SENIOR SUBORDINATED CREDIT AGREEMENT
LENFEST COMMUNICATIONS, INC.,
AS BORROWER,
AND
THE TORONTO-DOMINION BANK,
AS LENDER
hereby agree as
follows as of the 2nd day of May, 1996:
ARTICLE 1
Definitions
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For the purposes of this Agreement:
"Advance" or "Advances" shall mean amounts advanced by the Lender to
the Borrower pursuant to Article 2 hereof on the occasion of any borrowing, and
which shall be in a principal amount of at least $5,000,000 and in integral
multiples of $1,000,000 in excess thereof, except for a Advance which is in an
amount equal to the unused amount of the Commitment which Advance may be in such
amount.
"Affiliate" shall mean any Person directly or indirectly controlling,
controlled by, or under common control with, the Borrower. For purposes of this
definition, "control" when used with respect to any Person includes, without
limitation, the direct or indirect beneficial ownership of more than five
percent (5%) of the voting securities or voting equity of such Person or the
power to direct or cause the direction of the management and policies of such
Person, whether by contract or otherwise, including, without limitation, the
power to elect a majority of the directors or trustees of a corporation or
trust, as the case may be.
"Agreement" shall mean this Senior Subordinated Credit
Agreement.
"Agreement Date" shall mean the date as of which this
Agreement is dated.
"Annualized Operating Cash Flow" shall mean an amount equal to
Operating Cash Flow for the calendar quarter specified, multiplied by four (4).
"Applicable Law" shall mean, in respect of any Person, all provisions
of constitutions, statutes, rules, regulations and orders of governmental bodies
or regulatory agencies applicable to such Person and all orders and decrees of
all courts and arbitrators in proceedings or actions to which the Person in
question is a party or by which it is bound.
"Applicable Margin" shall mean (a) prior to September 3, 1996, three
percent (3%) and (b) on and after September 4, 1996, five percent (5%).
"Australis Media Credit Facility" shall mean the credit facility to be
entered into among Australis Media Limited and Toronto Dominion Australia
Limited and such other parties thereto on terms and conditions satisfactory to
the Lender in its sole and absolute discretion.
"Australis Media Indebtedness" shall mean the Indebtedness of Australis
Media Limited under the Australis Media Credit Facility in such principal amount
as shall be approved by the Lender in its sole and absolute discretion.
"Australis Media Limited" shall mean Australis Media Limited, a
corporation organized and existing under the laws of Australia.
"Authorized Officer" shall mean any officer of the Borrower holding the
office of Vice President or above.
"Authorized Signatory" shall mean such senior personnel of the Borrower
as may be duly authorized and designated in writing by the Borrower to execute
documents, agreements and instruments on behalf of the Borrower.
"Borrower" shall mean Lenfest Communications, Inc., a Delaware
corporation.
"Borrowing Availability" shall mean, as of any date, the Commitment (as
adjusted by the Commitment Reduction Amount) less any amounts previously
advanced to the Borrower hereunder.
"Borrowing Date" shall mean the date on which each Advance is made
available by the Lender to the Borrower pursuant to a Request for Advance.
"Business Day" shall mean a day on which banks and foreign exchange
markets are open for the transaction of business required for this Agreement in
London, England, Houston, Texas and New York, New York, as relevant to the
determination to be made or the action to be taken.
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"Capital Expenditures" shall mean, in respect of any Person,
expenditures for the purchase, repair, replacement or construction of fixed
assets, plant and equipment which are capitalized in accordance with GAAP.
"Capitalized Lease Obligation" shall mean that portion of any
obligation of a Person as lessee under a lease which at the time would be
required to be capitalized on the balance sheet of such lessee in accordance
with GAAP.
"Cash Equivalents" shall mean investments of the type described in
Sections 7.6(b), (c) and (d) hereof.
"Certificate of Financial Condition" shall mean a certificate of
financial condition of the Borrower substantially in the form of Exhibit A
attached hereto, and signed by an Authorized Signatory.
"Commission" shall mean the Federal Communications Commission or any
successor thereto.
"Commitment" shall mean the obligation of the Lender, subject to the
Borrowing Availability, to make Loans in an aggregate amount of up to
Seventy-Five Million Dollars ($75,000,000) to the Borrower pursuant to the terms
and conditions hereof, as such may be reduced by the Commitment Reduction
Amount.
"Commitment Reduction Amount" shall mean an amount equal to the
Borrower's pro rata portion of any reduction of the Indebtedness or commitment
of the lenders under the Australis Media Credit Facility after termination or
release of the Guaranty of the First Guarantor.
"Contiguous Areas" shall mean those geographical areas which are
geographically contiguous to any geographical boundary of the System.
"Continue", "Continuation", and "Continued" shall refer to the
continuation pursuant to Section 2.2(b)(ii) hereof of a Advance from one
Interest Period to the next Interest Period.
"Default" shall mean any Event of Default, and any of the events
specified in Section 8.1 hereof regardless of whether there shall have occurred
any passage of time or giving of notice or both that would be necessary for such
event to be an Event of Default.
"Default Rate" shall mean a simple per annum interest rate equal to the
sum of (a) the LIBOR Basis, plus (b) two percent (2%). In the event there is no
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otherwise applicable LIBOR Basis, the Default Rate shall mean a simple per annum
interest rate equal to the sum of the Federal Funds Rate, plus the Applicable
Margin, plus two and five-eighths percent (2-5/8%).
"Environmental Laws" shall mean any and all applicable federal, state,
local or municipal laws, rules, orders, regulations, statutes, ordinances,
codes, decrees or requirements of any governmental authority regulating,
relating to or imposing liability or standards of conduct concerning
environmental protection matters, including without limitation, Hazardous
Materials, as now or may at any time hereafter be in effect.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as in effect on the Agreement Date and as amended thereafter from time to time.
"ERISA Affiliate" shall mean any Person whose employees, together with
employees of the Borrower or any Restricted Subsidiary, are treated as employed
by a single employer for purposes of Section 414 of the Code.
"Event of Default" shall mean any of the events specified in Section
8.1 hereof, provided that any requirement for notice or lapse of time has been
satisfied.
"Federal Funds Rate" shall mean, as of any date, the weighted average
of the rates on overnight federal funds transactions with the members of the
Federal Reserve System arranged by federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by the Lender from three (3) federal funds brokers
of recognized standing selected by the Lender.
"First Guarantor" shall mean Publishing and Broadcasting, Limited, or
any successor acceptable to the Lender, who shall guaranty not less than
$32,000,000 of the Australis Media Indebtedness.
"Funded Debt" shall mean, with respect to the Borrower and the
Restricted Subsidiaries on a consolidated basis as of any calculation date, the
sum for each such Person of (a) Indebtedness for Money Borrowed (which shall
exclude Indebtedness hereunder), plus (b) Guaranties (which shall exclude the
LCI Guaranty), plus (c) the principal portion of Capitalized Lease Obligations,
all as determined in accordance with GAAP.
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"GAAP" shall mean, as in effect from time to time, generally accepted
accounting principles in the United States, consistently applied.
"Guaranty" or "Guaranteed," as applied to an obligation, shall mean and
include (a) a guaranty, direct or indirect, in any manner, of any part or all of
such obligation or (b) any other agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of non-performance) of any part
or all of such obligation, including, without limiting the foregoing, any
reimbursement obligations with respect to outstanding letters of credit, but
excluding guaranties by endorsement of negotiable instruments for collection or
deposit in the ordinary course of business.
"Hazardous Materials" shall mean any hazardous materials, hazardous
wastes, hazardous constituents, hazardous or toxic substances, petroleum
products (including crude oil or any fraction thereof), or friable asbestos
containing materials defined or regulated as such in or under any Environmental
Law.
"Indebtedness" shall mean, with respect to any Person, without
duplication, (a) all items which in accordance with GAAP would be included in
determining total liabilities as shown on the liability side of a balance sheet
of such Person, except (i) accounts payable which by their terms are less than
sixty (60) days past due, (ii) items of partners' or shareholders' equity or
capital stock or surplus or (iii) items of general contingency or deferred tax
reserves, (b) all direct or indirect obligations secured by any Lien to which
any property or asset owned by such Person is subject, whether or not the
obligation secured thereby shall have been assumed, (c) all Capitalized Lease
Obligations of such Person and all obligations of such Person with respect to
leases constituting part of a sale and lease-back arrangement, (d) all
obligations, contingent or otherwise, arising under Guaranties issued by such
Person, (e) all reimbursement obligations with respect to outstanding letters of
credit, and (f) all obligations of such Person under Interest Rate Hedge
Agreements.
"Indebtedness for Money Borrowed" shall mean, with respect to any
Person, money borrowed and Indebtedness represented by notes payable and drafts
accepted representing extensions of credit, all obligations evidenced by bonds,
debentures, notes or other similar instruments, all Indebtedness upon which
interest charges are customarily paid, and all Indebtedness issued or assumed as
full or partial payment for property or services, whether or not any such notes,
drafts, obligations or Indebtedness represent Indebtedness for money borrowed.
For purposes of this definition, interest which is accrued but not paid on the
original due date for such interest shall be deemed Indebtedness for Money
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Borrowed. Where obligations are evidenced by bonds, debentures, notes or other
similar instruments whose face amount exceeds the amount received by the
Borrower with respect thereto, only the amount received plus any debt discount
amortized as of the calculation date need be taken into account as Indebtedness
for Money Borrowed.
"Indemnitees" shall have the meaning assigned to such term in Section
5.10 hereof.
"Interest Period" shall mean the term of any Advance selected by the
Borrower or otherwise determined in accordance with this Agreement.
Notwithstanding the foregoing, however, (i) any Interest Period which would
otherwise end on a day which is not a Business Day shall be extended to the next
succeeding Business Day unless such Business Day falls in another calendar
month, in which case such Interest Period shall end on the next preceding
Business Day, (ii) any Interest Period which begins on a day for which there is
no numerically corresponding day in the calendar month during which such
Interest Period is to end shall (subject to clause (i) above) end on the last
day of such calendar month, and (iii) no Interest Period shall extend beyond the
Maturity Date. Interest shall be due and payable with respect to any Advance as
provided in Section 2.3 hereof.
"Interest Rate Hedge Agreement" shall mean the obligations of any
Person pursuant to any arrangement with any other Person whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such Person
calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall include, without limitation, interest rate swaps,
caps, floors, collars and similar agreements.
"LCI Credit Agreement" shall mean that certain Credit Agreement dated
as of December 14, 1995 by and among LCI, The Toronto-Dominion Bank, PNC Bank,
National Association, and NationsBank of Texas, N.A., as Arranging Agents, the
other financial institutions party thereto, and Toronto Dominion (Texas), Inc.,
as Lender, as hereafter amended or otherwise modified from time to time.
"LCI Guaranty" shall mean that certain guaranty issued by the Borrower
to the lenders under the Australis Media Credit Facility, guaranteeing the
Australis Media Indebtedness up to Seventy-Five Million Dollars ($75,000,000),
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on terms and conditions satisfactory to the Lender in its sole and absolute
discretion.
"Lender" shall mean The Toronto-Dominion Bank and any assignees or
participants thereof pursuant to and in accordance with Section 10.5 hereof.
"Lender's Office" shall mean the office of Lender located at 31 West
52nd Street, New York, New York 10019, or such other office as may be designated
pursuant to the provisions of Section 10.1 hereof.
"Leverage Ratio" shall mean for any period, the ratio of Funded Debt as
of the end of such period to Annualized Operating Cash Flow for such period.
"LIBOR" shall mean, for any Interest Period, the average (rounded
upward to the nearest one-sixteenth (1/16th) of one percent) of the interest
rates per annum at which deposits in United States dollars for such Interest
Period are offered to the Lender in the London interbank borrowing market at
approximately 11:00 a.m. (London time), two (2) Business Days before the first
day of such Interest Period, in an amount approximately equal to the principal
amount of, and for a length of time approximately equal to the Interest Period
for, the Advance sought by the Borrower.
"LIBOR Basis" shall mean a simple per annum interest rate equal to the
sum of (a) the quotient of (i) LIBOR divided by (ii) one minus the LIBOR Reserve
Percentage, stated as a decimal, plus (b) the Applicable Margin. The LIBOR Basis
shall be rounded upwards to the nearest one-sixteenth (1/16th) of one percent
and shall apply to Interest Periods of one (1) month, two (2) months or three
(3) months, and, once determined, shall remain unchanged during the applicable
Interest Period, except for changes to reflect adjustments in the LIBOR Reserve
Percentage and the Applicable Margin.
"LIBOR Reserve Percentage" shall mean the percentage which is in effect
from time to time under Regulation D of the Board of Governors of the Federal
Reserve System, as such regulation may be amended from time to time, as the
maximum reserve requirement applicable with respect to Eurocurrency Liabilities
(as that term is defined in Regulation D), whether or not the Lender has any
Eurocurrency Liabilities subject to such reserve requirement at that time. The
LIBOR Basis for any Advance shall be adjusted as of the effective date of any
change in the LIBOR Reserve Percentage.
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"Licenses" shall mean any rights, whether based upon any agreement,
statute, ordinance or otherwise, granted by any governmental authority to the
Borrower or any Restricted Subsidiary to own and operate cable television
systems, described as of the Agreement Date on Schedule 4.1(f) attached hereto,
and any other such rights subsequently obtained by the Borrower or any
Restricted Subsidiary, together with any amendment, modification or replacement
with respect thereto.
"Lien" shall mean, with respect to any property, any mortgage, lien,
pledge, assignment, charge, security interest, title retention agreement, levy,
execution, seizure, attachment, garnishment or other encumbrance of any kind in
respect of such property, whether or not choate, vested or perfected, but
excluding any negative pledge with respect to such property. For purposes of
this Agreement, the Borrower shall be deemed to own subject to a Lien any assets
which they have acquired or hold subject to the interest of a vendor or lessor
under any conditional sale agreement, capital lease or other title retention
agreement relating to any such assets.
"Loan Documents" shall mean, without limitation, this Agreement, the
Note, all Requests for Advances and all other documents and agreements executed
or delivered in connection with or contemplated by this Agreement.
"Loans" shall mean, collectively, the amounts advanced by the Lender to
the Borrower under the Commitment, not to exceed the amount of the Commitment,
and evidenced by the Note.
"Materially Adverse Effect" shall mean any materially adverse effect
upon the business, assets, liabilities, condition (financial or otherwise), or
results of operations of the Borrower or any of the Restricted Subsidiaries, or
upon the ability of the Borrower or any of the Restricted Subsidiaries to
construct, operate and maintain the System, or to ensure performance under the
Licenses, this Agreement or any other Loan Document by the Borrower or any of
the Restricted Subsidiaries, resulting from any act, omission, situation,
status, event or undertaking, either singly or taken together.
"Maturity Date" shall mean the earlier to occur of (a) November 18,
1996, (b) the occurrence of any of the following events: (i) termination or
cancellation of the LCI Guaranty; or (ii) repayment in full of the Australis
Media Indebtedness or (c) such earlier date as payment of the Loans shall be due
(whether by acceleration or otherwise).
"Multiemployer Plan" shall have the meaning set forth in
Section 4001(a)(3) of ERISA.
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"Necessary Authorizations" shall mean all approvals and licenses from,
and all filings and registrations with, any governmental or other regulatory
authority or other Applicable Law necessary in order to enable the Borrower to
maintain its investments and conduct its business.
"Net Income" shall mean, as applied to any Person for any fiscal
period, the aggregate amount of net income (or net loss) of such Person, after
taxes, for such period as determined in accordance with GAAP.
"Net Proceeds" shall mean, with respect to any sale, lease, transfer,
or other disposition of the assets of the Borrower or the assets of or interests
in any of its Subsidiaries, the gross sales price for the assets being sold
(including, without limitation, any payments received for non-competition
covenants), net of (a) amounts reserved, if any, for taxes payable with respect
to the sale (after application of any available losses, credits or offsets), (b)
reasonable and customary transaction costs payable by the Borrower or such
Subsidiary in connection with such sale, lease, transfer or other disposition of
assets or interests, (c) reasonable contingencies with respect to such sale,
lease, transfer or other disposition appropriately reserved for by the Borrower
or such Subsidiary, (d) until actually received by the Borrower or such
Subsidiary, any portion of the sales price held in escrow or paid in
installments or evidenced by a non-compete agreement or covenant for which
compensation is paid over time, and (e) in the case of any sale, lease, transfer
or other disposition of assets of an Unrestricted Subsidiary, amounts which are
required to be paid out of the proceeds thereof to any holder of Indebtedness
for Money Borrowed of such Unrestricted Subsidiary (or other Person in whom an
investment by such Unrestricted Subsidiary was made) pursuant to the agreement,
instrument or other document evidencing such Indebtedness for Money Borrowed.
Upon receipt by the Borrower or any of its Subsidiaries of amounts referred to
in clause (d) above, such amounts shall be deemed to be "Net Proceeds." "Net
Proceeds" of any sale, lease, transfer or other disposition of assets of or
interests in any Unrestricted Subsidiary which is not a wholly-owned direct or
indirect Subsidiary of the Borrower shall be adjusted to reflect the aggregate
percentage ownership of such Unrestricted Subsidiary by the Borrower and the
Restricted Subsidiaries.
"Note" shall mean that certain senior subordinated promissory note of
the Borrower in the principal amount of Seventy-Five Million Dollars
($75,000,000), substantially in the form of Exhibit B attached hereto, and any
extensions, renewals, amendments, replacements or substitutions to any of the
foregoing.
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"Obligations" shall mean (a) all payment and performance obligations of
the Borrower to the Lender under this Agreement and the other Loan Documents, as
the same may be amended from time to time, or as a result of making the Loans,
(b) all payment and performance obligations of all obligors (other than the
Borrower) to the Lender under the Loan Documents, as the same may be amended
from time to time, and (c) the obligation to pay an amount equal to the amount
of any and all damage which the Lender may suffer by reason of a breach by the
Borrower or any other obligor of any obligation, covenant or undertaking with
respect to this Agreement or any other Loan Document.
"Operating Cash Flow" shall mean, for the Borrower and the Restricted
Subsidiaries on a consolidated basis in respect of any period, without
duplication, the remainder of (a) the sum of (i) Net Income (excluding any gain
on the sale of any assets or properties of the Borrower or any of the Restricted
Subsidiaries and any non-cash income of the Borrower or any of the Restricted
Subsidiaries), plus (ii) to the extent deducted from Net Income, (A) Total
Interest Expense, (B) depreciation, (C) amortization, (D) deferred income taxes
and (E) other non-cash charges, minus (b) to the extent included in Net Income,
extraordinary income, all as determined in accordance with GAAP. Operating Cash
Flow shall be calculated for the Borrower and the Restricted Subsidiaries on a
consolidated basis after giving effect to any acquisitions and dispositions of
assets occurring during such period as if such transactions had occurred on the
first day of such period.
"Payment Date" shall mean the last day of any Interest Period.
"Permitted Liens" shall mean, as applied to any Person:
(a) any Lien in favor of the Lender given to secure
the Obligations;
(b) (i) Liens on real estate for real estate taxes not yet
delinquent and (ii) Liens for taxes, assessments, judgments, governmental
charges or levies or claims the non-payment of which is being diligently
contested in good faith by appropriate proceedings and for which adequate
reserves have been set aside on such Person's books, but only so long as no
foreclosure, distraint, sale or similar proceedings have been commenced with
respect thereto and remain unstayed for a period of thirty (30) days after their
commencement;
(c) Liens of carriers, warehousemen, mechanics, laborers and
materialmen incurred in the ordinary course of business for sums not yet due or
being diligently contested in good faith, if such reserve or appropriate
provision, if any, as shall be required by GAAP shall have been made therefor;
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(d) Liens incurred in the ordinary course of business in
connection with worker's compensation and unemployment insurance;
(e) Restrictions on the transfer of assets imposed by any of
the Licenses as presently in effect or by the Federal Communications Act of
1934, as amended, and any regulations thereunder;
(f) Liens created under Pole Agreements on cables and other
property affixed to transmission poles;
(g) Easements, rights-of-way, restrictions and other similar
encumbrances on the use of real property which do not interfere with the
ordinary conduct of the business of such Person, or Liens incidental to the
conduct of the business of such Person or to the ownership of its properties
which were not incurred in connection with Indebtedness or other extensions of
credit and which do not in the aggregate materially detract from the value of
such properties or materially impair their use in the operation of the business
of such Person;
(h) Purchase money security interests which are perfected by
operation of law only for a period not in excess of ten (10) days after the
inception thereof and limited to Liens on assets so purchased;
(i) Liens securing Indebtedness permitted under Section 7.1(e)
hereof to the extent incurred in connection with the acquisition of any property
or assets by the Borrower or any of the Restricted Subsidiaries, and Liens
securing Capitalized Lease Obligations permitted under Section 7.1(d) hereof;
provided, that
(i) such Lien shall attach only to the property or asset
acquired in such transaction and shall not extend to or cover any other
assets or properties of the Borrower or any of the Restricted
Subsidiaries; and
(ii) the Indebtedness secured or covered by such Lien shall
not exceed the cost of the asset or property acquired and shall not be
renewed or extended by the Borrower or any of the Restricted
Subsidiaries;
(iii) Liens arising under operating leases for leased
equipment; and
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(iv) Liens existing as of the Agreement Date as
described on Schedule 7.2 attached hereto.
"Person" shall mean an individual, corporation, partnership, limited
liability company, trust or unincorporated organization, or a government or any
agency or political subdivision thereof or, for the purpose of the definition of
"ERISA Affiliate," any trade or business.
"Plan" shall mean an employee benefit plan within the meaning of
Section 3(3) of ERISA maintained for employees of any Person or any affiliate of
such Person.
"Pole Agreements" shall mean the agreements between the Borrower or any
of the Restricted Subsidiaries and the parties referred to in Schedule 1.1 to
this Agreement, as more particularly described therein, and any other agreement
subsequently entered into by the Borrower or any of the Restricted Subsidiaries
permitting the Borrower or any of the Restricted Subsidiaries to make use of the
transmission poles or conduits of such parties in distributing its cable
television signals.
"Public Debt Indenture" shall mean that certain 8-3/8% Senior Notes Due
2005 Indenture, dated as of November 14, 1995, between the Borrower and The Bank
of New York serving as Trustee.
"Reportable Event" shall have the meaning set forth in
Title IV of ERISA.
"Request for Advance" shall mean the certificate signed by an
Authorized Signatory of the Borrower requesting each Advance hereunder, which
certificate shall be denominated a "Request for Advance," and shall be in
substantially the form of Exhibit C attached hereto. Such Request for Advance
shall, among other things, (a) specify the date of the Advance, which shall be a
Business Day, and the amount of the Advance, and (b) state that there shall not
exist, on the date of the requested Advance and after giving effect thereto, a
Default.
"Restricted Payment" shall mean (a) any direct or indirect
distribution, dividend or other payment to any Person (i) on account of any
capital stock (whether common or preferred) of, general or limited partnership
interest in, or other equity securities of or other ownership interests in, the
Borrower (or of any warrants, options or other rights to acquire the same) or
(ii) in connection with any tax sharing agreement; and (b) any management,
consulting or other similar fees, or any interest thereon, payable by the
Borrower to any Affiliate, or to any other Person.
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"Restricted Purchase" shall mean any payment on account of the
purchase, redemption, defeasance or other acquisition or retirement of any
capital stock of, general or limited partnership interest in, or other equity
securities of, or other ownership interest in, the Borrower (or of any warrants,
options or other rights to acquire the same).
"Restricted Subsidiaries" shall mean Suburban Cable TV Co. Inc., a
Pennsylvania corporation, LenComm, Inc., a California corporation, Lenfest West,
Inc., a California corporation, South Jersey Cablevision Associates, a New
Jersey partnership, Lenfest Atlantic, Inc., a New Jersey corporation, Lenfest
South Jersey Investments, Inc., a New Jersey corporation; any other wholly-owned
Subsidiaries of the Borrower which are solely engaged in businesses directly
related to the cable television business and which are acquired by the Borrower
or another Restricted Subsidiary in accordance with the terms of this Agreement,
and such other Subsidiaries of the Borrower as may be designated by the Borrower
as "Restricted Subsidiaries" with the prior written consent of the Lender.
"Sammons Acquisition" shall mean the acquisition by the Borrower of
certain assets pursuant to the certain Asset Purchase Agreement, dated as of May
9, 1995, by and between TCI Communications, Inc. and Sammons Communications of
New Jersey, Inc., Oxford Valley Cablevision, Inc., Sammons Communications of
Pennsylvania, Inc., NTV Realty, Inc., Capital Telecommunications, Inc., and AC
Communications, Inc.
"Senior Notes" shall mean collectively, the 11.30% Senior Notes due
2000, the 11.84% Senior Notes due 1998, and the 9.93% Senior Notes due 2001
issued by the Borrower to the order of various insurance company lenders.
"Shareholders' Agreements" shall mean (i) that certain letter
agreement dated as of December 18, 1991 among H. F. (Gerry) Lenfest, Liberty
Media Corporation, Marguerite B. Lenfest, Diane A. Lenfest, H. Chase Lenfest,
Brook J. Lenfest and the Lenfest Foundation, (ii) that certain Supplemental
Agreement dated as of December 15, 1981 among TCI Growth, Inc., a Nevada
corporation, H. F. and Marguerite B. Lenfest, and Lenfest Communications, Inc.
and that certain Joinder Agreement executed by LMC Lenfest, Inc., (iii) that
certain Amendment to Supplemental Agreement dated May 4, 1984 between Lenfest
Communications, Inc. and TCI Growth, Inc., (iv) that certain Agreement dated
July 1, 1990 between H.F. Lenfest, Marguerite B. Lenfest, Diane A. Lenfest, H.
Chase Lenfest, Brook J. Lenfest and the Lenfest Foundation, Telecommunications,
Inc. and Liberty Media Corporation, (v) that certain Agreement and Consent dated
as of November 1, 1990 by and among TCI Development Corporation, TCI Holdings,
Inc., TCI Liberty, Inc., Liberty Cable, Inc., H. F. Lenfest, Marguerite B.
Lenfest, H. Chase Lenfest, Brook J. Lenfest, Diane A. Lenfest and Lenfest
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Communications, Inc., (vi) those certain Irrevocable Proxies dated March 30,
1990 by Harold Chase Lenfest, Diane A. Lenfest and Brook J. Lenfest,
respectively, in favor of H. F. Lenfest, and (vii) that certain Assignment and
Assumption Agreement dated as of November 4, 1993 among Liberty Cable, Inc., a
Wyoming corporation, Liberty Media Corporation, a Delaware corporation, and LMC
Lenfest, Inc., a Colorado corporation.
"Solvent" shall mean, with respect to any Person on a particular date,
that on such date (i) the fair value of the property (tangible or intangible) of
such Person is greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such Person, (ii) the amount that will be
required to pay the probable liabilities of such Person on its debts as they
become absolute and matured will not be greater than the fair salable value of
the assets of such Person at such time if sold pursuant to an orderly sale,
(iii) such Person is able to realize upon its assets and pay its debts and other
liabilities, contingent obligations and other commitments as they mature in the
normal course of business, (iv) 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 (v) to the best of such Person's
knowledge (after due inquiry), and in its good faith reasonable judgment, 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 after giving due consideration to prevailing
practices in the industry in which such Person is engaged. In computing the
amount of any contingent liability at any time, it is intended that such
liability will be computed at the amount which, in light of all the facts and
circumstances existing at such time, represents the amount that might reasonably
be expected to become an actual or matured liability.
"Subordination Agreement" shall mean that certain Subordination
Agreement, dated as of the Agreement Date, made by the Lender in favor of the
Senior Lenders (as defined therein), subordinating in right and claim the
obligations of the Borrower to the Lender hereunder to the obligations of the
Borrower to the Senior Lender.
"Subsidiary" shall mean, as applied to any Person, (a) any corporation
of which fifty percent (50%) or more of the outstanding stock (other than
directors' qualifying shares) having ordinary voting power to elect a majority
of its board of directors, regardless of the existence at the time of a right of
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the holders of any class or classes of securities of such corporation to
exercise such voting power by reason of the happening of any contingency, or any
partnership of which fifty percent (50%) or more of the outstanding partnership
interests, is at the time owned by such Person, or by one or more Subsidiaries
of such Person, or by such Person and one or more Subsidiaries of such Person,
and (b) any other entity which is controlled or susceptible to being controlled
by such Person, or by one or more Subsidiaries of such Person, or by such Person
and one or more Subsidiaries of such Person, whether by contract or otherwise.
"System" shall mean, collectively, the cable television systems owned
by the Borrower and the Restricted Subsidiaries on the Agreement Date or
hereafter acquired by the Borrower or any of the Restricted Subsidiaries in
accordance with the terms and conditions of this Agreement.
"TCI Swap" shall mean that certain swap and exchange by
Tele-Communications, Inc., a Delaware corporation, of the assets comprising the
Wilmington, Delaware cable television system for assets comprising the
Oakland/San Francisco Bay cluster of cable television systems.
"Total Debt" shall mean, as of any calculation date, the sum of (a)
Funded Debt, plus (b) the unfunded principal amount of the LCI Guaranty, plus
(c) the principal amount outstanding under this Agreement.
"Total Interest Expense" shall mean, for any period with respect to the
Borrower and the Restricted Subsidiaries on a consolidated basis, the aggregate
amount of all interest accrued in respect of Funded Debt and the portion of
payments under Capitalized Lease Obligations which constitutes imputed interest,
all as determined in accordance with GAAP.
"Unrestricted Subsidiaries" shall mean all Subsidiaries of the Borrower
which are not Restricted Subsidiaries.
Each definition of an agreement in this Article 1 shall include such
agreement as amended from time to time with the prior written consent of the
Lender.
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ARTICLE 2
Loans
Section 2.1 The Loans.
(a) The Lender hereby agrees, upon the terms and subject to
the conditions of this Agreement, to lend prior to the Maturity Date to the
Borrower on such Borrowing Date an amount not to exceed, in the aggregate for
all such Borrowing Dates, the amount of the Commitment, subject at all times to
the Borrowing Availability. Advances under the Commitment may be repaid and
Continued as provided in Section 2.2(b)(ii) hereof in order to effect changes to
the LIBOR Basis applicable to Advances under the Commitment, provided, however,
that amounts repaid hereunder may not be reborrowed.
(b) The Loans shall be repayable in accordance with the terms
and provisions set forth herein and shall be evidenced by the Note, duly
executed and delivered by the Authorized Signatories, payable in full on
Maturity Date.
(c) The Loans hereunder shall be senior subordinated
obligations of the Borrower and shall be subordinated to amounts outstanding
under the LCI Credit Agreement pursuant to the terms and conditions of the
Subordination Agreement.
Section 2.2 Manner of Borrowing and Disbursement.
(a) Choice of Interest Rate, Etc. The initial Advance and all
subsequent Advances shall be made as Advances; provided, however, that the
Borrower may not receive a Advance pursuant to a Continuation of an Advance
under Section 2.2(b)(ii) hereof or otherwise after the occurrence and during the
continuance of an Event of Default hereunder and such Advance shall instead bear
interest at the Default Rate. Advances shall in all cases be subject to Article
9 hereof. Any notice given to the Lender in connection with a requested Advance
hereunder shall be given to the Lender prior to 10:00 a.m. (New York, New York)
in order for such Business Day to count toward the minimum number of Business
Days required.
(b) Advances.
(i) Advances. Upon request, the Lender, whose determination
shall be conclusive, shall determine the available LIBOR Basis and
shall notify the Borrower of such LIBOR Basis. The Borrower shall give
the Lender at least three (3) Business Days' irrevocable prior written
notice or telecopied notice followed immediately by written notice
(which notice shall be in the form of an original Request for Advance
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in the case of such Advance); provided, however, that the Borrower's
failure to confirm any telecopied notice with written notice (whether
in the form of an original Request for Advance or otherwise) shall not
invalidate any notice so given.
(ii) Repayments and Continuations. The Borrower shall
give the Lender at least three (3) Business Days' prior written notice
if all or a portion of any Advance outstanding on its Payment Date (i)
is to be repaid or continued, in whole or in part, or (ii) is to be
repaid and not continued. Upon such Payment Date such Advance will,
subject to the provisions hereof, be so repaid and, as applicable,
continued.
(c) Disbursement. Prior to 1:00 p.m. (New York, New York time)
on the date of an Advance hereunder, the Lender shall, subject to the
satisfaction of the conditions set forth in Article 3, make available to the
Borrower the amount of the Advance requested by wire transfer pursuant to the
Borrower's instructions in the applicable Request for Advance.
Section 2.3 Interest and Fees.
(a) On Advances. Interest on each Advance shall be computed on
the basis of a 360-day year for the actual number of days elapsed and shall be
payable at the LIBOR Basis for such Advance in arrears on the applicable Payment
Date. Interest on Advances then outstanding shall also be due and payable on the
Maturity Date.
(b) Interest if no Notice of Selection of LIBOR Basis. If the
Borrower fails to give the Lender timely notice of its selection of a LIBOR
Basis, or if for any reason a determination of a LIBOR Basis for any Advance is
not timely concluded, the Federal Funds Rate, plus the Applicable Margin, plus
five-eighths of one percent (5/8%) shall apply to such Advance, calculated daily
on the basis of a 365/366-day year and actual days elapsed. Interest accruing at
such rate shall be due and payable in arrears on the last day of each calendar
quarter (which shall be the Payment Date for such Advance) and on the Maturity
Date.
(c) Interest Upon Default. Immediately upon the occurrence and
during the continuance of an Event of Default, interest on the outstanding
principal balance of the Loans shall accrue at the Default Rate from the date of
such Event of Default and shall be payable upon the earlier of DEMAND or the
Maturity Date.
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(d) Accrual. All interest on the Loans shall accrue as of the
first day of each Advance hereunder through but excluding the Payment Date for
such Advance.
(e) Commitment Fee. Borrower hereby agrees to pay to the
Lender a commitment fee (the "Commitment Fee"), calculated on the basis of a
360-day year and actual days elapsed, equal to one-half of one percent (1/2 of
1%) per annum of the average daily unused amount of the Commitment, payable on
the first day of each calendar quarter for the previous calendar quarter or
portion thereof (commencing with the first such date following the Agreement
Date) and on the Maturity Date.
Section 2.4 Prepayment and Commitment Reduction.
(a) Advances may be prepaid upon three (3) Business Days'
prior written notice to the Lender, provided that the Borrower shall reimburse
the Lender on the earlier of demand or the Maturity Date, for any loss or
out-of-pocket expense incurred by the Lender in connection with such prepayment,
as set forth in Section 2.7. Any notice of prepayment shall be irrevocable and
all amounts prepaid on the Loans shall be applied first to interest and fees and
other amounts due hereunder, and then to principal. Partial prepayments shall be
in a principal amount of at least $2,000,000 and integral multiples of
$1,000,000.
(b) Upon three (3) Business Days' prior written notice to the
Lender, Borrower may, at its option, terminate and/or reduce the Commitment, in
whole or in part, in integral multiples of $5,000,000, on the date specified in
such notice, by paying to the Lender the amount of the accrued amount of the
Commitment Fee applicable to the amount of the Commitment reduction. In no event
may Borrower reduce the Commitment below the sum of the principal amount of the
Loans outstanding hereunder unless such reduction is accompanied by a payment in
the amount of the Loans in excess of the Commitment so reduced. The Commitment,
once terminated or reduced, may not be reinstated or increased.
Section 2.5 Loan Accounts. The Lender will maintain one or more loan
accounts for the Borrower to which the Lender will charge all amounts advanced
to or for the benefit of Borrower hereunder or under any of the other Loan
Documents and to which the Lender will credit all amounts collected under each
such credit facility from or on behalf of the Borrower. The unpaid principal
amount of the Loans, the unpaid interest accrued thereon, the interest rate or
rates applicable to such unpaid principal amount and the accrued and unpaid
fees, premiums and other amounts due hereunder shall at all times be ascertained
from the records of the Lender and such records shall constitute prima facie
evidence of the amounts so due and payable.
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Section 2.6 Manner of Payment.
(a) Each payment (including any prepayment) by the Borrower on
account of the principal of or interest on the Loans, and any other amount owed
to the Lender under this Agreement or the other Loan Documents shall be made not
later than 10:00 a.m. (New York, New York time) on the date specified for
payment under this Agreement to the Lender at the Lender's Office, for the
account of the Lender, in lawful money of the United States of America in
immediately available funds. Any payment received by the Lender after 10:00 a.m.
(New York, New York time) shall be deemed received on the next Business Day.
Receipt by the Lender of any payment hereunder prior to 10:00 a.m. (New York,
New York time) on any Business Day shall be deemed to constitute receipt by the
Lender on such Business Day. If any payment under this Agreement or the Note
shall be specified to be made on a day which is not a Business Day, such payment
shall be made on the next succeeding day which is a Business Day, and such
extension of time shall in such case be included in computing interest and fees,
if any, due and payable on such next succeeding Business Day.
(b) The Borrower agrees to pay principal, interest, fees and
all other amounts due hereunder or under the Note or the other Loan Documents
without set-off or counterclaim or any deduction whatsoever.
(c) Prior to the acceleration of the Loans under Section 8.2
hereof, if some but less than all amounts due from the Borrower are received by
the Lender, the Lender shall distribute such amounts in the following order of
priority: (i) to the costs and expenses, if any, incurred by the Lender in the
collection of such amounts under this Agreement; (ii) to the payment of all fees
then due and payable hereunder; (iii) to the payment of interest then due and
payable on the Loans; (iv) to the payment of all other amounts not otherwise
referred to in this Section 2.6(c) then due and payable hereunder or under the
Note or the other Loan Documents; and (v) to the payment of principal then due
on the Loans outstanding under the Commitment.
Section 2.7 Reimbursement.
(a) Whenever the Lender shall sustain or incur any losses or
out-of-pocket expenses in connection with (i) failure by the Borrower to borrow
any Advance after having given notice of its intention to borrow in accordance
with Section 2.2 hereof (whether by reason of the Borrower's election not to
proceed or the non-fulfillment of any of the conditions set forth in Article 3
hereof), or (ii) prepayment or repayment of any Advance in whole or in part
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(including a prepayment pursuant to Sections 9.2 and 9.3(b) hereof) prior to its
Payment Date, the Borrower agrees to pay to the Lender, upon the earlier of
demand or the Maturity Date, an amount sufficient to compensate the Lender for
all such losses and out-of-pocket expenses. The Lender's good faith
determination of the amount of such losses or out-of-pocket expenses, absent
manifest error, shall be binding and conclusive. Upon the request of the
Borrower, the Lender shall provide the Borrower with its calculation of such
losses and out-of-pocket expenses.
(b) Loss subject to reimbursement hereunder shall be any loss
incurred by the Lender in connection with the re-employment of funds prepaid,
repaid, not borrowed, or paid, as the case may be, and the amount of such loss
shall be the excess, if any, of (i) interest or other costs to the Lender of the
deposit or other sources of funding used to make any such Advance for the
remainder of its Interest Period over (ii) the interest which would be earned by
the Lender if the amount of such Advance were redeployed in the London interbank
borrowing market for the remainder of its putative Interest Period.
Section 2.8 Capital Adequacy. If the Lender shall determine that the
adoption of any Applicable Law regarding the capital adequacy of banks or bank
holding companies, or any change in any Applicable Law or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by the Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such
governmental authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on the Lender's capital as a consequence
of its commitment or its obligations to fund or maintain Advances hereunder to a
level below that which it could have achieved but for such adoption, change or
compliance (taking into consideration the Lender's policies with respect to
capital adequacy immediately before such adoption, change or compliance and
assuming that the Lender's capital was fully utilized prior to such adoption,
change or compliance) by an amount deemed by the Lender in good faith to be
material and the Lender has attempted in good faith, but without success, to
mitigate or eliminate such reduction in its rate of return by assigning its
Loans and its portion of the Commitment to an affiliate of the Lender if such
assignment would be reasonable under the circumstances as determined by the
Lender in good faith and would not be otherwise disadvantageous to the Lender,
then, upon the earlier of demand by the Lender or the Maturity Date, the
Borrower shall immediately pay to the Lender, such additional amounts as shall
be sufficient to compensate the Lender for such reduced return, together with
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interest on such amount from the fourth (4th) day after the date of demand or
the Maturity Date, as applicable, until payment in full thereof at the Default
Rate. A certificate of the Lender setting forth the amount to be paid to the
Lender by the Borrower as a result of any event referred to in this paragraph
shall, absent manifest error, be conclusive, and, at the Borrower's request, the
Lender shall set forth the basis for such determination.
ARTICLE 3
Conditions Precedent
--------------------
Section 3.1 Conditions Precedent to Effectiveness of Agreement. The
obligation of the Lender to undertake the Commitment and to make the initial
Advance hereunder, and the effectiveness of this Agreement is subject to the
prior fulfillment of each of the following conditions:
(a) The Lender shall have received each of the following, in
form and substance satisfactory to the Lender:
(i) a duly executed Note;
(ii) opinions of corporate counsel to the Borrower,
addressed to the Lender and satisfactory to the Lender, dated the
Agreement Date, and the Borrower hereby instructs such counsel to
deliver such opinions to the Lender;
(iii) a duly executed Certificate of Financial
Condition of the Borrower;
(iv) the loan certificate of the Borrower, in
substantially the form attached hereto as Exhibit D, including a
certificate of incumbency with respect to each Authorized Signatory,
together with appropriate attachments which shall include without
limitation, the following items: (A) a copy of the Certificate of
Incorporation of the Borrower, certified to be true, complete and
correct by the Delaware Secretary of State, (B) a true, complete and
correct copy of the By-Laws of the Borrower, as in effect on the date
hereof, (C) a true, complete and correct copy of the resolutions of the
Borrower authorizing the execution, delivery and performance of this
Agreement and the other Loan Documents to which the Borrower is party,
(D) certificates of good standing from appropriate jurisdictions for
the Borrower, (E) a true, complete and correct copy of any
shareholders' agreements or voting trust agreements in effect with
respect to the stock of the Borrower (F) a true and correct list of all
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Licenses granted to the Borrower and the Restricted Subsidiaries,
together with all amendments thereto through the date hereof, and (G) a
true and correct list of all Pole Agreements granted to the Borrower
and the Restricted Subsidiaries, together with all amendments thereto
through the date hereof;
(v) a certificate of an authorized officer of LCI
stating that no default exists under the LCI Credit Agreement, the
Public Debt Indenture or the Senior Notes;
(vi) all such other documents as the Lender may
reasonably request, certified by an appropriate governmental official
or an Authorized Signatory if so requested.
(b) The Lender shall have received evidence reasonably
satisfactory to the Lender that all Necessary Authorizations, including all
necessary consents to the closing of this Agreement, have been obtained or made,
are in full force and effect and are not subject to any pending or threatened
reversal or cancellation, and the Lender shall have received a certificate of an
Authorized Signatory so stating.
(c) The Lender shall have received such fees as are
due and payable to the Lender on the Agreement Date.
Section 3.2 All Advances. The obligation of the Lender to make each
Advance hereunder (including the initial Advance) shall be subject to
fulfillment of the following conditions:
(a) There shall exist no Default or Event of Default hereunder
or any event or condition which, with the making of such Advance, would
constitute a Default or Event of Default hereunder, and there shall exist no
default or event of default or any event or condition which, with the making of
such Advance, would constitute a default or event of default under the LCI
Credit Agreement or the Public Debt Indenture or the Senior Notes.
(b) All representations and warranties made by Borrower
hereunder shall be true and correct in all respects as of the date of such
Advance with the same force and effect as if made on and as of such date.
(c) The Lender shall have received a certified copy of
the Australis Media Credit Facility;
(d) The Lender shall have received a duly executed LCI
Guaranty, in form and substance satisfactory to the Lender;
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(e) The Lender shall have received certified copies of the
Guaranties with respect to the Australis Media Credit Facility issued
by (A) the First Guarantor, (B) PBL Film Library Pty Limited, (C)
Australis Media Limited, (D) Australis Holdings Pty Limited, (E) UTH
Asia/Pacific, Inc. and (F) Guiness Peat Group Plc, in each case in form
and substance satisfactory to the Lender;
(f) The Lender shall have received evidence satisfactory to
the Lender that demand shall have been made under the LCI Guaranty not to exceed
the Borrower's pro rata share of the Australis Media Indebtedness guaranteed
under the LCI Guaranty.
(g) The Lender shall have received evidence satisfactory to
the Lender that J.P. Morgan shall have contibuted to the Borrower not less than
$10,000,000 of equity.
(h) The Borrower shall have delivered to the Lender a
duly executed Request for Advance.
Section 3.3 Delay in Satisfaction of Conditions Precedent. If the
Lender makes an Advance prior to the fulfillment of any condition precedent set
forth in this Article 3, the making of such Advance shall constitute only an
extension of time for the fulfillment of such condition and not a waiver
thereof. The failure of Borrower, for any reason, to satisfy or cause to be
satisfied any such condition precedent within thirty (30) days after the date
thereof shall constitute an Event of Default for all purposes under this
Agreement and the Loan Documents, unless such failure is waived in writing by
the Lender.
ARTICLE 4
Representations and Warranties
------------------------------
Section 4.1 Representations and Warranties. The Borrower hereby agrees,
represents and warrants to the Lender that:
(a) Organization; Ownership; Power; Qualification;
Capitalization. The Borrower is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. The Borrower has
the corporate power and authority to own its properties and to carry on its
business as now being and hereafter proposed to be conducted. The Borrower is
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duly qualified, in good standing and authorized to do business in each
jurisdiction in which the character of its properties or the nature of its
businesses requires such qualification or authorization.
(b) Authorization; Enforceability. The Borrower has the
corporate power and has taken all necessary corporate action to authorize it to
borrow hereunder, to execute, deliver and perform this Agreement and each of the
other Loan Documents to which it is a party in accordance with their respective
terms, and to consummate the transactions contemplated hereby and thereby. This
Agreement has been duly executed and delivered by the Borrower and is, and each
of the other Loan Documents to which the Borrower is party is, a legal, valid
and binding obligation of the Borrower enforceable in accordance with its terms,
except as such enforceability may be limited by (a) bankruptcy, insolvency,
reorganization, arrangement, moratorium or similar laws of general applicability
affecting the enforcement of creditors' rights and (b) the application of
general principles of equity.
(c) Subsidiaries; Authorization. The Borrower has no
Subsidiaries other than as set forth on Schedule 4.1(c) hereto. Each of the
Restricted Subsidiaries is a corporation or partnership, as the case may be,
duly organized, validly existing, and in good standing under the laws of the
state of its organization, and has the power and authority, corporate,
partnership or otherwise, to own its properties and to carry on its business as
now being and hereafter proposed to be conducted. Each Restricted Subsidiary is
duly qualified, in good standing and authorized to do business in each
jurisdiction in which the character of its properties or the nature of its
business requires such qualification or authorization. All of the issued and
outstanding capital stock or other ownership interests of the Restricted
Subsidiaries is fully paid and non-assessable and is owned or held beneficially
and of record as shown on Schedule 4.1(c) attached hereto. None of the
Restricted Subsidiaries has any stock or securities or other ownership interests
convertible into or exchangeable for any shares of its capital stock or other
ownership interests, nor are there any preemptive or similar rights to subscribe
for or to purchase, or any other rights to subscribe for or to purchase, or any
options for the purchase of, or any agreements providing for the issuance
(contingent or otherwise) of, or any calls, commitments, or claims of any
character relating to, any such capital stock or other ownership interests, or
any stock or securities convertible into or exchangeable for any such capital
stock or other ownership interests. None of the Restricted Subsidiaries is
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subject to any obligation (contingent or otherwise) to repurchase or otherwise
acquire or retire any shares of its capital stock or other ownership interests
or to register any shares of its capital stock or other ownership interests, and
there are no agreements restricting the transfer of any shares of such capital
stock or other ownership interests.
(d) Compliance with Other Loan Documents and Contemplated
Transactions. The execution, delivery and performance, in accordance with their
respective terms, by the Borrower of this Agreement and the other Loan Documents
to which it is party, and the consummation of the transactions contemplated
hereby and thereby, do not and will not (i) require any consent or approval not
already obtained, (ii) violate any Applicable Law respecting the Borrower or any
of its Subsidiaries, (iii) conflict with, result in a breach of, or constitute a
default under any of the certificates or articles of incorporation or
partnership or by-laws or partnership agreements, as amended, of the Borrower or
of any of its Subsidiaries, under any License or under any indenture, agreement,
or other instrument to which the Borrower or any of its Subsidiaries is a party
or by which it or any of its properties may be bound, including, without
limitation, the Pole Agreements, or (iv) result in or require the creation or
imposition of any Lien upon or with respect to any property now owned or
hereafter acquired by the Borrower or any of the Restricted Subsidiaries except
Permitted Liens.
(e) Business. The Borrower is engaged solely in the business
of acting as a holding company for its Subsidiaries and of investing in other
cable television systems and investing in other activities directly relating to
the cable television business. The Restricted Subsidiaries are engaged
principally in the business of owning, operating and maintaining the System. Not
less than ninety percent (90%) of Annualized Operating Cash Flow as of any date
of determination is derived directly from the cable television business.
(f) Licenses, etc. The Licenses have been duly authorized (to
the best of the Borrower's knowledge after due inquiry) by the grantors thereof
and are in full force and effect. The Borrower and the Restricted Subsidiaries
are in compliance in all material respects with all of the provisions thereof.
The Borrower has secured all Necessary Authorizations and all such Necessary
Authorizations are in full force and effect. Neither any License nor any
Necessary Authorization is the subject of any pending or, to the best of the
Borrower's knowledge after due inquiry, threatened revocation which, with
respect to any License or Licenses, if determined adversely, would constitute an
Event of Default under Section 8.1(l) hereof. Except as described on Schedule
4.1(f) attached hereto, there is no Person other than the Borrower or any of its
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Restricted Subsidiaries which is currently providing cable, wireless or
satellite delivered television services in any territory within the System.
(g) Compliance with Law. The Borrower and each of the
Restricted Subsidiaries are in compliance in all material respects with all
Applicable Laws.
(h) Title to Assets. Except for Permitted Liens, the Borrower
and the Restricted Subsidiaries have good, legal and marketable title to, or a
valid leasehold interest in, all of their respective assets. None of such
properties or assets is subject to any Liens, except for Permitted Liens. No
financing statement under the Uniform Commercial Code as in effect in any
jurisdiction and no other filing which names the Borrower or any Restricted
Subsidiary as debtor or which covers or purports to cover any of the assets of
the Borrower or any Restricted Subsidiary is on file in any state or other
jurisdiction, and neither the Borrower nor any Restricted Subsidiary has signed
any such financing statement or filing or any security agreement authorizing any
secured party thereunder to file any such financing statement or filing.
(i) Litigation. Except as described on Schedule 4.1(i)
attached hereto and except for actions, suits, proceedings or investigations as
to which the Borrower is not required to notify the Lender or has given
appropriate notice in accordance with Section 6.6 hereof, there is no action,
suit, proceeding or investigation pending against, or, to the best of the
Borrower's knowledge after due inquiry, threatened against or in any other
manner relating adversely to, the Borrower or any Restricted Subsidiary or any
of its respective properties, including, without limitation, the Licenses, in
any court or before any arbitrator of any kind or before or by any governmental
body, and no such action, suit, proceeding or investigation (i) calls into
question the validity of this Agreement or any other Loan Document, or (ii)
could, if determined adversely to the Borrower or any Restricted Subsidiary,
have a Materially Adverse Effect, except to the extent such action, suit,
proceeding or investigation affects the cable television industry generally.
(j) Taxes. All federal, state and other tax returns of the
Borrower and the Restricted Subsidiaries required by law to be filed have been
duly filed and all federal, state and other taxes, including, without
limitation, withholding taxes, assessments and other governmental charges or
levies required to be paid by the Borrower or any Restricted Subsidiary or
imposed upon the Borrower or any Restricted Subsidiary or any of its respective
properties, income, profits or assets, which are due and payable, have been
paid, except any such (x) the payment of which the Borrower or the applicable
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Restricted Subsidiary is diligently contesting in good faith by appropriate
proceedings, (y) for which adequate reserves have been provided on the books of
the Borrower or the applicable Restricted Subsidiary, and (z) as to which no
Lien other than a Permitted Lien has attached and no foreclosure, distraint,
sale or similar proceedings have been commenced. The charges, accruals and
reserves on the books of the Borrower and the Restricted Subsidiaries in respect
of taxes are, in the judgment of the Borrower, adequate. All pro forma financial
information provided to the Lender in connection with this Agreement have been
based upon reasonable assumptions and prepared in good faith.
(k) Financial Statements. The Borrower has furnished to the
Lender audited financial statements for the Borrower and the Restricted
Subsidiaries on a consolidated basis which are complete and correct in all
material respects and present fairly, in accordance with GAAP, the financial
position of such Persons as of December 31, 1995 and the results of operations
for the period then ended. The Borrower and the Restricted Subsidiaries have no
material liabilities, contingent or otherwise, other than as disclosed in the
financial statements referred to in the preceding sentence or in the financial
statements delivered to the Lender pursuant to Sections 6.1 and 6.2 hereof, and
there are no material unrealized losses of the Borrower and the Restricted
Subsidiaries and no material anticipated losses of the Borrower other than those
which have been previously disclosed in writing to the Lender and identified to
the Lender as such. The financial projections delivered to the Lender prior to
the Agreement Date have been prepared by the Borrower in good faith and based on
reasonable assumptions.
(l) ERISA. The Borrower, each Restricted Subsidiary, each
ERISA Affiliate and each of their Plans are in compliance with ERISA and the
Code. Neither the Borrower, nor any Restricted Subsidiary nor any ERISA
Affiliate has incurred any accumulated funding deficiency with respect to any
such Plan within the meaning of ERISA or the Code. The Borrower, each Restricted
Subsidiary and each ERISA Affiliate have complied with all requirements of ERISA
Sections 601 through 608 and Code Section 4980B. Neither the Borrower, nor any
Restricted Subsidiary nor any ERISA Affiliate has made any promises of
retirement or other benefits to employees, except as set forth in any Plan.
Neither the Borrower, nor any Restricted Subsidiary nor any ERISA Affiliate has
incurred any liability to the Pension Benefit Guaranty Corporation in connection
with any such Plan. The assets of each such Plan which is subject to Title IV of
ERISA, if any, are sufficient to provide the benefits under such Plan payment of
which the Pension Benefit Guaranty Corporation would guarantee if such Plan were
terminated, and such assets are also sufficient to provide all other "benefit
liabilities" (as defined in ERISA Section 4001(a)(1b)) due under the Plan upon
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termination. No Reportable Event has occurred and is continuing with respect to
any such Plan. No such Plan or trust created thereunder, or party in interest
(as defined in Section 3(14) of ERISA), or any fiduciary (as defined in Section
3(21) of ERISA), has engaged in a "prohibited transaction" (as such term is
defined in Section 406 of ERISA or Section 4975 of the Code) which would subject
such Plan or any other Plan of the Borrower, any trust created thereunder, or
any such party in interest or fiduciary, or any party dealing with any such Plan
or any such trust to the penalty or tax on "prohibited transactions" imposed by
Section 502 of ERISA or Section 4975 of the Code. Neither the Borrower, nor any
Restricted Subsidiary nor any ERISA Affiliate is a participant in, or is
obligated to make any payment to, any Multiemployer Plan.
(m) Compliance with Regulations G, T, U and X. Neither the
Borrower nor any Restricted Subsidiary is engaged principally in or has as one
of its important activities the business of extending credit for the purpose of
purchasing or carrying, and neither the Borrower nor any Restricted Subsidiary
owns or presently intends to acquire, any "margin security" or "margin stock" as
defined in Regulations G, T, U, and X (12 C.F.R. Parts 221 and 224) of the Board
of Governors of the Federal Reserve System (herein called "margin stock"). None
of the proceeds of the Loans will be used, directly or indirectly, for the
purpose of purchasing or carrying any margin stock or for the purpose of
reducing or retiring any Indebtedness which was originally incurred to purchase
or carry margin stock or for any other purpose which might constitute this
transaction a "purpose credit" within the meaning of said Regulations G, T, U,
and X. Neither the Borrower nor any Restricted Subsidiary nor any bank acting on
its behalf has taken or will take any action which might cause this Agreement or
the Note to violate Regulation G, T, U, or X or any other regulation of the
Board of Governors of the Federal Reserve System or to violate the applicable
provisions of the Securities Exchange Act of 1934, in each case as now in effect
or as the same may hereafter be in effect. If so requested by the Lender, the
Borrower will furnish the Lender with (i) a statement or statements in
conformity with the requirements of Federal Reserve Forms G-3 and/or U-1
referred to in Regulations G and U of said Board of Governors and (ii) other
documents evidencing its compliance with the margin regulations, including
without limitation an opinion of counsel in form and substance satisfactory to
the Lender. Neither the making of the Loans nor the use of proceeds thereof will
violate, or be inconsistent with, the provisions of Regulation G, T, U, or X of
said Board of Governors.
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(n) Investment Company Act; Public Utility Holding Company
Act. Neither the Borrower nor any Restricted Subsidiary is required to register
under the provisions of the Investment Company Act of 1940, as amended, and
neither the entering into or performance by the Borrower of this Agreement nor
the issuance of the Note violates any provision of such Act or requires any
consent, approval or authorization of, or registration with, the Securities and
Exchange Commission or any other governmental or public body or authority
pursuant to any provisions of such Act. Neither the Borrower nor any Restricted
Subsidiary is subject to regulation under the Public Utility Holding Company Act
of 1935.
(o) Government Regulation. Neither the Borrower nor any
Restricted Subsidiary is required to obtain any consent, approval,
authorization, permit or license which has not already been obtained from, or
effect any filing or registration which has not already been effected with, any
federal, state or local regulatory authority in connection with the execution
and delivery of this Agreement or any other Loan Document. Neither the Borrower
nor any Restricted Subsidiary is required to obtain any consent, approval,
authorization, permit or license which has not already been obtained from, or
effect any filing or registration which has not already been effected with, any
federal, state or local regulatory authority in connection with the performance,
in accordance with their respective terms, of this Agreement or any other Loan
Document, or the borrowing hereunder, other than filings and consents relating
to the renewal of Licenses and ongoing filings and consents relating to the
Commission.
(p) Absence of Default. The Borrower and the Restricted
Subsidiaries are in compliance with all of the provisions of their certificates
or articles of incorporation and by-laws, or certificates of partnership and
partnership agreements, as the case may be, and no event has occurred or failed
to occur (including without limitation any matter which could create a Default
hereunder by cross-default) which has not been remedied or waived, the
occurrence or non-occurrence of which constitutes, or with the passage of time
or giving of notice or both would constitute, (i) an Event of Default or (ii) a
default by the Borrower or any Restricted Subsidiary under any material
indenture, agreement or other instrument, including without limiting the
foregoing, the material Pole Agreements, or any judgment, decree or order to
which the Borrower or any Restricted Subsidiary is a party or by which the
Borrower or any Restricted Subsidiary or any of its respective properties may be
bound or affected.
(q) Accuracy and Completeness of Information. All information,
reports, prospectuses and other papers and data relating to the Borrower and the
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Restricted Subsidiaries and furnished by or on behalf of the Borrower or any of
the Restricted Subsidiaries to the Lender, were, at the time furnished, complete
and correct in all material respects to the extent necessary to give the
recipients true and accurate knowledge of the subject matter. Notwithstanding
the foregoing, with respect to projections of the future performance of the
Borrower and the Restricted Subsidiaries, such representations and warranties
are made in good faith and to the best of the Borrower's knowledge after due
inquiry, but without any assurances by the Borrower of the future achievement of
such performance.
(r) Agreements with Affiliates. Except as set forth on
Schedule 4.1(r) attached hereto, neither the Borrower nor any Restricted
Subsidiaries have (i) any agreements or binding arrangements of any kind with
any Affiliates or (ii) any management or consulting agreements of any kind with
any third party (including Affiliates).
(s) Payment of Wages. The Borrower and the Restricted
Subsidiaries are in compliance with the Fair Labor Standards Act, as amended,
and the Borrower and the Restricted Subsidiaries have paid all minimum and
overtime wages required by law to be paid to their respective employees.
(t) Solvency. The Borrower and the Restricted Subsidiaries
are, and after giving effect to the making of the Loans and the other
transactions contemplated hereby will be, Solvent.
(u) Collective Bargaining. Except as set forth on Schedule
4.1(u) attached hereto, no employee of the Borrower or of any of the Restricted
Subsidiaries is a party to any collective bargaining agreement with the Borrower
or any of the Restricted Subsidiaries and, to the best knowledge of the Borrower
after due inquiry, there are no material grievances, disputes, or controversies
with any union or any other organization of the employees of the Borrower or any
of the Restricted Subsidiaries or threats of strikes, work stoppages, or any
asserted pending demands for collective bargaining by any union or other
organization.
(v) No Adverse Change. Since the date of the most recent
audited annual financial statements of the Borrower and the Restricted
Subsidiaries required to have been delivered to the Lender pursuant to Section
6.2 hereof (or, prior to the first such delivery required hereunder, since
December 31, 1995), there has occurred no event which would have a Materially
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Adverse Effect, except for such events affecting the cable television industry
generally.
(w) Environmental Matters.
(i) None of the properties of the Borrower and the
Restricted Subsidiaries contains, including, without limitation, in, on
or under the soil and groundwater thereunder, any Hazardous Materials
in violation of Environmental Laws or in amounts that could give rise
to liability under Environmental Laws.
(ii) The Borrower and the Restricted Subsidiaries are
in compliance with all Environmental Laws, and, to the best of the
Borrower's knowledge after due inquiry, there is no contamination of
any of such properties which could interfere with the continued
operation of any of such properties or impair the financial condition
of the Borrower or any of the Restricted Subsidiaries.
(iii) Neither the Borrower nor any Restricted
Subsidiary has received from any governmental authority any complaint,
notice of violation, alleged violation, investigation or advisory
action or notice of potential liability regarding matters of
environmental protection or permit compliance under applicable
Environmental Laws with regard to any such properties that have not
been resolved to the satisfaction of the issuing governmental
authority, nor is the Borrower or any Restricted Subsidiary aware that
any governmental authority is contemplating delivering any such notice
to the Borrower or any of the Restricted Subsidiaries.
(iv) There has been no pending or threatened
complaint, notice of violation, alleged violation, investigation or
notice of potential liability under Environmental Laws with regard to
any of such properties.
(v) Hazardous Materials have not been generated,
treated, stored, disposed of, at, on or under any of such property in
violation of any Environmental Laws or in a manner that could give rise
to liability under Environmental Laws, nor have any Hazardous Materials
been transported or disposed of from any of such properties to any
other location in violation of any Environmental Laws or in a manner
that could give rise to liability under Environmental Laws.
(vi) Neither the Borrower nor any of the Restricted
Subsidiaries are a party to any governmental administrative actions or
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judicial proceedings pending under any Environmental Law with respect
to any of such properties nor are there any consent decrees or other
decrees, consent orders, administrative orders or other orders, or
other administrative or judicial requirements outstanding under any
Environmental Law with respect to any of such properties.
(x) Voting Control of the Borrower. As of the Agreement Date,
all of the shares of the issued and outstanding capital stock of the Borrower
are fully paid and non-assessable and owned, beneficially and of record, as set
forth on Schedule 4.1(x) attached hereto. The Borrower has no stock or
securities convertible into or exchangeable for any shares of its capital stock,
and there are no preemptive or similar rights to subscribe for or to purchase,
or any other rights to subscribe for or to purchase, or any options for the
purchase of, or any agreements providing for the issuance (contingent or
otherwise) of, or any calls, commitments, or claims of any character relating
to, any such capital stock, or any stock or securities convertible into or
exchangeable for any such capital stock, except as set forth on Schedule 4.1(x)
attached hereto. The Borrower is not subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of its
capital stock or to register any shares of its capital stock, and there are no
agreements restricting the transfer of any shares of such capital stock, except
as set forth in the Shareholders' Agreements as in effect on the Agreement Date.
The voting control of H. F. Lenfest of the shares of the Borrower's capital
stock is evidenced by the Shareholders' Agreements. There has been no change in
or other modification to such Shareholders' Agreements or the voting control of
H. F. Lenfest evidenced thereby.
Section 4.2 Survival of Representations and Warranties, etc. All
representations and warranties made under this Agreement shall be deemed to be
made, and shall be true and correct, at and as of the Agreement Date, and shall
be true and correct in all material respects as of the date of each Advance
which increases the principal amount of the Loans outstanding hereunder, except
to the extent they relate solely to an earlier date or time period. All
representations and warranties made under this Agreement shall survive, and not
be waived by, the execution hereof by the Lender, any investigation or inquiry
by the Lender, or the making of any Advance.
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ARTICLE 5
General Covenants
-----------------
So long as any of the Obligations is outstanding and unpaid or the
Borrower shall have the right to borrow hereunder (whether or not the conditions
to borrowing have been or can be fulfilled), and unless the Lender shall
otherwise consent in writing:
Section 5.1 Preservation of Existence and Similar Matters. The Borrower
will, and will cause each Restricted Subsidiary to:
(a) preserve and maintain its existence in the state of its
formation, its material rights, franchises, licenses and privileges, including,
without limiting the foregoing, the Licenses (to the extent required to prevent
the occurrence of an Event of Default under Section 8.1(l) hereof), all material
Pole Agreements, and all other Necessary Authorizations, and
(b) qualify and remain qualified and authorized to do business
in each jurisdiction in which the character of its properties or the nature of
its businesses requires such qualification or authorization.
Section 5.2 Business; Compliance with Applicable Law. The Borrower will
engage solely in the business of (a) acting as a holding company for its
Subsidiaries, (b) investing in other cable television systems, (c) investing in
other activities directly relating to the cable television industry, and (d)
providing consulting services to Garden State Cablevision L.P., a Delaware
limited partnership. The Borrower will cause the Restricted Subsidiaries to
engage principally in the business of owning, operating and maintaining the
System. The Borrower will, and will cause the Restricted Subsidiaries to, comply
with the requirements of Applicable Law.
Section 5.3 Maintenance of Properties. The Borrower will maintain or
cause to be maintained in the ordinary course of business in good repair,
working order and condition (reasonable wear and tear excepted) all properties
used in its and the Restricted Subsidiaries' businesses (whether owned or held
under lease), and from time to time make or cause to be made all needed and
appropriate repairs, renewals, replacements, additions, betterments and
improvements thereto.
Section 5.4 Accounting Methods and Financial Records. The Borrower
will, and will cause each Restricted Subsidiary to, maintain a system of
accounting established and administered in accordance with GAAP, keep adequate
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records and books of account in which complete entries will be made in
accordance with such accounting principles consistently applied and reflecting
all transactions required to be reflected by such accounting principles, and
keep accurate and complete records of its properties and assets. The Borrower
will, and will cause each Restricted Subsidiary to, maintain a fiscal year
ending on December 31.
Section 5.5 Insurance. The Borrower will, and will cause each
Restricted Subsidiary to:
(a) Maintain insurance including, but not limited to, public
liability, business interruption and worker's compensation insurance from
responsible companies in such amounts and against such risks to the Borrower and
the Restricted Subsidiaries as shall be standard in the cable television
industry for cable television companies similar in size and location to the
Borrower and the Restricted Subsidiaries.
(b) Keep its assets insured by insurers on terms and in a
manner acceptable to the Lender against loss or damage by fire, theft, burglary,
loss in transit, explosions and hazards insured against by extended coverage, in
amounts which are standard in the cable television industry for cable television
companies similar in size and location to the Borrower and the Restricted
Subsidiaries, all premiums thereon to be paid by the Borrower and the Restricted
Subsidiaries.
(c) Require that each insurance policy provide for at least
thirty (30) days' prior written notice to the Lender of any termination of or
proposed cancellation or nonrenewal of such policy.
Section 5.6 Payment of Taxes and Claims. The Borrower will, and will
cause each Restricted Subsidiary to, pay and discharge all taxes, including,
without limitation, withholding taxes, assessments and governmental charges or
levies required to be paid by it or imposed upon it or its income or profits or
upon any properties belonging to it prior to the date on which penalties attach
thereto, and all lawful claims for labor, materials and supplies which, if
unpaid, might become a Lien or charge upon any of its properties; except that no
such tax, assessment, charge, levy or claim need be paid which is being
diligently contested in good faith by appropriate proceedings and for which
adequate reserves shall have been set aside on the appropriate books in
accordance with GAAP, but only so long as such tax, assessment, charge, levy or
claim does not become a Lien or charge other than a Permitted Lien and no
foreclosure, distraint, sale or similar proceedings shall have been commenced.
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The Borrower shall, and shall cause each Restricted Subsidiary to, timely file
all information returns required by federal, state or local tax authorities.
Section 5.7 Visits and Inspections. The Borrower will, and will cause
each Restricted Subsidiary to, permit representatives of the Lender to (a) visit
and inspect the properties of the Borrower and the Restricted Subsidiaries at
all reasonable times, (b) inspect and make extracts from and copies of its books
and records, and (c) discuss with the principal officers of the Borrower and the
Restricted Subsidiaries, its business, assets, liabilities, financial position,
results of operations and business prospects.
Section 5.8 Payment of Indebtedness; Loans. Subject to any provisions
regarding subordination herein or in any other Loan Document, the Borrower will,
and will cause each of the Restricted Subsidiaries to, pay any and all of its
Indebtedness when and as it becomes due, other than amounts diligently disputed
in good faith and as to which adequate reserves have been set aside in
accordance with GAAP.
Section 5.9 Use of Proceeds. The Borrower will use the aggregate
proceeds of the Loans to support the LCI Guaranty to the extent that demand is
made under the LCI Guaranty for payment in respect of the Australis Media
Indebtedness, which shall not exceed the Borrower's pro rata share of the
Australis Media Indebtedness guaranteed under the LCI Guaranty.
Section 5.10 Indemnity. The Borrower will indemnify and hold harmless
the Lender and its respective employees, representatives, officers, directors,
affiliates, agents and attorneys (collectively, "Indemnitees"), from and against
any and all claims, liabilities, losses, damages, actions, attorneys' fees and
demands incurred by any Indemnitee, whether or not such Indemnitee is a party to
any litigation, investigation or other proceeding, (a) resulting from, arising
out of or otherwise relating to any breach or alleged breach by the Borrower of
any representation or warranty made hereunder, or (b) arising out of (i) the
making or administration of any Loans or the actual or proposed use of the
proceeds of any Loans, (ii) the issuance by the Borrower of additional
Indebtedness for Money Borrowed, (iii) allegations of any participation by any
Indemnitee in the affairs of the Borrower or any Subsidiary of the Borrower, or
allegations that any Indemnitee has any joint liability with the Borrower or any
Subsidiary of the Borrower for any reason, or (iv) any claims against any
Indemnitee by any investor in or lender to the Borrower or any Subsidiary of the
Borrower, for any reason whatsoever; unless, in any case referred to above, the
Indemnitee seeking indemnification hereunder is determined to have acted or
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failed to act with gross negligence or willful misconduct by a non-appealable
judicial order.
Section 5.11 Payment of Wages. The Borrower shall at all times comply
with the requirements of the Fair Labor Standards Act, as amended, including,
without limitation, the provisions of such Act relating to the payment of
minimum and overtime wages as the same may become due from time to time.
ARTICLE 6
Information Covenants
---------------------
So long as any of the Obligations is outstanding and unpaid or the
Borrower has a right to borrow hereunder (whether or not the conditions to
borrowing have been or can be fulfilled) and unless the Lender shall otherwise
consent in writing, the Borrower will furnish or cause to be furnished to the
Lender at Lender's offices:
Section 6.1 Quarterly Financial Statements. As soon as available and in
any event within sixty (60) days after the end of each fiscal quarter in each
fiscal year of the Borrower, the consolidated financial statements of the
Borrower and its Subsidiaries and the special-purpose consolidated financial
statements for the Borrower and the Restricted Subsidiaries, each consisting of
a balance sheet as of the end of such fiscal quarter and related statements of
income, stockholders' equity and cash flows for the fiscal quarter then ended
and the fiscal year through that date, all in reasonable detail and certified
(subject to normal year-end audit adjustments) by the chief executive officer,
president or chief financial officer of the Borrower as having been prepared in
accordance with GAAP, and setting forth in comparative form the respective
financial statements for the corresponding date and period in the previous
fiscal year, together with a completed Quarterly Capital Expenditure Report in a
form substantially identical to Exhibit E.
Section 6.2 Annual Financial Statements. As soon as available and in
any event within one hundred twenty (120) days after the end of each fiscal year
of Borrower, the consolidated financial statements of the Borrower and its
Subsidiaries and the special-purpose consolidated financial statements for the
Borrower and the Restricted Subsidiaries, each consisting of a balance sheet as
of the end of such fiscal year and related statements of income, stockholders'
equity and cash flows for the fiscal year then ended, all in reasonable detail
and setting forth in comparative form the financial statements as of the end
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of and for the preceding fiscal year, and certified by the Borrower's current
independent certified public accountants or other nationally recognized
independent certified public accountants satisfactory to the Lender. The
certificate or report of accountants shall be free of qualifications (other than
any consistency qualification that may result from a change in the method used
to prepare the financial statements as to which such accountants concur) and
shall not indicate the occurrence or existence of any event, condition or
contingency which would materially impair the prospect of payment or performance
of any covenant, agreement or duty of the Borrower under any of the Loan
Documents, together with a letter of such accountants substantially to the
effect that, based upon their ordinary and customary examination of the affairs
of the Borrower, performed in connection with the preparation of such
consolidated financial statements, and in accordance with generally accepted
auditing standards, they are not aware of the existence of any condition or
event which constitutes a Default or Event of Default or, if they are aware of
such condition or event, stating the nature thereof and confirming the
Borrower's calculations with respect to the certificate to be delivered pursuant
to Section 6.4 hereof with respect to such financial statements.
Section 6.3 Performance Certificates. At the time the financial
statements are furnished pursuant to Sections 6.1 and 6.2, a certificate of an
Authorized Officer in form and substance satisfactory to the Lender:
(a) reaffirming the representations and warranties set forth
in Article 4 hereof as of the date of such certificate with the same effect as
though such representations and warranties had been made on and as of such date
(except for representations and warranties which expressly relate solely to an
earlier date or time period);
(b) setting forth as at the end of such quarterly period or
fiscal year, as the case may be, the arithmetical calculations required to
establish whether or not the Borrower was in compliance with the requirements of
Sections 7.1, 7.4(d), 7.6(d), 7.6(e) and 7.12 hereof;
(c) summarizing in reasonable detail (i) all investments made
by the Borrower or any of the Restricted Subsidiaries since the Agreement Date
pursuant to Section 7.6(e) hereof; (ii) all acquisitions made by the Borrower or
any of the Restricted Subsidiaries since the Agreement Date pursuant to Sections
7.4(b), (c) and (d) hereof; and (iii) all investments in excess of $1,000,000
made by the Borrower or any of the Restricted Subsidiaries during such quarterly
period or fiscal year, other than pursuant to Section 7.6(e) hereof; and
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(d) stating that, to the best of his or her knowledge after
due inquiry, no Default or Event of Default has occurred as at the end of such
quarterly period or year, as the case may be, or, if a Default or an Event of
Default has occurred, disclosing each such Default or Event of Default and its
nature, when it occurred, whether it is continuing and the steps being taken by
the Borrower with respect to such Default or Event of Default.
Section 6.4 Copies of Other Reports.
(a) Promptly upon receipt thereof, copies of all reports, if
any, submitted to the Borrower or any Restricted Subsidiary in connection with
an audit of the Borrower or any Restricted Subsidiary by the Borrower's or any
such Subsidiary's independent public accountants, including, without limitation,
any management report prepared in connection with the annual audit referred to
in Section 6.2.
(b) No later than January 31 of each year, a copy of the
annual budget for the Borrower for such fiscal year, including the budget for
Capital Expenditures.
(c) Promptly upon receipt thereof by an Authorized Officer,
copies of any material notice or report regarding any License from the grantor
of such License, or regarding the System or any License from the Commission with
respect to (i) the suspension, revocation or modification of any License, (ii) a
denial of a request for a rate change, (iii) disciplinary proceedings involving
the Borrower or any Restricted Subsidiary, (iv) notice of default or other
non-compliance by the Borrower or any Restricted Subsidiary under any License,
or (v) any similar event or occurrence.
(d) Upon any material decrease (by percentage or dollar value)
or termination of any programming discounts from Satellite Services, Inc. or
other Affiliates of TeleCommunications, Inc., pro forma projections in form and
substance reasonably acceptable to the Lender, which projections demonstrate the
Borrower's compliance with the terms of this Agreement on a pro forma basis
through the Maturity Date.
(e) Upon (i) any sale, lease, transfer or other disposition of
assets of the Borrower or any of its Subsidiaries (other than sales or other
dispositions of obsolete equipment or other immaterial assets in the ordinary
course of business having an aggregate sales price not to exceed $500,000 in any
fiscal year), (ii) any sale or other disposition of any interests in any
Unrestricted Subsidiary, or (iii) the making by the Borrower or any Restricted
Subsidiary of any acquisition pursuant to Section 7.4(b), (c) or (d) or any
investment pursuant to Section 7.6(e), a description of the material terms of
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such acquisition, investment, sale, lease, transfer or other disposition, in
form and substance satisfactory to the Lender.
(f) From time to time and promptly upon each request, such
data, certificates, reports, statements, opinions of counsel, documents or
further information regarding the business, assets, liabilities, financial
position, projections, results of operations or business prospects of the
Borrower or any Restricted Subsidiary, as the Lender reasonably may request.
(g) Promptly upon receipt thereof, copies of all notices
received by the Borrower under the LCI Credit Agreement or the LCI Guaranty.
Section 6.5 Notice of Litigation and Other Matters. Prompt notice of
the following events after an Authorized Officer has received notice or has
otherwise become aware thereof:
(a) the commencement of all proceedings and investigations by
or before any governmental body and all actions and proceedings in any court or
before any arbitrator against the Borrower or any Restricted Subsidiary
involving a claim for damages or potential cost to the Borrower or any
Restricted Subsidiary of $250,000 or more with respect to any single or related
series of proceedings, investigations or actions or, to the extent known to the
Borrower or any Restricted Subsidiary, in any other way relating materially
adversely and directly to the Borrower or any Restricted Subsidiary, or any of
its respective properties, assets or businesses or any License, including,
without limitation, proceedings, investigations or actions arising under
Environmental Laws;
(b) any material adverse change with respect to the business,
assets, liabilities, financial position, or results of operations of the
Borrower or any Restricted Subsidiary, other than changes in the ordinary course
of business which have not had and are not likely to have a Materially Adverse
Effect;
(c) any material amendment or change to any budget submitted
under Section 6.5(b) hereof for the operation of the System;
(d) any Default or the occurrence or non-occurrence of any
event (i) which constitutes, or which with the passage of time or giving of
notice or both would constitute a default by the Borrower or any Restricted
Subsidiary under any material agreement other than this Agreement to which the
Borrower or any Restricted Subsidiary is party or by which any of its properties
may be bound, or (ii) which could have a Materially Adverse Effect, giving in
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each case the details thereof and specifying the action proposed to be taken
with respect thereto;
(e) the occurrence of any Reportable Event or a "prohibited
transaction" (as such term is defined in Section 406 of ERISA or Section 4975 of
the Code) with respect to any Plan of the Borrower, any Restricted Subsidiary or
any ERISA Affiliate or the institution or threatened institution by the Pension
Benefit Guaranty Corporation of proceedings under ERISA to terminate or to
partially terminate any such Plan or the commencement or threatened commencement
of any litigation regarding any such Plan or naming it or the trustee of any
such Plan with respect to such Plan; and
(f) the occurrence of any event subsequent to the Agreement
Date which, if such event had occurred prior to the Agreement Date, would have
constituted an exception to the representation and warranty in Section 4.1(l) of
this Agreement.
ARTICLE 7
Negative Covenants
------------------
So long as any of the Obligations is outstanding and unpaid or the
Borrower has a right to borrow hereunder (whether or not the conditions to
borrowing have been or can be fulfilled) and unless the Lender shall otherwise
give their prior consent in writing:
Section 7.1 Indebtedness of the Borrower and the Restricted
Subsidiaries. The Borrower shall not, and shall not permit any Restricted
Subsidiary to, create, assume, incur or otherwise become or remain obligated in
respect of, or permit to be outstanding, any Indebtedness except:
(a) Indebtedness under this Agreement and the Note;
(b) Accounts payable, subscriber deposits, accrued expenses
and customer advance payments incurred in the ordinary course of business, which
are (1) current or (2) being contested in good faith by appropriate proceedings
and for which the Borrower or the applicable Restricted Subsidiary has
established adequate reserves on its books;
(c) Obligations arising under Interest Rate Hedge Agreements;
(d) Unsecured Indebtedness for Money Borrowed, Indebtedness
arising under Guaranties and Capitalized Lease Obligations in an aggregate
amount not to exceed $78,000,000 at any time outstanding;
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(e) Other Indebtedness incurred in the ordinary course of
business which is either unsecured or secured by Liens described in clause (i)
of the definition of "Permitted Liens" in an aggregate amount not to exceed
$1,000,000;
(f) Indebtedness of the Borrower to any Restricted Subsidiary
or of any Restricted Subsidiary to the Borrower or any other Restricted
Subsidiary; and
(g) Indebtedness existing as of the Agreement Date as
described on Schedule 7.1(g) attached hereto.
Section 7.2 Limitation on Liens. The Borrower shall not, and shall not
permit any Restricted Subsidiary to, create, assume, incur or permit to exist or
to be created, assumed, incurred or permitted to exist, directly or indirectly,
any Lien on any of its properties or assets (including, without limitation,
capital stock), whether now owned or hereafter acquired, except for Permitted
Liens set forth on Schedule 7.2 hereof.
Section 7.3 Amendment and Waiver. The Borrower shall not, and shall not
permit any Restricted Subsidiary to, enter into any amendment of, or agree to or
accept or consent to any waiver of any of the provisions of (a) its certificate
or articles of incorporation or by-laws, or certificate of partnership or
partnership agreement, as applicable; (b) any Loan Document; (c) any of the
documents, instruments and agreements evidencing or relating to the Borrower's
11.30% Senior Note due 2000, 11.84% Senior Note due 1998, 9.93% Senior Note due
2001 or the Indebtedness for Money Borrowed issued pursuant to the Public Debt
Indenture if the effect of any such amendment or waiver is to (i) increase the
aggregate principal amount outstanding thereunder, (ii) reduce the weighted
average life to maturity thereof, or (iii) cause the terms governing such
Indebtedness to be more restrictive than the terms of this Agreement or of the
existing documents, instruments or agreements governing such Indebtedness or (d)
the LCI Guaranty.
Section 7.4 Liquidation, Change in Ownership, Disposition or
Acquisition of Assets; Change in Business.
(a) The Borrower shall not, and shall not permit any
Restricted Subsidiary to, at any time (i) liquidate or dissolve itself (or
suffer any liquidation or dissolution) or otherwise wind up its affairs; (ii)
enter into any merger or consolidation (other than any merger or consolidation
-41-
of a Restricted Subsidiary into another Restricted Subsidiary or, so long as the
Borrower is the surviving corporation and so long as no Default then exists or
would be caused thereby, of a Restricted Subsidiary into the Borrower); or (iii)
sell, lease, abandon, transfer, exchange or otherwise dispose of all or any of
its assets, property or business (other than sales or other dispositions of
obsolete equipment or other immaterial assets in the ordinary course of business
having an aggregate sales price not to exceed $500,000 in any year and other
than as provided in Section 7.4(c) below); provided that, so long as no Default
then exists or would be caused thereby, the Borrower or any Restricted
Subsidiary may further sell or otherwise dispose of assets for fair
consideration so long as: (A) the assets sold or otherwise disposed of in any
single or series of related transactions contributed or accounted for less than
fifteen percent (15%) of Annualized Operating Cash Flow, calculated using the
financial statements of the Borrower and the Restricted Subsidiaries for the
most recently completed fiscal quarter for which financial statements are
required to have been provided to the Lender in accordance with Section 6.1
hereof as of the date of such proposed sale or other disposition; and (B) the
aggregate amount of Annualized Operating Cash Flow contributed by or
attributable to all assets sold or otherwise disposed of during the term of this
Agreement (calculated in the manner set forth in clause (A) above with respect
to each such sale or other disposition) is less than twenty-five percent (25%)
of Annualized Operating Cash Flow calculated using the financial statements of
the Borrower and the Restricted Subsidiaries for the most recently completed
fiscal quarter for which financial statements are required to have been provided
to the Lender as of the proposed date of the most recent such sale or other
disposition.
(b) The Borrower shall not, and shall not permit any
Restricted Subsidiary to, at any time, acquire any assets, property or business
of any other Person, or acquire stock, partnership or other ownership interests
in any other Person, other than as permitted by Section 7.6 hereof and other
than (i)(A) assets (other than capital stock or other ownership interests)
directly related to the cable television business, or (B) all of the issued and
outstanding capital stock or other ownership interests of Persons engaged in
businesses directly related to the cable television business, for, in any such
case described in clauses (i)(A) and (B) of this subsection (b), an aggregate
purchase price not to exceed $50,000,000, and provided that, in any such case,
no Default then exists or would be caused thereby. Prior to consummating any
such acquisition, the Borrower shall provide the Lender with calculations
specifically demonstrating the Borrower's pro forma compliance with Section 7.12
hereof. Any Subsidiary formed or acquired by the Borrower or any Restricted
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Subsidiary in connection with any acquisition described in this subsection
7.4(b) shall be deemed to be a Restricted Subsidiary unless the Lender shall
otherwise consent in writing.
(c) Further notwithstanding the foregoing, and exclusive of
the limitation on acquisitions set forth in subsections 7.4(a) and (b) above, so
long as no Default then exists or would be caused thereby, the Borrower or any
of the Restricted Subsidiaries may make acquisitions of (i) assets (other than
capital stock or other ownership interests) directly related to the cable
television business located in Contiguous Areas, or (ii) all of the issued and
outstanding capital stock or other ownership interests of Persons engaged in
businesses directly related to the cable television business whose assets are
located solely in Contiguous Areas, with the Net Proceeds of any sale, lease,
transfer or other disposition of assets of the Borrower or any Restricted
Subsidiary permitted hereby, so long as such acquisition is consummated within
one (1) year of the sale, lease, transfer or other disposition giving rise to
such Net Proceeds.
(d) The Borrower shall not permit less than ninety percent
(90%) of Annualized Operating Cash Flow as of any date of determination to be
derived directly from the cable television business.
Section 7.5 Limitation on Guaranties. The Borrower shall not, and shall
not permit any Restricted Subsidiary to, at any time Guaranty, assume, be
obligated with respect to, or permit to be outstanding any Guaranty of, any
obligation of any other Person other than (a) obligations under agreements of
the Borrower or any Restricted Subsidiary entered into in connection with the
acquisition of services, supplies and equipment in the ordinary course of
business of the Borrower or such Restricted Subsidiary, and (b) Guaranties
described in Section 7.1(d) hereof, and (c) the LCI Guaranty.
Section 7.6 Investments. The Borrower shall not, and shall not
permit any Restricted Subsidiary to, make any loan or advance, or otherwise
acquire for consideration evidences of Indebtedness, capital stock or other
securities of any Person other than as provided in Section 7.4(b) or (c) hereof,
except that so long as no Default then exists or would be caused thereby, the
Borrower or any Restricted Subsidiary may (a) advance funds to or on behalf of
Australis Media Limited in the form of debt upon demand made under the LCI
Guaranty, (b) purchase marketable, direct obligations of the United States of
America maturing within three hundred sixty-five (365) days of the date of
purchase, (c) purchase commercial paper issued by corporations, each of which
-43-
conducts a substantial part of its business in the United States of America,
maturing within one hundred and eighty (180) days from the date of the original
issue thereof, and rated "P-1" or better by Moody's Investors Service, (d)
purchase repurchase agreements and certificates of deposit maturing within three
hundred sixty-five (365) days of the date of purchase which are issued by the
Lender or by a United States national or state bank having capital, surplus and
undivided profits totaling more than $250 million and rated "A" or better by
Moody's Investors Service, (e) maintain the investments described as of the
Agreement Date on Schedule 7.6 attached hereto, (f) make additional investments
in Persons engaged in businesses directly related to the cable television
business in an aggregate amount not to exceed $50,000,000 at any time
outstanding, and (g) make investments in Australis Media Limited in connection
with the LCI Guaranty (which investments, when added to all loans under Section
7.6(a) hereof, shall not exceed $75,000,000 in the aggregate). The Borrower
shall cause each of the Restricted Subsidiaries to require that any loan or
advance made by the Borrower or such Restricted Subsidiary, as applicable, to
any other Person be evidenced by a duly executed and delivered promissory note
of such other Person in an original principal amount not less than the amount of
such loan; provided, however, that loans or advances made to the Borrower or any
Subsidiary of the Borrower need not be evidenced by such promissory notes if
regulatory approval by any governmental body of the State of New Jersey or
Delaware would be required in connection therewith.
Section 7.7 Restricted Payments and Purchases. The Borrower shall not,
and shall not permit any Restricted Subsidiary to, directly or indirectly
declare or make any Restricted Payment or Restricted Purchase, except that the
Restricted Subsidiaries may declare and make Restricted Payments to, and
Restricted Purchases from, the Borrower.
Section 7.8 Affiliate Transactions. The Borrower shall not, and shall
not permit any Restricted Subsidiary to, at any time engage in any transaction
with an Affiliate, nor make an assignment or other transfer of any of its
properties or assets to any Affiliate, on terms less advantageous to the
Borrower or the applicable Restricted Subsidiary than would be the case if such
transactions had been effected on an arm's length basis with a non-Affiliate.
Section 7.9 Limitation on Leases; Sale/Leasebacks. The Borrower shall
not, and shall not permit any Restricted Subsidiary to, make or be or become
obligated to make any payment in respect of any obligations as lessee under a
lease, except for (x) payments under leases to be used in connection with the
operation of its business (other than Pole Agreements and tower rental
-44-
agreements entered into in the ordinary course of business) which, when
aggregated with all other payments under such leases by the Borrower and the
Restricted Subsidiaries would not exceed in the aggregate during any one fiscal
year of the Borrower, $1,000,000, and during the term of this Agreement,
$9,000,000, and (y) payments relating to Capitalized Lease Obligations permitted
hereunder, and (z) payments under Pole Agreements and tower rental agreements
entered into in the ordinary course of business. The Borrower shall not, and
shall not permit any Restricted Subsidiary to, enter into any sale/leaseback
transaction.
Section 7.10 ERISA Liabilities. The Borrower shall not, and shall not
permit any Restricted Subsidiary to, allow any of its Plans to have an
accumulated funding deficiency as defined in Code Section 4971(c)(ii) and
measured at the end of the plan year. The Borrower shall not, and shall not
permit any Restricted Subsidiary to, become a participant in any Multiemployer
Plan.
Section 7.11 Restrictions on Upstream Dividends by Subsidiaries. The
Borrower shall not permit to exist at any time any consensual restriction
limiting the ability (whether by covenant, event of default, subordination or
otherwise) of any Restricted Subsidiary to (a) make Restricted Payments to or
Restricted Purchases from the Borrower or any Restricted Subsidiary, (b) pay any
obligation owed to the Borrower or any Restricted Subsidiary, (c) make any loans
or advances to or investments in the Borrower or in any Restricted Subsidiary,
(d) transfer any of its property or assets (other than property or assets
subject to Permitted Liens) to the Borrower or any Restricted Subsidiary, or (e)
create any Lien upon its property or assets whether now owned or hereafter
acquired or upon any income or profits therefrom, except for restrictions
provided in this Agreement and the other Loan Documents.
Section 7.12 Total Debt to Annualized Operating Cash Flow Ratio. (a) As
of the end of any calendar quarter, (b) at the time of any Advance which
increases the aggregate principal amount of the Loans outstanding hereunder, and
(c) at the time of any proposed sale, lease, transfer, exchange or other
disposition of assets, any proposed acquisition of assets, or any proposed
investment in any other Person, the Borrower shall not permit the ratio of Total
Debt to Annualized Operating Cash Flow for the calendar quarter end being tested
in the case of Section 7.12(a) above, or the most recent quarter end for which
financial statements are required to be delivered to the Lender pursuant to
Sections 6.1 and 6.2 hereof in the case of Sections 7.12(b) and (c) above, to
exceed 7.25 to 1 through the Maturity Date.
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ARTICLE 8
Default
-------
Section 8.1 Events of Default. Each of the following shall constitute
an Event of Default, whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
governmental or non-governmental body:
(a) Any material representation or warranty made under this
Agreement shall prove incorrect or misleading in any material respect when made
or deemed to be made pursuant to Section 4.2 hereof;
(b) The Borrower shall default in the payment of any principal
or interest under the Note, or fees or other amounts payable hereunder or under
any other Loan Document, when due;
(c) The Borrower shall default in the performance or
observance of any agreement or covenant contained in Article 6 or 7 hereof;
(d) The Borrower shall default in the performance or
observance of any other agreement or covenant contained in this Agreement not
specifically referred to elsewhere in this Section 8.1, and such default shall
not be cured to the Lender's satisfaction within a period of thirty (30) days
from the date of the occurrence of such default;
(e) There shall occur any default in the performance or
observance of any agreement or covenant or material breach of any representation
or warranty contained in any of the Loan Documents (other than this Agreement or
as otherwise provided in Section 8.1 of this Agreement), which shall not be
cured to the Lender's satisfaction within a period of thirty (30) days from the
date of the occurrence of such default;
(f) There shall occur any default on any payment when due
(whether by acceleration or otherwise) under the LCI Credit Agreement, the
Public Debt Indenture or the Senior Notes;
(g) Neither H.F. Lenfest (individually or through his control,
by written proxy, of the voting rights of his immediate family with respect to
the capital stock of the Borrower) nor Tele-Communications, Inc., a Delaware
corporation, directly or indirectly through one or more direct or indirect
wholly-owned Subsidiaries, shall own beneficially fifty percent (50%) or more of
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all voting shares of the Borrower's capital stock and have the right to elect at
least fifty percent (50%) of the members of the board of directors of the
Borrower; or the Borrower shall cease to own, directly or indirectly through a
wholly-owned Restricted Subsidiary, all of the issued and outstanding capital
stock of the Restricted Subsidiaries;
(h) There shall be entered a decree or order for relief in
respect of the Borrower or any Restricted Subsidiary under Title 11 of the
United States Code, as now constituted or hereafter amended, or any other
applicable Federal or state bankruptcy law or other similar law, or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or similar
official of the Borrower or any Restricted Subsidiary or of any substantial part
of its properties, or ordering the winding-up or liquidation of the affairs of
the Borrower or any Restricted Subsidiary or an involuntary petition shall be
filed against the Borrower or any Restricted Subsidiary, and (i) such petition
shall not be diligently contested, or (ii) any such petition shall continue
undismissed for a period of sixty (60) consecutive days;
(i) The Borrower or any Restricted Subsidiary shall file a
petition, answer or consent seeking relief under Title 11 of the United States
Code, as now constituted or hereafter amended, or any other applicable Federal
or state bankruptcy law or other similar law, or the Borrower or any Restricted
Subsidiary shall consent to the institution of proceedings thereunder or to the
filing of any such petition or to the appointment or taking of possession of a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Borrower or any Restricted Subsidiary or of any
substantial part of its properties, or the Borrower or any Restricted Subsidiary
shall fail generally to pay its debts as they become due, or the Borrower or any
Restricted Subsidiary shall take any action in furtherance of any such action;
(j) A final judgment shall be entered by any court against the
Borrower or any Restricted Subsidiary for the payment of money in excess of
$2,500,000 in the aggregate in excess of insurance coverage, or a warrant of
attachment or execution or similar process shall be issued or levied against
property of the Borrower or any Restricted Subsidiary which, together with all
other such property of the Borrower and the Restricted Subsidiaries subject to
other such process exceeds $2,500,000 in the aggregate in excess of insurance
coverage, and if, within thirty (30) days after the entry, issue or levy
thereof, such judgment, warrant or process shall not have been paid or
discharged or stayed pending appeal, or if, after the expiration of any such
stay, such judgment, warrant or process shall not have been paid or discharged;
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(k) There shall be at any time any "accumulated funding
deficiency," as defined in ERISA or in Section 412 of the Code, with respect to
any Plan maintained by the Borrower, any Restricted Subsidiary or any ERISA
Affiliate, or to which the Borrower, any Restricted Subsidiary or any ERISA
Affiliate has any liabilities, or any trust created thereunder; or a trustee
shall be appointed by a United States District Court to administer any such
Plan; or the Pension Benefit Guaranty Corporation shall institute proceedings to
terminate any such Plan; or the Borrower, any Restricted Subsidiary or any ERISA
Affiliate shall incur any liability to the Pension Benefit Guaranty Corporation
in connection with the termination of any such Plan; or any Plan or trust
created under any Plan of the Borrower, any Restricted Subsidiary or any ERISA
Affiliate shall engage in a "prohibited transaction" (as such term is defined in
Section 406 of ERISA or Section 4975 of the Code) which would subject any such
Plan, any trust created thereunder, any trustee or administrator thereof, or any
party dealing with any such Plan or trust to the tax or penalty on "prohibited
transactions" imposed by Section 502 of ERISA or Section 4975 of the Code; or
the Borrower, any Restricted Subsidiary or any ERISA Affiliate shall enter into
or become obligated to contribute to a Multiemployer Plan;
(l) There shall occur any default or event of default or any
event which gives rise to a right of redemption or similar option or privilege
with respect to Indebtedness of the Borrower or any Restricted Subsidiary or
which causes the Borrower or any Restricted Subsidiary to be required to offer
to purchase any such Indebtedness under any agreement or instrument evidencing
Indebtedness of the Borrower or any Restricted Subsidiary in an aggregate
principal amount exceeding $5,000,000, or there shall occur any material default
under any Interest Rate Hedge Agreement, fixed rate loan agreement or other
similar arrangement having a notional principal amount of $5,000,000 or more,
which default or event of default, in any such case, has not been cured within
any applicable cure period and as to which notice, if any is required to be
given in order for such event to constitute an event of default, has been given
under such agreement or instrument;
(m) Any number of Licenses shall be terminated or revoked such
that the Borrower or one or more Restricted Subsidiaries are no longer entitled
to operate the portion of the System subject to such Licenses and retain the
revenue received therefrom, or the Borrower or any Restricted Subsidiary or any
grantor or grantors of Licenses shall fail to renew any number of Licenses at
the stated expiration thereof such that the Borrower or one or more Restricted
Subsidiaries are no longer entitled to operate the portion of the System subject
-48-
to such Licenses and retain the revenue received therefrom, and the overall
effect of all such terminations, revocations and failures to renew would be or
has been to reduce, by ten percent (10%) or more, Annualized Operating Cash Flow
as of the Agreement Date; or
(n) Any material provision of any Loan Document shall at any
time and for any reason be declared to be null and void, or a proceeding shall
be commenced by the Borrower or any Restricted Subsidiary, or by any
governmental authority having jurisdiction over the Borrower or any Restricted
Subsidiary, seeking to establish the invalidity or unenforceability thereof
(exclusive of questions of interpretation of any provision thereof), or the
Borrower or any Restricted Subsidiary shall deny that it has any liability or
obligation for the payment of principal or interest purported to be created
under any Loan Document.
Section 8.2 Remedies. If an Event of Default shall have occurred and
shall be continuing:
(a) With the exception of an Event of Default specified in
Section 8.1(h) or (i), the Lender shall (i) terminate the Commitments, and/or
(ii) declare the principal of and interest on the Loans and the Note and all
other amounts owed under this Agreement, the Note and the other Loan Documents
to be forthwith due and payable without presentment, demand, protest or notice
of any kind, all of which are hereby expressly waived, anything in this
Agreement, the Note, or the other Loan Documents to the contrary
notwithstanding.
(b) Upon the occurrence and continuance of an Event of Default
specified in Section 8.1(h) or Section 8.1(i), such principal, interest and
other amounts shall thereupon and concurrently therewith become due and payable
and the Commitments shall forthwith terminate, all without any action by any of
the Lender, the Lender or the holders of the Note, and without presentment,
demand, protest or other notice of any kind, all of which are expressly waived,
anything in this Agreement, the Note or the other Loan Documents to the contrary
notwithstanding.
(c) The Lender shall exercise all of the post-default rights
granted to it and to them under the Loan Documents or under Applicable Law.
(d) The rights and remedies of the Lender hereunder shall be
cumulative, and not exclusive.
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ARTICLE 9
Change in Circumstances
Affecting Advances
------------------
Section 9.1 Illegality. If any applicable law, rule or regulation, or
any change therein, or any interpretation or change in interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by the Lender with any request or directive (whether or not having the force of
law) of any such authority, central bank or comparable agency, shall make it
unlawful or impossible for the Lender to make, maintain or fund Advances using
the LIBOR Basis as its interest rate, the Lender shall notify the Borrower
thereof. Before giving any notice to the Lender pursuant to this Section, the
Lender shall designate a different lending office if such designation will avoid
the need for giving such notice and will not, in the judgment of the Lender, be
otherwise disadvantageous to the Lender. Upon receipt of such notice,
notwithstanding anything contained in Article 2 hereof, the Borrower shall repay
in full the then outstanding principal amount of each Advance of the Lender so
affected, together with accrued interest thereon, either (a) on the last day of
the then current Interest Period applicable to such Advance if the Lender may
lawfully continue to maintain and fund such Advance to such day or (b)
immediately if the Lender may not lawfully continue to fund and maintain such
Advance to such day provided, that, Borrower may continue such Advance using the
rate of interest as specified in Section 2.3(b) hereof.
Section 9.2 Increased Costs.
(a) If any applicable law, rule or regulation, or any change
therein, or any interpretation or change in interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof or compliance by the Lender
with any request or directive (whether or not having the force of law) of any
such authority, central bank or comparable agency:
(1) shall subject the Lender to any tax, duty or
other charge with respect to this Agreement, the Note, the Loans or
payments by the Borrower of principal, interest, fees or other amounts
due from the Borrower hereunder or under the Note or its obligation to
make Loans hereunder (except for taxes on the overall net income of the
Lender), or shall change the basis of taxation of payments to the
Lender of the principal of or interest on its Loans or in respect of
-50-
any other amounts due under this Agreement in respect of its Loans, or
its obligation to make Loans; or
(2) shall impose, modify or deem applicable any
reserve (including, without limitation, any imposed by the Board of
Governors of the Federal Reserve System, but excluding any included in
an applicable LIBOR Reserve Percentage), special deposit, capital
adequacy, assessment or other requirement or condition against assets
of, deposits with or for the account of, or commitments or credit
extended by, the Lender or shall impose on the Lender or the London
Interbank Borrowing Market any other condition affecting its obligation
to make Loans;
and the result of any of the foregoing is to increase the cost to the Lender of
making or maintaining any such Loans, or to reduce the amount of any sum
received or receivable by the Lender under this Agreement or under its Note with
respect thereto, then, on the earlier of a date within fifteen (15) days after
demand by the Lender or the Maturity Date, the Borrower agrees to pay to the
Lender such additional amount or amounts as will compensate the Lender for such
increased costs. The Lender will promptly notify the Borrower and the Lender of
any event of which it has knowledge, occurring after the date hereof, which will
entitle the Lender to compensation pursuant to this Section 9.2 and will
designate a different lending office if such designation will avoid the need
for, or reduce the amount of, such compensation and will not, in the sole
judgment of the Lender made in good faith, be otherwise disadvantageous to the
Lender.
(b) A certificate of the Lender claiming compensation under
this Section 9.2 and setting forth the additional amount or amounts to be paid
to it hereunder and calculations therefor shall be presumptively correct in the
absence of manifest error. In determining such amount, the Lender may use any
reasonable averaging and attribution methods. If the Lender demands compensation
under this Section 9.2 with respect to Advances, the Borrower may at any time,
upon at least five (5) Business Days' prior notice to the Lender, prepay in full
the then outstanding Advances of the Lender, together with accrued interest
thereon to the date of prepayment, along with any reimbursement required under
Section 2.7 hereof.
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ARTICLE 10
Miscellaneous
-------------
Section 10.1 Notices.
(a) Except as provided in the following sentence, all notices
and other communications under this Agreement shall be in writing and shall be
deemed to have been given three (3) days after deposit in the mail, designated
as certified mail, return receipt requested, post-prepaid, or one (1) day after
being entrusted to a reputable commercial overnight delivery service, or when
sent out by telecopy addressed to the party to which such notice is directed at
its address determined as provided in this Section 10.1. All Requests for
Advances and other borrowing and payment notices shall be in writing and shall
be deemed to be given only upon actual receipt by the Lender. All notices and
other communications under this Agreement shall be given to the parties hereto
at the following addresses:
(i) If to the Borrower, to it at:
Lenfest Communications, Inc.
c/o The Lenfest Group
202 Shoemaker Road
Pottstown, Pennsylvania 19464
Telecopy No.: (610) 327-6340
Attn: Harry F. Brooks
and to:
The Lenfest Group
1332 Enterprise Drive
Suite 200
West Chester, Pennsylvania 19380
Telecopy No.: (610) 431-7718
Attn: Samuel W. Morris, Jr., Esq.
(ii) If to the Lender, to it at:
The Toronto-Dominion Bank
31 West 52nd Street
New York, New York 10019
Telecopy No.: (212) 262-1928
Attn: Melissa Glass
(b) Any party hereto may change the address to which notices
shall be directed under this Section 10.1 by giving ten (10) days' written
notice of such change to other parties.
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Section 10.2 Expenses. The Borrower will promptly pay:
(a) all reasonable out-of-pocket costs and expenses of the
Lender in connection with the preparation, negotiation, execution and delivery
of this Agreement and other Loan Documents, and the transactions contemplated
hereunder and thereunder and the making of the initial Advance hereunder whether
or not such Advance is made, provided that legal fees and expenses under this
subsection 10.2(a) shall be limited to the reasonable fees and disbursements of
Powell, Goldstein, Frazer & Murphy, special counsel for the Lender;
(b) all reasonable out-of-pocket costs and expenses of the
Lender in connection with the administration of the transactions contemplated in
this Agreement or the other Loan Documents (other than routine overhead
expenses) and the preparation, negotiation, execution and delivery of any
waiver, amendment or consent by the Lender or the Lender relating to this
Agreement or the other Loan Documents, including, but not limited to, the
reasonable fees and disbursements of any experts, agents or consultants and of
counsel for the Lender; and
(c) all reasonable out-of-pocket costs and expenses of the
Lender in obtaining performance under this Agreement or the other Loan Documents
and in connection with any restructuring, refinancing or "work out" of the
transactions contemplated hereby and thereby, and all reasonable out-of-pocket
costs and expenses of collection if default is made in the payment of the Note,
which in each case shall include reasonable fees and out-of-pocket expenses of
any experts, agents, consultants and counsel for each of the Lender.
Section 10.3 Waivers. The rights and remedies of the Lender under this
Agreement and the other Loan Documents shall be cumulative and not exclusive of
any rights or remedies which they would otherwise have. No failure or delay by
the Lender in exercising any right shall operate as a waiver of such right. The
Lender expressly reserves the right to require strict compliance with the terms
of this Agreement in connection with any funding of a request for an Advance. In
the event the Lender decides to fund a request for an Advance at a time when the
Borrower is not in strict compliance with the terms of this Agreement, such
decision by the Lender shall not be deemed to constitute an undertaking by the
Lender to fund any further requests for Advances or preclude the Lender from
exercising any rights available to the Lender under the Loan Documents or at law
or equity. Any waiver or indulgence granted by the Lender or by the Lender shall
not constitute a modification of this Agreement, except to the extent expressly
provided in such waiver or indulgence, or constitute a course of dealing by the
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Lender at variance with the terms of the Agreement such as to require further
notice by the Lender of their intent to require strict adherence to the terms of
the Agreement in the future. Any such actions shall not in any way affect the
ability of the Lender, in its discretion, to exercise any rights available to it
under this Agreement or under any other agreement, whether or not the Lender is
a party, relating to the Borrower.
Section 10.4 Set-Off. In addition to any rights now or hereafter
granted under Applicable Law and not by way of limitation of any such rights,
upon the occurrence of an Event of Default and during the continuation thereof,
the Lender and any subsequent holder or holders of the Note are hereby
authorized by the Borrower at any time or from time to time, without notice to
the Borrower (other than as expressly provided below) or to any other Person,
any such notice being hereby expressly waived, to set-off, appropriate and apply
any and all deposits (general or special, time or demand, including, but not
limited to, Indebtedness evidenced by certificates of deposit, in each case
whether matured or unmatured) and any other Indebtedness at any time held or
owing by the Lender or such holder to or for the credit or the account of the
Borrower, against and on account of the obligations and liabilities of the
Borrower, to the Lender or such holder under this Agreement, the Note and any
other Loan Document, including, but not limited to, all claims of any nature or
description arising out of or connected with this Agreement, the Note or any
other Loan Document, irrespective of whether (a) the Lender or the holder of the
Note shall have made any demand hereunder or (b) the Lender shall have declared
the principal of and interest on the Loans and Note and other amounts due
hereunder to be due and payable as permitted by Section 8.2 and although such
obligations and liabilities, or any of them, shall be contingent or unmatured.
Any sums obtained by the Lender or by any subsequent holder of the Note shall be
subject to the pro rata treatment provisions of Section 2.8 hereof. Upon
direction by the Lender with the consent of the Lender, the Lender holding
deposits of the Borrower shall exercise its set-off rights as so directed. The
Lender shall give the Borrower notice of any exercise of set-off rights of which
it is aware after the occurrence thereof; provided, however, that failure by the
Lender to provide such notice shall not invalidate or otherwise render
inappropriate or unlawful any such exercise of set-off rights hereunder.
Section 10.5 Assignment.
(a) The Borrower may not assign or transfer any of its rights
or obligations hereunder or under the Note without the prior written consent of
the Lender.
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(b) The Lender may at any time enter into participations with
one or more other banks or other Persons pursuant to which the Lender may
participate its interest under this Agreement and the Note and the other Loan
Documents, including, its interest in any particular Advance or portion thereof,
as follows:
(i) The Lender may sell assignments or participations
of up to one hundred percent (100%) of its interest hereunder to (A)
one or more U.S. affiliates of the Lender, and (B) any Federal Reserve
Bank as collateral security pursuant to Regulation A of the Board of
Governors of the Federal Reserve System and any Operating Circular
issued by such Federal Reserve Bank, without restriction.
(ii) All other assignments and participations (as
applicable) shall be subject to the following additional terms and
conditions:
(A) Any Person purchasing a participation or
an assignment of the Loans from the Lender shall be required
to represent and warrant that its purchase shall not
constitute a "prohibited transaction" (as defined in Section
406 of ERISA or Section 4975 of the Internal Revenue Code of
1986, as amended).
(B) Assignment (including any assignment of
any Advance or portion thereof) shall be made pursuant to an
Assignment and Assumption Agreement substantially in the form
attached hereto as Exhibit F. As of the effective date
thereof, assignments shall relieve the assigning Lender of all
future obligations with respect to the portion of the Loans so
assigned and shall confer on the assignee all rights and
obligations of the assigning Lender with respect to such
portion of the Loans.
(C) Participants shall have the same rights
and benefits as the assigning Lender under Sections 2.7 and
2.8 and Articles 6 and 9 hereof.
(D) No participation agreement shall confer
any rights under this Agreement or the other Loan Documents to
any purchaser thereof, or relieve the selling Lender from its
obligations under this Agreement; provided, however, that a
participation agreement may confer on the participant the
right to approve or disapprove (w) decreases in the interest
rates or fees applicable to the Loans, (x) any forgiveness of
principal or interest, (y) any extension of the Maturity Date
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or any scheduled date for the payment of principal or
reduction in the Commitment, or (z) any release of any
collateral or guaranty with respect to the Obligations.
(E) No assignment, participation or other
transfer of any rights hereunder or under the Note shall be
effected that would result in any interest requiring
registration under the Securities Act of 1933, as amended, or
qualification under any state securities law.
(F) If applicable, the assigning Lender
shall, and shall cause each of its assignees and participants
to provide to the Lender on or prior to the Agreement Date or
effective date of any assignment, as the case may be, an
appropriate Internal Revenue Service form as required by
Applicable Law supporting the assignee's or participant's
position that no withholding by the Borrower for U.S. income
tax payable by the Lender and their assignees and participants
in respect of amounts received by it hereunder is required.
For purposes of this Agreement, an appropriate Internal
Revenue Service form shall mean Form 1001 (Ownership Exemption
or Reduced Rate Certificate of the U.S. Department of
Treasury), or Form 4224 (Exemption from Withholding of Tax on
Income Effectively Connected with the Conduct of a Trade or
Business in the United States), or any successor or related
forms adopted by the relevant U.S. taxing authorities.
(c) The Borrower hereby agrees that any holder of a
participation in, and any assignee or transferee of, all or any portion of any
amount owed by the Borrower under this Agreement and the Note may exercise any
and all rights of banker's lien, set-off, or counterclaim with respect to any
and all amounts owed by the Borrower to such assignee, transferee, or holder as
fully as if such assignee, transferee, or holder had made the Loans in the
amount of the obligation in which it holds a participation or which is assigned
or transferred to it.
(d) Except as specifically set forth in this Section, nothing
in this Agreement or the other Loan Documents, expressed or implied, is intended
to or shall confer on any Person other than the respective parties hereto and
thereto and their successors and assignees permitted hereunder and thereunder
any benefit or any legal or equitable right, remedy, or other claim under this
Agreement or the other Loan Documents.
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(e) The provisions of this Section 10.5 shall not apply to any
purchase of participations among the Lender pursuant to Section 2.7 hereof.
Section 10.6 Accounting Principles. All references in this Agreement to
generally accepted accounting principles shall be to such principles as in
effect from time to time. All accounting terms used herein without definition
shall be used as defined under GAAP.
Section 10.7 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same instrument.
Section 10.8 Governing Law. This Agreement and the other Loan Documents
shall be construed in accordance with and governed by the internal laws of the
State of New York, without giving effect to any conflict of law principles.
Section 10.9 Severability. Any provision of this Agreement which is
prohibited or unenforceable shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof in that jurisdiction or affecting the validity or enforceability of such
provision in any other jurisdiction.
Section 10.10 Interest.
(a) In no event shall the amount of interest due or payable
hereunder or under the Note exceed the maximum rate of interest allowed by
Applicable Law, and in the event any such payment is inadvertently made by the
Borrower or inadvertently received by the Lender, then such excess sum shall be
credited as a payment of principal, unless the Borrower shall notify the Lender
in writing that it elects to have such excess sum returned forthwith. It is the
express intent hereof that the Borrower not pay and the Lender not receive,
directly or indirectly in any manner whatsoever, interest in excess of that
which may legally be paid by the Borrower under Applicable Law.
(b) Notwithstanding the use by the Lender of LIBOR as
reference rates for the determination of interest on the Loans, the Lender shall
be under no obligation to obtain funds from any particular source in order to
charge interest to the Borrower at interest rates tied to such reference rates.
Section 10.11 Headings. Headings used in this Agreement are for
convenience only and shall not be used in connection with the interpretation of
any provision hereof.
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Section 10.12 Amendment and Waiver. Neither this Agreement nor any term
hereof may be amended orally, nor may any provision hereof be waived orally but
only by an instrument in writing signed by the Lender and, in the case of an
amendment, also by the Borrower.
Section 10.13 Entire Agreement. Except as otherwise expressly provided
herein, this Agreement and the other documents described or contemplated herein
embody the entire agreement and understanding among the parties hereto and
thereto and supersede all prior agreements and understandings relating to the
subject matter hereof and thereof.
Section 10.14 Consent to Jurisdiction. The Borrower agrees that any
suit, action or proceeding with respect to this Agreement or Advances hereunder
may be brought in any court of the United States of America for the Southern
District of New York or the State of New York, and by execution and delivery of
this Agreement the Borrower irrevocably submits to each such jurisdiction for
that purpose. The Borrower irrevocably waives, to the fullest extent permitted
by law, any objection that it may now or hereafter have to the laying of the
venue of any such suit, action or proceeding brought in such court and any claim
that any such suit, action or proceeding brought in such a court has been
brought in an inconvenient forum. The Borrower agrees that a final judgment in
any such suit, action or proceeding brought in such a court, after all
appropriate appeals, shall be conclusive and binding upon the Borrower.
Section 10.15 Confidentiality. The Lender shall hold all non-public,
proprietary or confidential information (which has been identified as such by
the Borrower) obtained pursuant to the requirements of this Agreement in
accordance with their customary procedures for handling confidential information
of this nature and in accordance with safe and sound banking practices; however,
the Lender may make disclosure of any such information to their examiners,
Affiliates, outside auditors, counsel, consultants, appraisers and other
professional advisors in connection with this Agreement or as reasonably
required by any proposed syndicate member or any proposed transferee or
participant in connection with the contemplated transfer of any Note or
participation therein or as required or requested by any governmental authority
or representative thereof or in connection with the enforcement hereof or of any
Loan Document or related document or pursuant to legal process or with respect
to any litigation between or among the Borrower and the Lender. In no event
shall the Lender be obligated or required to return any materials furnished to
it by the Borrower. The foregoing provisions shall not apply to the Lender with
respect to information that (i) is or becomes generally available to the
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public (other than through the Lender), (ii) is already in the possession of the
Lender on a nonconfidential basis, or (iii) comes into the possession of the
Lender in a manner not involving a breach of a duty of confidentiality owing to
the Borrower.
ARTICLE 11
Waiver of Jury Trial
--------------------
Section 11.1 Waiver of Jury Trial. THE BORROWER, THE LENDER AND THE
LENDER HEREBY WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY COURT AND IN ANY ACTION
OR PROCEEDING OF ANY TYPE IN WHICH THE BORROWER, THE LENDER, OR ANY OF THEM, OR
ANY OF THEIR RESPECTIVE SUCCESSORS OR ASSIGNS, IS A PARTY, AS TO ALL MATTERS AND
THINGS ARISING DIRECTLY OR INDIRECTLY OUT OF THIS AGREEMENT, ANY OF THE NOTE OR
THE OTHER LOAN DOCUMENTS AND THE RELATIONS AMONG THE PARTIES SET FORTH ABOVE.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused it to be executed under seal by their duly authorized officers, all as of
the day and year first above written.
BORROWER: LENFEST COMMUNICATIONS, INC.
By:_________________________________________
[CORPORATE SEAL] Its:__________________________________
Attest:_____________________________________
Its:__________________________________
LENDER: THE TORONTO-DOMINION BANK
By:_________________________________________
Its:__________________________________
LENFEST COMMUNICATIONS, INC.
SENIOR SUBORDINATED CREDIT AGREEMENT
SIGNATURE PAGE 1