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EXHIBIT 10.2
AGREEMENT
This Agreement dated this 6th day of November, 1992, by and among
Susquehanna Cable Co., a Pennsylvania corporation with offices at 000 Xxxx
Xxxxxx Xxxxxx, Xxxx, Xxxxxxxxxxxx 00000 ("SCC" herein), and Cable TV of East
Providence, Inc. Casco Cable Television Inc., Casco Cable Television of Bath,
Inc., SBC Cable Co. and York Cable Television, Inc. (collectively
"Subsidiaries") corporations with offices at 000 X. Xxxxxx Xxxxxx Xxxx,
Xxxxxxxxxxxx and Xxxxxxx Communications, Inc. and Xxxxxxx York, Inc., Delaware
corporations with offices c/o Suburban Cable TV Co., Inc., 000 Xxxxxxxxx Xxxx,
Xxxxxxxxx, Xxxxxxxxxxxx 00000 (collectively "Xxxxxxx" herein).
W I T N E S S E T H:
WHEREAS, Susquehanna Pfaltzgraff Co. ("Susquehanna" herein) is the
owner of all issued and outstanding voting common stock of SCC and 98.8% of the
total voting and nonvoting common stock of SCC;
WHEREAS, Susquehanna is contemplating the formation of a new subsidiary
("Susquehanna Media") which will become the owner of all the issued and
outstanding voting common stock of SCC;
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WHEREAS, SCC owns at least 80% of the issued and outstanding stock of
its Subsidiaries and will own 100% at Closing (as hereinafter defined in Section
3);
WHEREAS, Xxxxxxx has requested and SCC has agreed to recapitalize SCC
and its subsidiaries by borrowing One Hundred Nine Million Dollars
($109,000,000) of debt in conjunction with the refinancing of its parent,
Susquehanna ("Refinancing" herein);
WHEREAS, SCC and its Subsidiaries desire to issue equity interests in
SCC and its Subsidiaries; and
WHEREAS, Xxxxxxx desires to acquire equity interests in SCC and the
Subsidiaries in exchange for capital contributions of cash and the cable
television systems in Red Lion and Mount Wolf, Pennsylvania ("Red Lion System"
herein) and will further provide SCC the opportunity to purchase cable
television programming for the systems owned by its Subsidiaries;
NOW, THEREFORE, in consideration of the promises and covenants
contained herein, the parties intending to be legally bound, mutually agree as
follows:
SECTION 1. SUBSCRIPTION AND ISSUANCE OF NEW SHARES. Subject to the terms and
conditions set forth in this Agreement, Xxxxxxx shall subscribe for and SCC and
its Subsidiaries shall issue the
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following minority percentage equity interests ("Equity Interests") in SCC and
its Subsidiaries:
% Equity Shares to Be
Company Interest Issued to Xxxxxxx
------- -------- -----------------
SCC 14.9% 132,886.64
York Cable Television, Inc. 14.1% 8.21
Casco Cable Television, Inc. 14.1% 47.27
Casco Cable Television of
Bath, Inc. 14.1% 26.26
Cable TV of East Providence, Inc. 14.1% 787.89
SBC Cable Co. 14.1% 5,909.20
SECTION 2. PURCHASE PRICE AND CONTRIBUTION OF RED LION SYSTEM.
(a) Xxxxxxx shall pay at Closing by transfer to each appropriate payee, which
shall be allocated to the acquisition of the various equity interests the
amounts as follows:
Company Purchase Price
------- --------------
SCC $10,213,000
Casco Cable Television, Inc. 100,000
Casco Cable Television of Bath, Inc. 50,000
Cable TV of East Providence, Inc. 387,000
SBC Cable Co. 250,000
(b) Xxxxxxx shall transfer or cause the transfer of the assets and franchises of
the Red Lion System ("Assets" herein) used or useful in the operation of the Red
Lion System to York Cable Television, Inc., ("York Cable" herein) said Assets
having an agreed upon value of the cost to acquire the Red Lion System. Xxxxxxx
shall contribute sufficient cash to York Cable to acquire the Assets at no cost
to York Cable. In the event that the Assets are acquired at a cost of less than
$13,000,000, Xxxxxxx shall compensate York Cable and SCC for any additional
taxes
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caused by the loss of depreciation associated with the difference in the
purchase price and $13,000,000. If Xxxxxxx is unable to transfer the Assets to
York Cable at Closing or at the Extended Red Lion Closing, Xxxxxxx shall convey
to York Cable in lieu of the Assets, Fifteen Million Five Hundred Thousand
Dollars ($15,500,000) except as otherwise provided herein.
SECTION 3. CLOSING DATE. (a) The Closing shall take place at 10:00 a.m. on a
date mutually agreed upon by the parties which shall be within fifteen (15) days
after the satisfaction of all of the conditions precedent in this Agreement, at
SCC's offices at 000 X. Xxxxxx Xxxxxx, Xxxx, Xxxxxxxxxxxx. If Closing does not
occur prior to March 31, 1993, either party may terminate this Agreement,
provided, however, that if a party's breach of this Agreement has prevented the
consummation of the transactions contemplated hereby, that party shall not be
entitled to terminate this Agreement.
(b) Extended Red Lion Closing. Notwithstanding Section 3(a) above, in the event
that Xxxxxxx is unable to transfer or cause the transfer of the Assets as
contemplated in Section 2(b) above on the Closing Date contemplated in Section
3(a), above, but except as provided in Section 7(a) below, then the Closing Date
for the Assets shall be extended to June 30, 1993 without penalty. If the
Extended Red Lion Closing occurs subsequent to June 30, 1993, Xxxxxxx shall pay
$75,000 per month on the fifteenth of the month for each additional month
(subject to proration for a partial month) that Xxxxxxx is unable to have the
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Assets conveyed to York Cable. The $75,000 per month payments shall continue
until the Assets are conveyed to York Cable or Xxxxxxx has determined in good
faith that it cannot cause the transfer of the Assets and has made the cash
payment in lieu thereof. If Xxxxxxx does not cause the transfer of the Assets on
or before December 31, 1993, Xxxxxxx shall pay to York Cable in lieu of the
Assets and in consideration of the Equity Interest in York Cable Fifteen Million
Five Hundred Thousand Dollars ($15,500,000) on December 31, 1993 as set forth in
Section 2(b) of this Agreement except as otherwise provided herein. The shares
of York Cable will be issued to Xxxxxxx on the date of the Extended Red Lion
Closing.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF SCC. As an incentive to Xxxxxxx to
enter into this Agreement and to consummate the transactions contemplated
herein, SCC represents and warrants to Xxxxxxx as follows:
(a) Subsistence. Each of SCC and the Subsidiaries are corporations duly
organized, validly existing and in good standing under the laws of their
respective states of incorporation and duly qualified to do business as a
foreign corporation in any state where such qualification would be required.
(b) Corporate Authority. Each of SCC and its Subsidiaries has the corporate
power and authority to enter into and perform its obligations under this
Agreement and SCC and its Subsidiaries
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will not take any action to impair such power and authority between the date
hereof and Closing. Neither the execution nor the delivery of the Agreement nor
the consummation of the transactions contemplated herein, nor compliance with or
fulfillment of the terms and provisions hereof, will conflict with or result in
a breach or violation of the terms, conditions or provisions of, or constitute a
default under (i) the articles of incorporation or bylaws of SCC or the
Subsidiaries, (ii) any instrument, agreement, judgement, order, award, decree to
or by which SCC or the Subsidiaries are a party or are bound and which is
material to their respective financial condition other than loan agreement with
current lenders which will be cured by the Refinancing to close
contemporaneously with the Closing or (iii) subject to compliance with the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, ("HSR Act") if applicable,
and subject to approvals, if any, required under existing governmental
franchises, permits, licenses and authorizations, any statute, law, rule or
regulation to which SCC or its Subsidiaries are subject except various
franchising authorities listed on Schedule 1. The execution, delivery and
performance of this Agreement by SCC or the Subsidiaries have been duly
authorized by all requisite corporate action, and this Agreement constitutes a
valid and binding agreement of SCC and its Subsidiaries enforceable against SCC
and its Subsidiaries in accordance with its terms, except as the enforceability
thereof may be limited by applicable bankruptcy, insolvency or similar laws
affecting
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creditor's rights generally and by general principles of equity, including,
without limitation, the availability of equitable remedies.
(c) Capital Structures of SCC and the Subsidiaries. The authorized, issued and
outstanding capital of SCC and the Subsidiaries are as follows:
To be
Shares Outstanding Par
Company Authorized at Closing Value
------- ---------- ---------- -----
SCC Class A 1,000,000 750,000 $ 1.00
Class B 100,000 8,970 $ 1.00
York Cable Television, Inc. 100 50 $ 1.00
Casco Cable Television, Inc. 1,000 288 $100.00
Casco Cable Television of
Bath, Inc. 2,000 160 None
Cable TV of East Providence
Inc. 10,000 4,800 $ 1.00
SBC Cable, Inc. 100,000 36,000 $ 1.00
All of the shares of stock of SCC and the Subsidiaries are fully paid, validly
issued and non-assessable. Susquehanna owns 100% of the voting stock of SCC and
98.8% of all of the capital stock of SCC. SCC owns in excess of 80% of each
subsidiary. At Closing, SCC shall own 100% of the issued and outstanding stock
of the Subsidiaries. With the exception of (i) rights to purchase 2,600 shares
of Class B Nonvoting Common Stock of SCC and options to acquire an additional
5200 shares (assuming all rights to purchase 2,600 shares are exercised), (ii)
the option to purchase 12,740 shares of Class B Nonvoting Common Stock of
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SCC, and (iii) the right of holders of Class B stock of SCC to convert this
stock to Class A stock if 50% of the stock or assets of SCC are sold, there are
no other rights or options to acquire shares of the capital stock of SCC or any
Subsidiary, whether upon conversion of other securities or otherwise.
(d) Title to Shares. Susquehanna or Susquehanna Media with respect to SCC and
SCC with respect to the subsidiaries, will have good and indefeasible title to
the shares of capital stock it currently holds and, at Closing, will have good
and indefeasible title to all of the outstanding voting shares of SCC and its
Subsidiaries, free and clear of all liens, charges, security interests, adverse
claims, pledges, encumbrances, or restrictions of any kind. At Closing, Xxxxxxx
will acquire good and valid title to the Equity Interests being issued by SCC
and its Subsidiaries fully paid and non-assessable and free and clear of any
lien or encumbrance.
(e) No distribution on Shares. Neither SCC nor any of the Subsidiaries have
since December 31, 1991, purchased or redeemed (other than redemption of
minority interests in the Subsidiaries or SCC) any of its capital stock, paid or
declared any dividend or made any other distribution in respect of its capital
stock. No dividends or distributions will be declared or paid from the date
hereof to Closing except that SCC and the Subsidiaries will declare dividends of
approximately Eighty Million Dollars ($80,000,000) in connection with the
refinancing contemplated by this transaction.
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(f) No Material Adverse Changes. Except as otherwise disclosed in this
Agreement, or in other information provided to Xxxxxxx by SCC, and the
refinancing of SCC and Susquehanna by which SCC will have intercompany debt in
the amount of $109,000,000, there have been no material Adverse changes in the
assets or liabilities, or in the condition, financial or otherwise, of SCC or
the Subsidiaries.
(g) No Material Undisclosed Liabilities. To the best knowledge of SCC, after due
inquiry and investigation, neither SCC nor any of the Subsidiaries is subject to
any material liability, absolute or contingent, which is not reflected in, or
which is substantially in excess of the amounts shown or reserved for in, the
balance sheet of SCC dated December 31, 1991, or which is not otherwise
disclosed in this Agreement, other than liabilities of the same nature as those
set forth in such balance sheet or disclosed herein and reasonably incurred in
the ordinary course of its business.
(h) No Material Default or Litigation. To the best knowledge of SCC, after due
inquiry and investigation, neither SCC nor the Subsidiaries are in default and
no condition exists which with notice or the passage of time would constitute a
default under any agreement, lease or other obligations to which it is a party,
which default, if acted upon by the party or parties legally entitled to do so,
would have a material adverse effect on the financial condition of SCC or the
Subsidiaries other than defaults in certain loan agreements with its current
lenders
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which will be cured by the Refinancing completed contemporaneously with Closing.
Except as set forth in Schedule 2, there are no lawsuits, proceedings, claims or
governmental investigations or demands pending or, to the best knowledge of SCC
after due inquiry and investigation threatened against SCC or its Subsidiaries
or any of the properties or businesses of SCC or the subsidiaries. None of the
lawsuits, if adversely decided, would have a material adverse effect on the
financial condition of SCC or seek to restrain, prohibit or delay consummation
of the transactions contemplated hereby. There are no outstanding decrees,
orders, judgments or stipulations to which SCC or its Subsidiaries are subject
which materially adversely affect the financial condition of SCC or its
Subsidiaries.
(i) Tax Liabilities. All income, excise, property, sales and other tax
returns which are required to be filed by or on behalf of SCC and its
Subsidiaries up to and including the date hereof have been filed by SCC, are
true and correct to the best of SCC's knowledge and all taxes which have become
due pursuant to such returns, or pursuant to any assessment which has become
payable have been paid. No extension of the time for filing a return with
respect to SCC is currently in effect except that Susquehanna had obtained an
extension of time to file its consolidated federal income tax return and certain
state tax returns for the year ended December 31, 1991 which returns have been
filed. Such returns for periods ended on or before December 31, 1991, and the
returns to be filed by or on behalf of the SCC
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and its Subsidiaries with respect to any interim period thereafter, and any
final returns required to be filed on or before the Closing Date, are or will be
true and correct in all material respects and, to the extent that any taxable
liability has accrued but has not yet become payable, the amounts accrued and
reflected in the 1991 Financial Statements or referred to in the notes thereto
are sufficient for the payment of all accrued, unpaid or deferred income,
excise, property and sales taxes (including any interest or penalties) for the
year ended December 31, 1991 and all prior fiscal years. SCC and the
Subsidiaries are not currently being audited by the Internal Revenue Service or
any state or local taxing authority and have received no notice regarding any
pending audit or investigation.
(j) Insurance. SCC and the Subsidiaries maintain policies of fire, casualty and
other liability and other forms of insurance in such amounts and against such
risks and losses as are reasonable for their businesses and properties. SCC and
the Subsidiaries will keep such insurance in full force and effect through the
Closing Date.
(k) Corporate Records. The corporate minute books of SCC and the Subsidiaries
contain all the minutes of meetings of directors and shareholders of SCC and the
Subsidiaries, and the share certificate books of SCC and the Subsidiaries are
complete and accurate in all material respects.
(l) Conduct of Business. Since December 31, 1991, SCC and the Subsidiaries have
(a) conducted their business in the ordinary
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course; (b) not been engaged in any significant labor disputes; (c) not
experienced any material change in their condition (financial or otherwise),
assets, liabilities, properties, or business, including any damage, destruction
or loss (whether or not covered by insurance) to property by fire or other
casualty, except changes in the ordinary course of their business, none of which
have been material; (d) not increased the compensation, bonuses, pensions or
profit sharing payable to their employees other than in the ordinary course of
business, or paid or declared any dividend or other distribution to their
shareholders except as provided in Schedule 4; (e) not placed a lien on any of
their assets, except in the ordinary course of business; (f) not sold, lent,
abandoned or otherwise disposed of any of their assets other than in the
ordinary course of business and other than a cable system serving approximately
1,300 subscribers in Xxxxxxxxx and Amite counties, Mississippi; (g) not
incurred, created or assumed any indebtedness, liability or obligation not in
the ordinary course of business; (h) not entered into any material agreement not
in the ordinary course of business and which has not been at arm's length rates
and terms; and (i) not acquired or disposed of any fixed assets made or
contracted for any capital expenditures or settled or discharged any balance
sheet receivable for less than the stated amount thereof, other than in the
ordinary course of business.
(m) Compliance with Laws. SCC and the Subsidiaries have complied in all material
respects with and are in material compliance with
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all federal, state and local statutes, laws, judgments, orders or decrees
applicable to it, and there does not exist any basis for any claim of default
under or violation of any such statute, law, judgment, order or decree except
such defaults or violations, if any, that in the aggregate do not and will not
materially and adversely affect SCC and the Subsidiaries.
(n) Indebtedness. At Closing, SCC will have consolidated indebtedness of One
Hundred Nine Million Dollars ($109,000,000) owing to Susquehanna Media which
shall be evidenced by a grid note payable in seven years with no predetermined
amortization. Such inter-company debt will have an interest rate equal to the
weighted average interest rate of Susquehanna Media's third party borrowings;
provided, however, that at Closing such rate shall not exceed nine and one-half
percent (9-1/2%) per annum.
(o) Financial Statements. The financial operating statements (pretax) of SCC and
its Subsidiaries dated December 31, 1991, and for the period through August 31,
1992 and which have been provided to Xxxxxxx have been prepared in accordance
with generally accepted accounting principles consistently applied.
(p) Disclosure. No representation or warranty by SCC and its Subsidiaries or
Susquehanna, to the extent it makes any representation or warranty, in this
Agreement or any Schedule to this Agreement or any statement, list or
certificate furnished or to be furnished by SCC or its Subsidiaries or
Susquehanna, to the extent it has furnished or furnishes any list or
certificate, pursuant to this Agreement, contains or will contain any untrue
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statement of material fact, or omits or will omit to state a material fact
required to be stated therein or necessary to make the statements contained
therein not misleading or necessary in order to provide a prospective purchaser
of the Equity Interests with proper information as to such Equity Interests.
(q) Effect of Certificates. All certificates of SCC and its Subsidiaries and
Susquehanna, to the extent Susquehanna is delivering any certificates, delivered
under this Agreement shall be deemed to be additional representations and
warranties of SCC and its Subsidiaries.
Section 5. Representations and Warranties of Xxxxxxx.
As an inducement to SCC to enter into this Agreement and to consummate
the transactions contemplated herein, Xxxxxxx hereby represents and warrants to
SCC as follows:
(a) Subsistence. (i) Xxxxxxx Communications Inc. is a corporation duly organized
and validly existing under the laws of the State of Delaware; (ii) Xxxxxxx York
is a corporation duly organized and validly existing under the laws of the State
of Delaware.
(b) Corporate Authority. Xxxxxxx has, the corporate power and authority to enter
into and perform its obligations under this Agreement, to acquire the Equity
Interests pursuant to this Agreement and to do all acts and things required to
be done by it under this Agreement except that Xxxxxxx is required to provide
notice to certain banks prior to execution of this Agreement which Xxxxxxx has
done and further it will not take any action to impair such power and authority
between the date hereof and the
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Closing. The execution, delivery and performance of this Agreement by Xxxxxxx
has been duly authorized by all requisite corporate action. Neither the
execution nor the delivery of this Agreement nor the consummation of the
transactions contemplated hereby, nor compliance with, nor fulfillment of, the
terms and provisions hereof will conflict with or result in a breach or
violation of the terms, conditions or provisions of or constitute a default and
no condition exists which with notice or the passage of time would constitute a
default under (i) the articles of incorporation or bylaws of Xxxxxxx, (ii) any
instrument, agreement, mortgage, judgment, order, award, or decree to which
Xxxxxxx is a party or by which it is bound, or (iii) subject to compliance with
the HSR Act, if applicable, any statute, law, rule or regulation to which
Xxxxxxx is subject. This Agreement, when executed and delivered by Xxxxxxx, will
constitute a valid and binding agreement of Xxxxxxx enforceable against Xxxxxxx
in accordance with its terms, except as the enforceability thereof may be
limited by applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and by general principles of equity, including,
without limitation, the availability of equitable remedies.
(c) Financing. Xxxxxxx has sufficient financing available to it to pay the cash
portion of the purchase price in full at Closing.
(d) Investment Intent. Xxxxxxx is acquiring the Equity Interests for its own
account for investment and not with a view to the public sale or distribution of
any part thereof.
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(e) Red Lion System. Specifically with reference to the Red Lion System, Xxxxxxx
will use its best efforts to cause the owner of the Red Lion System ("Seller")
to transfer to York Cable the Assets with the following representations and
warranties and covenants:
(i) Title to Red Lion Assets. Seller will convey good and marketable
title to all of the material Assets and the Assets are free and clear of all
security interests, liens and encumbrances of any kind or nature, except for any
property taxes not delinquent.
(ii) Required Consent. With respect to the Red Lion System, Seller has
obtained all material governmental franchises, approvals, licenses, consents and
other authorizations, and has entered into all other agreements and obtained all
other approvals and consents necessary and required for York Cable to operate
the Red Lion System and to own, lease, use, and operate, as the case may be, the
Assets at the places and in the manner in which the Red Lion System is presently
conducted and will be conducted on the Closing Date or Extended Red Lion Closing
Date (collectively, the "Required Consents"), unless SCC agrees that any
Required Consent need not be obtained until after the Closing Date or Extended
Red Lion Closing Date.
(iii) CATV Instruments. All intangible assets including but not limited
to channel distribution rights owned, leased, used or held for use by Seller,
franchises, pole attachment rights, leases, license, easements, crossing permits
and service
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agreements (the "CATV Instruments") are currently in full force and effect and
are valid under all applicable federal, state, and local laws. Seller is not in
violation or default under any CATV Instrument. There is no material legal
action, governmental proceeding or investigation, pending or threatened, for the
purpose of modifying, revoking, terminating, suspending, cancelling, or
reforming any CATV Instrument. Seller is in material compliance with other
applicable requirements of all governing or regulatory authorities (including
the FCC and the Register of Copyrights) relating to the CATV Instruments,
including, without limitation, all requirements relating to notifications,
filing, reporting, posting, and maintenance of logs and records. Seller holds
valid and continuing CATV Instruments, rights-of-way, rights of entry, permits,
and other rights and authorizations necessary to enable it to operate the Red
Lion System. Seller is in compliance in all material respects with the terms and
conditions of all such CATV Instruments, rights-of-way, rights of entry,
permits, and other rights and authorizations. No franchise will restrict York
Cable's ability to change any rates charged for cable television services
provided that such ability may be affected by the Cable Television Consumer
Protection and Competition Act of 1992. There is no pending assertion or claim
that operations pursuant to any franchise have been improperly conducted or
maintained. A request for renewal has been filed under Section 626 of the Cable
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Communications Policy Act of 1984 with respect to all franchises expiring within
36 months of the date of this Agreement.
(iv) Copies of CATV Instruments. True, complete, and correct copies of
the CATV Instruments and any amendments to the CATV Instruments to the date of
this Agreement will be delivered by Seller to SCC at the Closing or Extended Red
Lion Closing.
(v) FCC Compliance. The Red Lion System is duly authorized under
applicable CATV Instruments and FCC rules, regulations, and orders to distribute
the FM signals and off-air television broadcast signals presently being carried
to the Subscribers of the Red Lion System, and is licensed to operate all the
facilities, including, without limitation, any business radio and any cable
television relay service ("CARS") system, being operated by the Red Lion System.
The operation of the Red Lion System and of any FCC-licensed facility used in
conjunction with the operation of the Red Lion System has been, and is, in
compliance with the FCC's rules and regulations, and Seller has received no
notice, and otherwise has no reason to know, of any claimed default or violation
with respect to the foregoing. The Red Lion System has complied with its
obligations in connection with the Cumulative Leakage Index (CLI) under
applicable FCC rules and regulations including, without limitation, (i)
purchasing adequate CLI monitoring equipment, (ii) maintaining appropriate log
books and other recordkeeping, and (iii) correcting any radiation leakage
discovered in connection with its monitoring obligations under such FCC rules
and regulations.
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The Red Lion System complies with CLI standards under applicable FCC rules and
regulations. All required reports with the FCC have been filed.
(vi) Patents, Trademarks. and Copyrights. All requisite filings and
payments with the Register of Copyrights have been made and the Red Lion System
is otherwise in compliance with all applicable rules and regulations of the
Copyright Office. Seller has allocated revenues with respect to the payment of
copyright fees. Seller agrees to deliver to SCC copies of all current and past
reports and filings necessary to support compliance with FCC and Copyright rules
and regulations, as SCC shall request. There are no patents, patent rights,
trademarks, or copyrights and the Red Lion System is not a party to any license
or royalty agreement with respect to any patent, trademark, or copyright except
for licenses respecting program material and obligations under the Copyright Act
of 1976 applicable to CATV systems generally. The Assets are free of the
rightful claim of any third party by way of copyright infringement or the like.
The manner in which program services are offered over the Red Lion System will
not result in material additional reportable gross receipts under applicable
rules and regulations of the Copyright office.
(vii) Assets. All Assets are in good operating condition and repair,
ordinary wear and tear excepted and except as set forth in the purchase
agreement with Seller. None of the buildings, structures, or appurtenances used
in the Red Lion
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System violates applicable laws, ordinances, codes, regulations or restrictive
covenants, the enforcement of which would involve excessive cost to correct,
would detract from their value, or would interfere with their use. Except as set
forth in any of the Schedules, all facilities of the Red Lion System are
properly located and comply with applicable laws and regulations. The
distribution facilities of the Red Lion System do not constitute a trespass,
prohibited encumbrance, or illegal occupation of the land of any third person.
All cable used is coaxial, and, except for such conditions as might be expected
for a cable system of its age and geographic location, is water-tight and
properly joined and connected. The Red Lion system and the Assets are suitable
for continued use in the manner in which they are presently operated without the
need for repairs or replacement. Seller maintains insurance on its Red Lion
System in amounts and of such a nature and with insurers as is sufficient to
protect and save it harmless from casualty loss, and shall keep such policies in
such amounts duly in force until the Extended Red Lion Closing.
(viii) Litigation and Violations. There is no litigation at law, in
equity, or in any other proceeding or investigation pending or to Seller's
knowledge, threatened against, or which may adversely affect Seller, or any
judgment, decree, order, award or other decision which could have any adverse
effect on Seller's Red Lion System, might impair the quality of title to the
Assets, or might adversely affect the rights, title, or
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interest of Seller and Seller does not know of any basis for such litigation or
proceedings. Any liabilities and costs arising from such litigation shall be
the responsibility of Seller. Seller is not in default in any way with respect
to any order, writ, injunction, or decree of any court or federal, state,
municipal, or other governmental department, commission, board, bureau, agency,
or instrumentality which relates specifically to the operation of its Red Lion
System, and Seller has complied in all material respects with all laws, rules,
or regulations applicable to its Red Lion System and its operation by Seller.
(ix) Tax Returns; Other Reports. Seller has duly and timely filed in
proper form all federal, state, local, and foreign income, franchise, sales,
use, property, excise, payroll and other tax returns and all other reports
(whether or not relating to taxes) required to be filed by law with the
appropriate governmental authority. All taxes, fees, and assessments of whatever
nature due or payable by Seller pursuant to said returns, reports, or otherwise,
have been paid. There are no tax audits pending and no outstanding agreements of
or waivers extending the statutory period of limitations applicable to any
federal, state, or local income tax return for any period.
There are no outstanding taxes, fees or assessments against the Red
Lion System or its Assets as of the Closing or Extended Red Lion Closing.
(x) Bulk Sales. Neither the sale and transfer of the Assets pursuant
to this Agreement, nor York Cable's ownership,
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possession, or use of the Assets from and after the Closing because of such sale
and transfer, will result in or be subject to: (a) any law pertaining to bulk
sales or transfers or fraudulent conveyances which might make such sale or
transfer or any part thereof ineffective as to creditors of or claimants against
Seller; or (b) the imposition of any liability upon York Cable for appraisal
rights or any other liability of any nature whatsoever owing to any shareholder
of Seller or any other person which has not been expressly assumed by York Cable
under this Agreement.
(xi) Employment Matters. (A) At the Closing or Extended Red Lion
Closing, Seller shall provide a true and complete list of names and positions of
all employees of Seller's Red Lion System. Upon request by York Cable, Seller
will provide York Cable with current hourly wages or monthly salary and other
compensation amounts for all laws relating to the employment of labor,
including, without limitation, the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and those relating to wages, hours, collective
bargaining, unemployment insurance, worker's compensation, equal employment
opportunity and the payment and withholding of taxes.
(B) The Red Lion System has no employment agreements, either written or
oral, with any person which would require York Cable to employ any person after
the Closing Date or the Extended Red Lion Closing. From and after the Closing
Date or the Extended Red Lion Closing, York Cable may, but shall have no
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obligation to offer employment to such of the current employees of the Red Lion
System as York Cable may desire. On or prior to the Closing Date or the Extended
Red Lion Closing, the Red Lion System will pay its employees all accrued
compensation, including vacation, sick pay, or other similar benefits accrued as
of the Closing Date or the Extended Red Lion Closing.
(C) The Red Lion System is not a party to any contract with any labor
organization, and neither has it agreed to recognize any union or other
collective bargaining unit, nor has any union or other collective bargaining
unit been certified as representing any of its employees.
(D) SCC and York Cable are not required to continue any defined
benefit, defined contribution, or other employee benefit plan subject to the
jurisdiction of ERISA to which Seller is currently a party.
(E) Seller agrees to assume total responsibility for maintenance and/or
distribution of benefits accrued under any qualified plans maintained by Seller
pursuant to the plan provisions of all such plans sponsored by Seller. Neither
SCC nor York Cable will assume any liability for any such accrued benefits or
any fiduciary or administrative responsibility to account for or dispose of any
such accrued benefits maintained under any qualified plans for the benefit of
the employees of the Red Lion System.
(F) All welfare plan claims and short or long term disability plan
obligations incurred on or before the Closing or
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Extended Red Lion Closing shall remain the responsibility of Seller. Eligible
indemnity plan expenses attributable to any of the Red Lion System's covered
employees or dependents who are confined to a hospital or medical institution on
the date of the Closing will continue to be the responsibility of Seller under
Seller's applicable indemnity plan provisions until (a) such individual has been
discharged from the hospital or medical institution, and (b) the employee is
actually employed by York Cable and such employee meets York Cable's active work
requirements as described below.
(G) Current employees of the Red Lion System hired by York Cable shall
not be considered to be in the employ of York Cable until such time as they
satisfy the active work requirement of completing one full hour of active
service for York Cable.
(xii) Continuity and Maintenance of Operations. Seller shall continue
to operate the Red Lion System, shall maintain the Assets (including maintenance
of the inventories of spare equipment and parts), and shall keep all of its
Business Books, records, and files all in the ordinary course of business in
accordance with past practices, consistently applied. Seller shall not, without
prior written consent of SCC or York Cable which consent shall not be
unreasonably withheld, change the rate charged for Basic CATV Services, or Pay
TV and shall not add or delete any program services. Seller shall not sell,
transfer, assign, or permit the creation of any Security Interest on any of the
Assets, other than in the ordinary course of business,
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without prior written consent of SCC. Seller will not permit the amendment of
cancellation of any of the CATV Instruments, or any other contract or agreement
which is necessary for the operation of the Red Lion System, without the prior
written consent of SCC or York Cable. The Red Lion System shall not enter into
any contract or commitment or incur any indebtedness or other liability or
obligation of any kind relating to the Red Lion System involving an expenditure
in excess of $10,000 without the prior written consent of SCC or York Cable.
(xiii) Existing Relationships. Seller shall use its best efforts to
preserve its business as going concern concerns and to preserve existing
relationships with suppliers, customers, and others having business dealings
with Seller.
(xiv) Employees. Seller shall use its best efforts to preserve the Red
Lion System's relationship with its employees and shall pay to those employees
all salaries, commissions, and other compensation to which they are entitled for
services rendered prior to the Closing. The Red Lion System shall not, without
the prior written consent of York Cable, change the compensation of any
employees of the Red Lion System.
(f) Litigation. There is no litigation at law, equity, or in any other
proceeding or investigation pending or to Xxxxxxx'x knowledge threatened which
may adversely affect Xxxxxxx, or any judgment, decree, order or award or other
decision which might impair the ability of Xxxxxxx to perform under this
Agreement.
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(g) Disclosure. No representation or warranty by Xxxxxxx in this Agreement or
any statement, list, or certificate furnished or to be furnished by Xxxxxxx
pursuant to this Agreement, contains or will contain any untrue statement of
material fact, or omits or will omit to state a material fact required to be
stated therein or necessary to make the statements contained therein not
misleading or necessary in order to provide a prospective purchaser of the Red
Lion System with proper information as to such assets and business.
(h) Effect of Certificates. All certificates of Xxxxxxx delivered under this
Agreement shall be deemed to be additional representations and warranties of
Xxxxxxx.
SECTION 6. CONDUCT PENDING CLOSING.
(a) Xxxx-Xxxxx-Xxxxxx Filings. Each of the parties will use its best efforts to
promptly comply with any applicable requirements under the HSR Act, as amended,
and all applicable rules and regulations promulgated thereunder, relating to
filing and furnishing of information to the Federal Trade Commission ("FTC") and
the Antitrust Division of the Department of Justice ("DOJ"). Any filing fees
required to be paid under the HSR Act shall be paid 50 percent by Xxxxxxx and 50
percent by SCC. SCC shall not be responsible for any fees due on Xxxxxxx'x
transaction with Seller. The parties' actions shall include, without limitation,
(i) preparing and submitting or causing to be prepared and submitted all
documents required to be filed under the HSR Act by
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the parties, or by any other person or entity which is part of the same "Person"
(as that term is defined in the HSR Act); and (ii) coordinating the preparation
and submission of such filings (including exchanging drafts thereof, but
deleting from such exchanged drafts any confidential or proprietary information)
so as to submit all required filings to the FTC and DOJ at substantially the
same time and to avoid errors or inconsistencies, particularly with respect to
the description of the transaction. If either the FTC or DOJ issues a request
for additional information, the parties shall use reasonable efforts to promptly
respond to such request. Notwithstanding anything to the contrary contained
herein, if the consummation of the transactions contemplated hereby is
challenged by the FTC, the DOJ, or any agency or instrumentality of the federal
government by an action to stay or enjoin such consummation, then either party
shall have the right to terminate this Agreement at any time.
(b) Access to Premises and Records. Between the date of execution and delivery
of this Agreement and the Closing Date, SCC and the Subsidiaries shall give to
Xxxxxxx and its authorized representatives full access at reasonable times to
all the premises and books and records of SCC and the Subsidiaries, and Xxxxxxx
shall furnish to SCC and its authorized representatives full access at
reasonable times to all the premises and books and records of the Red Lion
System at such time as Xxxxxxx has access to such books and records.
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(c) Leased Equipment. Unless York Cable agrees to assume all reasonable
equipment and office leases for the Red Lion System, Xxxxxxx shall pay off the
remaining balances on any leases used in operating the Red Lion System and
deliver title to such equipment free and clear of all claims, liens, and other
encumbrances to York Cable at the Closing.
(d) Approvals. York Cable and Xxxxxxx shall use their best efforts and shall
cooperate with one another to obtain all approvals and consents required to
transfer the Assets and the Equity Interests; provided, however, that best
efforts shall not require Xxxxxxx or York Cable to undertake any extraordinary
or unreasonable measures to obtain such approvals and consents, including,
without limitation, the initiation or prosecution of legal proceedings or the
payment of fees in excess of normal and usual filing and processing fees, if
any.
SECTION 7. MATERIALITY OF WARRANTIES. (a) With respect to the Red Lion System,
the warranties and representations set forth in Section 5(e), (i), (ii), (iii)
limited to the third and fourth sentences, (v), (vii) limited to the last
sentence, (viii), (xi) (D) and (F) shall be considered material warranties. To
the extent that said warranties are not true and correct in all material
respects, York Cable shall not be obligated to accept the transfer of the Assets
and may accept, at its option, $14,000,000 in exchange for the Equity Interest
in York Cable. (b) To the extent that the warranties and representations in
Section 5(e) other than those specifically set forth above are
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not true and correct in all material respects, York Cable shall nevertheless be
obligated to accept the transfer of the Red Lion System in consideration of the
issuance of the Equity Interest in York Cable to Xxxxxxx and York Cable shall be
responsible for any costs necessary to make the warranties and representations
true and correct up to $50,000 in the aggregate and Xxxxxxx shall be responsible
for any costs in excess of $50,000. The customary proration adjustments between
Seller and York Cable for the Red Lion System shall not be counted against the
$50,000 amount. Prorations for the Red Lion System will be made between Seller
and York Cable and Xxxxxxx will not be required to contribute additional cash on
account of subscriber prepayments for service or converter deposits. If Xxxxxxx
buys the accounts receivables from Seller, York Cable will reimburse Xxxxxxx for
its cost in obtaining such receivables excluding receivables which are more than
60 days past due.
SECTION 8. CONDITIONS PRECEDENT TO OBLIGATIONS OF XXXXXXX. The obligations of
Xxxxxxx under this Agreement shall, at the option of Xxxxxxx, be subject to the
fulfillment, on or prior to the Closing Date, of the following conditions:
(a) Each of the representations and warranties of SCC and its
Subsidiaries and Susquehanna, to the extent it made any, contained in this
Agreement shall be true and correct in all material respects on the Closing as
though made at Closing and Susquehanna and SCC shall furnish at Closing a
certificate to that effect.
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(b) Between the date hereof and the Closing, there shall have been no
material adverse change in the affairs, assets, liabilities, conditions
(financial or otherwise) of SCC or its Subsidiaries, other than any adverse
change occurring as a result of any change in any Federal government legislation
or regulation affecting the cable television industry generally.
(c) Certified Resolutions of the shareholders and Board of Directors of
Susquehanna and SCC and its Subsidiaries evidencing authorizations and approval
of the transaction as contemplated by this Agreement.
(d) All material consents, approvals, permits and authorization of
appropriate federal, state, municipal or other governmental or administrative
bodies as may be required to permit the change of ownership of the Equity
Interests herein provided.
(e) SCC and its Subsidiaries shall have issued and delivered at the
Closing, certificates representing the Equity Interests being purchased by
Xxxxxxx.
(f) Xxxxxxx shall have received from counsel for SCC an opinion, dated as
of the Closing in form and substance satisfactory to Xxxxxxx.
(g) A Shareholders Agreement will have been executed by SCC incorporating
the provisions of Sections 13, 14, 15, 16, 17 and 18 of this Agreement in form
and substance satisfactory to Xxxxxxx.
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(h) No action or proceeding shall have been instituted, on or prior to
Closing, to set aside or modify the authorization of the transaction provided
for in this Agreement or to enjoin or prevent its consummation.
(i) The Refinancing shall have been completed to the satisfaction of
Xxxxxxx.
(j) Susquehanna Media shall have been created and shall hold 100% of the
outstanding voting common stock of SCC and Susquehanna Radio Corp. immediately
prior to Closing.
Section 9. Conditions Precedent to Obligations of Susquehanna, SCC and its
Subsidiaries.
(a) Each of the representations and warranties of Xxxxxxx contained in
this Agreement shall be true and correct in all material respects at the Closing
as though made at the Closing.
(b) Xxxxxxx shall have tendered a total of Eleven Million Dollars
($11,000,000) to SCC and the Subsidiaries set forth in Section 2.
(c) Susquehanna, SCC or its Subsidiaries shall have received from counsel
for Xxxxxxx, an opinion, dated as of the Closing in form and substance
satisfactory to SCC.
(d) York Cable shall have received executed bills of sale, deeds,
assignments or other instruments of conveyance sufficient to convey to SCC good
and marketable title to the Assets free and clear of all liens, claims or
encumbrances as of the Closing.
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(e) All of the Required Consents, shall have been obtained and delivered
to York Cable on or before Closing, except to the extent that Xxxxxxx and York
Cable execute a memorandum at Closing specifying any Required Consent that York
Cable agrees need not be obtained until after the Closing Date. York Cable shall
have received evidence satisfactory to York Cable that the terms and conditions
of the CATV Instruments have not been and will not be substantially changed
prior to or effective with the Closing, except to the extent that York Cable has
previously agreed to such changes.
(f) Operability. The Red Lion System shall not have suffered, on or prior
to Closing, any loss, casualty, or calamity which materially adversely affects
the Assets or the Red Lion System whether or not covered by insurance.
(g) Restraint of Proceedings. No action or proceeding shall have been
instituted, on or prior to Closing, to set aside or modify the authorization of
the transaction provided for in this Agreement or to enjoin or prevent its
consummation.
(h) Consent of Franchising Authorities. SCC and its Subsidiaries shall
have obtained the consent to issue the Equity Interests from any franchising
authority from which such consent is required.
(i) No Material Adverse Change. There shall have not occurred any
material adverse change in the Assets, other than any adverse change occurring
as a result of any change in any
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Federal governmental legislation or regulation affecting the cable television
industry generally.
(j) Shareholder's Agreement. A Shareholders Agreement executed by Xxxxxxx
incorporating the provisions of Sections 13, 14, 15, 16, 17 and 18 of this
Agreement in form and substance satisfactory to Susquehanna Media and SCC.
(k) York Cable's Examination. York Cable shall have been satisfied from
its examination of the Assets, books and records of the Red Lion System that all
of the terms and conditions of this Agreement have been complied with in all
material respects.
(l) Extended Red Lion Closing. To the extent that Xxxxxxx is unable to
the convey or cause the conveyance of the Assets at Closing, and all of the
conditions precedent to York Cable's obligations shall be satisfied at the
Extended Red Lion Closing notwithstanding their satisfaction as of Closing.
(m) Refinancing. The Refinancing shall have been completed to the
satisfaction of SCC and its parent Susquehanna.
(n) Assignment of Purchase Agreement. The purchase agreement by and
between Xxxxxxx and the Seller of the Assets shall be assignable to York Cable
and all warranties and representations and obligations of the Seller and all
rights of Xxxxxxx shall inure to the benefit of York Cable.
Section 9. Other Agreement Relative to Red Lion. Xxxxxxx shall obtain the
following agreements from Seller in substantially the following form:
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(a) Prorations (i) Appropriate adjustments to the Purchase Price
payable shall be made on a pro rata basis as of the Closing Date or Extended Red
Lion Closing Date with respect to the Assets (or as of such other date as
mutually agreed by the parties) for all prepaid expenses, accrued expenses,
prepaid income and outstanding accounts receivable for no more than two billing
cycles as shown on the Red Lion System's billing reports as of the Closing Date
or Extended Red Lion Closing, all as determined in accordance with generally
accepted accounting principles, consistently applied to reflect the principle
that all expenses and income attributable to the Red Lion System for the period
on and prior to the Closing are for the account of Seller, and all expenses and
income attributable to the Red Lion System for the period after the Closing Date
are for the account of York Cable. Seller shall receive no credit for any
outstanding accounts receivable for more than two billing cycles or for any
accounts receivable due from inactive subscribers as shown on Red Lion System's
billing reports as of the Closing. All advance payments to, or monies of, third
parties on deposit with Seller, as of the, Closing Date, relating to the Red
Lion System, including, without limitation, advance payments and deposits by
Subscribers served by the Red Lion System for converters, encoders, decoders,
CATV service and related sales, shall be retained by Seller and credited to the
account of York Cable. York Cable shall receive credit for the credit balances
of inactive Subscribers as reflected on the books and records of Seller. All
monies
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relating to the Red Lion System that are on deposit with third parties as of the
Closing Date for the account of Seller or as security for Seller's performance
of its obligations, including, without limitation, deposits on real property
leases and deposits for utilities, shall be credited to the account of Seller in
their full amounts and shall become the property of SCC.
(ii) Seller shall deliver to SCC a preliminary report (the "Preliminary
Prorations Report"), certified by Seller, in full detail, on the preliminary
determination of the adjustments referred to above, which are calculated as of
the Closing Date (or as of such other date as mutually agreed by the parties),
and any documents supporting the adjustments proposed in the Preliminary
Prorations Report at least two business days prior to closing. The Preliminary
Prorations Report shall include a complete itemized list of subscribers and of
accounts receivable relating to the Red Lion System showing sums due and their
respective aging as of the Closing Date.
(iii) Within 60 days following the Closing, Seller shall deliver to SCC a
final report (the "Final Prorations Report"), similarly certified by Seller, in
full detail, on the final determination of all adjustments which were not
calculated as of the Closing Date (or as of such other date mutually agreed by
the parties) and containing any corrections to the Preliminary Prorations
Report, including any corrections to the number of Subscribers as of the Closing
Date, and any documents supporting the adjustments proposed in the Final
Prorations Report.
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(iv) SCC shall review Seller's Final Prorations Report and if SCC
disapproves of any statement contained therein, SCC shall give Seller written
notice stating SCC's objections thereto and identifying reasons therefor within
30 days after receipt of the Final Prorations Report. If SCC makes any such
objections, the parties shall agree on the amount, if any, which is not in
dispute within 30 days after Seller's receipt of SCC's objections to the Final
Settlement Statement. Any undisputed amount shall be paid by SCC to Seller
within 90 days after the Closing Date or within three days after agreement on
the undisputed portion of the Final Prorations Report, if later. Any remaining
disputed amounts shall be determined within 30 days by a partner in a major
accounting firm with substantial cable television audit experience which is not
the auditor of either SCC or Seller and who is mutually acceptable to SCC and
Seller (the Arbitrator"), whose determination shall be final and conclusive. If
SCC and Seller cannot agree with respect to selection of the Arbitrator, SCC and
Seller each shall select an Arbitrator and those two persons so selected shall
select a third Arbitrator whose determination shall govern. Seller and SCC shall
bear equally the expenses arising in connection with such determination. The
payment required as a result of determination of all remaining disputed amounts
shall be made by the party responsible therefor to the other party within three
days after the final determination. If the payment determined hereunder by the
Arbitrator is payable by SCC to Seller, SCC also shall pay simple
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interest on such amount at the Prime Rate charged by Chase Manhattan Bank, N.A.
in effect on the Closing Date from the Closing Date to but not including the
date of payment of the amount determined by the Arbitrator hereunder. If the
payment determined hereunder by the Arbitrator is payable by Seller to SCC,
Seller also shall pay simple interest on such amount to the extent such amount
was determined by the Arbitrator to have been overpaid by SCC to Seller as a
result of resolution of any disputed amounts at the Prime Rate charged by Chase
Manhattan Bank, N.A. in effect on the Closing Date from the date on which SCC
paid to Seller the overpayment but not including the date of payment of the
amount determined by the Arbitrator hereunder.
(b) Allocation of Purchase Price. Prior to Closing or Extended Red Lion
Closing, York Cable and Seller shall agree to an allocation of the Purchase
Price for the Red Lion System and to be bound by such allocation and to file all
returns and reports with respect to the transaction contemplated by this
Agreement, including, but not limited to, all federal, state, and local tax
returns, on the basis of such allocation.
(c) Indemnification. Seller shall indemnify and hold harmless York
Cable and its shareholders, directors and officers from and against any loss,
liability, damage or expense (including attorney's fees) relating to the
ownership and operation by Seller of its Red Lion System and the Assets for the
period prior to the Extended Red Lion Closing Date.
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SECTION 10. ASSUMPTION OF LIABILITIES.
Assignment and Assumption. Seller shall assign, and York Cable shall
assume, only those of Seller's obligations with respect to the Red Lion System
as York Cable specifically agrees to assume provided that York Cable shall not
unreasonably reject Seller's obligations with respect to the Red Lion System.
Section 11. Indemnification and Hold Harmless.
(a) Xxxxxxx'x Indemnification of SCC and its subsidiaries.
(i) Xxxxxxx agrees to indemnify and hold harmless SCC and its
Subsidiaries from and against any loss, liability, damage or expense (including
attorneys' fees) arising from any breach of any representation, warranty, or
covenant by Xxxxxxx in this Agreement (including any Schedules and Exhibits) or
any other breach by Xxxxxxx of this Agreement (including any Schedules and
Exhibits), including copyright infringement.
(ii) If a claim to which these indemnification provisions apply arises
out of a suit or other demand by a third party against SCC and/or its
subsidiaries, SCC and/or its Subsidiaries will cause notice of such claim to be
promptly given to Xxxxxxx and will tender the defense of such claim to Xxxxxxx.
The failure by SCC and/or its Subsidiaries to give Xxxxxxx prompt notice of a
claim will not eliminate Xxxxxxx'x obligation to indemnify SCC and its
Subsidiaries to the extent required in this Section so long as Xxxxxxx has time
to defend such claim. If Xxxxxxx accepts defense of such claim, Xxxxxxx will pay
all amounts resulting from such claim to the extent of the
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indemnification required in this Section. If Xxxxxxx does not accept defense of
the claim, Xxxxxxx will nevertheless provide reasonable cooperation to SCC and
its Subsidiaries in the defense of same, and SCC AND its Subsidiaries will
consult with Xxxxxxx prior to effecting any settlement of such claim, but this
shall in no way limit Xxxxxxx'x indemnification obligations in this Section.
(iii) If an indemnification claim arises which does not involve a suit
or demand by a person against SCC and/or its Subsidiaries, SCC and its
Subsidiaries agree that prompt notice of such claim will be given to Xxxxxxx.
(iv) Notwithstanding any other provision of this Agreement, SCC and
York Cable shall not have any right to indemnification hereunder (i) for any
claim asserted against Xxxxxxx more than one year after the Closing Date, or
(ii) until all claims asserted by SCC and York Cable exceed in the aggregate the
sum of Fifty Thousand Dollars ($50,000) (the "Threshold Amount"), after which
SCC and York Cable shall be entitled to make a claim for and recover all damages
it has incurred and subsequently incurs regardless of amount, including, without
limitation, the Threshold Amount; provided, however, that the foregoing
limitations as to time and amount shall not apply to (a) claims based on fraud
or intentional misrepresentation or claims based on a failure by Xxxxxxx to
discharge its obligations with respect to retention of liabilities not
specifically assumed by SCC and York Cable under this Agreement, which claims
may be made at any
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time within the applicable statute of limitations and in any amount, (b) claims
related to Xxxxxxx'x breach of its representation with respect to title to the
Assets contained in Section 5(e), which claims must be made within two years and
which shall not be subject to the Threshold Amount.
(b) SCC's Indemnification of Xxxxxxx. (i) SCC agrees to indemnify and
hold harmless Xxxxxxx from and against any loss, liability, damage, or expense
(including attorneys' fees) arising from any breach of any representation,
warranty, or covenant by Susquehanna, SCC and its Subsidiaries in this Agreement
(including any Schedules and Exhibits) or any other breach by Susquehanna, SCC
or its Subsidiaries of this Agreement (including any Schedules and Exhibits).
(ii) If a claim to which these indemnification provisions apply arises
out of a suit or other demand by a third party against Xxxxxxx, Xxxxxxx will
cause notice of such claim to be promptly given to SCC, and will tender the
defense of such claim to SCC. The failure by Xxxxxxx to give SCC prompt notice
of a claim will not eliminate SCC's obligation to indemnify Xxxxxxx to the
extent required in this Section so long as SCC shall have time to defend such
claim. If SCC accepts defense of such claim, SCC will pay all amounts resulting
from such claim to the extent of the indemnification required in this Section.
If SCC does not accept defense of the claim, SCC will nevertheless provide
reasonable cooperation to Xxxxxxx in the defense of same, and Xxxxxxx will
consult with SCC prior to effecting any settlement
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of such claim, but this shall in no way limit SCC's indemnification obligations
in this Section.
(iii) If an indemnification claim arises which does not involve a suit
or demand by a person against Xxxxxxx, Xxxxxxx agrees that prompt notice of such
claim will be given to SCC.
(iv) Notwithstanding any other provision of this Agreement, Xxxxxxx
shall not have any right to indemnification hereunder (i) for any claim asserted
against SCC more than one year after the Closing Date, or (ii) until all claims
asserted by Xxxxxxx exceed in the aggregate the sum of Fifty Thousand Dollars
($50,000.00) (the "Threshold Amount"), after which Xxxxxxx shall be entitled to
make a claim for and recover all damages it has incurred and subsequently incurs
regardless of amount, including, without limitation, the Threshold Amount;
provided, however, that the foregoing limitations as to time and amount shall
not apply to claims based on fraud or intentional misrepresentation or claims
based on a failure by SCC to discharge its obligations which respect to
retention of liabilities not specifically assumed by Xxxxxxx under this
Agreement, which claims may be made at any time within the applicable statute of
limitations and in any amount.
Section 12. BOARD OF DIRECTORS REPRESENTATION. Commencing upon the Closing Date
and continuing until Xxxxxxx does not hold any Equity Interests, Xxxxxxx shall
have a representative on the Board of Directors of SCC and the Board shall not
exceed seven
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directors. In addition, a Xxxxxxx representative shall be appointed to SCC's
Finance Committee.
Section 13. RIGHT OF FIRST REFUSAL. So long as Xxxxxxx owns an Equity Interest
in SCC or its Subsidiaries, neither Xxxxxxx nor SCC can sell its stock without
offering it first to the other party and SCC and its Subsidiaries shall not sell
any cable television systems without offering them first to Xxxxxxx. In the
event that either party desires to sell, it shall notify the other party in
writing which writing will identify (i) what is to be sold and (ii) the price
offered. The party receiving such notice shall have sixty (60) days to accept or
reject the terms of the offer. Failure to respond within 60 days shall be deemed
a rejection. If rejected, the party desiring to sell shall have period of
forty-five (45) days after notice of rejection has been given in which to enter
into a binding agreement at a price which is equal to or greater than the
offering price and on substantially similar terms and conditions. It the
purchase agreement is signed, the parties to the agreement shall have an
additional eight (8) months to consummate the transaction.
If the party desiring to sell is unable to execute a purchase agreement
with forty-five (45) days after notice of rejection has been given at a price
which equals or exceeds the price initially offered to the other party and on
substantially similar terms and conditions, it will be precluded from selling
the stock or systems being offered without first offering them again to the
other party to this Agreement. Notwithstanding the
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foregoing, prior to the fifth anniversary of Closing, Xxxxxxx shall have the
right to transfer and assign its Equity Interests and its rights and obligations
under a Shareholders Agreement and this Agreement to Tele-Communications, Inc.
or Liberty Cable, Inc. without offering the Equity Interests first to SCC.
If SCC or a Subsidiary decides to sell the assets of a cable system
Xxxxxxx shall have the right of first refusal on the same terms as set forth
above for stock sales. If Xxxxxxx does not exercise its right of first refusal,
SCC or a Subsidiary shall have the right to sell the assets to a third party on
the same terms as set forth above for stock sales. Further, prior to completing
any such sale, SCC or a Subsidiary shall offer to repurchase and if accepted,
shall repurchase Xxxxxxx'x shares in the subsidiary selling assets for a price
per share equal to the total asset sales price less any debt outstanding less
20% divided by the total number of shares outstanding. This provision for
repurchase of Xxxxxxx'x stock also shall be applicable if SCC offers to sell
substantially all of the assets of SCC.
Section 14. Buy/Sell Agreement. On or subsequent to the fifth anniversary of
Closing, either Susquehanna Media or SCC or Xxxxxxx may make an offer to
purchase the other party's ownership interest in SCC and its Subsidiaries. The
party to whom the offer is made shall have a period of sixty (60) days to accept
or reject the offer; provided, however, that if the offer is rejected the party
to whom the offer was made is then obligated
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to purchase the offering party's ownership interest in SCC and its Subsidiaries
to the same aggregate economic effect and with the same terms and conditions.
Any agreement made hereunder shall be consummated within eight (8) months of the
date of the agreement to purchase and sell.
Section 15. Fee to Xxxxxxx. At the end of the seventh year from the Extended Red
Lion Closing Date, if Xxxxxxx still has any Equity Interests, SCC and its
Subsidiaries, at their option, may each pay Xxxxxxx a fee of 1 1/2% of the
amount contributed to such company by Xxxxxxx compounded annually from the date
contributed as a fee and SCC and its Subsidiaries shall have no further
obligation for any additional fee. Notwithstanding the foregoing, if Xxxxxxx
shall make an offer under Section 14 of this Agreement, SCC and its subsidiaries
shall not be permitted subsequent to the receipt of the offer to pay the fee at
1 1/2%. The fee shall be in consideration for the following from Xxxxxxx: (i)
acting on behalf of York Cable in negotiating for the purchase for the Red Lion
System from Tele-Communications, Inc., (ii) providing the opportunity to SCC and
its Subsidiaries to save money on the cost of programming, (iii) agreeing not to
expand its Wrightsville cable television system so that it would overlap with
any subscribers being served by the Red Lion System, (iv) assisting SCC and its
Subsidiaries in obtaining discounts on the purchase of equipment or purchasing
such equipment for SCC and its Subsidiaries at discounts available to Xxxxxxx,
and (v) using its best efforts to make SCC aware of any possible acquisitions
44
45
in the States of Pennsylvania, Maine, Rhode Island, Illinois, Indiana and
Mississippi which would be contiguous to or compatible with cable television
systems currently owned by SCC or its Subsidiaries. If SCC or an affiliated
entity repurchases Xxxxxxx'x Equity Interests pursuant to Section 14 of this
Agreement and the payment contemplated in this Section has not been made,
Xxxxxxx shall be paid a fee by SCC and its subsidiaries equal to 3% of (i)
$11,000,000 compounded annually allocated to the companies listed in Section 2
in proportion to the allocation of the purchase price in such section, from the
date of Closing to the date of the purchase of Xxxxxxx'x Equity Interests and
(ii) $14,000,000 or the actual cost, if less, to acquire the Red Lion System
from the date of the Extended Red Lion Closing to the date of the purchase of
Xxxxxxx'x Equity Interests. If Xxxxxxx acquires substantially all of the stock
or assets of SCC and its Subsidiaries, there shall be no fee paid pursuant to
this Section.
Section 16. SCC's Expenses and Intercompany Activities. SCC's operating
statements will reflect usual and customary operating expenses which shall
specifically include (1) interest payments due and owing on the debt referenced
in Section 4(n) of this Agreement, (2) all expenses relating to supervisory
personnel who are directly involved an a full-time basis in the cable operations
of SCC, (3) bonus calculated on the performance of the cable operations payable
to Xxxxx X. Xxxxxxxx or his successor up
45
46
to $50,000 per year and (4) fair and reasonable allocated corporate expenses
from Susquehanna not to exceed 2% of the revenues of SCC and its Subsidiaries
for 1993 and 1.6% of said annual revenues thereafter. Susquehanna will not
materially change the manner in which it allocates corporate expenses.
SCC and its Subsidiaries also lease certain vehicles and office
facilities from affiliated entities. Subsequent to Closing, no new leases shall
be entered into with affiliated entities without Xxxxxxx'x approval, which shall
not be unreasonably withheld. Leases presently in existence shall be adjusted,
if necessary, to reflect lease costs comparable to those that SCC would incur if
such services were provided by unaffiliated third parties.
Section 17. Employee Stock Plan. SCC currently has in existence an employee
stock plan ("Employee Stock Plan" herein) for certain employees of SCC and its
Subsidiaries. Pursuant to the terms of the Employee Stock Plan, there are i)
6,370 shares of Class B nonvoting common stock outstanding and options to
purchase an additional 12,740 shares, and ii) rights to purchase 2,600 shares.
SCC agrees that Xxxxxxx shall be protected against dilution which may occur by
virtue of the exercise of stock options currently outstanding or which may
become outstanding to employees who purchase stock pursuant to the rights for
2,600 shares currently outstanding. The parties agree that subsequent to
Closing, SCC may sell or issue pursuant to the exercise of options additional
nonvoting stock equivalent to an additional 4%
46
47
of the outstanding equity of the SCC in accordance with the terms of the
Employee Stock Plan and Xxxxxxx and SCC agree that their equity interests would
be diluted on a pro rata basis by the additional shares being sold.
In addition, Xxxxxxx acknowledges that under the terms of the Employee
Stock Plan, if fifty percent (50%) or more of the stock or assets of SCC are
sold, the price of the employee stock shall be the greater of the formula price
or the actual sale price for a period of twelve (12) months.
Section 18. Programming Agreement. SCC and its Subsidiaries shall be entitled to
purchase cable television programming at the group rates currently paid by
Xxxxxxx, plus a service charge of five percent (5%) of the total cost of
programming billed to SCC by Xxxxxxx. In the event Xxxxxxx is unable to pass on
these group rates to SCC and its Subsidiaries or in the event said group rates
are no longer available to Xxxxxxx, Xxxxxxx will nevertheless pay to SCC and its
Subsidiaries the difference between the cost actually paid by SCC and its
Subsidiaries for the programming and the cost which would have been paid at the
aforementioned group rates. This amount shall be billed within 30 days of the
end of SCC's fiscal year and paid on an annual basis within 40 days of the
billing by SCC provided, however, that the total aggregate amount paid by
Xxxxxxx under this Section shall not exceed Five Million Dollars ($5,000,000).
47
48
Section 19. Transfer Taxes. All transfer or sales taxes due as a result of this
Agreement shall be divided equally between the parties.
Section 20. Broker's Fee. SCC has not paid or become obligated to pay any fee or
commission to any agent, broker, finder or intermediary in connection with the
transactions contemplated herein with the exception that SCC has agreed to pay
$100,000 to Communications Equity Associates and all fees due to Xxxxxxx &
Associates. Xxxxxxx has not paid or become obligated to pay any fee or
commission any agent, broker, finder or intermediary in connection with the
transactions contemplated herein with the exception that Xxxxxxx has agreed to
pay all fees in excess of $100,000 due to Communications Equity Associates.
Section 21. Tax Payment Differential. In the event of a sale of all of the stock
by SCC and its Subsidiaries either to Xxxxxxx or to a third party or the
redemption of Xxxxxxx'x Equity Interests by SCC and its Subsidiaries, Xxxxxxx
will be compensated for its share of the difference between federal and 50% of
the state income taxes that would have been paid if Xxxxxxx had purchased assets
at Closing and federal and state income taxes that are actually paid during the
five year period commencing on the date of the Extended Red Lion Closing ("Tax
Differential Payment") provided that such amount shall not exceed $3,000,000 in
the aggregate.
The amount of the payment due to Xxxxxxx shall be calculated as follows:
48
49
(a) The assets of SCC will be valued at $173,000,000 as of the Closing
Date.
(b) Tax depreciation and amortization calculated for the five year period
set forth above in this Section shall be based upon a mutually acceptable asset
allocation. If the parties are unable to agree upon a mutually acceptable asset
allocation within sixty (60) days after the Closing Date, an independent
appraiser, Xxxx Xxxxx Associates shall be hired to make an asset allocation
which shall be binding upon the parties. The cost of the appraiser shall be
divided equally between the parties.
(c) For the five year period set forth above, the difference between tax
depreciation and amortization as determined in paragraph (b) above and actual
tax depreciation and amortization will be calculated and multiplied by the
maximum Federal income tax rate in effect from time to time. These calculations
will be made based upon the tax laws as they exist at that point in time. In
addition a similar calculation as set forth in (b) through (f) of this Section
shall be made for those states where a state income tax is levied provided that
the tax differential shall be calculated at 50% of the statutory rate.
(d) If there is a sale of stock or redemption of Xxxxxxx'x Equity Interests
as described above, SCC will pay to Xxxxxxx 30% of the incremental taxes for the
five year period as calculated in subparagraph (c) in an amount not to exceed
Three Million Dollars ($3,000,000).
49
50
(e) It is understood and agreed that any increase in the amount of
depreciation and amortization deductible for tax purposes relating to capital
expenditures and/or acquisitions can be used to decrease the amount of the tax
differential payable to Xxxxxxx as calculated above.
(f) In the event of a stock sale or redemption of all of Xxxxxxx'x Equity
Interests prior to December 31, 1997, the tax differential payment will be
prorated through the actual sale date.
(g) In the event that Xxxxxxx does not transfer the Assets to York Cable
prior to December 31, 1993 and pays cash in exchange for the issuance of stock
from York Cable as contemplated herein, Xxxxxxx shall receive 24.5% of the
amount calculated in (a) through (f) in lieu of the 30% set forth in (d) above.
Section 22. Notices. All notices and communications required or permitted to be
given under any of the provisions of this Agreement shall be in writing and
shall be deemed to have been duly given when delivered by messenger, by
overnight delivery service, or by facsimile (receipt confirmed) or mailed by
first class certified mail, return receipt requested, addressed to the parties
at the addresses set forth below (or at such other addresses mutually agreed to
by the parties):
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51
If to SCC or its Subsidiaries: Xxxxx X. Xxxxxxxx, President
Susquehanna Cable Co.
000 X. Xxxxxx Xxxxxx
Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With copy to: Xxxxx X. Xxxxxx, Esquire
Susquehanna Pfaltzgraff Co.
000 X. Xxxxxx Xxxxxx
Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
if to Xxxxxxx: X. X. Xxxxxxx, President
Xxxxxxx Communications, Inc.
c/o 000 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With copy to: Xxxxxx X. Xxxxxx, Xx.
Xxxxx, Xxxxxx and Xxxx
Xxx Xxxxxxx Xxxxx, Xxxxx 0000
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Section 23. Miscellaneous.
(a) Construction; Choice of Law. The unenforceability or invalidity of any
section or subsection of this Agreement shall not affect the validity of the
remainder of this Agreement provided that the remainder of the Agreement shall
be interpreted to give substantial effect to the agreement of the parties. The
failure of any party to enforce any right arising under this Agreement on one or
more occasions shall not operate as a waiver
51
52
of that or any other right on that or any other occasion. This Agreement and the
rights of the parties under it shall be governed and construed in all respects
under the laws of the Commonwealth of Pennsylvania.
(b) Assignment of Agreement. Neither party may assign this Agreement or any
interest in this Agreement without the prior written consent of the other party.
(c) Entire Agreement. This Agreement (including all Exhibits and Schedules)
represents the entire understanding of the parties, supersedes all other and
prior memoranda and agreements between the parties, and may not be modified or
amended except by a written instrument executed by the parties.
(d) Binding Effect. This Agreement shall be binding upon and shall inure to
the benefit of the parties to this Agreement and their respective successors and
assigns.
(e) Additional Agreements. Susquehanna, SCC and Xxxxxxx agree to sign any
additional agreements and other documents necessary to carry out the terms of
this Agreement.
(f) Expenses and Taxes. Except as otherwise expressly provided in this
Agreement, each party shall pay all of its expenses, including attorneys' and
accountants' fees, in connection with the negotiation of this Agreement, the
performance of its obligations hereunder and the consummation of the
transactions contemplated by this Agreement. SCC and Xxxxxxx each shall pay
one-half of all transfer taxes incurred as a
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53
result of the consummation of the transactions contemplated by this Agreement.
(g) Execution in Multiple Counterparts. This Agreement may be executed in
one or more identical counterparts, and all of such counterparts, when taken
together, shall be deemed to constitute the original of this Agreement.
Section 25. No Guarantees. Susquehanna covenants that it will not cause
Susquehanna Media, SCC or its Subsidiaries to guarantee or provide collateral
for or otherwise to become obligated or liable for the debt of any other entity,
without Xxxxxxx'x approval which shall not be unreasonably withheld, except that
SCC and its Subsidiaries and Susquehanna Radio Corp. and its Subsidiaries may
guarantee the debt of Susquehanna Media in connection with the Refinancing.
[Rest of page intentionally left blank]
53
54
XXXXXXX COMMUNICATIONS, INC.
By: /s/ X. X. Xxxxxxx
-----------------------------
President
XXXXXXX-YORK
By: /s/ X. X. Xxxxxxx
-----------------------------
President
SUSQUEHANNA CABLE CO.
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------
President
CABLE TV OF EAST PROVIDENCE, INC.
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------
President
CASCO CABLE TELEVISION, INC.
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------
(Vice) President
CASCO CABLE TELEVISION OF BATH, INC.
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------
(Vice) President
SBC CABLE CO.
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------
President
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55
YORK CABLE TELEVISION, INC.
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------
President
SUSQUEHANNA PFALTZGRAFF CO.
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------
(Vice) President
55
56
SCHEDULE 1
1. Brandon, Mississippi
2. Pearl River Valley Water Supply District, Mississippi
3. Bath, Maine
4. Brunswick, Maine
5. Springfield Township, Pennsylvania
57
SCHEDULE 2
There is currently pending an investigation by the Rhode Island
Commission for Human Rights (Case No. 93 1ESE 055-02/03) pursuant to a complaint
filed by a former employee, Xxxxxxx Xxx Xxxxxx. Xx. Xxxxxx alleges her
termination was the result of sex discrimination. We have responded that Xx.
Xxxxxx was terminated after it was discovered that she had been terminated from
her previous employer, another cable operator in Rhode Island for illegally
connecting potential subscribers. She had not been truthful on her employment
application as to her reason for termination from her previous employer.
58
MODIFICATION AGREEMENT
This Modification Agreement is made as of March 24, 1993, by and
among Susquehanna, SCC and the Subsidiaries and Xxxxxxx.
WHEREAS, the parties hereto have previously entered into an
Agreement, dated November 6, 1992 ("Agreement"), by and among Susquehanna, SCC
and the Subsidiaries and Xxxxxxx, which provided for, among other things, the
purchase by Xxxxxxx of shares of stock of SCC and the Subsidiaries; and
WHEREAS, the parties now wish to amend a portion of that Agreement
to better reflect their intentions with respect thereto;
NOW, THEREFORE, in consideration of the premises, and intending to
be legally bound hereby, the parties hereto agree as follows:
1. Section 15 of the Agreement is hereby amended by deleting
subparagraph (iii) on page 44 of the Agreement and replacing it with the
following: "(iii) [intentionally blank]".
2. All of the terms, conditions, provisions, covenants and
agreements in the Agreement shall remain unaltered and in full force and effect
except as modified by this Modification Agreement.
3. Any capitalized term not defined in this Modification Agreement
shall have the meaning given to it in the Agreement.
4. This Modification Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall constitute but one
and the same original.
IN WITNESS WHEREOF, the parties hereto have executed this agreement
as of the day and year first written above.
XXXXXXX COMMUNICATIONS, INC.
By: /s/ Xxxxx X. Xxxxxx, VP
-------------------------
XXXXXXX YORK, INC.
By: /s/ Xxxxx X. Xxxxxx, VP
-------------------------
(signatures continue on the next page)
59
SUSQUEHANNA CABLE CO.
By: /s/ Xxxxx X. Xxxxxxxx
----------------------
CABLE TV OF EAST PROVIDENCE, INC.
By: /s/ Xxxxx X. Xxxxxxxx
----------------------
CASCO CABLE TELEVISION, INC.
By: /s/ Xxxxx X. Xxxxxxxx
----------------------
CASCO CABLE TELEVISION OF BATH, INC.
By: /s/ Xxxxx X. Xxxxxxxx
----------------------
SBC CABLE CO.
By: /s/ Xxxxx X. Xxxxxxxx
----------------------
YORK CABLE TELEVISION, INC.
By: /s/ Xxxxx X. Xxxxxxxx
----------------------
SUSQUEHANNA PFALTZGRAFF CO.
By: /s/ Xxxxx X. Xxxxxxxx
----------------------
2
60
[LETTERHEAD OF SUSQUEHANNA PFALTZGRAFF]
March 31, 1993
Xxxxx Xxxxxx
Xxxxxxx Communications, Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Dear Xxxxx:
The Agreement between Xxxxxxx Communications, Inc. and Susquehanna Cable Co. and
its subsidiaries dated November 6, 1992 provides in Section 3 that either party
may terminate the Agreement if closing does not occur prior to March 31, 1993.
This letter will amend the Agreement to delete March 31, 1993 in Section 3 and
insert June 30, 1993.
Except as modified by this letter and the Modification Agreement dated as of
March 24, 1993, the Agreement shall remain in full force and effect.
Very truly yours,
Susquehanna Cable Co.
/s/ Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx
President
Agreed to:
Xxxxxxx Communications, Inc.
By: /s/ Xxxxx X. Xxxxxx
-------------------
Title: Vice President
----------------
cc: Xxx Xxxxx, Esq. w/enc.
61
[LETTERHEAD OF SUSQUEHANNA PFALTZGRAFF]
March 31, 1993
Xxxxx Xxxxxx
Xxxxxxx Communications, Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Dear Xxxxx:
The Agreement between Xxxxxxx Communications, Inc. and Susquehanna Cable Co. and
its subsidiaries dated November 6, 1992 provides in Section 3 that either party
may terminate the Agreement if closing does not occur prior to March 31, 1993.
This letter will amend the Agreement to delete March 31, 1993 in Section 3 and
insert June 30, 1993.
Except as modified by this letter and the Modification Agreement dated as of
March 24, 1993, the Agreement shall remain in full force and effect.
Very truly yours,
Susquehanna Cable Co.
/s/ Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx
President
Agreed to:
Xxxxxxx Communications, Inc.
By: /s/ Xxxxx X. Xxxxxx
-------------------
Title: Vice President
----------------
cc: Xxx Xxxxx, Esq. w/enc.
62
MODIFICATION AGREEMENT
This Modification Agreement is made as of March 24, 1993, by and among
Susquehanna, SCC and the Subsidiaries and Xxxxxxx.
WHEREAS, the parties hereto have previously entered into an Agreement,
dated November 6, 1992 ("Agreement"), by and among Susquehanna, SCC and the
Subsidiaries and Xxxxxxx, which provided for, among other things, the purchase
by Xxxxxxx of shares of stock of SCC and the Subsidiaries; and
WHEREAS the parties now wish to amend a portion of that Agreement to
better reflect their intentions with respect thereto;
NOW, THEREFORE, in consideration of the premises, and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Section 15 of the Agreement is hereby amended by deleting
subparagraph (iii) on page 44 of the Agreement and replacing it with the
following: "(iii) [intentionally blank]".
2. All of the terms, conditions, provisions, covenants and agreements
in the Agreement shall remain unaltered and in full force and effect except as
modified by this Modification Agreement.
3. Any capitalized term not defined in this Modification Agreement
shall have the meaning given to it in the Agreement.
4. This Modification Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall constitute but one
and the same original.
IN WITNESS WHEREOF, the parties hereto have executed this agreement as
of the day and year first written above.
XXXXXXX COMMUNICATIONS, INC.
By: /s/ Xxxxx X. Xxxxxx, VP
------------------------
XXXXXXX YORK, INC.
By: /s/ Xxxxx X. Xxxxxx, VP
------------------------
(signatures continue on the next page)
63
SUSQUEHANNA CABLE CO.
By: /s/ Xxxxx X. Xxxxxxxx
---------------------
CABLE TV OF EAST PROVIDENCE, INC.
By: /s/ Xxxxx X. Xxxxxxxx
---------------------
CASCO CABLE TELEVISION, INC.
By: /s/ Xxxxx X. Xxxxxxxx
---------------------
CASCO CABLE TELEVISION OF BATH,
INC.
By: /s/ Xxxxx X. Xxxxxxxx
---------------------
SBC CABLE CO.
By: /s/ Xxxxx X. Xxxxxxxx
---------------------
YORK CABLE TELEVISIONS, INC.
By: /s/ Xxxxx X. Xxxxxxxx
---------------------
SUSQUEHANNA PFALTZGRAFF CO.
By: /s/ Xxxxx X. Xxxxxxxx
---------------------
2
64
THIRD AMENDMENT
to the
AGREEMENT, DATED NOVEMBER 6, 1992
by and among
SUSQUEHANNA CABLE CO. ("SCC")
YORK CABLE TELEVISION, INC. ("York")
CASCO CABLE TELEVISION, INC. ("Casco")
CASCO CABLE TELEVISION OF BATH, MAINE ("Bath")
CABLE TV OF EAST PROVIDENCE, INC. ("Providence")
SBC CABLE CO. ("SBC") , and
SUSQUEHANNA PFALTZGRAFF CO. ("Susquehanna")
and
XXXXXXX YORK, INC. ("Xxxxxxx") and
XXXXXXX COMMUNICATIONS, INC. ("LCI")
This Third Amendment Agreement is made this May 17, 1993, by and
among Susquehanna, SCC and the Subsidiaries and Xxxxxxx and is joined by
Susquehanna Media Co. ("Media") and Susquehanna Radio Corp. ("Radio").
WHEREAS, the parties hereto have previously entered into an
Agreement, dated November 6, 1992, as subsequently amended as of March 24, 1993
and March 31, 1993 (collectively, the Agreement) , by and among Susquehanna, SCC
and the Subsidiaries and Xxxxxxx, which provided for, among other things, the
purchase by Xxxxxxx of shares of stock of SCC and the Subsidiaries; and
WHEREAS, Susquehanna has presented to Xxxxxxx the terms and
conditions of the Refinancing for the approval of Xxxxxxx as contemplated by the
Agreement;
WHEREAS, Xxxxxxx has requested, and Susquehanna and SCC and the
Subsidiaries have agreed to make, certain modifications to the Agreement as a
condition to its approval of the terms and conditions of the Refinancing;
WHEREAS, to better implement the Agreement as modified hereby,
Media and Radio have agreed to join in and agree to be bound by all of the terms
and conditions of the Agreement:, as modified hereby, with the same force and
legal effect as if each of' them had been a party to the Agreement as previously
executed by the parties; and
WHEREAS the parties now wish to amend a portion of that Agreement
to better reflect their intentions with respect thereto;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound hereby, the parties hereto agree
as follows:
65
1. Section 1 of the Agreement is hereby amended to correct the
number of shares to be issued to Xxxxxxx, as follows;
Company Xxxxxxx% Equity Interest Xxxxxxx Shares
------- ------------------------ --------------
SCC 14.9% 132,431.41
York Cable 14.1% 8.21
Casco 14.1% 52.53
Bath 14.1% 32.83
Providence 14.1% 984.87
SBC 14.1% 7,091.04
2. Section 2(b) of the Agreement is hereby amended and restated in
its entirety, as follows:
"(b) Xxxxxxx shall cause the transfer of the assets and franchises of
the Red Lion System ("Assets" herein) used or useful in the operation of
the Red Lion System to York. Xxxxxxx shall contribute cash to York for
its Equity Interest in York in the following amount under the described
circumstances:
A. $14,000,000 -- if York acquires the Assets;
B. $14,000,000 -- if York does not acquire the Assets on or before
December 31, 1993, except under the circumstance described in
(C), below; or
C. $15,500,000 if York does not acquire the Assets on or before
December 31, 1993 through no fault of its own.
3. Section 3(b) of the Agreement is hereby amended and restated in
its entirety as follows:
"(b) Extended Red Lion Closing. Notwithstanding Section 3 (a) above, in
the event that the Assets have not been acquired by York on the Closing
Date contemplated in section 3 (a) , above, then the Closing Date for the
acquisition by Xxxxxxx of the Equity Interest. in York shall be extended
to the date York acquires the Assets; provided, however, that the closing
on the acquisition of the Equity Interest in York ("Extended Red Lion
Closing") shall occur no later than December 31, 1993. The shares of York
shall be issued to Xxxxxxx on the date of the Extended Red Lion Closing."
4. A new section 3(c) shall be added to the Agreement, as follows:
"(c) Xxxxxxx agrees to pay one-half (1/2) at any amount paid by SCC
and/or its Subsidiaries to Tele-Communications, Inc. which amount is
required to obtain the consent of Integrated Resources to the transfer of
the Tuolumne, California systems to York."
66
5. Section 5 (e) of the Agreement is hereby amended and restated in
its entirety, as follows:
"(e) Red Lion System. [Intentionally Deleted.]"
6. Section 6 (c) of the Agreement is hereby amended and restated in
its entirety, as follows:
"(c) Leased Equipment. [Intentionally Deleted.]"
7. Section 7 of the Agreement is hereby amended and restated in its
entirety, as follows:
"Section 7. Materiality of Warranties. [Intentionally Deleted.]"
8. Section 18 of the Agreement is hereby amended by deleting the
last sentence of Section 18 and replacing it with the following:
"This amount shall be billed within 30 days following June 30 of the
periods set forth in A, below, and paid within the 40 days of the billing
by SCC. Notwithstanding the foregoing, the following limitations shall
apply to the liability of Xxxxxxx under this Section 18:
A. The maximum liability for payments hereunder shall be $1,000,000
for each of the following periods:
July 1, 1993 -- June 30,1994
July 1, 1994 -- June 30,1995
July 1, 1995 -- June 30,1996
July 1, 1996 -- June 30,1997
July 1, 1997 -- June 30,1998
B. The obligations for payments set forth in A, above, are
non-cumulative.
C. The liability of Xxxxxxx for payments shall terminate with the
period ending June 30, 1998.
D. Media, SCC and its Subsidiaries agree to execute all additional
documentation, including, without limitation, a Programming Supply
Agreement, as Xxxxxxx shall request in order that SCC and its
Subsidiaries may qualify for cable television programming at the
group rates then paid by Xxxxxxx. Any failure to sign such
Programming Supply Agreement or additional documentation similar
thereto to comply with this subsection D shall relieve Xxxxxxx of
any liability for payments under this Section 18."
67
9. Section 20 of the Agreement is hereby amended and restated in
its entirety as follows:
"Section 20. Broker's Fee. SCC has not paid or become obligated to pay any
fee or other commission to any agent, broker, finder or intermediary in
connection with the transactions contemplated herein with the exception
that SCC has agreed to pay all fees due to Xxxxxxx & Associates. Xxxxxxx
has not paid or become obligated to pay any fee or other commission to any
agent, broker, finder or intermediary in connection with the transactions
contemplated herein with the exception that Xxxxxxx has agreed to pay all
fees due to Communications Equity Associates."
10. A new Section 26 is hereby created as follows:
"Section 26. Intercompany Debt. It is understood and agreed that Media
may create intercompany debt by advancing funds to either SCC or Radio;
provided, however, that (1) all such intercompany debt shall be evidenced
by one or more demand promissory notes ("Intercompany Notes") delivered
by each of SCC and Radio, and (2) as of the date hereof, the intercompany
debt shall not exceed $109 million payable from SCC to Media and
$45,660,000 payable from Radio to Media. Nothing contained herein shall
prohibit Media, Radio or SCC or any of the Subsidiaries from refinancing
existing debt or from incurring additional debt for the purpose of
acquiring additional radio and/or cable properties; provided, however,
that (a) the terms and conditions of any such refinancing or the
incurring of additional debt are reasonably satisfactory to Xxxxxxx and
(b) no default shall exist or be created under the Media Debt (as
defined in Section 27) as a result thereof."
11. A new Section 27 is hereby created as follows:
"Section 27. Xxxxxxx Rights with respect to Intercompany Debt Owing from
Radio to Media. The parties agree, as of the Closing date, that Media
Debt shall consist of the obligations created under that certain Loan
Agreement dated May _, 1993 among Media, the Lenders party to the Loan
Agreement, and CoreStates Bank, N.A. as Agent, and under several Note
Purchase Agreements dated May _, 1993 between Media and the several
insurance companies party thereto (collectively, along with the holders
of other Senior Debt, the "Creditors"). In the event that Radio shall.
fail to amortize its intercompany debt on a pro rata basis with the
amortization of all of Media's 1-.hen current. debt obligations ("Media
Debt") , then the following provisions shall apply:
68
A. If at the end of any calendar quarter Radio has failed to amortize its
debt proportionately to the amortization of the Media Debt (after such
amortization has been adjusted for any acquisitions permitted under Section 26
above), then Media shall promptly give notice to Xxxxxxx.
B. Media and Radio shall have a period of one year to bring the
amortization of Radio's debt into compliance with its obligations hereunder.
Media may take any action it deems appropriate in its sole discretion, including
the sale of all or part of the stock or assets of Radio, to effect compliance
with the terms of Radio's Intercompany Note and the provisions of this Section.
C. If at the end of one year, Media has not been successful in bringing
Radio's intercompany debt into compliance as required hereunder, then Xxxxxxx
may exercise immediately its rights under Section 14. (Xxxxxxx hereby
acknowledges its obligation to the Creditors under the Xxxxxxx Pledge Agreement
and the Xxxxxxx Subordination Agreement, as defined in the Media Debt).
12. A new Section 28 is hereby created as follows:
"Section 28. Xxxxxxx rights with respect to a Major Default. In the event that
(i) the Creditors accelerate all or any part of the Media Debt, (ii) the
Creditors exercise their rights under the Pledge Agreements as defined in the
Media Debt to liquidate the collateral held by them, or (iii) Media fails to
make any scheduled payment of interest or principal when due and the appropriate
period of time for curing such default has ended then Xxxxxxx may (a) exercise
immediately its right under Section 14, and/or (b) assume management control of
SCC and its Subsidiaries."
13. A new Section 29 is hereby created as follows:
"Section 29. Notices to Xxxxxxx. Media shall deliver to Xxxxxxx any notice of
default and copies of consolidated and consolidating financial statements
concurrently with any delivery thereof to the Creditors."
69
14. A new Section 30 is hereby created as follows:
"Section 30. Media Indemnification. In the event that there is default in
the Media Debt which results in the Creditors exercising their rights with
respect to collateral held by them and selling all or part of the assets
(including the assets or stock of the Subsidiaries) or the stock of SCC,
and if the proceeds of such sales to SCC, one or more Subsidiaries and/or
Media exceed the amount of intercompany debt then owing from SCC to Media,
then Media, SCC and the Subsidiaries shall cause Xxxxxxx to be reimbursed
from the proceeds received by Media, SCC and the Subsidiaries so that
Xxxxxxx shall receive, in the aggregate, what it would have received if
the stock and/or assets of SCC were sold in the ordinary course of
business."
15. Notwithstanding anything to the contrary contained in the
Agreement, dated November 6, 1992, by and among Susquehanna, SCC and the
Subsidiaries and Xxxxxxx, the terms, conditions and obligation of the Agreement
as modified hereby shall survive the execution hereof for so long as Xxxxxxx has
any rights under the Agreement or any obligations under or in connection with
the agreements and other documents created in connection with or otherwise
defining the rights of the creditors of media in connection with the Media Debt.
16. No failure or delay on the part of Xxxxxxx in exercising any
right, power or privilege contained in the Agreement, as amended hereby, shall
operate as a waiver of any such right, power or privilege, except to the extent
SCC reasonably relies upon said failure or delay to its detriment or the
exercise of any other right, power or privilege; nor shall any single exercise
of any right, power or privilege preclude any further exercise of any right,
power or privilege.
17. All of the terms, conditions, provisions, covenants and
agreements in the Agreement shall remain unaltered and in full force and effect
except as modified by this Third Amendment Agreement.
18. Any capitalized term not defined in this Third Amendment
Agreement shall have the meaning given to it in the Agreement.
19. This Third Amendment Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall constitute but one
and the same original.
70
IN WITNESS WHEREOF, the parties hereto have executed this agreement
as of the day and year first written above.
ATTEST: XXXXXXX COMMUNICATIONS, INC.
/s/ Xxxxx X. Xxxxxxxxx By: /s/ X. X. Xxxxxxx
--------------------------------- --------------------------------
Pres.
ATTEST: XXXXXXX YORK, INC.
/s/ Xxxxx X. Xxxxxxxxx By: /s/ X. X. Xxxxxxx
--------------------------------- --------------------------------
Pres.
ATTEST: SUSQUEHANNA CABLE CO.
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------- --------------------------------
Pres.
ATTEST: CABLE TV OF EAST PROVIDENCE, INC.
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------- --------------------------------
Pres.
ATTEST: CASCO CABLE TELEVISION, INC.
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------- --------------------------------
V.P.
ATTEST: CASCO CABLE TELEVISION OF BATH, MAINE
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------- --------------------------------
V.P.
ATTEST: SBC CABLE CO.
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------- --------------------------------
Pres.
ATTEST: YORK CABLE TELEVISION, INC.
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------- --------------------------------
Pres.
ATTEST: SUSQUEHANNA PFALTZGRAFF CO.
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------- --------------------------------
V.P.
ATTEST: SUSQUEHANNA MEDIA CO.
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------- --------------------------------
E.V.P.
ATTEST: SUSQUEHANNA RADIO CORP.
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------- --------------------------------
V.P.
71
FOURTH AMENDMENT
to the
AGREEMENT, DATED NOVEMBER 6, 1992
by and among
SUSQUEHANNA CABLE CO. ("SCC"),
YORK CABLE TELEVISION, INC. ("York")
CASCO CABLE TELEVISION, INC. ("Casco")
CASCO CABLE TELEVISION OF BATH, MAINE ("Bath")
CABLE TV OF EAST PROVIDENCE, INC. ("Providence")
SBC CABLE CO. ("SBC"),
SUSQUEHANNA MEDIA CO. ("Media"),
SUSQUEHANNA RADIO CORP. ("Radio") and
SUSQUEHANNA PFALTZGRAFF CO. ("Susquehanna")
and
XXXXXXX YORK, INC. ("Xxxxxxx") and
XXXXXXX COMMUNICATIONS, INC. ("LCI")
This Fourth Amendment is made on November 30, 1993, with an effective
date of November 6, 1992, by and among the parties hereto.
WHEREAS, the parties hereto have previously entered into an Agreement,
dated November 6, 1992, as subsequently amended as of March 24, 1993, March 31,
1993 and May 17, 1993 (collectively, the "Agreement"), by and among Susquehanna,
SCC, the Subsidiaries, Media and Radio and Xxxxxxx providing for the purchase by
Xxxxxxx of shares of stock of SCC and the Subsidiaries; and
WHEREAS, the parties have discovered that the basis for their original
calculations were in error; and
WHEREAS, the parties have agreed that it is important to amend the
Agreement to reflect accurately the intent of the parties;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound hereby, the parties hereto agree
as follows:
1. Section 1 of the Agreement is hereby amended to correct the number
of shares to be issued to Xxxxxxx, as follows:
Xxxxxxx %
Company Equity Interest Xxxxxxx Shares
------- --------------- --------------
SCC 14.9% 132,431.41
York Cable 17.75% 10.79
Casco 17.75% 69.06
Bath 17.75% 43.16
Providence 17.75% l,294.83
SBC 17.75% 9,322.80
72
2. The first sentence of Section 16 of the Agreement is hereby amended
and restated in its entirety, as follows:
"SCC's operating statements will reflect usual and customary
operating expenses which shall specifically include (1) interest
payments due and owing on the debt referenced in Section 4(n) of this
Agreement, (2) all expenses relating to supervisory personnel who are
directly involved on a full-time basis in the cable operations of SCC,
(3) bonus calculated on the performance of the cable operations
payable to Xxxxx X. Xxxxxxxx or his successor up to $50,000 per year
and (4) fair and reasonable allocated corporate expenses not to exceed
two percent (2%) of the annual revenues of SCC and its Subsidiaries."
3. In order to give full effect to the original intent of the parties,
the amendments to the Agreement made herein shall have an effective date as of
November 6, 1992.
4. All of the terms, conditions, provisions, representations, covenants
and agreements in the Agreement shall remain unaltered and in full force and
effect except as modified by this Fourth Amendment Agreement. All of the
representations, warranties and covenants are true and correct on the date
hereof as if originally given on the date hereof.
5. Any capitalized term not defined in this Fourth Amendment Agreement
shall have the meaning given to it in the Agreement.
6. This Fourth Amendment Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original as against the
party whose signature appears thereon, and all of which together shall
constitute but one and the same original.
(REMAINDER OF PAGE INTENTIONALLY BLANK]
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73
IN WITNESS WHEREOF, the parties hereto have executed this agreement as
of the date first written above.
ATTEST: SUSQUEHANNA CABLE CO.
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxxxx
------------------------------- --------------------------------
Xxxxx X. Xxxxxxxx, President
ATTEST: YORK CABLE TELEVISION, INC.
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxxxx
------------------------------- --------------------------------
Xxxxx X. Xxxxxxxx, President/Treasurer
ATTEST: CASCO CABLE TELEVISION, INC.
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxxxx
------------------------------- --------------------------------
Xxxxx X. Xxxxxxxx, Vice President
ATTEST: CASCO CABLE TELEVISION OF BATH,
MAINE
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxxxx
------------------------------- --------------------------------
Xxxxx X. Xxxxxxxx, Vice President
ATTEST: CABLE TV OF EAST PROVIDENCE, INC.
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxxxx
------------------------------- --------------------------------
Xxxxx X. Xxxxxxxx, President/Treasurer
ATTEST: SBC CABLE CO.
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxxxx
------------------------------- --------------------------------
Xxxxx X. Xxxxxxxx, President/Treasurer
ATTEST: SUSQUEHANNA MEDIA CO.
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxxxx
------------------------------- --------------------------------
Xxxxx X. Xxxxxxxx, Executive Vice President/Treasurer
ATTEST: SUSQUEHANNA RADIO CORP.
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxxxx
------------------------------- --------------------------------
Xxxxx X. Xxxxxxxx, Vice President/Finance, Treasurer
(SIGNATURES CONTINUE ON THE FOLLOWING PAGE)
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74
ATTEST: SUSQUEHANNA PFALTZGRAFF CO.
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxxxx
------------------------------- --------------------------------
Xxxxx X. Xxxxxxxx, Vice President/Finance
ATTEST: XXXXXXX YORK, INC.
/s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxxx X. Xxxxxx
------------------------------- --------------------------------
Xxxxx X. Xxxxxx, VP
ATTEST: XXXXXXX COMMUNICATIONS, INC.
/s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxxx X. Xxxxxx
------------------------------- --------------------------------
Xxxxx X. Xxxxxx, VP
4
75
FIFTH AMENDMENT
to the
AGREEMENT, DATED NOVEMBER 6, 1992
by and among
SUSQUEHANNA CABLE CO. ("SCC")
YORK CABLE TELEVISION, INC.
CASCO CABLE TELEVISION, INC.
CASCO CABLE TELEVISION OF BATH, MAINE
CABLE TV OF EAST PROVIDENCE, INC.
SBC CABLE CO.
SUSQUEHANNA MEDIA CO. ("Media")
SUSQUEHANNA RADIO CORP. ("Radio") and
SUSQUEHANNA PFALTZGRAFF CO. ("Susquehanna")
and
XXXXXXX YORK, INC. ("Xxxxxxx") and
XXXXXXX COMMUNICATIONS, INC. ("LCI")
This Fifth Amendment is made on this 22nd day of April, 1999, by and
among the parties hereto.
WHEREAS, the parties hereto have previously entered into an Agreement,
dated November 6, 1992, as subsequently amended as of March 24, 1993, March 31,
1993, May 17, 1993 and November 30, 1993 (collectively, the "Agreement"), by and
among Susquehanna, SCC, the Subsidiaries (as defined below), Media and Radio and
LCI and Xxxxxxx (collectively "Xxxxxxx"); and
WHEREAS, the parties desire to further amend the Agreement;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, and intending to be bound, the parties hereto agree as
follows:
76
1. Put.
Xxxxxxx currently owns the following stock ("Stock") of SCC and
certain of its subsidiaries listed below ("Subsidiaries"):
Company # of Shares
------- -----------
Susquehanna Cable Co. 132,431.41
York Cable Television, Inc. 10.79
Casco Cable Television, Inc. 69.06
Casco Cable Television of Bath, Maine 43.16
Cable TV of East Providence, Inc. 1,294.83
SBC Cable Co. 9,322.8
Xxxxxxx is hereby granted a put option ("Put") with respect to the Stock that it
holds in SCC and its Subsidiaries for a period of three years commencing 18
months after the date of the closing of the Credit Agreement to be entered into
by and among Media and First Union National Bank, individually and as Agent, and
other signatory banks (as amended, restated or modified from time to time
"Credit Agreement"). If Xxxxxxx exercises the Put, it shall be exercised for all
of the Stock held by Xxxxxxx in SCC and its Subsidiaries. The Put shall be
exercised in writing and sent to Media at the address set forth in the Agreement
with a copy to the Agent at the address set forth in the Credit Agreement.
2. Conditions to Exercise of Put. The Put cannot be exercised, or if
exercised cannot be consummated during any period when:
(a) there is a default under the Credit Agreement, or
2
77
(b) if, after giving effect to the transaction contemplated by the
Put, Media:
(i) would violate the debt incurrence test under its
$150,000,000 Senior Subordinated Notes, or
(ii) would be in default on a pro forma basis under the Credit
Agreement at any time within one year and one day of Closing based on reasonable
projections.
3. Valuation. Upon receipt of the notice from Xxxxxxx to SCC that it is
exercising its Put, each party shall choose an appraiser to appraise the fair
market value of all of the equity of SCC and each of its Subsidiaries. The
appraisers shall be selected within ten (10) days of the exercise of the Put and
each appraiser shall be a nationally recognized broker or investment banker with
experience in valuing cable systems. Each appraiser will have sixty (60) days
from its selection to complete an independent valuation. The value of the Stock
("Value") shall be the average of the two valuations times 30%; provided,
however, that if the higher valuation is 10% greater than the lower valuation
neither valuation will be used and the parties shall choose two new appraisers
who shall repeat the process.
4. Closing. The Closing of the Put transaction ("Closing") shall occur
within 15 days after the last governmental approval is obtained, but in no event
shall Closing be less than 60 days after the determination of the Value.
5. Payments for Stock. Subject to Section 2 hereof, Media shall pay the
Value in cash by wire transfer at Closing subject to the following:
3
78
(a) Cash shall be paid up to the amount of availability under the
Credit Agreement provided that Media can demonstrate pro forma compliance (after
giving effect to the additional debt to be incurred by repurchase of the Stock
by Media under the Credit Agreement) at any time within one year and one day of
Closing based on reasonable projections. if Media is unable to pay the agreed
upon valuation in cash, Xxxxxxx shall have the option to withdraw the Put
without prejudice to the future exercise of the "Put" right granted herein or
the rights granted in the Agreement. In addition, the time elapsed from the
exercise of the Put to the date Xxxxxxx withdraws the Put shall be added to the
end of the three year exercise period for the Put.
(b) To the extent that Xxxxxxx does not receive cash at Closing for
the Stock put to Media, Xxxxxxx shall receive a Note from Media (the "Note") for
the amount of the Value not paid in cash.
(c) Principal on the Note will be payable in three equal annual
installments each on the anniversary of the Closing and shall bear interest at
the rate of 8% per annum, payable quarterly. If Media is prohibited from paying
interest under the terms of the Credit Agreement, unpaid interest shall be added
to the principal of the Note and shall thereupon bear interest at the rate set
forth above.
(d) Scheduled payments of principal or interest on the Note shall
not be paid if at the time of payment there is a default in the Credit Agreement
or, after giving effect to the payment, there would be a pro forma default under
the Credit Agreement.
4
79
(e) The Note may be prepaid at any time if there is (i) no default
under the Credit Agreement or any default has been waived and (ii) pro forma
compliance with the fixed charge ratio (which for this purpose will consider
payments under the Note as Restricted Payments).
(f) The Note shall have no covenants and be nonrecourse except to
the second lien on the Stock. Xxxxxxx agrees that, except as and to the extent
provided herein, its right to the payments contemplated by the Note (and all
other obligations under the Put) shall be subordinate to and subject in right of
payment in full, on substantially the terms set forth in the draft dated March
25, 1999 of the Subordination Agreement, to all of the obligations under the
Credit Agreement. The obligation under the Note will be senior to the Senior
Subordinated Notes.
(g) Upon receipt of the Note, Xxxxxxx shall have a security
interest in the Stock subject only to the prior security interest granted to
First Union National Bank, as Agent for itself and other Media lenders under the
Credit Agreement. Xxxxxxx will not be entitled to or accept and neither Media
nor any subsidiary will xxxxx Xxxxxxx an interest in any other stock or assets
of Media or its subsidiaries as security for the Note.
(h) If there is no default in the Credit Agreement (or if no
default will be caused thereby) and Media fails:
(i) to make a principal payment on the Note which payment
default is not cured within nine months, or
5
80
(ii) to make four consecutive interest payments on the Note (or
adds interest to principal for four consecutive quarters),
then Xxxxxxx shall be permitted to notify Media of a default under the Note and
require Media to sell the stock or assets (at Media's option) of SCC and its
Subsidiaries. Media shall have nine months to consummate the sale transaction.
Xxxxxxx'x right to require Media to sell the stock or assets of SCC and its
Subsidiaries shall be (i) Xxxxxxx'x sole recourse and remedy with respect to the
Note and (ii) subject to there being no default in the Credit Agreement at
closing on the sale both before and after giving effect to the sale. So long as
there are remaining payment obligations or any commitment to extend credit under
the Credit Agreement Xxxxxxx shall not be entitled to (i) otherwise accelerate
the Note or any payments contemplated thereunder, (ii) file or force to be filed
any involuntary proceedings under any bankruptcy, receivership, reorganization,
arrangement, dissolution or liquidation law or (iii) otherwise proceed against
the assets of Media or its subsidiaries.
6. Sale of SCC and Subsidiaries.
(a) If the Put is exercised by Xxxxxxx, Media and/or SCC shall have
the right to sell all of the stock or assets of SCC and its Subsidiaries to a
bona fide third party purchaser for cash in lieu of acquiring the Stock. Media
or SCC shall notify Xxxxxxx of the decision to sell to a third party no later
than 10 days after completion of determination of the Value. In the event that
Media or SCC decides to sell stock, such sale shall include all of the stock of
SCC and its Subsidiaries including the Stock held by Xxxxxxx and Xxxxxxx shall
receive
6
81
its pro rata share of the net proceeds after all debts are repaid. Media or SCC
shall have the right in its discretion to decline to sell the stock or assets of
SCC if the price offered or other terms are unacceptable. In such case, Media or
SCC shall notify Xxxxxxx and have 90 days from such notice to consummate the Put
transaction.
(b) If Media and/or SCC decide to proceed to closing on the sale of
all of the stock or assets of SCC and its Subsidiaries as provided in Paragraph
6(a), they shall notify Xxxxxxx and the time for a Closing on the Put set forth
herein shall be extended to a period of not in excess of nine months from the
date of the Valuation in order to allow for an orderly sale. In the event that
the sale of SCC and its Subsidiaries is not consummated, the time elapsed from
the decision by Media to sell to the date when Media determines that the sale
will not be consummated shall be added to the end of the period in which the Put
can be exercised.
7. Limitations on Exercise of rights under Buy/Sell provisions of
Section 14 of the Xxxxxxx Agreement.
(a) Section 14 of the Xxxxxxx Agreement provides that either party
may initiate an offer to purchase the interest of the other party in SCC and its
Subsidiaries. The terms and conditions of Section 14 shall remain in full force
and effect and shall be unamended by this Agreement, except for the following
limitations:
(i) Neither Xxxxxxx, Media nor SCC nor any person claiming by or
through them shall be permitted to
7
82
exercise their rights under Section 14 of the Agreement after Xxxxxxx has
exercised its Put.
(ii) If Media or SCC has made an offer to purchase pursuant to
Section 14 of the Agreement, Xxxxxxx shall not be permitted to exercise its Put
during the pendency of the offer.
(iii) If the Put is exercised and the transaction contemplated
by the Put is not consummated or cannot be consummated within the time period
contemplated herein, the parties' rights under Section 14 of the Agreement shall
be reinstated.
8. Deletion of Tax Payment Differential. Section 21 of the Agreement
entitled Tax Payment Differential shall be deleted and of no further force or
effect.
9. Restricted Payments. For clarification, the parties agree that the
fee contemplated by Section 15 of the Agreement if paid, will be considered a
Restricted Payment under the Credit Agreement.
10. Change to Credit Agreement. Section 7.3.2(o), Investments, and
Section 7.7.2(c), Sales and Other Dispositions, of the draft of the Credit
Agreement dated March 12, 1999 contained a condition that both before and after
the transactions contemplated by these sections the Consolidated Total Leverage
Ratio shall be no greater than 5.0 to 1.0. Media agrees that this language shall
be deleted from the Credit Agreement when executed by Media.
8
83
11. Consent. Susquehanna Pfaltzgraff Co. ("SPC") and Media have advised
Xxxxxxx that SPC is establishing an employee stock ownership plan ("ESOP") and
that Media intends to enter into the Credit Agreement and to issue $150,000,000
of Senior Subordinated Notes in the institutional public markets (collectively
"Credit Facilities"). Xxxxxxx consents to the establishment of the ESOP and to
Media entering into the Credit Facilities and agrees to execute such instruments
and documents as Media or any person providing all or a portion of the Credit
Facilities may reasonably request from time to time for the purposes of (a)
confirming the foregoing consent, (b) subjecting all equity interests of Xxxxxxx
held in SCC and its Subsidiaries to a security interest as security for the
Credit Agreement and (c) subordinating its interests to those of the lenders
under the Credit Agreement provided that any agreement, instrument or document
to be executed for the purposes stated in clause (b) and (c) shall be on terms
substantially consistent with the terms hereof and, (i) with respect to the
Pledge Agreement and Subordination Agreement, not less favorable to Xxxxxxx in
any material respect than in the drafts dated March 25, 1999, and (ii) with
respect to the Credit Agreement, not less favorable to Xxxxxxx in any material
respect than in the draft dated April 13, 1999, all of which have been delivered
to counsel for Xxxxxxx.
12. Survival. Notwithstanding anything to the contrary contained in the
Agreement, dated November 6, 1992, by and among Susquehanna, SCC and the
Subsidiaries and Xxxxxxx, the terms, conditions and obligation of the Agreement
as modified by the previous four amendments and this Amendment shall survive the
execution hereof for so long as Xxxxxxx has any rights under the Agreement or
any obligations under or in connection with the
9
84
agreements and other documents created in connection with or otherwise defining
the rights of the creditors of Media in connection with the Credit Agreement or
the Senior Subordinated Notes. Notwithstanding the foregoing, upon consummation
of the Put transaction, all of Xxxxxxx'x rights shall terminate other than its
rights under Sections 5, 10, 11 and 13 of this Fifth Amendment.
13. No Waiver. No failure or delay on the part of parties to the
Agreement in exercising any right, power or privilege contained in the
Agreement, as amended hereby, shall operate as a waiver of any such right, power
or privilege, except to the extent the other party reasonably relies upon said
failure or delay to its detriment nor shall any single exercise of any right,
power or privilege preclude any further exercise of any right, power or
privilege.
14. Notices. Section 22 of the Agreement is amended to change the
address for Xxxxxxx and its counsel which shall be:
If to Xxxxxxx:
Xxxxxxx Communications, Inc.
000 Xxxxxxx Xxxx.
Xxxx, XX 00000-0000
Attention: General Counsel
Facsimile No.: 610/650-3062
With Copy to:
Xxxxxx X. Xxxxx, Esq.
Saul, Ewing, Xxxxxx and Xxxx, LLP
Xxxxxx Xxxxxx Xxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Facsimile No.: 215/972-1831
10
85
Except as amended above, Section 22 of the Agreement shall remain in
full force and effect.
15. Continuing Agreement. All of the terms, conditions, provisions,
covenants and agreements in the Agreement as previously amended shall remain
unaltered and in full force and effect except as modified by this Fifth
Amendment.
15. Defined Terms. Any capitalized term not defined in this Fifth
Amendment shall have the meaning given to it in the Agreement.
16. Counterparts. This Fifth Amendment may be executed in one or more
counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall constitute but one
and the same original.
17. Effective Date. This Amendment shall be effective on the date of
its execution.
IN WITNESS WHEREOF, the parties hereto have executed this agreement as
of the day and year first written above.
ATTEST: XXXXXXX COMMUNICATIONS, INC.
BY: /s/ X. X. Xxxxxxx
-------------------------------
President
ATTEST: XXXXXXX YORK, INC.
By: /s/ X. X. Xxxxxxx
-------------------------------
President
11
86
ATTEST: SUSQUEHANNA CABLE CO.
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------
President
ATTEST: CABLE TV OF EAST PROVIDENCE, INC.
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------
President
ATTEST: CASCO CABLE TELEVISION, INC.
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------
Vice President
ATTEST: CASCO CABLE TELEVISION OF
BATH, MAINE
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------
Vice President
ATTEST: SBC CABLE CO.
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------
President
12
87
ATTEST: YORK CABLE TELEVISION, INC.
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------
President
ATTEST: SUSQUEHANNA PFALTZGRAFF CO.
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------
Vice President
ATTEST: SUSQUEHANNA MEDIA CO.
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------
President
13
