AMENDMENT AND WAIVER NO. 2
AMENDMENT AND WAIVER NO. 2 ("Amendment"), dated as of August 26, 1996,
to that certain Credit Agreement, dated as of June 30, 1995, among TIME WARNER
ENTERTAINMENT COMPANY, L.P., TIME WARNER ENTERTAINMENT-ADVANCE/XXXXXXXX
PARTNERSHIP and TWI CABLE INC., as Borrowers, THE CHASE MANHATTAN BANK, as
Administrative Agent, BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
THE BANK OF NEW YORK and XXXXXX GUARANTY TRUST COMPANY OF NEW YORK, as
Documentation and Syndication Agents, and the lenders party thereto, as amended
to the date hereof (the "Credit Agreement"). Capitalized terms used but not
otherwise defined herein shall have the meanings assigned to those terms in the
Credit Agreement.
W I T N E S S E T H:
WHEREAS, the Borrowers and the Lenders wish to amend and waive certain
provisions of the Credit Agreement as set forth herein;
NOW, THEREFORE, it is agreed:
SECTION 1. Amendments. The Credit Agreement shall be amended as
follows:
1.01. Section 1.01 of the Credit Agreement shall be amended as
follows:
(a) The following definitions shall be added:
"Applicable Amount" shall mean (i) $300,000,000 or (ii) in the
event that any of the TWI Convertible Intercompany Debt shall have
been converted into common equity of TWI Cable, an amount (not less
than $0) equal to $300,000,000 less the amount of the TWI Convertible
Intercompany Debt so converted.
"Free Cash Flow" shall mean, with respect to any New Beneficial
Asset for any period, the net income (or loss) of, or otherwise
derived from, such New Beneficial Asset, as determined in accordance
with or otherwise consistent with GAAP, plus (to the extent deducted
in calculating such net income), the sum of amortization and
depreciation and other non-cash
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charges to net income, and, without duplication, the proceeds of any
sale or other disposition of, or any distributions or proceeds of
financings with respect to, such New Beneficial Asset (but only to
the extent that (i) such proceeds are not invested in or otherwise
used in connection with the ownership and operation of such assets
and (ii) the indebtedness relating to such financings will be
assumed by TWEAN), minus the sum of capital expenditures
attributable to such asset and non-cash credits to net income, plus
or minus changes in working capital.
"New Beneficial Assets" shall have the meaning provided in the
definition of "Transfer."
"New Holder Guarantee" shall mean a guarantee of the
Obligations of TWEAN, substantially in the form of Exhibit G-8.
"New Holder Guarantor" shall have the meaning provided in
Section 3.03(h).
"Transaction Summary" shall mean Annex A of Amendment and
Waiver No. 2 to this Agreement, with such changes thereto as are not
materially less favorable to the Lenders and as are reasonably
satisfactory to the Administrative Agent.
"Transfer Date" shall have the meaning provided in the
definition of "Transfer."
"TW Holding" shall mean (i) TW Holding Co., a New York general
partnership, whose partners shall include TWI Cable and certain of
its Subsidiaries; Paragon; and CVI and certain of its Subsidiaries
or (ii) Paragon.
"TW Holding Guarantee" shall mean a guarantee of all of the
Obligations of TWEAN, substantially in the form of Exhibit G-7.
"TW Holding Partner Guarantee" shall mean a pro rata guarantee
of TW Holding's obligations under the TW Holding Guarantee,
substantially in the form of Exhibit G-9.
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"TW Holding Partner Guarantor" shall have the meaning provided
in Section 3.03(h).
"TWI Convertible Intercompany Debt" shall mean Convertible
Intercompany Debt of TWI Cable to TWI in an aggregate principal
amount not to exceed $1,500,000,000 (excluding accrued interest
thereon added to principal from time to time in lieu of cash payment
of interest, in accordance with the terms of such Convertible
Intercompany Debt); provided, however, that (x) all of the proceeds
of such Convertible Intercompany Debt shall be used by TWI Cable
upon receipt thereof to repay its outstanding Loans and (y) the rate
of interest on such Convertible Intercompany Debt shall not at any
time exceed the highest rate of interest on the Loans to TWI Cable
hereunder (it being understood, without limiting any other provision
of this Agreement, that the amount of the TWI Convertible
Intercompany Debt in excess of the Applicable Amount shall be
included in the calculation of the Leverage Ratio of TWI Cable for
all purposes under this Agreement).
(b) The definition of "Convertible Intercompany Debt" shall be
amended by replacing it in its entirety with the following:
"Convertible Intercompany Debt" shall mean any Indebtedness
for money borrowed of (a) any Borrower owing to TWI or any of its
Subsidiaries or (b) any Foreign Subsidiary owing to TWI that, in
each case, (i) is issued on terms reasonably satisfactory to the
Administrative Agent, (ii) if owed to a Person other than a Borrower
or a Restricted Subsidiary of a Borrower, is convertible into equity
of the borrower of such Indebtedness or is extinguishable, in each
case, upon (x) the liquidation or dissolution of the borrower of
such Indebtedness, (y) failure to repay any Loans at final maturity
or (z) acceleration of the maturity of any Loans hereunder, and
(iii) provides that principal thereof and interest thereon may not
be paid except to the extent permitted under Section 6.06; provided,
however, that any Convertible Intercompany Debt of a Borrower shall
be subordinated in right of payment to the Obligations on terms and
conditions reasonably satisfactory to the Administrative Agent.
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(c) The definition of "Applicable Fee Percentage" shall be amended
by adding the following at the end thereof:
"Notwithstanding anything to the contrary, so long as
any TWI Convertible Intercompany Debt is outstanding,
the Applicable Fee Percentage for TWI Cable shall be determined by
reference to its Leverage Ratio if such Applicable Fee Percentage
would be higher than that determined by reference to TWI Cable's
Debt Ratings."
(d) The definition of "Applicable Margin" shall be amended by adding
the following at the end thereof:
"Notwithstanding anything to the contrary, so long as any TWI
Convertible Intercompany Debt is outstanding, the Applicable Margin
for TWI Cable shall be determined by reference to its Leverage Ratio
if such Applicable Margin would be higher than that determined by
reference to TWI Cable's Debt Ratings."
(e) The definition of "Beneficial Assets" shall be amended by adding
", the New Beneficial Assets" after "TWE Beneficial Assets".
(f) The definition of "Guarantee" shall be amended by adding "TW
Holding Guarantee, New Holder Guarantee, TW Holding Partner Guarantee," before
"TWE Guarantee".
(g) The definition of "Guarantor" shall be amended by adding "any
New Holder Guarantor, any TW Holding Partner Guarantor, TW Holding in its
capacity as a guarantor of the Obligations of TWEAN," after "any Subsidiary
Guarantor".
(h) The definition of "Indebtedness" shall be amended by deleting
"and" before clause (f) of the proviso thereof and adding before the period
thereof "; (g) any Guarantee; and (h) any reimbursement obligation among
Guarantors with respect to any Guarantees; provided, however, that any such
obligation shall be subordinated to the obligations of the Guarantors under the
Credit Documents".
(i) The definition of "Restricted Payment" shall be amended (I) by
replacing the second parenthetical phrase in clause (iv) thereof with the
following:
"(other than (x) any payment by any Subsidiary of a Borrower to any
Wholly Owned Subsidiary of such
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Borrower or to such Borrower and (y) so long as no Default or Event
of Default has occurred and be continuing or would result therefrom,
any payment of principal of or interest on such amount of the TWI
Convertible Intercompany Debt that is in excess of the Applicable
Amount)"
and (II) by replacing clause (v) thereof with the following:
"(v) Investments by any Company in any of its Affiliates, other than
any direct or indirect Investment by any Company in (A) any Person
that, after giving effect to such Investment, would be a Restricted
Subsidiary of such Company, (B) any Person that is not an Affiliate
of such Company immediately prior to such Investment or (C) any
joint venture between such Company and one or more Persons who are
not Affiliates of TWI or any Company".
(j) The definition of "Transfer" shall be amended by
replacing it in its entirety with the following:
"Transfer" shall mean a transfer to TWEAN (in such capacity,
the "Transferee Borrower") by TWI Cable or any of its Subsidiaries
of one or more Acquired Cable Businesses (or one or more cable
systems comprising parts thereof), together with the portion of the
then outstanding Loans of TWI Cable (and if the Stock Contribution
shall not have occurred, of the then outstanding CVI Loans)
allocated to the Applicable Acquired Cable Business or applicable
cable system, as the case may be, as described in the Transaction
Summary (the "Allocated Loans"). Notwithstanding the foregoing, if
TWI Cable or such Subsidiary, as the case may be, has not obtained
all of the governmental consents or approvals required for a
transfer of an Acquired Cable Business or cable system prior to the
proposed date of such transfer (the "Transfer Date"), TWI Cable or
such Subsidiary, as the case may be, may, on the Transfer Date,
transfer the Allocated Loans but hold the related assets for the use
and benefit of TWEAN (such assets, collectively, the "New Beneficial
Assets"); provided, however, that TWI Cable shall (i) use its
reasonable best efforts to afford TWEAN the economic benefits
intended to be conferred by the New Beneficial Assets, (ii) assign
to TWEAN the right to
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receive all Free Cash Flow derived from the New Beneficial Assets on
and after the Transfer Date, which Free Cash Flow shall be paid to
TWEAN as soon as reasonably practicable but in no event more than 45
days after the end of each fiscal quarter, (iii) take all reasonable
actions to obtain such governmental consents or approvals as soon as
practicable after the Transfer Date and (iv) effectuate the
transfers of New Beneficial Assets after all governmental consents
or approvals required for the transfer of such New Beneficial Assets
are obtained (it being understood that no cable television franchise
comprising a New Beneficial Asset shall be required to be
contributed to TWEAN until governmental consents or approvals have
been obtained with respect to the contribution of all cable
television franchises in the same cable television system).
(k) The definition of "TWE Partnership Agreement" shall be amended
by adding ", as amended on the date hereof and as hereafter amended in
accordance with the terms of this Agreement" before the period thereof.
(l) The definition of "TWEAN Contribution Agreement" shall be
amended by adding ", as amended in accordance with the terms of this Agreement"
before the period thereof.
(m) The definition of "TWEAN Partnership Agreement" shall be amended
by adding ", as amended in accordance with the terms of this Agreement" before
the period thereof.
1.02. Guarantees. Section 3.03(h) of the Credit Agreement shall be
amended by adding the following at the end thereof:
"TW Holding shall have executed and delivered the TW Holding
Guarantee. Each holder of New Beneficial Assets (each, in such
capacity, a "New Holder Guarantor") shall have executed and
delivered a New Holder Guarantee. Each partner of TW Holding that
assigns indebtedness to TW Holding (each, in such capacity, a "TW
Holding Partner Guarantor") shall have executed and delivered a TW
Holding Partner Guarantee. Each such Guarantee shall be in full
force and effect."
1.03. Intercompany Indebtedness. Section 6.04 of the Credit
Agreement shall be amended by deleting "and" at the
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end of clause (v) thereof and adding the following immediately after the end of
clause (vi) thereof:
"(vii) Indebtedness of any Restricted Subsidiary of such Borrower to
a Wholly Owned Restricted Subsidiary of such Borrower or to such
Borrower (other than Indebtedness of TWEAN to TWE or to a Wholly
Owned Restricted Subsidiary of TWE or Indebtedness of a Wholly Owned
Restricted Subsidiary of TWE to TWEAN) or Indebtedness of a Foreign
Subsidiary of such Borrower to another Foreign Subsidiary of such
Borrower;".
1.04. Restricted Payments. Section 6.06(e) of the Credit Agreement
shall be amended by (I) deleting "assuming any Loans of TWI Cable" from clause
(x)(ii) thereof and replacing it with "assuming any Allocated Loans" and (II) by
adding "or (z) any holder of New Beneficial Assets (other than any Borrower or
any Restricted Subsidiary) from distributing or otherwise transferring any
assets other than such New Beneficial Assets" before the period thereof.
1.05. Unrestricted Subsidiaries. Section 6.14(a) of the Credit
Agreement shall be amended by deleting the parenthetical phrase in clause (iii)
thereof.
1.06. Release of Certain Guarantees. Section 9.08 of the Credit
Agreement shall be amended by deleting the text before "(ii)" and replacing it
with the following:
"TWE, TW Holding (other than in its capacity as a Subsidiary
Guarantor) or any TWE Partner Guarantor, TW Holding Partner
Guarantor, Holder Guarantor, holder of TWEAN Material Beneficial
Assets or New Holder Guarantor may, without the consent of any
Lender, be released from its Guarantee if (i) such Guarantor shall
not hold any Material Beneficial Assets or any New Beneficial Assets
(or in the case of any TWE Partner Guarantor, none of its
Subsidiaries that issued a Holder Guarantee shall hold any Material
Beneficial Assets),"
and by deleting from the third sentence thereof "TWE or TWEAN, as the case may
be," and replacing it with "The Borrowers".
1.07. Calculations for Summit and New Beneficial Assets. (a) Section
9.15(a) of the Credit Agreement shall be
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amended by deleting it in its entirety and replacing it with the following:
"All Financial Statements to be furnished to the Lenders hereunder
shall be prepared, and all calculations determining compliance with
Article VI (including the definitions used therein) shall be made,
in accordance with GAAP consistently applied throughout the periods
involved except as set forth in the notes thereto; provided,
however, that except as otherwise specifically provided herein, all
such calculations shall utilize accounting principles and policies
in effect at the time of the preparation of, and in conformity with
those used to prepare, the audited Financial Statements of TWE for
the fiscal year ended December 31, 1994. Notwithstanding the
foregoing:
(i) the assets and liabilities and results of operations of
TWE shall include, without duplication, (x) the TWE Beneficial
Assets and any related liabilities of the holders thereof and (y)
the cash flow received by TWE with respect to TWE Beneficial Assets;
(ii) the assets and liabilities and results of operations of
TWEAN shall include, without duplication, (x) the TWEAN Beneficial
Assets and any related liabilities of the holders thereof, (y) the
New Beneficial Assets and any related liabilities of the holders
thereof and (z) the cash flow received by TWEAN with respect to
TWEAN Beneficial Assets and New Beneficial Assets; and
(iii) to the extent that Beneficial Assets or New Beneficial
Assets and any related liabilities of the holders thereof and the
related cash flows are included in the calculations for TWE or
TWEAN, as the case may be, they shall be excluded from the
calculations for any other Borrower."
(b) Section 9.15(b) of the Credit Agreement shall be amended by
deleting "Notwithstanding paragraph (a) of this Section 9.15, nothing" and
replacing it with the following:
"The covenants contained in Article V and Article VI (other than
Section 6.11) shall apply as if holders of TWE Material Beneficial
Assets were Restricted
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Subsidiaries of TWE and holders of TWEAN Material Beneficial Assets
(other than any Borrower or any Restricted Subsidiary) were
Restricted Subsidiaries of TWEAN during any period and on any date
on which such holders (each, a "Beneficial Subsidiary") own such
Beneficial Assets (but with respect to the Specified Holders, only
to the extent of the assets and liabilities related to Material
Beneficial Assets). Nothing".
(c) Section 9.15(c) of the Credit Agreement shall be amended (I) by
deleting "Sections 6.04(b), 6.06 and 6.11" and replacing it with "Article VI"
and (II) by deleting "and" at the end of clause (ii) thereof and adding the
following immediately after the end of clause (iii) and before the period
thereof:
"; and
(iv) Summit, so long as it is an Unrestricted Subsidiary,
shall be excluded from all such calculations, except as otherwise
expressly provided in the definitions relating thereto."
1.08. Annex I, Annex II and Annex III hereto shall be attached to
the Credit Agreement as Exhibit G-7, Exhibit G-8 and Exhibit G-9, respectively.
SECTION 2. Waivers and Consent.
2.01. Consideration in Transfers. With respect to Section 3.03(d) of
the Credit Agreement, the Lenders agree that the consideration to be received by
TWI Cable in the Transfers to occur on the Transfer Date, as set forth in the
Transaction Summary, is satisfactory to the Lenders.
2.02. Restricted Payment. Notwithstanding Section 6.06 of the Credit
Agreement: (a) Paragon may redeem TWE's partnership interest in Paragon
(anticipated to be approximately 49.8%) by distributing to TWE an undivided
interest of approximately 95.2% in the cable television systems described in
Schedule 1 to the Transaction Summary without any reduction to the Consolidated
Cash Flow of TWI Cable pursuant to Section 9.15(c)(iii); (b) TWE may contribute
to Paragon cable television systems serving approximately 6,500 subscribers in
exchange for an increase in TWE's interest in Paragon; and (c) TWEAN may
distribute to TWE Primestar operations serving
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approximately 6,700 subscribers in connection with TWE's contribution to TWEAN
of Primestar operations serving approximately 15,500 subscribers.
2.03. Amendment or Waiver of Organizational Documents.
Notwithstanding Section 6.12 of the Credit Agreement, provisions of the
Partnership Agreements may be amended, modified or waived in connection with the
transactions contemplated by the Transaction Summary; provided, however, that
the Administrative Agent shall have received a copy of each agreement or
instrument evidencing any such amendment, modification or waiver, and shall be
reasonably satisfied with respect thereto.
SECTION 3. Representations and Warranties. In order to induce the
Lenders to enter into this Amendment, each of the Borrowers makes the following
representations, warranties and agreements to each of the Lenders:
3.01. No Default. No Default or Event of Default has occurred and is
continuing.
3.02. Representations and Warranties. All of the representations and
warranties in the Credit Documents, after giving effect to this Amendment, are
true, correct and accurate in all material respects on and as of the date
hereof, except to the extent that such representations and warranties expressly
relate to an earlier date.
SECTION 4. Conditions. The effectiveness of this Amendment is
subject to the satisfaction of each of the following conditions:
4.01. Execution. The Administrative Agent shall have received duly
executed counterparts hereof from (i) each of the Borrowers and (ii) the Lenders
constituting the Required Lenders.
4.02. Representations and Warranties. All of the representations and
warranties of the Borrowers in Sections 3.01 and 3.02 hereof shall be true and
correct.
4.03. Officers' Certificates. The Administrative Agent shall have
received an Officers' Certificate to the effect that all of the conditions in
this Section 4 are satisfied.
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SECTION 5. Miscellaneous.
5.01. Amendment Limited. All terms, provisions, covenants,
representations, warranties, agreements and conditions contained in the Credit
Agreement shall remain in full force and effect except as expressly contemplated
herein and shall not otherwise be deemed waived, modified or amended hereby.
5.02. Counterparts. This Amendment may be executed in any number of
counterparts and by the different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed to be an original, but
all of such counterparts together shall constitute one and the same agreement.
5.03. Governing Law. This Amendment shall be governed by, and
construed in accordance with, the laws of the State of New York without regard
to its principles of conflicts of law.
5.04. Headings. Headings have been inserted for convenience only and
shall not in any way affect the meaning or construction of any provision of this
Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the date first above written.
TIME WARNER ENTERTAINMENT
COMPANY, L.P.
By: /s/ Xxxxxxx X. Xxxxxxxx
________________________________________
Name:
Title: Senior Vice President and Chief
Financial Officer
TIME WARNER ENTERTAINMENT-
ADVANCE/XXXXXXXX PARTNERSHIP
By: TIME WARNER ENTERTAINMENT
COMPANY, L.P.,
Managing Partner
By: /s/ Xxxxxxx X. Xxxxxxxx
________________________________________
Name:
Title: Senior Vice President and Chief
Financial Officer
TWI CABLE INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
________________________________________
Name:
Title:
THE CHASE MANHATTAN BANK, as
Administrative Agent and Lender
By: /s/ X.X. Xxxxxx
________________________________________
Name:
Title: Attorney-in-Fact
Signature pages for the Banks that are Parties to Amendment and Waiver No. 2 to
the TWE Credit Agreement have been omitted.
