[Execution Copy]
AMENDMENT NO. 3
AMENDMENT NO. 3 dated as of September 30, 1996 between TURNER
BROADCASTING SYSTEM, INC., a Georgia corporation (the "Company"), the Banks (as
such term is defined below) party hereto and THE CHASE MANHATTAN BANK, successor
by merger to The Chase Manhattan Bank, N.A. ("Chase"), as agent (the "Agent").
The Company, certain lenders (the "Banks") and the Agent are
party to a Credit Agreement dated as of September 7, 1994 (as amended,
supplemented and otherwise modified and in effect to but excluding the date
hereof, the "Credit Agreement"). The Company has requested that the Banks agree,
and the Banks party hereto are willing, to amend certain provisions of the
Credit Agreement, all on the terms and conditions of this Amendment.
Accordingly, in consideration of the premises and the mutual agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
Section 1. Definitions. Terms used but not defined herein shall
have the respective meanings ascribed to such terms in the Credit Agreement.
Section 2. Amendments. Subject to the satisfaction of the
conditions to effectiveness specified in Section 4 hereof, but with effect on
and after the date hereof, the Credit Agreement shall be amended as follows:
A. Definition of Cash Flow. The last sentence of the definition
of "Cash Flow" in Section 1.01 of the Credit Agreement shall be amended in its
entirety to read as follows:
"Solely for the purposes of computations under Sections 8.11,
8.12 and 8.13 hereof, the calculation of "Cash Flow" for any period that
includes any of the fiscal quarters of the Company ending December 31,
1995, and March 31, June 30, September 30 and December 31, 1996, shall
exclude the adjustments described in the letter dated November 4, 1996
of the Company to the Banks titled "TBS Credit Facilities Post Time
Warner Merger" to the extent that the aggregate of such adjustments for
all such fiscal quarters does not exceed 105% of the aggregate of the
"Ultimate Adjustments" and "Merger Adjustments" for all such fiscal
quarters set forth in Annex 1 to Amendment No. 3 hereto (it being
understood that, to the extent the aggregate of
Amendment No. 3
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such adjustments shall exceed 105% of the aggregate of such "Ultimate
Adjustments" and "Merger Adjustments", such excess shall be treated as
expense items in the manner otherwise required by this definition in
calculating net income under clause (a) of this definition)."
B. Funded Debt Ratio. Section 8.13 of the Credit
Agreement shall be amended in its entirety to read as follows:
"8.13 Funded Debt Ratio. The Company shall not
permit the Funded Debt Ratio to exceed the following
respective ratios at any time during the following
respective periods:
Period Ratio
From and including the first
Delivery Date after September
30, 1996 through but excluding
the first Delivery Date after
December 31, 1996 6.50 to 1
From and including the first
Delivery Date after December
31, 1996 through but excluding
the first Delivery Date after
March 31, 1997 6.50 to 1
From and including the first
Delivery Date after March 31,
1997 through but excluding the
first Delivery Date after
September 30, 1997 5.50 to 1
Amendment No. 3
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From and including the first
Delivery Date after September
30, 1997 through but excluding
the first Delivery Date after
March 31, 1998 5.00 to 1
From and including the first
Delivery Date after March 31,
1998 and at all times
thereafter 4.50 to 1"
Section 3. Representations and Warranties. The Company represents
and warrants to the Banks and the Agent that:
(a) this Amendment has been duly and validly executed and
delivered by the Company and constitutes the Company's legal, valid and
binding obligation, enforceable against the Company in accordance with
its terms; and
(b) after giving effect to this Amendment, (i) no Default shall
have occurred and be continuing and (ii) the representations and
warranties made by the Company in Section 7 of the Credit Agreement are
true and correct on and as of the date hereof with the same force and
effect as if made on and as of such date (or, if any such representation
or warranty is expressly stated to have been made as of a specific date,
as of such specific date).
Section 4. Conditions To Effectiveness. The amendments to the
Credit Agreement set forth in Section hereof shall become effective, as of the
date hereof, upon the receipt by the Agent of this Amendment, duly executed and
delivered by the Company, the Majority Banks and the Agent.
Section 5. Documents Otherwise Unchanged. Except as herein
provided, the Credit Agreement shall remain unchanged and in full force and
effect, and each reference to the Credit Agreement and words of similar import
in the Credit Agreement, as amended hereby, and the Notes shall be a reference
to the Credit Agreement as amended hereby and as the same may be further
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amended, supplemented and otherwise modified and in effect from time to time.
Section 6. Counterparts. This Amendment may be executed in any
number of counterparts, each of which shall be identical and all of which, when
taken together, shall constitute one and the same instrument, and any of the
parties hereto may execute this Amendment by signing any such counterpart.
Section 7. Binding Effect. This Amendment shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns.
Section 8. Governing Law. This Amendment shall be governed by,
and construed in accordance with, the law of the State of New York.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed as of the day and year first above written.
TURNER BROADCASTING SYSTEM, INC.
By /s/ William P. Eddy
______________________________
Title: Assistant Treasurer
Amendment No. 3
Signature pages for the Banks that are Parties to Amendment No. 3 to the 1994
TBS Credit Agreement have been omitted.
TBS Inc.
Debt Covenant Projections
Post Merger 1996 Forecast
Quarter Quarter Quarter Quarter Quarter Full Year
12/31/95 3/31/96 6/30/96 9/30/96 12/31/96 12/31/96
-------- ------- ------- ------- -------- ---------
Cash Flow As Adjusted 75,391 118,072 142,000 179,000 514,463
Adjustments:
CRE ultimate adjustments (42,000)a (30,000)a (72,000)
NLC ultimate adjustments (50,000)a (49,000)a (99,000)
TPS contract (4,000)b (4,000)
Merger costs (9,749)b (951)b (5,762)b (2,089)b (43,000)b (51,802)
Severance costs (37,000)b (37,000)
Affiliation agreements (2,000)b (2,000)
Development costs:
Castle Rock Entertainment (25,000)b (25,000)
New Line Cinema (45,000)b (45,000)
TBS (48,000)b (48,000)
Licensed and Produced Prog:
TNT (10,000)b (10,000)
WTBS (73,000)b (73,000)
---------- ---------- --------- ---------- ---------- ----------
Reported OCF 74,440 112,310 47,911 (187,000) 47,661
Ultimate Adjustments sum of a (92,000) (79,000) (171,000)
Merger Adjustments sum of b (9,749) (951) (5,762) (2,089) (287,000) (295,802)
NOTE: The above adjustments are estimates based on facts existing as of October
31, 1996. Due to the subjective nature of the estimation process, the
adjustments may change.