EXHIBIT 99.17(a)(2)
(COMPOSITE COPY)
THE BANK OF NEW YORK
Xxx Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
THE BANK OF NEW YORK COMPANY, INC.
Xxx Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
BNY CAPITAL MARKETS, INC.
Xxx Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
May 15, 1998
BTV Acquisition Corporation
0000 X Xxxxx, X.X.
Xxxxxxxxxx X.X. 00000
Attention: Xxxxxx X. Xxxxxxx
Gentlemen/Ladies:
Based upon recent discussions between The Bank of New York (the "Bank"),
The Bank of New York Company, Inc. ("BNYCO") and BNY Capital Markets, Inc. ("BNY
Capital Markets") (each a "BNY Group Member" and, collectively, the "BNY
Group"), and you, and relying upon the information which you have previously
provided to the BNY Group, (i) the Bank is pleased to confirm its willingness to
act as administrative agent for a proposed $625,000,000 senior secured revolving
credit and term loan facilities (collectively, the "Facility") for BTV
Acquisition Corporation, a Delaware corporation (the "Company"), for the purpose
of financing the acquisition, through a merger (the "Acquisition"), of the
Company into BET Holdings, Inc., a Delaware corporation ("BET Holdings"), (ii)
BNYCO is pleased to confirm its willingness to participate up to the full amount
in the Facility, and (iii) BNY Capital Markets is pleased to confirm its
willingness to be the sole arranger of the Facility and syndicate the Facility,
in each case subject to the conditions set forth in this Commitment Letter. The
Facility would be provided pursuant to a credit agreement which would contain
terms, conditions of lending, funding and yield protections, representations and
warranties, covenants, events of default and other provisions customary for
facilities of this size, type and purpose, including, without limitation, the
terms and conditions set forth on the Summary of Proposed Terms and Conditions
attached hereto (the "Term Sheet"). This Commitment Letter, the fee letter,
dated the date hereof, from the Bank Group to the Company (the "Fee Letter"),
and the Term Sheet are sometimes hereinafter referred to collectively as the
"Commitment Documents".
The Bank's willingness to act as administrative agent for the Facility,
BNYCO's willingness to participate in the Facility, and BNY Capital Markets
willingness to arrange the Facility are subject to (i) the negotiation and
execution of a credit agreement (as described above) and related documents that
are satisfactory in form and substance to the BNY Group, the Company and their
respective counsel, (ii) the absence of any material adverse change in the
condition (financial or otherwise), business, assets, properties, prospects,
operations, performance or current capital structure of the Company, BET
Holdings, BET Television, Inc., BET Satellite Services, Inc. or any of the
direct or indirect subsidiaries of BET Holdings from that described to the BNY
Group in the information previously delivered to the BNY Group, (iii)
verification by the BNY Group of the
information you have previously provided to the BNY Group, (iv) the satisfaction
of the BNY Group and its counsel with their legal due diligence concerning the
Acquisition and the Company, BET Holdings, BET Television, Inc., BET Satellite
Services, Inc. and the direct and indirect subsidiaries of BET Holdings and such
legal matters relating to aspects of their business that the BNY Group or its
counsel chooses to investigate, (v) the absence of any change or proposed change
in law that could materially and adversely affect the Facility, the Acquisition
or the economic consequences thereof and (vi) the absence of any material
adverse change in the financial markets and in the market for senior debt
financing.
By executing this Commitment Letter, you agree to indemnify and hold
harmless the Bank in its capacity as administrative agent, each of the
participating lenders (including BNYCO), BNY Capital Markets and each of their
respective officers, directors, employees, affiliates, agents and controlling
persons (each an "Indemnified Party") from and against any and all losses,
claims, damages and liabilities to which any such Indemnified Party may become
subject arising out of or in connection with any claim, litigation,
investigation or proceeding made or commenced by or on behalf of any person
(other than the Company) relating to the Commitment Documents, the Facility
(including the use of the proceeds thereof), the Acquisition or any related
transaction, whether or not any Indemnified Party is a party thereto, and to
reimburse each Indemnified Party upon demand for all legal and other expenses
incurred in connection with investigating or defending any of the foregoing;
provided that the foregoing indemnity will not, as to any Indemnified Party,
apply to losses, claims, damages, liabilities or related expenses to the extent
arising from the willful misconduct or gross negligence of such Indemnified
Party.
By executing this Commitment Letter, you agree with the BNY Group as
follows: (i) neither the Company nor the BNY Group will make any claim against
(a) any Indemnified Party, in the case of the Company, and (b) the Company or
any of its officers, directors, employees, affiliates, agents or controlling
persons, in the case of the BNY Group, in each case for any special, indirect or
consequential damages in respect of any breach or wrongful conduct (whether the
claim therefor is based on contract, tort or duty imposed by law) in connection
with, arising out of, or in any way related to, the transactions contemplated
and the relationship established by the Commitment Documents, or any act,
omission or event occurring in connection therewith, and (ii) each of the
Company and the BNY Group waives, releases and agrees not to xxx upon any such
claim for any such damages, whether or not accrued and whether or not known or
suspected, to exist in its favor.
You acknowledge that each BNY Group Member may have shared, and may in the
future share, in accordance with its standard procedures regarding
confidentiality, nonpublic information concerning the Company, BET Holdings,
Inc., BET Television, Inc., BET Satellite Services, Inc., and their respective
affiliates with each other and with their other affiliates. By your execution of
this Commitment Letter, you consent and agree to such sharing.
You agree that the Commitment Documents are for your confidential use only
and will not, without the prior consent of the BNY Group, be disclosed by you or
any of your representatives to any person other than your accountants, attorneys
and other advisors, and then only in connection with the transactions
contemplated hereby and only on a confidential basis, except that, following
your acceptance of the Commitment Documents, you may make such disclosures of
the terms and conditions hereof as you are required by law to make.
-2-
The BNY Group and you shall each have the right to review and approve all
public announcements and filings relating to the transactions contemplated
hereby that refer, directly or indirectly, to the other or to the Commitment
Documents before they are made (such approval not to be unreasonably withheld),
provided that you and BET Holdings may name us and make reference to factual
matters concerning us in a press release and filings made by you in connection
with the Acquisition and may file a copy of this Commitment Letter and the Term
Sheet as may be required by law.
The Commitment Documents shall not be assignable by you and may not be
amended or any provision thereof waived or modified except by a document in
writing signed by you and the BNY Group.
You hereby knowingly, voluntarily and intentionally waive any right you may
have to a trial by jury in respect of any litigation arising out of, under or in
connection with the Commitment Documents or the transactions contemplated
thereby.
The Commitment Documents shall automatically expire if not accepted by you
on or before 11:59 P.M. (New York City time) on the date hereof. Please indicate
your acceptance of the Commitment Documents and your agreement to the terms
thereof by signing the enclosed copy of this Commitment Letter and the Fee
Letter and returning them to the Bank. By so doing, you will be deemed to have
agreed as follows:
A. You (i) will provide sufficient information, in form and substance
acceptable to the BNY Group, for the preparation of an information package
describing the Facility, the Acquisition and the Company, BET Holdings, BET
Television, Inc., BET Satellite Services, Inc. and the direct and indirect
subsidiaries of BET Holdings, (ii) consent to the establishment by BNY Capital
Markets of a syndicate of, and the distribution by BNY Capital Markets (on a
confidential basis) of the aforesaid information package and other information
to, interested lenders, and (iii) will (and will cause your management, and will
use your best reasonable efforts to cause the management of BET Holdings, to)
take an active role in the syndication process (including, without limitation,
cooperating in the establishment of a group of co-agents and co-documentation
agents, attending bank meetings and holding yourselves available to answer
questions during the syndication process);
B. Neither the Company, BET Holdings, BET Television, Inc., BET Satellite
Services, Inc. nor any of the direct or indirect subsidiaries of BET Holdings
will, prior to the date of closing of the Facility, syndicate or privately place
any debt or credit facilities which, in the reasonable opinion of BNY Capital
Markets, might have a detrimental effect on the syndication of the Facility; and
C. You will pay all out-of-pocket fees and expenses incurred by the BNY
Group in connection with the syndication of, and the negotiation and preparation
of the Commitment Documents and the loan documentation relating to, the Facility
(including, without limitation, costs and expenses in connection with the BNY
Group's due diligence investigations and fees and expenses of the BNY Group's
counsel), whether or not the loan documentation is finalized or the syndication
is completed and whether or not the Facility is extended or other financial
accommodations are made, and regardless of the reasons for which such
documentation is not finalized or the syndication is not completed or the
Facility is not extended or other financial accommodations are not made.
-3-
Even if accepted in accordance with the provisions of the previous
paragraph, the obligations of the BNY Group under this Commitment Letter shall
expire and terminate automatically, without further act or condition and
regardless of cause or circumstance, if loan documentation satisfactory in form
and substance to the BNY Group, the Company and their respective counsel is not
executed on or before September 30, 1998.
The Commitment Documents set forth the entire understanding of the parties
hereto as to the scope of the obligations of the parties thereto and supersede
all prior agreements, representations and understandings, if any, relating to
the subject matter thereof.
The Commitment Documents shall be governed by, and construed in accordance
with, the laws of the State of New York.
Very truly yours,
THE BANK OF NEW YORK
By: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Vice President
THE BANK OF NEW YORK COMPANY,
INC.
By: /s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Authorized Signer
BNY CAPITAL MARKETS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Managing Director
Accepted and agreed:
BTV ACQUISITION CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
---------------------
Name: Xxxxxx X. Xxxxxxx
Title: President
-4-
BLACK ENTERTAINMENT TELEVISION, INC.
SUMMARY OF PROPOSED TERMS AND CONDITIONS
May 15, 1998
Borrower: BTV Acquisition Corporation (a newly formed entity
wholly-owned by Xxxxxx X. Xxxxxxx (approximately 66% on
a fully diluted basis as of the Closing Date, subject to
slight adjustments for stock options owned by members of
management) and Liberty Media Corporation (approximately
34% on a fully diluted basis as of the Closing Date,
subject to slight adjustments for stock options owned by
members of management), which will merge with BET
Holdings, Inc. ("BET Holdings") at or prior to the
Closing Date (defined below), with BET Holdings as the
survivor. Immediately after the Closing Date, Black
Entertainment Television, Inc. ("BET") will replace, and
assume all of the obligations and liabilities of, BTV
Acquisition Corporation as the Borrower.
Guarantors: BET Holdings, BET Satellite Services, Inc. and all of
the direct and indirect wholly-owned subsidiaries of the
Borrower at closing and in the future.
Guaranty: The Guarantors shall provide full and unconditional
guarantees of all obligations under the Facilities.
Facilities: Up to $625.0 million of senior secured credit facilities
comprised of the following:
1. $325.0 million reducing revolving facility (the
"Revolver"), including a $25.0 million sublimit for
standby letters of credit issued by the Letter of
Credit Issuer, in which the Lenders shall participate
pro rata based upon their Revolver commitments (the
"L/C Sublimit");
2. $175.0 million term loan ("Term Loan A"); and
3. $125.0 million term loan ("Term Loan B").
Arranger: BNY Capital Markets, Inc.
Administrative Agent: The Bank of New York ("BNY" or the "Agent").
Syndication Agent: BNY.
Co-Documentation
Agents: To be determined.
Black Entertainment Television, Inc. Confidential
Page 2
Lenders: BNY, the Co-Documentation Agents and a syndicate of
financial institutions.
Letters of Credit: All letters of credit issued under the L/C Sublimit
shall be in form and substance satisfactory to the
Letter of Credit Issuer.
Letter of Credit
Issuer: BNY.
Anticipated Closing
Date: July 31, 1998.
Final Maturity: 1. Revolver - June 30, 2005.
2. Term Loan A - June 30, 2005.
3. Term Loan B - June 30, 2006.
Use of Proceeds: As follows: (i) to finance the acquisition (the "Share
Acquisition") of 100% of the Class A shares of BET
Holdings which are not owned by Xxxxxx X. Xxxxxxx
and/or Liberty Media Corporation ("Liberty") by BTV
Acquisition Corporation, (ii) to pay Share Acquisition
expenses, (iii) for general corporate purposes,
including the repurchase of employee owned stock
options ("Employee Options"), (iv) to make one or more
advances to Xxxxxx X. Xxxxxxx not to exceed $35.0
million in the aggregate (the "Xxxxxxx Loans"), and
(v) to refinance certain existing indebtedness of the
Borrower including the Aetna senior secured notes.
Security: The Facilities will be secured by a first priority
security interest in (i) all of the stock of BET and
its subsidiaries and (ii) all intercompany notes owed
to BET and/or the Guarantors.
Interest Rates: Loans would bear interest, at the option of the
Borrower, at a rate per annum equal to either: (a)
LIBOR (adjusted for actual reserves) for interest
periods of 1, 2, 3 or 6 months plus the Applicable
Margin or (b) the Alternate Base Rate plus the
Applicable Margin.
The Alternate Base Rate is defined as the greater of
the following:
(a) BNY's prime commercial lending rate as publicly
announced from time to time; or
(b) 0.50% plus the federal funds rate (as published
by the Federal Reserve Bank of New York).
Letter of Credit
Fees: For each Letter of Credit, a fee will be payable
quarterly in arrears to the Administrative Agent, for
the pro rata account of the Lenders, on the average
daily maximum amount available to be drawn under such
Letter of Credit, calculated from the date of issuance
thereof to the date of expiration thereof on the basis
of the actual
Black Entertainment Television, Inc. Confidential
Page 3
number of days elapsed over a 360 day year, at a rate
per annum equal to the Applicable Margin for LIBOR
borrowings under the Revolver. In addition to the
Letter of Credit Fees, the Borrower agrees to pay to
the Letter of Credit Issuer, for its own account, its
standard fees and charges customarily charged to
customers similar to the Borrower with respect to any
Letter of Credit.
Applicable Margins: The Applicable Margin will be based upon the Total
Leverage Ratio, which is defined as the ratio of (i)
total debt of BET Holdings and its subsidiaries on a
consolidated basis (including capitalized leases)
("Total Debt") to (ii) EBITDA.
"EBITDA" means earnings of the Borrower and its Media
Subsidiaries (defined below) on a consolidated basis
after the amortization of programming rights and
payments to BET Holdings' shareholders other than
payments of Incentive/Service Compensation (defined in
item 7 under Covenants), but before interest, taxes,
depreciation, Incentive/Service Compensation, and
amortization of goodwill and other intangibles, in
each case of the Borrower and its subsidiaries on a
consolidated basis, for the immediately preceding four
fiscal quarters; provided, however, that EBITDA shall
be adjusted to exclude EBITDA attributable to the
subsidiaries of the Borrower which do not have a
positive EBITDA for the period for which EBITDA is
being measured (the "Non-Cash Flow Subsidiaries of
BET"). "Media Subsidiaries" means the cable
programming and publishing subsidiaries of BET
Holdings.
The following shall apply in regards to EBITDA: for
the period from: (i) the Closing Date through the date
that financial statements are required to be delivered
for the quarter ended July 31, 1998, EBITDA shall be
EBITDA for the quarter ended April 30, 1998 times
four, (ii) subsequently, and until the date that
financial statements are required to be delivered for
the quarter ended October 31, 1998, EBITDA shall be
EBITDA for the two fiscal quarters ended July 31, 1998
times two, (iii) subsequently, and until the date that
financial statements are required to be delivered for
the quarter ended January 31, 1999, EBITDA shall be
EBITDA for the three fiscal quarters ended October 31,
1998 times four divided by 3 and (iv) subsequently,
and until the date that financial statements are
required to be delivered for the quarter ended April
30, 1999, EBITDA shall be EBITDA for the four fiscal
quarters ended January 31, 1999.
Black Entertainment Television, Inc. Confidential
Page 4
Applicable Margin For
The Revolver, Letters
of Credit & Term
Loan A
Applicable Applicable
Total Leverage Ratio ABR Margin LIBOR Margin
x greater than or
equal to 6.50 0.500% 1.750%
6.00 less than or equal to
x less than 6.50 0.250% 1.500%
5.50 less than or equal to
x less than 6.00 0.125% 1.375%
5.00 less than or equal to
x less than 5.50 0.000% 1.000%
4.50 less than x
less than 5.00 0.000% 0.875%
4.00 less than or equal to
x less than 4.50 0.000% 0.625%
2.00 less than or equal to
x less than 4.00 0.000% 0.500%
x less than 2.00 0.000% 0.375%
Applicable Margin For
Term Loan B
Applicable Applicable
Total Leverage Ratio ABR Margin LIBOR Margin
x greater than or equal to
6.50 0.750% 2.000%
6.00 less than or equal to
x less than 6.50 0.625% 1.875%
5.50 less than or equal to
x less than 6.00 0.500% 1.750%
x less than 5.50 0.250% 1.500%
Notwithstanding the foregoing, for the six month period
following the Closing Date, the Total Leverage Ratio shall be
deemed to be greater than 6.5:1.0 for purposes of determining
the Applicable Margin.
Mandatory
Commitment
Reductions and
Prepayments: Commitments under the Facilities shall be permanently reduced
by the following:
1. 100% of the net cash proceeds (after estimated cash taxes)
received from permitted Dispositions (defined in item 5
under Covenants) in excess of $10.0 million.
2. 100% of the net cash proceeds received from any equity
issuances other than certain exceptions to be determined.
Commitment Fee: When the Total Leverage Ratio is greater than or equal to 4.50
to 1.00, 0.375% per annum on the unused portion of the
Revolver. When the Total Leverage Ratio is less than 4.50 to
1.00, 0.25%
Black Entertainment Television, Inc. Confidential
Page 5
per annum on the unused portion of the Revolver. The
Commitment Fee will be payable quarterly in arrears and
calculated on the basis of the actual number of days elapsed
over a 360-day year.
Scheduled
Commitment
Reduction and
Term Loan
Amortization
Schedule: 1. The commitment under the Revolver shall be reduced and
Term Loan A shall amortize in equal quarterly
installments commencing July 31, 1999 according to the
following table:
Revolver Term Loan A
Fiscal Year Reductions Amortization
1999 0.00% 0.00%
2000 10.00% 10.00%
2001 15.00% 15.00%
2002 15.00% 15.00%
2003 15.00% 15.00%
2004 20.00% 20.00%
2005 25.00% 25.00%
2. Term Loan B - $1.0 million per year until Final Maturity.
Borrowings: Borrowings will be available upon three business days
written notice for LIBOR loans and upon the same business
day written notice for ABR loans. Drawings for LIBOR loans
and ABR loans to be in minimum amounts of $1,000,000 and
$500,000, respectively, and in integral multiples of
$500,000 and $100,000, respectively.
Interest Payments: Interest on ABR borrowings based on BNY's prime commercial
lending rate will be payable quarterly in arrears and
calculated on the basis of the actual number of days elapsed
over a 365(6) day year. Interest on ABR borrowings based on
the federal funds rate will be payable quarterly in arrears
and calculated on the basis of the actual number of days
elapsed over a 360 day year.
Interest on LIBOR borrowings will be payable in arrears at
(i) the end of each applicable interest period and (ii) in
the case of a period longer than three months, every three
months. Interest on LIBOR borrowings will be calculated on
the basis of the actual number of days elapsed over a 360
day year.
Default Rate: During the continuance of any payment Event of Default, all
Applicable Margins will increase by 2.00% per annum.
Black Entertainment Television, Inc. Confidential
Page 6
Conditions Precedent: Usual and customary for credit facilities of this size,
type and purpose including, without limitation:
1. No material adverse change in the financial
condition, operations, business or prospects of the
Borrower or the Guarantors, individually or taken as
a whole, since 1/31/98.
2. The Borrower and the Guarantors shall deliver such
financial statements and other information as the
Agent shall require, all of which shall be in all
respects reasonably satisfactory to the Agent.
3. No material undisclosed liabilities (contingent or
otherwise) including, without limitation, pension
liabilities, post-retirement healthcare benefits and
litigation.
4. Absence of material litigation.
5. Receipt of financial projections reasonably
satisfactory to the Agent in all respects.
6. The Share Acquisition shall be consummated in a
manner satisfactory to the Agent and its counsel.
7. Cancellation of, and repayment of all obligations
under, the existing credit facility.
Representations
and Warranties: Usual and customary for credit facilities of this size,
type and purpose (including compliance with Regulation
U of the Board of Governors or the Federal Reserve
System).
Covenants: Usual and customary for credit facilities of this size,
type and purpose, including, without limitation, the
following covenants which shall apply to both the
Borrower and the Guarantors:
1. Delivery of (i) unaudited quarterly consolidated and
consolidating (reflecting the Borrower and its
subsidiaries as an entity) financial statements of
BET Holdings within 60 days after the end of each
fiscal quarter and (ii) audited annual consolidated
and unaudited annual consolidating financial
statements of BET Holdings within 120 days after the
end of each fiscal year.
2. Limitation on indebtedness (including guarantees and
contingent obligations). Permitted indebtedness
shall include (i) certain existing debt, (ii)
existing capitalized leases, (iii) intercompany debt
owed, and (iv) additional indebtedness in amounts to
be agreed upon by the Borrower and the Agent.
Black Entertainment Television, Inc. Confidential
Page 7
3. Limitation on liens. Permitted liens shall include
usual and customary liens.
4. Limitation on mergers and consolidations.
5. Prohibition on sales, assignments, transfers and
other dispositions other than those of the type
described in each of the following clauses (i) and
(ii) ("Dispositions"): (i) sales, assignments,
transfers and other dispositions which are made in
the ordinary course of business, and (ii) sales,
assignments, transfers and other dispositions of
assets which are obsolete or no longer useful in
the conduct of business; provided, however, that so
long as no default or Event of Default would exist
before and after giving effect thereto, the
Borrower may make Dispositions, provided that the
EBITDA attributable to all assets subject to a
Disposition during the life of the Facilities shall
not exceed 10% of the EBITDA of the Borrower.
Compliance with this basket shall be determined by
aggregating the calculated percentage associated
with each Disposition. Dispositions of assets of
Non-Cash Flow Subsidiaries or non Media
Subsidiaries shall be permitted and not constitute
usage of this 10% basket, so long as no default or
Event of Default would exist before or after giving
effect thereto.
6. While the Total Leverage Ratio Covenant is greater
than 4.50x, the total amount of all investments
(which shall include operating losses and capital
expenditures in non Media Subsidiaries, but shall
exclude the Xxxxxxx Loans), and all acquisitions,
shall not exceed $75 million in the aggregate over
the life of the Facilities (the "Investment
Basket"). The following pending investments shall
not be included in the calculation of the
Investment Basket: (1) $5.0 million in Urban City
Foods, (2) $4.0 million in CyberSonics Records; and
(3) $1.0 million in BET Studios. When the Total
Leverage Ratio Covenant is 4.50x or less, such
limitations shall not apply. Short term investments
in cash equivalents shall not be considered
investments for purposes of this covenant.
7. Prohibition on fees and other amounts (other than
base salary, bonuses, fringe benefits, and other
arms-length service arrangement compensation)
payable to Xxxxxx X. Xxxxxxx or Liberty
("Incentive/Service Compensation"), except that (i)
the Borrower may obligate itself to pay any
Incentive/Service Compensation in respect of any
year from and after the Closing Date in an amount
not to exceed $6.0 million (subject to annual
increases beginning with the second full year after
the Closing Date equal to (a) 5%, when the Total
Leverage Ratio Covenant is greater than 4.50x, and
(b) the greater of 5% and the increase in the
consumer price
Black Entertainment Television, Inc. Confidential
Page 8
or similar index over the previous year, when the
Total Leverage Ratio Covenant is 4.50x or less),
provided, however, that all such Incentive/Service
Compensation shall be subordinated to the
Facilities in a manner in all respects reasonably
satisfactory to the Administrative Agent, and (ii)
notwithstanding clause (i) of this item 7, the
Borrower may pay any Incentive/Service Compensation
which shall have accrued in accordance with such
clause (i), provided and to the extent that,
immediately before and after giving effect to each
such payment, no payment default, payment Event of
Default, or Event of Default in respect of any
Financial Covenant shall or would exist.
8. By December 31, 2001, the Borrower shall have
entered into transponder agreements which provide
for transmission of BET Cable Network's programming
through July 31, 2008.
9. The Borrower shall maintain hedging arrangements
under terms and conditions mutually satisfactory to
the Agent and the Borrower.
Financial Covenants: The following financial covenants shall apply to both
the Borrower and the Guarantors:
1. The Total Leverage Ratio shall not exceed:
Period Total Leverage Ratio
Closing - 07/30/98 6.75x
07/31/98 - 01/30/99 6.50x
01/31/99 - 07/30/99 5.75x
07/31/99 - 01/30/00 5.25x
01/31/00 - 07/30/00 4.50x
07/31/00 - 07/30/01 4.00x
07/31/01 - thereafter 3.50x
2. The ratio of EBITDA to interest expense shall not be
less than 2.50 to 1.00.
3. The ratio of EBITDA to pro forma debt service (the
sum of all scheduled principal payments, interest
payments, and capitalized lease payments to be made
during the next four fiscal quarters) shall not be
less than 1.25 to 1.0.
4. The ratio of EBITDA to fixed charges shall not be
less than 1.10 to 1.00. Fixed charges will include
cash taxes, interest, scheduled principal
amortization, capital expenditures for any Media
Subsidiary, programming payments in excess of
amortization of rights, all cash launch support
payments, all cash payments of Incentive/Service
Compensation, in each case of BET Holdings and its
subsidiaries on a consolidated
Black Entertainment Television, Inc. Confidential
Page 9
basis and operating losses associated with Media
Subsidiaries that are Non-Cash Flow Subsidiaries of
BET.
Events of Default: Usual and customary for credit facilities of this
size, type and purpose, including, without
limitation: cross-default, non-payment,
misrepresentation in a material respect, breach of
covenant, bankruptcy, ERISA, judgments and change of
control. Change of control shall mean any of (i) any
person or group (as such terms are defined in the
Securities Exchange Act of 1934), other than Xxxxxx
X. Xxxxxxx, his heirs and/or his controlled
affiliates (the "Xxxxxxx Group"), Liberty, or Tele-
Communications, Inc., shall become the beneficial
owner, directly or indirectly, of 25% or more on a
fully diluted basis, of the voting or economic
interests of BET Holdings, (ii) the Xxxxxxx Group
and Liberty do not each own at least 25.1% on a
fully diluted basis, of the voting interests of BET
Holdings, (iii) the Xxxxxxx Group and Liberty do not
each own at least 20.0% on a fully diluted basis, of
the economic interests of BET Holdings, (iv) a
majority of the members of the board of directors of
BET Holdings are not appointed by the Xxxxxxx Group
or Liberty, or (v) BET Holdings ceases to own 100%
of the Borrower.
Cost and Yield
Protection: Standard provisions, including, without limitation,
those for illegality, inability to determine rate,
indemnification for break funding, and increased
costs or reduced return including those arising from
reserve requirements, taxes and capital adequacy.
Required Lenders: 51%.
Voting Rights: Increases in commitments, decreases in amount of
payment, extensions in time of payment, extension of
the maturity of the Facilities, release of any
guaranties, release of Security, changes in the
sharing provisions among Lenders, changes in the
several nature of the obligations of the Lenders,
and changes in the percentage of the Facilities'
commitments necessary to act will require the
approval of all of the Lenders. In all other cases,
the Required Lenders will have the authority to
approve amendments and waivers.
Assignments and
Participations: Each Lender may make assignments in all or any part
of its loans and commitments under the Facilities
with the consent of the Borrower (such consent not
to be unreasonably withheld or required if a default
or Event of Default shall exist), provided that
assignments shall be in a minimum amount equal to
$10 million and subject to payment of a $3,500
assignment fee to the Agent. Assignments by a Lender
to a Federal Reserve Bank, any other Lender, or
affiliates of any Lender, and participations, shall
not require the consent of the Borrower.
Black Entertainment Television, Inc. Confidential
Page 10
Syndication: The Borrower and the Guarantors will provide
sufficient information (including pro forma
financial projections in a form acceptable to the
Agent) for the preparation of an information package
describing the Borrower, the Guarantors and the
Facilities. Such package will be distributed on a
confidential basis to selected financial
institutions. In addition, the management of the
Borrower and the Guarantors will, at the request of
the Agent, hold themselves and their advisors
available for a bank meeting and at all times to
answer questions during the syndication process.
Expenses and
Indemnification: The Borrower will pay the Arranger and the Agent's
reasonable legal and other reasonable out-of-pocket
expenses incurred in connection with the
negotiation, preparation, syndication and execution
of the legal documentation of the Facilities
regardless of whether the transaction is
consummated. Documentation shall contain reasonable
expense and indemnification provisions for the
benefit of the Arranger, the Agent and the Lenders
customary for transactions of this type.
Confidentiality: This document is intended for your confidential use
only and should not be disclosed by you or any of
your representatives, without BNY's prior consent,
to any person other than your accountants, attorneys
and other advisors, and then only in connection with
the transactions contemplated hereby and only on a
confidential basis.
Governing Law: The State of New York.
Waiver of Jury Trial
and Consent to
New York Jurisdiction: Required.
Black Entertainment Television, Inc. Confidential
