Exhibit 10.1

 

Execution Version

 

AMENDED AND RESTATED

TRANSACTION SUPPORT AGREEMENT

 

This Amended and Restated Transaction Support Agreement (together with the
exhibits and schedules attached hereto, which include, without limitation, the
Term Sheet (as defined below),(1) as each may be amended, restated,
supplemented, or otherwise modified from time to time in accordance with the
terms hereof, this “Amended Agreement”), dated as of October 30, 2018, is
entered into by and among:  (i) Ascent Capital Group, Inc. (“Ascent”) and
Monitronics International, Inc. (together with its subsidiaries, “Monitronics”);
(ii)  the beneficial owners (or nominees, investment managers, advisors or
subadvisors for the beneficial owners) (each, a “Noteholder”) of the 9.125%
Senior Notes due 2020 (the “Notes”) issued pursuant to that certain Indenture
dated as of March 23, 2012 (as amended, restated, modified, supplemented, or
replaced from time to time in accordance with the terms thereof, the “Notes
Indenture”), by and among Monitronics, the guarantors named thereunder, and U.S.
Bank National Association, as trustee, that are (and any Noteholder that may
become a Consenting Noteholder in accordance with Section 14(a) hereof)
signatories hereto (each, a “Consenting Noteholder” and collectively, the
“Consenting Noteholders”); and (iii) the lenders for the Term B-2 Loans under
the Credit Agreement (each, a “Term B-2 Lender”) that are (and any Term B-2
Lender that may become a Consenting Term B-2 Lender in accordance with
Section 14(b)) signatories hereto (each, a “Consenting Term B-2 Lender” and
collectively, the “Consenting Term B-2 Lenders”).  This Amended Agreement
collectively refers to Ascent, Monitronics, the Consenting Noteholders, and the
Consenting Term B-2 Lenders as the “Parties” and each individually as a “Party.”

 

RECITALS

 

WHEREAS, Ascent, Monitronics, and the Consenting Noteholders entered into
(i) that certain Transaction Support Agreement, dated as of September 24, 2018,
and (ii) that certain First Amendment to Transaction Support Agreement, dated as
of October 16, 2018;

 

WHEREAS, each of Ascent, Monitronics and the Requisite Consenting Noteholders
agreed to further amend the Transaction Support Agreement and to have the
Consenting Term B-2 Lenders join this Amended Agreement in accordance with and
subject to the terms hereof;

 

WHEREAS, the Parties have engaged in good faith, arm’s-length negotiations and
agreed to enter into certain transactions pursuant to the terms and conditions
set forth in this Amended Agreement and in the term sheet attached hereto as
Exhibit A (the “Term Sheet”) incorporated herein by reference pursuant to
Section 2 hereof;

 

WHEREAS, as of the date hereof, the Consenting Noteholders, in the aggregate,
hold approximately 66% of the aggregate outstanding principal amount of the
Notes;

 

WHEREAS, as of the date hereof, the Consenting Term B-2 Lenders in the
aggregate, hold not less than 50.1% of the aggregate outstanding principal
amount of the Term B-2 Loans.

 

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(1)         Capitalized terms used herein but not otherwise defined shall have
the meanings ascribed to them in the Term Sheet.

 

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NOW, THEREFORE, in consideration of the promises, mutual covenants, and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, each of the Parties,
intending to be legally bound, hereby agrees as follows:

 

AGREEMENT

 

1.                                      TSA Effective Date.  This Amended
Agreement shall become effective, and the obligations contained herein shall
become binding upon the Parties, upon the first date (such date, the “TSA
Effective Date”) that this Amended Agreement has been executed by all of the
following:  (i) Ascent; (ii) Monitronics; (iii) Requisite Consenting Noteholders
to provide the requisite consent for all Consenting Noteholders holding, in the
aggregate, at least 65% in principal amount outstanding of all Notes; and
(iv) Consenting Term B-2 Lenders holding in the aggregate at least 50.1% in
principal amount outstanding of the Term B-2 Loans.  With respect to any
Consenting Noteholder or any Consenting Term B-2 Lender that becomes a party to
this Amended Agreement pursuant to Section 14 hereof, this Amended Agreement
shall become effective as to such Consenting Noteholder or Consenting Term B-2
Lender, as applicable, at the time it executes and delivers a Transferee Joinder
or Loan Transferee Joinder in accordance with Section 14 hereof.

 

2.                                      Exhibits and Schedules Incorporated by
Reference.  Each of the exhibits attached hereto (including the Term Sheet) and
any schedules to such exhibits (collectively, the “Exhibits”) is expressly
incorporated herein and made a part of this Amended Agreement, and all
references to this Amended Agreement shall include the Exhibits.  In the event
of any inconsistency between this Amended Agreement (without reference to the
Term Sheet) and the Term Sheet, the Term Sheet shall govern.

 

3.                                      Certain Defined Terms.  As used in this
Amended Agreement:

 

(a)                                 “Aggregate Backstop Amount” shall mean a
dollar amount (rounded down to the nearest dollar) equal to the quotient of
(a)(i) $100,000,000 minus (ii) the product of (x) the Dutch Auction Price
divided by 1,000 times (y) the aggregate principal amount of all Tendered Notes,
divided by (b) 0.875, which amount shall not be less than zero.

 

(b)                                 “Backstop Amount” shall mean, with respect
to any Consenting Noteholder, a dollar amount (rounded down to the nearest
$1,000) equal to (x) such Consenting Holder’s Backstop Percentage times (y) the
Aggregate Backstop Amount.”

 

(c)                                  “Backstop Percentage” shall mean, with
respect to any Consenting Noteholder, the quotient, expressed as a percentage,
of (x) the aggregate principal amount of Notes that such Consenting Noteholder
tenders in the Unsecured Exchange (without giving effect to Section 8 of this
Amended Agreement), divided by (y) the aggregate principal amount of all Notes
that all Consenting Noteholders tender in the Unsecured Exchange (without giving
effect to Section 8 of this Amended Agreement).

 

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(d)                                 “Credit Agreement” shall mean that certain
Amended and Restated Credit Agreement, dated as of March 23, 2012 (as amended,
restated, supplemented, or otherwise modified from time to time in accordance
with the terms thereof), by and among Monitronics, as borrower, the guarantors
party thereto, Bank of America, N.A., as administrative agent, and the lenders
from time to time party thereto.

 

(e)                                  “Dutch Auction” shall mean a modified
‘Dutch Auction’ tender offer conducted by Ascent pursuant to (and consistent in
all material respects with) the Unsecured Exchange Term Sheet.

 

(f)                                   “Dutch Auction Price” shall mean the
dollar amount per $1,000 in principal amount of Notes at which Ascent is
required to accept and purchase the Tendered Notes, as determined pursuant to
the terms and conditions of the Dutch Auction, which amount shall not be less
than $750 nor more than $875.

 

(g)                                  “Requisite Consenting Noteholders” shall
mean, as of any date of determination on or after the TSA Effective Date,
Consenting Noteholders holding at least 66-2/3% of the outstanding Notes held by
all Consenting Noteholders as of such date of determination.

 

(h)                                 “Requisite Consenting Term B-2 Lenders”
shall mean, as of any date of determination on or after the TSA Effective Date,
Consenting Term B-2 Lenders holding at least 66-2/3% of the outstanding Term B-2
Loans held by all Consenting Term B-2 Lenders as of such date of determination.

 

(i)                                     “Second Lien Exchange Transaction” shall
mean transactions consistent in all material respects with the Second Lien Term
Sheet.

 

(j)                                    “Second Lien Term Sheet” shall mean the
‘Second Lien Transactions Overview’ set forth in the Term Sheet.

 

(k)                                 “SUN Exchange Offer” shall mean an offer to
exchange the Notes for New Second Lien Notes to be issued by Monitronics as
contemplated by the Second Lien Term Sheet (a “Second Lien Exchange”); provided,
that if on or prior to the Toggle Trigger Time, Monitronics has not obtained the
requisite consents to the Bank Amendments, following the Toggle Trigger Time, a
“SUN Exchange Offer” shall mean an offer to exchange the Notes for cash and new
unsecured notes of Monitronics as contemplated by the Unsecured Exchange Term
Sheet.  For the avoidance of doubt, if on or prior to the Toggle Trigger Time
Monitronics obtains the requisite consents to the Bank Amendments, “SUN Exchange
Offer” shall at all times mean a Second Lien Exchange.

 

(l)                                     “Tendered Notes” shall mean all Notes
that are validly tendered (and not validly withdrawn) in the Dutch Auction as of
the expiration thereof and that Ascent is (pursuant to the terms and conditions
thereof, without giving effect to Section 8 of this Amended Agreement) required
to accept for purchase therein.

 

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(m)                             “Toggle Trigger Time” shall mean 11:59
p.m. prevailing Eastern time on November 2, 2018.

 

(n)                                 “Transactions” shall mean a Second Lien
Exchange Transaction; provided, that if on or prior to the Toggle Trigger Time
Monitronics has not obtained the requisite consents to the Bank Amendments,
following the Toggle Trigger Time, “Transactions” shall mean an Unsecured
Exchange Transaction.  For the avoidance of doubt, if on or prior to the Toggle
Trigger Time Monitronics obtains the requisite consents to the Bank Amendments,
“Transactions” shall at all times mean a Second Lien Exchange Transaction.

 

(o)                                 “Unsecured Exchange” shall mean the SUN
Exchange Offer (excluding the Dutch Auction component thereof), on the terms and
conditions applicable thereto from and after the Toggle Trigger Time, if
applicable, conducted pursuant to (and consistent in all material respects with)
the Unsecured Exchange Term Sheet.

 

(p)                                 “Unsecured Exchange Term Sheet” shall mean
the ‘Unsecured Exchange Transaction Overview’ set forth in the Term Sheet.

 

(q)                                 “Unsecured Exchange Transaction” shall mean
transactions consistent in all material respects with the Unsecured Exchange
Term Sheet.

 

4.                                      Definitive Documentation.  The
definitive documents and agreements (the “Definitive Documentation”) governing
the Transactions shall include, but not be limited to, any offering memoranda
prepared in connection with the Transactions, any indenture and security
documents with respect to the New Senior Unsecured Notes and the New Second Lien
Notes, as applicable, any supplemental indenture in respect of the Notes, any
amendments, waivers and/or consents with respect to the Notes or the Credit
Agreement, including the Bank Amendments, all related transactional or corporate
documents, including the intercreditor agreement, and any other documents or
agreements executed, delivered and/or filed in connection with the
Transactions.  The Definitive Documentation (including any amendment, supplement
or modification thereto) identified in the foregoing sentence remains subject to
negotiation and shall, upon completion, contain terms, conditions,
representations, warranties, and covenants consistent with the terms of this
Amended Agreement and shall otherwise be in form and substance reasonably
satisfactory to Ascent, Monitronics, the Requisite Consenting Noteholders, and
the Requisite Consenting Term B-2 Lenders.

 

5.                                      Commitment of Consenting Noteholders. 
Each Consenting Noteholder shall (severally and not jointly), solely for so long
as it remains a Noteholder, from the TSA Effective Date until the occurrence of
the Termination Date (as defined below) and subject to Section 14 hereto:

 

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(a)                                 subject to such Consenting Noteholder’s
receipt of the offering memorandum prepared in connection with the Transactions,
tender or cause to be tendered all Notes (other than Notes in denominations of
less than $1,000, if applicable) held by such Consenting Noteholder and provide
any consents in respect of the Notes, in each case, in accordance with the terms
and conditions of this Amended Agreement prior to the tender time with respect
to the SUN Exchange Offer; provided, that such Consenting Noteholder may
withdraw its Notes from the SUN Exchange Offer in accordance with the terms and
conditions of the SUN Exchange Offer in order to effect a Transfer (as defined
below) of such Notes in compliance with Section 14 hereof;

 

(b)                                 not withdraw or revoke its tender, consent
and/or vote with respect to the SUN Exchange Offer, except as otherwise
expressly permitted pursuant to this Amended Agreement;

 

(c)                                  take all commercially reasonable actions,
and support and cooperate with Ascent and Monitronics to take all commercially
reasonable actions, necessary to consummate the Transactions in accordance with
the terms and conditions of this Amended Agreement, including without limitation
to vote in favor of, or otherwise support, the Transactions with respect to any
debt or other securities of Ascent or Monitronics that such Consenting
Noteholder may hold; provided that (i) the foregoing shall not limit or
restrict, in any respect, any consent or approval rights provided under this
Amended Agreement or the Definitive Documentation and (ii) no Consenting
Noteholder shall be obligated to waive (to the extent waivable by such
Consenting Noteholder) any condition to the consummation of any part of the
Transactions set forth in any Definitive Documentation;

 

(d)                                 not directly or indirectly object to, delay,
impede, or take any other action to interfere with the Transactions;

 

(e)                                  not take any action (or encourage or
instruct any other party including any agent or indenture trustee to take any
action) in respect of any potential, actual, or alleged occurrence of any
“Default” or “Event of Default” under the Notes Indenture that is triggered or
that would be triggered as a result of the execution of this Amended Agreement
or the undertaking of Ascent or Monitronics hereunder to implement the
Transactions; and

 

(f)                                   not take any other action that is
materially inconsistent with its obligations under this Amended Agreement.

 

Notwithstanding the foregoing, nothing in this Amended Agreement shall (u) be
construed to prohibit any Consenting Noteholder from contesting whether any
matter, fact, or thing is a breach of, or is inconsistent with, this Amended
Agreement or the Definitive Documentation, (v) affect the ability of any
Consenting Noteholder to consult with other Consenting Noteholders or Ascent or
Monitronics, (w) impair or waive the rights of any Consenting Noteholder to

 

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enforce this Amended Agreement against Ascent, Monitronics, any other Consenting
Noteholder or any Consenting Term B-2 Lender, (x) limit (i) the rights of a
Consenting Noteholder in any applicable bankruptcy, insolvency, foreclosure or
similar proceeding, including appearing as a party in interest in any matter to
be adjudicated in order to be heard concerning any matter arising in any chapter
11 case of any of Ascent or Monitronics or any of their material subsidiaries,
(ii) the ability of a Consenting Noteholder to purchase or sell the Notes or any
other claims or interests against any of Ascent, Monitronics or any of their
respective subsidiaries, subject in all such cases to the terms hereof,
(iii) except to the extent any such right or remedy would conflict or be
inconsistent with this Amended Agreement, any right or remedy of any Consenting
Noteholder under, as applicable, (A)  any of the documents governing the Notes,
and (B) any other applicable agreement, instrument or document that gives rise
to a Consenting Noteholder’s claims or interests against any of Ascent,
Monitronics or any of their respective subsidiaries; (iv) the rights of any
Consenting Noteholder to engage in any discussions, enter into any agreements or
take any other action after the Termination Date; or (v) the ability of a
Consenting Noteholder to enforce any right, remedy, condition, consent or
approval requirement under this Amended Agreement or any Definitive
Documentation; (y) constitute a waiver or amendment of any term or provision of
(i) any of the Notes Indenture or any other document governing the Notes, or
(ii) any other agreement, instrument or document that gives rise to a Consenting
Noteholder’s claims or interests against any of Ascent, Monitronics or any of
their respective subsidiaries; or (z) be construed to require any Consenting
Noteholder to incur, assume, become liable in respect of or suffer to exist any
expenses, liabilities or other obligations, or agree to or become bound by any
commitments, undertakings, concessions, indemnities or other arrangements that
could result in expenses, liabilities or other obligations to such Consenting
Noteholder, other than those set forth in this Amended Agreement.

 

6.                                      Commitment of Consenting Term B-2
Lenders.  Each Consenting Term B-2 Lender shall (severally and not jointly),
solely for so long as it remains a Term B-2 Lender, from the TSA Effective Date
until the occurrence of the Termination Date (as defined below) and subject to
Section 14 hereto:

 

(a)                                 subject to such Consenting Term B-2 Lender’s
receipt of the Bank Amendments prepared in connection with the Transactions,
timely provide any consents and execute the Bank Amendments in respect of the
Term B-2 Loans, in each case, in accordance with the terms and conditions of
this Amended Agreement upon presentation by the Administrative Agent of such
consent or Bank Amendments;

 

(b)                                 not withdraw or revoke its consent or
signature to the Bank Amendments, except as otherwise expressly permitted
pursuant to this Amended Agreement;

 

(c)                                  take all commercially reasonable actions,
and support and cooperate with Ascent and Monitronics to take all commercially
reasonable actions, necessary to consummate the Transactions in accordance with
the terms and conditions of this Amended Agreement, including without limitation
to vote in favor of, or otherwise support, the Transactions with respect to any
debt or other securities of Ascent or Monitronics that such Consenting

 

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Term B-2 Lender may hold; provided that (i) the foregoing shall not limit or
restrict, in any respect, any consent or approval rights provided under this
Amended Agreement or the Definitive Documentation and (ii) no Consenting Term
B-2 Lender shall be obligated to waive (to the extent waivable by such
Consenting Term B-2 Lender) any condition to the consummation of any part of the
Transactions set forth in any Definitive Documentation;

 

(d)                                 not directly or indirectly object to, delay,
impede, or take any other action to interfere with the Transactions;

 

(e)                                  not take any action (or encourage or
instruct any other party including any agent or indenture trustee to take any
action) in respect of any potential, actual, or alleged occurrence of any
“Default” or “Event of Default” under the Credit Agreement that is triggered or
that would be triggered as a result of the execution of this Amended Agreement
or the undertaking of Ascent or Monitronics hereunder to implement the
Transactions; and

 

(f)                                   not take any other action that is
materially inconsistent with its obligations under this Amended Agreement.

 

Notwithstanding the foregoing, nothing in this Amended Agreement shall (u) be
construed to prohibit any Consenting Term B-2 Lender from contesting whether any
matter, fact, or thing is a breach of, or is inconsistent with, this Amended
Agreement or the Definitive Documentation, (v) affect the ability of any
Consenting Term B-2 Lender to consult with other Consenting Term B-2 Lenders,
Ascent or Monitronics, (w) impair or waive the rights of any Consenting Term B-2
Lender to enforce this Amended Agreement against Ascent, Monitronics, any
Consenting Noteholder or any other Consenting Term B-2 Lender, (x) limit (i) the
rights of a Consenting Term B-2 Lender in any applicable bankruptcy, insolvency,
foreclosure or similar proceeding, including appearing as a party in interest in
any matter to be adjudicated in order to be heard concerning any matter arising
in any chapter 11 case of any of Ascent or Monitronics or any of their material
subsidiaries, (ii) the ability of a Consenting Term B-2 Lender, to purchase or
sell the Term B-2 Loans or any other claims or interests against any of Ascent,
Monitronics or any of their respective subsidiaries, subject in all such cases
to the terms hereof, (iii) except to the extent any such right or remedy would
conflict or be inconsistent with this Amended Agreement, any right or remedy of
any Consenting Term B-2 Lender under, as applicable, (A)  any of the Loan
Documents (as defined in the Credit Agreement), and (B) any other applicable
agreement, instrument or document that gives rise to a Consenting Term B-2
Lender’s claims or interests against any of Ascent, Monitronics or any of their
respective subsidiaries; (iv) the rights of any Consenting Term B-2 Lender to
engage in any discussions, enter into any agreements or take any other action
after the Termination Date; or (v) the ability of a Consenting Term B-2 Lender
to enforce any right, remedy, condition, consent or approval requirement under
this Amended Agreement or any Definitive Documentation; (y) constitute a waiver
or amendment of any term or provision of (i) the Loan Documents or (ii) any
other agreement, instrument or document that gives rise to a Consenting Term B-2
Lender’s claims or interests against any of Ascent, Monitronics or any of their
respective subsidiaries; or (z) be construed to require any Consenting Term B-2
Lender to incur, assume, become liable in respect of or suffer to exist any
expenses,

 

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liabilities or other obligations, or agree to or become bound by any
commitments, undertakings, concessions, indemnities or other arrangements that
could result in expenses, liabilities or other obligations to such Consenting
Term B-2 Lender, other than those set forth in this Amended Agreement.

 

7.                                      Commitment of Ascent and Monitronics. 
Each of Ascent and Monitronics shall (jointly and severally), from the TSA
Effective Date until the occurrence of the Termination Date:

 

(a)                                 timely take all commercially reasonable
actions necessary or reasonably requested by the Requisite Consenting
Noteholders or the Requisite Consenting Term B-2 Lenders to complete the
Transactions in accordance with the terms and conditions of this Amended
Agreement and the Definitive Documentation; provided, however, that Monitronics
shall not accept tenders of Notes or consummate the SUN Exchange Offer unless
and until all of the conditions to the closing of the Transactions (including
the SUN Exchange Offer) set forth in the offering memorandum, the Bank
Amendments, and the other Definitive Documentation have been satisfied or waived
(other than conditions that, by their nature, are to be satisfied or waived at
the closing of the Transactions, but subject to their being satisfied or waived
contemporaneously with such closing) in accordance with the terms of such
offering memorandum, Bank Amendments, or other Definitive Documentation, as
applicable;

 

(b)                                 (i) negotiate in good faith, execute and
deliver, and perform its obligations under this Amended Agreement and the
Definitive Documentation to which it is (or will be) a party; provided, however,
that (A) the foregoing shall not limit or restrict, in any respect, any consent
or approval rights provided under this Amended Agreement or the Definitive
Documentation and (B) neither Ascent nor Monitronics shall be obligated to waive
(to the extent waivable by such Party) any closing condition set forth in any
Definitive Documentation, and (ii) take any and all necessary and appropriate
actions in furtherance of this Amended Agreement and the consummation of the
Transactions;

 

(c)                                  prior to the Toggle Trigger Time, use good
faith efforts customary for transactions similar to the Bank Amendments to
obtain the required consents or approvals in connection with the Bank
Amendments;

 

(d)                                 comply with each of the following milestones
(the “Milestones”), which Milestones may only be extended pursuant to a further
written agreement among Ascent, Monitronics, the Requisite Consenting
Noteholders and the Requisite Consenting Term B-2 Lenders:

 

(i)                                     launch the SUN Exchange Offer pursuant
to Definitive Documentation not later than November 2, 2018;

 

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(ii)                                  commence solicitation with respect to the
Bank Amendments pursuant to Definitive Documentation not later than October 30,
2018; and

 

(iii)                               consummate the Transactions on or prior to
December 12, 2018;

 

(e)                                  not execute, deliver or file, or solicit
consents or tenders pursuant to, any Definitive Documentation that, in whole or
in part, is not consistent in all material respects with this Amended Agreement
or is not otherwise acceptable to the Requisite Consenting Noteholders, the
Requisite Consenting Term B-2 Lenders, Ascent and Monitronics;

 

(f)                                   make commercially reasonable efforts to
obtain any and all required regulatory and/or third-party approvals or consents
necessary to consummate the Transactions;

 

(g)                                  not directly or indirectly object to,
delay, impede, or take any other action to interfere with the Transactions;

 

(h)                                 not seek, solicit, support, encourage,
propose, assist, consent to, vote for, enter into, participate in, pursue or
consummate (i) any reorganization, merger, consolidation, tender offer, exchange
offer, business combination, joint venture, partnership, sale of a material
portion of assets, financing (whether debt or equity), recapitalization or
restructuring of any of Ascent, Monitronics or any of their respective
subsidiaries, other than the Transactions (each, an “Alternative Transaction”)
or (ii) any substantive discussions (other than as to respond to any such Person
to advise such Person that it does not intend to engage in such discussions),
subject to the appropriate exercise of Ascent’s or Monitronics’ fiduciary
duties, or any agreement with any individual, partnership, joint venture,
limited liability company, corporation, trust, unincorporated organization,
group, governmental entity, or legal entity or association (each, a “Person”)
regarding an Alternative Transaction; provided, however, that notwithstanding
anything to the contrary herein, the Unsecured Exchange Transaction shall
constitute an Alternative Transaction prior to the Toggle Trigger Time;

 

(i)                                     if Ascent or Monitronics (or any
director, manager, officer, agent or representative thereof, as applicable)
receives an unsolicited proposal or expression of interest with respect to any
Alternative Transaction, within one (1) business day after the receipt of such
proposal or expression of interest, notify the Consenting Noteholder Advisors
(as defined below) and the Consenting Term B-2 Lender Advisors (as defined
below) of the receipt thereof, with such notice to include the material terms
thereof;

 

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(j)                                    not undertake any action materially
inconsistent with the consummation and implementation of the Transactions or
with its obligations under this Amended Agreement;

 

(k)                                 subject in each case to each of Ascent’s and
Monitronics’s compliance with and observation of its fiduciary duties
(i) conduct, and shall cause their respective subsidiaries to conduct, their
businesses and operations only in the ordinary course in a manner that is
consistent with past practices and in compliance with applicable law,
(ii) maintain their respective books and records in the ordinary course, in a
manner that is consistent with past practices, and in compliance with applicable
law, (iii) maintain all insurance policies, or suitable replacements therefor,
in full force and effect, in the ordinary course, in a manner that is consistent
with past practices, and in compliance with applicable law, and (iv) use
commercially reasonable efforts to preserve intact their business organizations
and relationships with third parties (including creditors, lessors, licensors,
suppliers, distributors and customers) and employees in the ordinary course, in
a manner that is consistent with past practices, and in compliance with
applicable law; and

 

(l)                                     (i) promptly pay when due the reasonable
and documented fees, costs and expenses of Stroock & Stroock & Lavan LLP
(“Stroock”) and Houlihan Lokey Capital, Inc., as advisors to that certain ad hoc
group of holders of the Notes (together, the “Consenting Noteholder Advisors”)
in accordance with the terms and conditions of their executed engagement letters
and (ii) promptly (and not later than three business days following the TSA
Effective Date with respect to accrued fees as of that date, and no later than
upon closing with respect to the balance of the fees and expenses) pay the
reasonable and documented fees, costs and expenses of Jones Day (“Jones Day”)
and Evercore Inc. as advisors to that certain ad hoc group of Term B-2 Lenders
(the “Consenting Term B-2 Lenders Advisors”).

 

8.                                      Backstop Commitments. In the Unsecured
Exchange Transaction, in the event the Dutch Auction is conducted and the
aggregate purchase price of all Tendered Notes is less than $100,000,000 (such
shortfall, a “Dutch Auction Shortfall”), then on and subject to the terms and
conditions of this Amended Agreement:

 

(a)                                 Ascent shall provide written notice thereof
to each Consenting Noteholder (with a copy to the Consenting Noteholder
Advisors) as promptly as practicable (and in no event more than 3 Business Days)
after expiration of the Dutch Auction, which notice shall set forth the amount
of the Dutch Auction Shortfall, the Aggregate Backstop Amount and such
Consenting Noteholder’s Backstop Amount;

 

(b)                                 Each Consenting Noteholder hereby agrees,
severally and not jointly, that a portion of the Notes that is tendered into the
Unsecured Exchange, in an aggregate principal amount equal to its respective
Backstop Amount (the

 

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“Backstop Notes”), shall automatically be deemed, for all purposes of this
Amended Agreement, the Dutch Auction, and the Unsecured Exchange, to have been
validly tendered by such Consenting Noteholder in the Dutch Auction (in lieu of
having been tendered in the Unsecured Exchange) at a purchase price equal to
$875 per $1,000 in principal amount of such Notes; provided, however, that such
deemed tender shall not affect the calculation of the Dutch Auction Price or the
payment thereof for any other Notes that are accepted and purchased by Ascent in
the Dutch Auction; and

 

(c)                                  Ascent and Monitronics hereby agree that
each Consenting Noteholder’s Backstop Notes shall automatically be deemed, for
all purposes of this Amended Agreement, the Dutch Auction and the Unsecured
Exchange, to have been validly tendered into the Dutch Auction (in lieu of
having been tendered in the Unsecured Exchange) by such Consenting Noteholder,
at a purchase price equal to $875 per $1,000 in principal amount of such Notes,
and Ascent shall accept and purchase all such Backstop Notes at such price and
otherwise pursuant to and in accordance with the terms of the Dutch Auction at
such price; provided, however, that such deemed tender shall not affect the
calculation of the Dutch Auction Price or the payment thereof for any other
Notes that are accepted and purchased by Ascent in the Dutch Auction.

 

Nothing contained in this Section 8 shall in any way restrict or limit any
Consenting Noteholder’s right or ability to otherwise participate in the Dutch
Auction pursuant to the terms and conditions thereof, at a price equal to $875
per $1,000 in principal amount, or at any lower price.

 

9.                                      Consenting Noteholder Termination
Events.  The Requisite Consenting Noteholders, in their sole discretion, may
terminate this Amended Agreement with respect to the Consenting Noteholders (a
“Consenting Noteholder Termination”) upon or at any time following the
occurrence of any of the following events (each, a “Consenting Noteholder
Termination Event”), by giving written notice of such termination to each of the
other Parties, and such termination shall be effective immediately upon delivery
of such written notice to each of the other Parties in accordance with
Section 25 hereof, except to the extent that such Consenting Noteholder
Termination Event has been waived in writing by the Requisite Consenting
Noteholders in their sole discretion:

 

(a)                                 Any of the Definitive Documentation is
amended or modified in a manner that is inconsistent with this Amended
Agreement, and such amendment or modification has not been revoked or withdrawn
within three (3) business days of written notice from the Requisite Consenting
Noteholders (which notice may be provided by Stroock at the direction of the
Requisite Consenting Noteholders) to the other Parties hereto;

 

(b)                                 the issuance by any governmental authority,
any regulatory authority, or any court of competent jurisdiction, of any ruling
or order enjoining the

 

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substantial consummation of the Transactions on the terms and conditions set
forth in this Amended Agreement, the Term Sheet and the Definitive
Documentation; provided, however, that any Party shall have five (5) business
days after issuance of such ruling or order to obtain relief that would allow
consummation of the Transactions in a manner that (i) does not prevent or
diminish in a material way compliance with the terms of this Amended Agreement,
and (ii) is acceptable to the Requisite Consenting Noteholders in their
reasonable discretion;

 

(c)                                  the breach in any material respect (without
giving effect to any “materiality” qualifiers set forth therein) of any of
Ascent, Monitronics or one or more of the Consenting Term B-2 Lenders (in the
case of the Consenting Term B-2 Lenders, solely to the extent that the
non-breaching Consenting Term B-2 Lenders own or control, in the aggregate, 50%
or less of the aggregate principal amount of the Term B-2 Loans and solely in
the context of the Second Lien Exchange Transaction) of any representation,
warranty, or covenant of such Party set forth in this Amended Agreement (it
being understood and agreed that any actions required to be taken by any Party
that are included in the Term Sheet attached to this Amended Agreement but not
in this Amended Agreement are to be considered “covenants” of such Party, and
therefore covenants of this Amended Agreement, notwithstanding the failure of
any specific provision in the Term Sheet to be re-copied in this Amended
Agreement) that (to the extent curable) remains uncured for a period of five
(5) business days after the receipt by such breaching Party of written notice of
such breach from the Requisite Consenting Noteholders (which notice may be
provided by Stroock at the direction of the Requisite Consenting Noteholders in
accordance with Section 25);

 

(d)                                 Ascent or Monitronics terminates its
respective obligations under and in accordance with Section 11 respectively, of
this Amended Agreement;

 

(e)                                  the failure of any Definitive Documentation
to comply with the requirements of Section 4 of this Amended Agreement, which
non-compliance remains uncured for a period of three (3) business days after the
receipt by the other Parties hereto of written notice of such non-compliance
from the Requisite Consenting Noteholders (which notice may be provided by
Stroock at the direction of the Requisite Consenting Noteholders);

 

(f)                                   the occurrence of any event, change,
effect, occurrence, development, circumstance, condition, result, state of fact
or change of fact that is not known as of the date hereof (each, an “Event”)
that, individually or together with all other Events, has had, or would
reasonably be expected to have, a material adverse effect as measured from the
date hereof on the business, operations, finances, properties, condition
(financial or otherwise), assets or liabilities of Ascent or Monitronics, taken
as a whole,

 

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or their ability to perform their respective obligations under, or to consummate
the Transactions contemplated by, this Amended Agreement, which material adverse
effect remains uncured for a period of three (3) business days after the receipt
by Ascent and Monitronics of written notice thereof from the Requisite
Consenting Noteholders (which notice may be provided by Stroock at the direction
of the Requisite Consenting Noteholders);

 

(g)                                  the occurrence of any “Event of Default”
under the Notes Indenture or the Credit Agreement (subject to any applicable
right to cure therein upon notice to the Consenting Noteholders or the
Consenting Term B-2 Lenders, as applicable); or

 

(h)                                 the occurrence of any other material breach
of this Amended Agreement not otherwise covered in the immediately preceding
clauses (a) through and including (g) by any of Ascent, Monitronics or one or
more of the Consenting Term B-2 Lenders (in the case of the Consenting Term B-2
Lenders, solely to the extent that the non-breaching Consenting Term B-2 Lenders
own or control, in the aggregate, 50% or less of the aggregate principal amount
of the Term B-2 Loans and solely with respect to the Second Lien Exchange
Transaction) that has not been cured (if susceptible to cure) within five
(5) business days after the receipt by Ascent,  Monitronics, and the Consenting
Term B-2 Lenders of written notice of such breach from the Requisite Consenting
Noteholders (which notice may be provided by Stroock at the direction of the
Requisite Consenting Noteholders in accordance with Section 25).

 

Notwithstanding the foregoing, upon a Consenting Noteholder Termination pursuant
to the foregoing subsections 9(c) or 9(h) resulting from a breach by any of the
Consenting Term B-2 Lenders, the Amended Agreement shall not terminate with
respect to the Consenting Noteholders; provided however, that the obligations of
the Consenting Noteholders hereunder shall thereafter only be with respect to an
Unsecured Exchange Transaction.

 

10.                               Consenting Term B-2 Lender Termination
Events.  The Requisite Consenting Term B-2 Lenders, in their sole discretion,
may terminate this Amended Agreement with respect to the Consenting Term B-2
Lenders (a “Consenting Term B-2 Lender Termination”) upon or at any time
following the occurrence of any of the following events (each, a “Consenting
Term B-2 Lender Termination Event”), by giving written notice of such
termination to each of the other Parties, and such termination shall be
effective immediately upon delivery of such written notice to each of the other
Parties in accordance with Section 25 hereof, except to the extent that such
Consenting Term B-2 Lender Termination Event has been waived in writing by the
Requisite Consenting Term B-2 Lenders in their sole discretion:

 

(a)                                 Any of the Definitive Documentation is
amended or modified in a manner that is inconsistent with this Amended
Agreement, and such amendment or modification has not been revoked or withdrawn
within three (3) business days of written notice from the Requisite Consenting
Term B-2

 

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Lenders (which notice may be provided by Jones Day at the direction of the
Requisite Consenting Term B-2 Lenders) to the other Parties hereto;

 

(b)                                 the issuance by any governmental authority,
any regulatory authority, or any court of competent jurisdiction, of any ruling
or order enjoining the substantial consummation of the Transactions on the terms
and conditions set forth in this Amended Agreement, the Term Sheet and the
Definitive Documentation; provided, however, that any Party shall have five
(5) business days after issuance of such ruling or order to obtain relief that
would allow consummation of the Transactions in a manner that (i) does not
prevent or diminish in a material way compliance with the terms of this Amended
Agreement, and (ii) is acceptable to the Requisite Consenting Term B-2 Lenders
in their reasonable discretion;

 

(c)                                  the breach in any material respect (without
giving effect to any “materiality” qualifiers set forth therein) of any of
Ascent, Monitronics or one or more of the Consenting Noteholders (in the case of
the Consenting Noteholders, solely to the extent that the non-breaching
Consenting Noteholders own or control, in the aggregate, 50% or less of the
aggregate principal amount of the Notes) of any representation, warranty, or
covenant of such Party set forth in this Amended Agreement (it being understood
and agreed that any actions required to be taken by any Party that are included
in the Term Sheet attached to this Amended Agreement but not in this Amended
Agreement are to be considered “covenants” of such Party, and therefore
covenants of this Amended Agreement, notwithstanding the failure of any specific
provision in the Term Sheet to be re-copied in this Amended Agreement) that (to
the extent curable) remains uncured for a period of five (5) business days after
the receipt by such breaching Party of written notice of such breach from the
Requisite Consenting Term B-2 Lenders (which notice may be provided by Jones Day
at the direction of the Requisite Consenting Term B-2 Lenders in accordance with
Section 25);

 

(d)                                 Ascent, Monitronics, or the Requisite
Consenting Noteholders as a group, terminates its respective obligations under
and in accordance with Sections 9 or 11, respectively, of this Amended
Agreement;

 

(e)                                  the failure of any Definitive Documentation
to comply with the requirements of Section 4 of this Amended Agreement, which
non-compliance remains uncured for a period of three (3) business days after the
receipt by the other Parties hereto of written notice of such non-compliance
from the Requisite Consenting Term B-2 Lenders (which notice may be provided by
Jones Day at the direction of the Requisite Consenting Term B-2 Lenders);

 

(f)                                   the occurrence of any event, change,
effect, occurrence, development, circumstance, condition, result, state of fact
or change of fact that is not

 

14

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known as of the date hereof (each, an “Event”) that, individually or together
with all other Events, has had, or would reasonably be expected to have, a
material adverse effect as measured from the date hereof on the business,
operations, finances, properties, condition (financial or otherwise), assets or
liabilities of Ascent or Monitronics, taken as a whole, or their ability to
perform their respective obligations under, or to consummate the Transactions
contemplated by, this Amended Agreement, which material adverse effect remains
uncured for a period of three (3) business days after the receipt by Ascent and
Monitronics of written notice thereof from the Requisite Consenting Term B-2
Lenders (which notice may be provided by Jones Day at the direction of the
Requisite Consenting Term B-2 Lenders);

 

(g)                                  the occurrence of any “Event of Default”
under the Notes Indenture or the Credit Agreement (subject to any applicable
right to cure therein upon notice to the Consenting Noteholders or the
Consenting Term B-2 Lenders, as applicable); or

 

(h)                                 the occurrence of any other material breach
of this Amended Agreement not otherwise covered in the immediately preceding
clauses (a) through and including (g) by any of Ascent, Monitronics or one or
more of the Consenting Noteholders (in the case of the Consenting Noteholders,
solely to the extent that the non-breaching Consenting Noteholders own or
control, in the aggregate, 50% or less of the aggregate principal amount of the
Notes) that has not been cured (if susceptible to cure) within five (5) business
days after the receipt by Ascent, Monitronics, and the Consenting Noteholders of
written notice of such breach from the Requisite Consenting Term B-2 Lenders
(which notice may be provided by Jones Day at the direction of the Requisite
Consenting Term B-2 Lenders in accordance with Section 25).

 

11.                               Company Termination Events.  Each of Ascent
and Monitronics, in its sole discretion, may terminate this Amended Agreement
with respect to Ascent or Monitronics (a “Company Termination”) upon or at any
time following the occurrence of any of the following events (each a “Company
Termination Event”), by giving written notice of such termination to each of the
other Parties and such termination shall be effective immediately upon delivery
of such written notice to each of the other Parties in accordance with
Section 25 hereof, except to the extent that such Company Termination Event has
been waived in writing by Ascent and/or Monitronics in its sole discretion:

 

(a)                                 the breach in any material respect (without
giving effect to any “materiality” qualifiers set forth therein) by one or more
of the Consenting Noteholders or one or more of the Consenting Term B-2 Lenders
of any representation, warranty, or covenant of such Consenting Noteholder(s) or
Consenting Term B-2 Lender(s), as applicable, set forth in this Amended
Agreement such that the non-breaching Consenting Noteholders, or non-breaching
Consenting Term B-2 Lenders, as applicable, own or control, in

 

15

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the aggregate, 50% or less of the aggregate principal amount of the Notes or 50%
or less of the aggregate principal amount of the Term B-2 Loans, as applicable
that (to the extent curable) remains uncured for a period of five (5) business
days after the receipt by such Consenting Noteholder(s) or Consenting Term B-2
Lender(s), as applicable, of written notice and description of such breach from
Ascent or Monitronics;

 

(b)                                 the issuance by any governmental authority,
any regulatory authority, or any court of competent jurisdiction, of any ruling
or order enjoining the consummation of the Transactions on the terms and
conditions set forth in this Amended Agreement, the Term Sheet and the
Definitive Documentation; provided, however, that Ascent and Monitronics have
made commercially reasonable, good faith efforts to cure, vacate, or have
overruled such ruling or order prior to terminating this Amended Agreement and
such ruling or order shall remain uncured, not vacated or not overruled for a
period of at least five (5) business days;

 

(c)                                  the Requisite Consenting Noteholders
terminate their obligations under and in accordance with Section 9 of this
Amended Agreement (it being understood that termination by the Requisite
Consenting Term B-2 Lenders shall not terminate the right and the obligations of
the remaining Parties to engage in the Unsecured Exchange Transaction); or

 

(d)                                 the failure of any Definitive Documentation
to comply with the requirements of Section 4 of this Amended Agreement, which
non-compliance remains uncured for a period of three (3) business days after the
receipt by the Consenting Noteholders and the Consenting Term B-2 Lenders of
written notice of such non-compliance from Ascent or Monitronics; provided that
Ascent and Monitronics have made good faith efforts to negotiate such Definitive
Documentation.

 

Notwithstanding the foregoing, upon a Company Termination pursuant to the
foregoing subsection 11(a) resulting from a breach by any of the Consenting Term
B-2 Lenders, the Amended Agreement shall not terminate with respect to Ascent or
Monitronics; provided however, that the obligations of Ascent and Monitronics
hereunder shall thereafter only be with respect to an Unsecured Exchange
Transaction.

 

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12.          Mutual Termination; Automatic Termination.  This Amended Agreement
and the obligations of all Parties hereunder may be terminated by mutual written
agreement by and among Ascent, Monitronics, the Requisite Consenting
Noteholders, and the Requisite Consenting Term B-2 Lenders.  Notwithstanding
anything in this Amended Agreement to the contrary, this Amended Agreement shall
terminate automatically (i) only as to the Consenting Term B-2 Lenders, if
Monitronics fails to obtain the requisite consents to the Bank Amendments on or
prior to the Toggle Trigger Time (as such Toggle Trigger Time may be amended in
accordance with the terms of this Amended Agreement), and (ii) as to all
Parties, upon the occurrence of any of the following events:

 

(a)                                 any of Ascent, Monitronics or any of their
respective subsidiaries (i) consents to the appointment of or taking possession
by a receiver, liquidator, assignee, custodian, trustee or sequestrator (or
similar official) of such entity or any substantial part of the property of such
entity, (ii) seeks any arrangement, adjustment, protection, or relief of its
debts other than as contemplated by this Amended Agreement, or (iii) makes a
general assignment for the benefit of its creditors;

 

(b)                                 any of Ascent, Monitronics or any of their
respective subsidiaries commences a voluntary case filed under title 11 of the
United States Code, 11 U.S.C. §§ 101, et seq. (as amended, the “Bankruptcy
Code”);

 

(c)                                  the commencement of an involuntary case
against any of Ascent, Monitronics or any of their respective subsidiaries under
the Bankruptcy Code that is not dismissed within thirty (30) days of such
filing; or

 

(d)                                 the occurrence of the consummation of the
Transactions.

 

13.          Effect of Termination.  The date on which termination of this
Amended Agreement as to a Party is effective in accordance with Sections 9, 10,
11 or 12 of this Amended Agreement shall be referred to as a “Termination
Date.”  Upon the occurrence of (a) a Consenting Noteholder Termination or a
Termination Date pursuant to Sections 12(ii)(a)-(c), Monitronics shall promptly
withdraw, and shall not consummate, the SUN Exchange Offer, (b) a Consenting
Term B-2 Lender Termination or a Termination Date pursuant to Sections
12(ii)(a)-(c), Monitronics shall promptly withdraw, and shall not consummate,
the Bank Amendments, and (c) any Termination Date, (i) the rights and
obligations of the terminating Party under this Amended Agreement shall be
terminated effective immediately, and (ii) the terminating Party shall be
released from all commitments, undertakings, and agreements hereunder; provided
however, that each of the following shall survive any such termination:  (A) any
claim for breach of this Amended Agreement that occurs prior to such Termination
Date, and all rights and remedies with respect to such claims shall not be
prejudiced in any way; and (B) Sections 13, 19, 20, 21, 22, 23, 24, 25, 26, 27,
28, 29, 30, 31, 32, and 33 hereof.  At any time from and after the Termination
Date (except in the case of a Termination Date pursuant to Section 12(ii)(d)),
each Consenting Noteholder in its sole discretion may withdraw or revoke its
tender, consent and/or vote with respect to the SUN Exchange Offer in accordance
with the terms and conditions of the SUN Exchange Offer and each Consenting Term
B-2 Lender may withdraw its consent to the Bank Amendments in accordance with
the terms thereof.

 

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14.          Transfers of Claims and Interests. (a) Each Consenting Noteholder
shall not sell, loan, assign, transfer, hypothecate (other than hypothecations
or re-hypothecations in favor of a registered broker-dealer with whom the Notes
are held in a prime brokerage account), tender or otherwise dispose of
(including by participation), directly or indirectly, its right, title, or
interest in any Notes, in whole or in part (such actions are collectively
referred to herein as a “Transfer” and the Consenting Noteholder making such
Transfer is referred to herein as the “Transferor”), unless such Transfer is to
another Consenting Noteholder or any other entity that first agrees in writing
to be bound by the terms of this Amended Agreement by executing and delivering
to counsel to Ascent and Monitronics and counsel to the Consenting Noteholders,
in accordance with Section 25 hereof, a transferee joinder substantially in the
form attached hereto as Exhibit B-1 (a “Noteholder Transferee Joinder”);
provided, however, that a Consenting Noteholder may permit its prime broker to
hold the Notes as part of a custodian arrangement whereby such Consenting
Noteholder retains all of its voting rights with respect to such Notes from the
TSA Effective Date until the occurrence of the Termination Date.  With respect
to any and all Notes held by the relevant transferee upon consummation of a
Transfer in accordance herewith, such transferee is deemed to make all of the
representations, warranties, and covenants of a Consenting Noteholders, as
applicable, set forth in this Amended Agreement and (if not already a Consenting
Noteholder) is deemed to be, and shall be, a Consenting Noteholder for all
purposes of this Amended Agreement.  Upon compliance with the foregoing, the
Transferor shall be deemed to relinquish its rights (and be released from its
obligations, except for any claim for breach of this Amended Agreement that
occurs prior to such Transfer) under this Amended Agreement to the extent of
such transferred rights and obligations.

 

Any Transfer made in violation of this Section 14(a) shall be deemed null and
void ab initio and of no force or effect, regardless of any prior notice
provided to Ascent, Monitronics, any Consenting Noteholder or Consenting Term
B-2 Lender, and shall not create any obligation or liability of Ascent,
Monitronics, any Consenting Noteholder or any Consenting Term B-2 Lender to the
purported transferee.

 

(b)           Each Consenting Term B-2 Lender shall not sell, loan, assign,
transfer, hypothecate, tender or otherwise dispose of (including by
participation), directly or indirectly, its right, title, or interest in any
Term B-2 Loan, in whole or in part (such actions are collectively referred to
herein as a “Loan Transfer” and the Consenting Term B-2 Lender making such Loan
Transfer is referred to herein as the “Loan Transferor”), unless such Loan
Transfer is to another Consenting Term B-2 Lender or any other entity that first
agrees in writing to be bound by the terms of this Amended Agreement by
executing and delivering to counsel to Ascent and Monitronics and counsel to the
Consenting Term B-2 Lenders, in accordance with Section 25 hereof, a transferee
joinder substantially in the form attached hereto as Exhibit B-2 (a “Loan
Transferee Joinder”).  With respect to any and all Term B-2 Loans held by the
relevant transferee upon consummation of a Loan Transfer in accordance herewith,
such transferee is deemed to make all of the representations, warranties, and
covenants of a Consenting Term B-2 Lender, as applicable, set forth in this
Amended Agreement and (if not already a Consenting Term B-2 Lender is deemed to
be, and shall be, a Consenting Term B-2 Lender for all purposes of this Amended
Agreement).  Upon compliance with the foregoing, the Loan Transferor shall be
deemed to relinquish its rights (and be released from its obligations, except
for any claim for breach of this Amended Agreement that occurs prior to such
Loan Transfer) under this Amended Agreement to the extent of such transferred
rights and obligations.

 

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Any Loan Transfer made in violation of this Section 14(b) shall be deemed null
and void ab initio and of no force or effect, regardless of any prior notice
provided to Ascent, Monitronics, any Consenting Noteholder or any Consenting
Term B-2 Lender, and shall not create any obligation or liability of Ascent,
Monitronics, any Consenting Noteholder, or any Consenting Term B-2 Lender to the
purported transferee.

 

(c)           Notwithstanding the foregoing, a Qualified Marketmaker (as defined
herein), acting solely in its capacity as such, that acquires any Notes or Term
B-2 Loans subject to this Amended Agreement shall not be required to execute a
counterpart signature page to this Amended Agreement or otherwise agree to be
bound by the terms and conditions set forth herein if, and only if, such
Qualified Marketmaker sells or assigns such Notes or Term B-2 Loans within five
(5) business days of its acquisition and the purchaser or assignee of such Notes
or Term B-2 Loans is a Consenting Noteholder or a Consenting Term B-2 Lender, as
applicable, or such purchaser or assignee executes and delivers a Transferee
Joinder or Loan Transferee Joinder, as applicable, to counsel to Ascent and
Monitronics, counsel to the Consenting Noteholders, and counsel to the
Consenting Term B-2 Lenders, in accordance with Section 25 hereof; provided
that, if a Qualified Marketmaker, acting solely in its capacity as such,
acquires Notes or Term B-2 Loans from an entity who is not a Consenting
Noteholder with respect to such Notes or is not a Consenting Term B-2 Lender
with respect to such Term B-2 Loans (collectively, “Qualified Unrestricted
Claims”), such Qualified Marketmaker may Transfer any right, title or interest
in such Qualified Unrestricted Claims without the requirement that the
transferee execute and deliver a Transferee Joinder or a Loan Transferee
Joinder; provided further, that any such Qualified Marketmaker that is a Party
to this Amended Agreement shall otherwise be subject to the terms and conditions
of this Amended Agreement pending the completion of any such Transfer.  For
purposes of this Amended Agreement, a “Qualified Marketmaker” means an entity
that holds itself out to the public or applicable private markets as standing
ready in the ordinary course of business to purchase from customers and sell to
customers Notes and/or Term B-2 Loans of Monitronics, in its capacity as a
dealer or market maker in Notes and/or Term B-2 Loans of Monitronics and is not
holding such Notes or Term B-2 Loans for its own account.

 

15.          Further Acquisition of Claims or Interests.  Nothing in this
Amended Agreement shall be construed as precluding any Consenting Noteholder or
any Consenting Term B-2 Lender or any of such party’s affiliates from acquiring
additional Notes or Term B-2 Loans; provided, however, that any additional Notes
or Term B-2 Loans acquired by any Consenting Noteholder or any Consenting Term
B-2 Lender and with respect to which such Consenting Noteholder or such
Consenting Term B-2 Lender is the beneficial owner, or the nominee, investment
manager, advisor or subadvisor for the beneficial owner with power and/or
authority to bind any Notes or Term B-2 Loans held by it shall automatically and
immediately be subject to the terms and conditions of this Amended Agreement,
except to the extent the additional Notes or additional Term B-2 Loans are
acquired by such Consenting Noteholder or Consenting Term B-2 Lender (in its
capacity as such a nominee, investment manager, advisor or subadvisor) for the
account of a beneficial owner for whom the Consenting Noteholder or Consenting
Term B-2 Lender does not currently hold any Notes or Term B-2 Loans that are
subject to this Amended Agreement.  Upon any such further acquisition, such
Consenting Noteholder or Consenting Term B-2 Lender shall promptly notify
counsel to Ascent and Monitronics and counsel to the Consenting

 

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Noteholders or Consenting Term B-2 Lenders as applicable, and the Notes or Term
B-2 Loans so acquired shall become subject to the terms of this Amended
Agreement.

 

16.          Consents and Acknowledgments.  Each Party irrevocably acknowledges
and agrees that this Amended Agreement does not constitute an offer to issue or
sell securities to any Person, or the solicitation of an offer to acquire or buy
securities, in any jurisdiction where such offer or solicitation would be
unlawful.

 

17.          Representations and Warranties.

 

(a)                                 Each Consenting Noteholder hereby represents
and warrants on a several and not joint basis for itself and not any other
Person that the following statements are true, correct, and complete as of the
date hereof:

 

(i)                                     it has the requisite organizational
power and authority to enter into this Amended Agreement and to carry out the
transactions contemplated by, and perform its respective obligations under, this
Amended Agreement;

 

(ii)                                  the execution and delivery of this Amended
Agreement and the performance of its obligations hereunder have been duly
authorized by all necessary corporate or other organizational action on its
part;

 

(iii)                               the execution, delivery, and performance by
it of this Amended Agreement does not violate any provision of its certificate
of incorporation, or bylaws, or other organizational documents;

 

(iv)                              it is an “accredited investor” within the
meaning of Rule 501 of Regulation D promulgated under the Securities Act of
1933, as amended (the “Securities Act”), with sufficient knowledge and
experience to evaluate the terms and conditions of this Amended Agreement and to
consult with its legal and financial advisors with respect to its investment
decision to execute this Amended Agreement, and it has made its own analysis and
decision to enter into this Amended Agreement;

 

(v)                                 it has reviewed, or has had the opportunity
to review, with the assistance of professional and legal advisors of its
choosing, all information it deems necessary and appropriate for it to evaluate
the financial risks inherent in the Transactions; and

 

(vi)                              it (A) is the beneficial owner, or the
nominee, investment manager, advisor or subadvisor for the beneficial owner with
power and/or authority to bind the Notes identified and in the amounts set forth
on its signature page hereto (or, in the case of a Consenting Noteholder that
becomes a party hereto after the TSA Effective Date, below its name on its
signature page to the Transferee

 

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Joinder executed and delivered by such Consenting Noteholder); and (B) does not
beneficially own any Notes other than as identified on its signature page hereto
(or, in the case of a Consenting Noteholder that becomes a party hereto after
the TSA Effective Date, below its name on its signature page to the Transferee
Joinder executed and delivered by such Consenting Noteholder).

 

(b)                                 Each Consenting Term B-2 Lender hereby
represents and warrants on a several and not joint basis for itself and not any
other Person that the following statements are true, correct, and complete as of
the date hereof:

 

(i)                                     it has the requisite organizational
power and authority to enter into this Amended Agreement and to carry out the
transactions contemplated by, and perform its respective obligations under, this
Amended Agreement;

 

(ii)                                  the execution and delivery of this Amended
Agreement and the performance of its obligations hereunder have been duly
authorized by all necessary corporate or other organizational action on its
part;

 

(iii)                               the execution, delivery, and performance by
it of this Amended Agreement does not violate any provision of its certificate
of incorporation, or bylaws, or other organizational documents;

 

(iv)                              it is an “accredited investor” within the
meaning of Rule 501 of Regulation D promulgated under the Securities Act of
1933, as amended (the “Securities Act”), with sufficient knowledge and
experience to evaluate the terms and conditions of this Amended Agreement and to
consult with its legal and financial advisors with respect to its investment
decision to execute this Amended Agreement, and it has made its own analysis and
decision to enter into this Amended Agreement;

 

(v)                                 it has reviewed, or has had the opportunity
to review, with the assistance of professional and legal advisors of its
choosing, all information it deems necessary and appropriate for it to evaluate
the financial risks inherent in the Transactions; and

 

(vi)                              it (A) is the beneficial owner, or the
nominee, investment manager, advisor or subadvisor for the beneficial owner with
power and/or authority to bind the Term B-2 Loans identified and in the amounts
set forth on its signature page hereto (or, in the case of a Consenting Term B-2
Lender that becomes a party hereto after the TSA Effective Date, below its name
on its signature page to the Loan Transferee Joinder executed and delivered by
such

 

21

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Consenting Term B-2 Lender); and (B) does not beneficially own any Term B-2
Loans other than as identified on its signature page hereto (or, in the case of
a Consenting Term B-2 Lender that becomes a party hereto after the TSA Effective
Date, below its name on its signature page to the Loan Transferee Joinder
executed and delivered by such Consenting Term B-2 Lender).

 

(c)                                  Each of Ascent and Monitronics hereby
represents and warrants on a joint and several basis (and not for any other
Person other than itself) that the following statements are true, correct, and
complete as of the date hereof:

 

(i)                                     it has the requisite corporate or other
organizational power and authority to enter into this Amended Agreement and to
carry out the transactions contemplated by, and perform its respective
obligations under, this Amended Agreement;

 

(ii)                                  the execution and delivery of this Amended
Agreement and the performance of its obligations hereunder have been duly
authorized by all necessary corporate or other organizational action on its
part;

 

(iii)                               the execution and delivery by it of this
Amended Agreement does not (A) violate its certificates of incorporation, or
bylaws, or other organizational documents, or those of any of its affiliates, or
(B) result in a breach of, or constitute (with due notice or lapse of time or
both) a default under any material contractual obligation to which it or any of
its affiliates is a party;

 

(iv)                              the execution and delivery by it of this
Amended Agreement does not require any registration or filing with, the consent
or approval of, notice to, or any other action with any federal, state, or other
governmental authority or regulatory body, other than, for the avoidance of
doubt, the actions with governmental authorities or regulatory bodies required
in connection with implementation of the Transactions;

 

(v)                                 it has sufficient knowledge and experience
to evaluate properly the terms and conditions of this Amended Agreement, and has
been afforded the opportunity to consult with its legal and financial advisors
with respect to its decision to execute this Amended Agreement, and it has made
its own analysis and decision to enter into this Amended Agreement and otherwise
investigated this matter to its full satisfaction; and

 

(vi)                              it is not currently engaged in any
discussions, negotiations or other arrangements with respect to any Alternative
Transaction.

 

22

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18.          Waiver.  If the Transactions are not consummated, then following
the occurrence of the Termination Date, if applicable, nothing herein shall be
construed as a waiver by any Party of any or all of such Party’s rights, other
than as provided in Section 13 of this Amended Agreement, and the Parties
expressly reserve any and all of their respective rights.  The Parties
acknowledge that this Amended Agreement and all negotiations relating hereto are
part of a proposed settlement of matters that could otherwise be the subject of
litigation.  Pursuant to Rule 408 of the Federal Rules of Evidence, any
applicable state rules of evidence, and any other applicable law, foreign or
domestic, this Amended Agreement, any related documents, and all negotiations
relating thereto shall not be admissible into evidence in any proceeding, or
used by any party for any reason whatsoever, including in any proceeding, other
than a proceeding to enforce its terms.

 

19.          Relationship Among Parties.  Notwithstanding anything herein to the
contrary, the duties and obligations of the Consenting Noteholders under this
Amended Agreement shall be several, not joint and the duties and obligations of
the Consenting Term B-2 Lenders under this Amended Agreement shall be several,
not joint.  No Party shall have any responsibility by virtue of this Amended
Agreement for any trading by any other entity.  No prior history, pattern, or
practice of sharing confidences among or between the Parties shall in any way
affect or negate this Amended Agreement.

 

20.          Specific Performance.  It is understood and agreed by the Parties
that money damages would be an insufficient remedy for any breach of this
Amended Agreement by any Party and each non-breaching Party shall be entitled to
seek specific performance and injunctive or other equitable relief as a remedy
of any such breach of this Amended Agreement, including, without limitation, an
order of a court of competent jurisdiction requiring any Party to comply
promptly with any of its obligations hereunder; provided, however, that each
Party agrees to waive any requirement for the securing or posting of a bond in
connection with such remedy.

 

21.          GOVERNING LAW & JURISDICTION.  THIS AMENDED AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO ANY CONFLICTS OF LAW PROVISION WHICH WOULD REQUIRE
THE APPLICATION OF THE LAW OF ANY OTHER JURISDICTION.  BY ITS EXECUTION AND
DELIVERY OF THIS AMENDED AGREEMENT, EACH OF THE PARTIES HEREBY IRREVOCABLY AND
UNCONDITIONALLY AGREES FOR ITSELF THAT ANY LEGAL ACTION, SUIT OR PROCEEDING
AGAINST IT WITH RESPECT TO ANY MATTER UNDER OR ARISING OUT OF OR IN CONNECTION
WITH THIS AMENDED AGREEMENT OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT
RENDERED IN ANY SUCH ACTION, SUIT OR PROCEEDING, MAY BE BROUGHT IN ANY STATE OR
FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK, COUNTY OF NEW
YORK. BY EXECUTION AND DELIVERY OF THIS AMENDED AGREEMENT, EACH OF THE PARTIES
HERETO IRREVOCABLY ACCEPTS AND SUBMITS ITSELF TO THE NONEXCLUSIVE JURISDICTION
OF SUCH COURTS, GENERALLY AND UNCONDITIONALLY, WITH RESPECT TO ANY SUCH ACTION,
SUIT OR PROCEEDING, AND WAIVES ANY OBJECTION IT MAY HAVE TO VENUE OR THE
CONVENIENCE OF THE FORUM.

 

23

--------------------------------------------------------------------------------

 

22.          WAIVER OF RIGHT TO TRIAL BY JURY.  EACH OF THE PARTIES HERETO
IRREVOCABLY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY
DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN ANY OF THE
PARTIES ARISING OUT OF, CONNECTED WITH, RELATING TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN ANY OF THEM IN CONNECTION WITH THIS AMENDED
AGREEMENT.  INSTEAD, ANY DISPUTES RESOLVED IN COURT SHALL BE RESOLVED IN A BENCH
TRIAL WITHOUT A JURY.

 

23.          Successors and Assigns.  Except as otherwise provided in this
Amended Agreement, this Amended Agreement is intended to bind and inure to the
benefit of each of the Parties and each of their respective permitted
successors, assigns, heirs, executors, administrators, and representatives.

 

24.          No Third-Party Beneficiaries.  Unless expressly stated herein, this
Amended Agreement shall be solely for the benefit of the Parties and no other
Person shall be a third-party beneficiary of this Amended Agreement.

 

25.          Notices.  All notices (including, without limitation, any notice of
termination or breach) and other communications from any Party hereunder shall
be in writing and shall be deemed to have been duly given if personally
delivered by courier service, messenger, email, or facsimile to the other
Parties at the applicable addresses below, or such other addresses as may be
furnished hereafter by notice in writing.  Any notice of termination or breach
shall be delivered to all other Parties.

 

 

(a)

If to Ascent or Monitronics:

 

 

 

 

 

Ascent Capital Group, Inc.

5251 DTC Parkway, Suite 1000

Greenwood Village, CO 80111

 

 

Attn:

Mr. William Niles

 

 

Tel:

303.628.5600

 

 

Email:

wniles@ascentcapitalgroupinc.com

 

 

 

 

 

 

With a copy to:

 

 

 

 

 

Baker Botts L.L.P.

 

 

30 Rockefeller Plaza

 

 

New York, New York 10112

 

 

Attn:

Renee L. Wilm, Esq.

 

 

 

Emanuel C. Grillo, Esq.

 

 

 

 

 

Tel: 212.408.2500

 

 

Fax: 212.408.2501

 

 

Email:

renee.wilm@bakerbotts.com

 

 

 

emanuel.grillo@bakerbotts.com

 

24

--------------------------------------------------------------------------------

 

 

 

and

 

 

 

 

 

Latham & Watkins LLP

 

 

885 Third Avenue,

 

 

New York, New York 10022

 

 

Attn:

Roger Schwartz, Esq.

 

 

 

David Hammerman, Esq.

 

 

 

 

 

 

Tel: 212.906.1200

 

 

Fax: 212.751.4864

 

 

Email:

roger.schwartz@lw.com

 

 

 

david.hammerman@lw.com

 

 

 

 

(b)

Consenting Noteholders:

 

 

 

 

 

Stroock & Stroock & Lavan LLP

 

 

180 Maiden Lane

 

 

New York, New York 10038-4982

 

 

Attn:

Kristopher M. Hansen, Esq.

 

 

 

Sayan Bhattacharyya, Esq.

 

 

 

 

 

 

Tel:

212.806.6056

 

 

 

212.806.5723

 

 

Fax:

212.806.6006

 

 

Email:

khansen@stroock.com

 

 

 

sbhattacharyya@stroock

 

 

 

 

 

(c)

Consenting Term B-2 Lenders:

 

 

 

 

 

Jones Day LLP

 

 

250 Vesey Street

 

 

New York, New York 10281-1047

 

 

Attn: Scott J. Greenberg, Esq.

 

 

 

 

 

Tel: 212.326.3939

 

 

Fax: 212.755.7306

 

 

Email: sgreenberg@jonesday.com

 

26.          Entire Agreement.  This Amended Agreement (including, for the
avoidance of doubt, the Term Sheet and any other Exhibits) constitutes the
entire agreement of the Parties with respect to the subject matter of this
Amended Agreement, and supersedes all prior negotiations, agreements, and
understandings, whether written or oral, among the Parties with respect to the
subject matter of this Amended Agreement.

 

27.          Amendments.  Except as otherwise provided herein, this Amended
Agreement may not be modified, amended, or supplemented except in a writing
executed and delivered by

 

25

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Ascent, Monitronics, the Requisite Consenting Noteholders and the Requisite
Consenting Term B-2 Lenders.

 

28.          Counterparts.  This Amended Agreement may be executed in one or
more counterparts, each of which, when so executed, shall be deemed to be an
original and shall constitute the same instrument, and the counterparts may be
delivered by facsimile transmission or by email in portable document format
(.pdf) or other electronic imaging means, which shall be deemed to be an
original for the purposes of this Section 28; provided, however, that signature
pages executed by each of the Consenting Noteholders or the Consenting Term B-2
Lenders shall be delivered to (a) each of the other Consenting Noteholders, the
other Consenting Term B-2 Lenders, counsel to the Consenting Noteholders (solely
with respect to the signature pages of Consenting Term B-2 Lenders) and counsel
to the Consenting Term B-2 Lenders (solely with respect to the signature
pages of Consenting Noteholders) in a redacted form that removes such Consenting
Noteholder’s or Consenting Term B-2 Lender’s holdings of Notes or Term B-2 Loans
(as applicable), and (b) Ascent and Monitronics in an unredacted form.

 

29.          Public Disclosure and Press Releases.  This Amended Agreement, as
well as its terms, its existence, and the details regarding the negotiation of
its terms are expressly subject to any existing confidentiality agreements
executed by and among any of the Parties as of the date hereof.  Notwithstanding
the foregoing, Ascent and Monitronics may make any public disclosure or filing
with respect to the subject matter of this Amended Agreement, including, without
limitation, the existence of, or the terms of, this Amended Agreement or any
other material term of the Transactions, that, based upon the advice of counsel,
is required to be made (i) by applicable law or regulation or (ii) pursuant to
any rules or regulations of NASDAQ, without the express written consent of the
other Parties; provided, that Ascent and Monitronics shall consult with the
Consenting Noteholder Advisors and the Consenting Term B-2 Lender Advisors
before issuing any such press release or making any such filing and shall submit
drafts to the Consenting Noteholder Advisors and the Consenting Term B-2 Lender
Advisors of any such press releases or filing as soon as reasonably practicable
prior to making any such disclosure, and shall afford the Consenting Noteholder
Advisors and the Consenting Term B-2 Lender Advisors an opportunity to comment
on such documents and disclosures, and such documents and disclosures shall be
in form and substance reasonably acceptable to the Consenting Noteholder
Advisors and the Consenting Term B-2 Lender Advisors.  Each Party to this
Amended Agreement shall have the right, at any time, to know the identities of
every other Party to this Amended Agreement, but must keep such information
confidential and may not disclose such information to any Person except to the
extent such Party believes, upon the advice of counsel, that it is legally
required to do so.  Notwithstanding anything to the contrary in this Amended
Agreement, Ascent and Monitronics shall not disclose to any Person (and shall
redact all such information in any public filing) the identities and holdings
information (including the amounts or percentages of Notes held) of any
Consenting Noteholders and the identities and holdings information (including
the amounts or percentages of Term B-2 Loans held) of any the Consenting Term
B-2 Lenders as of the date hereof or at any time hereafter, except to the extent
compelled to disclose such information by a court of competent jurisdiction, in
which event Ascent and Monitronics shall (a) take all reasonable measures to
limit the scope of such disclosure and (b) give the affected Consenting
Noteholder(s) and the Consenting Noteholder Advisors (who shall have the right
to seek a protective order prior to disclosure) or the affected Consenting Term
B-2 Lender(s) and the Consenting Term B-2 Lender Advisors, in each case as

 

26

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applicable, prior written notice of such disclosure and a reasonable opportunity
to review and comment in advance of such disclosure or filing; provided,
however, that the foregoing shall not prohibit the disclosure of the aggregate
percentage or aggregate principal amount of Notes held by all Consenting
Noteholders, collectively or the aggregate percentage or aggregate principal
amount of Term B-2 Loans held by all Consenting Term B-2 Lenders.

 

30.          Headings.  The section headings of this Amended Agreement are for
convenience of reference only and shall not, for any purpose, be deemed a part
of this Amended Agreement.

 

31.          Interpretation.  This Amended Agreement is the product of
negotiations among the Parties, and the enforcement or interpretation hereof is
to be interpreted in a neutral manner, and any presumption with regard to
interpretation for or against any Party by reason of that Party having drafted
or caused to be drafted this Amended Agreement or any portion hereof, shall not
be effective in regard to the interpretation hereof.

 

32.          Representation by Counsel.  Each Party hereto acknowledges that it
has been represented by, or has been provided a reasonable period of time to
obtain access to and advice by, counsel with respect to this Amended Agreement
and the Transactions contemplated hereby.  Accordingly, any rule of law or any
legal decision that would provide any Party with a defense to the enforcement of
the terms of this Amended Agreement against such Party based upon lack of legal
counsel shall have no application and is expressly waived.

 

33.          Severability.  If any provision of this Amended Agreement, or the
application of any such provision to any Person or circumstance, shall be held
invalid or unenforceable in whole or in part, such invalidity or
unenforceability shall attach only to such provision or part thereof and the
remaining part of such provision and this Amended Agreement shall continue in
full force and effect; provided, however, that nothing in this Section 33 shall
be deemed to amend, supplement or otherwise modify, or constitute a waiver of,
any Termination Event.  Upon any such determination of invalidity, the Parties
shall negotiate in good faith to modify this Amended Agreement so as to effect
the original intent of the Parties as closely as possible, in a reasonably
acceptable manner, such that the transactions contemplated hereby are
consummated as originally contemplated to the greatest extent possible.

 

[Signatures and exhibits follow.]

 

27

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IN WITNESS WHEREOF, the Parties hereto have caused this Amended Agreement to be
executed and delivered by their respective duly authorized officers, solely in
their respective capacity as officers of the undersigned and not in any other
capacity, as of the date first set forth above.

 

 

 

 

ASCENT CAPITAL GROUP, INC.

 

 

 

 

 

 

 

 

By:

/s/ William Niles

 

 

 

Name:

William Niles

 

 

 

Title:

Chief Executive Officer

 

 

 

 

 

MONITRONICS INTERNATIONAL, INC.

 

 

 

 

 

 

 

 

By:

/s/ William Niles

 

 

 

Name:

William Niles

 

 

 

Title:

Executive Vice President

 

--------------------------------------------------------------------------------

 

 

[CONSENTING NOTEHOLDERS]

 

--------------------------------------------------------------------------------

 

 

[CONSENTING TERM B-2 LENDERS]

 

--------------------------------------------------------------------------------

 

Exhibit A to the Amended and Restated Transaction Support Agreement

 

Term Sheet

 

--------------------------------------------------------------------------------

 

Execution Version

 

ASCENT CAPITAL GROUP, INC.

MONITRONICS INTERNATIONAL, INC.

(COLLECTIVELY, THE “COMPANY”)

 

TERM SHEET

 

OCTOBER 30, 2018

 

This Term Sheet sets forth the principal terms of the Transactions.  Capitalized
terms used herein and not otherwise defined shall have the meanings given them
in that certain Amended and Restated Transaction Support Agreement dated as of
October 30, 2018, to which this Term Sheet is an exhibit (the “Amended
Agreement”).

 

THIS TERM SHEET DOES NOT CONSTITUTE (NOR SHALL IT BE CONSTRUED AS) AN OFFER TO
BUY, SELL OR EXCHANGE ANY OF THE SECURITIES OR INSTRUMENTS DESCRIBED HEREIN, IT
BEING UNDERSTOOD THAT SUCH A SOLICITATION, IF ANY, ONLY WILL BE MADE IN
COMPLIANCE WITH APPLICABLE PROVISIONS OF ALL APPLICABLE LAWS. THIS TERM SHEET
DOES NOT ADDRESS ALL TERMS THAT WOULD BE REQUIRED IN CONNECTION WITH THE
TRANSACTIONS AND ENTRY INTO OR THE CREATION OF ANY BINDING AGREEMENT IS SUBJECT
TO THE NEGOTIATION AND EXECUTION OF DEFINITIVE DOCUMENTATION, AS CONTEMPLATED BY
THE AMENDED AGREEMENT.

 

Second Lien Transactions Overview

 

 

 

 

 

Second Lien Exchange:

 

Monitronics shall offer to exchange (the “Second Lien Exchange”), and the
Consenting Noteholders shall exchange, the Notes for the New Second Lien Notes
(as defined below) on the following basis:

 

(i)                                     on or prior to the early tender date,
the Notes shall be exchanged on a par value basis such that for each $1,000
aggregate principal amount of Notes tendered, the holder shall receive $1,000
aggregate principal amount of New Second Lien Notes; and

 

(ii)                                  after the early tender date, but on or
before the expiration date of the Second Lien Exchange, the Notes shall be
exchanged such that for each $1,000 aggregate principal amount of Notes
tendered, the holder shall receive $950 aggregate principal amount of New Second
Lien Notes.

 

 

 

New Second Lien Notes of Monitronics (“New Second Lien Notes”)

 

 

 

 

 

Interest Rate:

 

Monitronics shall pay interest on the New Second Lien Notes, semi-annually,
(a) in cash at a rate per annum equal to 5.5%; plus (b) in kind (PIK) at a rate
per annum equal to 6.5%.

 

 

 

Guarantees/Collateral/Security:

 

The New Second Lien Notes shall be guaranteed by each subsidiary of Monitronics
that guarantees the obligations under the Credit Agreement

 

1

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(the “Guarantors”).  Monitronics and the Guarantors shall grant to the
collateral trustee for the New Second Lien Notes for the benefit of the holders
of the New Second Lien Notes second priority security interests in, and liens
upon the same collateral presently pledged as security for the Credit Agreement,
including the existing parent pledge and any collateral that may be pledged in
the future as security for the obligations under the Credit Agreement.  Any
security interests granted shall be in all respects subject to the Intercreditor
Agreement described in the “Conditions to Closing” below.

 

 

 

Maturity Date:

 

April 30, 2023.

 

 

 

Covenants and Events of Default:

 

Standard and customary covenants and events of default for a transaction of this
type, nature and size, and including (without limitation) the following:

 

·                  Monitronics’ right to issue additional New Second Lien Notes
up to a maximum aggregate principal amount of $610.0 million (inclusive of the
amount of the New Second Lien Notes issued in the Second Lien Exchange), which
may be issued solely for the following purposes: (i) up to $585.0 million
aggregate principal amount of New Second Lien Notes (excluding any PIK Interest,
but inclusive of the amount of the New Second Lien Notes issued in the Second
Lien Exchange) may be issued following the closing of the Second Lien Exchange
solely to refinance the Notes not exchanged in the Second Lien Exchange (the
“Stub Notes”); and (ii) up to $25.0 million aggregate principal amount of New
Second Lien Notes (but, excluding any PIK Interest) (the “Supplemental Second
Lien Notes”) may be issued solely in exchange for, or solely to refinance, the
Ascent 4.00% Convertible Senior Notes due 2020 (the “Ascent Convertible Notes”)
at an exchange rate not in excess of par for par, in each case of clauses
(i) and (ii), subject to pro forma compliance with a new Total Secured Debt to
EBITDA debt incurrence ratio covenant (taking into account only first and second
lien debt, plus any PIK Interest) to be set at 5.25 times (which is to be
calculated in the same manner as the existing Total Debt to EBITDA covenant
under the Credit Agreement which Total Debt to EBITDA covenant shall also remain
in effect and shall also be amended to be set at 5.5x; and for which the
calculation for EBITDA will include the adjustments set forth in this Term
Sheet);

 

·                 Monitronics shall not distribute to Ascent any proceeds
received in connection with that certain anticipated insurance reimbursement in
an estimated amount of $9,700,000 (the “Insurance Proceeds”), except (i) in
connection with a settlement of the litigation initiated by certain holders of
the Ascent Convertible Notes, which settlement either satisfies all or a portion
of the Ascent Convertible Notes or extends the maturity date of the Ascent
Convertible Notes to a date at least 90 days after the final maturity date of
the Term B-2 Loans or the New

 

2

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Second Lien Notes, whichever is later (the “Settlement”) or (ii) as part of an
exchange or other similar transaction in lieu of a Settlement which transaction
either refinances, repays, redeems, or repurchases all or a portion of the
Ascent Convertible Notes or extends the maturity date of the Ascent Convertible
Notes to a date at least 90 days after the final maturity date of the Term B-2
Loans or the New Second Lien Notes, whichever is later; provided that any such
distribution from Monitronics to Ascent shall be made solely in the form of
repayment in full satisfaction of the outstanding intercompany loan evidenced by
that certain Amended and Restated Promissory Note, dated as of February 29, 2016
(the “Interco Note”) with such Insurance Proceeds;

 

·                 Monitronics shall not purchase, prepay, redeem or otherwise
retire for cash any of the Notes not exchanged in the Second Lien Exchange;
provided, that immediately prior to the date (or on the date) of either (i) the
springing maturity date of the Term B-2 Loans with respect to non-consenting
Term B-2 Lenders (each as defined below), if any, or (ii) the contractual
maturity date of the Notes, Monitronics may use up to $30,000,000 of cash or any
remaining portion of the New Second Lien Notes to acquire or repay any Stub
Notes;

 

·                 A “Permitted Payments” basket under the indenture for the New
Second Lien Notes shall be included to permit an aggregate annual amount of up
to $10,000,000 to be distributed to Ascent by Monitronics to fund (i) solely
public company and other administrative expenses in an amount not to exceed
$6,000,000 annually and (ii) interest payments solely on the Ascent Convertible
Notes (or any notes or debt instruments exchanged for the Ascent Convertible
Notes) not to exceed $4,000,000 annually; provided, that the amount that may be
distributed in any year shall be reduced on a dollar-for-dollar basis (a) in an
amount equal to any principal payments (but not interest payments which may
continue to be made in the ordinary course of business) made in respect of the
Interco Note in such year (which reduction shall be applied ratably to the
sublimits applicable to the public company expenses and the interest on the
Ascent Convertible Notes), except that no such reduction shall be applied in
connection with any payment in respect of the Interco Note with the Insurance
Proceeds as described above; and (b) in an amount equal to solely the cash
interest payable in respect of any Supplemental Second Lien Notes issued in
accordance with this Term Sheet.  For avoidance of doubt, to the extent that the
cash amount of interest payable on the Ascent Convertible Notes is reduced in
accordance with the foregoing, the Permitted Payments basket shall be reduced by
a corresponding amount. Any cash transferred from Monitronics to Ascent pursuant
to the Permitted Payments basket that is not used for the purposes specified in
the first sentence of this section within 18 months of the distribution thereof
shall be promptly returned to Monitronics; and

 

3

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·                 Credit Agreement covenants (including Section 7.02(d)) shall
be amended to permit the incurrence of unsecured debt solely to refinance debt
of Monitronics which shall be subject to the consent of the Requisite Term B-2
Lenders and the Requisite Consenting Noteholders (which in each case shall not
unreasonably be withheld) with respect to the maturity and the pricing of such
unsecured debt.

 

 

 

Treatment of the Ascent Convertible Notes:

 

To retire the Ascent Convertible Notes, Ascent may use available cash of Ascent
(including proceeds of the repayment of the Interco Loan to the extent permitted
hereunder) and Monitronics may exchange up to $25.0 million of New Second Lien
Notes (subject to the leverage ratio test referenced above).

 

 

 

Consent Solicitation:

 

The tender of any Note into the Second Lien Exchange shall constitute consent to
the proposed amendments to the Notes Indenture which shall include the
elimination or waiver of all, or substantially all, of the restrictive covenants
and events of default under the Notes Indenture.

 

 

 

Amendments to Existing Credit Agreement

 

In connection with the Second Lien Exchange, those lenders under the Term B-2
Loan (the “Term B-2 Lenders”) under the Existing Credit Agreement who consent to
the proposed amendments of the Credit Agreement (the “Bank Amendments”) shall
receive, and the Existing Credit Agreement shall be amended to include:

 

·                 an increase in the interest rate payable in respect of the
Term B-2 loan under the Credit Agreement (the “Term B-2 Loan”) of 100 basis
points to L + 650;

 

·                 an increase in the per quarter amortization payments for two
years commencing on the first quarterly payment date after the effective date of
the amendment such that each quarterly payment in respect of all Term B-2 Loans
shall be equal to $9,375,000 for two years (totaling $75,000,000 in the
aggregate over such two-year period) with such quarterly amortization payments
to be reduced after such two-year period to $2,750,000;

·                 call protection following the amendment effective date as
follows: 102 in the first year, 101 in the second year and par thereafter.

 

In connection with the Second Lien Exchange, those lenders under the Revolving
Loans (the “Revolving Loan Lenders”) under the Existing Credit Agreement who
consent to the Bank Amendments shall receive, and the Existing Credit Agreement
shall be amended to include:

 

·                 an increase in the interest rate payable in respect of the
Revolving Loans under the Existing Credit Agreement of 75 basis points; and

and

·                 permanent reduction of each Revolving Loan Lender’s pro rata
share of the Revolving Credit Commitment from $295,000,000 to $250,000,000.

 

4

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In addition to the foregoing, the Bank Amendments shall include amendments
(i) to provide for (x) termination of the accordion feature of the Term B-2 Loan
reducing such amount from $150,000,000 to $0 and eliminating the ability to
incur Incremental Equivalent Debt under Section 7.02(l)(i) of the Credit
Agreement and (y) termination of the accordion feature of the Revolving Loan
reducing such amount from $20,000,000 to $0 and (ii) to the existing covenants
in the Credit Agreement to facilitate and permit the Second Lien Exchange,
including without limitation:

 

·                 Total Debt to EBITDA ratio of 5.50x (from 5.25x);

·                 Exclusion of the second lien debt from current RMR to Secured
Debt calculation;

·                 LTM pro forma adjustment (add-back) to EBITDA for direct
channel account generation up to $10,000,000;

·                 Covenant amendments to permit creation of New Second Lien
Notes

·                 Covenant amendments consistent with the covenants set forth
above including with respect to amount and conditions of the issuance of the New
Second Lien Notes, use of Insurance Proceeds, acquisition or prepayment of
Notes; and the use of the up to $10,000,000 annual distribution to Ascent;

·                 Carve out for Permitted Payments basket (as described above)
and for the use of up to $30,000,000 in cash to repay (at the times specified
above) any outstanding Senior Notes, after giving effect to the Second Lien
Exchange to avoid the occurrence of the Springing Maturity (as defined below) or
otherwise prior to the maturity date of the Notes;

·                 Elimination of event of default for going concern
qualification to the Monitronics’ audit that results from or is related to the
“springing” maturity of the Existing Credit Agreement obligations associated
with any outstanding Notes (the “Springing Maturity”);

·                 Limit the unsecured debt basket set forth in
Section 7.02(d) of the Credit Agreement to refinancings of debt of Monitronics
only; and

·                 Solely as to the consenting lenders under the Existing Credit
Agreement (and the Consenting Noteholders to the extent applicable), a waiver of
the Springing Maturity where no more than $22,500,000 in principal amount of
Notes remain outstanding at the date of the Springing Maturity.

 

 

 

Ascent Cash Contribution

 

Ascent shall contribute $75,000,000 to Monitronics upon the closing of the
Second Lien Exchange, which contribution shall not increase or provide for any
additional capacity under any of the negative covenants applicable to the Notes
and shall not be used to pre-pay any indebtedness of the Company; provided that
such funds may be used for general working capital purposes and to pay amounts
set forth in the Permitted Payments basket and except as expressly permitted
hereunder.

 

5

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Conditions Precedent to Closing:

 

The closing of the Second Lien Exchange and the Bank Amendments shall be subject
to customary conditions which shall include the following:

 

·                 Definitive Documentation that complies with Section 4 of the
Amended Agreement and shall include an Intercreditor Agreement between the
collateral agent for the lenders under the Existing Credit Agreement and the
collateral agent for the holders of the New Second Lien Notes, which Definitive
Documentation and Intercreditor Agreement shall be in form and substance
reasonably satisfactory to the Requisite Consenting Term B-2 Lenders and the
Requisite Consenting Noteholders;

·                 The Bank Amendments shall be in form and substance reasonably
satisfactory to the Requisite Consenting Noteholders;

·                 Delivery of customary opinions, as reasonably determined by
the parties;

·                 Payment of the reasonable and documented fees and expenses
incurred by the professionals for the Revolving Loan Agent, the Consenting Term
B-2 Lenders, and the Consenting Noteholders; and

·                 Receipt of requisite consents to the Bank Amendments from the
lenders under the Existing Credit Agreement (the “Requisite Consents”).

 

 

 

Unsecured Exchange Transaction Overview

 

 

 

 

 

Unsecured Exchange Transaction for New Senior Unsecured Notes and Cash Tender
Offer:

 

If Monitronics has not received the Requisite Consents by the Toggle Trigger
Time, then Ascent and Monitronics shall offer to exchange, up to $100 million in
cash and/or up to $585 million of New Senior Unsecured Notes (as defined below),
together with the Additional Consideration (as defined below) on the following
basis:

 

·                 Cash Tender/Modified Dutch Auction: Tendered Notes shall be
accepted for purchase by Ascent (such Notes, the “Acquired Notes”) pursuant to a
modified “Dutch Auction” tender offer within a price range of $750 per $1,000
principal amount of Notes to $875 per $1,000 principal amount of Notes.  Notes
will be accepted from the lowest price bid to the highest within the range until
the tender is filled and the maximum participation level has been reached.
Except as provided below with respect to Acquired Notes that may be exchanged by
Ascent for New Senior Unsecured Notes, the Acquired Notes shall be exchanged by
Ascent for new unsecured notes of Monitronics, which shall be expressly
subordinated in right of payment to the New Senior Unsecured Notes and to the
guarantees of the New Senior Unsecured Notes, pay cash interest at 9.125% (no
PIK feature), and will mature no earlier than the New Senior Unsecured Notes. 
Any Notes tendered into the modified Dutch Auction in excess of the maximum
participation level, but not accepted, will be deemed tendered into the exchange
offer described below.

 

6

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·                 Exchange Offer: On or prior to the early tender date, the
Notes shall be exchanged on a par value basis such that for each $1,000
principal of Notes tendered, the holder shall receive New Senior Unsecured Notes
with a par value of $1,000 principal of New Senior Unsecured Notes; and after
the early tender date, but on or before the expiration date of the Unsecured
Exchange Transaction, the Notes shall be exchanged such that for each $1,000
principal of Notes tendered, the holder shall receive New Senior Unsecured Notes
with a par value of $950 principal of New Senior Unsecured Notes.

 

 

 

Additional Consideration

 

Cashlessly exercisable warrants representing in the aggregate 10% of the total
number of outstanding shares of Ascent’s Series A and Series B common stock on a
fully-diluted basis, exercisable for Ascent Series A common stock, with a strike
price of $3.435 per share.

 

 

 

New Senior Unsecured Notes of Monitronics (“New Senior Unsecured Notes”):

 

 

 

 

 

Interest Rate:

 

Monitronics shall pay interest on the New Senior Unsecured Notes, semi-annually,
(a) in cash at a rate per annum equal to 10.125%; plus (b) to be paid in kind
(PIK) at a rate per annum equal to 2.625% subject to a mechanism by which up to
2.375% of the cash interest can toggle to an equivalent amount of PIK interest
through April 30, 2021 based upon an officer’s certificate and a financial test
to ensure compliance with current covenant package under Credit Agreement.

 

 

 

Maturity Date:

 

April 30, 2023

 

 

 

Subsidiary Guarantees, Priority and Related Asset Transfers:

 

Monitronics and all of its restricted subsidiaries that guarantee the
obligations under the Credit Agreement will guarantee the New Senior Unsecured
Notes.  Monitronics and certain of its existing subsidiaries will transfer a
majority of their assets (the “Transferred Assets”) which will include a
majority of their primary revenue-generating contracts to one or more
subsidiaries that guarantee or will guarantee the New Senior Unsecured Notes and
the Credit Agreement, but will be designated as unrestricted under the Notes
Indenture and will not guarantee the Notes.

 

For avoidance of doubt, the Transferred Assets will remain subject to the
security interests granted in connection with the Credit Agreement.

 

 

 

Covenants and Events of Default:

 

Standard and customary covenants and events of default for a transaction of this
kind, nature and size, and the following:

 

·                 Monitronics’ right to issue additional New Senior Unsecured
Notes up to a maximum aggregate principal amount of $585 million, including
those New Senior Unsecured Notes issued as part of the Unsecured Exchange
Transaction, for the sole purpose

 

7

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of refinancing all of the existing Notes subject to pro forma compliance with a
new Total Debt to EBITDA ratio covenant to be set at 5.25 times (which is the
calculated in the same manner as the existing Total Debt to EBITDA covenant);

 

·                 Monitronics’ right to issue New Senior Unsecured Notes in an
aggregate principal amount up to $25 million in exchange for the Acquired Notes
(with Ascent then exchanging such New Senior Unsecured Notes for existing Ascent
Convertible Notes) and for other corporate purposes; and

 

·                 Monitronics’ right to issue additional New Senior Unsecured
Notes (in excess of the cap described above) with the consent of the holders of
a majority of the principal amount of the New Senior Unsecured Notes
outstanding.

 

For the avoidance of doubt, the Permitted Payments basket described above in the
Second Lien Transactions Overview will not apply to the New Senior Unsecured
Notes.

 

 

 

Consent Solicitation:

 

The tender of any Note into the Unsecured Exchange Transaction shall constitute
consent to the proposed amendments to the Notes Indenture which shall include
(i) the elimination or waiver of all or substantially all of the restrictive
covenants and events of default under the Notes Indenture and (ii) the
modification or elimination of other provisions in the Notes Indenture to remove
the subsidiary guarantees granted to the Notes.

 

 

 

Conditions Precedent to Closing:

 

The closing of the Unsecured Exchange Transaction shall be subject to customary
conditions which shall include the following:

 

·                 Definitive Documentation that complies with Section 4 of the
Agreement;

·                 Participation of the Consenting Noteholders, subject to the
terms of the Agreement; and

·                 Delivery of customary opinions, as reasonably determined by
the parties.

 

8

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Exhibit B-1 to the Amended and Restated Transaction Support Agreement

 

Form of Transferee Joinder

 

This joinder (this “Joinder”) to the Amended and Restated Transaction Support
Agreement (as amended, amended and restated, supplemented or otherwise modified
from time to time in accordance with the terms thereof, the “Amended
Agreement”), dated as of [DATE], by and among:  (i) Ascent and Monitronics,
(ii) the Consenting Noteholders thereunder, and (iii) the Consenting Term B-2
Lenders thereunder, is executed and delivered by [                            ]
(the “Joining Party”) as of [                                 ].  Each
capitalized term used herein but not otherwise defined shall have the meaning
ascribed to it in the Amended Agreement.

 

1.                                      Agreement to be Bound.  The Joining
Party hereby acknowledges that it has read and understands the Amended Agreement
(including the exhibits and schedules attached thereto, which includes, without
limitation, the Term Sheet) and agrees to be bound by all of the terms of the
Amended Agreement, a copy of which is attached to this Joinder as Annex 1 (as
the same has been or may be hereafter amended, restated, supplemented or
otherwise modified from time to time in accordance with the provisions
thereof).  The Joining Party shall hereafter be deemed to be a Party for all
purposes under the Amended Agreement and one or more of the entities comprising
the Consenting Noteholders.

 

2.                                      Representations and Warranties.  The
Joining Party hereby represents and warrants to each other Party to the Amended
Agreement that, as of the date hereof, such Joining Party (a) is the legal or
beneficial holder of, and has all necessary authority (including authority to
bind any other legal or beneficial holder) with respect to the Notes identified
below its name on the signature page hereto, and (b) makes, as of the date
hereof, the representations and warranties set forth in Section 17 of the
Amended Agreement to each other Party.

 

3.                                      Governing Law.  This Joinder shall be
governed by and construed in accordance with the internal laws of the State of
New York, without regard to any conflicts of law provisions which would require
the application of the law of any other jurisdiction.

 

4.                                      Notice.  All notices and other
communications given or made pursuant to the Amended Agreement shall be sent to:

 

To the Joining Party at:

 

[JOINING PARTY]
[ADDRESS]
Attn:
Facsimile: [FAX]
EMAIL:

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as
of the date first written above.

 

 

Name of Transferor:

 

 

 

 

 

 

Name of Joinder Party:

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

Principal Amount of Notes:

 

 

 

$

 

--------------------------------------------------------------------------------

 

Annex 1 to the Form of Transferee Joinder

 

34

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Exhibit B-2 to the Amended and Restated Transaction Support Agreement

 

Form of Loan Transferee Joinder

 

This joinder (this “Joinder”) to the Amended and Restated Transaction Support
Agreement (as amended, amended and restated, supplemented or otherwise modified
from time to time in accordance with the terms thereof, the “Amended
Agreement”), dated as of [DATE], by and among:  (i) Ascent and Monitronics,
(ii) the Consenting Noteholders thereunder, and (iii) the Consenting Term B-2
Lenders is executed and delivered by [                            ] (the
“Joining Party”) as of [                          ].  Each capitalized term used
herein but not otherwise defined shall have the meaning ascribed to it in the
Amended Agreement.

 

1.                                      Agreement to be Bound.  The Joining
Party hereby acknowledges that it has read and understands the Amended Agreement
(including the exhibits and schedules attached thereto, which includes, without
limitation, the Term Sheet) and agrees to be bound by all of the terms of the
Amended Agreement, a copy of which is attached to this Joinder as Annex 1 (as
the same has been or may be hereafter amended, restated, supplemented or
otherwise modified from time to time in accordance with the provisions
thereof).  The Joining Party shall hereafter be deemed to be a Party for all
purposes under the Amended Agreement.

 

2.                                      Representations and Warranties.  The
Joining Party hereby represents and warrants to each other Party to the Amended
Agreement that, as of the date hereof, such Joining Party (a) is the legal or
beneficial holder of, and has all necessary authority (including authority to
bind any other legal or beneficial holder) with respect to the Term B-2 Loans
identified below its name on the signature page hereto, and (b) makes, as of the
date hereof, the representations and warranties set forth in Section 17 of the
Amended Agreement to each other Party.

 

3.                                      Governing Law.  This Joinder shall be
governed by and construed in accordance with the internal laws of the State of
New York, without regard to any conflicts of law provisions which would require
the application of the law of any other jurisdiction.

 

4.                                      Notice.  All notices and other
communications given or made pursuant to the Amended Agreement shall be sent to:

 

To the Joining Party at:

 

[JOINING PARTY]
[ADDRESS]
Attn:
Facsimile: [FAX]
EMAIL:

 

35

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as
of the date first written above.

 

 

Name of Transferor:

 

 

 

 

 

 

Name of Joinder Party:

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

Principal Amount of Term B-2 Loans:

 

 

 

$

 

--------------------------------------------------------------------------------

 

Annex 1 to the Form of Loan Transferee Joinder

 

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