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Agreement And Undertaking

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Sectors: Telecommunications
Effective Date: March 10, 1995
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AGREEMENT AND UNDERTAKING


Agreement and Undertaking dated March 10, 1995, from MSG HOLDINGS, L.P., a Delaware limited partnership ("New MSG"), MSG EDEN CORPORATION, a Delaware corporation (the "General Partner"), CABLEVISION SYSTEMS CORPORATION, a Delaware corporation ("Cablevision"), RAINBOW PROGRAMMING HOLDINGS, INC., a New York corporation ("Rainbow"), RAINBOW GARDEN CORPORATION, a Delaware corporation, GARDEN L.P. HOLDING CORP., a Delaware corporation, ITT CORPORATION, a Delaware corporation ("ITT"), ITT EDEN CORP., a Delaware corporation, and ITT MSG INC., a Delaware corporation (the foregoing corporations, together with New MSG, being collectively referred to as the "Owners"), in favor of the NATIONAL BASKETBALL ASSOCIATION ("NBA"), the member teams of the NBA ("Teams"), NBA PROPERTIES, INC., THE NBA MARKET EXTENSION PARTNERSHIP, PLANET INSURANCE, LTD., and any other entity formed generally by the Teams after this date (together with the NBA, the "NBA Entities").


WHEREAS, in connection with the merger (the "Merger") of Madison Square Garden Corporation, a Delaware corporation ("Old MSG"), with and into New MSG, New MSG has acquired all of the assets of Old MSG, including Old MSG's NBA franchise and other NBA-related assets (collectively, the "Knickerbockers"), and has assumed all of the liabilities of Old MSG; and


WHEREAS, each of the other Owners directly or indirectly owns partnership interests in New MSG; and


WHEREAS, the transfer of the Knickerbockers to New MSG requires the approval of the Board of Governors of the NBA; and


WHEREAS, the Board of Governors of the NBA has granted such approval upon the condition that each of the Owners executes, delivers and performs this Agreement and Undertaking;


NOW, THEREFORE, in consideration of the approval by the Board of Governors of the NBA of the transfer to New MSG of the Knickerbockers, New MSG and each of the other Owners agrees and undertakes as follows:


1. Notwithstanding anything to the contrary in any agreement between New MSG and Old MSG, New MSG shall pay, perform and discharge the following debts, liabilities and obligations, howsoever arising, whether known or unknown, fixed or contingent, mature or unmatured, whether or not existing on the date hereof or arising in the future:


(a) all debts, liabilities and obligations of Old MSG and
its predecessors under all


agreements with players, coaches and other employees of the
Knickerbockers including, by way of example but not of
limitation, all deferred compensation obligations;


(b) all debts, liabilities and obligations of Old MSG and
its predecessors under all pension, insurance and other benefit
programs covering players, coaches and employees of the
Knickerbockers; and


(c) all debts, liabilities and obligations of Old MSG and
its predecessors to any of the Teams and to any of the other NBA
Entities.


2. New MSG shall pay and be responsible for the payment and performance of Old MSG's share of all debts, liabilities and obligations of the NBA Entities (excluding the other Teams), and New MSG's share of all debts, liabilities and obligations of the NBA Entities (excluding the other Teams).


3. New MSG shall purchase its workers' compensation insurance with respect to its NBA players through the NBA's league-wide workers' compensation program.


4. (a) For so long as it owns, directly or indirectly, any interest in an NBA franchise, each Owner shall be bound by and conduct itself in accordance with, and shall cause each of its affiliates and subsidiaries over which it has effective control (collectively, the "Related Parties") to be bound by and conduct itself in accordance with, (i) the Constitution and By-Laws of the NBA, (ii) the governing documents of each of the NBA Entities (excluding the other Teams), (iii) all present and future rules, regulations, memoranda, resolutions and directives of each of the NBA Entities (excluding the other Teams) and the NBA Commissioner, and (iv) any agreements and arrangements to which the Teams generally or any of the other NBA Entities are (or after the date of this agreement may become) subject or by which they or their assets are (or may become) bound, in each case as they may be amended or adopted from time to time and including the custom and practice thereunder (clauses (i)-(iv) collectively, "NBA Rules"), including, but not limited to, (w) NBA Rules relating to franchise relocation, secured indebtedness and ownership transfers, (x) NBA Rules relating to territorial rights and limitations, (y) NBA Rules relating to the telecast or broadcast, by over-the-air television, non-broadcast television, radio or any other means, whether on a local, regional, national or international basis, of NBA games, and (z) NBA Rules relating to advertising and promotional arrangements with establishments that have or offer legalized gambling.


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(b) Notwithstanding anything to the contrary in paragraph 4(a), the Owners and the NBA Entities acknowledge the following:


(i) If any act or omission of a Related Party taken on behalf of, as agent for or for the benefit of the Knickerbockers (including, for example, compensation arrangements with players on the Knickerbockers' roster) shall constitute a violation of NBA Rules, the NBA Entities shall have, against the Knickerbockers and the Owner or Owners that control the Related Party, the right to take all actions then permitted under NBA Rules for such violations as though the Knickerbockers and such Owner or Owners had themselves violated NBA Rules, including, but not limited to, the levying of fines or penalties, the exercise of set-off rights against payments due to New MSG and the Knickerbockers from any of the NBA Entities, and the termination of the Knickerbockers NBA franchise or the direct or indirect ownership interest of such Owner or Owners in the Knickerbockers NBA franchise; provided that Cablevision shall not be liable for any fines, penalties or other monetary damages with respect to any such acts or omissions of its Related Parties (but any such fines, penalties or other monetary damages may be assessed against Rainbow, Rainbow's subsidiaries which are Owners, or the Knickerbockers).


(ii) (A) Subject to paragraph 4(b) (iii) below, if any act or omission of a Related Party shall constitute a violation of NBA Rules not subject to paragraph 4(b)(i), the NBA Entities shall have the right, in accordance with the procedures established under NBA Rules and as their sole remedy under NBA Rules, to terminate the direct or indirect ownership interest in the Knickerbockers of the Owner or Owners that control such Related Party. Any Owner which may be subject to termination of its interest pursuant to the preceding sentence shall be given prior written notice of, and a reasonable period (not to exceed 30 days) to cure such violation, but no notice need be given pursuant to this section for a second violation within any twelve month period of such NBA Rule by the Related Parties of an Owner if a notice has previously been given within such period to the Owner of a prior violation by one of its Related Parties.


(B) No Owner shall be subject to termination of its interest for a violation by one of its Related Parties of any NBA Rule that becomes effective after the date of this Agreement and Undertaking unless (a) that NBA Rule relates to the misconduct provisions contained in Article 35.1 (other than paragraph (a) thereof) of the NBA Constitution or any successor to that provision ("Misconduct") or (b) (1) that NBA Rule applies generally to the relationship between an NBA team and any person or entity operating in the same business or line of business as the Related Party (a "Similar Person") and (2) the NBA takes (or causes a Team to take) action that is commercially


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reasonable, in light of the facts and circumstances (including (A) the proposed termination of the ownership interest in the Knickerbockers of such Owner, (B) the nature and extent of the violation of such Similar Person and the Related Party and (C) the nature of the rights of the NBA against such Similar Person, ((A), (B) and (C), collectively, the "Relevant Considerations")) against any Similar Person (x) against which it (or the Team) has the right to take action and (y) which is then in violation of such NBA Rule. An NBA Rule shall be deemed to have become effective after the date hereof if (i) it is adopted or issued (including, without limitation, the adoption or issuance of instructions or directions pursuant to an NBA Rule which is not self executing without further instruction or direction) after the date hereof, even if the authority to adopt or issue the rule (including, without limitation, the authority to adopt or issue instructions or directions) existed prior to the date hereof, (ii) it constitutes an application, interpretation or implementation of an existing NBA Rule materially different from any prior application, interpretation or implementation of such NBA Rule, or (iii) in the case of an NBA Rule that has not previously been applied, interpreted or implemented, it constitutes an application, interpretation or implementation materially different from the express provisions of such NBA Rule.


(C) No Owner shall be subject to termination of its interest for a violation by one of its Related Parties of any NBA Rule that became effective on or prior to the date of this Agreement and Undertaking unless (a) that NBA Rule relates to Misconduct or (b) (1) that NBA Rule applies to the relationship between an NBA team and a Related Party and (2) the NBA takes (or causes a Team to take) action that is commercially reasonable, in light of the facts and circumstances, including the Relevant Considerations, against any Similar Person (x) against which it (or the Team) has the right to take action and (y) which is then in violation of such NBA Rule. Neither the NBA nor, based on a review of the NBA Rules listed on annex A hereto, any Owner has reason to believe that any NBA Rule existing on the date hereof applies to a Related Party materially differently than to the Similar Persons.


(iii) If any act or omission of a Related Party shall constitute a violation of NBA Rules not subject to paragraph 4(b)(i), the NBA Entities shall have the right against the Related Party to take such action as they may then have under any then applicable law or then existing agreement or arrangement (other than this Agreement and Undertaking and NBA Rules), whether as a direct party, third-party beneficiary or otherwise.


(iv) If any act or omission of a Related Party creates a cause of action (whether in contract, tort or otherwise) in favor of any NBA Entity, but such act or omission does not constitute a violation of NBA Rules, the NBA Entities


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shall not have the right to take action against any of the Owners for such act or omission by virtue of this Agreement and Undertaking and NBA Rules (but the NBA Entity having the cause of action shall have the right to pursue it separately under such other agreement, law or doctrine as may be applicable).


(v) If at any time ITT breaches its agreements with the NBA dated January _, 1995 with respect to its gaming operations, the NBA Entities shall be entitled to exercise such rights and remedies (legal, equitable or otherwise) as may be available to them under that agreement, NBA Rules and applicable law against ITT and its wholly-owned subsidiaries (including, but not limited to, their right to terminate ITT's direct and indirect ownership interests in the Knickerbockers) but shall not have any rights as a result of such breach against New MSG (unless the breach also constitutes a violation of paragraph 4(b)(i) above) or against Cablevision, Rainbow or their respective Related Parties.


(vi) The consequences of termination of the interest of any Owner in the Knickerbockers shall be as set forth in the NBA Constitution and By-laws, as they may be amended from time to time.


5. If at any time the Knickerbockers shall be sold, transferred or otherwise assigned to any unaffiliated third-party (whether directly or indirectly, by operation of law or otherwise and including any change of control), all contracts, agreements and other arrangements (including, but not limited to, any leases or telecast or broadcast agreements) between New MSG or any division of New MSG operating the Knickerbockers and any other divisions of New MSG (or if either ITT, on the one hand, or Cablevision or Rainbow, on the other hand, no longer owns a direct or indirect interest in the Knickerbockers, any of New MSG's parent entities or any of their respective controlled subsidiaries), shall terminate upon such sale, transfer or assignment unless the NBA Entities shall otherwise consent.


6. Each Owner severally represents, warrants and agrees as follows:


(a) The Agreement dated as of August 15, 1994 and amended as of September 12, 1994 among ITT, Cablevision and Rainbow (the "Bid Agreement") constitutes a valid and binding obligation enforceable against each of its parties in accordance with its terms, and contains a complete statement of all the arrangements between its parties and their subsidiaries with respect to the ownership and control of New MSG and the other matters included therein. Without limiting the generality of the preceding sentence, pursuant to the Bid Agreement:


(i) On the date of this Agreement and Undertaking: (1) the General Partner, as a general partner, owns


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a 1% partnership interest in New MSG; (2) ITT MSG Inc., as a limited partner, owns an approximately 83.9% partnership interest in New MSG; (3) Garden L.P. Holding Corp., as a limited partner, owns an approximately 15.1% partnership interest in New MSG; (4) the outstanding capital stock of the General Partner is owned equally by ITT Eden Corp. and Rainbow Garden Corporation; (5) ITT MSG Inc. and ITT Eden Corp. are wholly-owned subsidiaries of ITT Corporation and (6) Garden L.P. Holding Corp. and Rainbow Garden Corporation are wholly-owned subsidiaries of Rainbow, which in turn is a wholly-owned subsidiary of Cablevision.


(ii) Garden L.P. Holding Corp. has the right, exercisable within eighteen months from the date of the Merger, to purchase additional limited partnership interests in New MSG from ITT MSG Inc. such that, following such purchase, Garden L.P. Holding Corp and ITT MSG Inc. would each own a 49.5% limited partnership interest in New MSG (the "Rainbow Post Closing Purchase"). If Garden L.P. Holding Corp. does not consummate the Rainbow Post Closing Purchase, Rainbow has the right, exercisable within 135 days after the expiration of the period in which Rainbow had the right to consummate the Rainbow Post Closing Purchase, to sell to ITT (or its designees), in whole or in part, the interests in New MSG held by Garden L.P. Holding Corp. and Rainbow Garden Corporation (the "ITT Post Closing Purchase").


(b) Initially, the person representing New MSG on the NBA Board of Governors shall be Rand V. Araskog, and the person having the responsibilities of New MSG's Alternate Governor shall be Robert A. Bowman.


(c) Except for those securities listed on schedule 1 attached hereto and for options to purchase shares of ITT or Cablevision, in each case, which, if exercised or converted, would not require NBA approval under Article 7(c)(iii) of the NBA Constitution, and the rights of Cablevision and ITT under the Bid Agreement, there are no options, warrants, rights or convertible securities of any kind entitling any person or entity to acquire
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