Borrowing Enstar Partnership at
the dates thereof and the results of its operations for the periods covered
thereby, and (ii) stating whether or not in the course of the examination upon
which their opinion on such financial statements was based (which shall include
a review of the relevant provisions of the Enstar Partnership Loan Agreement
relating to such Borrowing Enstar Partnership but need not include any special
or additional audit procedures) they became aware of the existence, at the end
of
49
101
the fiscal year covered by such financial statements, of any Default (as
defined in such Enstar Partnership Loan Agreement) under Sections 7.5 through
7.12 of the Enstar Partnership Loan Agreement relating to such Borrowing Enstar
Partnership, and, if their examination has disclosed such a Default, specifying
the nature and period of the existence thereof.
(d) as soon as available, but not later than forty-five (45) days
after the end of each of the first three fiscal quarters of each fiscal year,
the balance sheet of each Borrowing Enstar Partnership as of the end of such
period and statements of income and cash flows of such Borrowing Enstar
Partnership (other than Enstar VII, Enstar X Ltd. and Enstar XI Ltd.) for the
period from the beginning of the current fiscal year to the end of such period
and internally prepared quarterly operating statements of such Borrowing Enstar
Partnership by operating regions for the portion of the fiscal year of such
Borrowing Enstar Partnership then ended, setting forth in each case in
comparative form the figures for the corresponding period of the previous fiscal
year, all in reasonable detail and accompanied by (i) a partner's certificate
signed by the president, vice president, treasurer or controller of the
Corporate General Partner of such Borrowing Enstar Partnership stating that such
statements are complete and correct, subject only to normal changes resulting
from year-end audit adjustments, have been prepared in accordance with GAAP
applied on a consistent basis and fairly present the financial condition of such
Borrowing Enstar Partnership at the dates thereof and the results of its
operations for the periods covered thereby, (ii) computations by such Borrowing
Enstar Partnership hereto demonstrating, as of the close of such fiscal quarter,
compliance with Sections 7.5.2, 7.5.4, 7.10.1, 7.10.2, 7.10.3, 7.11.2 and 7.15
of the Borrowing Enstar Partnership Loan Agreement relating to such Borrowing
Enstar Partnership, (iii) a partner's certificate signed by the president, vice
president, treasurer or controller of the Corporate General Partner of such
Borrowing Enstar Partnership (a) stating that each signer has reviewed the
Enstar Partnership Loan Agreement relating to such Borrowing Enstar Partnership
and has made, or caused to be made under its supervision, a review of the
transactions and conditions of such Borrowing Enstar Partnership during the
accounting period covered by such financial statements, and (b) stating that
such review has not disclosed the existence during such accounting period (and
that such signer does not have knowledge of the existence, as of the date of
such certificate) of any Default (as defined in the Enstar Partnership Loan
Agreement relating to such Borrowing Enstar Partnership, or, if any such Default
exists, specifying the nature and period of existence thereof and what action
such Borrowing Enstar Partnership has taken, is taking or proposes to take with
respect thereto.
50
102
6.02 Certificates; Other Information. The Company shall furnish to each
Agent, with sufficient copies for each Bank:
(a) concurrently with the delivery of the financial statements
referred to in subsection 6.01(a), a certificate of the Independent Auditor
stating that in making the examination necessary therefor no knowledge was
obtained of any Default or Event of Default, except as specified in such
certificate;
(b) concurrently with the delivery of the financial statements
referred to in subsections 6.01(a) and (b), a Compliance Certificate executed by
a Responsible Officer;
(c) promptly, such additional information regarding the business,
financial or corporate affairs of the Company as any Agent, at the request of
any Bank, may from time to time request.
6.03 Notices. The Company shall promptly notify each Agent and each Bank:
(a) of the occurrence of any Default or Event of Default or
"Default" or "Event of Default" under any Enstar Partnership Loan Agreement, and
of the occurrence or existence of any event or circumstance that foreseeably
will become a Default or Event of Default or "Default" or "Event of Default"
under any Enstar Partnership Loan Agreement;
(b) of (i) any breach or non-performance of, or any default under,
any Contractual Obligation of the Company which could result in a Material
Adverse Effect; and (ii) any dispute, litigation, investigation, proceeding or
suspension which may exist at any time between the Company and any Governmental
Authority;
(c) of the commencement of, or any material development in, any
litigation or proceeding affecting the Company (i) in which the amount of
damages claimed is $100,000 (or its equivalent in another currency or
currencies) or more, (ii) in which injunctive or similar relief is sought and
which, if adversely determined, would reasonably be expected to have a Material
Adverse Effect, or (iii) in which the relief sought is an injunction or other
stay of the performance of this Agreement or any Loan Document;
(d) upon, but in no event later than 10 days after, becoming aware
of (i) any and all enforcement, cleanup, removal or other governmental or
regulatory actions instituted,
51
103
completed or threatened against the Company or any of its properties pursuant to
any applicable Environmental Laws, (ii) all other Environmental Claims, and
(iii) any environmental or similar condition on any real property adjoining or
in the vicinity of the property of the Company that could reasonably be
anticipated to cause such property or any part thereof to be subject to any
restrictions on the ownership, occupancy, transferability or use of such
property under any Environmental Laws;
(e) of the occurrence of any of the following events affecting the
Company or any ERISA Affiliate (but in no event more than 10 days after such
event), and deliver to each Agent and each Bank a copy of any notice with
respect to such event that is filed with a Governmental Authority and any notice
delivered by a Governmental Authority to the Company or any ERISA Affiliate with
respect to such event:
(i) an ERISA Event;
(ii) a material increase in the Unfunded Pension Liability of
any Pension Plan;
(iii) the adoption of, or the commencement of contributions
to, any Plan subject to Section 412 of the Code by the Company or any
ERISA Affiliate; or
(iv) the adoption of any amendment to a Plan subject to
Section 412 of the Code, if such amendment results in a material increase
in contributions or Unfunded Pension Liability.
(f) of any material change in accounting policies or financial
reporting practices by the Company;
(g) of the entry by the Company into any Specified Swap Contract,
together with the details thereof;
(h) of the occurrence of any default, event of default,
termination event or other event under any Specified Swap Contract that after
the giving of notice, passage of time or both, would permit either counterparty
to such Specified Swap Contract to terminate early any or all trades relating to
such contract; and
(i) upon the request from time to time of the Agent, the Swap
Termination Values, together with a description of the method by which such
amounts were determined, relating to any then-outstanding Specified Swap
Contracts to which the Company is party.
52
104
Each notice under this Section shall be accompanied by a written statement
by a Responsible Officer setting forth details of the occurrence referred to
therein, and stating what action the Company proposes to take with respect
thereto and at what time. Each notice under subsection 6.03(a) shall describe
with particularity any and all clauses or provisions of this Agreement or other
Loan Document that have been (or foreseeably will be) breached or violated.
6.04 Preservation of Corporate Existence, Etc. The Company shall:
(a) preserve and maintain in full force and effect its limited
liability company existence and good standing under the laws of its state or
jurisdiction of organization;
(b) preserve and maintain in full force and effect all
governmental rights, privileges, qualifications, permits, licenses and
franchises necessary or desirable in the normal conduct of its business;
(c) use reasonable efforts, in the ordinary course of business, to
preserve its business organization and goodwill; and
(d) preserve or renew all of its registered patents, trademarks,
trade names and service marks, the non-preservation of which could reasonably be
expected to have a Material Adverse Effect.
6.05 Maintenance of Property. The Company shall maintain and preserve all
its property which is used or useful in its business in good working order and
condition, ordinary wear and tear excepted.
6.06 Insurance. In addition to insurance requirements set forth in the
Collateral Documents, the Company shall maintain with financially sound and
reputable independent insurers, insurance with respect to its properties and
business against loss or damage of the kinds customarily insured against by
Persons engaged in the same or similar business, of such types and in such
amounts as are customarily carried under similar circumstances by such other
Persons; including workers' compensation insurance, public liability and
property and casualty insurance which amount shall not be reduced by the Company
in the absence of 30 days' prior notice to each Agent. All such insurance shall
name the Documentation Agent as loss payee/mortgagee and as additional insured,
for the benefit of the Banks, as their interests may appear. All casualty and
key man insurance maintained by the Company shall name the Documentation Agent
as loss payee and all liability insurance
53
105
shall name the Documentation Agent as additional insured for the benefit of the
Banks, as their interests may appear. Upon request of either Agent or any Bank,
the Company shall furnish the Documentation Agent, with sufficient copies for
each Bank, at reasonable intervals (but not more than once per calendar year) a
certificate of a Responsible Officer of the Company (and, if requested by the
Agent, any insurance broker of the Company) setting forth the nature and extent
of all insurance maintained by the Company in accordance with this Section or
any Collateral Documents (and which, in the case of a certificate of a broker,
were placed through such broker).
6.07 Payment of Obligations. The Company shall pay and discharge as the
same shall become due and payable, all their respective obligations and
liabilities, including:
(a) all tax liabilities, assessments and governmental charges or
levies upon it or its properties or assets, unless the same are being contested
in good faith by appropriate proceedings and adequate reserves in accordance
with GAAP are being maintained by the Company;
(b) all lawful claims which, if unpaid, would by law become a Lien
upon its property; and
(c) all indebtedness, as and when due and payable, but subject to
any subordination provisions contained in any instrument or agreement evidencing
such Indebtedness.
6.08 Compliance with Laws. The Company shall comply in all material
respects with all Requirements of Law of any Governmental Authority having
jurisdiction over it or its business (including the Federal Fair Labor Standards
Act), except such as may be contested in good faith or as to which a bona fide
dispute may exist.
6.09 Compliance with ERISA. The Company shall, and shall cause each of
its ERISA Affiliates to: (a) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code and other federal or
state law; (b) cause each Plan which is qualified under Section 401(a) of the
Code to maintain such qualification; and (c) make all required contributions to
any Plan subject to Section 412 of the Code.
6.10 Inspection of Property and Books and Records. The Company shall
maintain proper books of record and account, in which full, true and correct
entries in conformity with GAAP consistently applied shall be made of all
financial transactions and matters involving the assets and business of the
Company. The Company shall permit representatives and independent
54
106
contractors of each Agent or any Bank to visit and inspect any of its
properties, to examine its corporate, financial and operating records, and make
copies thereof or abstracts therefrom, and to discuss its affairs, finances and
accounts with its directors, officers, and independent public accountants, all
at the expense of the Company and at such reasonable times during normal
business hours and as often as may be reasonably desired, upon reasonable
advance notice to the Company; provided, however, when an Event of Default
exists the Agent or any Bank may do any of the foregoing at the expense of the
Company at any time during normal business hours and without advance notice.
6.11 Environmental Laws. (a) The Company shall conduct its operations and
keep and maintain its property in compliance with all Environmental Laws.
(b) Upon the written request of either of the Agents or any Bank,
the Company shall submit to the Documentation Agent with sufficient copies for
each Bank, at the Company's sole cost and expense, at reasonable intervals, a
report providing an update of the status of any environmental, health or safety
compliance, hazard or liability issue identified in any notice or report
required pursuant to subsection 6.03(d), that could, individually or in the
aggregate, result in liability in excess of $100,000.
6.12 Use of Proceeds. The Company shall use the proceeds of the Loans to
finance the Enstar Partnership Loans in accordance with Section 7.07 and not in
contravention of any Requirement of Law.
6.13 Enforcement of Enstar Partnership Loan Agreements. The Company shall
enforce each Enstar Partnership Loan Agreement in accordance with its terms.
6.14 Further Assurances. (a) The Company shall ensure that all written
information, exhibits and reports furnished to either of the Agents or any Bank
do not and will not contain any untrue statement of a material fact and do not
and will not omit to state any material fact or any fact necessary to make the
statements contained therein not misleading in light of the circumstances in
which made, and will promptly disclose to each of the Agents and the Banks and
correct any defect or error that may be discovered therein or in any Loan
Document or in the execution, acknowledgement or recordation thereof.
(b) Promptly upon request by either of the Agents or the Majority
Banks, the Company shall do, execute, acknowledge, deliver, record, re-record,
file, re-file, register and re-register, any and all such further acts, deeds,
conveyances,
55
107
security agreements, mortgages, assignments, estoppel certificates, financing
statements and continuations thereof, termination statements, notices of
assignment, transfers, certificates, assurances and other instruments such Agent
or such Banks, as the case may be, may reasonably require from time to time in
order (i) to carry out more effectively the purposes of this Agreement or any
other Loan Document, (ii) to subject to the Liens created by any of the
Collateral Documents any of the properties, rights or interests covered by any
of the Collateral Documents, (iii) to perfect and maintain the validity,
effectiveness and priority of any of the Collateral Documents and the Liens
intended to be created thereby, and (iv) to better assure, convey, grant,
assign, transfer, preserve, protect and confirm to the Agents and Banks the
rights granted or now or hereafter intended to be granted to the Banks under any
Loan Document or under any other document executed in connection therewith.
ARTICLE VII
NEGATIVE COVENANTS
So long as any Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, unless the Majority Banks
waive compliance in writing:
7.01 Limitation on Liens. The Company shall not, and shall not permit ECC
to, directly or indirectly, make, create, incur, assume or suffer to exist any
Lien upon or with respect to any part of its property, whether now owned or
hereafter acquired, other than the following ("Permitted Liens"):
(a) any Lien (other than a Lien on the Collateral) existing on
property of the Company on the Closing Date and set forth in Schedule 7.01
securing Indebtedness outstanding on such date;
(b) any Lien created under any Loan Document;
(c) Liens for taxes, fees, assessments or other governmental
charges which are not delinquent or remain payable without penalty, or to the
extent that non-payment thereof is permitted by Section 6.07, provided that no
notice of lien has been filed or recorded under the Code;
(d) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other similar Liens arising in the ordinary course
of business which are not delinquent or remain payable without penalty;
56
108
(e) Liens (other than any Lien imposed by ERISA and other than on
the Collateral) consisting of pledges or deposits required in the ordinary
course of business in connection with workers' compensation, unemployment
insurance and other social security legislation;
(f) Liens (other than Liens on the Collateral) consisting of
judgment or judicial attachment liens, provided that the enforcement of such
Liens is effectively stayed and all such liens in the aggregate at any time
outstanding for the Company do not exceed $500,000;
(g) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property subject thereto or interfere
with the ordinary conduct of the businesses of the Company;
(h) Liens securing obligations in respect of capital leases on
assets subject to such leases, provided that such capital leases are otherwise
permitted hereunder; and
(i) Liens arising solely by virtue of any statutory or common law
provision relating to banker's liens, rights of set-off or similar rights and
remedies as to deposit accounts or other funds maintained with a creditor
depository institution; provided that (i) such deposit account is not a
dedicated cash collateral account and is not subject to restrictions against
access by the Company in excess of those set forth by regulations promulgated by
the FRB, and (ii) such deposit account is not intended by the Company to provide
collateral to the depository institution.
7.02 Disposition of Assets. The Company shall not, and shall not permit
any Borrowing Enstar Partnership to, directly or indirectly, sell, assign,
lease, convey, transfer or otherwise dispose of (whether in one or a series of
transactions) any property (including accounts and notes receivable, with or
without recourse) or enter into any agreement to do any of the foregoing, except
(i) sales, assignments, leases, conveyances, transfers or dispositions by the
Company or any Borrowing Enstar Partnership of its property in the ordinary
course of business the aggregate Net Proceeds of which received on or after the
date hereof do not exceed $50,000 for the Company and each Borrowing Enstar
Partnership on an individual basis and (ii) sales, assignments, leases,
conveyances, transfers or dispositions the Net Proceeds of which are applied to
the prepayment of the Loans and the reduction of the Commitments in accordance
with Section 2.07.
57
109
7.03 Consolidations and Mergers. The Company shall not merge, consolidate
with or into, or convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions all or substantially all of its
assets (whether now owned or hereafter acquired) to or in favor of any Person.
7.04 Loans and Investments. The Company shall not purchase or acquire, or
make any commitment therefor, any capital stock, equity interest, or any
obligations or other securities of, or any interest in, any Person, or make or
commit to make any Acquisitions, or make or commit to make any advance, loan,
extension of credit or capital contribution to or any other investment in, any
Person including any Affiliate of the Company (together, "Investments"), except
for:
(a) Investments held by the Company in the form of Liquid Assets;
(b) extensions of credit in the nature of accounts receivable or
notes receivable arising from the sale or lease of goods or services in the
ordinary course of business;
(c) Investments constituting Specified Swap Contracts or payments
or advances under Specified Swap Contracts;
(d) Enstar Partnership Loans; and
(e) Receivables due from the Enstar Partnerships in the amount of
$1,000,000 in existence on the Closing Date.
7.05 Limitation on Indebtedness. The Company shall not create, incur,
assume, suffer to exist, or otherwise become or remain directly or indirectly
liable with respect to, any Indebtedness, except Indebtedness incurred pursuant
to this Agreement.
7.06 Transactions with Affiliates. The Company shall not enter into any
transaction with any Affiliate of the Company, except upon fair and reasonable
terms no less favorable to the Company than would obtain in a comparable
arm's-length transaction with a Person not an Affiliate of the Company.
7.07 Use of Proceeds. The Company shall not, and shall not suffer or
permit any Subsidiary to, use any portion of the Loan proceeds, directly or
indirectly, for any purpose other than to finance the Enstar Partnership Loans
on the terms and conditions set forth in the Enstar Partnership Loan Agreements.
7.08 Contingent Obligations. The Company shall not create, incur, assume
or suffer to exist any Contingent Obligations except:
58
110
(a) endorsements for collection or deposit in the ordinary course
of business;
(b) Permitted Swap Obligations;
7.09 Joint Ventures. The Company shall not enter into any Joint Venture.
7.10 Lease Obligations. The Company shall not create or suffer to exist
any obligations for the payment of rent for any property under lease or
agreement to lease.
7.11 Restricted Payments. The Company shall not declare or make any
dividend payment or other distribution of assets, properties, cash, rights,
obligations or securities on account of any shares of any class of its
membership interests or purchase, redeem or otherwise acquire for value any
membership interests or any warrants, rights or options to acquire such
membership interests, now or hereafter outstanding.
7.12 ERISA. The Company shall not, and shall not suffer or permit any of
its ERISA Affiliates to: (a) engage in a prohibited transaction or violation of
the fiduciary responsibility rules with respect to any Plan which has resulted
or could reasonably expected to result in liability of the Company in an
aggregate amount in excess of $100,000; or (b) engage in a transaction that
could be subject to Section 4069 or 4212(c) of ERISA.
7.13 Change in Business. The Company shall not engage in any material
line of business substantially different from those lines of business carried on
by the Company on the date hereof.
7.14 Accounting Changes. The Company shall not make any significant
change in accounting treatment or reporting practices, except as required by
GAAP, or change the fiscal year of the Company.
7.15 Subsidiaries. The Company shall not form, acquire, own, make an
Investment in or permit to exist any Subsidiary.
7.16 Financial Covenants.
(a) Minimum Tangible Net Worth. The Company shall not permit
Tangible Net Worth to be less than $1,000,000 at any time.
(b) Minimum Liquid Assets. The Company shall not permit Liquid
Assets of the Company to be less than $150,000 at any time.
59
111
(c) Maximum Leverage Ratio. The Company shall not at any time
permit the ratio of (i) Total Debt of the Company (as of the date of
calculation) to (ii) Pro Forma Annualized EBITDA as of the last day of any
Fiscal Quarter on or preceding such date of calculation to exceed the
correlative ratio indicated:
Period Maximum Leverage Ratio
Closing Date - Dec. 31, 1998 3.50:1.00
Jan. 1, 1999 - Dec. 31, 1999 3.00:1.00
Jan. 1, 2000 - Dec. 31, 2000 2.50:1.00
Jan. 1, 2001 and thereafter 2.00:1.00
(d) Minimum Interest Coverage Ratio. The Company shall not permit
the ratio of (i) the sum of EBITDA for each of the Borrowing Enstar Partnerships
to (ii) Cash Interest Expense of the Company, for any four Fiscal Quarter period
to be less than 2.00:1.00.
(e) Minimum Fixed Charge Coverage Ratio. The Company shall not
permit the ratio of (i) the sum of EBITDA for each of the Borrowing Enstar
Partnerships to (ii) Fixed Charges of the Company, for any four Fiscal Quarter
period to be less than 1.20:1.00.
7.17 Hedging Requirements. The Company shall not permit the aggregate
outstanding amount of the Loans to exceed $20,000,000 unless:
(i) the Company shall have entered into one or more
Specified Swap Contracts with respect to at least 50% of the outstanding
Offshore Rate Loans;
(ii) such Specified Swap Contracts have a minimum weighted
average term of 24 months (the "Hedge Period"); and
(iii) if such Specified Swap Contracts are interest rate caps,
such Specified Swap Contracts do not have a strike price more than 2%
higher than the rate per annum for U.S. Treasury notes with a maturity
equal to the applicable Hedge Period.
7.18. Amendment of Enstar Partnership Loan Agreements. The Company shall
not, without the consent of the Majority Banks, amend, supplement, restate or
otherwise modify, or waive or consent to any departure from, any Enstar
Partnership Loan Agreement or any provision thereof.
60
112
ARTICLE VIII
EVENTS OF DEFAULT
8.01 Event of Default. Any of the following shall constitute an "Event of
Default":
(a) Non-Payment. The Company fails to make, (i) when and as
required to be made herein, payments of any amount of principal of any Loan, or
(ii) when and as required to be paid under any Specified Swap Contract, any
payment or transfer under such Specified Swap Contract, or (iii) within three
days after the same becomes due, payment of any interest, fee or any other
amount payable hereunder or under any other Loan Document (other than a
Specified Swap Contract); or
(b) Representation or Warranty. Any representation or warranty by
the Company or ECC made or deemed made herein, in any other Loan Document other
than a Specified Swap Contract, or which is contained in any certificate,
document or financial or other statement by the Company, ECC, or any Responsible
Officer, furnished at any time under this Agreement, or in or under any other
Loan Document other than a Specified Swap Contract, is incorrect in any material
respect on or as of the date made or deemed made; or
(c) Specific Defaults. The Company fails to perform or observe any
term, covenant or agreement contained in any of Section 6.01, 6.02, 6.03 or
6.09(c) or in Article VII; or
(d) Other Defaults. The Company fails to perform or observe any
other term or covenant contained in this Agreement or any other Loan Document
other than a Specified Swap Contract, and such default shall continue unremedied
for a period of 30 days after the earlier of (i) the date upon which a
Responsible Officer knew or reasonably should have known of such failure or (ii)
the date upon which written notice thereof is given to the Company by the Agent
or any Bank; or
(e) Cross-Default. (i) The Company (A) fails to make any payment
in respect of any Indebtedness or Contingent Obligation (other than in respect
of Swap Contracts), when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise); or (B) fails to perform or
observe any other condition or covenant, or any other event shall occur or
condition exist, under any agreement or instrument relating to any such
Indebtedness or Contingent Obligation, if the effect of such failure, event or
condition is to cause, or to permit the holder or holders of such
61
113
Indebtedness or beneficiary or beneficiaries of such Indebtedness (or a trustee
or agent on behalf of such holder or holders or beneficiary or beneficiaries) to
cause such Indebtedness to be declared to be due and payable prior to its stated
maturity, or such Contingent Obligation to become payable or cash collateral in
respect thereof to be demanded; or (ii) there occurs under any Specified Swap
Contract having a Swap Termination Value of greater than $50,000 an Early
Termination Date (as defined in such Specified Swap Contract) resulting from (1)
any event of default under such Specified Swap Contract as to which the Company
or any Subsidiary is the Defaulting Party (as defined in such Specified Swap
Contract) or (2) any Termination Event (as so defined) as to which the Company
or any Subsidiary is an Affected Party (as so defined).
(f) Insolvency; Voluntary Proceedings. The Company, ECC, Falcon or
any Borrowing Enstar Partnership (i) generally fails to pay, or admits in
writing its inability to pay, its debts as they become due, subject to
applicable grace periods, if any, whether at stated maturity or otherwise; (ii)
voluntarily ceases to conduct its business in the ordinary course; (iii)
commences any Insolvency Proceeding with respect to itself; or (iv) takes any
action to effectuate or authorize any of the foregoing; or
(g) Involuntary Proceedings. (i) Any involuntary Insolvency
Proceeding is commenced or filed against the Company, ECC, Falcon or any
Borrowing Enstar Partnership, or any writ, judgment, warrant of attachment,
execution or similar process, is issued or levied against a substantial part of
the Company's, ECC's, Falcon's or any Borrowing Enstar Partnership's properties,
and any such proceeding or petition shall not be dismissed, or such writ,
judgment, warrant of attachment, execution or similar process shall not be
released, vacated or fully bonded within 60 days after commencement, filing or
levy; (ii) the Company, ECC, Falcon or any Borrowing Enstar Partnership admits
the material allegations of a petition against it in any Insolvency Proceeding,
or an order for relief (or similar order under non-U.S. law) is ordered in any
Insolvency Proceeding; or (iii) the Company, ECC, Falcon or any Borrowing Enstar
Partnership acquiesces in the appointment of a receiver, trustee, custodian,
conservator, liquidator, mortgagee in possession (or agent therefor), or other
similar Person for itself or a substantial portion of its property or business;
or
(h) ERISA. (i) An ERISA Event shall occur with respect to a
Pension Plan or Multiemployer Plan which has resulted or could reasonably be
expected to result in liability of the Company under Title IV of ERISA to the
Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of
$100,000; or (ii) the aggregate amount of Unfunded Pension
62
114
Liability among all Pension Plans at any time exceeds $100,000; or (iii) the
Company or any ERISA Affiliate shall fail to pay when due, after the expiration
of any applicable grace period, any installment payment with respect to its
withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in
an aggregate amount in excess of $100,000; or
(i) Monetary Judgments. One or more non-interlocutory judgments,
non-interlocutory orders, decrees or arbitration awards is entered against the
Company involving in the aggregate a liability (to the extent not covered by
independent third-party insurance as to which the insurer does not dispute
coverage) as to any single or related series of transactions, incidents or
conditions, of $100,000 or more, and the same shall remain unvacated and
unstayed pending appeal for a period of 10 days after the entry thereof; or
(j) Non-Monetary Judgments. Any non-monetary judgment, order or
decree is entered against the Company which does or would reasonably be expected
to have a Material Adverse Effect, and there shall be any period of 10
consecutive days during which a stay of enforcement of such judgment or order,
by reason of a pending appeal or otherwise, shall not be in effect; or
(k) Change of Control. There occurs any Change of Control; or
(l) Loss of Licenses. Any Governmental Authority revokes or fails
to renew any material license, permit or franchise of the Company, or the
Company for any reason loses any material license, permit or franchise, or the
Company suffers the imposition of any restraining order, escrow, suspension or
impound of funds in connection with any proceeding (judicial or administrative)
with respect to any material license, permit or franchise; or
(m) Adverse Change. There occurs a Material Adverse Effect; or
(n) Defaults Under Loan Documents. ECC or Falcon fails in any
material respect to perform or observe any term, covenant or agreement in the
Loan Documents to which it is a party;
(p) Collateral.
(i) any material provision of any Collateral Document shall
for any reason cease to be valid and binding on or enforceable against the
Company or any Person party thereto or the Company or any such Person
shall so state in
63
115
writing or bring an action to limit its obligations or liabilities
thereunder; or
(ii) any Collateral Document shall for any reason (other than
pursuant to the terms thereof) cease to create a valid security interest
in the Collateral purported to be covered thereby or such security
interest shall for any reason cease to be a perfected and first priority
security interest subject only to Permitted Liens.
(q) Default Under Enstar Partnership Loans. Any Default or Event
of Default shall have occurred under and as defined in any Enstar Partnership
Loan Agreement.
8.02 Remedies. If any Event of Default occurs, the Administrative Agent
shall, at the request of, or may, with the consent of, the Majority Banks,
(a) declare the commitment of each Bank to make Loans to be
terminated, whereupon such commitments shall be terminated;
(b) declare the unpaid principal amount of all outstanding Loans,
all interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by the Company; and
(c) exercise on behalf of itself and the Banks all rights and
remedies available to it and the Banks under the Loan Documents or applicable
law;
provided, however, that upon the occurrence of any event specified in subsection
(f) or (g) of Section 8.01 (in the case of clause (i) of subsection (g) upon the
expiration of the 60-day period mentioned therein), the obligation of each Bank
to make Loans shall automatically terminate and the unpaid principal amount of
all outstanding Loans and all interest and other amounts as aforesaid shall
automatically become due and payable without further act of the Agent or any
Bank.
8.03 Specified Swap Contract Remedies. Notwithstanding any other
provision of this Article VIII, each Swap Provider shall have the right, with
prior notice to the Agent, but without the approval or consent of the Agent or
the other Banks, with respect to any Specified Swap Contract of such Swap
Provider, (a) to declare an event of default, termination event or other similar
event thereunder and to create an Early Termination Date, (b) to determine net
termination amounts in accordance with the terms of such Specified Swap
Contracts and to set-off
64
116
amounts between Specified Swap Contracts, and (c) to prosecute any legal action
against the Company to enforce net amounts owing to such Swap Provider.
8.04 Rights Not Exclusive. The rights provided for in this Agreement and
the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement now existing or hereafter arising.
ARTICLE IX
THE AGENTS
9.01 Appointment and Authorization; "Agent". Each Bank hereby irrevocably
(subject to Section 9.09) appoints, designates and authorizes the Administrative
Agent and the Documentation Agent to take such action on its behalf under the
provisions of this Agreement and each other Loan Document and to exercise such
powers and perform such duties as are expressly delegated to it by the terms of
this Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document, no Agent
shall have any duties or responsibilities, except those expressly set forth
herein, nor shall either Agent have or be deemed to have any fiduciary
relationship with any Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against any Agent.
Without limiting the generality of the foregoing sentence, the use of the term
"agent" in this Agreement with reference to the Administrative Agent or the
Documentation Agent is not intended to connote any fiduciary or other implied
(or express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only an administrative relationship between independent
contracting parties.
9.02 Delegation of Duties. Either of the Agents may execute any of its
duties under this Agreement or any other Loan Document by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. No Agent shall be responsible
for the negligence or misconduct of any agent or attorney-in-fact that it
selects with reasonable care.
9.03 Liability of Agent. None of the Agent-Related Persons
65
117
shall (i) be liable for any action taken or omitted to be taken by any of them
under or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or willful
misconduct), or (ii) be responsible in any manner to any of the Banks for any
recital, statement, representation or warranty made by the Company or Affiliate
of the Company, or any officer thereof, contained in this Agreement or in any
other Loan Document, or in any certificate, report, statement or other document
referred to or provided for in, or received by any Agent under or in connection
with, this Agreement or any other Loan Document, or for the value of or title to
any Collateral, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document, or for any failure of
the Company or any other party to any Loan Document to perform its obligations
hereunder or thereunder. No Agent-Related Person shall be under any obligation
to any Bank to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement or any
other Loan Document, or to inspect the properties, books or records of the
Company or any of the Company's Affiliates.
9.04 Reliance by Agent. (a) The Agents shall be entitled to rely, and
shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone
message, statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons, and upon advice and statements of legal counsel (including counsel
to the Company), independent accountants and other experts selected by the
Agents. The Agents shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Majority Banks as it deems appropriate
and, if it so requests, it shall first be indemnified to its satisfaction by the
Banks against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The Agents shall in all
cases be fully protected in acting, or in refraining from acting, under this
Agreement or any other Loan Document in accordance with a request or consent of
the Majority Banks and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Banks.
(b) For purposes of determining compliance with the conditions
specified in Section 4.01, each Bank that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by any Agent to such Bank for consent,
approval, acceptance or satisfaction, or required thereunder to be consented to
or approved by or acceptable or satisfactory to
66
118
the Bank.
9.05 Notice of Default. Neither Agent shall be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default (except, in the
case of the Administrative Agent, with respect to defaults in the payment of
principal, interest and fees required to be paid to the Administrative Agent for
the account of the Banks), unless such Agent shall have received written notice
from a Bank or the Company referring to this Agreement, describing such Default
or Event of Default and stating that such notice is a "notice of default". Such
Agent will notify the Banks of its receipt of any such notice. The
Administrative Agent shall take such action with respect to such Default or
Event of Default as may be requested by the Majority Banks in accordance with
Article VIII; provided, however, that unless and until the Administrative Agent
has received any such request, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable or in the best
interest of the Banks.
9.06 Credit Decision. Each Bank acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by any Agent hereinafter taken, including any review of the affairs of the
Company, shall be deemed to constitute any representation or warranty by any
Agent-Related Person to any Bank. Each Bank represents to the Agent that it has,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Company, the
value of and title to any Collateral, and all applicable bank regulatory laws
relating to the transactions contemplated hereby, and made its own decision to
enter into this Agreement and to extend credit to the Company hereunder. Each
Bank also represents that it will, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigations as it deems necessary
to inform itself as to the business, prospects, operations, property, financial
and other condition and creditworthiness of the Company. Except for notices,
reports and other documents expressly herein required to be furnished to the
Banks by any Agent, no Agent shall have any duty or responsibility to provide
any Bank with any credit or other information concerning the business,
prospects, operations, property, financial and other condition or
67
119
creditworthiness of the Company which may come into the possession of any of the
Agent-Related Persons.
9.07 Indemnification of Agent. Whether or not the transactions
contemplated hereby are consummated, the Banks shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Company and without limiting the obligation of the Company to do so), pro rata,
from and against any and all Indemnified Liabilities; provided, however, that no
Bank shall be liable for the payment to the Agent-Related Persons of any portion
of such Indemnified Liabilities resulting solely from such Person's gross
negligence or willful misconduct. Without limitation of the foregoing, each Bank
shall reimburse each Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including Attorney Costs) incurred by such Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that such Agent is not
reimbursed for such expenses by or on behalf of the Company. The undertaking in
this Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of the Agent.
9.08 Agent in Individual Capacity. BofA and its Affiliates and Banque
Paribas and its Affiliates may make loans to, issue letters of credit for the
account of, accept deposits from, acquire equity interests in and generally
engage in any kind of banking, trust, financial advisory, underwriting or other
business with the Company and its Affiliates as though BofA and Banque Paribas
were not an Agent hereunder and without notice to or consent of the Banks. The
Banks acknowledge that, pursuant to such activities, BofA or its Affiliates and
Banque Paribas and its Affiliates may receive information regarding the Company
or its Affiliates (including information that may be subject to confidentiality
obligations in favor of the Company) and acknowledge that no Agent shall be
under any obligation to provide such information to them. With respect to its
Loans, BofA and Banque Paribas shall have the same rights and powers under this
Agreement as any other Bank and may exercise the same as though it were not an
Agent, and the terms "Bank" and "Banks" include BofA and Banque Paribas in its
individual capacity.
9.09 Successor Agent. Either Agent may, and at the request of the
Majority Banks shall, resign as Agent upon 30 days' notice to the Banks. If such
Agent resigns under this Agreement, the Majority Banks shall appoint from among
the Banks a successor agent for the Banks. If no successor agent is appointed
prior to the effective date of the resignation of such
68
120
Agent, such Agent may appoint, after consulting with the Banks and the Company,
a successor agent from among the Banks. Upon the acceptance of its appointment
as successor agent hereunder, such successor agent shall succeed to all the
rights, powers and duties of the retiring Agent and the term "Administrative
Agent" or "Documentation Agent," as the case may be, shall mean such successor
agent and the retiring Agent's appointment, powers and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Article IX and Sections 10.04 and 10.05 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement. If no successor agent has accepted appointment as Agent by
the date which is 30 days following a retiring Agent's notice of resignation,
the retiring Agent's resignation shall nevertheless thereupon become effective
and the Banks shall perform all of the duties of the Agent hereunder until such
time, if any, as the Majority Banks appoint a successor agent as provided for
above.
9.10 Withholding Tax. (a) If any Bank is a "foreign corporation,
partnership or trust" within the meaning of the Code and such Bank claims
exemption from, or a reduction of, U.S. withholding tax under Sections 1441 or
1442 of the Code, such Bank agrees with and in favor of the Administrative
Agent, to deliver to the Administrative Agent:
(i) if such Bank claims an exemption from, or a reduction
of, withholding tax under a United States tax treaty, two properly
completed and executed copies of IRS Form 1001 before the payment of any
interest in the first calendar year and before the payment of any interest
in each third succeeding calendar year during which interest may be paid
under this Agreement;
(ii) if such Bank claims that interest paid under this
Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such Bank,
two properly completed and executed copies of IRS Form 4224 before the
payment of any interest is due in the first taxable year of such Bank and
in each succeeding taxable year of such Bank during which interest may be
paid under this Agreement; and
(iii) such other form or forms as may be required under the
Code or other laws of the United States as a condition to exemption from,
or reduction of, United States withholding tax.
Such Bank agrees to promptly notify the Agent of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
69
121
(b) If any Bank claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form 1001 and
such Bank sells, assigns, grants a participation in, or otherwise transfers all
or part of the Obligations of the Company to such Bank, such Bank agrees to
notify the Agent of the percentage amount in which it is no longer the
beneficial owner of Obligations of the Company to such Bank. To the extent of
such percentage amount, the Agent will treat such Bank's IRS Form 1001 as no
longer valid.
(c) If any Bank claiming exemption from United States withholding
tax by filing IRS Form 4224 with the Administrative Agent sells, assigns, grants
a participation in, or otherwise transfers all or part of the Obligations of the
Company to such Bank, such Bank agrees to undertake sole responsibility for
complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the Code.
(d) If any Bank is entitled to a reduction in the applicable
withholding tax, the Administrative Agent may withhold from any interest payment
to such Bank an amount equivalent to the applicable withholding tax after taking
into account such reduction. However, if the forms or other documentation
required by subsection (a) of this Section are not delivered to the
Administrative Agent, then the Agent may withhold from any interest payment to
such Bank not providing such forms or other documentation an amount equivalent
to the applicable withholding tax imposed by Sections 1441 and 1442 of the Code,
without reduction.
(e) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that the Administrative Agent did
not properly withhold tax from amounts paid to or for the account of any Bank
(because the appropriate form was not delivered or was not properly executed, or
because such Bank failed to notify the Agent of a change in circumstances which
rendered the exemption from, or reduction of, withholding tax ineffective, or
for any other reason) such Bank shall indemnify the Administrative Agent fully
for all amounts paid, directly or indirectly, by the Administrative Agent as tax
or otherwise, including penalties and interest, and including any taxes imposed
by any jurisdiction on the amounts payable to the Administrative Agent under
this Section, together with all costs and expenses (including Attorney Costs).
The obligation of the Banks under this subsection shall survive the payment of
all Obligations and the resignation or replacement of the Administrative Agent.
9.11 Collateral Matters. (a) The Documentation Agent is authorized on
behalf of all the Banks, without the necessity of
70
122
any notice to or further consent from the Banks, from time to time to take any
action with respect to any Collateral or the Collateral Documents which may be
necessary to perfect and maintain perfected the security interest in and Liens
upon the Collateral granted pursuant to the Collateral Documents.
(b) The Banks irrevocably authorize the Documentation Agent, at
its option and in its discretion, to release any Lien granted to or held by the
Agent upon any Collateral (i) upon termination of the Commitments and payment in
full of all Loans and all other Obligations known to the Documentation Agent and
payable under this Agreement or any other Loan Document; (ii) constituting
property sold or to be sold or disposed of as part of or in connection with any
disposition permitted hereunder; (iii) constituting property in which the
Company owned no interest at the time the Lien was granted or at any time
thereafter; (iv) constituting property leased to the Company under a lease which
has expired or been terminated in a transaction permitted under this Agreement
or is about to expire and which has not been, and is not intended by the Company
to be, renewed or extended; (v) consisting of an instrument evidencing
Indebtedness or other debt instrument, if the indebtedness evidenced thereby has
been paid in full; or (vi) if approved, authorized or ratified in writing by the
Majority Banks or all the Banks, as the case may be, as provided in subsection
10.01(f). Upon request by the Documentation Agent at any time, the Banks will
confirm in writing the Documentation Agent's authority to release particular
types or items of Collateral pursuant to this subsection 9.11(b), provided that
the absence of any such confirmation for whatever reason shall not affect the
Documentation Agent's rights under this Section 9.11.
(c) Each Bank agrees with and in favor of each other (which
agreement shall not be for the benefit of the Company) that the Company's
obligation to such Bank under this Agreement and the other Loan Documents is not
and shall not be secured by any real property collateral now or hereafter
acquired by such Bank.
ARTICLE X
MISCELLANEOUS
10.01 Amendments and Waivers. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by the Company or ECC therefrom, shall be effective unless the same
shall be in writing and signed by the Majority Banks (or by the Documentation
Agent at the written request of the Majority
71
123
Banks) and the Company and acknowledged by the Agents, and then any such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no such waiver, amendment, or
consent shall, unless in writing and signed by all the Banks and the Company and
acknowledged by the Agents, do any of the following:
(a) increase or extend the Commitment of any Bank (or reinstate
any Commitment terminated pursuant to Section 8.02);
(b) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest, fees or other
amounts due to the Banks (or any of them) hereunder or under any other Loan
Document or reduce the calculation of the amount of, or postpone or delay the
timing of any mandatory prepayment or reduction of Commitment hereunder or under
any other Loan Documents;
(c) reduce the principal of, or the rate of interest specified
herein on any Loan, or (subject to clause (ii) below) any fees or other amounts
payable hereunder or under any other Loan Document;
(d) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which is required for the Banks or any of
them to take any action hereunder; or
(e) amend this Section, or Section 2.14, or any provision herein
providing for consent or other action by all Banks; or
(f) release all or any substantial portion of the Collateral
except as otherwise may be provided in the Collateral Document or except where
the consent of the Majority Banks only is specifically provided for;
and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the applicable Agent in addition to the Majority Banks or
all the Banks, as the case may be, affect the rights or duties of such Agent
under this Agreement or any other Loan Document, and (ii) the Fee Letters and
documents evidencing Specified Swap Contracts may be amended, or rights or
privileges thereunder waived, in a writing executed by the parties thereto.
10.02 Notices. (a) All notices, requests, consents, approvals, waivers and
other communications shall be in writing (including, unless the context
expressly otherwise provides, by facsimile transmission, provided that any
matter transmitted by the Company by facsimile (i) shall be immediately
confirmed by a telephone call to the recipient at the number specified on
72
124
Schedule 10.02, and (ii) shall be followed promptly by delivery of a hard copy
original thereof) and mailed, faxed or delivered, to the address or facsimile
number specified for notices on Schedule 10.02; or, as directed to the Company
or any Agent, to such other address as shall be designated by such party in a
written notice to the other parties, and as directed to any other party, at such
other address as shall be designated by such party in a written notice to the
Company and such Agent.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted in legible form by facsimile
machine, respectively, or if mailed, upon the third Business Day after the date
deposited into the U.S. mail, or if delivered, upon delivery; except that
notices pursuant to Article II or IX to the Agent shall not be effective until
actually received by the Agent.
(c) Any agreement of the Agents and the Banks herein to receive
certain notices by telephone or facsimile is solely for the convenience and at
the request of the Company. The Agents and the Banks shall be entitled to rely
on the authority of any Person purporting to be a Person authorized by the
Company to give such notice and the Agents and the Banks shall not have any
liability to the Company or other Person on account of any action taken or not
taken by the Agents or the Banks in reliance upon such telephonic or facsimile
notice. The obligation of the Company to repay the Loans shall not be affected
in any way or to any extent by any failure by the Agents and the Banks to
receive written confirmation of any telephonic or facsimile notice or the
receipt by the Agents and the Banks of a confirmation which is at variance with
the terms understood by the Agents and the Banks to be contained in the
telephonic or facsimile notice.
10.03 No Waiver; Cumulative Remedies. No failure to exercise and no delay
in exercising, on the part of any Agent or any Bank, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege.
10.04 Costs and Expenses. The Company shall:
(a) whether or not the transactions contemplated hereby are
consummated, pay or reimburse the Agents within ten Business Days after demand
(subject to subsection 4.01(e)) for all out-of-pocket costs and expenses
incurred by each of them in connection with the development, preparation,
delivery, administration and execution of, and any amendment, supplement,
73
125
waiver or modification to (in each case, whether or not consummated), this
Agreement, any Loan Document and any other documents prepared in connection
herewith or therewith, and the consummation of the transactions contemplated
hereby and thereby, including reasonable Attorney Costs incurred by the Agents
with respect thereto; and
(b) pay or reimburse the Agents and each Bank within ten Business
Days after demand (subject to subsection 4.01(e)) for all costs and expenses
(including Attorney Costs) incurred by them in connection with the enforcement,
attempted enforcement, or preservation of any rights or remedies under this
Agreement or any other Loan Document during the existence of an Event of Default
or after acceleration of the Loans (including in connection with any "workout"
or restructuring regarding the Loans, and including in any Insolvency Proceeding
or appellate proceeding); and
(c) pay or reimburse the Agents within ten Business Days after
demand (subject to subsection 4.01(e)) for all appraisal, audit, environmental
inspection and review, search and filing costs, fees and expenses, incurred or
sustained by them in connection with the matters referred to under subsections
(a) and (b) of this Section.
10.05 Company Indemnification. (a) Whether or not the transactions
contemplated hereby are consummated, the Company shall indemnify, defend and
hold the Agent-Related Persons, and each Bank and each of its respective
officers, directors, employees, counsel, agents and attorneys-in-fact (each, an
"Indemnified Person") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses and disbursements (including Attorney Costs) of any kind or
nature whatsoever which may at any time (including at any time following
repayment of the Loans and termination of all Specified Swap Contracts and the
termination, resignation or replacement of the Agent or replacement of any Bank)
be imposed on, incurred by or asserted against any such Person in any way
relating to or arising out of this Agreement or any document contemplated by or
referred to herein, or the transactions contemplated hereby, or any action taken
or omitted by any such Person under or in connection with any of the foregoing,
including with respect to any investigation, litigation or proceeding (including
any Insolvency Proceeding or appellate proceeding) related to or arising out of
this Agreement or the Specified Swap Contracts or the Loans or the use of the
proceeds thereof, whether or not any Indemnified Person is a party thereto (all
the foregoing, collectively, the "Indemnified Liabilities"); provided, that the
Company shall have no obligation hereunder to any Indemnified Person with
respect to Indemnified Liabilities resulting solely
74
126
from the gross negligence or willful misconduct of such Indemnified Person. The
agreements in this Section shall survive payment of all other Obligations.
(b) (i) The Company shall indemnify, defend and hold harmless
each Indemnified Person, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses or disbursements (including Attorney Costs and the
allocated cost of internal environmental audit or review services), which
may be incurred by or asserted against such Indemnified Person in
connection with or arising out of any pending or threatened investigation,
litigation or proceeding. No action taken by legal counsel chosen by the
Agent or any Bank in defending against any such investigation, litigation
or proceeding or requested remedial, removal or response action shall
vitiate or any way impair the Company's obligation and duty hereunder to
indemnify and hold harmless the Agents and each Bank.
(ii) In no event shall any site visit, observation, or
testing by any Agent or any Bank (or any contractee of the Agent or any
Bank) be deemed a representation or warranty that Hazardous Materials are
or are not present in, on, or under, the site, or that there has been or
shall be compliance with any Environmental Law. Neither the Company nor
any other Person is entitled to rely on any site visit, observation, or
testing by any Agent or any Bank. None of the Administrative Agent, the
Documentation Agent or any Bank owes any duty of care to protect the
Company or any other Person against, or to inform the Company or any other
party of, any Hazardous Materials or any other adverse condition affecting
any site or property. None of the Administrative Agent, the Documentation
Agent or any Bank shall be obligated to disclose to the Company or any
other Person any report or findings made as a result of, or in connection
with, any site visit, observation, or testing by the Agent or any Bank.
(c) Survival; Defense. The obligations in this Section shall
survive payment of all other Obligations. At the election of any Indemnified
Person, the Company shall defend such Indemnified Person using legal counsel
satisfactory to such Indemnified Person in such Person's sole discretion, at the
sole cost and expense of the Company. All amounts owing under this Section shall
be paid within 30 days after demand.
10.06 Marshalling; Payments Set Aside. None of the Administrative Agent,
the Documentation Agent or any Bank shall be under any obligation to ▇▇▇▇▇▇▇▇
any assets in favor of the
75
127
Company or any other Person or against or in payment of any or all of the
Obligations. To the extent that the Company makes a payment to an Agent or the
Banks, or an Agent or the Banks exercise their right of set-off, and such
payment or the proceeds of such set-off or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
(including pursuant to any settlement entered into by such Agent or such Bank in
its discretion) to be repaid to a trustee, receiver or any other party, in
connection with any Insolvency Proceeding or otherwise, then (a) to the extent
of such recovery the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such set-off had not occurred, and (b) each Bank
severally agrees to pay to the Administrative Agent upon demand its pro rata
share of any amount so recovered from or repaid by the Administrative Agent.
10.07 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Company may not assign or transfer any
of its rights or obligations under this Agreement without the prior written
consent of the Administrative Agent, the Documentation Agent and each Bank.
10.08 Assignments, Participations, etc. (a) Any Agent may, and with the
written consent of the Agents, which consents shall not be unreasonably
withheld, any other Bank, may at any time assign and delegate to one or more
Eligible Assignees (provided that no written consent of either Agent shall be
required in connection with any assignment and delegation by a Bank to an
Eligible Assignee that is an Affiliate of such Bank) (each an "Assignee") all,
or any ratable part of all, of the Loans, the Commitments and the other rights
and obligations of such Bank hereunder, in a minimum amount of $5,000,000;
provided, however, that (i) the Company and the Agents may continue to deal
solely and directly with such Bank in connection with the interest so assigned
to an Assignee until (A) written notice of such assignment, together with
payment instructions, addresses and related information with respect to the
Assignee, shall have been given to the Company and the Administrative Agent by
such Bank and the Assignee; (B) such Bank and its Assignee shall have delivered
to the Company and the Administrative Agent an Assignment and Acceptance in the
form of Exhibit E ("Assignment and Acceptance") together with any Note or Notes
subject to such assignment and (C) the assignor Bank or Assignee has paid to
each the Administrative Agent a processing fee in the amount of its
$[______________]; and (ii) if the assignor Bank or any of its Affiliates is a
Swap Provider with respect to any Specified Swap Contract, such Bank shall not
assign all of its interest in the
76
128
Loans and the Commitments to an Assignee unless such Assignee, or an Affiliate
of such Assignee, shall also assume all obligations of such assignor Bank or
Affiliate with respect to such Specified Swap Contracts, with the consent of the
Company.
(b) From and after the date that the Administrative Agent notifies
the assignor Bank that it has received (and provided its consent and obtained
the consent of the Documentation Agent) with respect to) an executed Assignment
and Acceptance and payment of the above-referenced processing fee, (i) the
Assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, shall have the rights and obligations of a Bank under the Loan
Documents, and (ii) the assignor Bank shall, to the extent that rights and
obligations hereunder and under the other Loan Documents have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Loan Documents.
(c) Within five Business Days after its receipt of notice by the
Administrative Agent that it has received an executed Assignment and Acceptance
and payment of the processing fee, the Company shall execute and deliver to the
Administrative Agent, new Notes evidencing such Assignee's assigned Loans and
Commitment and, if the assignor Bank has retained a portion of its Loans and its
Commitment, replacement Notes in the principal amount of the Loans retained by
the assignor Bank (such Notes to be in exchange for, but not in payment of, the
Notes held by such Bank). Immediately upon each Assignee's making its processing
fee payment under the Assignment and Acceptance, this Agreement shall be deemed
to be amended to the extent, but only to the extent, necessary to reflect the
addition of the Assignee and the resulting adjustment of the Commitments arising
therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Bank pro tanto.
(d) Any Bank may at any time sell to one or more commercial banks
or other Persons not Affiliates of the Company (a "Participant") participating
interests in any Loans, the Commitment of that Bank and the other interests of
that Bank (the "originating Bank") hereunder and under the other Loan Documents;
provided, however, that (i) the originating Bank's obligations under this
Agreement shall remain unchanged, (ii) the originating Bank shall remain solely
responsible for the performance of such obligations, (iii) the Company and the
Agents shall continue to deal solely and directly with the originating Bank in
connection with the originating Bank's rights and obligations under this
Agreement and the other Loan Documents, and (iv) no Bank shall transfer or grant
any participating interest under which the Participant has rights to
77
129
approve any amendment to, or any consent or waiver with respect to, this
Agreement or any other Loan Document, except to the extent such amendment,
consent or waiver would require unanimous consent of the Banks as described in
the first proviso to Section 10.01. In the case of any such participation, the
Participant shall not have any rights under this Agreement, or any of the other
Loan Documents, and all amounts payable by the Company hereunder shall be
determined as if such Bank had not sold such participation; except that, if
amounts outstanding under this Agreement are due and unpaid, or shall have been
declared or shall have become due and payable upon the occurrence of an Event of
Default, each Participant shall be deemed to have the right of set-off in
respect of its participating interest in amounts owing under this Agreement to
the same extent as if the amount of its participating interest were owing
directly to it as a Bank under this Agreement.
(e) Notwithstanding any other provision in this Agreement, any
Bank may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement and the Note held by
it in favor of any Federal Reserve Bank in accordance with Regulation A of the
FRB or U.S. Treasury Regulation 31 CFR Section203.14, and such Federal Reserve
Bank may enforce such pledge or security interest in any manner permitted under
applicable law.
10.09 Confidentiality. Each Bank agrees to take and to cause its
Affiliates to take normal and reasonable precautions and exercise due care to
maintain the confidentiality of all information identified as "confidential" or
"secret" by the Company and provided to it by the Company, or by an Agent on the
Company's behalf, under this Agreement or any other Loan Document, and neither
it nor any of its Affiliates shall use any such information other than in
connection with or in enforcement of this Agreement and the other Loan Documents
or in connection with other business now or hereafter existing or contemplated
with the Company; except to the extent such information (i) was or becomes
generally available to the public other than as a result of disclosure by the
Bank, or (ii) was or becomes available on a non-confidential basis from a source
other than the Company, provided that such source is not bound by a
confidentiality agreement with the Company known to the Bank; provided, however,
that any Bank may disclose such information (A) at the request or pursuant to
any requirement of any Governmental Authority to which the Bank is subject or in
connection with an examination of such Bank by any such authority; (B) pursuant
to subpoena or other court process; (C) when required to do so in accordance
with the provisions of any applicable Requirement of Law; (D) to the extent
reasonably required in connection with any litigation or proceeding to which any
Agent, any Bank or their respective Affiliates may be
78
130
party; (E) to the extent reasonably required in connection with the exercise of
any remedy hereunder or under any other Loan Document; (F) to such Bank's
independent auditors and other professional advisors; (G) to any Participant or
Assignee, actual or potential, provided that such Person agrees in writing to
keep such information confidential to the same extent required of the Banks
hereunder; (H) as to any Bank or its Affiliate, as expressly permitted under the
terms of any other document or agreement regarding confidentiality to which the
Company is party or is deemed party with such Bank or such Affiliate; and (I) to
its Affiliates.
10.10 Set-off. In addition to any rights and remedies of the Banks
provided by law, if an Event of Default exists or the Loans have been
accelerated, each Bank is authorized at any time and from time to time, without
prior notice to the Company, any such notice being waived by the Company to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held by,
and other indebtedness at any time owing by, such Bank to or for the credit or
the account of the Company against any and all Obligations owing to such Bank,
now or hereafter existing, irrespective of whether or not any Agent or such Bank
shall have made demand under this Agreement or any Loan Document and although
such Obligations may be contingent or unmatured. Each Bank agrees promptly to
notify the Company and the Agents after any such set-off and application made by
such Bank; provided, however, that the failure to give such notice shall not
affect the validity of such set-off and application.
10.11 Notification of Addresses, Lending Offices, Etc. Each Bank shall
notify the Agents in writing of any changes in the address to which notices to
the Bank should be directed, of addresses of any Lending Office, of payment
instructions in respect of all payments to be made to it hereunder and of such
other administrative information as either Agent shall reasonably request.
10.12 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.
10.13 Severability. The illegality or unenforceability of any provision of
this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
10.14 No Third Parties Benefited. This Agreement is made
79
131
and entered into for the sole protection and legal benefit of the Company, the
Banks, the Agents and the Agent-Related Persons, and their permitted successors
and assigns, and no other Person shall be a direct or indirect legal beneficiary
of, or have any direct or indirect cause of action or claim in connection with,
this Agreement or any of the other Loan Documents.
10.15 Governing Law and Jurisdiction. (a) THIS AGREEMENT AND THE NOTES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
CALIFORNIA; PROVIDED THAT THE AGENT AND THE BANKS SHALL RETAIN ALL RIGHTS
ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF
CALIFORNIA OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF CALIFORNIA, AND
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANY, THE AGENT AND
THE BANKS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE COMPANY, THE AGENT AND
THE BANKS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE
COMPANY, THE AGENT AND THE BANKS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY
CALIFORNIA LAW.
(c) Nothing contained in this Section shall override any contrary
provision contained in any Specified Swap Contract.
10.16 Waiver of Jury Trial. THE COMPANY, THE BANKS AND THE AGENT EACH
WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST
ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER
WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE COMPANY, THE
BANKS AND THE AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE
TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE
PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED
BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF
THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF.
THIS WAIVER SHALL APPLY TO ANY
80
132
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS.
10.17 Entire Agreement. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the Company,
the Banks and the Agent, and supersedes all prior or contemporaneous agreements
and understandings of such Persons, verbal or written, relating to the subject
matter hereof and thereof.
81
133
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in Los Angeles, California by their proper and duly
authorized officers as of the day and year first above written.
ENSTAR FINANCE COMPANY, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Title: Chief Financial Officer
----------------------------
By: ______________________________
Title: ___________________________
BANQUE PARIBAS,
as Administrative Agent
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇ / ▇▇ ▇▇▇▇▇▇▇
-------------------------------
Title: Assistant / Managing
Vice President / Director
-------------------------------
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Documentation Agent
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------
Title: Vice President
----------------------------
BANQUE PARIBAS,
as a Bank
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇ / ▇▇ ▇▇▇▇▇▇▇
------------------------------
Title: Assistant / Managing
Vice President / Director
-------------------------------
82
▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ NATIONAL TRUST
AND SAVINGS ASSOCIATION, as a Bank
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------
Title: Vice President
----------------------------
83
135
SCHEDULE 2.01
COMMITMENTS
AND PRO RATA SHARES
Pro Rata
Bank Commitment Share
Banque Paribas $17,500,000 50%
Bank of America National
Trust and Savings
Association $17,500,000 50%
TOTAL $35,000,000 100%
84
136
SCHEDULE 5.18
INSURANCE MATTERS
[None]
85
137
SCHEDULE 7.01
PERMITTED LIENS
[None]
86
138
SCHEDULE 10.02
OFFSHORE AND DOMESTIC LENDING OFFICES
ADDRESSES FOR NOTICES
BANQUE PARIBAS,
as Agent
Banque Paribas
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
BANQUE PARIBAS,
as a Bank
For drawdowns or repayments:
Banque Paribas
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent
Bank of America National Trust
and Savings Association
Department of Entertainment #3283
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
87
▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as a Bank
Domestic and Offshore Lending Office:
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Notices (other than Borrowing notices and Notices of
Conversion/Continuation):
Bank of America National Trust
and Savings Association
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
88
140
EXHIBIT 4.2
SECURITY AGREEMENT
This SECURITY AGREEMENT (this "Agreement") is dated as of
September 30, 1997 and entered into by and between ENSTAR IV/PBD SYSTEMS
VENTURE, a Georgia general partnership ("Grantor"), and ENSTAR FINANCE COMPANY,
LLC, a Delaware limited liability company ("Secured Party").
PRELIMINARY STATEMENTS
On the date hereof, Lender and Enstar Income Program IV-1, L.P., a
Georgia limited partnership ("IV-1"), entered into a loan agreement (as amended,
restated, modified and/or extended, the "IV-1 Loan Agreement"), pursuant to
which Lender agreed to make a revolving credit loan to IV-1 in the aggregate
principal amount outstanding at any time of not more than $3,331,833 (the "IV-1
Loan"). On the date hereof, Lender and Enstar Income Program IV-2, L.P., a
Georgia limited partnership ("IV-2") entered into a loan agreement (as amended,
restated, modified and/or extended, the "IV-2 Loan Agreement" and collectively
with the IV-1 Loan Agreement, the "Loan Agreements") pursuant to which Lender
agreed to make a revolving credit loan to IV-2 in the aggregate principal amount
outstanding at any time of not more than $3,320,667 (the "IV-2 Loan" and
collectively with the IV-1 Loan, the "Loans").
IV-1 and IV-2 own 100% of the general partnership interest in
Grantor, and certain of the proceeds of the Loans will be used by IV-1 and IV-2
for capital expenditures, working capital and other partnership purposes in
connection with Grantor.
As required by the Loan Agreements, Grantor desires to grant to
Lender a security interest in and to the Collateral (as hereinafter defined) and
to undertake the obligations contemplated by this Agreement.
Capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Loan Agreements.
NOW, THEREFORE, in consideration of the premises and in order to
induce Secured Party to make Loans and other extensions of credit under the Loan
Agreements, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Grantor hereby agrees with Secured
Party as follows:
SECTION 1. Grant of Security. Grantor hereby assigns to Secured
Party, and hereby grants to Secured Party a security interest in, all of
Grantor's right, title and interest in and to the following, in each case
whether now or hereafter existing or in which Grantor now has or hereafter
acquires an interest and wherever the same may be located (the "Collateral"):
141
(a) All of its goods, machinery, equipment, inventory and all
other tangible personal property of any nature whatsoever, wherever located,
including without limitation antennae, microwave and other receivers and
transmitters, earth stations, studio and head end equipment, computers, computer
equipment, converters, decoders, power supplies, electronic equipment,
mechanical fittings, signal processors, wire, cable of all types (including
without limitation coaxial and fiber optic cable), amplifiers, filters, traps,
connectors, anchors, radio, television, motion picture and video tape equipment,
including camera, recorders and players, tools and lifts.
(b) All accounts and other rights to receive the payment of money,
including without limitation, receivables, rights to receive the payment of
money under present or future contracts or agreements (whether or not earned by
performance) and rights to receive payments from cable television subscribers
(all such accounts and other such rights being referred to herein as
"Accounts").
(c) To the extent that the valid and enforceable terms thereof or
any valid and enforceable law or regulation applicable thereto does not prohibit
their being subjected to a security interest, all Franchises, rights under
agreements with public utilities and microwave transmission companies,
distribution and exhibition rights, common law and statutory copyrights and
rights in literary property and rights and licenses thereunder, contracts,
licenses and agreements (including without limitation pole rental, attachment or
use agreements) and all rights thereunder (to the extent not included in Section
1(b) hereof), trade names, goodwill, patents and patent rights, inventions,
processes, licenses (including FCC Licenses), leases, royalties, chattel paper,
documents, permits, negotiable and non-negotiable instruments, judgments,
chooses in action and all other general intangibles and intangible property and
all rights thereunder (to the extent not included in Section 1(b) hereof).
(d)(i) All shares of capital stock or membership interests, as the
case may be, in any Person which is a corporation or a limited liability
company; all limited partnership interests in any Person which is a limited
partnership; and all warrants, options and similar rights to acquire such
shares, membership interests or such limited partnership interests. All such
capital stock, limited partnership interests, membership interests, warrants and
other rights are collectively referred to herein as the "Pledged Stock".
(ii) All rights to receive profits or surplus of, or
other Distributions by way of income, return of capital or liquidating
distributions from, any Person that is a partnership, including without
limitation any distributions to general partners. All such rights are
collectively referred to herein as the "Pledged Rights".
(iii) All Indebtedness from time to time owing to the
Company from any Person, together with all security held by the Company with
respect to such Indebtedness (all such Indebtedness being referred to herein as
the "Pledged Indebtedness"). The Pledged Stock,
2
142
the Pledged Rights and the Pledged Indebtedness are collectively referred to
herein as the "Pledged Securities".
(e) All other personal property, assets and things of value of
every kind and nature, tangible or intangible, absolute or contingent, legal or
equitable, of which the Company may be possessed of or entitled to or which are
now owned or may be hereafter acquired by the Company.
(f) All proceeds (including insurance proceeds) and products of
the items of Loan Security described in Sections 1(a) through Section 1(e)
hereof.
SECTION 2. Security for Obligations. This Agreement secures, and
the Collateral is collateral security for, the prompt payment or performance in
full when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including the payment of amounts that would
become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C. Section 362(a)), of all obligations and
liabilities of every nature of IV-1 and IV-2 now or hereafter existing under or
arising out of or in connection with the Loan Agreements, now or hereafter
existing, and all extensions or renewals thereof, whether for principal,
interest (including without limitation interest that, but for the filing of a
petition in bankruptcy with respect to IV-1 or IV-2, would accrue on such
obligations), fees, expenses, indemnities or otherwise, whether voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and whether or not from
time to time decreased or extinguished and later increased, created or incurred,
and all or any portion of such obligations or liabilities that are paid, to the
extent all or any part of such payment is avoided or recovered directly or
indirectly from Secured Party or any Lender as a preference, fraudulent transfer
or otherwise (all such obligations and liabilities being the "Underlying Debt"),
and all obligations of every nature of Grantor now or hereafter existing under
this Agreement (all such obligations of Grantor, together with the Underlying
Debt, being the "Secured Obligations").
SECTION 3. Grantor Remains Liable. Anything contained herein to
the contrary notwithstanding, (a) Grantor shall remain liable under any
contracts and agreements included in the Collateral, to the extent set forth
therein, to perform all of its duties and obligations thereunder to the same
extent as if this Agreement had not been executed, (b) the exercise by Secured
Party of any of its rights hereunder shall not release Grantor from any of its
duties or obligations under the contracts and agreements included in the
Collateral, and (c) Secured Party shall not have any obligation or liability
under any contracts and agreements included in the Collateral by reason of this
Agreement, nor shall Secured Party be obligated to perform any of the
obligations or duties of Grantor thereunder or to take any action to collect or
enforce any claim for payment assigned hereunder.
3
143
SECTION 4. Representations and Warranties. Grantor represents
and warrants as follows:
(a) Ownership of Collateral. Except for the security interest
created by this Agreement, Grantor owns the Collateral free and clear of any
Lien. Except such as may have been filed in favor of Secured Party relating to
this Agreement, no effective financing statement or other instrument similar in
effect covering all or any part of the Collateral is on file in any filing or
recording office.
(b) Location of Equipment and Inventory. All of the Equipment and
Inventory is, as of the date hereof, located in Wabash County, Illinois,
▇▇▇▇▇▇▇▇ County, Missouri and ▇▇▇▇▇▇ County, Missouri.
(c) Negotiable Documents of Title. No Negotiable Documents of
Title are outstanding with respect to any of the Inventory.
(d) Office Locations; Other Names. The chief place of business,
the chief executive office and the office where Grantor keeps its records
regarding the Accounts and all originals of all chattel paper that evidence
Accounts is, and has been located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. Grantor has not in the past done, and does not now
do, business under any other name (including any trade-name or fictitious
business name).
(e) Delivery of Certain Collateral. All chattel paper and all
notes and other instruments (excluding checks) comprising any and all items of
Collateral have been delivered to Secured Party duly endorsed and accompanied by
duly executed instruments of transfer or assignment in blank.
(f) Governmental Authorizations. No authorization, approval or
other action by, and no notice to or filing with, any governmental authority or
regulatory body is required for either (i) the grant by Grantor of the security
interest granted hereby, (ii) the execution, delivery or performance of this
Agreement by Grantor, or (iii) the perfection of or the exercise by Secured
Party of its rights and remedies hereunder (except as may have been taken by or
at the direction of Grantor).
(g) Perfection. This Agreement, together with the filing of
properly completed UCC-1 financing statements in the offices set forth on
Schedule 4(g) attached hereto creates a valid, perfected and first priority
security interest in the Collateral, securing the payment of the Secured
Obligations, and all filings and other actions necessary or desirable to perfect
and protect such security interest have been duly made or taken.
(h) Other Information. All information heretofore, herein or
hereafter supplied to Secured Party by or on behalf of Grantor with respect to
the Collateral is accurate and complete in all respects.
4
144
SECTION 5. Further Assurances.
(a) Grantor agrees that from time to time, at the expense of
Grantor, Grantor will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or desirable, or
that Secured Party may request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable Secured Party to
exercise and enforce its rights and remedies hereunder with respect to any
Collateral. Without limiting the generality of the foregoing, Grantor will: (i)
▇▇▇▇ conspicuously each item of chattel paper included in the Accounts and, at
the request of Secured Party, each of its records pertaining to the Collateral,
with a legend, in form and substance satisfactory to Secured Party, indicating
that such Collateral is subject to the security interest granted hereby, (ii) if
any Account shall be evidenced by a promissory note or other instrument
(excluding checks) or chattel paper, deliver and pledge to Secured Party
hereunder such note or instrument or the original counterpart of such chattel
paper, duly endorsed and accompanied by duly executed instruments of transfer or
assignment, all in form and substance satisfactory to Secured Party, (iii)
execute and file such financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be necessary or
desirable, or as Secured Party may request, in order to perfect and preserve the
security interests granted or purported to be granted hereby, (iv) at any
reasonable time, upon request by Secured Party, exhibit the Collateral to and
allow inspection of the Collateral by Secured Party, or persons designated by
Secured Party, and (v) at Secured Party's request, appear in and defend any
action or proceeding that may affect Grantor's title to or Secured Party's
security interest in all or any part of the Collateral.
(b) Grantor hereby authorizes Secured Party to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral without the signature of Grantor. Grantor agrees that
a carbon, photographic or other reproduction of this Agreement or of a financing
statement signed by Grantor shall be sufficient as a financing statement and may
be filed as a financing statement in any and all jurisdictions.
(c) Grantor will furnish to Secured Party from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as Secured Party may
reasonably request, all in reasonable detail.
SECTION 6. Certain Covenants of Grantor. Grantor shall:
(a) not use or permit any Collateral to be used unlawfully or in
violation of any provision of this Agreement or any applicable statute,
regulation or ordinance or any policy of insurance covering the Collateral;
(b) notify Secured Party of any change in Grantor's name, identity
or partnership structure within 15 days of such change;
5
145
(c) give Secured Party 30 days' prior written notice of any change
in Grantor's chief place of business, chief executive office or residence or the
office where Grantor keeps its records regarding its Accounts and all originals
of all chattel paper that evidence Accounts;
(d) if Secured Party gives value to enable Grantor to acquire
rights in or the use of any Collateral, use such value for such purposes; and
(e) pay promptly when due all property and other taxes,
assessments and governmental charges or levies imposed upon, and all claims
(including claims for labor, materials and supplies) against, the Collateral,
except to the extent the validity thereof is being contested in good faith;
provided that Grantor shall in any event pay such taxes, assessments, charges,
levies or claims not later than five days prior to the date of any proposed sale
under any judgement, writ or warrant of attachment entered or filed against
Grantor or any of the Collateral as a result of the failure to make such
payment.
SECTION 7. Special Covenants with respect to Accounts.
(a) Grantor shall keep its chief place of business and chief
executive office and the office where it keeps its records concerning the
Accounts, and all originals of all chattel paper that evidence Accounts, at the
location therefor specified in Section 4(d) or, upon 30 days' prior written
notice to Secured Party, at such other location in a jurisdiction where all
action that may be necessary or desirable, or that Secured Party may request, in
order to perfect and protect any security interest granted or purported to be
granted hereby, or to enable Secured Party to exercise and enforce its rights
and remedies hereunder, with respect to such Accounts shall have been taken.
Grantor will hold and preserve such records and chattel paper and will permit
representatives of Secured Party at any time during normal business hours to
inspect and make abstracts from such records and chattel paper, and Grantor
agrees to render to Secured Party, at Grantor's cost and expense, such clerical
and other assistance as may be reasonably requested with regard thereto.
(b) Grantor shall, for not less than 5 years from the date on
which such Account arose, maintain (i) complete records of each Account,
including records of all payments received, credits granted and merchandise
returned, and (ii) all documentation relating thereto.
(c) Except as otherwise provided in this subsection (c), Grantor
shall continue to collect, at its own expense, all amounts due or to become due
to Grantor under the Accounts. In connection with such collections, Grantor may
take (and, at Secured Party's direction, shall take) such action as Grantor or
Secured Party may deem necessary or advisable to enforce collection of amounts
due or to become due under the Accounts; provided, however, that Secured Party
shall have the right at any time, upon the occurrence and during the
continuation of an Event of Default and upon written notice to Grantor of its
intention to do so, to notify the account debtors or obligors under
6
146
any Accounts of the assignment of such Accounts to Secured Party and to direct
such account debtors or obligors to make payment of all amounts due or to become
due to Grantor thereunder directly to Secured Party, to notify each Person
maintaining a lockbox or similar arrangement to which account debtors or
obligors under any Accounts have been directed to make payment to remit all
amounts representing collections on checks and other payment items from time to
time sent to or deposited in such lockbox or other arrangement directly to
Secured Party and, upon such notification and at the expense of Grantor, to
enforce collection of any such Accounts and to adjust, settle or compromise the
amount or payment thereof, in the same manner and to the same extent as Grantor
might have done. After receipt by Grantor of the notice from Secured Party
referred to in the proviso to the preceding sentence, (i) all amounts and
proceeds (including checks and other instruments) received by Grantor in respect
of the Accounts shall be received in trust for the benefit of Secured Party
hereunder, shall be segregated from other funds of Grantor and shall be
forthwith paid over or delivered to Secured Party in the same form as so
received (with any necessary endorsement) to be held as cash Collateral and
applied as provided by Section 16, and (ii) Grantor shall not adjust, settle or
compromise the amount or payment of any Account, or release wholly or partly any
account debtor or obligor thereof, or allow any credit or discount thereon.
SECTION 8. Deposit Accounts. Upon the occurrence and during the
continuation of an Event of Default, Secured Party may exercise dominion and
control over, and refuse to permit further withdrawals (whether of money,
securities, instruments or other property) from any deposit accounts maintained
with Secured Party constituting part of the Collateral.
SECTION 9. License of Patents, Trademarks, Copyrights, etc.
Grantor hereby assigns, transfers and conveys to Secured Party, effective upon
the occurrence of any Event of Default, the nonexclusive right and license to
use all trademarks, tradenames, copyrights, patents or technical processes owned
or used by Grantor that relate to the Collateral and any other collateral
granted by Grantor as security for the Secured Obligations, together with any
goodwill associated therewith, all to the extent necessary to enable Secured
Party to use, possess and realize on the Collateral and to enable any successor
or assign to enjoy the benefits of the Collateral. This right and license shall
inure to the benefit of all successors, assigns and transferees of Secured Party
and its successors, assigns and transferees, whether by voluntary conveyance,
operation of law, assignment, transfer, foreclosure, deed in lieu of foreclosure
or otherwise. Such right and license is granted free of charge, without
requirement that any monetary payment whatsoever be made to Grantor.
SECTION 10. Transfers and Other Liens. Grantor shall not:
(a) sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral except as permitted by the Loan Agreements; or
7
147
(b) except for the security interest created by this Agreement,
create or suffer to exist any Lien upon or with respect to any of the Collateral
to secure the indebtedness or other obligations of any Person.
SECTION 11. Secured Party Appointed Attorney-in-Fact. Grantor
hereby irrevocably appoints Secured Party as Grantor's attorney-in-fact, with
full authority in the place and stead of Grantor and in the name of Grantor,
Secured Party or otherwise, from time to time in Secured Party's discretion to
take any action and to execute any instrument that Secured Party may deem
necessary or advisable to accomplish the purposes of this Agreement, including
without limitation:
(a) upon the occurrence and during the continuation of an Event of
Default, to ask for, demand, collect, ▇▇▇ for, recover, compound, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;
(b) upon the occurrence and during the continuation of an Event of
Default, to receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with clauses (a) and (b) above;
(c) upon the occurrence and during the continuation of an Event of
Default, to file any claims or take any action or institute any proceedings that
Secured Party may deem necessary or desirable for the collection of any of the
Collateral or otherwise to enforce the rights of Secured Party with respect to
any of the Collateral;
(d) to pay or discharge taxes or Liens (other than Liens permitted
under this Agreement or the Loan Agreements) levied or placed upon or threatened
against the Collateral, the legality or validity thereof and the amounts
necessary to discharge the same to be determined by Secured Party in its sole
discretion, any such payments made by Secured Party to become obligations of
Grantor to Secured Party, due and payable immediately without demand;
(e) to sign and endorse any invoices, freight or express bills,
bills of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications and notices in connection with Accounts and other
documents relating to the Collateral; and
(f) upon the occurrence and during the continuation of an Event of
Default, generally to sell, transfer, pledge, make any agreement with respect to
or otherwise deal with any of the Collateral as fully and completely as though
Secured Party were the absolute owner thereof for all purposes, and to do, at
Secured Party's option and Grantor's expense, at any time or from time to time,
all acts and things that Secured Party deems necessary to protect, preserve or
realize upon the Collateral and Secured Party's security interest therein in
order to effect the intent of this Agreement, all as fully and effectively as
Grantor might do.
8
148
SECTION 12. Secured Party May Perform. If Grantor fails to perform
any agreement contained herein, Secured Party may itself perform, or cause
performance of, such agreement, and the expenses of Secured Party incurred in
connection therewith shall be payable by Grantor under Section 16.
SECTION 13. Standard of Care. The powers conferred on Secured
Party hereunder are solely to protect its interest in the Collateral and shall
not impose any duty upon it to exercise any such powers. Except for the exercise
of reasonable care in the custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, Secured Party shall
have no duty as to any Collateral or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to any
Collateral. Secured Party shall be deemed to have exercised reasonable care in
the custody and preservation of Collateral in its possession if such Collateral
is accorded treatment substantially equal to that which Secured Party accords
its own property.
SECTION 14. Remedies.
(a) If any Event of Default shall have occurred and be continuing,
Secured Party may exercise in respect of the Collateral, in addition to all
other rights and remedies provided for herein or otherwise available to it, all
the rights and remedies of a secured party on default under the Uniform
Commercial Code as in effect in any relevant jurisdiction (the "Code") (whether
or not the Code applies to the affected Collateral), and also may (i) require
Grantor to, and Grantor hereby agrees that it will at its expense and upon
request of Secured Party forthwith, assemble all or part of the Collateral as
directed by Secured Party and make it available to Secured Party at a place to
be designated by Secured Party that is reasonably convenient to both parties,
(ii) enter onto the property where any Collateral is located and take possession
thereof with or without judicial process, (iii) prior to the disposition of the
Collateral, store, process, repair or recondition the Collateral or otherwise
prepare the Collateral for disposition in any manner to the extent Secured Party
deems appropriate, (iv) take possession of Grantor's premises or place
custodians in exclusive control thereof, remain on such premises and use the
same and any of Grantor's equipment for the purpose of completing any work in
process, taking any actions described in the preceding clause (iii) and
collecting any Secured Obligation, and (v) without notice except as specified
below, sell the Collateral or any part thereof in one or more parcels at public
or private sale, at any of Secured Party's offices or elsewhere, for cash, on
credit or for future delivery, at such time or times and at such price or prices
and upon such other terms as Secured Party may deem commercially reasonable.
Secured Party may be the purchaser of any or all of the Collateral at any such
sale and Secured Party, shall be entitled, for the purpose of bidding and making
settlement or payment of the purchase price for all or any portion of the
Collateral sold at any such public sale, to use and apply any of the Secured
Obligations as a credit on account of the purchase price for any Collateral
payable by Secured Party at such sale. Each purchaser at any such sale shall
hold the property sold absolutely free from any claim or right on the part of
Grantor, and Grantor hereby waives (to the extent permitted by
9
149
applicable law) all rights of redemption, stay and/or appraisal which it now has
or may at any time in the future have under any rule of law or statute now
existing or hereafter enacted. Grantor agrees that, to the extent notice of sale
shall be required by law, at least ten days' notice to Grantor of the time and
place of any public sale or the time after which any private sale is to be made
shall constitute reasonable notification. Secured Party shall not be obligated
to make any sale of Collateral regardless of notice of sale having been given.
Secured Party may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned.
Grantor hereby waives any claims against Secured Party arising by reason of the
fact that the price at which any Collateral may have been sold at such a private
sale was less than the price which might have been obtained at a public sale,
even if Secured Party accepts the first offer received and does not offer such
Collateral to more than one offeree.
(b) (1) Notwithstanding anything to the contrary contained in this
Agreement, but without limiting or waiving any of the Grantor's obligations
hereunder, the Secured Party's remedies hereunder are subject to compliance with
the Communications Act of 1934, as amended (or any successor statute),with all
applicable rules and regulations of the FCC, and with state or local law and
regulations, to the extent applicable thereto; and the Secured Party is not
authorized to take any action pursuant to this Agreement that would constitute
any change of control of any of the FCC Licenses or any franchises or other
authorization to operate a cable television system granted by any federal, state
or local governmental authority or agency ("Franchises") if such change of
control would require under then-existing law (including the rules and
regulations promulgated by the FCC), the prior approval of the FCC or other
governmental authority, without first obtaining such approval of the FCC or
other such governmental authority.
(2) This Agreement and the transactions contemplated hereby
and thereby do not and will not constitute, create, or have the effect of
constituting or creating, directly or indirectly, actual or practical control
over the Grantor by the Secured Party control of which (within the meaning of
the applicable federal, state or local law, including the Communications Act and
FCC's rules and regulations) shall remain with the Grantor until such time as
the Secured Party or any third-party purchaser of the Collateral, shall have
complied with the applicable requirements of the Communications Act of 1934, as
amended (or any successor statute), the applicable rules of the FCC, or other
applicable law relating to any required consent for such change of control.
SECTION 15. Application of Proceeds. Except as expressly provided
elsewhere in this Agreement, all proceeds received by Secured Party in respect
of any sale of, collection from, or other realization upon all or any part of
the Collateral may, in the discretion of Secured Party, be held by Secured Party
as Collateral for, and/or then, or at any other time thereafter, applied in full
or in part by Secured Party against, the Secured Obligations in the following
order of priority:
10
150
FIRST: To the payment of all costs and expenses of such sale,
collection or other realization, including reasonable compensation to
Secured Party and its agents and counsel, and all other expenses,
liabilities and advances made or incurred by Secured Party in connection
therewith, and all amounts for which Secured Party is entitled to
indemnification hereunder and all advances made by Secured Party
hereunder for the account of Grantor, and to the payment of all costs and
expenses paid or incurred by Secured Party in connection with the
exercise of any right or remedy hereunder, all in accordance with Section
16;
SECOND: To the payment of all other Secured Obligations; and
THIRD: To the payment to or upon the order of Grantor, or to
whosoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct, of any surplus then remaining from
such proceeds.
SECTION 16. Indemnity and Expenses.
(a) Grantor agrees to indemnify Secured Party from and against any
and all claims, losses and liabilities in any way relating to, growing out of or
resulting from this Agreement and the transactions contemplated hereby
(including, without limitation, enforcement of this Agreement), except to the
extent such claims, losses or liabilities result solely from Secured Party's
gross negligence or willful misconduct as finally determined by a court of
competent jurisdiction.
(b) Grantor shall pay to Secured Party upon demand the amount of
any and all costs and expenses, including the reasonable fees and expenses of
its counsel and of any experts and agents, that Secured Party may incur in
connection with (i) the administration of this Agreement, (ii) the custody,
preservation, use or operation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of Secured Party hereunder, or (iv) the failure by Grantor to
perform or observe any of the provisions hereof.
SECTION 17. Continuing Security Interest; Transfer of Loans. This
Agreement shall create a continuing security interest in the Collateral and
shall (a) remain in full force and effect until the payment in full of the
Secured Obligations and the cancellation or termination of the Commitments, (b)
be binding upon Grantor, its successors and assigns, and (c) inure, together
with the rights and remedies of Secured Party hereunder, to the benefit of
Secured Party and its successors, transferees and assigns. Without limiting the
generality of the foregoing clause (c), Secured Party may assign or otherwise
transfer any Loans held by it to any other Person in accordance with the
provisions of the Loan Agreements, and such other Person shall thereupon become
vested with all the benefits in respect thereof granted to Secured Party herein
or otherwise. Upon the payment in full of all Secured Obligations and the
cancellation or termination of the Loan Agreements, the security interest
granted
11
151
hereby shall terminate and all rights to the Collateral shall revert to
Grantor. Upon any such termination Secured Party will, at Grantor's expense,
execute and deliver to Grantor such documents as Grantor shall reasonably
request to evidence such termination.
SECTION 18. Amendments; Etc. No amendment, modification,
termination or waiver of any provision of this Agreement, and no consent to any
departure by Grantor therefrom, shall in any event be effective unless the same
shall be in writing and signed by Secured Party and, in the case of any such
amendment or modification, by Grantor. Any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
it was given.
SECTION 19. Notices. (a) All notices, requests, consents,
approvals, waivers and other communications shall be in writing (including,
unless the context expressly otherwise provides, by facsimile transmission,
provided that any matter transmitted by Grantor by facsimile (i) shall be
immediately confirmed by a telephone call to the recipient at the number
specified on Schedule 19 hereof, and (ii) shall be followed promptly by delivery
of a hard copy original thereof) and mailed, faxed or delivered, to the address
or facsimile number specified for notices on Schedule 19 hereof; or, as directed
to Grantor or Secured Party, to such other address as shall be designated by
such party in a written notice to the other parties.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted in legible form by facsimile
machine, respectively, or if mailed, upon the third Business Day after the date
deposited into the U.S. mail, or if delivered, upon delivery.
(c) Any agreement of the Secured Party herein to receive certain
notices by telephone or facsimile is solely for the convenience and at the
request of Grantor. The Secured Party shall be entitled to rely on the authority
of any Person purporting to be a Person authorized by Grantor to give such
notice and the Secured Party shall not have any liability to Grantor or other
Person on account of any action taken or not taken by the Secured Party in
reliance upon such telephonic or facsimile notice. The obligations of Grantor
herein shall not be affected in any way or to any extent by any failure by the
Secured Party to receive written confirmation of any telephonic or facsimile
notice or the receipt by the Secured Party of a confirmation which is at
variance with the terms understood by the Secured Party to be contained in the
telephonic or facsimile notice.
SECTION 20. No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of Secured Party, any right, remedy,
power or privilege hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege.
SECTION 21. Counterparts. This Agreement may be executed in any
number of separate counterparts, each of which, when so
12
152
executed, shall be deemed an original, and all of said counterparts taken
together shall be deemed to constitute but one and the same instrument.
SECTION 22. Severability. The illegality or unenforceability of
any provision of this Agreement or any instrument or agreement required
hereunder shall not in any way affect or impair the legality or enforceability
of the remaining provisions of this Agreement or any instrument or agreement
required hereunder.
SECTION 23. Headings. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 24. Governing Law and Jurisdiction. (a) THIS AGREEMENT
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
CALIFORNIA; PROVIDED THAT THE SECURED PARTY SHALL RETAIN ALL RIGHTS ARISING
UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA OR OF THE UNITED STATES
FOR THE SOUTHERN DISTRICT OF CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH OF GRANTOR AND SECURED PARTY CONSENTS, FOR ITSELF AND IN RESPECT
OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF
GRANTOR AND SECURED PARTY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT
RELATED HERETO. THE SECURED PARTY AND GRANTOR EACH WAIVE PERSONAL SERVICE OF ANY
SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS
PERMITTED BY CALIFORNIA LAW.
SECTION 25. Waiver of Jury Trial. GRANTOR AND SECURED PARTY EACH
WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST
ANY OTHER PARTY, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT
CLAIMS, TORT CLAIMS, OR OTHERWISE. GRANTOR AND SECURED PARTY EACH AGREE THAT ANY
SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.
WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE
RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION
13
153
OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS,
IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS
AGREEMENT OR ANY PROVISION HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
[Remainder of page intentionally left blank.]
14
154
IN WITNESS WHEREOF, Grantor and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
ENSTAR IV/PBD SYSTEMS VENTURE,
a Georgia limited partnership
By: ENSTAR INCOME PROGRAM IV-1,
L.P., a General Partner
By: ENSTAR COMMUNICATIONS
CORPORATION,
its General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Chief Financial Officer
By: ENSTAR INCOME PROGRAM IV-2,
L.P., a General Partner
By: ENSTAR COMMUNICATIONS
CORPORATION,
its General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Chief Financial Officer
ENSTAR FINANCE COMPANY, LLC
By: ENSTAR COMMUNICATIONS
CORPORATION, Managing Member
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Chief Financial Officer
S-1
155
Schedule 4(g)
Filing Jurisdictions
▇▇▇▇▇▇ County, Georgia
Illinois Secretary of State
Wabash County, Illinois
Missouri Secretary of State
▇▇▇▇▇▇ County, Missouri
▇▇▇▇▇▇▇▇ County, Missouri
California Secretary of State
156
EXHIBIT 4.3
ENSTAR INCOME PROGRAM IV-1, L.P.
Request for Borrowing and Partner's Certificate
Enstar Communications Corporation, a Georgia corporation ("Enstar
Communications") and a general partner of Enstar Income Program IV-1, L.P., a
Georgia limited partnership (the "Company"), hereby refers to the Loan Agreement
dated as of September 30, 1997, as from time to time in effect (the "Loan
Agreement") between the Company and Enstar Finance Company, LLC and hereby
certifies that:
1. This certificate is being furnished to Enstar Finance Company,
LLC under the Loan Agreement in connection with a loan to be made under the
revolving credit established by Section 2.1 of the Loan Agreement on the date
(the "Closing Date") and in the amount specified below:
Closing Date:
Amount of Requested Loan:
Type of Required Loan (Base Rate or Offshore Rate):
Interest Period (if Offshore Rate):
2. The representations and warranties contained in Sections 6.3 and
8 of the Loan Agreement are true and correct on and as of the Closing Date with
the same force and effect as though made on and as of such Closing Date.
3. No Default exists on the Closing Date prior to or after giving
effect to the extension of credit to be made on the Closing Date.
4. Each of the conditions set forth in Section 4 of the Credit
Agreement has been satisfied as of the date hereof.
5. Between June 30, 1997 and the Closing Date, neither the business
nor the assets nor the financial condition of the Company has been materially
and adversely affected as the result of any fire, flood, explosion, accident,
drought, strike, lockout, riot, sabotage, confiscation, condemnation or purchase
of any property by governmental authority, activities of armed forces, acts of
God or the public enemy, new or amended legislation or regulation, regulatory
order, judicial decision or other event or development whether or not related to
those enumerated above.
6. Attached as Schedule A to this certificate and made a part
hereof are calculations demonstrating compliance with Section 7.10 of the Loan
Agreement immediately after giving effect to the
157
making of the Loan requested hereby.
7. Except as set forth in a certificate attached hereto, there has
been no change in the Partnership Agreement heretofore certified to Enstar
Finance Company, LLC under the Loan Agreement or in the incumbency of the
officers of Enstar Communications whose signatures have heretofore been
certified to Enstar Finance Company, LLC.
8. Terms defined in the Loan Agreement and not otherwise defined
herein are used herein with the meanings so defined.
IN WITNESS WHEREOF, ENSTAR COMMUNICATIONS CORPORATION has caused this
Request for Borrowings and Partner's Certificate to be signed by its duly
authorized officer this 30th day of September, 1997.
ENSTAR COMMUNICATIONS CORPORATION,
a Georgia corporation
By:________________________________
Title:__________________________
2
158
EXHIBIT A
Section 7.10 Compliance Calculations
Section 7.10.1
Total Debt (a):
Pro Forma
Annualized EBITDA (b):
The ratio of (a) to (b) is _________________
Maximum Permitted is _______________________
Section 7.10.2
EBITDA for four consecutive
Fiscal Quarter periods (a) is ______________
Cash Interest Expense for
four consecutive Fiscal
Quarter periods (b) is _____________________
The ratio of (a) to (b) is _________________
Minimum ratio allowed is 2.00:1.00
Section 7.10.3
EBITDA for four consecutive
Fiscal Quarter periods (a) is _____________
Fixed Charges for four consecutive
Fiscal Quarters (b) is ____________________
The ratio of (a) to (b) is ________________
Minimum ratio allowed is 1.20:1.00
159
EXHIBIT 4.7
E-Mail: ▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
September 30, 1997
Enstar Finance Company, LLC
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Gentlemen:
This opinion is furnished to you pursuant to Section 4.7 of the Loan
Agreement dated as of September 30, 1997 (the "Loan Agreement") between you and
Enstar ______________, a Georgia limited partnership (the "Company"). Terms
defined in the Loan Agreement and not otherwise defined herein are used herein
with the meanings so defined.
We have acted as special counsel to the Company and Enstar
Communications Corporation, a Georgia corporation ("ECC") in connection with the
Loan Agreement and in connection with the transactions contemplated thereby and
as such are familiar with the proceedings taken by them in connection therewith.
We have participated in the preparation of, and have examined executed
counterparts of the Loan Agreement. We have also examined such certificates,
documents and records and have made such examinations of law as we have deemed
necessary to enable us to render the opinions expressed below. In addition, we
have examined and relied upon the representations and warranties contained in
the Loan Agreement and in certificates delivered to you in connection therewith
as to matters of fact (other than facts constituting conclusions of law) and
upon the covenants contained in the Loan Agreement as to the application of
proceeds of the loans made pursuant thereto.
No opinion is expressed herein as to any matter arising under the
Communications Act of 1934, as amended, or the rules and regulations thereunder
or any rule or regulation otherwise under the jurisdiction of the Federal
Communications Commission. We call your attention to the fact that we do not
represent the Company with respect to franchise matters and our opinions
expressed in paragraphs 7 and 8 are made without any independent check or
verification. In addition, our opinions expressed in paragraph 5 with respect to
the perfection of security interests in jurisdictions outside of the State of
California are based solely upon our review of the Uniform Commercial Code as in
effect
160
Enstar Finance Company, LLC
September 30, 1997
Page 2
in such jurisdiction as contained in a Uniform Commercial Code reporting service
published by Commerce Clearing House.
Based on the foregoing, we are of the opinion that:
1. The Company is a duly organized and validly existing limited
partnership in good standing under the laws of the State of Georgia, with powers
adequate for the execution, delivery and performance of the Loan Agreement, for
obtaining the credit contemplated by the Loan Agreement, for securing the
Secured Obligations with the Loan Security, for owning its properties and for
carrying on its business as now conducted and as proposed to be conducted. The
Company is duly qualified or has filed all necessary documents to become
qualified to do business as a foreign limited partnership in the states of
_____________.
2. ECC is a corporation duly organized, validly existing and in
good standing under the laws of the State of Georgia, with corporate powers
adequate for owning its properties, for carrying on its business as now
conducted and as proposed to be conducted and for acting as a general partner of
the Company and for entering into the Loan Agreement on behalf of the Company.
With respect to all matters relating to the Loan Agreement, ECC as a general
partner of the Company has full authority to bind the Company without any
consent of any other partner of the Company. ECC is duly qualified or has filed
all necessary documents to become qualified to do business as a foreign
corporation in the states of Arkansas, California, Illinois, Kentucky, Missouri,
North Carolina, South Carolina, Tennessee and Utah.
3. The Loan Agreement has been duly authorized, executed and
delivered on behalf of the Company by ECC in its capacity as a general partner
of the Company, constitutes the legal, valid and binding obligation of the
Company, and subject to the qualifications in the paragraph following paragraph
8 hereof, is enforceable against the Company in accordance with its terms.
4. The incurrence of the Loan Obligations has been duly authorized
by all necessary partnership action on the part of the Company, and the Loan
Obligations outstanding on the date hereof have been duly authorized by all
necessary partnership action on the part of the Company, constitute the legal,
valid and binding obligations of the Company, entitled to the benefits of the
Loan Security and, subject to the qualifications in the paragraph following
paragraph 8 hereof, are enforceable against the Company in accordance with their
terms.
161
Enstar Finance Company, LLC
September 30, 1997
Page 3
5. The provisions of the Loan Agreement are sufficient to create in
your favor a security interest in all right, title and interest of the Company
in those items and types of Loan Security described in the Loan Agreement in
which a security interest may be created under Article 9 of the Uniform
Commercial Code as in effect in the State of California. Financing statements on
Form UCC-1 have been duly executed by ECC, as a general partner of the Company.
The description of the Loan Security set forth in said financing statements is
sufficient to perfect a security interest in the items and types of Loan
Security described therein in which a security interest may be perfected by the
filing of a financing statement under the Uniform Commercial Code as in effect
in such states. Assuming such financing statements have been duly filed in each
filing office indicated in Exhibit "A" hereto under the Uniform Commercial Code
in effect in each state in which said filing offices are located, and all fees
and taxes in connection with such filings have been paid, such filings are
sufficient to perfect the security interests created by the Loan Agreement in
all right, title and interest of the Company in those items and types of Loan
Security described in the Loan Agreement in which a security interest may be
perfected by the filing of financing statements under the Uniform Commercial
Code in such states. However, we express no opinion as to personal property
affixed to real property in such a manner as to become a fixture under the laws
of any state in which the Loan Security may be located and we call your
attention to the fact that your security interest in certain of such Loan
Security may not be perfected by the filing of financing statements under the
Uniform Commercial Code.
6. The execution and delivery of the Loan Agreement by the Company
does not, and the performance by it with the terms thereof will not, result in
any violation of, or be in conflict with, constitute default under or, except
for the security interests securing the Secured Obligations, result in the
creation of a Lien under, any term or provision of: (a) the Partnership
Agreement or any document or instrument relating to the management or internal
regulation of the Company or interpretative of such Partnership Agreement, (b)
the charter or bylaws of ECC, (c) any license, judgment, decree, order,
agreement, indenture or other instrument applicable to the Company or ECC of
which we have knowledge, or (d) any law, statute or governmental regulation of
the United States of America or the State of California applicable to the
Company or ECC.
7. To the best of our knowledge, there is no action, proceeding or
investigation, pending or threatened, against the Company or ECC which places in
question the validity or
162
Enstar Finance Company, LLC
September 30, 1997
Page 4
enforceability of the Loan Agreement, the Secured Obligations or the Loan
Security.
8. No consent or approval of any trustee or holder of any
Indebtedness or other obligation of the Company or ECC and no consent,
permission, authorization, order or approval of, or other action by, and no
declaration of filing with, any governmental authority or any other Person is
necessary in connection with the execution, delivery and performance by any of
the Company of any Loan Agreement to which it is a party or in connection with
the granting by the Company of Liens in the Loan Security as contemplated by the
Loan Agreement.
Our opinions that the Loan Agreement and the Loan Obligations are
enforceable against the Company in accordance with its terms are subject to (i)
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured parties
and (ii) general principles of equity, regardless of whether enforcement is
sought in proceedings in equity or at law.
We call your attention to the fact that:
i. the effectiveness of each financing statement referred
to in paragraph 5 above terminates five years after the date of filing
unless a continuation statement is filed prior to such termination in
accordance with Section 9-403 of the Uniform Commercial Code;
ii. Section 9-402(7) of the Uniform Commercial Code provides
that if the Company so changes its name, identity or corporate structure
that a filed financing statement becomes seriously misleading, the
filing is not effective to perfect a security interest in collateral
acquired by the Company more than four months after such change unless a
new appropriate financing statement is filed before the expiration of
that period;
iii. if certain tangible Loan Security is moved to a state in
which a financing statement has not been filed or if the Company's
location changes to a state in which a financing statement has not been
filed, Section 9-103 of the Uniform Commercial Code requires that a new
appropriate financing statement be filed in such new state within four
months after such move to continue perfection of the security interest;
163
Enstar Finance Company, LLC
September 30, 1997
Page 5
iv. under certain circumstances described in Section 9-306
of the Uniform Commercial Code, the rights of a secured party to enforce
a perfected security interest in proceeds of collateral may be limited;
and
v. under certain circumstances described in Sections 9-307
and 9-308 of the Uniform Commercial Code, purchasers of collateral may
take the same free of a perfected security interest.
Except as otherwise expressly stated herein, we express no opinion
herein as to the laws of any jurisdiction other than the laws of the State of
California and the laws of the United States of America. Insofar as the opinions
herein expressed depend upon the laws of any other jurisdiction, we have
assumed, for purposes hereof, that such laws are substantially similar to the
laws of the State of California.
This opinion is limited to the matters expressly stated herein and no
opinion is implied or may be inferred beyond the matters expressly stated
herein.
This opinion is delivered by the undersigned to you, and only you, shall
be entitled to rely thereon.
Very truly yours,
WEINSTEIN, BOLDT, RACINE,
HALFHIDE & CAMEL
Professional Corporation
164
EXHIBIT 7.4.1
ENSTAR INCOME PROGRAM IV-1, L.P.,
a Georgia limited partnership
COMPLIANCE CERTIFICATE
Financial
Statement Date: ________________, ____
(the "Test Quarter")
Reference is made to that certain Loan Agreement dated as of September
30, 1997 (as extended, renewed, amended or restated from time to time, the
"Credit Agreement") between Enstar Finance Company, LLC, a Delaware limited
liability company (the "Lender") and Enstar Income Program IV-1, L.P. (the
"Company"). Unless otherwise defined herein, capitalized terms used herein have
the respective meanings assigned to them in the Loan Agreement.
The undersigned hereby certifies as of the date hereof that he/she is
the _______________ of the Corporate General Partner of the Company, and that,
as such, he/she is authorized to execute and deliver this compliance certificate
(the "Certificate") to the Lender on behalf of the Company, and that:
[Use the following paragraph if this Certificate is delivered in connection with
the financial statements required by subsection 7.4.1 of the Loan Agreement.]
1. Attached as Schedule 1 hereto are (a) a true and correct copy of
the audited balance sheet of the Company as at the end of the fiscal year ended
________________, ____ and (b) the related consolidated statements of income or
operations, shareholders' equity and cash flows for such fiscal year, setting
forth in each case in comparative form the figures for the previous fiscal year
and accompanied by the opinion of [________________] or another
nationally-recognized certified independent public accounting firm (the
"Independent Auditor"), which report shall state that such consolidated
financial statements are complete and correct and have been prepared in
accordance with GAAP, and fairly present, in all material respects, the
financial position of the Company for the periods indicated and on a basis
consistent with prior periods.
[Use the following paragraph if this Certificate is delivered in connection with
the financial statements required by subsection 7.4.2 of the Loan Agreement.]
1. Attached as Schedule 1 hereto are (a) a true and correct copy of
the unaudited consolidated balance sheet of the Company and its Subsidiaries as
of the end of the fiscal quarter ended ______________, _____, and (b) the
related unaudited consolidated statements of income, shareholders' equity, and
cash flows for the period commencing on the first day and ending on the last day
of such quarter and certified by the chief financial officer or controller of
the
165
Corporate General Partner that such financial statements were prepared in
accordance with GAAP (subject only to ordinary, good faith year-end audit
adjustments and the absence of footnotes) and fairly present, in all material
respects, the financial position and the results of operations of the Company
and its Subsidiaries.
2. The undersigned has reviewed and is familiar with the terms of
the Loan Agreement and has made, or has caused to be made under his/her
supervision, a detailed review of the transactions and conditions (financial or
otherwise) of the Company during the accounting period covered by the attached
financial statements (the "Test Quarter") with a view to determining whether
during such Test Quarter Company performed, observed and satisfied all of its
obligations. The undersigned certifies that during the Test Quarter, all
covenants and conditions have been so performed and observed and no Default or
Event of Default has occurred or is continuing, with the exceptions set forth
below in response to which Company has taken or proposes to take the following
actions (if none, so state).
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
The undersigned certifies that the calculations made and the information
contained herein are derived from and correctly reflect the books and records of
Company.
3. The following financial covenant analyses and information set
forth on Schedule 2 attached hereto are true and accurate on and as of the date
of this Certificate.
[Signature page follows.]
166
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
September 30, 1997.
ENSTAR COMMUNICATIONS CORPORATION
By:_________________________________
Title:___________________________
167
EXHIBIT 7.4.1
Schedule 1
Compliance Calculations
Section 7.5.2
Aggregate principal amount of Indebtedness of
the Company in respect of Capitalized Lease
Obligations $__________
Maximum Amount Permitted: $ 50,000
Section 7.5.4
Aggregate principal amount of Indebtedness in
respect of judgments or awards outstanding on
the date hereof which have been in force for
less than the applicable appeal period or in
respect of which the Company is in good faith
prosecuting an appeal or proceedings for
review $__________
Maximum Amount Permitted: $ 100,000
Section 7.10.1
Total Debt (a):
Pro Forma
Annualized EBITDA (b):
The ratio of (a) to (b) is _________________
Maximum Permitted is _______________________
Section 7.10.2
EBITDA for four consecutive
Fiscal Quarter periods (a) is ______________
Cash Interest Expense for
four consecutive Fiscal
Quarter periods (b) is _____________________
The ratio of (a) to (b) is _________________
Minimum ratio allowed is 2.00:1.00
168
Section 7.10.3
EBITDA for four consecutive
Fiscal Quarter periods (a) is _____________
Fixed Charges for four consecutive
Fiscal Quarters (b) is ____________________
The ratio of (a) to (b) is ________________
Minimum ratio allowed is 1.20:1.00
Section 7.11.2
Aggregate fixed rental obligations of the
Company for any period of twelve consecutive
months under all leases (other than
Capitalized Leases), including payments
required to be made by the lessee in respect
of taxes and insurance, whether or not
denominated as rent, but excluding rental
payments made by the Company under pole
attachments or use agreements, leases of
microwave services, maintenance contracts and
payments under programming agreements $____________
Maximum Permitted: $ 50,000
Section 7.15
Total Debt $____________
One-third of Adjusted Capital
$____________
Total Debt may not exceed [one-third] of Adjusted Capital.
Dated:______________________________
2
169
EXHIBIT 8.1.1 A
GENERAL PARTNERS
Name Partnership Interest
Enstar Communications Corporation 0.5%
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇. 0.5%
170
EXHIBIT 8.1.1 B
NAMES AND JURISDICTIONS
Names Jurisdictions
Enstar Income Program IV-1, L.P. Illinois
Missouri
Enstar Cable TV
Falcon Cable TV
171
08/14/97
Franchise List by Partnership/Region
===================================================================================================
Partnership Region Franchise Community Granted Expiration
===================================================================================================
ENSTAR CABLE MACOUPIN COUNTY
Macoupin, IL
Auburn, IL City 1/1/96 12/31/04
Carlinville, IL City 10/5/87 10/05/97
Girard, IL City 12/1/87 12/01/97
Nillwood, IL Village 5/8/89 05/08/04
Sunset Lakes, IL Community 2/22/88 12/01/03
Thayer, IL City 12/8/80 12/08/95
Virden, IL City 1/3/88 01/03/98
172
8/14/97
Enstar Income Program IV-I
FCC LICENSES
-----------------------------------------------------------------------------------------
TYPE EXPIRATION CALL SIGN LOCATION REGION
=========================================================================================
ENSTAR CABLE MACOUPIN COUNTY
NONE
173
COMMUNITIES SERVED
PARTNERSHIP: ENSTAR CABLE MACOUPIN COUNTY
REGION: MACOUPIN, IL
Auburn, IL
Carlinville, IL
Girard, IL
Nillwood, IL
Sunset Lakes Association, IL
Thayer, IL
Virden, IL
174
EXHIBIT 8.6.1
08/14/97
Franchise List by Partnership/Region
===================================================================================================
Partnership Region Franchise Community Granted Expiration
===================================================================================================
ENSTAR IV/PBD SYSTEMS VENTURE
Mt. Carmel, IL
Mt. Carmel, IL City 12/31/73 12/31/93
Poplar Bluff, MO
Bloomfield, MO City 2/14/84 02/14/99
Dexter, MO City 4/16/84 01/01/10
Poplar Bluff, MO City 9/16/88 11/03/97
175
8/14/97
Enstar Income Program IV-I
FCC LICENSES
-----------------------------------------------------------------------------------------
TYPE EXPIRATION CALL SIGN LOCATION REGION
=========================================================================================
ENSTAR IV/PBD SYSTEMS VENTURE
NONE
176
COMMUNITIES SERVED
PARTNERSHIP: ENSTAR IV/PBD SYSTEMS VENTURE
REGION: MT. CARMEL, IL
Mt. Carmel, IL
Wabash County, IL
REGION: POPLAR BLUFF, MO
Bloomfield, MO
▇▇▇▇▇▇ County, MO
Dexter, MO
Poplar Bluff, MO
▇▇▇▇▇▇▇▇ County, MO
177
EXHIBIT 12
Addresses
Enstar Income Program IV-1, L.P.
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
FAX (▇▇▇) ▇▇▇-▇▇▇▇
Enstar Finance Company, LLC
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
FAX (▇▇▇) ▇▇▇-▇▇▇▇