<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 9, 1997
REGISTRATION NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
CCA HOLDINGS CORP.
CCA ACQUISITION CORP.
CENCOM CABLE ENTERTAINMENT, INC.
CHARTER COMMUNICATIONS ENTERTAINMENT, L.P.
(Exact Name of Registrants, as Specified in Their Charters)
DELAWARE [4841] [43-1720013]
DELAWARE [4841] [43-1696238]
DELAWARE [4841] [43-1258015]
DELAWARE [4841] [43-1723475]
(State or Other (Primary Standard (I.R.S. Employer
Jurisdiction of Industrial Identification Number)
Incorporation or Classification Code
Organization) Number)
12444 POWERSCOURT DRIVE, SUITE 400
ST. LOUIS, MISSOURI 63131
(314) 965-0555
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrants' Principal Executive Offices)
----------------
MARCY LIFTON, ESQ. COPIES TO:
CHARTER COMMUNICATIONS, INC. JOEL M. SIMON, ESQ.
12444 POWERSCOURT DRIVE, SUITE 400 PAUL, HASTINGS, JANOFSKY & WALKER
ST. LOUIS, MISSOURI 63131 LLP
(314) 965-0555 399 PARK AVENUE
NEW YORK, NEW YORK 10022
(Name, Address, Including Zip Code, (212) 318-6000
and Telephone Number,
Including Area Code, of Agent For
Service)
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM
AMOUNT OFFERING AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF TO BE PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PER UNIT(2) PRICE(2) FEE
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Senior Subordinated Notes
due 1999(3).............. $82,000,000 100% $82,000,000 $24,848
</TABLE>
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(1) Estimated solely for purposes of calculating the registration fee.
(2) Exclusive of accrued interest.
(3) Issued by CCA Holdings Corp. and guaranteed by CCA Acquisition Corp.,
Cencom Cable Entertainment, Inc. and Charter Communications Entertainment,
L.P..
The registrants hereby amend this registration statement on such date or
dates as may be necessary to delay its effective date until the registrants
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the registration statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
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- -------------------------------------------------------------------------------
<PAGE>
CCA HOLDINGS CORP.
CCA ACQUISITION CORP.
CENCOM CABLE ENTERTAINMENT, INC.
CHARTER COMMUNICATIONS ENTERTAINMENT, L.P.
CROSS-REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K AND RULE 404(A)
SHOWING LOCATION IN PROSPECTUS OF
INFORMATION REQUIRED BY ITEMS IN S-4
<TABLE>
<CAPTION>
REGISTRATION STATEMENT ITEM AND HEADING PROSPECTUS CAPTION
- --------------------------------------- ------------------
<S> <C>
1. Forepart of Registration Statement
and Outside Front Cover Page of Forepart of the Registration
Prospectus........................ Statement; Outside Front Cover Page of
Prospectus
2. Inside Front and Outside Back Cover
Pages of Prospectus............... Inside Front and Outside Back Cover
Pages of Prospectus
3. Risk Factors, Ratio of Earnings to
Fixed Charges and Other Summary; Risk Factors; Unaudited
Information....................... Summary Historical and Unaudited Pro
Forma Financial Data of CCA and
Subsidiaries; Unaudited Pro Forma
Financial Statements
4. Terms of the Transaction........... Summary; The Exchange Offer
5. Pro Forma Financial Information.... Unaudited Summary Historical and
Unaudited Pro Forma Financial Data of
CCA and Subsidiaries; Unaudited Pro
Forma Financial Statements;
Supplemental Selected Historical
Combined Financial Data
6. Material Contracts with Company
Being Acquired...................... Not Applicable
7. Additional Information Required for
Reoffering by Persons and Parties
Deemed to be Underwriters......... Not Applicable
8. Interests of Named Experts and
Counsel............................. Not Applicable
9. Disclosure of Commission Position
on Indemnification for Securities
Act Liabilities................... Not Applicable
10. Information With Respect to S-3
Registrants......................... Not Applicable
11. Incorporation of Certain
Information by Reference............ Not Applicable
12. Information with Respect to S-2 or
S-3 Registrants..................... Not Applicable
13. Incorporation of Certain
Information by Reference............ Not Applicable
14. Information with Respect to
Registrants Other than Prospectus Summary; Supplemental
S-2 or S-3 Registrants............ Selected Historical Combined Financial
Data; Unaudited Pro Forma Financial
Statements; Management's Discussion
and Analysis of Financial Condition
and Results of Operations; Business
15. Information with Respect to S-3
Companies........................... Not Applicable
16. Information with Respect to S-2 or
S-3 Companies....................... Not Applicable
17. Information with Respect to
Companies Other than S-2 or S-3
Companies......................... Not Applicable
18. Information if Proxies, Consents or
Authorizations are to be
Solicited......................... Not Applicable
19. Information if Proxies, Consents or
Authorizations are not to be Management; Certain Relationships and
Solicited or in an Exchange Related Transactions; The Exchange
Offer............................. Offer
</TABLE>
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED MAY 9, 1997
CCA HOLDINGS CORP. [LOGO] CHARTER
CCA ACQUISITION CORP. COMMUNICATIONS
CENCOM CABLE ENTERTAINMENT, INC.
CHARTER COMMUNICATIONS ENTERTAINMENT, L.P.
OFFER TO EXCHANGE
SERIES B SENIOR SUBORDINATED NOTES DUE 1999
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT
FOR ANY AND ALL OF ITS OUTSTANDING
SERIES A SENIOR SUBORDINATED NOTES DUE 1999
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK TIME, ON , 1997,
UNLESS EXTENDED (THE "EXPIRATION DATE").
CCA Holdings Corp., a Delaware corporation (the "Issuer" or "CCA"), hereby
offers, upon the terms and subject to the conditions set forth in this
Prospectus and the accompanying Letter of Transmittal, as the same may be
amended or supplemented from time to time (which together constitute the
"Exchange Offer"), to issue an aggregate of up to $82,000,000 principal amount
of Series B Senior Subordinated Notes due 1999 (the "New Notes") in exchange
for an identical face amount of outstanding Series A Senior Subordinated Notes
due 1999 (the "Old Notes" and, with the New Notes, the "Notes"). The terms of
the New Notes are identical in all material respects to the terms of the Old
Notes except that the registration and other rights relating to the exchange of
Old Notes for New Notes and the restrictions on transfer set forth on the face
of the Old Notes will not appear on the New Notes. See "The Exchange Offer."
The New Notes are being offered hereunder in order to satisfy certain
obligations of the Issuer under a letter agreement dated as of November 15,
1996 (the "Letter Agreement"). Based on an interpretation by the staff of the
Securities and Exchange Commission (the "Commission") set forth in no-action
letters issued to third parties unrelated to the Issuer and the Guarantors (as
defined below), New Notes issued pursuant to the Exchange Offer in exchange for
Old Notes may be offered for resale, resold, and otherwise transferred by a
holder thereof (other than a holder which is an "affiliate" of the Issuer or
any of the Guarantors (as defined below) within the meaning of Rule 405 under
the Securities Act of 1933, as amended (the "Securities Act")), without
compliance with the registration and (except as provided below) the prospectus
delivery provisions of the Securities Act, provided that such New Notes are
acquired in the ordinary course of such holder's business and such holder has
no arrangement with any person to participate in or is engaged in or is
planning to be engaged in the distribution of such New Notes.
The Notes are unsecured obligations of the Issuer and are subordinated in
right and priority of payment to all existing and future indebtedness of the
Issuer, other than indebtedness that by its terms is expressly subordinated to
the Notes. The obligations on the Notes are guaranteed (the "Guarantees") as
set forth herein on a subordinated basis by two subsidiaries ("CAC" and "Cencom
Cable") of the Issuer and by a limited partnership ("CCE, L.P.") in which the
Issuer owns indirect limited and general partnership interests (collectively,
the "Guarantors"). The Issuer and the Guarantors are holding companies that
currently conduct substantially all their business through two limited
partnerships ("CCE-I" and "CCE-II"); the Issuer and one of the Guarantors
control CCE-I (and neither the Issuer nor any of the Guarantors controls CCE-
II). Because the Issuer and the Guarantors currently do not have any other
assets which generate revenue or distributions, the Issuer and the Guarantors
are dependent primarily upon distributions from CCE-I and its subsidiaries to
service the Notes and the Guarantees. The receipt of such distributions by the
Issuer are governed by the terms of the CCE, L.P. Partnership Agreement (as
defined herein). See "CCE, L.P. Transaction--The Partnership Agreements." The
Notes, except under certain limited circumstances, will not have the benefit of
distributions from CCE-II or any other affiliates of the Issuer or the
Guarantors. The Guarantees, by their terms, are limited to the proceeds of
distributions received by the Guarantors from CCE-I. The CCE, L.P. Guarantee
cannot be enforced until the repayment in full and termination of the CCE-I
Credit Facility and the CCE-II Credit Facility (as defined herein), and any
other senior indebtedness of CCE-II and senior indebtedness of New CCE
Subsidiaries (as defined herein). The Guarantees issued by CAC and Cencom Cable
cannot be enforced until the repayment in full and termination of the CCE-I
Credit Facility (as defined herein). As of December 31, 1996, the Issuer's and
the Guarantors' only indebtedness other than the Notes was approximately $55.5
million of deferred income taxes. As of December 31, 1996, the aggregate
indebtedness of CCE-I (including current liabilities of approximately $28.9
million and other long-term liabilities of approximately $2.5 million) was
approximately $493.5 million. Except for certain fees and expenses payable or
which may become payable by the Company (as defined herein) on an ongoing basis
as described herein, the Company will not make any distributions or advances,
by dividend or otherwise, to any of its shareholders before the Notes are
repaid in full. See "Prospectus Summary--The Company," and "--Organizational
Structure."
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. The Letter of Transmittal states
that by so acknowledging and by delivering a prospectus, a broker-dealer will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be amended or supplemented from time
to time, may be used by a broker-dealer in connection with resales of New Notes
received in exchange for Old Notes where such Old Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities. The Issuer has agreed that, for a period of 180 days after the
effective date hereof, it will make the Prospectus available to any broker-
dealer for use in connection with any such resale. See "The Exchange Offer."
The Issuer will not receive any proceeds from the Exchange Offer. HC Crown
Corp. ("HC Crown," an affiliate of Hallmark Cards, Incorporated, which
previously purchased the Notes from the Issuer) will pay all the expenses
incident to the Exchange Offer. Tenders of Old Notes pursuant to the Exchange
Offer may be withdrawn at any time prior to the Expiration Date. If the Issuer
terminates the Exchange Offer and does not accept for exchange any Old Notes,
it will promptly return the Old Notes to the holders thereof. See "The Exchange
Offer."
Prior to this Exchange Offer, there has been no public market for the Old
Notes or the New Notes. To the extent that Old Notes are tendered and accepted
in the Exchange Offer, a holder's ability to sell untendered Old Notes could be
adversely affected. If a market for the New Notes should develop, the New Notes
could trade at a discount from their principal amount. The Issuer does not
currently intend to list the New Notes on any securities exchange or to seek
approval for quotation through any automated quotation system; however, the
Notes have been designated for trading in the PORTAL market. There can be no
assurance that an active public market for the New Notes will develop.
The Exchange Agent for the Exchange Offer is Harris Trust and Savings Bank.
SEE "RISK FACTORS" BEGINNING ON PAGE 24 FOR A DESCRIPTION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED IN CONNECTION WITH THE EXCHANGE OFFER.
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is June , 1997.
<PAGE>
STATEMENT OF AVAILABLE INFORMATION
The Issuer and the Guarantors have filed with the Commission a Registration
Statement on Form S-4 with respect to the New Notes being offered hereby
(including all exhibits and amendments thereto, the "Registration Statement").
This Prospectus, which constitutes a part of the Registration Statement, does
not contain all the information set forth in the Registration Statement and
the exhibits and schedules thereto, certain portions of which have been
omitted pursuant to the rules and regulations of the Commission. For further
information with respect to the Issuer and the Guarantors and the securities
offered hereby, reference is made to the Registration Statement and to the
exhibits filed therewith. Statements made in this Prospectus as to the
contents of any contract or other document referred to are not necessarily
complete and, where applicable reference is made to the copy of such contract
or other document filed as an exhibit to the Registration Statement, each such
statement is qualified by such reference.
As a result of the filing of the Registration Statement, the Company will
become subject to the periodic reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith will be required to file reports and other information with the
Commission. Such reports, the Registration Statement and other information may
be inspected and copied, at prescribed rates, at the public reference
facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, at the regional offices of the
Commission located at Seven World Trade Center, New York, New York 10048, and
at 500 West Madison Street, Suite 1400 Northwestern Atrium Center, Chicago,
Illinois 60611. Copies of such material may also be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549 at prescribed rates.
The duty to file reports and other information with the Commission will be
automatically suspended as to any fiscal year, after the fiscal year ended
December 31, 1997, during which the Notes are held of record by fewer than 300
persons. In the event the Company is not subject to the reporting requirements
of the Exchange Act at any time following the consummation of the Exchange
Offer, the Company will be required under the Indenture, dated as of February
13, 1997 (the "Indenture"), among the Issuer, the Guarantors and Harris Trust
and Savings Bank, as trustee (the "Trustee"), pursuant to which the Old Notes
were, and the New Notes will be, issued, to deliver to the Trustee and each
holder of $1.0 million or more in unpaid principal amount of the Notes the
following information and reports: (a) within 45 days after the last day of
each quarter (other than the fourth quarter) in each fiscal year, the
unaudited consolidated statement of operations and statement of cash flows of
the Issuer for such quarterly period and for the period from the beginning of
the fiscal year to the end of such quarter and the unaudited consolidated
balance sheet of the Issuer as of the end of such quarter period; and (b)
within 90 days after the end of each fiscal year, the consolidated statements
of operations, shareholders' investment and cash flows of the Issuer for such
fiscal year, and the consolidated balance sheet of the Issuer as of the end of
such fiscal year. Certain other information and reports shall also be
delivered to the Trustee and the holders. Such information will be made
available upon request, which should be directed to the Secretary of the
Company at 12444 Powerscourt Drive, Suite 400, St. Louis, Missouri 63131
(telephone number: (314) 965-0555).
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus. As used in this Prospectus, unless the context
otherwise requires, the term (i) "Issuer" or "CCA" refers to CCA Holdings Corp.
and (ii) "Company" refers collectively to (a) CCA, and (b) CCA's direct and
indirect consolidated and unconsolidated subsidiaries, including CAC, Cencom
Cable, CCE, L.P., CCE-I, CCE-II and CC Radio. The term "CAC" refers to CCA
Acquisition Corp., "Cencom Cable" refers to Cencom Cable Entertainment, Inc.,
"CCE, L.P." refers to Charter Communications Entertainment, L.P., "CCE-I"
refers to Charter Communications Entertainment I, L.P., "CCE-II" refers to
Charter Communications Entertainment II, L.P., "CC Radio" refers to Charter
Communications Radio St. Louis, LLC, and "CASTL" refers to Cable Advertising
St. Louis, L.L.C. CCE-I and CCE-II are collectively referred to herein as the
"Operating Entities." All of the foregoing entities, excluding CCE-II and any
other affiliated entities that are not controlled by the Issuer or the
Guarantors, but including CCE, L.P., are sometimes collectively referred to as
the "CCE-I Entities." See "Business--Background and Ownership Structure." A
glossary of certain other terms appearing herein has been included in this
Prospectus. See "Glossary."
The Notes will be repaid by distributions to the Issuer from CAC, which CAC
shall receive primarily from Cencom Cable, CCE, L.P. and CCE-I. Distributions
made by Cencom Cable and CCE, L.P. will be made primarily from distributions
received from CCE-I. Subject to certain limited exceptions, CCE-I may only make
distributions once the obligations in respect of the senior credit facility of
CCE-I (including any amendments or extensions or renewals of the commitments
thereunder, the "CCE-I Credit Facility") are indefeasibly paid in full in cash
and all commitments to lend in respect thereof are terminated. Although the
CCE-I Credit Facility restricts CCE-I's ability to incur additional
indebtedness, such restriction can be amended by mutual agreement of the
lenders thereto and the obligors thereunder, without the consent of the
holders. The benefit of distributions from CCE-II, if any, will not be
available until the obligations under both the senior credit facility of CCE-II
(including any amendments or extensions or renewals of the commitments
thereunder, and including the commitments, and any amendments or extensions or
renewals thereof, under the Long Beach Credit Facility (as defined herein), the
"CCE-II Credit Facility"), the California Note (as defined herein), and any
other indebtedness of CCE-II are indefeasibly paid in full in cash and all
commitments to lend in respect of the CCE-II Credit Facility and any other
indebtedness of CCE-II are terminated. Therefore, the presentation of
information regarding the Company herein focuses on the CCE-I Entities. Holders
of the Notes may ultimately benefit from distributions from CCE-II, but should
not rely on distributions from CCE-II for payment of principal or interest on
the Notes. Subject to certain restrictions, CCE, L.P. may establish new
subsidiaries (the "New CCE Subsidiaries") from time to time, which could have
financing arrangements that result in the sharing with other creditors of
distributions to CCE, L.P. from CCE-II and/or such New CCE Subsidiaries. See
"The Crown Transaction, Issuance of the Notes and Subordination Agreement--The
Partnership Agreements" and "Certain Relationships and Related Transactions--
The Partnership Agreements," "Description of Notes--General" and "Description
of Notes--Partnership Agreements" and "Description of Notes--Certain
Covenants."
3
<PAGE>
THE COMPANY
The Company's principal business is the ownership, operation and development
of cable television systems, which it currently conducts through two principal
operating entities, CCE-I and CCE-II. CCE-I owns, operates and develops cable
television systems in the St. Louis, Missouri metropolitan area including
southwestern Illinois and in certain rural and suburban areas in Connecticut
and Massachusetts ("CCE-I Systems"). As of December 31, 1996, CCE-I's cable
television systems passed approximately 533,600 homes and served approximately
338,300 basic subscribers in western and northeastern Connecticut,
Massachusetts, eastern Missouri and southwestern Illinois. CCE-II owns,
operates and develops cable television systems in metropolitan areas of
southern California ("CCE-II Systems"). As of December 31, 1996, CCE-II's cable
television systems passed approximately 425,300 homes and served approximately
168,100 basic subscribers in southern California. CCE-I's and CCE-II's
operations are managed by Charter Communications, Inc. ("Charter"), a
privately-held owner and manager of cable television systems. As of December
31, 1996, Charter managed cable television systems which serve approximately
971,000 basic subscribers (including the Company's subscribers). Assuming
completion of all publicly announced cable television industry transactions,
management believes that Charter would be the 13th largest multiple system
operator ("MSO") in the United States based on number of basic subscribers. The
Company seeks to own and operate cable television systems serving an increased
number of basic subscribers in the regions in which its cable television
systems are presently located.
The Issuer commenced operations in January 1995 in connection with
consummation of the Crown Transaction (as defined herein, see "--The Crown
Transaction, Issuance of the Notes and the Subordination Agreement--The Crown
Transaction"), which included the purchase of the Crown Connecticut Systems (as
defined herein) and the acquisition of Cencom Cable, an existing operator of
cable systems in St. Louis. The cable television systems currently comprising
CCE-I's operations were initially acquired pursuant to the Crown Transaction
and as a result of several additional acquisitions completed in 1995 and 1996.
The financial information contained herein with respect to periods prior to
such acquisitions does not reflect any changes in the operation or management
of such systems that CCE-I or the Company have implemented since the date of
acquisition or that they intend to implement in the future; thus, this
financial information is not necessarily indicative of the results of
operations that would have been achieved had the systems been operated by the
Company during all of the periods with respect to which financial information
is presented herein or which may be achieved in the future.
CCE-I owns and operates cable television systems which lie principally within
two regions: northeastern and western Connecticut and central Massachusetts
(the "Northeast Region"); and eastern Missouri and southwestern Illinois (the
"Central Region" and collectively with the Northeast Region, the "Regions").
CCE-II owns and operates cable television systems which lie principally within
southern California.
The Company's cable television systems in the Northeast Region passed
approximately 138,700 homes and served approximately 115,000 basic subscribers
as of December 31, 1996. The Northeast Region is more diverse geographically
than the Central Region, and consists of (i) the Newtown cluster in Connecticut
(which includes 14 contiguous towns southwest of Hartford, Connecticut), and
tends to be more affluent than other clusters within the Northeast Region, (ii)
the Willimantic cluster, which includes 16 contiguous suburban and rural towns
northeast of Hartford, and (iii) smaller clusters in Massachusetts consisting
of rural communities near and suburbs of the cities of Boston, Springfield and
Worcester, Massachusetts and Providence, Rhode Island.
The Company's cable television systems in the Central Region passed
approximately 394,900 homes and served approximately 223,300 basic subscribers
in suburban St. Louis as of December 31, 1996. The Central Region does not
include the City of St. Louis, but includes contiguous suburbs within other
portions of St. Louis County and neighboring cities in eastern Missouri and
southwestern Illinois. The Company, through CC Radio, owns a radio station in
St. Louis. On January 27, 1997, the Company entered into an agreement to sell
its interest in CC Radio, subject to regulatory approval, and expects to
complete the sale in the second or third quarter of 1997. Since January 27,
1997, the radio station has been operated by the purchaser pursuant to a
management agreement.
4
<PAGE>
Organizational Structure
The capital stock of the Issuer is owned 85% by Kelso Investment Associates
V, L.P., an investment fund, together with an affiliate (collectively, "Kelso")
and certain other individuals; and 15% by Charter, with distributions on exit
varying depending on the rates of return on the stockholders' equity investment
in the Issuer. Kelso and certain other individuals have invested an aggregate
of $68.0 million and $17.0 million in the Issuer and CCT Holdings Corp.
("CCT"), respectively, and Charter has invested an aggregate of $12.0 million
and $3.0 million in the Issuer and CCT, respectively. Except for management
fees and financial advisory fees and related expenses payable or which may
become payable by the Company to Charter and Kelso & Company (an affiliate of
Kelso) on an on-going basis and investment banking fees payable to such
entities under certain circumstances, the Company will not make any
distributions or advances, by dividend or otherwise, to either Charter or Kelso
before the Notes are repaid in full. See "Certain Relationships and Related
Transactions--Management Agreements-- Transaction Fees" and "Description of
Notes--Transactions with Affiliates." The Issuer holds through CAC a 1% general
partnership interest in CCE, L.P. and a 1.22% general partnership interest in
CCE-I. As of April 30, 1997, the organizational structure of the Company and
certain of its affiliates is as follows:
[ORGANIZATIONAL FLOW CHART]
5
<PAGE>
Priority of CCE-I and CCE-II Distributions
The Company conducts business principally through CCE-I and CCE-II, each of
which maintains a credit facility with certain lenders and is the indirect
obligor under certain promissory notes issued in partial payment of the
purchase price for the acquisition of certain assets as described herein.
After the obligations in respect of the CCE-I Credit Facility are
indefeasibly paid in full in cash and all commitments to lend in respect
thereof are terminated, CCE-I will be permitted to make distributions to CCE,
L.P., which in turn will make distributions of such funds to Cencom Cable and
CAC for distribution to the Issuer. Distributions made by CCE-II will not be
available to repay the Notes until the obligations under the CCE-II Credit
Facility, the California Note (as defined herein) and any other indebtedness of
CCE-II are indefeasibly paid in full in cash and all commitments to lend in
respect of the CCE-II Credit Facility or any other indebtedness of CCE-II are
terminated. Distributions made by CCE-I and CCE-II will be directed to the
Issuer in a manner consistent with the foregoing priorities pursuant to the
agreement of limited partnership of CCE, L.P. (the "CCE, L.P. Partnership
Agreement"). Subject to certain restrictions, the CCE, L.P. Partnership
Agreement may be amended to enable CCE, L.P. to establish New CCE Subsidiaries.
Subject to certain restrictions, CCE, L.P. may establish New CCE Subsidiaries
from time to time, which could have financing arrangements that result in the
sharing with other creditors of distributions to CCE, L.P. from CCE-II and/or
such New CCE Subsidiaries. See "Certain Relationships and Related
Transactions--the Partnership Agreements," "Description of Other Indebtedness,"
"Description of Notes--General," "Description of Notes--Partnership Agreements"
and "Description of Notes--Certain Covenants." In addition, the Guarantee
issued by CCE, L.P. is limited exclusively to funds received by CCE, L.P. from
CCE-I. Except as otherwise described herein, no funds from CCE-II or the New
CCE Subsidiaries will be available should payment be sought under the
Guarantees. See "Description of Notes--Guarantees." Any payment made on the
Guarantee issued by CCE, L.P. (i) would result in an event of default under the
California Note (as defined herein), and such an event of default would result
in a default under the CCE-II Credit Facility and (ii) could result in a
default under any senior credit facility or other financing arrangement of a
New CCE Subsidiary. In addition the Subordination Agreement (as defined herein)
limits the ability of the Guarantees to be enforced. See "--The Crown
Transaction, Issuance of the Notes and the Subordination Agreement" in this
Prospectus Summary.
BUSINESS STRATEGY
Management believes clustered cable television systems offer significant
growth opportunities, and management's principal objective is to increase the
Company's operating cash flow by capitalizing upon such opportunities. To
achieve its objective, the Company has pursued the following business
strategies:
Cluster Through Strategic Acquisitions in Metropolitan Markets
The Company has sought to "cluster" its cable systems in suburban and ex-
urban areas surrounding selected metropolitan markets. Management believes that
such clustering offers significant opportunities to increase operating
efficiencies and to improve operating margins and cash flow by spreading the
Company's fixed costs over an expanding subscriber base. In addition,
management believes that by concentrating its clusters in metropolitan markets,
the Company will be able to generate higher growth in revenues and operating
cash flow. Such metropolitan markets, because of their concentration of
businesses and population, offer greater opportunities for advertising sales
and telecommunications services such as competitive access service. In
addition, because disposable income levels in many areas served by the
Company's cable systems are generally higher than the national average,
management believes that the Company will benefit from the opportunity to
generate enhanced revenues from existing video services, such as pay television
and pay-per-view services, as well as from future services, such as video-on-
demand and Internet access services.
Through strategic acquisitions, the Company seeks to enlarge the coverage of
its current areas of operations, and if feasible, develop clusters in new
geographic areas within existing regions. In developing and enhancing cable
system clusters, the Company's acquisition strategy is opportunistic and
depends in large part upon which
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cable systems become available in the marketplace. Because many of the
Company's operating areas include other significant cable operators with nearby
systems, marketplace availability and pricing may be heavily influenced by the
interest level of other potential purchasers. This strategy is also subject to
the changing competitive telecommunications market.
In determining whether to acquire a particular system, the Company evaluates,
among other things, the (i) location, size and strategic fit of the system with
the Company's existing operations, (ii) technical quality of the system and
anticipated capital expenditure requirements which may be necessary to comply
with franchising requirements or to upgrade systems to satisfy the Company's
operating standards, (iii) demographic trends of the market, (iv) existing and
potential competition in the market, (v) price of the system relative to other
characteristics of the system and (vi) number of years remaining until the
system's franchises must be renewed, along with the seller's relationship with
the relevant franchising authorities. By virtue of its relationship with
Charter, management believes that the Company has increased access to
acquisition opportunities that might otherwise not be available to a company of
comparable size. The Company is not currently a party to any letter of intent
or definitive agreement with respect to any acquisitions. From time to time,
the Company reviews and analyzes potential acquisitions, which may include the
acquisition of other cable systems managed by Charter or as to which Charter
has secured purchase rights. The Company anticipates that future acquisitions
will be financed with additional debt, or, depending on the size and
circumstances of the acquisition, possibly with additional equity.
Realize Operating Efficiencies
Each of the Company's regions has centralized management and offers certain
services that benefit the clusters and all customers within the region. By
establishing such clusters, the Company is typically able to create regional
customer service centers and establish centralized administration and
technological support for local management, which enables the Company to
eliminate duplicative management personnel and operations. After consummating
an acquisition from an independent third party, the Company incorporates the
system within the existing centralized network of operational and
organizational functions. By combining the acquired systems with an existing
cluster, or by adding a new cluster within an existing regional structure, the
Company is able to reduce the operating costs of the system it acquires, and at
the same time, spread its fixed costs over an expanded subscriber base and
thereby improve operating cash flow and margins.
Focus on the Customer
The Company continually seeks to improve its understanding of, and
relationship with, its customers. The Company's emphasis on customer
satisfaction is evident in its customer service policies, marketing,
programming and technological plans. The Company seeks to provide a high level
of customer service by employing a well-trained staff of customer service
representatives and experienced field technicians. Upon acquisition of a new
system, the Company implements a 24-hour customer service hotline, provides
completed repair service in 24 hours (with in excess of 90% of "no picture"
problems solved on the same day as reported) and also offers an installation
and service guarantee within a two-hour window period. Management believes that
the level of customer service provided by the Company to subscribers gained
through acquisitions is generally better than that provided by previous owners
of the systems acquired. The Company's programming packages offer different
pricing options, including special value packages and add-on services. From a
technological standpoint, the Company focuses on its customers through its
emphasis on service reliability, improved picture quality and expanded channel
capacity. In making any operational or organizational changes, the Company
attempts to maintain strong community relations and enhance customer service.
The Company is also working with Charter to develop a database that will assist
management with its evaluation of the potential demand by existing and
prospective customers for home entertainment, educational services and data
transmission. Management believes this focus on the customer will, over time,
increase both subscriber penetration and revenue per subscriber.
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Maximize Benefits Provided by Relationship with Charter
The Company receives significant benefits from its relationship with Charter.
The Company benefits from the financial and operational expertise of Charter's
principals (Barry L. Babcock, Jerald L. Kent and Howard L. Wood) and their
familiarity with those of the Company's systems previously owned by a
predecessor entity of the Company (the senior management team of which such
individuals were a part). As of December 31, 1996, a majority of CCE-I's
subscribers were served by systems formerly owned and operated by such
predecessor entity. The Company also benefits from Charter's membership in the
TeleSynergy programming cooperative, which offers its members certain
programming benefits. Charter's prominence as one of the larger MSOs in the
United States has also increased the Company's opportunities to investigate
potential acquisitions, access debt financing and equity capital, and obtain
marketing support and discounts on cable system equipment.
The ten individuals principally responsible for the Company's operations
(including Barry L. Babcock, Jerald L. Kent and Howard L. Wood, the co-founders
of Charter) have more than 100 years of collective experience in the cable
television industry. Messrs. Babcock, Kent and Wood formerly served as members
of the senior management team of Cencom Cable Associates, Inc., which, during
the nine year period prior to its sale in 1991 to Crown Media, Inc., purchased
and developed the cable systems formerly owned by Cencom Cable. See "Business--
Business Strategy--Maximize Benefits Provided by Relationship with Charter." In
addition, Kelso and certain other individuals have invested approximately $68.0
million in the Issuer. As a result of such investment, Kelso and such
individuals own directly or indirectly 85% of the outstanding equity interests
in the Issuer, with distributions on exit varying depending on the rate of
return on the stockholders' equity investment in the Issuer. See "Risk
Factors--Control of the Issuer and the Company by Kelso."
THE CROWN TRANSACTION, ISSUANCE OF THE NOTES AND THE SUBORDINATION AGREEMENT
The Crown Transaction
In January 1995, the Company completed stock and asset acquisitions (the
"Crown Transaction") from HC Crown and certain of its affiliates related to
cable television systems. The cable television systems acquired in the Crown
Transaction serve communities in St. Louis County, Missouri (the "Crown
Missouri Systems") and in western and northeastern Connecticut (the "Crown
Connecticut Systems"). The aggregate purchase price of the Crown Missouri
Systems and the Crown Connecticut Systems was approximately $488.2 million,
including related acquisition fees and expenses, and was a substantial
component of a larger transaction in which HC Crown sold all of its cable
television systems to a group of investors. Upon the completion of the Crown
Transaction, the Crown Connecticut Systems were owned by CAC, a wholly owned
subsidiary of the Issuer, and the Crown Missouri Systems were owned by Cencom
Cable, a wholly owned subsidiary of CAC. The Crown Connecticut Systems and the
Crown Missouri Systems were contributed by CAC and Cencom Cable to CCE-I in
September 1995 concurrently with the consummation of the California Transaction
(as defined herein) and in connection therewith, CCE-I assumed all obligations
under the CCE-I Credit Facility in connection with such Systems being
contributed to CCE-I. The Crown Connecticut Systems and the Crown Missouri
Systems, together with the cable television systems constituting the Illinois
Systems (as defined herein), the UVC Systems (as defined herein), the Park
Hills Systems (as defined herein) and the Masada Systems (as defined herein)
(together, the "Systems"), along with a radio station owned by CC Radio and a
cable advertising business owned by CASTL (both subsidiaries of CCE-I),
constitute the sole operating assets of CCE-I as of the date of this
Prospectus.
Issuance of the Notes and Subordination Agreement
Senior Subordinated Notes due 1999 of the Issuer (the "Original Notes") were
issued by the Issuer to HC Crown as partial payment of the purchase price in
connection with the Crown Transaction, pursuant to the Senior Subordinated Loan
Agreement (the "Original HC Crown Loan Agreement") between the Issuer and HC
Crown dated as of January 18, 1995. In connection with the Original HC Crown
Loan Agreement, HC Crown entered
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into a Subordination Agreement, dated as of January 18, 1995 among HC Crown,
the Issuer and certain of the lenders under the CCE-I Credit Facility (as
originally executed and delivered and thereafter amended and restated, the
"Subordination Agreement") with respect to the subordination of obligations
under the Notes. In addition, CCE, L.P., CAC and Cencom Cable subsequently
issued to HC Crown guarantees of payment under the Notes; these guarantees are
limited to funds received directly or indirectly from CCE-I by one or more of
the Guarantors and are not enforceable until the CCE-I Credit Facility (and the
CCE-II Credit Facility, any other senior indebtedness of CCE-II and senior
indebtedness of New CCE Subsidiaries, in the case of the guarantee issued by
CCE, L.P.) has been indefeasibly repaid in full in cash and the commitments to
lend thereunder have terminated. See "Certain Relationships and Related
Transactions--The Guarantees," "Description of Notes--The Guarantees" and
"Description of Other Indebtedness." The subordination under the Subordination
Agreement is in addition to the provisions contained in the Original HC Crown
Loan Agreement pursuant to which the Notes are subordinated to all Senior Debt
(as defined in "Description of Notes--Certain Definitions") of the Issuer. The
Original HC Crown Loan Agreement, the three outstanding Guarantees and the
Subordination Agreement were amended and restated as of November 15, 1996. In
connection with the resale of the Notes to "qualified institutional buyers" (as
defined in Rule 144A under the Securities Act), the Amended and Restated HC
Crown Loan Agreement and the Notes issued thereunder were converted into an
indenture (the "Indenture") dated as of February 13, 1997 between the Issuer
and Harris Trust and Savings Bank, as trustee (the "Trustee") and Senior
Subordinated Notes issued thereunder containing substantially the same terms
and conditions as are contained in the Amended and Restated HC Crown Loan
Agreement and the Notes.
In connection with the Crown Transaction and the establishment of the CCE-I
Credit Facility, the Selling Securityholder agreed to subordinate its rights to
receive payments on and exercise certain remedies with respect to the Notes
prior to the indefeasible repayment in full in cash of and the termination of
commitments to lend under the CCE-I Credit Facility. In particular, the holders
do not have the right to compel payment of the Notes on the Stated Maturity
Date or thereafter or to accelerate the maturity of the Notes upon the
occurrence of a default under the Notes (including a payment default) prior to
the indefeasible payment in full in cash of and termination of commitments to
lend under the CCE-I Credit Facility. In the event the principal of and accrued
interest on the Notes are not paid in full on the Stated Maturity Date, the
annual rate at which interest on the Notes accrues will initially increase to
18% and will increase by an additional 2% on each successive anniversary of the
Stated Maturity Date, up to 26%. A default rate of 3% per annum (the "Default
Rate") may also be added if certain other events of default under the Notes
occur and are continuing. Consequently, the maximum annual rate of interest at
which the Notes may accrue interest is 29%. The CCE-I Credit Facility is
scheduled to expire on December 31, 2004, but may, subject to certain limited
exceptions, be extended or refinanced beyond that date without the consent of
the holders. In connection with the establishment of the CCE-II Credit
Facility, the holder of the California Note (as defined herein) agreed to
subordinate its rights to receive payments on and exercise certain remedies
with respect to the California Note (as defined herein) prior to the
indefeasible repayment in full in cash of and the termination of commitments to
lend under the CCE-II Credit Facility. In addition, distributions from CCE-II
will only be available to service obligations in respect of the Notes after
obligations in respect of the CCE-II Credit Facility, the California Note and
any other indebtedness of CCE-II are indefeasibly paid in full in cash and all
commitments to lend in respect of the CCE-II Credit Facility and any other
indebtedness of CCE-II are terminated. See "Risk Factors--Segregation of
Distributions to Service the Notes and the Guarantees; New CCE Subsidiaries."
The Subordination Agreement has been amended and restated on substantially the
same terms in connection with the issuance of the Notes pursuant to the
Indenture.
California Acquisitions and CCE, L.P. Transactions
1. The California Transaction and the California Note. In November 1994,
Charter began to manage certain cable television systems in the Los Angeles,
California metropolitan area (the "Los Angeles Systems") then owned by Cencom
Cable Television, Inc., an affiliate (the "Gaylord Affiliate") of the Gaylord
Entertainment Company ("Gaylord").
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In September 1995, CCT, an affiliate of the Issuer and Charter, purchased the
Los Angeles Systems and certain other cable television systems from the Gaylord
Affiliate (the "California Transaction") as part of a larger transaction. The
Los Angeles Systems were immediately contributed by CCT to CCE, L.P., and by
CCE, L.P. to CCE-II and constitute the sole assets of CCE-II. The consideration
for the California Transaction consisted in part of a $165.7 million promissory
note (the "California Note"), which was issued by CCT pursuant to a Senior
Subordinated Loan Agreement dated as of September 29, 1995 (the "California
Loan Agreement"). The portion of the aggregate purchase price attributable to
the Los Angeles Systems was $340.9 million.
2. New Financings. Concurrently with the consummation of the California
Transaction, CCE-I entered into the CCE-I Credit Facility to borrow up to
$300.0 million, in connection with a corporate reorganization whereby the Crown
Connecticut Systems and the Crown Missouri Systems acquired in the Crown
Transaction were contributed to CCE, L.P., and by CCE, L.P. to the newly formed
CCE-I. The CCE-I Credit Facility replaced the credit facility established to
finance the Crown Transaction. CCE-II entered into the CCE-II Credit Facility
to borrow up to $235.0 million. The CCE-I Credit Facility and the CCE-II Credit
Facility are sometimes referred to herein as the "Credit Facilities."
3. Issuance of the Guarantees. Pursuant to the Original HC Crown Loan
Agreement, in connection with the California Transaction, CCE, L.P., CAC and
Cencom Cable issued the Guarantees to HC Crown. The Guarantees were amended and
restated as of November 15, 1996 and were further amended and restated as of
February 13, 1997 in connection with the issuance of the Notes pursuant to the
Indenture on substantially the same terms as are contained in the Guarantees
which were amended and restated as of November 15, 1996.
The Guarantees, by their terms, are limited to the proceeds of distributions
received by the Guarantors from CCE-I. The CCE, L.P. Guarantee cannot be
enforced until the indefeasible repayment in full of and termination of
commitments to lend under the CCE-I Credit Facility, the CCE-II Credit
Facility, any other senior indebtedness of CCE-II and any senior indebtedness
of New CCE Subsidiaries. In connection with the Long Beach Investment (as
defined herein), CCE-II and Long Beach Acquisition Corp. ("LBAC") (which will
be an affiliate of the Issuer and CCE-II) will become jointly and severally
liable under the CCE-II Credit Facility, which would be increased by $140.0
million upon consummation of the Long Beach Investment. It is anticipated that
$25.0 million would be borrowed by CCE-II under the CCE-II Credit Facility in
order to make the Long Beach Investment. The CAC Guarantee and the Cencom Cable
Guarantee cannot be enforced until the indefeasible repayment in full of and
termination of the commitments to lend under the CCE-I Credit Facility. See
"Certain Relationships and Related Transactions--The Guarantees," "Description
of Notes--The Guarantees" and "Description of Other Indebtedness."
4. The Partnership Agreements. The partnership agreements of CCE, L.P., CCE-I
and CCE-II each currently provide for, among other things, distributions to
their respective partners in proportion to their respective partnership
interests and, in the case of CCE, L.P., the creation of preferred capital
accounts and preferred distributions related thereto. The effect of these
provisions is (i) to direct any distributions from CCE-I to CCE, L.P. and,
then, to Cencom Cable and CAC which, in turn, will make distributions to the
Issuer for repayment of the Notes, and (ii) to direct any distributions from
CCE-II to CCE, L.P. and, then, to CCT for repayment of the California Note.
Subject to the formation of New CCE Subsidiaries as described below, if the
CCE-II Credit Facility, the California Note and any other indebtedness of CCE-
II and indebtedness of New CCE Subsidiaries is repaid prior to payment in full
of all amounts payable under the Notes, then all further distributions to CCE,
L.P. from both CCE-I and CCE-II will be used to make distributions to CAC and
Cencom Cable for distribution to the Issuer, and if the Notes are repaid prior
to the payment in full of all amounts payable under the California Note, then
all further distributions to CCE, L.P. from both CCE-I and CCE-II will be used
to make distributions to CCT. Subject to certain limitations, the Indenture
permits the formation of New CCE
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Subsidiaries below CCE, L.P. in the corporate structure and the contribution of
additional assets to existing Subsidiaries other than CCE-I. New CCE
Subsidiaries may engage in the cable television business or other businesses.
In connection with their businesses, New CCE Subsidiaries, and in connection
with such asset contributions to existing Subsidiaries, such existing
Subsidiaries, may establish senior credit facilities and other financing
arrangements (debt and/or equity), which may establish a basis for a new or
revised preferred capital account in CCE, L.P. Once any applicable financing
arrangement of CCE-II or any New CCE Subsidiary is repaid, the existence of the
aforementioned new or revised preferred capital account in CCE, L.P. could
result in any further distributions to CCE, L.P. from CCE-II and/or any New CCE
Subsidiaries being shared pro rata between the Notes and any such new or
existing financing arrangements (with such sharing to be based upon the then
outstanding preferred capital accounts in CCE, L.P.). Holders of the Notes
should not rely on any distributions from CCE-II or any New CCE Subsidiaries
for payment of principal or interest on the Notes. In connection with the
creation of New CCE Subsidiaries or the contribution of additional assets to
existing Subsidiaries of CCE, L.P., the CCE, L.P. Partnership Agreement's
distribution provisions may be amended. See "Description of Notes--Certain
Covenants--Limitation on Changes to CCE, L.P. Partnership Agreement." For
example (and without limiting the arrangements which could be entered into by a
New CCE Subsidiary), in the event one or more New CCE Subsidiaries are formed
below CCE, L.P. in the corporate structure in connection with the acquisition
of new assets or equity interests and the issuance by an affiliate of CCE, L.P.
of a note payable to the sellers of such assets or equity interests (i.e., a
purchase money note, as was the case in the California Transaction and the
Crown Transaction), then, the CCE, L.P. Partnership Agreement can be amended,
so that (i) rather than all distributions to CCE, L.P. from CCE-II being
available to service the Notes exclusively after payment of the California
Note, such distributions would instead be available pro rata based on then
outstanding preferred capital accounts (i.e., to service both the Notes and any
new purchase money note owed to such sellers) and (ii) all cash generated by
any New CCE Subsidiary would be used first to repay any credit facility entered
into by such New CCE Subsidiary to accomplish the related acquisition. Any
amounts thereafter distributed by such New CCE Subsidiary to CCE, L.P. would be
used next to repay any new purchase money note, and after such new purchase
money note is repaid, such distributions from such New CCE Subsidiary to CCE,
L.P. would be available pro rata to service the Notes, the California Note and
any other outstanding purchase money notes. See "Description of the Notes--
Certain Covenants--Limitation on Changes to the CCE, L.P. Partnership
Agreement."
Notwithstanding the foregoing, such credit facilities, other financing
arrangements and asset contributions and the existence of new or revised
preferred capital accounts will not affect distributions to the Issuer from
CAC, Cencom Cable, CCE, L.P. (to the extent the funds to be distributed by CCE,
L.P. were obtained from CCE-I) or CCE-I.
UVC Acquisition
In October 1995, CCE-I acquired certain cable television systems serving
communities in western St. Louis County (which augmented the Central Region)
and central and southeastern Massachusetts (which extended the Company's
operations in the Northeast Region) from United Video Cablevision, Inc. (the
"UVC Systems"), for an aggregate purchase price of approximately $96.0 million,
including related acquisition fees and expenses (the "UVC Acquisition"). As of
December 31, 1996, the UVC Systems served approximately 48,400 basic
subscribers.
The Park Hills, Missouri Acquisition
In January 1996, CCE-I acquired certain cable television systems serving
communities in the Park Hills, Missouri area from Mineral Area Cable Vision Co.
(the "Park Hills Systems"), for an aggregate purchase price of approximately
$9.4 million, including related acquisition fees and expenses (the "Park Hills
Acquisition"). As of December 31, 1996, the Park Hills Systems served
approximately 6,100 basic subscribers.
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Illinois Acquisition
In March 1996, CCE-I acquired certain cable television systems in that
portion of Illinois located within the St. Louis metropolitan area (the
"Illinois Systems") from Cencom Cable Income Partners, L.P., a Delaware limited
partnership ("CCIP") whose general partner is an affiliate of Charter, for an
aggregate purchase price of approximately $82.0 million, including related
acquisition fees and expenses (the "Illinois Acquisition"). As of December 31,
1996, the Illinois Systems served approximately 45,500 basic subscribers. The
Illinois Acquisition was part of a larger transaction whereby three Charter
affiliates purchased all of the assets of CCIP and, in accordance with the
terms of the partnership agreement of CCIP, independent appraisals were
obtained valuing all of the assets of CCIP. The aggregate purchase price paid
by the three Charter affiliates exceeded the appraisal value by 5 percent. The
purchase price allocated to the Illinois Systems was determined by the three
Charter affiliates based on the relative value of the Illinois Systems to the
total assets being sold. On October 20, 1995, a purported class action lawsuit
on behalf of the CCIP limited partners was filed in the Chancery Court of New
Castle County, Delaware (the "Action"). The Action named as defendants the
general partner of CCIP, the proposed purchasers of all the systems owned by
CCIP (which includes CCE-I and certain other affiliates of Charter), Charter
and certain individuals, including the directors and executive officers of the
general partner of CCIP. On February 15, 1996, the Court of Chancery of the
State of Delaware in and for New Castle County dismissed all of the plaintiff's
claims for injunctive relief (including that which sought to prevent the
consummation of the Illinois Acquisition); the plaintiff's claims for money
damages which might result from the proposed sale by CCIP of its assets
(including the Illinois Acquisition) remain pending. In October, 1996, the
plaintiff filed a Consolidated Amended Class Action Complaint. The defendants
filed an Answer to the amended complaint in December 1996. In January 1997, the
defendants filed a Motion for Summary Judgment to dismiss all remaining claims
as to all parties in the Action. Based upon, among other things, the advice of
counsel, each of the defendants to the Action believes the Action to be without
merit and is contesting it vigorously. There can be no assurance, however, that
the plaintiff will not be awarded damages, some or all of which may be payable
by CCE-I, in connection with the Action.
Masada Acquisition
On November 29, 1996, CCE-I acquired certain cable television systems serving
suburban and ex-urban communities in Missouri that augment the St. Louis
cluster, from Masada Cable Partners, L.P. (the "Masada Systems"), for an
aggregate purchase price of approximately $23.7 million, before transaction
costs and working capital adjustments (the "Masada Acquisition"). As of
December 31, 1996, the Masada Systems served approximately 11,800 basic
subscribers.
Pending Long Beach Investment by CCE-II
In the second quarter of 1997, CCE-II expects to make a $25.0 million
investment (the "Long Beach Investment") in LBAC, in connection with the
acquisition of LBAC by an affiliate of CCE-II and the Issuer. Such acquisition
is subject to the approval of the relevant franchising authorities and
customary closing conditions. LBAC owns cable television systems (the "Long
Beach Systems") serving communities in Long Beach, California. The Long Beach
Investment will be in the form of a loan convertible into 27.5% of the stock of
LBAC. In connection with the Long Beach Investment, CCE-II and LBAC will become
jointly and severally liable under the CCE-II Credit Facility, which will be
increased by $140.0 million upon consummation of the Long Beach Investment. It
is anticipated that $25.0 million would be borrowed by CCE-II under the CCE-II
Credit Facility in order to make the Long Beach Investment. As of December 31,
1996, the Long Beach Systems served approximately 70,100 basic subscribers. The
Notes do not contain any restrictions on the ability of CCE-II (or any New CCE
Subsidiary) to incur additional indebtedness, including that contemplated in
connection with the Long Beach Investment. The CCE-II Credit Facility restricts
the ability of CCE-II to incur additional indebtedness, although such
restriction can be amended by mutual agreement of the lenders thereto and the
obligors thereunder, without the consent of the holders. See "Risk Factors--
High Degree of Leverage." As is
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the case with the other assets owned by CCE-II, holders of the Notes should not
rely on the assets to be acquired in the Long Beach Investment or the revenues
which will be generated by them for payment of principal or interest on the
Notes.
CERTAIN REGULATORY AND LEGISLATIVE DEVELOPMENTS
The cable television industry is subject to extensive regulation by federal,
local and, in some instances, state government agencies. The Cable Television
Consumer Protection and Competition Act of 1992 (the "1992 Cable Act")
significantly expanded the scope of cable television regulation on an industry-
wide basis by imposing rate regulation, requirements related to the carriage of
local broadcast stations, customer service obligations and other requirements.
Under the FCC's initial rate regulations pursuant to the 1992 Cable Act,
regulated cable systems (i.e., those systems not subject to effective
competition) were required to reduce their rates by up to 17%. On a going
forward basis, regulated cable systems may be required to justify their rates
(including rate increases) under a benchmark approach, a utility-type cost of
service approach, or, if applicable, a small system cost-of-service showing.
On February 1, 1996, Congress passed the Telecommunications Act of 1996 (the
"Telecommunications Act"). The Telecommunications Act was signed into law by
the President on February 8, 1996, and substantially amends the Communications
Act of 1934 (the "Communications Act") (including the re-regulation of
subscriber rates under the 1992 Cable Act). The Telecommunications Act alters
federal, state and local laws and regulations pertaining to cable television,
telecommunications and other services.
Certain provisions of the Telecommunications Act could materially affect the
growth and operation of the cable television industry and the cable services
provided by the Company. Although the new legislation is expected to
substantially lessen regulatory burdens, the cable television industry may be
subject to additional competition as a result thereof. There are numerous
rulemakings which have been, and which will be undertaken by the FCC, which
will interpret and implement the Telecommunications Act's provisions. In
addition, certain provisions of the Telecommunications Act (such as the
deregulation of cable programming rates) generally are not immediately
effective. Furthermore, certain of the Telecommunications Act's provisions have
been, and are likely to continue to be, judicially challenged. The Company is
unable at this time to predict the outcome of such rulemakings or litigation or
the substantive effect (financial or otherwise) of the new legislation and the
rulemakings on the Company. See "Risk Factors--Regulation in the Cable
Television Industry" and "Business--Regulation in the Cable Television
Industry."
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THE EXCHANGE OFFER
Letter Agreement.............. The Old Notes were sold by the Issuer on Janu-
ary 18, 1995 to HC Crown, which resold the Old
Notes on February 10, 1997, through a placement
agent to certain "qualified institutional buy-
ers" (as defined in Rule 144A under the Securi-
ties Act), including an affiliate of HC Crown.
In connection with the resale of the Old Notes,
the Issuer executed and delivered for the bene-
fit of the holders of the Old Notes a letter
agreement dated as of November 15, 1996 (the
"Letter Agreement") providing, among other
things, for the Exchange Offer.
The Exchange Offer............ New Notes are being offered in exchange for a
like principal amount of Old Notes. As of the
date hereof, approximately $82 million aggre-
gate principal amount of Old Notes are out-
standing. The Issuer will issue the New Notes
to holders of Old Notes promptly following the
Expiration Date. See "Risk Factors--Conse-
quences of Failure to Exchange."
Based on interpretations by the staff of the
Commission set forth in no-action letters is-
sued to third parties unrelated to the Issuer,
the Issuer believes that New Notes issued pur-
suant to the Exchange Offer in exchange for Old
Notes may be offered for resale, resold and
otherwise transferred by any holder thereof
(other than any such holder which is an "affil-
iate" of the Issuer or any of the Guarantors
within the meaning of Rule 405 under the Secu-
rities Act) without compliance with the regis-
tration and (except as provided in the follow-
ing sentence) prospectus delivery provisions of
the Securities Act, provided that such New
Notes are acquired in the ordinary course of
such holder's business and that such holder is
not engaged in, and does not intend to engage
in, and has no arrangement or understanding
with any person to participate in, the distri-
bution of such New Notes. Each broker or dealer
that receives New Notes for its own account in
exchange for Old Notes, where such Old Notes
were acquired by such broker or dealer as a re-
sult of market-making activities or other trad-
ing activities, must acknowledge that it will
deliver a prospectus in connection with any re-
sale of such New Notes. See "Plan of Distribu-
tion."
Federal Income Tax Conse- The substitution of New Notes for Old Notes
quences....................... pursuant to the Exchange Offer should not be
treated as a sale, exchange, disposition or
other taxable event with respect to the holders
for Federal income tax purposes. A holder's ba-
sis, holding period, issue price and amount of
original issue discount, if any, with respect
to a Note should not change upon the substitu-
tion. Holders, however, are strongly urged to
consult their own tax advisors. See "Certain
Federal Income Tax Consequences."
14
<PAGE>
Expiration Date............... 5:00 p.m., New York City Time, on ,
1997, unless the Exchange Offer is extended, in
which case the term "Expiration Date" means the
latest date and time to which the Exchange Of-
fer is extended.
Conditions to the Exchange The Exchange Offer is subject to certain cus-
Offer......................... tomary conditions, which may be waived by the
Company. See "The Exchange Offer--Conditions."
Procedures for Tendering Old
Notes....................... Each holder of Old Notes wishing to accept the
Exchange Offer must complete, sign and date the
Letter of Transmittal, or a facsimile thereof,
in accordance with the instructions contained
herein and therein, and mail or otherwise de-
liver such Letter of Transmittal, or such fac-
simile, together with the Old Notes and any
other required documentation to the exchange
agent (the "Exchange Agent") at the address set
forth herein. See "The Exchange Offer--Exchange
Agent." Old Notes may be physically delivered,
but physical delivery is not required if a con-
firmation of a book-entry of such Old Notes to
the Exchange Agent's account at The Depository
Trust Company ("DTC" or the "Depositary") is
delivered in a timely fashion. By executing the
Letter of Transmittal, each holder will repre-
sent to the Issuer that, among other things,
the New Notes acquired pursuant to the Exchange
Offer are being obtained in the ordinary course
of business of the person receiving such New
Notes, whether or not such person is the hold-
er, that neither the holder nor any such other
person is engaged in, or intends to engage in,
or has an arrangement or understanding with any
person to participate in, the distribution of
such New Notes and that neither the holder nor
any such other person is an "affiliate," as de-
fined under Rule 405 of the Securities Act, of
the Issuer or any of the Guarantors. Each bro-
ker or dealer that receives New Notes for its
own account in exchange for Old Notes, where
such Old Notes were acquired by such broker or
dealer as a result of market-making activities
or other trading activities, must acknowledge
that it will deliver a prospectus in connection
with any resale of such New Notes. See "The Ex-
change Offer- Procedures for Tendering" and
"Plan of Distribution."
Special Procedures for Bene- Any beneficial owner whose Old Notes are regis-
ficial Owners............... tered in the name of a broker, dealer, commer-
cial bank, trust company or other nominee and
who wishes to tender should contact such regis-
tered holder promptly and instruct such regis-
tered holder to tender on such beneficial own-
er's behalf. If such beneficial owner wishes to
tender on such owner's own behalf, such owner
must, prior to completing and executing the
Letter of Transmittal and delivering the Old
Notes, either make appropriate arrangements to
register ownership of the Old Notes in such
owner's name or obtain a properly completed
bond power from the registered holder. The
transfer of registered ownership may take con-
siderable time. See "The Exchange Offer--Proce-
dures for Tendering."
15
<PAGE>
Guaranteed Delivery Proce- Holders of Old Notes who wish to tender their
dures......................... Old Notes and whose Old Notes are not entirely
available or who cannot deliver their Old
Notes, the Letter of Transmittal or any other
documents required by the Letter of Transmittal
to the Exchange Agent prior to the Expiration
Date must tender their Old Notes according to
the guaranteed delivery procedures set forth in
"The Exchange Offer--Guaranteed Delivery Proce-
dures."
Withdrawal Rights............. Tenders may be withdrawn at any time prior to
5:00 p.m., New York City time, on the Expira-
tion Date. See "The Exchange Offer--Withdrawal
of Tenders."
Acceptance of Old Notes and
Delivery of New Notes.......
The Issuer will accept for exchange any and all
Old Notes which are properly tendered in the
Exchange Offer prior to 5:00 p.m., New York
City time, on the Expiration Date. The New
Notes issued pursuant to the Exchange Offer
will be delivered promptly following the Expi-
ration Date. See "The Exchange Offer-- Terms of
the Exchange Offer."
Exchange Agent................ Harris Trust and Savings Bank is serving as Ex-
change Agent in connection with the Exchange
Offer. See "The Exchange Offer--Exchange
Agent."
16
<PAGE>
THE NEW NOTES
The Exchange Offer applies to approximately $82.0 million aggregate principal
amount of Old Notes outstanding as of the date hereof. The form and the terms
of the New Notes will be identical in all material respects to the form and the
terms of the Old Notes, except that the New Notes will have been registered
under the Securities Act and, therefore, will not contain legends restricting
the transfer thereof. The New Notes evidence the same debt as the Old Notes
exchanged for the New Notes and will be entitled to the benefits of the same
Indenture under which the Old Notes were issued. See "Description of the
Notes." Certain capitalized terms listed below are defined under the caption
"Description of Notes--Certain Definitions."
Notes Offered................. $82,000,000 aggregate principal amount of Se-
nior Subordinated Notes due 1999, plus accrued
interest since January 18, 1995.
Issuer........................
CCA Holdings Corp.
Stated Maturity Date;
Limitations on Payment and
Exercise of Remedies..........
The stated maturity of the Notes is December
31, 1999 (the "Stated Maturity Date"). Pursuant
to the terms of the Subordination Agreement, no
payments are permitted to be made on the Notes
(including on the Stated Maturity Date) until
the indefeasible repayment in full in cash of
and termination of commitments to lend under
the CCE-I Credit Facility. Moreover, under the
terms of the Notes and the Subordination Agree-
ment, the holders do not have the right to com-
pel payment of the Notes on the Stated Maturity
Date or thereafter or to accelerate the matu-
rity of the Notes upon the occurrence of a de-
fault under the Notes (including a payment de-
fault), except as permitted in the Indenture
and the Subordination Agreement. See "Descrip-
tion of Notes--Subordination." The CCE-I Credit
Facility is scheduled to expire on December 31,
2004, but may, subject to certain limited ex-
ceptions, be extended or refinanced beyond that
date without the consent of the holders. If the
Notes are not repaid by the Stated Maturity
Date, then the interest rate thereon will in-
crease (see "Interest" below).
Interest...................... Interest accrues on the Notes at an annual rate
of 13%, compounded semi-annually, until the
Stated Maturity Date. If principal plus accrued
interest on the Notes is not paid at the Stated
Maturity Date, the annual rate at which inter-
est accrues on the Notes will initially in-
crease to 18% and will increase by an addi-
tional 2% on each successive anniversary of the
Stated Maturity Date (up to 26%), compounded
semi-annually, until the Notes are repaid. In
addition, the interest rate on the Notes shall
be increased by an additional 3% per annum if
certain other events of default occur or are
continuing (the "Default Rate"). As of December
31, 1996, accrued interest on the Notes was
$22,843,402. For U.S. Federal income tax pur-
poses, purchasers of the Notes will be required
to include amounts in gross income generally in
advance of the receipt of the cash payments to
which the income is attributable. See "Certain
Federal Income Tax Consequences."
17
<PAGE>
Optional Redemption........... The Notes are redeemable at the Issuer's op-
tion, in whole or in part, at any time without
premium or penalty provided that any such pre-
payment of principal shall include all payments
of accrued interest on the amount prepaid.
There are no mandatory redemption or sinking
fund provisions.
Guarantees.................... The obligations on the Notes are guaranteed on
a subordinated basis by CAC, Cencom Cable and
CCE, L.P. The Guarantees, by their terms, are
limited to the proceeds of distributions re-
ceived by the Guarantors from CCE-I. The CCE,
L.P. Guarantee cannot be enforced until the in-
defeasible repayment in full in cash of and
termination of commitments to lend under the
CCE-I Credit Facility, the CCE-II Credit Facil-
ity, any other senior indebtedness of CCE-II
and senior indebtedness of New CCE Subsidiar-
ies. The CAC Guarantee and the Cencom Cable
Guarantee cannot be enforced until the indefea-
sible repayment in full in cash of and termina-
tion of commitments to lend under the CCE-I
Credit Facility. See "Description of Notes--
General" and "Description of Notes--The Guaran-
tees."
Ranking....................... The Notes and the Guarantees are unsecured ob-
ligations of the Issuer and the Guarantors and
are subordinate in right and priority of pay-
ment to all existing and future indebtedness of
the Issuer and the Guarantors, other than in-
debtedness that by its terms is expressly sub-
ordinated in right and priority of payment to
the Notes and the Guarantees. Except for cer-
tain management fees and financial advisory
fees and related expenses payable or which may
become payable by the Company to Charter and
Kelso & Company on an on-going basis and in-
vestment banking fees payable to such entities
in certain circumstances, the Company will not
make any distributions or advances to either
Charter or Kelso before the Notes are repaid in
full. See "Description of Notes--Certain Cove-
nants--Transactions with Affiliates." The Is-
suer and the Guarantors are holding companies
that currently conduct substantially all of
their business through the Operating Entities.
As a result, all distributions from CCE-I and
CCE-II would be subject to the claims of credi-
tors of CCE-I and CCE-II, respectively, includ-
ing, without limitation, pursuant to the CCE-I
Credit Facility, the CCE-II Credit Facility and
any other indebtedness of CCE-I and CCE-II. The
Issuer and the Guarantors control CCE-I and are
primarily dependent upon distributions from
CCE-I and its subsidiaries to service their ob-
ligations, including the Notes and the Guaran-
tees. See "--Distributions from CCE-I as Pri-
mary Source of Repayment." The current priori-
ties with respect to such distributions are set
forth in the CCE, L.P. Partnership Agreement.
See "Description of Notes--the Partnership
Agreements." Subject to certain restrictions,
the CCE, L.P. Partnership Agreement may be
amended to provide for, among other things, the
creation of New CCE Subsidiaries, which could
have financing arrangements that result in the
sharing with other creditors of
18
<PAGE>
distributions to CCE, L.P. from CCE-II or such
New CCE Subsidiaries. See "Certain Relation-
ships and Related Transactions--the Partnership
Agreements," "Description of Other In-
debtedness," "Description of Notes--General,"
"Description of Notes--Partnership Agreements"
and "Description of Notes--Certain Covenants."
As of December 31, 1996, the Issuer and the
Guarantors' indebtedness other than the Notes
was approximately $55.5 million of deferred in-
come taxes and approximately $0.4 million of
current liabilities. As of December 31, 1996,
the aggregate indebtedness (including current
liabilities in an aggregate amount of approxi-
mately $28.9 million and other long-term lia-
bilities of approximately $2.5 million) of CCE-
I was approximately $493.5 million and, as of
such date, the aggregate indebtedness (includ-
ing current liabilities in an aggregate amount
of approximately $13.1 million, an intercompany
note of $27.4 million and other long-term lia-
bilities of $0.4 million) of CCE-II was approx-
imately $234.9 million.
As of December 31, 1996, approximately $191.3
million was outstanding under the California
Note. For financial reporting purposes, the
amount of the California Note is approximately
$198.8 million because interest accruing under
the California Note is based on the average
rate of interest over the life of the Califor-
nia Note (which approximates 15.43%) rather
than the current stated interest rate.
The CCE-I Credit Facility restricts CCE-I's
ability to incur additional indebtedness. The
Indenture does not contain any restriction on
CCE-II's ability to incur additional indebted-
ness. Although the CCE-II Credit Facility re-
stricts the ability of CCE-II to incur addi-
tional indebtedness, such restriction can be
amended by mutual agreement of the lenders
thereto and the obligors thereunder, without
the consent of the holders. See "Description of
Notes--General" and "Risk Factors--High Degree
of Leverage."
Distributions from CCE-I as
Primary Source of Except under certain limited circumstances, the
Repayment.................... Notes will only have the benefit of distribu-
tions from CCE-I. As a result, the presentation
of information regarding the Company focuses on
the CCE-I Entities. Holders of the Notes may
ultimately benefit from the CCE-II assets but
should not rely on such assets or distributions
generated by them for payment of principal or
interest on the Notes.
Certain Covenants............. The Indenture contains certain covenants by the
Issuer, including, but not limited to, cove-
nants with respect to the following matters:
(i) reporting and information requirements;
(ii) limitations on restricted payments by the
Issuer and the Restricted Subsidiaries (as de-
fined in the Indenture); (iii) limitations on
mergers and consolidations; (iv) limitations on
sales of assets; (v) limitations on changes of
control of the Issuer; (vi) limitations on
changes of management of CCE-I's cable televi-
sion properties and of Char-
19
<PAGE>
ter; (vii) maintenance of a minimum Operating
Cash Flow (as defined in the Indenture); (viii)
limitations on Indebtedness (as defined in the
Indenture); (ix) limitations on the use of the
proceeds of the sale of any of the Issuer's ca-
ble television properties; (x) limitations, un-
der certain circumstances, on permitting the
extension of the maturity of the CCE-I Credit
Facility beyond July 17, 2005; (xi) limitations
on change of ownership of Restricted Subsidiar-
ies; (xii) limitations on transfer of assets of
the Issuer and the Restricted Subsidiaries;
(xiii) limitations on certain transactions with
affiliates; (xiv) limitations on Indebtedness
of CCE, L.P.; (xv) limitations of certain af-
filiate payments; (xvi) limitations on changes
to the CCE, L.P. Partnership Agreement; (xvii)
limitations on intercompany indebtedness; and
(xviii) limitation on investing in radio opera-
tions. These covenants are subject to important
exceptions and qualifications. See "Description
of Notes--Certain Covenants."
Charter and Kelso separately have undertaken,
in an agreement with HC Crown which was amended
and restated as of November 15, 1996, to cause
the Issuer to comply with the reporting re-
quirements and dividend, merger, divestiture
and indebtedness restrictions set forth in the
Indenture. However, neither Charter nor Kelso
has issued a guarantee with respect to such
compliance. Holders of Notes should not expect
to rely on either Charter or Kelso for payment
of principal or interest on the Notes. Charter
and Kelso have also undertaken, in that agree-
ment, to maintain their control of the Issuer
while the Notes remain outstanding.
Registration Rights...........
In addition to the rights of the holders under
the Letter Agreement, under the Indenture the
holders are collectively entitled to a single
additional demand registration right, pursuant
to which the Issuer and the Guarantors will use
their reasonable best efforts to cause to be-
come effective a shelf registration statement
(a "Shelf Registration Statement") with respect
to the resale of the Notes and use their rea-
sonable best efforts to keep such shelf regis-
tration statement continuously effective until
nine months after the effective date thereof.
Expenses related to the exercise of such addi-
tional demand registration rights, if exer-
cised, will be borne by the holders of the
Notes so exercising such demand registration
rights.
RISK FACTORS
Prospective purchasers of the Notes should consider carefully all of the
information set forth in this Prospectus before making an investment in the
Notes. In particular, prospective purchasers should consider the risks set
forth under "Risk Factors."
20
<PAGE>
UNAUDITED SUMMARY HISTORICAL AND UNAUDITED PRO FORMA FINANCIAL DATA OF CCA AND
SUBSIDIARIES
The Unaudited Summary Historical and Unaudited Pro Forma Financial Data set
forth below presents (i) summary historical financial and operating data for
the Crown Systems (as defined herein) (CCA's predecessor) through January 1,
1995 (which was the effective date on which the Crown Systems were acquired by
CCA), (ii) summary historical financial and operating data for CCA and its
subsidiaries since January 1, 1995 (the date CCA effectively commenced
operations), and (iii) summary pro forma financial and operating data assuming
certain transactions described in Note (a) below. The financial data set forth
below has been derived from the audited and unaudited historical financial
statements of CCA and the Crown Systems, and from the Unaudited Selected
Historical and Unaudited Pro Forma Financial Data appearing elsewhere in this
Prospectus, and should be read in conjunction with the historical financial
statements and the notes thereto, and reports of independent public
accountants. The unaudited pro forma financial and operating data include data
derived from certain cable systems owned by entities other than CCA prior to
their acquisition by CCA. Accordingly, the financial information contained
herein with respect to periods prior to such acquisition does not reflect any
changes in the operations or management of such systems that CCA has made since
the date of acquisition or that it intends to make in the future; thus, this
financial information is not necessarily indicative of the results of
operations that would have been achieved had the systems been operated by CCA
during all the periods with respect to which financial information is presented
herein or that may be achieved in the future. There are no pro forma
adjustments reflected in the pro forma balance sheet data as all acquisitions
were consummated prior to December 31, 1996.
21
<PAGE>
CCA AND SUBSIDIARIES
UNAUDITED SUMMARY HISTORICAL AND UNAUDITED PRO FORMA FINANCIAL DATA
(NUMBERS IN THOUSANDS, EXCEPT FOR FINANCIAL RATIOS AND SUBSCRIPTION DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
PREDECESSOR OF CCA CCA
-------------------------------- -----------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
-------------------------------- -----------------------------
PRO
FORMA (A)
1992 1993 1994 1995 1996 1996
-------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues................ $ 81,557 $ 85,627 $ 87,623 $ 99,689 $143,023 $151,548
Operating Expenses:
Operating, general and
administrative........ 41,603 43,270 44,164 48,943 71,498 76,026
Management fees........ 2,617(b) 2,723(b) 2,781(b) 6,499 5,034 6,138(c)
Depreciation and
amortization.......... 47,662 54,804 54,272 51,194 65,757 68,958
-------- -------- -------- -------- -------- --------
Total operating
expenses............. 91,882 100,797 101,217 106,636 142,289 151,122
-------- -------- -------- -------- -------- --------
Operating Income
(loss)................. (10,325) (15,170) (13,594) (6,947) 734 426
Interest expense....... (19,547) (12,051) (15,053) (35,461) (46,654) (50,132)
Interest income........ 66 -- 20 504 164 223
Other income
(expense)............. 267 8 444 42 (1,058) (1,058)
-------- -------- -------- -------- -------- --------
Loss before equity in
loss of unconsolidated
limited partnerships,
provision for income
taxes, loss from
discontinued operation
and minority interest
in loss of subsidiary.. (29,539) (27,213) (28,183) (41,862) (46,814) (50,541)
Equity in loss of
unconsolidated limited
partnerships.......... -- -- -- (1,402) (6,303) (6,303)
Provision for income
taxes................. -- -- -- -- -- --
Loss from discontinued
operation............. -- -- -- -- (1,516) --
Minority interest in
loss of subsidiary.... -- -- -- 1,503 15,999 17,676
-------- -------- -------- -------- -------- --------
Net loss................ $(29,539) $(27,213) $(28,183) $(41,761) $(38,634) $(39,168)
======== ======== ======== ======== ======== ========
Ratio of earnings to
fixed charges (d)...... -- -- -- -- -- --
BALANCE SHEET DATA (AT
END OF PERIOD):
Total assets............ $666,139 $744,081 $744,081
Deferred taxes.......... 55,500 55,500 55,500
Total debt (including
current maturities).... 447,439 572,843 572,843
Shareholders' investment
(deficit).............. 38,239 (395) (395)
FINANCIAL RATIOS AND
OTHER DATA:
EBITDA (e).............. $ 39,954 $ 42,357 $ 43,459 $ 50,746 $ 71,525 $ 75,522
EBITDA margin (f)....... 49.0% 49.5% 49.6% 50.9% 50.0% 49.8%
Capital expenditures
(g).................... $ 13,375 $ 19,128 $ 24,513 $ 22,024 $ 33,898 $ 35,461
Total debt to EBITDA.... 8.8x 8.0x 7.6x
EBITDA to interest
expense................ 1.4x 1.5x 1.5x
OPERATING STATISTICAL
DATA (AT END OF PERIOD,
EXCEPT AVERAGES):
Homes passed............ 339,142 344,418 350,404 413,930 533,563 533,563
Basic subscribers....... 185,767 196,087 206,948 266,119 338,284 338,284
Basic penetration....... 54.8% 56.9% 59.1% 64.3% 63.4% 63.4%
Premium service units... 125,745 126,396 145,967 173,172 194,602 194,602
Premium penetration..... 67.7% 64.5% 70.5% 65.1% 57.5% 57.5%
Average monthly revenue
per basic subscriber
(h).................... $ 36.59 $ 36.39 $ 35.28 $ 36.89 $ 38.20 $ 37.33
</TABLE>
22
<PAGE>
- --------
(a) The pro forma statement of operations data assumes the consummation of the
Illinois Acquisition and the Masada Acquisition as if the applicable
transactions had occurred on January 1, 1996. There are no pro forma
adjustments reflected in the pro forma balance sheet data as all
acquisitions were consummated prior to December 31, 1996.
(b) Represents combined management fees for the Crown Systems (during periods
prior to their acquisition by CCA), for those systems which paid management
fees. These fees are not necessarily indicative of the management fees that
would have been charged had the Crown Systems been operated by CCA or that
may be expected for any future periods.
(c) CCE-I pays annual management and financial advisory fees to Charter and
Kelso & Company equal to certain specified contractual amounts set forth in
the management and financial advisory agreements executed with Charter and
Kelso & Company, which amounts increase upon the acquisition of additional
cable television systems and decrease with the disposition of any cable
television systems. As of December 31, 1996, CCE-I pays Charter $4,845,000
annually and Kelso & Company $552,500 annually based upon the current
contracts. In addition, the management agreement with Charter provides for
an annual bonus equal to 30% of the excess, if any, of operating cash flow
(as defined in the management agreement) over the projected operating cash
flow for the year; however, payment of such bonus is deferred until
termination of the CCE-I Credit Facility. The accrued but unpaid bonus as
of December 31, 1996 was $1,755,000 of which $740,000 was recorded during
1996. See "Certain Relationships and Related Transactions."
(d) The combined earnings of the Crown Systems were inadequate to cover fixed
charges by $29.5 million, $27.2 million and $28.2 million for the years
ended December 31, 1992, 1993 and 1994, respectively. The earnings of CCA
were inadequate to cover fixed charges by $41.8 million and $38.6 million
for the years ended December 31, 1995 and 1996, respectively.
(e) EBITDA represents income (loss) before interest expense, interest income,
income taxes, depreciation and amortization, management fees, other income
(expense), equity in loss of unconsolidated limited partnerships, loss from
discontinued operation and minority interest in loss of subsidiary. EBITDA
is calculated before payment of management fees. Management believes that
EBITDA is a meaningful measure of performance because it is commonly used
in the cable television industry to analyze and compare cable television
companies on the basis of operating performance, leverage and liquidity.
EBITDA is not presented in accordance with generally accepted accounting
principles and should not be considered an alternative to, or more
meaningful than, operating income or operating cash flows as an indicator
of CCA's operating performance. EBITDA does not include CCA's debt
obligations or other significant commitments.
(f) Represents EBITDA as a percent of revenues.
(g) Capital expenditures exclude cash consideration paid in connection with the
acquisition of cable television systems.
(h) Revenues divided by basic subscribers divided by 12 months.
23
<PAGE>
RISK FACTORS
An investment in the Notes is highly speculative. Prospective investors
should carefully consider the following risk factors in addition to the other
information set forth in this Prospectus.
HIGH DEGREE OF LEVERAGE
The Company is, and will continue to be, highly leveraged as a result of the
substantial indebtedness it has incurred, and intends to incur, to finance
acquisitions and expand its operations. As of December 31, 1996, the Company's
aggregate indebtedness (including current liabilities in an aggregate amount
of approximately $42.0 million, deferred taxes of $55.5 million, an
intercompany note of $27.4 million and other long-term liabilities of $3.3
million) was approximately $889.1 million. As of December 31, 1996, the
Issuer's and the Guarantors' indebtedness other than the Notes was
approximately $55.5 million of deferred income taxes and approximately $.4
million of current liabilities. As of December 31, 1996, the aggregate
indebtedness of CCE-I (including current liabilities in an aggregate amount of
approximately $28.9 million and other long-term liabilities of $2.5 million)
was approximately $493.5 million. As of December 31, 1996, the aggregate
consolidated indebtedness of CCE-II (including current liabilities in an
aggregate amount of approximately $13.1 million, an intercompany note of $27.4
million and other long-term liabilities of $0.4 million) was approximately
$234.9 million. The California Note is a direct obligation of CCT and,
therefore, is not treated as indebtedness of the Company or its subsidiaries;
as of December 31, 1996, CCT's obligation on the California Note, including
accrued interest, was $198.8 million for financial reporting purposes. As of
December 31, 1996, the Company was approaching the maximum levels of
indebtedness allowable under the Original HC Crown Loan Agreement. See
"Description of Notes--Certain Covenants." The lenders under the CCE-II Credit
Facility have a first priority right to the revenues and cash flow generated
by and assets of CCE-II. In connection with the Long Beach Investment, CCE-II
and LBAC (which will be an affiliate of the Issuer and CCE-II) will become
jointly and severally liable under the CCE-II Credit Facility (approximately
$194.0 million outstanding at December 31, 1996), which would be increased by
$140.0 million upon consummation of the Long Beach Investment. After the
repayment of the obligations under the CCE-II Credit Facility, distributions
from CCE-II shall be directed to CCT for payments on the California Note.
Subject to the creation of New CCE Subsidiaries and the contribution of
additional assets to existing Subsidiaries of CCE, L.P., if any, once the
obligations in respect of the CCE-II Credit Facility, the California Note and
any other indebtedness of CCE-II are indefeasibly paid in full in cash and all
commitments to lend in respect of the CCE-II Credit Facility and any other
indebtedness of CCE-II are terminated, distributions from CCE-II will be
available to service outstanding obligations under the Notes (on a shared
basis with any other purchase money notes that might be outstanding as
described in the third paragraph under "Risk Factors--Segregation of
Distributions to Service the Notes and the Guarantees; New CCE Subsidiaries"
in connection with future acquisition transactions). The Indenture does not
contain any restriction on the ability of any subsidiary (other than CCE-I and
its Restricted Subsidiaries) of CCE, L.P. including CCE-II to incur
indebtedness, including indebtedness incurred in connection with the Long
Beach Investment. See "Business--Description of the Systems--Pending
Investment by CCE-II."
The Company anticipates that, in light of the amount of its existing
indebtedness, it will continue to be highly leveraged for the foreseeable
future. The Company's highly leveraged capital structure, combined with the
unavailability of CCE-II distributions until the CCE-II Credit Facility, the
California Note and any other indebtedness of CCE-II are repaid, could
adversely affect the Issuer's ability to service the Notes and could
significantly limit the Company's ability to finance its operations and fund
its capital expenditure requirements, to compete effectively, to expand its
business, to comply with its obligations under its franchise agreements and to
operate under adverse economic conditions. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources."
DEFICIENCY OF EARNINGS AVAILABLE TO COVER FIXED CHARGES
The historical earnings of CCA and the Crown Systems were inadequate to
cover their fixed charges by $28.2 million, $41.8 million and $38.6 million
for the years ended December 31, 1994, 1995 and 1996, respectively.
24
<PAGE>
In addition, the Company expects to service its other indebtedness and to
fund general working capital needs and capital expenditure requirements with
cash generated by CCE-I and borrowings from other sources. In the event that
the Company is unable to meet its working capital needs and capital
expenditure requirements with cash generated from the CCE-I operations or
borrowings from other sources, the Company will have to consider various
options, such as selling certain assets, refinancing outstanding indebtedness
or obtaining additional equity capital. There can be no assurance that the
Company will be able to raise new equity capital, refinance its outstanding
indebtedness, or obtain new financing in the future, or that, if the Company
is able to do so, the terms available will be favorable to the Company.
SEGREGATION OF DISTRIBUTIONS TO SERVICE THE NOTES AND THE GUARANTEES; NEW CCE
SUBSIDIARIES
The CCE, L.P. Partnership Agreement provides, among other things, that while
any amounts remain outstanding under both the Notes and the California Note,
distributions to CCE, L.P. from CCE-I will be distributed by CCE, L.P. to CAC
and Cencom Cable for distribution to the Issuer for use solely to service the
Notes and distributions to CCE, L.P. from CCE-II will be distributed by CCE,
L.P. to CCT for use solely to service the California Note. CCT, on the one
hand, and CAC and Cencom Cable, on the other hand, have agreed to use all
distributions so received to repay the California Note and the Notes,
respectively. If the California Note is repaid prior to payment in full of all
amounts payable under the Notes, then all distributions to CCE, L.P. from both
CCE-I and CCE-II will, subject to the next two paragraphs, be distributed to
service the Notes. If CCE-I is unable to make distributions to CCE, L.P.,
under the terms of the CCE, L.P. Partnership Agreement, CCE, L.P. will not be
able to use any amounts distributed to it by CCE-II to make distributions to
CAC, Cencom Cable and the Issuer until the CCE-II Credit Facility, the
California Note and any other indebtedness of CCE-II are indefeasibly paid in
full in cash and all commitments to lend in respect of the CCE-II Credit
Facility and any other indebtedness of CCE-II are terminated. There can be no
assurance that CCE-I or CCE-II will make any distributions to CCE, L.P.,
particularly since the CCE-I and CCE-II Credit Facilities and any other senior
indebtedness of CCE-II must be indefeasibly repaid in full prior to CCE-I and
CCE-II, respectively, making any distributions to CCE, L.P.
The Guarantees are limited to the proceeds of distributions received by the
Guarantors from CCE-I. Thus, even if CCE, L.P. were receiving distributions
from CCE-II or any New CCE Subsidiary, such distributions would not be
available under any circumstances through a claim on the Guarantees.
Notwithstanding the foregoing, the CCE, L.P. Partnership Agreement provides
for distributions from CCE-II to be applied towards repayment of the Notes, if
the CCE-II Credit Facility, the California Note and any other senior
indebtedness of CCE-II have been indefeasibly repaid in full in cash.
Subject to certain limitations, the Indenture permits the formation of New
CCE Subsidiaries and contributions of additional assets to existing
Subsidiaries of CCE, L.P. New CCE Subsidiaries may engage in the cable
television business or other businesses. In connection with their businesses,
New CCE Subsidiaries, and, in connection with such asset contributions,
existing Subsidiaries of CCE, L.P., may establish senior credit facilities and
other financing arrangements (debt and/or equity), which may establish a basis
for a new or revised preferred capital account in CCE, L.P. The contribution
of assets to existing CCE, L.P. Subsidiaries could establish the basis for
revised preferred capital accounts in CCE, L.P. Until any applicable financing
arrangement of CCE-II or any New CCE Subsidiary is repaid, such arrangement
could result in any distributions to CCE, L.P. from CCE-II and any New CCE
Subsidiaries being shared pro rata between the Notes and any such new or
existing financing arrangement (with such sharing to be based upon the then
outstanding preferred capital accounts in CCE, L.P.). Holders of the Notes
should not rely on any distributions from CCE-II or any New CCE Subsidiaries
for payment of principal or interest on the Notes. In connection with the
creation of New CCE Subsidiaries or the contribution of additional assets to
existing Subsidiaries of CCE, L.P., the CCE, L.P. Partnership Agreement's
distribution provisions may be amended. See "Description of Notes--Certain
Covenants--Limitation on Changes to CCE, L.P. Partnership Agreement." For
example (and without limiting the arrangements which could be entered into by
a New CCE Subsidiary), in the event one or more New CCE Subsidiaries are
formed in connection with the acquisition of new assets or equity interests
and the issuance by
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an affiliate of CCE, L.P. of a purchase money note payable to the sellers of
such assets or equity interests (i.e., a purchase money note, as was the case
in the California Transaction and the Crown Transaction), then, the CCE, L.P.
Partnership Agreement can be amended, so that (i) rather than all
distributions to CCE, L.P. from CCE-II being available to service the Notes
after payment of the California Note, such distributions would instead be
available pro rata based on preferred capital accounts to service both the
Notes and any new purchase money note owed to such sellers and (ii) all cash
generated by any New CCE Subsidiary would be used first to repay any senior
credit facility entered into by such New CCE Subsidiary to accomplish the
related acquisition. Any amounts thereafter distributed to CCE, L.P. by such
New CCE Subsidiary would be used next to repay any new purchase money note,
and after such new purchase money note is repaid, such distributions from such
New CCE Subsidiary to CCE, L.P. would be available pro rata to service the
Notes, the California Note and any other outstanding purchase money notes. See
"Description of Notes--Certain Covenants."
Such credit facilities, other financing arrangements and asset contributions
and the existence of new or revised preferred capital accounts will not affect
distributions to the Issuer from CAC, Cencom Cable, CCE, L.P. (to the extent
the funds to be distributed by CCE, L.P. were obtained from CCE-I) or CCE-I.
Holders of the Notes may benefit from distributions from CCE-II (and New CCE
Subsidiaries referred to in the preceding paragraph), but should not rely on
such distributions made by them for payment of principal or interest on the
Notes. Accordingly, the presentation of information regarding the Company
focuses on the CCE-I Entities. Thus, holders of the Notes should not rely on
the assets of CCE-II (or any New CCE Subsidiary) or cash flow generated by
such assets for payment of principal or interest on the Notes. See "Certain
Relationship and Related Transactions--The Partnership Agreements."
LIMITED RIGHTS AND REMEDIES ON DEFAULT; LIMITATION ON ENFORCEMENT OF
GUARANTEES
The holders have limited rights and remedies upon the occurrence of an Event
of Default (as defined in the Indenture; see "Description of Notes--Events of
Default" herein), including the failure to pay the Notes at the Stated
Maturity Date. The holders do not have the right to compel payment on the
Stated Maturity Date or thereafter or to accelerate the Notes or commence a
bankruptcy action against the Issuer. Among such limited rights upon the
occurrence of an Event of Default is the right of the holders to increased
rates of interest on amounts outstanding under the Notes. Until the Stated
Maturity Date, if an Event of Default occurs and shall be continuing for any
reason other than failure to pay principal or interest when due, all
principal, interest and other amounts due from the Issuer shall bear the 13%
per annum stated rate of interest plus the 3% per annum Default Rate of
interest set forth in Section 10.01 of the Indenture. If the Issuer fails to
pay all of the outstanding principal on or prior to the Stated Maturity Date
or all of the accrued and unpaid interest on or prior to the third day
following the Stated Maturity Date, there shall be imposed upon the unpaid
principal amount of each Note, in addition to the 13% per annum stated rate of
interest and the 3% per annum Default Rate of interest, if applicable, a
penalty rate of interest that increases yearly from 2000 to 2004. See
"Description of Notes--Events of Default." Because of the restrictions
contained in the Subordination Agreement, as long as such agreement is in
effect it is expected that if an Event of Default occurs such Default Rate of
interest and/or penalty rate of interest shall accrue but not be currently
payable at such time. See "Description of Notes--Subordination."
The CCE, L.P. Guarantee cannot be enforced until the repayment in full and
termination of the CCE-I Credit Facility, the CCE-II Credit Facility, any
other senior indebtedness of CCE-II and senior indebtedness of New CCE
Subsidiaries. The Indenture prohibits CCE, L.P. from incurring indebtedness
but does not contain any restriction on the ability of any subsidiary of CCE,
L.P. to incur indebtedness (other than CCE-I and its Restricted Subsidiaries,
as defined in the Indenture) or the ability of CCE-II to incur additional
indebtedness, including but not limited to indebtedness incurred pursuant to
the Long Beach Investment in connection with which CCE-II and LBAC will become
jointly and severally liable under the CCE-II Credit Facility, which would be
increased by $140.0 million upon consummation of the Long Beach Investment.
See "Description of the Systems--Pending Investment by CCE-II." The CAC
Guarantee and the Cencom Cable Guarantee cannot be enforced until the
indefeasible repayment in full in cash of and termination of the commitments
to lend under the CCE-I Credit Facility. The CCE-I Credit Facility restricts
CCE-I's ability to incur additional indebtedness.
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RESTRICTIONS IMPOSED BY LENDERS
The lenders under the CCE-I Credit Facility and the lenders under the CCE-II
Credit Facility who have security interests in all of the assets of CCE-I and
CCE-II, respectively, as well as the lenders under the Long Beach Credit
Facility who are expected to have security interests in all of the assets of
CCE-II and security interests in the partnership interests of CCE-II held by
certain subsidiaries and affiliates of the Issuer, will have available to them
all of the remedies available to secured creditors under applicable law.
Moreover, the Indenture and the Subordination Agreement (pursuant to which the
holders of the Notes are and will continue to be bound) prohibit any and all
payments on the Notes until all obligations owing under the CCE-I Credit
Facility (including any refinancings thereof) are indefeasibly paid in full in
cash and all commitments to lend in respect thereof are terminated. The final
maturity dates of the CCE-I Credit Facility and the CCE-II Credit Facility
(not including the Long Beach Credit Facility) are December 31, 2004 and
September 29, 2005, respectively. The final maturity dates of the Credit
Facilities may, subject to certain limited exceptions, be extended by mutual
agreement of the lenders thereto and the obligors thereunder, without the
consent of the holders. The final maturity dates of the Long Beach Credit
Facility and any other senior indebtedness of CCE-II are unknown at this time.
The CCE-I Credit Facility imposes restrictions that, among other things,
limit the amount of additional indebtedness that may be incurred by CCE-I, and
imposes limitations on, among other things, investments, loans and other
payments, certain transactions with affiliates and certain mergers and
acquisitions. In addition, the CCE-I Credit Facility substantially prohibits
CCE-I from making any distributions to CCE, L.P. or to the other partners of
CCE-I. The ability of CCE-I to comply with the applicable covenants and
restrictions contained in the CCE-I Credit Facility can be affected by events
beyond its control, and there can be no assurance that CCE-I will achieve
operating results that would permit compliance with such provisions. The
breach of any of the provisions of the CCE-I Credit Facility would, under
certain circumstances, result in a default thereunder, permitting the lenders
thereunder to accelerate the indebtedness under the CCE-I Credit Facility or
foreclose upon the assets pledged to secure such payment. In such event, the
holders of the Notes might not be able to receive payment until such time as
the payment default is cured or waived, any such acceleration is rescinded or
the obligations owing under the CCE-I Credit Facility are indefeasibly paid in
full in cash and all commitments to lend in respect thereof are terminated.
Any of such events would adversely affect the Issuer's ability to service the
Notes. The CCE-II Credit Facility (not including the Long Beach Credit
Facility) contains similar restrictions applicable to CCE-II. It is expected
that the Long Beach Credit Facility and any other senior indebtedness of CCE-
II will contain similar restrictions.
HOLDING COMPANY STRUCTURE
The Issuer is a holding company which has no significant assets, other than
its indirect investments in CCE-I and CCE-II. The Issuer must rely upon
distributions originating from CCE-I to generate the funds necessary to meet
its obligations, including the payment of principal or interest on the Notes.
The Issuer is dependent upon the receipt of distributions from CAC and Cencom
Cable, both of which, in turn, are dependent upon the receipt of distributions
from CCE, L.P., which, in turn, is dependent upon distributions from CCE-I to
provide it with funds. Thus, the Issuer will not have sufficient funds
available to repay the Notes in the event that CAC, Cencom Cable, CCE, L.P. or
CCE-I, as the case may be, is prevented for any reason from making
distributions. In this connection, it should be noted that the CCE-I Credit
Facility substantially prohibits distributions from CCE-I to CCE, L.P., until
the obligations under such credit facility are fully paid. The rights of the
Issuer and its creditors, including the holders of the Notes, to realize upon
the assets of any of the Company's subsidiaries upon any such subsidiary's
bankruptcy, liquidation or reorganization (and the consequent rights of the
holders of the Notes to participate in the realization of those assets), will
be subject to the prior claims of such subsidiary's respective creditors,
including the lenders under the CCE-I Credit Facility and, in the case of CCE-
II, the lenders under the CCE-II Credit Facility, the holder of the California
Note and the lenders under any other indebtedness of CCE-II, and in the case
of any New CCE Subsidiary, any lender to such New CCE Subsidiary. In any such
event, there may not be sufficient assets remaining to pay amounts due on any
or all of the Notes then outstanding. See "Description of Notes--
Subordination" and "Description of Other Indebtedness." The CCE-I Credit
Facility permits CCE-I to incur additional indebtedness under certain
circumstances. See "Description of Notes."
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CONTRACTUAL SUBORDINATION
The Notes are unsecured obligations of the Issuer and by virtue of the terms
of the Subordination Agreement and the terms of the Notes are subordinate in
right and priority of payment to all existing indebtedness of the Issuer,
other than indebtedness that by its terms is expressly subordinated in right
and priority of payment to the Notes. The Issuer conducts its business
principally through the Operating Entities. See "Business--Company's
Background and Ownership Structure."
CONTROL OF THE COMPANY BY KELSO
Kelso and certain other individuals own an 85% interest in the Issuer, which
holds through CAC a 1% general partnership interest in CCE, L.P. and a 1.22%
general partnership interest in CCE-I. Kelso also owns an 85% interest in CCT,
which in turn holds a 1% general partnership interest in CCE, L.P. and a 1%
general partnership interest in CCE-II. Kelso and certain other individuals
own approximately 19.9% of Charter. Because Kelso directly controls the Issuer
and indirectly controls CAC and Cencom Cable, as well as the general partners
of CCE, L.P., CCE-I and CCE-II, Kelso can, subject to applicable law, exercise
effective control over the management and affairs of the Company, CCT and
their subsidiaries.
NONRECOURSE NATURE OF NOTES AS TO KELSO, CHARTER AND OTHERS
The Issuer is the sole obligor under the Notes. Although Charter and Kelso
have agreed to cause certain covenants under the Indenture to be complied
with, none of Charter, Kelso or any of their respective directors, officers,
partners, stockholders, employees or affiliates (other than the Guarantors)
will be an obligor under or guarantor of the Notes. There should be no
expectation that Charter, Kelso or any person other than the Issuer will, in
the future, fund the operations or deficits of the Issuer or any of their
respective subsidiaries. The CCE, L.P. Guarantee cannot be enforced until
repayment in full of and termination of commitments to lend under the CCE-I
Credit Facility, the CCE-II Credit Facility, any other senior indebtedness of
CCE-II and senior indebtedness of new CCE Subsidiaries. The CAC Guarantee and
the Cencom Cable Guarantee cannot be enforced until the repayment in full of
and termination under the CCE-I Credit Facility. See "Description of Notes--
General" and "Description of Notes--The Guarantees."
DEPENDENCE ON CHARTER AND KEY PERSONNEL OF CHARTER; POTENTIAL CONFLICTS OF
INTEREST
The Company's success depends on the management of its cable systems by
Charter and, therefore, on Charter's ability to attract, motivate and retain
highly qualified management, sales and technical personnel. In the event
Charter is unable to continue to do so, the operations and growth prospects of
the Company could be adversely affected. Charter is dependent upon the
services of certain key personnel, including Messrs. Babcock, Kent and Wood.
In the event Charter loses the services of any of Messrs. Babcock, Kent or
Wood, or certain other key personnel, its ability to conduct its business,
including management of the Systems, could be adversely affected. In addition,
in certain circumstances, in the event that the partnership that controls
Charter fails to be Controlled (as defined in the CCE-I Credit Facility) by at
least one of Messrs. Babcock, Kent or Wood, or a majority of the voting equity
and economic interests in such partnership fails to be owned by at least one
of such individuals, an Event of Default (as defined in the CCE-I Credit
Facility) shall occur under the CCE-I Credit Facility.
Furthermore, Charter's management of other cable systems could adversely
affect Charter's ability to manage the Systems by limiting the availability
and accessibility of certain Charter personnel, including the personnel who
service the Systems as well as other Charter-managed systems in the same
operating region (but owned by other legal entities).
In the event the Company's relationship with Charter is terminated for any
reason, the Company will no longer benefit from, among other things,
advantageous programming opportunities, acquisition opportunities and
financing relationships which are made available to the Company through
Charter. See "Business--Business Strategy--Maximize Benefits Provided by
Relationship with Charter." In such event, the Company's operating expenses
and access to capital could be adversely affected.
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The other cable systems managed by Charter and owned by certain of its
affiliated entities are located principally in Alabama, Georgia, Kentucky,
Louisiana, Missouri, North Carolina, South Carolina, Tennessee and Texas.
Although the Company's acquisition strategy calls for the acquisition of
additional cable systems in the vicinity of the Company's existing operations,
such systems may become available for sale in tandem with systems located in
other portions of the country, for aggregate amounts which exceed the
Company's purchasing ability, or which otherwise do not fit the Company's
business strategy. It is possible, therefore, that systems in close proximity
to the Regions which are identified for sale may be acquired by Charter itself
or other Charter-affiliated entities. There can be no assurance that such
systems, if acquired by Charter or a Charter-affiliated entity, would
ultimately be sold or otherwise transferred to the Company, or that the
Company will be able to take advantage of any other opportunity which becomes
available to Charter or any of its affiliates.
Subject to certain exceptions, the Issuer will not permit CCE-I to engage in
any transaction with an affiliate on terms less advantageous to CCE-I than
would be the case if such transaction were effected on an arm's length basis
with a non-affiliate. This restriction shall not apply to any transaction
(including the payment of fees and expenses) permitted under the CCE-I Credit
Facility from time to time or, after the CCE-I Credit Facility Termination
Date (as defined in "Description of Notes--Certain Definitions"), which is
consistent with past practice.
OPERATING HISTORY
The Issuer was formed on November 17, 1994 to consummate the Crown
Transaction in January 1995 and thereafter act as a holding company for CAC
and Cencom Cable. The Company has grown principally through acquisitions. See
"Business--Description of the Systems." Prospective investors, therefore, have
limited historical financial information about the Company and about the
results that can be achieved by Charter in managing the Systems to evaluate
its performance and an investment in the Notes. In addition, as a result of
the Company's rapid growth through acquisitions, past operating history is not
necessarily indicative of future results. Further, there can be no assurance
that the Company will be able to implement successfully its business strategy.
RISKS RELATING TO ACQUISITION STRATEGY
A significant element of the Company's strategy is to expand its operations
by acquiring cable television systems located in reasonable proximity to
existing systems or of a sufficient size to enable the acquired system to
serve as the basis for a new cluster. There can be no assurance that the
Company will be able to identify and acquire such systems or that it will be
able to finance such acquisitions in the future. Furthermore, any acquisition
may have an adverse effect upon the Company's operating results or cash flow,
particularly for acquisitions of new systems which require significant capital
expenditures. Thus, there can be no assurance that the Company will be able to
integrate successfully any acquired business with its existing operations or
realize any efficiencies therefrom, or that any such acquisition will be
profitable or that the Company will be able to obtain any required financing
to acquire additional systems in the future. See "Business--Description of the
Systems" and "Business--Business Strategy."
REGULATION IN THE CABLE TELEVISION INDUSTRY
The cable television industry is subject to extensive regulation by federal,
local and, in some instances, state governmental agencies. The Cable
Communications Policy Act of 1984 (the "1984 Cable Act") and the Cable
Television Consumer Protection and Competition Act of 1992 (the "1992 Cable
Act," together with the 1984 Cable Act, the "Cable Acts"), both of which
amended the Communications Act, established a national policy to guide the
development and regulation of cable television systems. The 1992 Cable Act
significantly expanded the scope of cable television regulation on an
industry-wide basis by imposing rate regulation, carriage requirements for
local broadcast stations, customer service obligations and other requirements.
The 1992 Cable Act and the FCC's rules implementing that Act generally have
increased the administrative and operational expenses and in certain instances
required rate reductions for cable television systems and have resulted in
additional regulatory oversight by the FCC and local or state franchise
authorities. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Business--Regulation in the
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Cable Television Industry." Under the FCC's initial rate regulations pursuant
to the 1992 Cable Act, many cable systems were required to reduce their rates,
some by 17%. See "Business--Regulation in the Cable Television Industry."
Telecommunications Legislation
The Telecommunications Act was signed into law by the President on February
8, 1996, and substantially amends the Communications Act by altering federal,
state and local laws and regulations pertaining to cable television,
telecommunications and other services. The Telecommunications Act also
authorizes additional competition in the cable television industry, including
competition from local exchange companies ("LECs"), which include the Regional
Bell Operating Companies ("RBOCs"), and from public utilities. See "Business--
Regulation in the Cable Television Industry--Telecommunications Legislation."
Telephone Company Provision of Video Programming
Under the Telecommunications Act, telephone companies can compete directly
with cable operators in the provisioning of video programming in the telephone
company's service areas, with certain regulatory safeguards. The new
legislation recognizes several multiple entry options for telephone companies
to provide competitive video programming. Local exchange carriers, including
the RBOCs, will be allowed to compete with cable operators both inside and
outside the LECs' telephone service areas with certain limitations, including
limitations on LEC buyouts of cable systems within the LEC's telephone service
area, cable operator buyouts of LEC systems within the cable operator's
franchise area, and joint ventures between cable operators and LECs in the
same markets. However, there are some statutory exceptions, and the FCC may
grant waivers of the buyout provisions in certain cases. See "Business--
Regulation in the Cable Television Industry."
Miscellaneous Requirements and Provisions
The Telecommunications Act also imposes other miscellaneous requirements on
cable operators, including an obligation to fully scramble or block at no
charge the audio and video portion of any channel not specifically subscribed
to by a household. The Telecommunications Act also amends the definition of
"cable system" so that a broader class of entities (including some entities
which may compete with the Company) providing video programming will be exempt
from regulation as a cable system under the Communications Act.
Franchise Renewal
A franchise relating to the CCE-I Systems (as defined herein) located in the
State of Connecticut is currently being negotiated to be renewed. Connecticut
regulates cable systems on a statewide basis (as opposed to franchising by the
various municipalities). The Company's franchise for "Area 13" in Connecticut
(the northeastern system) is scheduled to expire in July 1998. The Company
requested the commencement of renewal proceedings in January 1996 with the
Connecticut Department of Public Utility Control ("DPUC"). The DPUC granted
the Company's request for an "informal renewal" and has requested, in
conformance with general procedures, that the Company submit its Proposal for
Renewal as the next step in the process. The DPUC has also undertaken,
pursuant to its customary procedures, a community needs assessment. Management
believes that it generally has a good relationship with the DPUC.
Franchises, including the Connecticut franchise referenced above, covering
an aggregate of approximately 40% of the Company's total subscriber base, are
currently within the three year renewal window provided in the Communications
Act. While there can be no assurance that all of these franchises will be
renewed on commercially reasonable terms, the Company believes that it
maintains generally good relationships with its franchising authorities.
COMPETITION IN THE CABLE TELEVISION BUSINESS
Cable television companies generally operate under non-exclusive franchises
granted by local authorities that are subject to renewal and renegotiation
from time to time. The 1992 Cable Act prohibits franchising authorities from
granting exclusive cable television franchises and from unreasonably refusing
to award additional competitive franchises. Cable system operators may
therefore experience competition from other operators building a cable
television system in a franchise area in which such a system had previously
been constructed (i.e., an "overbuild"). The 1992 Cable Act also permits
municipal authorities to operate cable television systems in their communities
without franchises.
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Cable television systems also face competition from alternative methods of
receiving and distributing television signals and from other sources of home
entertainment. Within the home video programming market, the Company competes
primarily with home satellite and wireless cable providers and, when existing
franchises become available for renewal, with other cable operators. In
addition, the Telecommunications Act allows LECs to provide a wide variety of
video services competitive with services provided by cable systems and to
provide cable services directly to customers in the telephone companies'
service areas, with some regulatory safeguards. In Connecticut, the DPUC
recently granted to a subsidiary of a local telephone company a statewide
franchise. The local telephone company subsidiary proposed to provide cable
television services initially to customers in at least one community currently
served by CCE-I. This new statewide cable franchise is currently being
challenged by a regional cable association. The association recently filed an
appeal in the Connecticut Superior Court challenging the DPUC's grant of the
statewide franchise on several substantive and procedural grounds. The Company
cannot predict the outcome of this litigation. According to the terms of its
franchise, the service must pass all homes in Connecticut within eleven years.
See "Business--Competition in the Cable Television Business." Management
cannot predict the extent to which competition will materialize from other
cable television operators, telephone companies, other distribution systems
for delivering video programming to the home, or other potential competitors,
including those from technologies not yet available in the marketplace, and,
if such competition materializes, the extent of its effect on the Company.
Many of the Company's competitors or potential competitors have greater
technical, financial and other resources than the Company. See "Business--
Competition in the Cable Television Business."
ORIGINAL ISSUE DISCOUNT CONSEQUENCES OF THE NOTES
Under the Notes, interest is not due and payable until the final maturity of
the Notes. Consequently, the holders of the Notes generally will be required
to include amounts in gross income for Federal income tax purposes in advance
of the receipt of the cash payments to which such income is attributable. See
"Certain Federal Income Tax Consequences" for a more detailed discussion of
the Federal income tax consequences to the holders of the Old Notes of the
acquisition, ownership and disposition (including repayment or redemption) of
the New Notes.
ABSENCE OF PUBLIC MARKET; RESTRICTIONS ON RESALE
There is currently no established public market for the Notes. There can be
no assurance as to (i) the liquidity of any market that may develop, (ii) the
ability of the holders of Notes to sell their Notes or (iii) the price at
which the holders of Notes would be able to sell their Notes. If such a market
were to exist, the Notes could trade at prices that may be higher or lower
than their principal amount or purchase price, depending on many factors,
including prevailing interest rates, the market for similar securities and the
financial performance of the Issuer. The Issuer does not presently intend to
apply for the listing of the Notes on any national securities exchange or on
the National Association of Securities Dealers Automated Quotation System;
however, the Notes have been designated for trading in the PORTAL market.
Accordingly, no assurance can be given as to the development or liquidity of
any market for the Notes.
Under the Indenture, the holders are collectively entitled to a single
additional demand registration right (independent of the registration pursuant
to which this Exchange Offer is being made), which, if exercised, will be at
the expense of the holders of the Notes as described herein. See "Description
of the Notes--Registration Rights."
CONSEQUENCES OF FAILURE TO EXCHANGE; RESALES BY BROKER-DEALERS
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes as set forth in the legend thereon as a
consequence of the issuance of the Old Notes pursuant to exemptions from, or
in transactions not subject to, the registration requirements of the
Securities Act and applicable state securities laws. In general, the Old Notes
may not be offered or sold, unless registered under the Securities Act, except
pursuant to an exemption from, or in a transaction not subject to, the
Securities Act and applicable state securities laws. The Issuer does not
currently anticipate it will register the Old Notes under the Securities Act,
except in the event that holders of $15 million or more of the Notes request
registration pursuant to the registration right described in Section 12.01(b)
of the
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Indenture. Based on an interpretation by the staff of the Commission set forth
in no-action letters issued to third parties unrelated to the Issuer, New
Notes issued pursuant to the Exchange Offer in exchange for Old Notes may be
offered for resale, resold or otherwise transferred by holders thereof (other
than any such holder which is an "affiliate" of the Issuer or any of the
Guarantors within the meaning of Rule 405 under the Securities Act) without
compliance with the registration and prospectus delivery provisions of the
Securities Act provided that such New Notes are acquired in the ordinary
course of such holders' business and such holders have no arrangement with any
person to participate in the distribution of such Notes. Each broker-dealer
that receives New Notes for its own account pursuant to the Exchange Offer
must acknowledge that it will deliver a prospectus in connection with any
resale of such New Notes. The Letter of Transmittal states that, by so
acknowledging and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be amended or supplemented from
time to time, may be used by a broker-dealer in connection with resales of New
Notes received in exchange for Old Notes where such Old Notes were acquired by
such broker-dealer as a result of market-making activities or other trading
activities. The Issuer has agreed that, for a period of 180 days after the
effective date of this Prospectus, it will make this Prospectus available to
any broker-dealer for use in connection with any such resale. See "Plan of
Distribution." However, to comply with the securities laws of certain
jurisdictions, if applicable, the New Notes may not be offered or sold unless
they have been registered or qualified for sale in such jurisdictions or an
exemption from registration or qualification is available and is complied
with. To the extent that Old Notes are tendered and accepted in the Exchange
Offer, the trading market for untendered and tendered but unaccepted Old Notes
will be adversely affected.
32
<PAGE>
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Old Notes were sold by the Issuer on January 18, 1995 to HC Crown, which
resold the Old Notes to "qualified institutional buyers" (as defined in Rule
144A under the Securities Act), including an affiliate of HC Crown. In
connection with the sale of the Old Notes, the Issuer and HC Crown entered
into a Letter Agreement dated as of November 15, 1996 (the "Letter Agreement")
pursuant to which the Issuer agreed to file with the Commission a registration
statement (the "Exchange Offer Registration Statement") with respect to an
offer to exchange the Old Notes for New Notes. In addition, the Issuer agreed
to use its best efforts to cause the Exchange Offer Registration Statement to
become effective under the Securities Act and to issue the New Notes pursuant
to the Exchange Offer.
The Exchange Offer is being made pursuant to the Letter Agreement to satisfy
the Issuer's obligations thereunder. The term "holder of Old Notes," with
respect to the Exchange Offer, means any person in whose name Old Notes are
registered on the books of the Company or any other person who has obtained a
properly completed bond power from the registered holder, or any person whose
Old Notes are held of record by the Depository Trust Company (the
"Depositary"). The Issuer is not required to file any registration statement
to register any outstanding Old Notes. Holders of Old Notes who do not tender
their Old Notes or whose Old Notes are tendered but not accepted would have to
rely on exemptions to registration requirements under the securities laws,
including the Securities Act, if they wish to sell their Old Notes.
Based on an interpretation by the staff of the Commission set forth in no-
action letters issued to third parties, the Issuer believes that the New Notes
issued pursuant to the Exchange Offer in exchange for Old Notes may be offered
for resale, resold and otherwise transferred by any holder of such New Notes
(other than a person that is an "affiliate" of the Issuer or any of the
Guarantors within the meaning of Rule 405 under the Securities Act and except
as set forth in the next paragraph) without compliance with the registration
and prospectus delivery provisions of the Securities Act, provided that such
New Notes are acquired in the ordinary course of such holder's business and
such holder is not participating, and has no arrangement or understanding with
any person to participate, in the distribution of such New Notes.
If any person were to be participating in the Exchange Offer for the purpose
of distributing securities in a manner not permitted by the staff's
interpretation (i) the position of the staff of the Commission enunciated in
interpretive letters would be inapplicable to such person and (ii) such person
would be required to comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction.
Each broker-dealer that receives New Notes for its own account in exchange for
Old Notes, where such Old Notes were acquired by such broker-dealer as a
result of market-making activities or other trading activities, must
acknowledge that it will deliver a prospectus in connection with any resale of
such New Notes. See "Plan of Distribution."
Except as aforesaid, this Prospectus may not be used for any offer to
resell, resale or other transfer of New Notes.
The Exchange Offer is not being made to, nor will the Exchange Agent accept
surrenders for exchange from, holders of Old Notes in any jurisdiction in
which the Exchange Offer or the acceptance thereof would not be in compliance
with the securities or Blue Sky laws of such jurisdiction. Prior to the
Exchange Offer, however, the Issuer will use its best efforts to register or
qualify the New Notes for offer and sale under the securities or Blue Sky laws
of such jurisdictions as any such holder requests in writing and do any and
all other acts or things necessary or advisable to enable the offer and sale
in such jurisdictions of the New Notes.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal the Company will accept any and
all Old Notes validly tendered prior to 5:00 p.m., New York time,
33
<PAGE>
on the Expiration Date (as defined below). The Issuer will issue up to $82.0
million aggregate principal amount of New Notes in exchange for a like
principal amount of outstanding Old Notes which are validly tendered and
accepted in the Exchange Offer. Subject to the conditions of the Exchange
Offer described below, the Issuer will accept any and all Old Notes which are
so tendered. Holders may tender some or all of their Old Notes pursuant to the
Exchange Offer.
The form and terms of the New Notes will be the same in all material
respects as the form and terms of the Old Notes, except that the New Notes
will be registered under the Securities Act and hence will not bear legends
restricting the transfer thereof.
Holders of Old Notes do not have any appraisal or dissenters' rights under
the General Corporation Law of the State of Delaware or the Indenture in
connection with the Exchange Offer. The Issuer intends to conduct the Exchange
Offer in accordance with the provisions of the Letter Agreement. Old Notes
which are not tendered for exchange or are tendered but not accepted in the
Exchange Offer will remain outstanding and be entitled to the benefits of the
Indenture. Under the Indenture, the holders are entitled to a single demand
registration right (in addition to the registration pursuant to which this
Exchange Offer is being made), pursuant to which the Issuer and the Guarantors
will use their reasonable best efforts to cause to become effective a shelf
registration statement with respect to the resale of the Notes and to keep
such shelf registration statement continuously effective until nine months
after the effective date thereof.
The Issuer shall be deemed to have accepted validly tendered Old Notes when,
as and if the Issuer has given oral or written notice thereof to Harris Trust
and Savings Bank acting in its capacity as the exchange agent (the "Exchange
Agent") for the Exchange Offer. The Exchange Agent will act as agent for the
tendering holders for the purpose of receiving the New Notes from the Issuer.
If any tendered Old Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, certificates for any such unaccepted Old Notes will be returned,
without expense, to the tendering holder thereof as promptly as practicable
after the Expiration Date.
Holders who tender Old Notes in the Exchange Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the
Letter of Transmittal, transfer taxes with respect to the exchange of Old
Notes pursuant to the Exchange Offer. HC Crown will pay all charges and
expenses, other than certain applicable taxes described below, in connection
with the Exchange Offer. See "--Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; CLOSING
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
, 1997, unless the Issuer, in its sole discretion, extends the Exchange
Offer, in which case the term "Expiration Date" shall mean the latest date and
time to which the Exchange Offer is extended.
In order to extend the Exchange Offer, the Issuer will notify the Exchange
Agent of any extension by oral or written notice and will announce such
extension on the next business day after the previously scheduled Expiration
Date. Such announcement will state that the Issuer is extending the Exchange
Offer for a specified period of time. Without limiting the manner in which the
Issuer may choose to make a public announcement of any extension of the
Exchange Offer, the Issuer shall have no obligation to publish, advertise or
otherwise communicate any such public announcement, other than by making a
timely release to an appropriate news agency.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Issuer will not be
required to accept any Old Notes for exchange, or exchange any New Notes for
any Old Notes, and may terminate or amend the Exchange Offer before the
acceptance of any Old Notes for exchange, if the Exchange Offer violates any
applicable law or interpretation by the staff of the Commission.
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<PAGE>
If the Issuer determines in its sole discretion that the foregoing condition
exists, the Issuer may (i) refuse to accept any Old Notes and return all
tendered Old Notes to the tendering holders, (ii) extend the Exchange Offer
and retain all Old Notes tendered prior to the expiration of the Exchange
Offer, subject, however, to the rights of holders who tendered such Old Notes
to withdraw their tendered Old Notes, or (iii) waive such condition with
respect to the Exchange Offer and accept all properly tendered Old Notes which
have not been withdrawn. If such waiver constitutes a material change to the
Exchange Offer, the Issuer will promptly disclose such waiver by means of a
prospectus supplement that will be distributed to the holders, and the Issuer
will extend the Exchange Offer as required by applicable law.
PROCEDURES FOR TENDERING
Only a holder of Old Notes may tender such Old Notes in the Exchange Offer.
To tender in the Exchange Offer, a holder must complete, sign and date the
Letter of Transmittal or a facsimile thereof, have the signatures thereon
guaranteed if required by the Letter of Transmittal, and mail or otherwise
deliver such Letter of Transmittal or such facsimile, together with the Old
Notes (unless such tender is being effected pursuant to the procedure for
book-entry transfer described below) and any other required documents, to the
Exchange Agent prior to 5:00 p.m., New York City time, on the Expiration Date.
Any financial institution that is a participant in the Depositary's Book-
Entry Transfer Facility system may make book-entry delivery of the Old Notes
by causing the Depositary to transfer such Old Notes into the Exchange Agent's
account in accordance with the Depositary's procedure for such transfer.
Although delivery of Old Notes may be effected through book-entry transfer
into the Exchange Agent's account at the Depositary, the Letter of Transmittal
(or facsimile thereof), with any required signature guarantees and any other
required documents, must, in any case, be transmitted to and received or
confirmed by the Exchange Agent at its addresses set forth in "Exchange Agent"
below prior to 5:00 p.m., New York City time, on the Expiration Date. DELIVERY
OF DOCUMENTS TO THE DEPOSITARY IN ACCORDANCE WITH ITS PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
The tender by a holder of Old Notes will constitute an agreement between
such holder and the Issuer in accordance with the terms and subject to the
conditions set forth herein and in the Letter of Transmittal.
The method of delivery of Old Notes and the Letter of Transmittal and all
other required documents to the Exchange Agent is at the election and risk of
the holders of Old Notes. Instead of delivery by mail it is recommended that
holders of Old Notes use an overnight or hand delivery service. In all cases
sufficient time should be allowed to assure delivery to the Exchange Agent
before the Expiration Date. No Letter of Transmittal or Old Notes should be
sent to the Issuer. Holders of Old Notes may request their respective brokers,
dealers, commercial banks, trust companies or nominees to effect the tenders
for such Holders.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by an Eligible Institution (as defined below)
unless the Old Notes tendered pursuant thereto are tendered (i) by a
registered holder of Old Notes which has not completed the box entitled
"Special Payment Instructions" or "Special Delivery Instructions" on the
Letter of Transmittal or (ii) for the account of an Eligible Institution. In
the event that signatures on a Letter of Transmittal or a notice of
withdrawal, as the case may be, are required to be guaranteed, such guarantee
must be by a member of a signature guarantee program within the meaning of
Rule 17Ad-15 under the Exchange Act (an "Eligible Institution").
If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, owners of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and unless waived by the Issuer,
evidence satisfactory to the Issuer of their authority to so act must be
submitted with the Letter of Transmittal.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance and withdrawal of tendered Old Notes will be
determined by the Issuer in its sole discretion, which determination will be
final and binding. The Issuer reserves the absolute right to reject any and
all Old Notes not properly tendered or any
35
<PAGE>
Old Notes the Issuer's acceptance of which would, in the opinion of counsel
for the Issuer, be unlawful. The Issuer also reserves the right to waive any
defects, irregularities or conditions of tender as to particular Old Notes.
The Issuer's interpretation of the terms and conditions of the Exchange Offer
(including the instructions in the Letter of Transmittal) will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Old Notes must be cured within such times as the
Issuer shall determine. Although the Issuer intends to request the Exchange
Agent to notify holders of Old Notes of defects or irregularities with respect
to tenders of Old Notes, neither the Issuer, the Exchange Agent nor any other
person shall incur any liability for failure to give such notification.
Tenders of Old Notes will not be deemed to have been made until such defects
or irregularities have been cured or waived. Any Old Notes received by the
Exchange Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned by the Exchange
Agent to the tendering holders, unless otherwise provided in the Letter of
Transmittal, as soon as practicable following the Expiration Date.
In addition, the Issuer reserves the right in its sole discretion (subject
to limitations contained in the Indenture) (i) to purchase or make offers for
any Old Notes that remain outstanding subsequent to the Expiration Date and
(ii) to the extent permitted by applicable law, purchase Old Notes in the open
market, in privately negotiated transactions or otherwise. The terms of any
such purchases or offers could differ from the terms of the Exchange Offer.
By tendering, each holder of Old Notes will represent to the Issuer that,
among other things, the New Notes acquired pursuant to the Exchange Offer are
being obtained in the ordinary course of business of the person receiving such
New Notes, whether or not such person is the holder and that neither the
holder nor any such other person (i) has an arrangement or understanding with
any person to participate in the distribution of such New Notes, (ii) is an
"affiliate", as defined in Rule 405 under the Securities Act, of the Issuer or
any of the Guarantors or (iii) is engaged in, or intends to engage in, a
distribution of the New Notes. If the holder is a broker-dealer that will
receive New Notes for its own account in exchange for Old Notes that were
acquired as a result of market-making activities or other trading activities,
such holder by tendering will acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. See "Plan of Distribution."
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available, or (ii) who cannot deliver their Old Notes and other
required documents to the Exchange Agent, or cannot complete the procedure for
book-entry transfer prior to the Expiration Date, may effect a tender if:
(a) The tender is made through an Eligible Institution;
(b) Prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder, the certificate number(s)
of such Old Notes (if available) and the principal amount of Old Notes
tendered together with a duly executed Letter of Transmittal (or a
facsimile thereof), stating that the tender is being made thereby and
guaranteeing that, within five business days after the Expiration Date, the
certificate(s) representing the Old Notes to be tendered in proper form for
transfer (or a confirmation of a book-entry transfer into the Exchange
Agent's account at the Depositary of Old Notes delivered electronically)
and any other documents required by the Letter of Transmittal will be
deposited by the Eligible Institution with the Exchange Agent; and
(c) Such certificate(s) representing all tendered Old Notes in proper
form for transfer (or confirmation of a book-entry transfer into the
Exchange Agent's account at the Depositary of Old Notes delivered
electronically) and all other documents required by the Letter of
Transmittal are received by the Exchange Agent within three business days
after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders of Old Notes who wish to tender their Old Notes according to
the guaranteed delivery procedures set forth above.
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<PAGE>
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the Expiration Date,
unless previously accepted for exchange.
To withdraw a tender of Old Notes in the Exchange Offer, a written or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its address set forth herein prior to 5:00 p.m., New York City time,
on the Expiration Date, and prior to acceptance for exchange thereof by the
Issuer. Any such notice of withdrawal must (i) specify the name of the person
having deposited the Old Notes to be withdrawn (the "Depositor"), (ii)
identify the Old Notes to be withdrawn (including the certificate number or
numbers and principal amount of such Old Notes), (iii) be signed by the
Depositor in the same manner as the original signature on the Letter of
Transmittal by which such Old Notes were tendered (including any required
signature guarantees) or be accompanied by documents of transfer sufficient to
have the Trustee with respect to the Old Notes register the transfer of such
Old Notes into the name of the person withdrawing the tender, and (iv) specify
the name in which any such Old Notes are to be registered, if different from
that of the Depositor. All questions as to the validity, form and eligibility
(including time of receipt) of such withdrawal notices will be determined by
the Issuer, whose determination shall be final and binding on all parties. Any
Old Notes so withdrawn will be deemed not to have been validly tendered for
purposes of the Exchange Offer and no New Notes will be issued with respect
thereto unless the Old Notes so withdrawn are validly re-tendered. Any Old
Notes which have been tendered but which are not accepted for exchange or
which are withdrawn will be returned to the holder thereof without cost to
such holder as soon as practicable after withdrawal, rejection of tender or
termination of the Exchange Offer. Properly withdrawn Old Notes may be re-
tendered by following one of the procedures described above under "Procedures
for Tendering" at any time prior to the Expiration Date.
EXCHANGE AGENT
Harris Trust and Savings Bank has been appointed as Exchange Agent for the
Exchange Offer. Questions and requests for assistance, requests for additional
copies of this Prospectus or of the Letter of Transmittal and requests for
Notices of Guaranteed Delivery should be directed to the Exchange Agent
addressed as follows:
By Registered or Certified Mail:
Harris Trust and Savings Bank c/o Harris Trust
Company of New York
Wall Street Station
P.O. Box 1010
New York, NY 10268-1010
Facsimile Transmission Number:
(212) 701-7636
(212) 701-7637
By Hand/Overnight Delivery: Harris Trust and Savings Bank c/o Harris Trust
Company of New York
77 Water Street, 5th Floor
New York, NY 10005
FEES AND EXPENSES
The expenses of soliciting tenders pursuant to the Exchange Offer will be
borne by HC Crown. The principal solicitation for tenders pursuant to the
Exchange Offer is being made by mail; however, additional solicitation may be
made by telephone, facsimile or other electronic transmission or in person by
officers and regular employees of the Issuer and their affiliates.
The Issuer has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The Issuer, however, will pay
the Exchange Agent reasonable and customary fees for its services and will
reimburse it for its reasonable out-of-pocket expenses in connection
therewith. HC Crown may also pay brokerage houses and other custodians,
nominees and fiduciaries the reasonable out-of-pocket expenses incurred by
them in forwarding
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<PAGE>
copies of this Prospectus, Letters of Transmittal and related documents to the
beneficial owners of the Old Notes and in handling or forwarding tenders for
exchange. HC Crown will pay the other expenses to be incurred in connection
with the Exchange Offer, including fees and expenses of the Trustee,
accounting and legal fees and printing costs.
HC Crown will pay all transfer taxes, if any, applicable to the exchange of
Old Notes pursuant to the Exchange Offer. If, however, certificates
representing New Notes or Old Notes for principal amounts not tendered or
accepted for exchange are to be delivered to, or are to be issued in the name
of, any person other than the registered holder of Old Notes tendered, or if
tendered Old Notes are registered in the name of any person other than the
person signing the Letter of Transmittal, or if a transfer tax is imposed for
any reason other than the exchange of Old Notes pursuant to the Exchange
Offer, then the amount of any such transfer taxes (whether imposed on the
registered holder or any other persons) will be payable by the tendering
holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted with the Letter of Transmittal, the amount of such
transfer taxes will be billed directly to such tendering holder.
CONSEQUENCES OF FAILURE TO EXCHANGE OLD NOTES
Generally, holders of Old Notes (other than any holder which is an
"affiliate" of the Issuer or any of the Guarantors within the meaning of Rule
405 under the Securities Act) that exchange their Old Notes for New Notes
pursuant to the Exchange Offer may offer such New Notes for resale, resell
such New Notes, and otherwise transfer such New Notes without compliance with
the registration and prospectus delivery provisions of the Securities Act,
provided such New Notes are acquired in the ordinary course of the holders'
business, and such holders have no arrangement with any person to participate
in a distribution of such New Notes. Each broker-dealer that receives New
Notes for its own account in exchange for Old Notes, where such Old Notes were
acquired by such broker-dealer as a result of market-making activities or
other trading activities, must acknowledge that it will deliver a prospectus
in connection with any resale of such New Notes. See "Plan of Distribution."
To comply with the securities laws of certain jurisdictions, it may be
necessary to qualify for sale or register the New Notes prior to offering or
selling such New Notes. Upon request by holders of Old Notes prior to the
Exchange Offer, the Issuer will register or qualify the New Notes in certain
jurisdictions subject to the conditions in the Letter Agreement. If a holder
does not exchange such Old Notes for New Notes pursuant to the Exchange Offer,
such Old Notes will continue to be subject to the restrictions on transfer
contained in the legend thereon. In general the Old Notes may not be offered
or sold, unless registered under the Securities Act, except pursuant to an
exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. To the extent that Old Notes are not
tendered or are tendered but not accepted in the Exchange Offer, a holder's
ability to sell untendered Old Notes could be adversely affected.
ACCOUNTING TREATMENT
The New Notes will be recorded at the same carrying value as the Old Notes,
as reflected in the Issuer's accounting records on the date of the exchange.
Accordingly, no gain or loss for accounting purposes will be recognized by the
Issuer upon the consummation of the Exchange Offer.
FEDERAL INCOME TAX CONSEQUENCES
Under current Federal law, which is subject to retroactive change, the
substitution of New Notes for Old Notes pursuant to the Exchange Offer should
not be treated as a sale, exchange, disposition or other taxable event for the
holders of the Old Notes for Federal income tax purposes. Holders should not
recognize any taxable gain or loss or any interest income as a result of
substituting New Notes for Old Notes pursuant to the Exchange Offer, and a
holder should have the same adjusted tax basis and holding period in the New
Notes as it had in the Old Notes immediately before the substitution and the
New Notes should have the same issue price (and adjusted issue price
immediately after the substitution) and the same amount of original issue
discount, if any, as the Old Notes. Holders, however, are strongly urged to
consult their own tax advisors regarding the consequences of the Exchange
Offer, including the effect under Federal, state, local and any applicable
foreign laws. For federal income tax consequences of ownership of the Notes
generally, see "Certain Federal Income Tax Consequences."
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<PAGE>
THE COMPANY
The Company's principal business is the ownership, operation and development
of cable television systems. CCE-I owns, operates and develops cable
television systems in the St. Louis, metropolitan area including southwestern
Illinois and in certain rural and suburban areas in Connecticut and
Massachusetts. As of December 31, 1996, the cable television systems owned by
CCE-I passed approximately 533,600 homes and served approximately 338,300
basic subscribers in western and northeastern Connecticut, Massachusetts,
eastern Missouri and southwestern Illinois. In addition, CCE-II owns, operates
and develops cable television systems in metropolitan areas of southern
California. The Company's operations are managed under the direction of
Charter, a privately held owner and manager of cable television systems. As of
December 31, 1996, Charter managed cable television systems which serve
approximately 971,000 basic subscribers (including the Company's subscribers).
Assuming completion of all publicly announced cable television industry
transactions, management believes that Charter would be the 13th largest MSO
in the United States based on number of basic subscribers. The Company seeks
to own and operate cable television systems serving an increased number of
basic subscribers in the Regions.
The ten individuals principally responsible for the Company's operations
(including Barry L. Babcock, Jerald L. Kent and Howard L. Wood, the co-
founders of Charter) have more than 100 years of collective experience in the
cable television industry. Messrs. Babcock, Kent and Wood formerly served as
members of the senior management team of Cencom Cable Associates, Inc.
("Cencom"), which, during the nine-year period prior to its sale in 1991 to
Crown Media, Inc. ("Crown Media"), purchased and developed cable television
systems through acquisitions ("Cencom Systems"). See "Business--Business
Strategy--Maximize Benefits Provided by Relationship with Charter." In
addition, Kelso and certain other individuals have invested an aggregate of
approximately $68.0 million in the Issuer. As a result of such investment,
Kelso and such individuals own directly or indirectly 85% of the outstanding
equity interests in the Issuer, with distributions on exit varying depending
on the rates of return on the stockholders' equity investment in the Issuer.
See "Risk Factors--Control of the Issuer and the Company by Kelso."
The principal executive offices of the Issuer are located at 12444
Powerscourt Drive, Suite 400, St. Louis, Missouri 63131. Its telephone number
is (314) 965-0555.
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<PAGE>
CAPITALIZATION
The following table sets forth the consolidated unaudited capitalization of
the Issuer as of December 31, 1996. This table should be read in conjunction
with the audited and unaudited Financial Statements of the Issuer and the
related Notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
UNAUDITED
AS OF DECEMBER 31,
1996
------------------
ACTUAL
------------------
(IN MILLIONS)
<S> <C>
Debt:
CCE-I Credit Facility................................... $468.0(a)
Notes (including accrued interest)...................... 104.8
------
Total debt............................................ 572.8
Equity:
Total contributed capital............................... 80.0
Accumulated losses...................................... (80.4)
------
Total capitalization.................................... $572.4
======
</TABLE>
- --------
(a) As of December 31, 1996, $37.0 million was unused and available for
borrowing, under the CCE-I Credit Facility.
40
<PAGE>
UNAUDITED SELECTED HISTORICAL AND UNAUDITED PRO FORMA FINANCIAL DATA
The unaudited statements of operations, balance sheets, financial ratios and
other data for the years ended December 31, 1995 and 1996, set forth below
have been derived from the consolidated financial statements of CCA which have
been audited by Arthur Andersen LLP. The unaudited combined statement of
operations, financial ratios and other data for the year ended December 31,
1994, set forth below have been derived from the financial statements of
Cencom Cable Entertainment, Inc.--Missouri System which have been audited by
Arthur Andersen LLP, the financial statements of Crown Media, Inc.--Western
Connecticut and Crown Cable, L.P. acquired from HC Crown (the "Crown Systems")
which have been audited by KPMG Peat Marwick LLP, and represent CCA's
predecessor. The unaudited combined statement of operations, financial ratios
and other data for the year ended December 31, 1993, set forth below has been
derived from the financial statements of Cencom Cable Entertainment, Inc.--
Missouri System, Crown Media, Inc.--Western Connecticut and Crown Cable, L.P.,
which have been audited by KPMG Peat Marwick LLP. The unaudited combined
statement of operations, financial ratios and other data for the year ended
December 31, 1992, set forth below have been derived from the unaudited
financial statements of Cencom Cable Entertainment, Inc.--Missouri System and
the unaudited financial statements of Tele-media Company of Northeastern
Connecticut, L.P., the Housatonic CableVision Company, L.P., the New Milford
CableVision Company and the Mid-Connecticut CableVision Company (which
collectively represent the predecessor of the Crown Systems).
The data set forth below should be read in conjunction with the historical
financial statements, reports of the independent public accountants thereto
and the other financial information included elsewhere in the Prospectus.
The unaudited pro forma financial statements are based upon the historical
financial statements of CCA, the Illinois Systems (prior to their acquisition
by CCE-I) and the Masada Systems (prior to their acquisition by CCE-I). The
unaudited pro forma balance sheet and pro forma statement of operations data
has been derived from the audited and unaudited financial statements of
operations included elsewhere in this Prospectus.
The following unaudited pro forma statement of operations data for the year
ended December 31, 1996 gives effect to the applicable pro forma adjustments,
as if such pro forma adjustments had occurred on January 1, 1996. There are no
pro forma adjustments reflected in the pro forma balance sheet data as all
acquisitions were consummated prior to December 31, 1996. The historical
acquisitions have been accounted for under the purchase method of accounting.
The unaudited pro forma financial information may therefore not be indicative
of the actual results of operations of CCA had the transactions been completed
on the dates assumed, nor are such financial statements necessarily indicative
of the results of operations of CCA that may exist in the future. The
unaudited pro forma financial information should be read in conjunction with
the historical financial statements and the related Notes thereto appearing
elsewhere in this Prospectus.
41
<PAGE>
CCA AND SUBSIDIARIES
UNAUDITED SELECTED HISTORICAL AND UNAUDITED PRO FORMA FINANCIAL DATA
(NUMBERS IN THOUSANDS, EXCEPT FOR FINANCIAL RATIOS AND SUBSCRIBER DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
PREDECESSOR OF CCA CCA
--------------------------------- ------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
--------------------------------- ------------------------------
PRO
FORMA (A)
1992 1993 1994 1995 1996 1996
-------- -------- --------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues................ $ 81,557 $ 85,627 $ 87,623 $ 99,689 $143,023 $151,548
Operating Expenses:
Operating, general and
administrative......... 41,603 43,270 44,164 48,943 71,498 76,026
Management fees......... 2,617(b) 2,723(b) 2,781(b) 6,499 5,034 6,138(c)
Depreciation and
amortization........... 47,662 54,804 54,272 51,194 65,757 68,958
-------- -------- --------- --------- -------- --------
Total operating
expenses............... 91,882 100,797 101,217 106,636 142,289 151,122
-------- -------- --------- --------- -------- --------
Operating Income
(loss)................. (10,325) (15,170) (13,594) (6,947) 734 426
Interest expense........ (19,547) (12,051) (15,053) (35,461) (46,654) (50,132)
Interest income......... 66 -- 20 504 164 223
Other income (expense).. 267 8 444 42 (1,058) (1,058)
-------- -------- --------- --------- -------- --------
Loss before equity in
loss of unconsolidated
limited partnerships,
provision for income
taxes, loss from
discontinued operation
and minority interest
in loss of subsidiary.. (29,539) (27,213) (28,183) (41,862) (46,814) (50,541)
Equity in loss of
unconsolidated limited
partnerships........... -- -- -- (1,402) (6,303) (6,303)
Provision for income
taxes.................. -- -- -- -- -- --
Loss from discontinued
operation.............. -- -- -- -- (1,516) --
Minority interest in
loss of subsidiary..... -- -- -- 1,503 15,999 17,676
-------- -------- --------- --------- -------- --------
Net loss................ $(29,539) $(27,213) $ (28,183) $ (41,761) $(38,634) $(39,168)
======== ======== ========= ========= ======== ========
Ratio of earnings to
fixed charges (d)...... -- -- -- -- -- --
BALANCE SHEET DATA (AT
END OF PERIOD):
Total assets............ $ 666,139 $744,080 $744,080
Deferred taxes.......... 55,500 55,500 55,500
Total debt (including
current maturities).... 447,439 572,843 572,843
Shareholders' investment
(deficit).............. 38,239 (395) (395)
FINANCIAL RATIOS AND
OTHER DATA:
EBITDA (e).............. $ 39,954 $ 42,357 $ 43,459 $ 50,746 $ 71,525 $ 75,522
EBITDA margin (f)....... 49.0% 49.5% 49.6% 50.9% 50.0% 49.8%
Capital expenditures
(g).................... $ 13,375 $ 19,128 $ 24,513 $ 22,024 $ 33,898 35,461
Total debt to EBITDA.... 8.8x 8.0x 7.6x
EBITDA to interest
expense................ 1.4x 1.5x 1.5x
OPERATING STATISTICAL
DATA (AT END OF PERIOD,
EXCEPT AVERAGES):
Homes passed............ 339,142 344,418 350,404 413,930 533,563 533,563
Basic subscribers....... 185,767 196,087 206,948 266,119 338,284 338,284
Basic penetration....... 54.8% 56.9% 59.1% 64.3% 63.4% 63.4%
Premium service units... 125,745 126,396 145,967 173,172 194,602 194,602
Premium penetration..... 67.7% 64.5% 70.5% 65.1% 57.5% 57.5%
Average monthly revenue
per basic subscriber
(h).................... $ 36.59 $ 36.39 $ 35.28 $ 36.89 $ 38.20 37.33
</TABLE>
42
<PAGE>
- --------
(a) The pro forma statement of operations data assumes the consummation of the
Illinois Acquisition and the Masada Acquisition as if the applicable
transactions had occurred on January 1, 1996. There are no pro forma
adjustments reflected in the pro forma balance sheet data as all
acquisitions were consummated prior to December 31, 1996.
(b) Represents combined management fees for the Crown systems during periods
prior to their acquisition by CCA for those systems which paid management
fees. These fees are not necessarily indicative of the management fees that
would have been charged had the Crown systems been operated by CCA or that
may be expected for any future periods.
(c) CCE-I pays annual management and financial advisory fees to Charter and
Kelso & Company equal to certain specified contractual amounts set forth in
the management and financial advisory agreements executed with Charter and
Kelso & Company, such amounts increase upon the acquisition of additional
cable television systems and decrease with the disposition of any cable
television systems. As of December 31, 1996, CCE-I pays Charter $4,845,000
annually and Kelso & Company $552,500 annually based upon the current
contracts. In addition, the management agreement with Charter provides for
an annual bonus equal to 30% of the excess, if any, of operating cash flow
(as defined in the management agreement) over the projected operating cash
flow for the year; however, payment of such bonuses is deferred until
termination of the CCE-I Credit Facility. The accrued but unpaid bonus as
of December 31, 1996 was $1,755,000 of which $740,000 was recorded during
1996. See "Certain Relationships and Related Transactions" and "Description
of Notes."
(d) The combined earnings of the Crown Systems were inadequate to cover fixed
charges by $29.5 million, $27.2 million and $28.2 million for the years
ended December 31, 1992, 1993 and 1994, respectively. The earnings of CCA's
systems were inadequate to cover fixed charges by $41.8 million and $38.6
million for the years ended December 31, 1995 and 1996, respectively.
(e) EBITDA represents income (loss) before interest expense, interest income,
income taxes, depreciation and amortization, management fees, other income
(expense), equity in loss of unconsolidated limited partnerships, loss from
discontinued operation and minority interest in loss of subsidiary.
Management believes EBITDA is a meaningful measure of performance because
it is commonly used in the cable television industry to analyze and compare
cable television companies on the basis of operating performance, leverage
and liquidity. EBITDA is not presented in accordance with generally
accepted accounting principles and should not be considered an alternative
to, or more meaningful than, operating income or operating cash flows as an
indicator of CCA's operating performance. EBITDA does not include CCA's
debt obligations or significant commitments.
(f) Represents EBITDA as a percent of revenues.
(g) Capital expenditures exclude cash consideration paid in connection with the
acquisition of cable systems.
(h) Revenues divided by basic subscribers divided by 12 months.
43
<PAGE>
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The following unaudited pro forma financial statements are based upon the
historical financial statements of CCA, the Illinois Systems (prior to their
acquisition by CCE-I), and the Masada Systems (prior to their acquisition by
CCE-I). The following unaudited pro forma statement of operations data for the
year ended December 31, 1996, gives effect to the applicable pro forma
adjustments, as if such pro forma adjustments had occurred on January 1, 1996.
There are no pro forma adjustments reflected in the pro forma balance sheet
data as all acquisitions were consummated prior to December 31, 1996. The
acquisitions of the Illinois Systems and the Masada Systems have been
accounted for under the purchase method of accounting. The unaudited pro forma
financial statements may not be indicative of what the results of CCA would
have been had the transactions been completed on the dates assumed, nor are
such financial statements necessarily indicative of the results of operations
of CCA that may exist in the future. The unaudited pro forma financial
statements should be read in conjunction with the Notes thereto and with the
historical financial statements and the related Notes thereto appearing
elsewhere in this Prospectus.
44
<PAGE>
CCA AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENT DATA
(FOR THE YEAR ENDED AND AS OF DECEMBER 31, 1996) (NUMBERS IN THOUSANDS, EXCEPT
FOR FINANCIAL RATIOS AND SUBSCRIBER DATA)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
HISTORICAL HISTORICAL PRO FORMA HISTORICAL
CCA ACQUISITIONS COMBINED ADJUSTMENTS ACQUISITIONS
-------- ------------ ---------- ----------- ------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues................ $143,023 $8,525 (a) $151,548 $ -- $151,548
Operating Expenses:
Operating, general and
administrative........ 71,498 4,528 (a) 76,026 -- 76,026
Management fees........ 5,034 503 (a) 5,537 601(b) 6,138
Depreciation and
amortization.......... 65,757 3,629 (a) 69,386 (428)(c) 68,958
-------- ------ -------- ------ --------
Total operating
expenses............. 142,289 8,660 150,949 173 151,122
-------- ------ -------- ------ --------
Operating Income
(loss)................. 734 (135)(a) 599 (173) 426
Interest expense....... (46,654) (1,610)(a) (48,264) (1,868) (50,132)
Interest income........ 164 59 (a) 223 -- 223
Other income
(expense)............. (1,058) -- (1,058) -- (1,058)
-------- ------ -------- ------ --------
Loss before equity in
loss of unconsolidated
limited partnerships,
provision for income
taxes, loss from dis-
continued operation and
minority interest in
loss of subsidiary..... (46,814) (1,686) (48,500) (2,041) (50,541)
Equity in loss of
unconsolidated limited
partnerships.......... (6,303) -- (6,303) -- (6,303)
Provision for income
taxes................. -- -- -- -- --
Loss from discontinued
operation............. (1,516) 1,516 (i) -- -- --
Minority interest in
loss of subsidiary.... 15,999 -- 15,999 1,677(j) 17,676
-------- ------ -------- ------ --------
Net loss................ $(38,634) $ (170) $(38,804) $ (364) $(39,168)
======== ====== ======== ====== ========
BALANCE SHEET (AT END OF
PERIOD):
Cash and cash equiva-
lents.................. $ 2,935 $ 2,935 $ 2,935
Receivables, net........ 5,466 5,466 5,466
Systems and equipment,
net.................... 206,351 206,351 206,351
Franchise costs, net.... 439,232 439,232 439,232
Other assets............ 10,158 10,158 10,158
Investment in unconsoli-
dated limited partner-
ships.................. 78,070 78,070 78,070
Net assets of discontin-
ued operation.......... 1,869 1,869 1,869
-------- -------- --------
Total assets.......... $744,081 $744,081 $744,081
======== ======== ========
Accounts payable and ac-
crued expenses......... $ 24,678 $ 24,678 $ 24,678
Subscriber deposits and
deferred revenue....... 1,182 1,182 1,182
Deferred taxes.......... 55,500 55,500 55,500
Total debt, including
current maturities of
$5,880................. 572,843 572,843 572,843
Minority interest in
subsidiary............. 90,273 90,273 90,273
-------- -------- --------
Total liabilities..... 744,476 744,476 744,476
Shareholders' investment
(deficit).............. (395) (395) (395)
-------- -------- --------
Total liabilities and
shareholders' invest-
ment (deficit)......... $744,081 $744,081 $744,081
======== ======== ========
FINANCIAL RATIOS AND
OTHER DATA:
EBITDA (e)............. $ 71,525 3,997 $ 75,522 $ 75,522
EBITDA margin (f)...... 50.0% 46.9% 49.8% 49.8%
Capital expenditures
(g)................... $ 33,898 $1,563 $ 35,461 $ 35,461
OPERATING STATISTICAL
DATA (AT END OF PERIOD,
EXCEPT
AVERAGES):
Homes passed............ 533,563 533,563 533,563
Basic subscribers....... 338,284 338,284 338,284
Basic penetration....... 63.4% 63.4% 63.4%
Premium units........... 194,602 194,602 194,602
Premium penetration..... 57.5% 57.5% 57.5%
Monthly revenue per ba-
sic subscriber(h)...... $ 38.20 $32.52 $ 37.33 $ 37.33
</TABLE>
45
<PAGE>
NOTES TO THE UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
(FOR THE YEAR ENDED AND AS OF DECEMBER 31, 1996)
(NUMBERS IN THOUSANDS)
(a) Amounts reflect the historical 1996 results for the following systems
which were acquired during 1996. Certain reclassifications have been made
between operating, general and administrative expenses to conform the
presentation to that of CCA.
<TABLE>
<CAPTION>
MASADA SYSTEMS
ILLINOIS SYSTEMS 1/1/96-
1/1/96-3/28/96 11/29/96 TOTAL
---------------- -------------- --------
<S> <C> <C> <C>
Revenues............................. $4,190 $ 4,335 $8,525
Operating expenses:
Operating, general and
administrative.................... 2,133 2,395 4,528
Management fees.................... 210 293 503
Depreciation and amortization...... 1,010 2,619 3,629
------ ------- --------
Total operating expenses......... 3,353 5,307 8,660
------ ------- --------
Operating income..................... 837 (972) (135)
Interest expense................... (516) (1,094) (1,610)
Interest income.................... 13 46 59
------ ------- --------
Net income........................... $ 334 $(2,020) $ (1,686)
====== ======= ========
</TABLE>
(b) To eliminate the historical management fees expense and to record for the
year ended December 31, 1996 management fee expense pursuant to CCE-I's
management agreement.
(c) To eliminate the historical depreciation and amortization expense and to
record for the year ended December 31, 1996 depreciation and amortization
expense based upon the allocation of purchase price to various categories
of systems equipment and franchises and depreciated using methods and
terms consistent with those utilized by CCE-I. The franchise costs are
being amortized over 15 years.
(d) To eliminate historical interest expense and to record for the year ended
December 31, 1996 interest expense based upon CCE-I's pro forma borrowings
under the CCE-I Credit Facility assuming an average interest rate of
8.05%. Also, includes amortization of all deferred debt issuance costs.
(e) EBITDA represents income (loss) before interest expense, interest income,
income taxes, depreciation and amortization, management fees, other income
(expense), equity in loss of unconsolidated limited partnerships, loss
from discontinued operation and minority interest in loss of subsidiary.
EBITDA is calculated before payment of management fees so as to be
consistent with certain financial terms contained in the CCE-I Credit
Facility. Management believes that EBITDA is a meaningful measure of
performance because it is commonly used in the cable television industry
to analyze and compare cable television companies on the basis of
operating performance, leverage and liquidity. EBITDA is not presented in
accordance with generally accepted accounting principles and should not be
considered an alternative to, or more meaningful than, operating income or
operating distributions as an indicator of the CCE-I's operating
performance. EBITDA does not include CCE-I's debt obligations or other
significant commitments.
(f) Represents EBITDA as a percent of revenues.
(g) Capital expenditures exclude cash consideration paid in connection with
the acquisition of cable television systems.
(h) Revenues divided by basic subscribers divided by 12 months.
(i) To eliminate the loss from discontinued operation.
(j) To record minority interest (45%) in the Illinois Systems (January 1, 1996
to March 28, 1996) and the Masada Systems (January 1, 1996 to November 29,
1996).
46
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
The Company has operated cable television systems for a limited period of
time and had no operations prior to January 1995. The Company acquired (i) the
Crown Systems as of January 1, 1995 for aggregate consideration of
approximately $488.2 million, (ii) the UVC Systems on October 30, 1995 for
approximately $96.0 million and (iii) the Illinois Systems on March 29, 1996
for approximately $82.0 million (iv) the Masada Systems on November 29, 1996
for approximately $23.7 million (the Crown Systems, the UVC Systems, the
Illinois Systems and the Masada Systems are sometimes referred to herein as
the "CCE-I Systems"). The following discussion of results of operations for
the years ended December 31, 1994, 1995 and 1996 is based on the historical
results of operations of CCA and the Crown Systems. Since the Crown Systems
were not acquired until 1995, the financial information contained herein with
respect to periods prior to this acquisition does not reflect any changes in
the operation or management of these systems that CCA has made since the date
of such acquisition or that it intends to make in the future; thus, this
financial information is not necessarily indicative of the results of
operation that would have been achieved had the systems been operated by CCA
during all of the periods with respect to which financial information is
presented herein or which may be achieved in the future. Information relating
to the payment of management fees, programming costs and other similar matters
for years prior to the acquisition by CCA of the systems discussed herein is
not comparable to the discussion of such matters after such systems have been
fully integrated with the CCE-I Systems. See "Business--Description of the
Systems" for a description of the CCE-I Systems.
OVERVIEW
The CCE-I Systems generate substantially all of their revenues from monthly
customer fees for basic tier, expanded basic tier, premium and other cable
television services (such as the rental of converters and remote control
devices and installation charges). Additional revenues are generated from pay-
per-view programming and the sale of advertising and commissions from home
shopping networks.
The CCE-I Systems have generated increases in revenues in each of 1994, 1995
and 1996. This growth was accomplished primarily through internal subscriber
growth and the UVC Acquisition in 1995, the Illinois Acquisition and Masada
Acquisition in 1996, which offset the adverse effects of FCC-required rate
rollbacks in certain systems, that became effective in September 1993. Systems
operating, general and administrative expenses have increased during such
three year period due to increased customer growth and expenses related to
implementing rate regulation (pursuant to the 1992 Cable Act and the FCC's
regulations promulgated thereunder). In particular, programming costs, which
comprise a substantial portion of systems operating expenses, have increased
both in dollars and as a percentage of revenues for the past three years. This
increase is due to several factors, including subscriber growth, the provision
of additional channels to customers, the expiration of certain programming
agreements with favorable terms, which were assigned to CCE-I in the Crown
Transaction and industry-wide increases in costs to purchase cable
programming. While CCE-I's retention of Charter as manager of the CCE-I
Systems is expected to result in better control over programming costs, there
can be no assurance that this result will be achieved. Furthermore, management
believes it will be able, under the FCC's existing cable rate regulations, to
increase its rates for cable services to offset increases in the costs of
programming. The high level of depreciation and amortization associated with
the acquisitions and capital expenditures related to continued construction,
upgrade and expansion of the CCE-I Systems, together with interest costs
related to CCE-I's financing activities, have caused the CCE-I Systems to
report net losses. CCE-I believes that such net losses are common for cable
television companies and that such net losses will continue for the
foreseeable future. EBITDA (as defined herein), which is a common industry
measure of performance, has been between 49.6% and 50.9% of revenues during
the years ended December 31, 1994, 1995 and 1996.
CCE-I pays annual management and financial advisory fees to Charter and
Kelso & Company equal to certain specified amounts set forth in the management
and financial advisory agreements executed with Charter and Kelso & Company;
such amounts increase upon the acquisition of additional cable television
systems and
47
<PAGE>
decrease with the disposition of any cable television systems. As of December
31, 1996, CCE-I pays Charter $4,845,000 annually and Kelso & Company $552,500
annually. In addition, the management agreement with Charter provides for an
annual bonus equal to 30% of the excess, if any, of operating cash flow (as
defined in the management agreement) over the projected operating cash flow
for the year; however, payment of such bonuses is deferred until termination
of the CCE-I Credit Facility. The accrued but unpaid bonus as of December 31,
1996 was $1,755,000, of which $740,000 was recorded during 1996. See "Certain
Relationships and Related Transactions" and "Description of Notes."
48
<PAGE>
<TABLE>
<CAPTION>
PREDECESSOR OF
CCA CCA
------------------ ---------------------------------------
YEAR ENDED
DECEMBER 31, YEAR ENDED DECEMBER 31,
------------------ ---------------------------------------
1994 1995 1996
------------------ ------------------ --------------------
% OF % OF % OF
AMOUNT REVENUES AMOUNT REVENUES AMOUNT REVENUES
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues................ $ 87,623 100.0% $ 99,689 100.0% $143,023 100.0%
Operating Expenses:
Operating, general and
administrative........ 44,164 50.4% 48,943 49.1% 71,498 50.0%
Management fees(a)..... 2,781 3.2% 6,499 6.5% 5,034 3.5%
Depreciation and
amortization.......... 54,272 61.9% 51,194 51.4% 65,757 46.0%
-------- ------ -------- ------ -------- -----
Total operating
expense.............. 101,217 115.5% 106,636 107.0% 142,289 99.5%
-------- ------ -------- ------ -------- -----
Operating Income
(loss)................. (13,594) (15.5%) (6,947) (7.0%) 734 0.5%
Interest expense....... (15,053) (17.2%) (35,461) (35.6%) (46,654) (32.6%)
Interest income........ 20 0.0% 504 0.5% 164 0.1%
Other income
(expense)............. 444 0.5% 42 0.0% (1,058) (0.7%)
-------- ------ -------- ------ -------- -----
Loss before equity in
loss of unconsolidated
limited partnerships,
provision for income
taxes, loss from
discontinued operation
and minority interest
in loss of subsidiary.. (28,183) (32.2%) (41,862) (42.0%) $(46,814) (32.7%)
Equity in loss from
unconsolidated limited
partnerships.......... -- -- (1,402) (1.4%) (6,303) (4.4%)
Provision for income
taxes................. -- -- -- -- -- --
Loss from discontinued
operation............. -- -- -- -- (1,516) (1.1%)
Minority interest in
loss of subsidiary.... -- -- 1,503 1.5% 15,999 11.2%
-------- ------ -------- ------ -------- -----
Net loss................ $(28,183) (32.2%) $(41,761) (41.9%) $(38,634) (27.0%)
======== ====== ======== ====== ======== =====
EBITDA(b)............... $ 43,459 49.6% $ 50,746 50.9% $ 71,525(d) 50.0%(d)
</TABLE>
- --------
(a) Represents combined management fees paid by the Crown Systems during
periods prior to the acquisition of the systems by CCA for those systems
which paid management fees. These fees are not necessarily indicative of
the management fees that would have been charged had the Systems been
operated by CCA and that may be expected for any future periods. CCE-I
pays annual management and financial advisory fees to Charter and Kelso &
Company equal to certain specified contractual amounts set forth in the
management agreements executed with Charter and Kelso & Company; such
amounts increase upon the acquisition of additional cable television
systems and decrease with the disposition of any cable television systems.
As of December 31, 1996, CCE-I pays Charter $4,845,000 annually and Kelso
& Company $552,500 annually based upon the current contracts. In addition,
the management agreement with Charter provides for an annual bonus equal
to 30% of the excess, if any, of operating cash flow (as defined in the
management agreement) over the projected operating cash flow for the year;
however, payment of such bonuses is deferred until termination of the
applicable CCE-I Credit Facility. The accrued but unpaid bonus as of
December 31, 1996 was $1,775,000, of which $740,000 was recorded during
1996. See "Certain Relationships and Related Transactions" and
"Description of Notes."
(b) EBITDA represents income (loss) before interest expense, interest income,
income taxes, depreciation and amortization, management fees, other income
(expense), equity in loss of unconsolidated limited partnerships, loss
from discontinued operation and minority interest in loss of subsidiary.
Management believes EBITDA is a meaningful measure of performance because
it is commonly used in the cable television industry to analyze and
compare cable television companies on the basis of operating performance,
leverage and liquidity. EBITDA is not presented in accordance with
generally accepted accounting principles and should not be considered an
alternative to, or more meaningful than, operating income or operating
cash flows as an indicator of CCA's operating performance. EBITDA does not
include CCA's debt obligations or significant commitments.
49
<PAGE>
FISCAL 1996 TO FISCAL 1995
Revenues. Revenues increased by $43.3 million, or approximately 43.4%, from
$99.7 million in fiscal 1995 to $143.0 million in fiscal 1996. Average monthly
revenue per basic subscriber increased 3.6% from $36.89 in fiscal 1995 to
$38.20 in fiscal 1996. Homes passed increased 28.9%, from 413,930 at December
31, 1995 to 533,563 at December 31, 1996. There was a significant increase in
homes passed resulting from the acquisitions of the Illinois Systems in March
1996 and the Masada Systems in November 1996. Basic service subscribers
increased 27.1%, from 266,119 at December 31, 1995 to 338,284 at December 31,
1996. The basic penetration rate decreased from 64.3% in fiscal 1995 to 63.4%
in fiscal 1996, as a result of an increase in the number of homes passed
without an equivalent increase in the number of basic subscribers.
Revenues of the Crown Systems, excluding the activity of any other systems
acquired during the periods, increased by $10.5 million, or approximately
10.9%, from $96.6 million in fiscal 1995 to $107.1 million in fiscal 1996.
Operating, general and administrative expenses. Operating, general and
administrative expenses increased by $22.6 million, or approximately 46.2%,
from $48.9 million in fiscal 1995 to $71.5 million in fiscal 1996. These
increases were due to a combination of factors, including a 27.1% increase in
basic subscribers from December 31, 1995 to December 31, 1996, additional
costs associated with the purchase of programming on the new channels offered
to customers, industry-wide increases in programming rates charged by certain
vendors, and the acquisitions of the UVC Systems in October 1995, the Illinois
Systems in March 1996 and the Masada Systems in November 1996.
Management fees. Management fees decreased by $1.5 million, or approximately
23.1%, from $6.5 million in fiscal 1995 to $5.0 million in fiscal 1996,
representing a decrease, as a percentage of revenues, from 6.5% in fiscal 1995
to 3.5% in fiscal 1996.
Depreciation and amortization. Depreciation and amortization expense
increased by $14.6 million, or 28.5%, from $51.2 million in fiscal 1995 to
$65.8 million in fiscal 1996. There was a significant increase in amortization
resulting from the acquisitions of the UVC Systems in October 1995 the
Illinois Systems in March 1996 and the Masada Systems in November 1996. In
connection with such acquisitions, the acquired franchises were recorded at
fair market value which resulted in a stepped-up basis upon acquisition. In
addition, the increase in depreciation and amortization expense occurred as a
result of the amortization of certain acquisition-related costs such as legal,
accounting and due diligence expenses and deferred debt costs.
Interest expense. Interest expense increased by $11.2 million, or
approximately 31.5%, from $35.5 million in fiscal 1995 to $46.7 million in
fiscal 1996. This increase resulted primarily from the additional indebtedness
incurred in connection with the acquisitions of the UVC Systems in October
1995, the Illinois Systems in March 1996 and the Masada Systems in November
1996.
Discontinued Operations. The Company acquired and began operating a radio
station in April 1996. The revenues generated by the radio operation from
April 1996 to December 31, 1996 were approximately $1.5 million. The net loss
related to this operation during the same period of time was approximately
$1.5 million and is classified as a discontinued operation. Subsequent to
year-end, the Company entered into an agreement to sell the radio operation.
Net Loss. Net loss decreased by approximately $3.2 million from
approximately $41.8 million in fiscal 1995 to approximately $38.6 million in
fiscal 1996. Significant increases in operating expenses and interest expense
were offset by increased revenues and an allocation of CCE-I's loss to a
minority interest holder in CCE-I.
50
<PAGE>
The increase in revenues that resulted from cable television subscriber
growth was not sufficient to offset the significant costs related to the
acquisitions of the UVC Systems in October 1995, the Illinois Systems in March
1996, and the Masada Systems in November 1996, such acquisitions caused a
substantial increase in interest expense due to increased borrowings.
EBITDA. EBITDA increased by $20.8 million, or approximately 41.0%, from
$50.7 million in fiscal 1995 to $71.5 million in fiscal 1996, due to an
increase in revenues which was offset by an increase in systems operating
expenses. EBITDA, as a percentage of revenues, decreased slightly from 50.9%
in fiscal 1995 to 50.0% in fiscal 1996. Management believes that EBITDA is a
meaningful measure of performance because it is commonly used in the cable
television industry to analyze and compare cable television companies on the
basis of operating performance, leverage and liquidity. EBITDA does not
include debt obligations or other significant commitments.
FISCAL 1995 COMPARED TO FISCAL 1994
Revenues. Revenues increased by $12.1 million, or approximately 13.8%, from
$87.6 million in fiscal 1994 to $99.7 million in fiscal 1995. Average monthly
revenue per basic subscriber increased from $35.28 in fiscal 1994 to $36.89,
or 4.6%, in fiscal 1995. Homes passed increased 18.1% from 350,404 at December
31, 1994 to 413,930 at December 31, 1995. Basic service subscribers increased
28.6%, from 206,948 at December 31, 1994 to 266,119 at December 31, 1995. The
basic penetration rate increased by 5.2% from fiscal 1994 to fiscal 1995 from
59.1% to 64.3%. There was an increase in revenues resulting from the
acquisition of the UVC Systems on October 31, 1995. Revenue growth during 1994
and 1995 was limited by rate rollbacks of up to 17.0% beginning in July 1994
experienced by certain of the CCA Systems (such rate rollbacks have remained
in effect throughout 1995, and have therefore had a more significant effect on
revenue growth in 1995 than 1994). In fiscal 1994 and 1995, however, there
were limited instances of rate increases representing a pass-through of
certain external costs (such as copyright, programming and franchise fees).
Revenues of the Crown Systems, excluding the activity of any other systems
acquired during the periods, increased by $9.0 million, or approximately
10.3%, from $87.6 million in fiscal 1994 to $96.6 million in fiscal 1995.
Operating, general and administrative expenses. Operating, general and
administrative expenses increased by $4.7 million, or approximately 10.6%,
from $44.2 million in fiscal 1994 to $48.9 million in fiscal 1995, and the
expenses, as a percentage of revenues, decreased from 50.4% in fiscal 1994 to
49.1% in fiscal 1995. CCA experienced added costs relating to the UVC
Acquisition on October 31, 1995.
Management fees. Management fees increased by $3.7 million, or approximately
132.1%, from $2.8 million in fiscal 1994 to $6.5 million in fiscal 1995,
representing an increase, as a percentage of revenues, from 3.2% in fiscal
1994 to 6.5% for fiscal 1995. Prior to their acquisition by CCA, the
predecessor paid management fees to Crown.
Depreciation and amortization. Depreciation and amortization expense
decreased by $3.1 million, or approximately 5.7%, from $54.3 million in fiscal
1994 to $51.2 million in fiscal 1995. There was a decrease in amortization due
to the Crown Transaction and the amortization policy used by CCE-I.
Interest expense. Interest expense increased by $20.4 million, or
approximately 135.1%, from $15.1 million in fiscal 1994 to $35.5 million in
fiscal 1995. This increase resulted primarily from the additional indebtedness
incurred in connection with the Crown Transaction and the UVC Transaction in
fiscal 1995.
Other Income. The Crown Systems generated other income of approximately $0.4
million in fiscal 1994 as compared to approximately $42,000 in fiscal 1995.
The 1994 income was due primarily to the settlement of a lawsuit related to
the Crown Missouri Systems. The income represents the reversal of accruals
established in prior years related to such litigation.
Net loss. Net loss increased by $13.6 million, or approximately 48.2%, from
$28.2 million in fiscal 1994 to $41.8 million in fiscal 1995. This increase
resulted primarily from an increase in interest expense due to increased
borrowing. In addition, the net loss was decreased during fiscal 1995 as
approximately $1.5 million of
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CCE-I's loss was allocated to a minority interest holder in CCE-I. This amount
was offset by an increase in net loss related to the loss incurred by an
unconsolidated limited partnership of which CCA was allocated approximately
$1.4 million of the loss.
The loss prior to these allocations increased by $13.7 million, or
approximately 48.6%, from $28.2 million in fiscal 1994 to $41.9 million in
fiscal 1995.
EBITDA. EBITDA increased by $7.2 million, or approximately 16.6%, from $43.5
million in fiscal 1994 to $50.7 million in fiscal 1995, due to an increase in
revenues which was partially offset by an increase in systems operation
expenses. EBITDA, as a percentage of revenues, increased slightly from 49.6%
in fiscal 1994 to 50.9% in fiscal 1995. Management believes that EBITDA is a
meaningful measure of performance because it is commonly used in the cable
television industry to analyze and compare cable television companies on the
basis of operating performance, leverage and liquidity.
LIQUIDITY AND CAPITAL RESOURCES
The cable television business has substantial ongoing capital requirements
for construction, expansion and maintenance of plant. Historically, the
Company has been able to meet its capital requirements through its operating
cash flow, equity contributions and available borrowings. Subject to the
availability of sufficient financing, the Company intends to continue the
pursuit of a business strategy which includes selective strategic
acquisitions.
The CCE-I Credit Facility was increased by $85.0 million in 1996 in
connection with the UVC Acquisition and by $120.0 million in 1996 in
connection with the Illinois and Masada Acquisitions. As of December 31, 1996,
CCE-I had an aggregate of approximately $468.0 million of indebtedness
outstanding (and $37.0 million unused and available for borrowing) under the
CCE-I Credit Facility. See "Description of Other Indebtedness."
The historical cash flow provided by operating activities for CCA and the
Crown Systems prior to their acquisition by CCE-I totaled approximately $27.1
million and $37.0 million for the years ended December 31, 1995 and 1996,
respectively.
Distributions provided by operating activities together with third party
borrowings have been historically sufficient to fund CCE-I's debt service,
capital expenditures and working capital requirements. Future distributions
provided by operating activities and availability for borrowings under the
CCE-I Credit Facility are anticipated to be sufficient, during the next 12
months, to meet CCE-I's ongoing debt service, capital expenditures and working
capital needs. The Company anticipates that future acquisitions could be
financed through borrowings, either presently available under the CCE-I Credit
Facility or as a result of amending the CCE-I Credit Facility to allow for
expanded borrowing capacity. Although to date, the Company has been able to
obtain financing on satisfactory terms, there can be no assurance that this
will continue to be the case in the future.
CCE-I manages risk arising from fluctuations in interest rates through the
use of interest rate swap and cap agreements required under the terms of the
CCE-I Credit Facility. Interest rate swap and cap agreements are accounted for
by CCE-I as a hedge of the related debt obligation. As a result, the net
settlement amount of any such swap or cap agreement is recorded as an
adjustment to interest expense in the period incurred. The effects of CCE-I's
hedging practices on its weighted average borrowing rate and on reported
interest expense were not material for the years ended December 31, 1996 and
1995.
CCE-I has insurance covering risks incurred in the ordinary course of
business, including general liability, property and business interruption
coverage. As is typical in the cable television industry, CCE-I does not
maintain insurance covering its underground plant, the cost of which
management believes is currently
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prohibitive. Management believes that CCE-I's insurance coverage is adequate
and intends to monitor the insurance markets to attempt to obtain coverage for
CCE-I underground plants at reasonable and cost-effective rates.
Capital Expenditures
The capital expenditures for CCE-I and the previous owner of the Crown
Systems (excluding acquisition costs of systems) totaled approximately $24.5
million, $22.0 million and $33.9 million for the years ended December 31,
1994, 1995 and 1996, respectively. These expenditures were primarily for
expansion and rebuild of cable plant and rewiring of associated headend
equipment, converters, office expansion and relocation, upgrade and
replacement of service vehicles, and routine maintenance and replacement of
cable plant and related equipment. These capital expenditures were financed
through a variety of sources which included (i) amounts available under credit
facilities and (ii) distributions from operations. Capital expenditures in the
future will include maintenance capital expenditures, expansion of the cable
plant, converters, rewiring of associated electronic equipment, land and
building renovation costs, new vehicles, test equipment and computer
equipment. The remaining capital items will include capitalized labor and
capital expenditures required to add new subscribers and to upgrade plant.
CCE-I expects to finance the anticipated capital expenditures with
distributions generated from operations and additional borrowings under the
CCE-I Credit Facility.
The Credit Facilities
As of December 31, 1996, CCE-I had an aggregate of approximately $468.0
million of indebtedness outstanding ($37.0 million unused and available for
borrowing) under the CCE-I Credit Facility. The CCE-I Credit Facility requires
CCE-I to purchase and maintain interest rate protection on at least 50% of the
outstanding principal under the CCE-I Credit Facility, so that the weighted
average interest rate protection is not less than 18 months at all dates of
determination. CCE-I may enter into interest cap agreements to satisfy this
requirement, provided that the interest rate related thereto shall not exceed
by 2% per annum the United States Treasury rate in effect on the date of the
agreement for the applicable hedge period. For additional information on the
terms of the CCE-I Credit Facility, see the historical financial statements
and the notes thereto included elsewhere herein.
CCE-I intends to utilize the CCE-I Credit Facility as it presently exists or
as amended in the future to fund capital expenditures and working capital, to
acquire additional cable systems and for related strategic acquisitions and
for general corporate purposes. See "Business--Business Strategy." CCE-I
expects that it will be able, during the next 12 months, to meet its debt
service, working capital and capital expenditure requirements through its
operating distributions and borrowings under the CCE-I Credit Facility. See
"Description of Other Indebtedness."
In addition to the CCE-I Credit Facility, CCA holds an indirect 55%
unconsolidated limited partnership interest in CCE-II, which maintains its own
credit facility, the CCE-II Credit Facility. As of December 31, 1996, CCE-II
had an aggregate of approximately $194.0 million of indebtedness outstanding
(and $41.0 million unused and available for borrowing) under the CCE-II Credit
Facility. The Indenture does not contain any restriction on the ability of any
subsidiary of CCE, L.P. to incur indebtedness (other than CCE-I and its
Restricted Subsidiaries (as defined in the Indenture)) or the ability of CCE-
II to incur additional indebtedness, including pursuant to a currently
contemplated investment in which CCE-II and LBAC, which will become an
affiliate of the Issuer and CCE-II, will become jointly and severally liable
under the CCE-II Credit Facility, which will be increased by $140.0 million
upon consummation of the Long Beach Investment. See "Description of the
Systems--Pending Investment by CCE-II." It is anticipated that CCE-II will
draw down $25.0 million under the CCE-II Credit Facility in order to make an
investment in LBAC, which will own the Long Beach Systems. This investment
will be in the form of an equity interest representing, or a loan convertible
into, 27.5% of the stock of LBAC. See "Description of Other Indebtedness--
Charter Communications Entertainment II, L.P."
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THE FOLLOWING DATA HAS NOT BEEN PREPARED IN ACCORDANCE
WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND DOES NOT
COMPLY WITH ARTICLE 11 OF REGULATION S-X
SUPPLEMENTAL SELECTED HISTORICAL
COMBINED FINANCIAL DATA
The supplemental table set forth below has not been prepared in accordance
with generally accepted accounting principles or Article 11 of Regulation S-X.
Since the acquisitions (depicted below) did not meet the specified criteria to
be accounted for under the pooling-of-interests method, the reported
operations of the acquired systems should not be combined and restated as
operations of CCE-I. However, such data is included for the purpose of
providing supplemental information to assist investors.
For financial reporting purposes, CCE-I had no operations prior to its
acquisition of the Crown Systems effective January 1995. The combined
historical results of operations, balance sheet, selected financial ratios and
operating statistical data set forth below (which have been derived by
combining historical results of operations of systems acquired by CCE-I during
1995 and 1996, and which therefore reflect results of periods prior to CCE-I's
management of such systems) do not purport to represent what CCE-I's actual
results of operations would have been had the system been owned by CCE-I
throughout the periods indicated. The combined historical results include the
operations of the Systems prior to their acquisition by CCE-I.
The unaudited combined statement of operations data for the year ended
December 31, 1994 set forth below have been derived from the unaudited
financial statements of the Crown Missouri Systems, Crown Connecticut Systems,
the UVC Systems, the Illinois Systems and the Masada Systems. The unaudited
combined statement of operations data for the year ended December 31, 1995
have been derived from the unaudited financial statements of CCE-I for the
year ended December 31, 1995, the UVC Systems for the 10 months ended October
31, 1995, the Illinois Systems and the Masada Systems for the year ended
December 31, 1995. The unaudited combined statement of operations data for the
year ended December 31, 1996 have been derived from the unaudited financial
statements of CCE-I for the year ended December 31, 1996, the Illinois Systems
for the period ended March 29, 1996 and the Masada Systems for the period
ended November 29, 1996.
The unaudited balance sheet data as of December 31, 1996 set forth below
have been derived from the unaudited financial statements of CCE-I.
The data should be read in conjunction with the historical financial
statements and notes related thereto, the reports of independent auditors, and
the other financial information included elsewhere in this Prospectus.
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CCE-I SUPPLEMENTAL SCHEDULE
(NUMBERS IN THOUSANDS, EXCEPT FINANCIAL RATIOS AND SUBSCRIBER DATA)
<TABLE>
<CAPTION>
COMBINED HISTORICAL
--------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------
1994 1995 1996
-------- -------- --------
(DOLLARS IN THOUSANDS,
EXCEPT PER SUBSCRIBER
DATA)
UNAUDITED
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues................................... $124,344 $135,409 $151,548
Operating Expenses:
Operating, general and administrative..... 62,994 66,639 75,653
Management fees........................... 4,184(a) 8,126(a) 5,537(a)
Depreciation and amortization............. 66,482 61,494 69,386
-------- -------- --------
Total operating expenses.................. 133,660 136,259 150,576
-------- -------- --------
Operating Income (loss).................... (9,316) (850) 972
Interest expense.......................... (21,764) (32,256) (35,860)
Interest income........................... 45 572 223
Other income (expense).................... 269 (53) (1,058)
Loss from discontinued operation.......... -- -- (1,516)
-------- -------- --------
Net loss................................... $(30,766) $(32,587) $(37,239)
======== ======== ========
Ratio of earnings to fixed charges(b)...... -- -- --
BALANCE SHEET DATA (AT END OF PERIOD):
Total assets............................... $744,081
Total debt (including current maturities).. 592,843
Partners' capital.......................... (395)
FINANCIAL RATIOS AND OTHER DATA:
EBITDA(c).................................. 61,350 $ 68,770 $ 75,895
EBITDA margin(d)........................... 49.3% 50.8% 50.1%
Capital expenditures(e).................... $ 29,876 $ 26,488 $ 35,461
Total debt to EBITDA....................... 7.3x
EBITDA to interest expense................. 2.1x
OPERATING STATISTICAL DATA
(AT END OF PERIOD, EXCEPT AVERAGES):
Homes passed............................... 508,605 515,769 533,563
Basic subscribers.......................... 304,685 322,309 338,284
Basic penetration.......................... 59.9% 62.5% 63.4%
Premium service units...................... 209,428 205,535 194,602
Premium penetration........................ 68.7% 63.7% 57.5%
Monthly revenue per basic subscriber(f).... $34.01 $35.01 $ 37.33
</TABLE>
- --------
(a) Represents combined management fees for the CCE-I Systems during periods
prior to their acquisition by CCE-I, for those systems which paid
management fees. These fees are not necessarily indicative of the
management fees that would have been charged had the CCE-I Systems been
operated by CCE-I or that may be expected for any future periods.
(b) The combined earnings of the CCE-I systems were inadequate to cover fixed
charges by $30.8 million, $32.6 million and 37.2 million for the years
ended December 31, 1994, 1995, and 1996, respectively.
(c) EBITDA represents income (loss) before interest expense, interest income,
income taxes, depreciation and amortization, management fees, other income
(expense), equity in loss of unconsolidated limited partnerships, loss
from discontinued operation and minority interest in loss of subsidiary.
Management believes EBITDA is a meaningful measure of performance because
it is commonly used in the cable television industry to analyze and
compare cable television companies on the basis of operating performance,
leverage and liquidity. EBITDA is not presented in accordance with
generally accepted accounting principles and should not be considered an
alternative to, or more meaningful than, operating income or operating
cash flows as an indicator of CCE-I's operating performance. EBITDA does
not include CCE-I's debt obligations or other significant commitments.
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(d) Represents EBITDA as a percent of revenues.
(e) Capital expenditures exclude cash consideration paid in connection with
the acquisition of cable television systems.
(f) Revenues divided by basic subscribers divided by 12 months.
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BUSINESS
GENERAL
The Company's principal business is the ownership, operation and development
of cable television systems, which it currently conducts through two principal
operating entities, CCE-I and CCE-II. CCE-I owns, operates and develops cable
television systems in the St. Louis, Missouri metropolitan area including
southwestern Illinois and in certain rural and suburban areas in Connecticut
and Massachusetts. As of December 31, 1996, CCE-I's cable television systems
passed approximately 533,600 homes and served approximately 338,300 basic
subscribers in western and northeastern Connecticut, central Massachusetts,
eastern Missouri and southwestern Illinois. CCE-II owns, operates and develops
cable television systems in metropolitan areas of southern California. As of
December 31, 1996, CCE-II's cable television systems passed approximately
425,300 homes and served approximately 168,100 basic subscribers in southern
California. CCE-I's and CCE-II's operations are managed by Charter. As of
December 31, 1996, Charter managed cable television systems which serve
approximately 971,000 basic subscribers (including the Company's subscribers).
Assuming completion of all publicly announced cable television industry
transactions, management believes that Charter would be the 13th largest
multiple system operator in the United States based on number of basic
subscribers. The Company seeks to own and operate cable television systems
serving an increased number of basic subscribers in the regions in which its
cable television systems are presently located.
The ten individuals principally responsible for the Company's operations
(including Barry L. Babcock, Jerald L. Kent and Howard L. Wood, the co-
founders of Charter) have more than 100 years of collective experience in the
cable television industry. Messrs. Babcock, Kent and Wood formerly served as
members of the senior management team of Cencom Cable Associates, Inc., which,
during the nine year period prior to its sale in 1991 to Crown Media,
purchased and developed through acquisitions the Cencom Systems. See
"Business--Business Strategy--Maximize Benefits Provided by Relationship with
Charter." In addition, Kelso and certain other individuals have invested
approximately $68.0 million in the Issuer. As a result of such investment,
Kelso and such individuals own directly or indirectly 85% of the outstanding
equity interests in the Company. In addition, Kelso and certain other
individuals own approximately 19.9% of Charter. See "Risk Factors--Control of
the Company by Kelso."
CCE-I owns and operates cable television systems which lie principally
within two clusters: northeastern and western Connecticut and central
Massachusetts (the "Northeast Region"); and eastern Missouri and southwestern
Illinois (the "Central Region" and collectively with the Northeast Region, the
"Regions"). CCE-II owns and operates cable television systems which lie
principally within southern California. In all, as of December 31, 1996,
approximately 69.9% of the Company's basic subscribers are served by cable
television systems which were part of the Cencom Systems. As such, management
of the Company has a high degree of familiarity with a substantial portion of
the Systems in the Regions. See "Business--Description of the Systems--
Historical Acquisitions" and "Recent Developments."
The Company has sought to "cluster" its cable systems in concentrated
geographic areas in top metropolitan markets. Management believes that such
clustering offers significant opportunities to increase operating efficiencies
and to improve operating margins and cash flow by spreading the Company's
fixed costs over an expanding subscriber base. By establishing such clusters,
the Company is typically able to create regional customer service centers and
establish centralized administration and technological support for local
management, which enables the Company to eliminate duplicative management
personnel and operations. In addition, management believes that by
concentrating its clusters in top metropolitan markets the Company will be
able to generate higher growth in revenues and operating cash flow. Such
metropolitan markets, because of their concentration of businesses and
population, offer greater opportunities for advertising sales and
telecommunications services such as competitive access service. In addition,
because disposable income levels in the areas served by the CCE-I Systems are
generally higher than the national average, management believes that the
Company will benefit from the opportunity to generate enhanced revenues from
existing video services, such as pay television and pay-per-view services, as
well as from future services, such as video-on-demand and Internet access
services. See "Business--Business Strategy--Realize Operating Efficiencies"
and "The Company."
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As part of its commitment to customer service, the Company emphasizes high
technical standards in all of its cable television systems. As of December 31,
1996, CCE-I's cable systems had an average channel capacity of approximately
54 channels, and approximately 89% of CCE-I's subscribers were served by
systems that offered addressable technology. Addressable technology enables
the Company, from its office or at the headend (which processes and combines
signals for distribution within the cable network), to change the premium
channels being delivered to subscribers or to activate pay-per-view services.
The CCE-I Systems are selectively upgraded to increase channel capacity and to
improve picture quality and reliability for the delivery of additional
programming and new services. The Company is currently installing fiber optic
technology (which is capable of carrying significantly more video, data and
voice channels than coaxial technology) in certain of its systems. The Company
believes that the use of fiber optic technology improves system reliability
and lowers operational costs, provides a platform for the further development
and diversification of revenues from existing video services (such as pay-per-
view and home shopping) and advertising sales, and also provides the potential
to develop new and additional services, such as competitive access,
interactive services and data services, such as Internet access. The Company
expects to continue selectively upgrading its systems with fiber optic cable
so that, by the year 2000, average channel capacity in the CCE-I Systems will
increase to approximately 60-70 channels and substantially all of the
Company's customers are expected to be served by systems that offer
addressable technology.
BUSINESS STRATEGY
Management believes clustered cable television systems in major metropolitan
markets offer superior growth opportunities, and management's principal
objective is to increase the Company's operating cash flow by capitalizing
upon such opportunities. To achieve its objective, the Company has pursued the
following business strategies:
Cluster Through Strategic Acquisitions in Metropolitan Markets
The Company has sought to "cluster" its cable systems in suburban and rural
areas surrounding selected metropolitan markets. Management believes that such
clustering offers significant opportunities to increase operating efficiencies
and to improve operating margins and cash flow by spreading the Company's
fixed costs over an expanding subscriber base. In addition, management
believes that by concentrating its clusters in metropolitan markets, the
Company will be able to generate higher growth in revenues and operating cash
flow. Such metropolitan markets, because of their concentration of businesses
and population, offer greater opportunities for advertising sales and
telecommunications services such as competitive access service. In addition,
because disposable income levels in many areas served by the Company's cable
systems are generally higher than the national average, management believes
that the Company will benefit from the opportunity to generate enhanced
revenues from existing video services, such as pay television and pay-per-view
services, as well as from future services, such as video-on-demand and
Internet access services.
Through strategic acquisitions, the Company seeks to enlarge the coverage of
its current areas of operations, and if feasible, develop clusters in new
geographic areas within existing regions. In developing and enhancing cable
system clusters, the Company's acquisition strategy is, by necessity,
opportunistic and depends in large part upon which cable systems become
available in the marketplace. Because many of the Company's operating areas
include other significant cable operators with nearby systems, market place
availability and pricing may be heavily influenced by the interest level of
other potential purchasers. This strategy is also subject to the changing
competitive telecommunications market.
CCE-I owns and operates cable television systems which lie principally
within two regions: the Northeast Region and the Central Region. CCE-II owns
and operates cable television systems which lie principally within southern
California.
The Central Region's systems passed approximately 394,900 homes and served
approximately 223,300 basic subscribers in the suburban St. Louis area as of
December 31, 1996. The Central Region does not include the City of St. Louis,
but includes contiguous suburbs in eastern Missouri and southwestern Illinois.
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The Northeast Region includes selected areas of Connecticut and
Massachusetts, and its systems passed approximately 138,700 homes and served
approximately 115,000 basic subsidiaries as of December 31, 1996. The
Northeast Region, which is composed of several clusters, is more diverse
geographically than the Central Region. The Newtown cluster in Connecticut
consists of 14 contiguous towns southwest of Hartford, Connecticut, and tends
to be more affluent than other clusters within the region. The Willimantic
cluster consists of 16 contiguous suburban and rural towns northeast of
Hartford. Within Massachusetts, there are five clusters, consisting of rural
and suburban communities surrounding the cities of Boston, Springfield and
Worcester, Massachusetts and Providence, Rhode Island.
In determining whether to acquire a particular system, the Company
evaluates, among other things, the (i) location, size and strategic fit of the
system with the Company's existing operations, (ii) technical quality of the
system and anticipated capital expenditure requirements which may be necessary
to comply with franchising requirements or to upgrade systems to satisfy the
Company's operating standards, (iii) demographic trends of the market, (iv)
existing and potential competition in the market, (v) price of the system
relative to other characteristics of the system and (vi) number of years
remaining until the system's franchises must be renewed, along with the
seller's relationship with the relevant franchising authorities. By virtue of
its relationship with Charter, management believes that the Company has
increased access to acquisition opportunities that might otherwise not be
available to a Company of comparable size. Except as described under
"Description of the Systems--Masada Acquisition," below, the Company is not
currently a party to any letter of intent or definitive agreement with respect
to any acquisitions. From time to time, the Company reviews and analyzes
potential acquisitions, which may include the acquisition of other cable
systems managed by Charter or as to which Charter has secured purchase rights.
The Company anticipates that future acquisitions will be financed with
additional debt, or, depending on the size and circumstances of the
acquisition, possibly with additional equity.
Realize Operating Efficiencies
Each region has centralized management and offers certain services that
benefit the clusters and all customers within the region. By establishing such
clusters, the Company is typically able to create regional customer service
centers and establish centralized administration and technological support for
local management, which enables the Company to eliminate duplicative
management personnel and operations. After consummating an acquisition from an
independent party, the Company incorporates the system within the existing
centralized network of operational and organizational functions. By combining
the acquired systems with an existing cluster, or by adding a new cluster
within an existing regional structure, the Company is able to reduce the
operating costs of the system it acquires, and at the same time, spread its
fixed costs over an expanded subscriber base and thereby improve operating
cash flow and margins.
Focus on the Customer
The Company continually seeks to improve its understanding of, and
relationship with, its customers. The Company's emphasis on customer
satisfaction is evident in its customer service policies, marketing,
programming and technological plans. The Company seeks to provide a high level
of customer service by employing a well-trained staff of customer service
representatives and experienced field technicians. Upon acquisition of the new
system, the Company implements a 24-hour customer service hotline, provides
completed repair service in 24 hours (with in excess of 90% of "no picture"
problems solved on the same day as reported) and also offers an installation
and service guarantee within a two-hour window period. Management believes
that the level of customer service provided by the Company to subscribers
gained through acquisitions is generally better than that provided by previous
owners of the systems acquired. The Company's programming packages offer
different pricing options, including special value packages and add-on
services. From a technological standpoint, the Company focuses on its
customers through its emphasis on service reliability, improved picture
quality and expanded channel capacity. In making any operations or
organizational changes, the Company attempts to maintain strong community
relations and enhance customer service. The Company is also working with
Charter to develop a database that will assist management with its evaluation
of the potential
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demand by existing and prospective customers for home entertainment,
educational services and data transmission. Management believes this focus on
the customer will, over time, increase both subscriber penetration and revenue
per subscriber.
Maximize Benefits Provided by Relationship with Charter
The Company receives significant benefits from its relationship with
Charter. The Company benefits from the financial and operational expertise of
Charter's principals (Messrs. Babcock, Kent and Wood, formerly part of the
senior management team of a predecessor entity of the Company) and their
familiarity with those of the Company's systems previously owned by such
predecessor entity. As of December 31, 1996, a majority of CCE-I's subscribers
were served by systems formerly owned and operated by such predecessor entity.
The Company also benefits from Charter's financial and operational expertise,
and from Charter's membership in the TeleSynergy programming cooperative,
which Charter joined in October 1995 and which offers its members certain
programming benefits. Charter's prominence as one of the larger MSO's has also
increased the Company's opportunities to investigate potential acquisitions,
access debt financing and equity capital and obtain marketing support and
discounts on cable system equipment.
THE CABLE TELEVISION INDUSTRY
Cable television was introduced in the early 1950s to provide television
signals to small or rural towns with little or no available off-air television
signals and to communities with reception difficulties caused by terrain
problems. Since that time, the cable television industry has added non-
broadcast programming, utilized improved technology to increase channel
capacity and expanded its service markets to include more densely populated
areas and those communities in which off-air reception is not problematic.
Enhanced channel capacity has increased the potential number of programming
offerings available to the subscriber and, consequently, increased the
potential revenue available per subscriber. State-of-the-art cable television
systems are currently capable of providing approximately 36 to 108 channels of
programming.
Cable television systems offer customers various levels (or "tiers") of
basic cable service consisting of off-air television signals of local
networks, independent and educational stations, a limited number of television
signals from "superstations" originating from distant cities, various
satellite-delivered, non-broadcast channels and certain programming originated
locally by the cable systems. For an extra monthly charge, cable systems also
typically offer premium television services to their customers, consisting of
satellite-delivered channels generally providing feature films, live sports
events, concerts and other special entertainment features. See""--Marketing,
Programming and Rates."
A cable television system consists of two principal operating components:
one or more signal origination points called "headends," which receive
television, radio and data signals that are transmitted by means of off- air
antennas, microwave relay systems and satellite earth stations, and a signal
distribution system. Each headend includes a tower, antennae or other
receiving equipment at a location favorable for receiving broadcast signals
and one or more earth stations that receives signals transmitted by satellite.
The headend facility also houses the electronic equipment which amplifies,
modifies and modulates the signals, preparing them for passage over the
system's network of cables. Cable television systems may also originate their
own programming and other information services for distribution through the
systems.
The signal distribution system consists of amplifiers and trunk lines which
originate at the headend and carry the signal to various parts of the system,
smaller distribution cables and distribution amplifiers which carry the signal
to the immediate vicinity of the subscriber and drop lines which carry the
signal into the subscriber's home. In the past several years, many cable
operators have utilized fiber optic (in place of co-axial cable) technology to
transmit signals through the primary trunk lines.
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DESCRIPTION OF THE SYSTEMS
General
The Company acquired the CCE-I Systems in a series of transactions
commencing in January 1995. The CCE-I Systems, generally lie within two
clusters: the Northeast Region in northeastern and western Connecticut and
central Massachusetts; and the Central Region comprising suburbs of St. Louis
in eastern Missouri and southwestern Illinois. As of December 31, 1996, the
CCE-I Systems, passed approximately 533,600 homes and provided service to
approximately 338,300 subscribers.
Demographic Profile
The following table sets forth certain subscriber and comparative
demographic data relating to the Clusters as of December 31, 1996;
<TABLE>
<CAPTION>
1994 MEDIAN
BASIC HOUSEHOLD
CLUSTERS HOMES PASSED SUBSCRIBERS PENETRATION INCOME
-------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
St. Louis County............ 394,900 223,300 56.5% $44,459(a)
Connecticut/Massachusetts... 138,700 115,000 82.9% 48,966(a)
------- -------
Total....................... 533,600 338,300 -- --
======= =======
St. Louis and
Connecticut/Massachusetts
Average.................... -- -- 63.4% $45,991(a)
National Average............ -- -- 65.7% $37,070
</TABLE>
- --------
(a) Based on latest available data from The 1994 County and City Data Book
(the most recent edition) and The 1986 County and City Data Book for the
counties in which CCE-I operates weighted by the number of basic
subscribers in each county.
As set forth in the table above, CCE-I serves subscribers with household
income levels that are substantially higher than the national average. In the
most recent year for which there is public data, the weighted average
household income for subscribers served by CCE-I was $45,991, or 24% above the
national average of $37,070.
Over the last 15 years, the population of the counties comprising the St.
Louis Cluster has grown 4.2% and the population of the counties comprising the
Connecticut/Massachusetts Cluster has grown 6.3%.
The City of St. Louis and its surrounding area is the 20th largest
Designated Market Area ("DMA") and the 16th largest Metropolitan Statistical
Area ("MSA") in the United States. Connecticut and Massachusetts are the 28th
and 13th largest states in the United States ranked by population,
respectively. The term "DMA" is defined by the A.C. Nielsen Company and
reflects rankings based on population. The DMA rankings have been obtained
from BIA Publications, Inc. (1996). The term "MSA" is as defined by the Office
of Management and Budget on December 31, 1992 and as revised through July 1,
1994. The MSA rankings have been obtained from Rand McNally 1996 Commercial
Atlas & Marketing Guide, BIA Publications, Inc. (1996).
Historical Acquisitions
Crown Systems Acquisition. In January 1995, the Company completed the
acquisition of the Crown Missouri Systems and the Crown Connecticut Systems,
for an aggregate purchase price of approximately $488.2 million, including
related acquisition fees and expenses. As of December 31, 1996, the Crown
Missouri Systems and the Crown Connecticut Systems provided service to
approximately 140,300 and 86,300 basic subscribers, respectively.
The Crown Transaction was part of a larger transaction in which HC Crown
sold its cable television systems to a group of investors, including Charter,
the Company and certain affiliates of Charter, for a total purchase price of
approximately $900.0 million. As a result of this transaction, Charter-
affiliated entities acquired certain of the cable television systems owned by
HC Crown, serving approximately 260,000 basic subscribers in Connecticut,
Kentucky, Missouri, North Carolina and South Carolina, adding to Charter's
then-existing subscriber base of approximately 280,000.
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UVC Systems Acquisition. In October 1995, the Company, through CCE-I,
purchased the UVC Systems for an aggregate purchase price of approximately
$96.0 million, including related acquisition fees and expenses. As of December
31, 1996, the UVC Systems passed approximately 60,900 homes and served
approximately 48,400 basic subscribers in the western suburbs of St. Louis and
in Massachusetts.
Park Hills, Missouri, Systems Acquisition. In January 1996, the Company,
through CCE-I, purchased the Park Hills Systems for an aggregate purchase
price of approximately $9.4 million, including related acquisition fees and
expenses. As of December 31, 1996, the Park Hills Systems passed approximately
9,700 homes and served approximately 6,100 basic subscribers in the Park
Hills, Missouri area.
Illinois Systems Acquisition. In March 1996, the Company, through CCE-I,
purchased the Illinois Systems from CCIP, whose general partner is an
affiliate of Charter, for an aggregate purchase price of approximately $82.0
million, including related acquisition fees and expenses. As of December 31,
1996, the Illinois Systems passed approximately 75,700 homes and served
approximately 45,500 basic subscribers. The Illinois Acquisition was part of a
larger transaction whereby three Charter affiliates purchased all of the
assets of CCIP and, in accordance with the terms of the partnership agreement
of CCIP, independent appraisals were obtained valuing all of the assets of
CCIP. The aggregate purchase price paid by the three Charter affiliates
exceeded the appraisal value by five percent. The purchase price allocated to
the Illinois Systems was determined by the three Charter affiliates based on
the relative value of the Illinois Systems to the total assets being sold.
On October 20, 1995, a purported class action lawsuit on behalf of the CCIP
limited partners was filed in the Chancery Court of New Castle County,
Delaware. The Action named as defendants the general partner of CCIP, the
proposed purchasers of all of the systems owned by CCIP (which includes CCE-I
and certain other affiliates of Charter), Charter and certain individuals,
including the directors and executive officers of the general partner of CCIP.
On February 15, 1996, the Court of Chancery of the State of Delaware in and
for New Castle County dismissed all of the plaintiff's claims for injunctive
relief (including that which sought to prevent the consummation of the
Illinois Acquisition); the plaintiff's claims for money damages which might
result from the proposed sale by CCIP of its assets (including the Illinois
Acquisition) remain pending. In October, 1996, the plaintiff filed a
Consolidated Amended Class Action Complaint. The defendants filed an Answer to
the amended complaint in December 1996. In January 1997, the defendants filed
a Motion for Summary Judgment to dismiss all remaining claims as to all
parties in the Action. Based upon, among other things, the advice of counsel,
each of the defendants to the Action believes the Action to be without merit
and is contesting it vigorously. There can be no assurance, however, that the
plaintiff will not be awarded damages, some or all of which may be payable by
CCE-I, in connection with the Action.
The California Acquisition. In September 1995, CCT purchased the Los Angeles
Systems and the certain other cable television systems from the Gaylord
Affiliate for an aggregate purchase price of approximately $340.9 million,
including related acquisition fees and expenses. In conjunction with the
California Transaction, the Los Angeles Systems were immediately contributed
to CCE-II; and such other systems were sold to Charter Communications
Properties, Inc. As a result, the Los Angeles Systems constitute the sole
assets of CCE-II.
Masada Acquisition
On November 29, 1996, the Company, through CCE-I, acquired certain cable
television systems serving communities in the St. Louis, Missouri metropolitan
area from Masada Cable Partners, L.P., for an aggregate purchase price of
approximately $23.7 million, before transaction costs and working capital
adjustments. As of December 31, 1996, the Masada Systems served approximately
11,800 basic subscribers.
Pending Long Beach Investment by CCE-II
In the second quarter of 1997, CCE-II expects to make a $25.0 million
investment in LBAC, in connection with the acquisition of LBAC by an affiliate
of CCE-II and the Issuer. Such acquisition is subject to the approval
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of the relevant franchising authorities and customary closing conditions. LBAC
owns the Long Beach Systems, serving communities in Long Beach, California.
The Long Beach Investment will be in the form of a loan convertible into 27.5%
of the stock of LBAC. In connection with the Long Beach Investment, CCE-II and
LBAC will become jointly and severally liable under the CCE-II Credit
Facility, which will be increased by $140.0 million upon consummation of the
Long Beach Investment. It is anticipated that CCE-II will draw down $25.0
million under the CCE-II Credit Facility in order to make the Long Beach
Investment. As of December 31, 1996, the Long Beach Systems served
approximately 70,100 basic subscribers. As is the case with assets owned by
CCE-II, holders of the Notes are unlikely to benefit from the assets to be
acquired in the Long Beach Investment, and therefore should not rely on such
assets or revenues generated by them for payment of principal or interest on
the Notes.
OPERATIONS AND MANAGEMENT BY CHARTER
Charter manages the Company's operations under a decentralized management
structure that is intended to maximize the Company's presence in each of its
clusters and thereby enhance customer service and strengthen community
relations. Each of the Company's clusters has a regional senior vice president
of operations who is responsible for overseeing the day-to-day operations of
the systems in such manager's cluster, including, in some cases, systems not
owned by the Company. See "Risk Factors--Dependence on Charter and Key
Personnel of Charter; Potential Conflicts of Interest." Regional management
also provides full marketing support and has established a 24-hour customer
service hotline. Regional costs, including personnel and other operating
expenses, are allocated to the Systems and (where applicable) to certain other
systems owned by affiliates of Charter, pro rata based on the number of
subscribers. By spreading such costs over a broader base of subscribers, the
Company experiences lower operating costs per subscriber than it would without
its affiliation with Charter.
The Company relies on Charter for all of its strategic and managerial
advice, as well as administrative support, including accounts payable,
accounts receivable, billing, payroll and human resources. Charter is
dependent upon the services of certain key personnel, including Messrs.
Babcock, Kent and Wood. Charter also coordinates and provides advice with
respect to all programming arrangements, capital expenditure requirements,
engineering planning, and acquisitions and financing of cable television
systems. In the event the Company's relationship with Charter terminates for
any reason, the Company will no longer benefit from, among other things, the
cost savings on programming and access to acquisition opportunities and
financing relationships that are made available to the Company through
Charter. Charter also provides in-house legal support. See "Certain
Relationships and Related Transactions."
MARKETING, PROGRAMMING AND RATES
The Company's marketing programs are based upon offering various packages of
cable services designed to appeal to different market segments. Charter, in
its capacity as manager of the CCE-I Systems, performs and utilizes market
research on selected systems, compares the data to national research and
tailors a marketing program for each individual market. The Company uses a
coordinated array of marketing techniques to attract and retain subscribers,
including door-to-door solicitation, telemarketing, media advertising and
direct mail solicitations. The Company regularly implements these marketing
efforts in order to gain new subscribers and to increase basic and premium
service penetration in the communities served by its systems. In addition, the
Company is in the process of developing a new five channel "customer choice"
tier of programming, adding four new premium channels, enabling "multiplex"
programming, and offering customers the ability to customize programming
packages. The Company is in the process of developing an in-depth customer
profile data base which will result in more targeted direct marketing efforts
and is intended to increase sales per customer. Such information would then
allow the Company to tailor its marketing efforts with respect to the specific
programming.
Charter has entered into various contracts to obtain basic and premium
programming with a number of suppliers. This programming is made available to
the Company for a fixed fee per subscriber. Charter's
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programming contracts generally continue for a fixed period of time and are
subject to negotiated renewal. Some program suppliers offer marketing and
pricing support. In particular, Charter has negotiated programming agreements
with premium service suppliers that offer cost incentives under which premium
service unit prices decline as certain premium service growth thresholds are
met. In October 1995, Charter joined the TeleSynergy programming cooperative,
which consists of midsize MSOs, and which is expected to offer its members
certain programming benefits.
The Company's aggregate programming costs are expected to increase in the
future due to additional programming being provided to customers, increased
costs to produce or purchase cable programming, inflationary increases and
other factors affecting the cable television industry. Under FCC rate
regulation, opportunities exist for program suppliers to increase their rates,
subject to certain limitations. See "--Regulation in the Cable Television
Industry--Cable Acts and FCC Regulation." Management believes that the
increases in the Company's programming costs which it expects to incur will be
less than the possible increases the Company would otherwise expect to incur
without the benefit of Charter's membership in TeleSynergy. Subject to the
foregoing, management believes the Company will be able to pass-through
expected increases in its programming costs to subscribers, although there can
be no assurance that it will be able to do so. Management believes that the
CCE-I Systems will continue to have access to programming services at
competitive prices, although there can be no assurance that it will continue
to do so.
Although services vary from system to system due to differences in channel
capacity, viewer interests and community demographics, each of the CCE-I
Systems offers a "basic service tier," consisting of local television channels
(network and independent stations) available over-the-air, local public
channels, governmental, home-shopping and leased access channels. Each of the
CCE-I Systems offers, for a monthly fee, an expanded basic tier of
"superstations" originating from distant cities (such as WTBS, WGN and WWOR),
various satellite-delivered, non-broadcast channels (such as Cable News
Network ("CNN"), MTV, Music Television, the USA Network, Entertainment and
Sports Programming Network ("ESPN") and Turner Network Television ("TNT")) and
certain programming originated locally by the cable system (such as public,
governmental and educational access programs) providing information with
respect to news, time, weather and the stock market. In addition to these
services, the CCE-I Systems typically provide four or more premium services
purchased from independent suppliers and combined in different formats to
appeal to the various segments of the viewing audience, such as Home Box
Office ("HBO"), Cinemax, Showtime, The Movie Channel and The Disney Channel.
These services are satellite-delivered channels consisting principally of
feature films, original programming, live sports events, concerts and other
special entertainment features, usually presented without commercial
interruption. Such premium programming services are offered by the CCE-I
Systems both on an a la carte basis and as part of premium service packages
designed to enhance customer value and to enable the CCE-I Systems to take
advantage of programming agreements offering cost incentives based on premium
service unit growth. A "premium service unit" is a single premium service for
which a subscriber must pay an additional monthly fee in order to receive the
service. Subscribers may subscribe for one or more premium service units. The
CCE-I Systems also typically provide one or more pay-per-view services
purchased from independent suppliers such as Request, Viewer's Choice,
Showtime Event Television, etc. These services are satellite-delivered
channels, consisting principally of feature films, live sporting events,
concerts and other special "events," usually presented without commercial
interruption. Such pay-per-view services are offered by the Company on a "per
viewing" basis, with subscribers only paying for programs which they select
for viewing. Additionally, the Company plans to upgrade certain of its systems
with fiber optic cable, which will allow the Company to expand its ability to
use "tiered" packaging strategies for marketing premium services and promoting
niche programming services. Management believes that this ability will
increase basic and premium service penetration as well as revenue per
subscriber.
Rates to subscribers vary from market to market and in accordance with the
type of service selected. As of December 31, 1996, the monthly basic fees for
the basic service tier in the CCE-I Systems ranged from $6.31 to $18.55 for
the Central Region Systems and $9.95 to $12.75 for the Northeast Region
Systems and the monthly fees for the expanded basic service tier in the CCE-I
Systems ranged from $13.64 to $18.28 for the Central Region Systems and 13.75
to 17.70 for the Northeast Region Systems. These rates reflect reductions
enacted in response to the 1992 Cable Act's re-regulation of cable television
industry rates, and in particular, the FCC's
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rate regulations which became effective in 1993 and 1994 implementing the 1992
Cable Act. A one-time installation fee, which may be waived in part during
certain promotional periods, is charged to new subscribers. Management
believes that the Company's rate practices are generally consistent with the
current practices in the industry. See "--Regulation in the Cable Television
Industry."
TECHNOLOGICAL DEVELOPMENTS AND STRATEGY
As part of its commitment to customer service, the Company endeavors to
maintain high technical performance standards in all of its cable systems. All
acquired and existing systems are selectively upgraded to increase channel
capacity and improve picture quality and reliability for the delivery of
additional programming and new services. As part of its evaluation process,
management considers a number of factors before initiating a system upgrade.
Such factors include management's assessment of the (i) upgrades that may be
required by a franchising authority in connection with the renewal of one of
the Company's franchises, (ii) programming alternatives offered by competitors
located near the CCE-I Systems and (iii) cost-effectiveness of any such
upgrades.
The following table sets forth certain information regarding the channel
capacities, miles of plant and basic subscribers for CCE-I's existing owned
and operated systems as of December 31, 1996.
<TABLE>
<CAPTION>
37 TO 42 43 TO 54 55 TO 62 63 TO 78*
CHANNELS CHANNELS CHANNELS CHANNELS TOTAL
-------- -------- -------- --------- -------
<S> <C> <C> <C> <C> <C>
OWNED SYSTEMS:
Number of Systems................ 16 2 10 0 28
Miles of Plant................... 1,307 3,888 4,901 196 10,292
Basic Subscribers................ 56,971 132,886 143,179 5,264 338,300
% of Total Basic Subscribers..... 17 39 42 2 100
</TABLE>
- --------
* While the capacity exists to carry this level of channels to the number of
subscribers disclosed, this capability is currently not utilized as portions
of the trunk and distribution plant associated with the headend do not have
this capacity.
The CCE-I Systems have an average capacity of approximately 54 channels and
approximately 89% of CCE-I's subscribers are currently served by systems that
offer addressable technology. Addressable technology enables the Company, from
the office or headend, to change the premium channels being delivered to each
subscriber or to activate pay-per-view services. These service level changes
can be effectuated without the delay or expense associated with dispatching a
technician to the subscriber's home. Addressable technology also reduces
premium service theft and allows Charter automatically to disconnect
delinquent accounts.
The use of fiber optic technology in concert with coaxial cable has
significantly enhanced cable system performance. Fiber optic strands are
capable of carrying hundreds of video, data and voice channels over extended
distances without the extensive signal amplification typically required for
coaxial cable. To date, Charter has used fiber to interconnect headends, to
eliminate headends by installing fiber backbones, and to reduce amplifier
cascades, thereby improving both picture quality and system reliability.
Digital compression and high capacity data modems may become commercially
viable within the next few years. These developments may enable an increase in
system channel capacity and may allow the introduction of alternative
communications delivery systems for data and voice. Management does not
currently plan to deploy digital technology, as it believes such technologies
will not become cost-effective for the CCE-I Systems in the near term.
However, the Company will continue to monitor the development of such
technology and its utilization by other cable operators, and the cost-
effectiveness of such technology.
CUSTOMER SERVICE AND COMMUNITY RELATIONS
The Company is dedicated to providing superior service to its customers. As
part of this effort, the Company emphasizes improving system reliability,
which includes enhancing technology of the systems, increasing the level of
engineering resources and providing the highest level of customer service. The
Company has also emphasized the availability of customer service and technical
support response time by implementing a 24-hour customer service hotline and
offering installation and service guarantees that provide free installation if
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the Company's installer is late for a scheduled appointment and a $20 credit
if the Company's service technician is late for a service call. As a result of
the Company's clustering of its cable systems, the Company's technicians from
each of the local clusters are able to assist each other as and when
necessary. See "--Properties."
Charter and the Company are also dedicated to fostering strong community
relations in the towns and cities served by the CCE-I Systems. The Company
supports local charities and community causes through marketing promotions.
The Company installs and provides free basic cable service to public schools,
government buildings and not-for-profit hospitals in the communities in which
it operates. Management believes that its relations with the communities in
which the Company operates are generally good.
FRANCHISES
The Company operates pursuant to an aggregate of 123 non-exclusive
franchises, permits or similar authorizations issued by governmental
authorities. Franchises or permits are awarded by a governmental authority and
generally are not transferable without the consent of the authority. Most of
the franchises pursuant to which the CCE-I Systems operate may be terminated
prior to their stated expiration by the granting authority, after due process,
following a breach of a material provision of such franchise. Under the terms
of most of the franchises, a franchise fee of up to 5% of the gross revenues
derived by a cable system from the provision of cable television services (the
maximum amount that may be charged by a franchising authority under the 1984
Cable Act) is payable to the franchising authority.
The table below illustrates the grouping of the franchises of the CCE-I
Systems by date of expiration and sets forth the approximate number and
percentage of basic service customers for each group of franchises as of March
31, 1997.
CCE-I FRANCHISE INFORMATION
<TABLE>
<CAPTION>
PERCENTAGE OF APPROXIMATE PERCENTAGE OF
NUMBER OF TOTAL NUMBER OF TOTAL
YEAR OF FRANCHISE EXPIRATION FRANCHISES FRANCHISES SUBSCRIBERS SUBSCRIBERS
- ---------------------------- ---------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
1997-1998................. 17 14% 113,000 34%
1999-2001................. 45 36% 72,300 21%
After 2001................ 61 50% 153,000 45%
--- ----- ------- -----
Total................... 123 100.0% 338,300 100.0%
=== ===== ======= =====
</TABLE>
The Cable Acts provide for an orderly franchise renewal process in which
franchise renewal may not be unreasonably withheld. If a renewal is withheld
and the franchising authority acquires ownership of the cable system or
effects a transfer of ownership to another party, the franchise authority must
pay the cable operator the "fair market value" for the system covered by such
franchise. The Cable Acts also establish comprehensive renewal procedures
requiring that an incumbent franchisee's renewal application be asserted on
its own merit and not as part of a comparative process with competing
applications. In connection with the franchise renewal process, many
governmental authorities require the cable operator to commit to making
certain technological upgrades to the system, which may require substantial
capital expenditures.
Management believes that the Company generally has good relationships with
the franchising authorities. In the past, all of the material franchises
relating to the CCE-I Systems eligible for renewal have been renewed or
extended at or prior to their stated expirations. The Company's franchise for
"Area 13" in Connecticut (the northeastern system), with 32,900 subscribers as
of December 31, 1996, is scheduled to expire in July 1998. Connecticut
regulates cable systems on a statewide basis (as opposed to franchising by the
various municipalities). The Company requested the commencement of renewal
proceedings in January 1996 with the DPUC. The DPUC granted the Company's
request for an "informal renewal" and has requested, in conformance with
general procedures, that the Company submit its Proposal for Renewal as the
next step in the informal process. The DPUC has also undertaken, pursuant to
its customary procedures, a community needs assessment.
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Management believes that it generally has a good relationship with the DPUC.
No material franchise authority has ever refused to consent to a franchise
transfer to the Company, although there can be no assurance that all franchise
authorities will consent to franchise transfers to the Company in the future,
or that the terms and conditions of any such transfers will be acceptable to
the Company.
COMPETITION IN THE CABLE TELEVISION BUSINESS
Cable television companies generally operate under non-exclusive franchises
granted by local authorities that are subject to renewal and renegotiation
from time to time. The 1992 Cable Act prohibits franchising authorities from
granting exclusive cable television franchises and from unreasonably refusing
to award additional competitive franchises. Cable system operators may
therefore experience competition from other operators building a system in an
existing franchise area (i.e., an "overbuild"). The 1992 Cable Act also
permits municipal authorities to operate cable television systems in their
communities without franchises. There are virtually no overbuilds in the areas
in which the CCE-I Systems are located, although other cable operators may
operate systems in the vicinity of the CCE-I Systems. Cable systems operators
also compete for the right to construct systems in new housing developments
adjoining or otherwise located in proximity to such operator's existing
systems. Management believes that the selection of a cable operator to
construct a system in a new housing development (which may be located near the
cable systems of several different operators) is typically based upon an
evaluation by the real estate developer of the programming and pricing offered
by the different cable operators conducting business in proximity to such
housing development.
Cable television systems also face competition from alternative methods of
receiving and distributing television signals and from other sources of home
entertainment. Within the home video programming market, the Company competes
primarily with other cable franchise holders and with home satellite and
wireless cable providers, and, when existing franchises become available for
renewal (or new franchises become available in the southeastern region of the
United States), with other cable franchise holders. Management believes that
direct broadcast satellite ("DBS"), a service by which packages of television
programming are transmitted to individual homes which are serviced by a single
satellite dish, is currently the most significant competitive threat to the
CCE-I Systems. DBS involves the transmission of an encoded signal directly
from a satellite to the home user. DBS provides video service using a
relatively small dish located at each subscriber's premises. In 1994, two
companies offering high-power DBS video service utilizing an 18-inch satellite
receiver dish, DIRECTV, Inc. ("DIRECTV") and United States Satellite
Broadcasting, began operations over DIRECTV's DBS satellites, and at present,
together offer over 150 channels of programming. PrimeStar Partners, L.P.
("PrimeStar"), which offers 70 channels of programming, is a medium-power DBS
service provider using larger (36-inch) satellite receiver dishes than high-
power DBS providers. DIRECTV requires the consumer to purchase home dish
equipment, while PrimeStar, which is owned primarily by a consortium of cable
television operators (including TCI), leases its dishes to consumers. Both of
these services provide the consumer with access to most satellite-delivered
cable television programming, including premium channels, pay-per-view and
national sporting events. Some of the services offered by DBS are not
available through the Systems, including special events and packages of Major
League Baseball, National Basketball Association, National Football League and
National Hockey League games. The DBS systems use video compression technology
to increase their channel capacity and are able to use 18-inch or 36-inch dish
antennae to receive the satellite signals directly. Several companies
including EchoStar Communications Corp., a venture between MCI
Telecommunications Corporation and The News Corporation Limited, and PrimeStar
have begun or are scheduled to begin offering high-power DBS services.
Basic DBS service starts at approximately $30 per month nationally and
increases depending on the programming selected. A DBS satellite dish for one
television retails for as low as approximately $100, and recent reports
indicate that prices may be reduced by the latter part of 1997 to as low as
$50. Competition by DBS may suffer from the following factors: (i) lack of
reception of local broadcast signals, (ii) topographical limitations which
limit reception in hilly areas, (iii) high cost of additional outlets, (iv)
the inability to view different channels on other television sets in the home
without purchasing a second receiver, (v) the inability to
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offer interactive services and (vi) signal degradation in heavy rain. The lack
of reception of local broadcast signals may cause some DBS subscribers to
continue their subscriptions to basic cable service in order to receive these
channels, although the DBS industry is seeking to modify current law in order
to retransmit these local channels to its customers. However, recent published
reports indicate that there are now approximately 4.5 million subscribers to
DBS services, which reflects a substantial increase in the number of such
subscribers from those reported in previous years. In addition, many observers
are projecting continued growth for the DBS industry through the end of the
decade. Thus, although it is difficult to assess the ultimate magnitude of the
impact that DBS will have on the cable industry or upon the Company's
operations and revenues, DBS services now pose a significant competitive
threat to cable television systems. Furthermore, recently announced plans by
Newscorp/Echostar to seek approval to offer local broadcast channels on DBS
commencing in the latter part of 1998, if implemented with effective
technology and providing local channels to the markets served by the Company's
Systems, could accelerate the timing and increase the impact of the
competition. (This proposed plan calls for local stations on the DBS system in
at least 75% of the country by the end of 1998, via the use of "spot beam"
technology, which aims local signals down to small geographic areas.)
Cable television systems also compete with wireless program distribution
services such as multichannel multipoint distribution service ("MMDS"), which
uses low power microwave frequencies to transmit video programming over-the-
air to customers. The FCC has amended its regulations to enable MMDS systems
to compete more effectively with cable systems by making available additional
channels to the MMDS industry and by refining the procedures by which MMDS
licenses are granted. The FCC also ruled that wireless cable operators may
increase their channel capacity and service offerings through digital
compression techniques. Such increased capacity and offerings may make
wireless cable a more significant competitor in the video programming
industry. The 1992 Cable Act generally prohibits a cable operator from holding
an FCC MMDS license in its franchised cable service area. However, the
Telecommunications Act allows such common ownership if the cable operator is
subject to "effective competition." Additionally, the FCC allocated
frequencies in the 28 GHz band for a new multichannel wireless video service
similar to MMDS. The Company is unable to predict the economic viability of
wireless video services, such as MMDS, or whether such services will present a
competitive threat to the Company.
Since 1992, a portion of the Los Angeles Systems, located in Riverside
County, California (the "Riverside System"), has faced competition from Cross
Country Wireless, Inc. ("Cross Country"), a major MMDS operator. Although
Cross Country initially caused significant subscriber erosion due to an
aggressive marketing campaign, their subscriber count has been essentially
flat at approximately 40,000 over the past two years. (It should be noted that
Cross Country serves all of Riverside County, including substantial areas not
covered by the Riverside System.) In fact, the Riverside System has since
substantially surpassed the subscriber and cash flow levels enjoyed prior to
Cross Country's entry into the market.
Additional forms of competition for cable systems are master antenna
television ("MATV") and satellite master antenna television systems ("SMATV").
These systems are essentially small, closed cable systems which operate within
specific hotels, apartment or condominium complexes and individual residences.
Due to the widespread availability of earth stations, such private cable
television systems can offer both improved reception of local television
stations and many of the same satellite-delivered program services which are
offered by franchised cable television systems. MATV and SMATV systems
currently benefit from operating advantages not available to franchised cable
television systems, including fewer regulatory burdens and no requirement to
service low density or economically depressed communities. The
Telecommunications Act, which to some extent deregulates or lessens the
regulatory burden on the cable industry, may reduce some of the advantages of
SMATV and MATV systems. However, since SMATV and MATV systems generally do not
fall within the Cable Acts' definition of a "cable system," notwithstanding
the enactment of such legislation, they could still be exempt from other
requirements of the Cable Acts which were not amended. Furthermore, the
Telecommunications Act broadens an exemption from regulation as a "cable
system," which may exempt additional SMATV and MATV systems from regulation
under the Cable Acts.
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Federal cross-ownership restrictions have historically limited entry into
the cable television business by potentially strong competitors such as
telephone companies. The 1984 Cable Act codified the FCC's cross-ownership
regulations, which, in part, prohibited local exchange telephone companies,
including RBOCs (Regional Bell Operating Companies), from providing video
programming directly to subscribers within their local exchange telephone
service areas, except in rural areas or by specific waiver of FCC rules. Among
other reasons, this federal cable television/telephone cross-ownership rule
was particularly important to the cable industry, because these telephone
companies already own certain facilities needed for cable television
operators, such as poles, ducts and associated rights-of-way. The
Telecommunications Act repeals the cable television/telephone cross-ownership
ban adopted in the 1984 Cable Act, and contains restrictions on buying out
incumbent cable operations in a telephone company's service area, especially
in suburban and rural markets. Specifically, the Telecommunications Act
authorizes LECs (local exchange companies) to provide a wide variety of video
services competitive with services provided by cable systems and to provide
cable services directly to customers in the telephone companies' service
areas, with some regulatory safeguards. See "--Regulation in the Cable
Television Industry--Telecommunications Legislation."
Various LECs currently are seeking to provide video programming services
within their telephone service areas through a variety of distribution
methods, including both the deployment of broadband wire facilities and the
use of wireless (MMDS) transmission. In Connecticut, the DPUC recently granted
a subsidiary of a local telephone company, The Southern New England
Telecommunications Corporation ("SNET"), a franchise to serve the entire state
of Connecticut. The SNET subsidiary, SNET Personal Vision, Inc. ("Personal
Vision") proposed to offer its services initially to a "primary franchise
area" of several Connecticut communities, including one in which CCE-I
provides cable television service, within its first two years of operation
(beginning by January 1997). Pursuant to the terms of Personal Vision's eleven
year franchise, its services must pass all homes in Connecticut within eleven
years. See "Regulation in the Cable Television Industry." This new statewide
cable franchise is currently being challenged by a regional cable association.
The association recently filed an appeal in the Connecticut Superior Court
challenging the DPUC's grant of the statewide franchise, on several
substantive and procedural grounds. The Company cannot predict the outcome of
this litigation. Some video programming services provided by telephone
companies (e.g., "open video systems") do not require local franchises.
Further, certain of the RBOCs have already entered the cable television
business outside their service areas. Cable television systems could be placed
at a competitive disadvantage if the delivery of video programming services by
LECs becomes widespread. LECs may not be required, under certain
circumstances, to obtain local franchises to deliver such video services or to
comply with the variety of obligations imposed upon cable television systems
under such franchises. Issues of cross-subsidization by LECs of video and
telephony services also pose strategic disadvantages for cable operators
seeking to compete with LECs that provide video services. Management believes
that telephone companies will generally focus their efforts on cable
acquisitions in larger metropolitan areas, although there can be no assurance
that this will be the case.
Other new technologies may become competitive with non-entertainment
services that cable television systems can offer. Advances in communications
technology as well as changes in the marketplace and the regulatory and
legislative environment are constantly occurring. Management cannot predict
the effect that ongoing or future developments might have on the cable
television industry generally or the Company specifically.
REGULATION IN THE CABLE TELEVISION INDUSTRY
The cable television industry is subject to extensive regulation at the
federal, local and, in some instances, state levels. In addition, recent
legislative and regulatory changes and additional regulatory proposals under
consideration may materially affect the cable television industry. The Cable
Acts, both of which amended the Communications Act, establish a national
policy to guide the development and regulation of cable television systems.
The Communications Act was recently substantially amended by the
Telecommunications Act, which alters federal, state and local laws pertaining
to cable television, telecommunications and other services. Principal
responsibility for implementing the policies of the Cable Acts and the
Telecommunications Act is allocated
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between the FCC and state or local franchising authorities. The FCC and state
regulatory agencies are required to conduct numerous rulemaking and regulatory
proceedings to implement the Telecommunications Act and such proceedings may
materially affect the cable television industry.
Cable Acts and FCC Regulation
The Cable Acts and the FCC's implementing rules establish, among other
things, (i) rate regulations, (ii) "anti-buy through" provisions, (iii) "must
carry" and "retransmission consent" requirements that may require a cable
system under certain circumstances to carry a local broadcast station or
obtain consent to carry a distant or local station, (iv) rules for franchise
renewals and transfers and (v) other regulations covering a variety of
operational areas such as equal employment opportunity, public inspection
files, technical standards, leased access and customer service requirements.
The 1992 Cable Act and the FCC's rules implementing the 1992 Cable Act
generally have increased the administrative and operational expenses of cable
television systems and have resulted in additional regulatory oversight by the
FCC and local (and in some instances, state) franchise authorities. Management
is unable to predict the ultimate effect of the 1992 Cable Act or the ultimate
outcome of various FCC rulemaking proceedings or the litigation challenging
various aspects of the 1992 Cable Act and the FCC's regulations implementing
the 1992 Cable Act. In August 1996, the United States Court of Appeals for the
District of Columbia (the "D.C. Appeals Court") upheld the constitutionality
of several provisions of the Cable Acts against a First Amendment
constitutional challenge in a case that has been pending since 1993. The D.C.
Appeals Court affirmed a lower court decision upholding the constitutionality
of the federal statutory provisions authorizing (i) public, educational and
governmental access channels, (ii) commercial leased access channels, (iii)
rate regulation, (iv) liability for operators carrying obscene programming on
access channels, and (v) municipal immunity from damage claims. The D.C.
Appeals Court reversed the lower court's determination that the federal
statutory provisions authorizing (i) advance subscriber notice for certain
free premium channel previews and associated blocking requirements and (ii)
direct broadcast satellite channel set-aside requirements were
unconstitutional. The D.C. Appeals Court denied a request to review its
decision en banc. The D.C Appeals Court deferred a ruling on the
constitutional challenge to statutory requirements mandating program access
and system ownership restrictions and determined that it will consider the
validity of these provisions in a separate case involving a challenge to the
FCC's regulations implementing these statutory provisions.
Rate Regulation. The Cable Acts and FCC regulations have imposed rate
requirements for basic services and equipment. Under the 1992 Cable Act, a
local franchising authority in a community not subject to "effective
competition" (as defined in the 1992 Cable Act) generally is authorized to
regulate basic cable service rates after certifying to the FCC that, among
other things, it will adopt and administer rate regulations consistent with
FCC rules, and in a manner that will provide a reasonable opportunity to
consider the views of interested parties.
Under the FCC's initial rate regulations pursuant to the 1992 Cable Act,
regulated cable systems were required to apply a benchmark formula to
determine their maximum permitted rates. Those systems with rates which were
above the benchmark on September 30, 1992 were required to reduce their rates
to the benchmark or by 10%, whichever was less. Under revised rate regulations
adopted in February 1994, regulated cable systems were required to reduce
their rates so that regulated revenues per subscriber did not exceed September
30, 1992 levels, reduced by 17% (taking into account the previous 10%
reduction).
At this time, approximately 40% of the franchise authorities (covering
approximately 80% of subscribers of CCE-I as of December 31, 1996) that
oversee the franchises under which the Systems operate are certified to
regulate basic tier rates. Several local franchising authorities are currently
in the process of reviewing the basic service rates charged by certain
Systems. However, because the 1992 Cable Act permits communities to certify at
any time, it is possible that additional localities served by the Systems may
choose to certify and regulate rates in the future.
The Telecommunications Act expands the definition of "effective competition"
to include any franchise area where a local exchange carrier or its affiliate
(or any multichannel video programming distributor using the
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facilities of such carrier or its affiliate) provides video programming
services to subscribers by any means, other than through direct broadcast
satellite. The local exchange carrier must provide "comparable" programming
services in the franchise area. In regulating the basic service rates,
certified local franchise authorities have the authority to order a rate
refund of previously paid rates determined to be in excess of the maximum
permitted reasonable rates. With respect to any of the Region's systems
regulated by local authorities that have already been certified, during the
year ended December 31, 1996, the Company paid no rate refunds to subscribers
as a result of rate orders issued by its franchise authorities.
Rate regulation of the basic service tier remains subject to regulation by
local franchising authorities under the Telecommunications Act, except in
certain circumstances for certain small cable operators. For a defined class
of "small cable operators," the Telecommunications Act immediately eliminates
regulation of cable programming rates. Rates for the basic tier of small cable
operators are deregulated if the system offered only a single tier of services
as of December 31, 1994. To qualify as a "small cable operator," the operator
(and its affiliates) must serve in the aggregate fewer than one percent of all
U.S. cable television subscribers and have affiliate gross revenues not
exceeding $250 million. The exception applies in any franchise area in which
the operator serves 50,000 or fewer subscribers.
Under the 1992 Cable Act, rates for cable programming services not carried
on the basic tier ("non-basic services") could be regulated by the FCC upon
the filing of a complaint by franchise authorities or subscribers that
indicates the cable operator's rates for these services are unreasonable. Rate
complaints have been filed with the FCC with respect to certain of the
Company's cable programming service tiers. As of the date of this Prospectus,
one complaint with regard to the Missouri System was dismissed and several
complaints were recently resolved adversely to the Company. Specifically, the
FCC ruled that, during 1994, the Company charged in excess of its maximum
permitted rates (under FCC rules) for its cable programming service tiers in
certain systems operating in Connecticut. The FCC ordered the Company to
refund to subscribers in the affected communities the excess amounts paid,
plus interest to the date of the refunds. The Company believes this ruling
will not have a material adverse effect on its business. The
Telecommunications Act eliminates regulation of the cable programming service
tier (non-basic programming) as of March 31, 1999. In the interim, rate
regulation of the cable programming tier is circumscribed, as rate regulation
can only be triggered by a franchising authority complaint to the FCC. A
franchising authority complaint must be based on more than one subscriber
complaint, which must be filed within 90 days after a rate increase. If the
FCC determines that any of the Company's cable programming service tier rates
(other than the 1994 rates for certain Connecticut systems, as to which the
FCC has already ruled) are unreasonable, the FCC has the authority to order
the Company to reduce those cable programming service tier rates and to refund
to customers any overcharges occurring from the filing date of the rate
complaint at the FCC. In jurisdictions that have not yet chosen to certify,
refunds covering a one-year period on basic service may be ordered upon future
certification if the Company is unable to justify its rates through a
benchmark or cost-of-service filing pursuant to FCC rules. Management is
unable to estimate at this time the total amount of refunds that may be
payable by the Company in the event the Systems' rates (other than the 1994
rates for certain Connecticut systems, as to which the FCC has already ruled)
are successfully challenged by franchising authorities or found to be
unreasonable by the FCC, although management does not believe that the amount
of any such refunds would have a material adverse effect on the Company.
Notwithstanding mandated rate reductions, cable operators currently may adjust
their regulated rates to reflect inflation and what the FCC has deemed to be
external costs (such as increases in franchise fees and programming costs).
In November 1994, the FCC adopted the so-called "going-forward rules" which,
among other things, allow cable operators to raise rates over the next three
years by adding channels to the expanded basic tier. Under the revised rules,
cable operators were allowed to take a per channel markup of up to 20 cents
for each channel added to the expanded basic tier, with an aggregate cap of
$1.20 per subscriber per month. Accordingly, the Company was permitted to
adjust rates on January 1, 1995 for channel additions occurring after May 14,
1994. In addition to rate adjustments permitted for additional channels, the
"going-forward rules" allowed cable operators to recover an additional amount
of 30 cents in the aggregate per subscriber per month for license fees
associated with adding new channels through 1996. (During the third year,
license fees are subject to the general
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rate rules.) Thus, through 1996 the allowable rate increases for channel
adjustments and license fees could have totaled up to $1.50 per subscriber per
month. Under the "going-forward rules," in 1997, cable operators may make an
additional flat fee increase of 20 cents per channel per month for channels
added during that year, provided that the rate increases made by cable
operators over the three-year period (exclusive of license fees) do not exceed
$1.40 in the aggregate. For channels added after May 14, 1994, operators
electing to take advantage of the 20 cents per channel adjustment may not take
a 7.5% mark-up on programming cost increases that are otherwise currently
permissible under the rate rules. The "going-forward rules" are scheduled to
expire on December 31, 1997. The Company has incorporated the "going-forward
rules" into all filings based on the benchmark methodology.
The "going-forward rules" also allow cable operators to place channels that
were not offered on the cable system prior to October 1, 1994 on a new
separate unregulated tier as long as the regulated basic and expanded basic
tiers remain intact. Cable operators may offer the same new channels
simultaneously on both an expanded basic tier and a new unregulated tier, and
may at any time move them to the new tier. Thus, operators may build up a
following for new channels by putting them in the expanded basic tier before
moving them to the new unregulated tier. Channels that were in the basic tier
or the expanded basic tier prior to September 30, 1994 may not be moved to the
new tier, nor may such channels be dropped from the basic or expanded basic
tiers and then added to a new tier within the two-year period after the date
upon which any such channel is dropped.
In September 1995, the FCC developed an abbreviated cost-of-service form
that permits cable operators to recover the costs of significant upgrades that
provide benefits to subscribers of regulated cable services. Cable operators
seeking to raise rates to cover the costs of an upgrade would submit only the
costs of the upgrade instead of all current costs. In December 1995 and April
1996, the FCC revised its cost-of-service rules.
In another action in September 1995, the FCC established a new optional rate
adjustment methodology that encourages operators to limit their rate increases
to once per year to reflect inflation and changes in external costs and in the
number of channels. The rules permit cable operators to "project reasonably"
changes in their costs for the 12 months following the rate change (in an
effort to eliminate delays in recovering costs). The order also allows
operators to recover increases in additional types of franchise-requirement
costs. Permitted pass-through increases include increases in the costs of
providing institutional networks, video services, data services to or from
governmental and educational institutions, and certain other cost increases.
The Company has made annual benchmark filings where appropriate.
In November 1995, the FCC proposed to provide cable operators with the
option of establishing uniform rates for similar service packages offered in
multiple franchise areas located in the same region. Under the FCC's current
rules, cable operators subject to rate regulation must establish rates on a
franchise-specific basis. The FCC recently adopted an order that will permit a
cable television system operator to submit a proposal to establish uniform
rules across multiple franchise areas. The new rule could lower cable
operators' marketing costs and may also allow operators to better respond to
competition from alternative providers. The Company is unable to predict
whether these rules will be of any benefit to the Systems.
In July 1996, the FCC proposed to give operators more flexibility with
respect to the relative pricing of different tiers of service. Under this
proposal, once an operator has set rates in accordance with existing
regulations, the operator could decrease its basic service tier ("BST") rate
and then take a corresponding increase in its cable programming service tier
("CPST") rate to offset the lost revenue on the BST. In this proceeding, the
FCC has also asked parties to comment on whether it should place a limit on
the amount of any CPST rate increase or otherwise limit the amount by which
the BST and CPST rates may be adjusted.
The FCC expects that this proposal would give operators rate structure
flexibility enjoyed by alternative providers of video services that are, or
soon will be, attempting to compete with cable operators but are not subject
to the rate regulation imposed by statute on cable operators. The Company is
unable to predict whether these proposed rules will ultimately be promulgated
by the FCC and, if they are promulgated, their effect on the Company.
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The uniform rate requirements in the 1992 Cable Act, which required a cable
operator to charge uniform rates throughout its franchise areas, are relaxed
by the Telecommunications Act. Specifically, the Telecommunications Act
clarifies that the uniform rate provision does not apply where a cable
operator faces "effective competition." In addition, bulk discounts to
multiple dwelling units are exempted from the uniform rate requirements.
However, complaints concerning "predatory" pricing (including with respect to
bulk discounts to multiple dwelling units) may be made to the FCC. The
Telecommunications Act also permits cable operators to aggregate, on a
franchise system, regional or company level, its equipment costs in broad
categories. The Telecommunications Act should facilitate the rationalization
of equipment rates across jurisdictional boundaries. However, these cost-
aggregation rules do not apply to the limited equipment used by subscribers
who only receive basic programming.
"Anti-Buy Through" Provisions. The 1992 Cable Act and corresponding FCC
regulations require cable systems to permit customers to be able to purchase
video programming offered by the operator on a per channel or per program
basis without having to subscribe to any tier of service (other than the basic
tier), subject to available technology. The available technology exception
sunsets on October 5, 2002. Although approximately 89% of CCE-I's subscribers
are served by systems that offer addressable technology, most of CCE-I's
subscribers do not currently have the requisite equipment in their homes to
utilize such technology. As a result, most of CCE-I's cable television systems
are currently exempt from complying with the requirements of the 1992 Cable
Act. Management cannot predict the extent to which this provision of the 1992
Cable Act and the corresponding FCC rules may cause customers to discontinue
optional non-basic service tiers in favor of the less expensive basic cable
service.
"Must Carry" Requirements/"Retransmission Consents." Under the 1992 Cable
Act, cable television operators are subject to mandatory broadcast signal
carriage requirements that allow local commercial and non-commercial
television broadcast stations to elect once every three years to require a
cable system to carry the station, subject to certain exceptions, or, in the
case of commercial stations, to negotiate for "retransmission consent" to
carry the station. In addition, there are requirements for cable systems to
obtain retransmission consent for all "distant" commercial television stations
(except for commercial/satellite-delivered independent "superstations" such as
WTBS), commercial radio stations and certain low power television stations
carried by such systems after October 6, 1993. The validity of mandatory
signal carriage requirements was litigated in the United States Supreme Court,
which recently upheld the "must carry" requirements on constitutional grounds.
The carriage requirements remained in effect during the litigation. As a
result of the mandatory carriage rules, some of the CCE-I Systems have been
required to carry television broadcast stations that otherwise would not have
been carried, thereby causing displacement of possibly more attractive
programming. In one recent proceeding, the FCC ordered the Company's systems
in Uxbridge, Massachusetts to carry a local broadcast channel pursuant to the
must carry rules. The retransmission consent rules have resulted in the
deletion of certain local and distant television broadcast stations which
various systems were carrying. To the extent retransmission consent fees were
paid for the continued carriage of certain television stations, such costs
were not recoverable. Any future amounts paid in exchange for retransmission
consent, however, may be passed along to subscribers as additional programming
costs.
Franchise Matters. The 1984 Cable Act affirms the right of franchising
authorities (state or local, depending on the practice in the individual
states) to award one or more franchises within their jurisdictions and
prohibits nongrandfathered cable systems from operating without a franchise in
such jurisdictions. The 1992 Cable Act encourages competition with existing
cable systems by (i) allowing municipalities to operate their own cable
systems without franchises, (ii) preventing franchising authorities from
granting exclusive franchises or unreasonably refusing to award additional
franchises covering an existing cable system's service area, and (iii)
prohibiting (with limited exceptions) the common ownership of cable systems
and co-located MMDS or SMATV systems. In January 1995, the FCC relaxed its
restrictions on ownership of SMATV systems to permit a cable operator to
acquire SMATV systems in the operator's existing franchise area so long as the
programming services provided through the SMATV system are offered according
to the terms and conditions of the cable operator's local franchise agreement.
The Telecommunications Act provides that the cable/SMATV and cable/MMDS cross-
ownership rules do not apply in any franchise area where the cable operator
faces "effective
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competition" as defined by federal law. The Telecommunications Act also
permits local telephone companies to provide video programming services as
traditional cable operators with local franchises.
The 1984 Cable Act also provides that in granting or renewing franchises,
local authorities may establish requirements for cable-related facilities and
equipment, but not for video programming or information services other than in
broad categories. Among the more significant provisions, the Cable Act limits
franchise fees to 5% of a cable system's annual gross revenues and permits
cable operators to obtain modification of franchise requirements by the
franchising authority or judicial action if warranted by changed
circumstances. The 1984 Cable Act contains franchise renewal procedures
designed to protect incumbent franchisees against arbitrary denials of
renewal. The 1992 Cable Act made several changes to the renewal process that
could make it easier for a franchising authority to deny renewal. Moreover,
even if a franchise is renewed, a franchising authority may seek to impose new
and more onerous requirements, including requiring significant upgrades in
facilities and services or increased franchise fees. If a franchising
authority's consent is required for the purchase or sale of a cable television
system, the franchising authority may also seek to impose new and more onerous
requirements as a condition to the transfer. The acceptance of these new
requirements, however, may not be made a condition of the transfer.
Historically, franchises have been renewed for cable operators that have
provided satisfactory services and have complied with the terms of their
franchises. Although management believes that the Company has generally met
the terms of its franchise agreements, has provided quality levels of service,
and anticipates that the Company's future franchise renewal prospects
generally will be favorable, there can be no assurance that any such
franchises will be renewed or, if renewed, that the franchising authority will
not impose more onerous requirements on the Company than previously existed.
Connecticut regulates cable systems on a statewide basis (as opposed to
franchising by the various municipalities). The Company's franchise for "Area
13" in Connecticut (the northeastern system) is scheduled to expire in July
1998. The Company requested the commencement of renewal proceedings in January
1996 with the DPUC. The DPUC granted the Company's request for an "informal
renewal" and has requested, in conformance with general procedures, that the
Company submit its Proposal for Renewal as the next step in the process. The
DPUC has also undertaken, pursuant to its customary procedures, a community
needs assessment. Management believes that it generally has a good
relationship with the DPUC. In addition, many of the Company's other
franchises are currently or will be in the near future within the three year
renewal window provided in the Communications Act. Those franchises serve
approximately 62% of the Company's total subscriber base. While there can be
no assurance that all of these franchises will be renewed on commercially
reasonable terms, the Company believes that it maintains generally good
relationships with its franchising authorities.
Under the Telecommunications Act, a franchising authority may not require a
cable operator to provide telecommunications service or facilities, other than
an institutional network, as a condition to a grant, renewal, or transfer of a
cable franchise, and franchising authorities are preempted from requiring
cable operators to obtain a franchise to provide telecommunications services.
Various courts have considered whether franchising authorities have the
legal right to limit franchise awards to a single cable operator and to impose
certain substantive franchise requirements (i.e., access channels, universal
service and other technical requirements). These decisions have been somewhat
inconsistent and, until the United States Supreme Court rules definitively on
the scope of cable operators' First Amendment protections, the legality of
certain issues relating to the franchising process and of various specific
franchise requirements is likely to be in a state of flux. It is not possible
at the present time to predict the constitutionally permissible bounds of
cable franchising and particular franchise requirements.
Other FCC Regulations. The Company is subject to a variety of other FCC
rules, covering such diverse areas as equal employment opportunity,
programming, leased access, maintenance of records and public inspection of
files, technical standards, customer service and cable inside wiring. The FCC
has initiated a rulemaking proceeding to consider, among other issues, whether
to adopt uniform regulations governing telephone and cable inside wiring. The
regulation ultimately adopted by the FCC could affect the Company's ownership
interests and access to inside wiring used to provide telephony and video
programing services. In a related rulemaking proceeding, the FCC will consider
the appropriate treatment of inside wiring in multiple
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dwelling unit buildings ("MDUs"). The outcome of that proceeding could affect
cable operators' access to inside wiring in MDUs. As required by the 1992
Cable Act, the FCC has adopted rules regulating the maximum reasonable rate a
cable operator may charge for commercial use of the designated channel
capacity for cable systems that have a certain number of channels, including
such systems located at MDUs. The Commission recently reconsidered and revised
its rules governing the rates that operators may charge for this designated
channel capacity as well as its rules governing the use of such channels.
Among other revisions to its rules, operators must compute the rates for these
channels based on an average, rather than on the highest spread between
program costs and subscriber revenues, and, consequently, the rates that
operators will be permitted to charge for these channels will likely decrease.
The FCC has authority to enforce its regulations through the imposition of
substantial fines, the issuance of cease and desist orders and/or the
imposition of other administrative sanctions, such as the revocation of FCC
licenses needed to operate certain transmission facilities often used in
connection with cable operations. Although management believes the Company is
in compliance in all material respects with all applicable FCC requirements,
there can be no assurance that the FCC would not find a violation and impose
sanctions that could adversely affect the Company's operations.
Telecommunications Legislation
On February 1, 1996, Congress passed the Telecommunications Act. The
Telecommunications Act was signed into law by the President on February 8,
1996, and substantially amends the Communications Act (including the re-
regulation of subscriber rates under the 1992 Cable Act). The
Telecommunications Act alters federal, state and local laws and regulations
pertaining to cable television, telecommunications, and other services. In
addition to the amendments previously discussed in this section, the
legislation also allows additional competition in video programming by
telephone companies, and makes other revisions to the Communications Act and
the Cable Acts.
The most far-reaching changes in the communications industry will result
from the telephony provisions of the Telecommunications Act. These provisions
promote local exchange competition as a national policy by eliminating legal
barriers to competition in the local telephone business and setting standards
to govern the relationships among telecommunications providers. The provisions
also establish uniform requirements and standards for entry, competitive
carrier interconnection, and unbundling of LEC (local exchange company)
monopoly services. The Telecommunications Act expressly prohibits any legal
barriers to competition in intrastate or interstate communications service
under state and local laws. The Telecommunications Act empowers the FCC, after
notice and an opportunity for comment, to preempt the enforcement of any
statute, regulation or legal requirement that prohibits, or has the effect of
prohibiting, the ability of any entity to provide any intrastate or interstate
telecommunications service.
The Telecommunications Act is intended, in part, to promote substantial
competition in the marketplace for telephone local exchange service and in the
delivery of video and other services, and permits cable television operators
to enter the local telephone exchange market. The cable industry's ability to
offer telephone services competitively may be adversely affected by the degree
and form of regulatory flexibility afforded to LECs and, in part, will depend
upon the outcome of various FCC rulemakings and judicial proceedings,
including the proceedings dealing with the interconnection obligations of
telecommunications carriers. The United States Court of Appeals for the Eighth
Circuit recently stayed implementation of part of the FCC's recently issued
interconnection order, which had been viewed favorably by companies seeking to
compete with LECs in the provisioning of telephony services. Additionally,
whether the cable industry will be able to provide competitive telephone
services will depend, in part, on its ability to obtain access to public
rights of way. The FCC currently is conducting a proceeding that could
determine a franchise authority's scope of authority to impose monetary and
other obligations on cable operators for the use of public rights of way to
provide telecommunications services.
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Telephone Company Provision of Video Programming. Under the
Telecommunications Act, telephone companies can compete directly with cable
operators in the provisioning of video programming. The new legislation
recognizes several multiple entry options for telephone companies to provide
competitive video programming, including over their telephone facilities,
through either common carrier transport or an "open video system," by radio
communications, or as a regular cable system. LECs, including RBOCs, will be
allowed to compete with cable operators both inside and outside the LECs'
telephone service areas. The Telecommunications Act repeals the statutory ban
on telephone company provision of video programming services in the telephone
company's service areas. The FCC's video dialtone regulations have also been
repealed. Pursuant to authority granted to the FCC in the Telecommunications
Act, the FCC ordered that video dialtone operators could only continue to
offer service by electing, by November 6, 1996, one of the four permissible
options for telephone companies to provide video programming which are
described below. Video dialtone operators could apply for extensions to the
November 6, 1996 deadline upon a demonstration of "good cause" for an
extension.
In particular, if a telephone company provides video via radio
communications, it will be regulated under title III of the Communications Act
(the general sections governing use of the airwaves), rather than cable
regulation under title VI. If a telephone company provides common carriage
transport of video programming, it will be subject to the requirements of
title II of the Communications Act (the general common carrier provisions),
rather than title VI cable regulation. Telephone companies providing video
programming through any other means (other than as an "open video system," as
described below) will be regulated under title VI cable regulation.
The Telecommunications Act replaces the FCC's video dialtone rules with an
"open video system" plan by which telephone companies can provide video
programming service in their telephone service areas. Telephone companies that
comply with the FCC's open video system regulations (which must be prescribed
within six months from enactment) will be subject to a relaxed regulatory
scheme. The open video system requirements are in lieu of title II common
carrier regulation. The FCC has certified the operation of open video systems
in various areas of the United States.
The FCC was directed to and has prescribed rules that prohibit open video
systems from discriminating among video programming providers with regard to
carriage, and that ensure that open video system rates, terms and conditions
for service are reasonable and non-discriminatory. Pursuant to the
Telecommunications Act, the FCC has also adopted regulations prohibiting an
open video system operator and its affiliates from occupying more than one-
third of the system's activated channels when demand for channels exceeds
supply. The Telecommunications Act also mandates other open video system
regulations, including channel sharing and sports exclusivity. Open video
systems will be subject to the authority of local governments to manage public
rights-of-way. Local franchising authorities may require open video system
operators to pay franchise-type fees, which may not exceed the rate at which
franchise fees are imposed on any cable operator in the corresponding
franchise area. The FCC's open video system regulations have been appealed.
Buyouts. The Telecommunications Act generally prohibits LEC buyouts of cable
systems (which includes any ownership interest exceeding 10%) within the LEC's
telephone service area, cable operator buyouts of LEC systems within the cable
operator's franchise area, and joint ventures between cable operators and LECs
in the same markets. There are some statutory exceptions, including a rural
exemption which permits buyouts where the purchased system serves an area with
fewer than 35,000 inhabitants outside an urban area. Also, the FCC may grant
waivers of the buyout provisions in cases where (1) the cable operator or LEC
would be subject to undue economic distress; (2) the system or facilities
would not be economically viable; or (3) the anticompetitive effects of the
proposed transaction are clearly outweighed by the effect of the transaction
in meeting community needs. The respective local franchising authority must
approve any such waiver.
Public Utility Competition. The Telecommunications Act also authorizes
another potential competitor, registered utility holding companies and
subsidiaries, to provide video programming services, notwithstanding the
Public Utility Holding Company Act. Utilities must establish separate
subsidiaries and must apply to the FCC
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for operating authority. Several such utilities have been granted broad
authority by the FCC to engage in activities which could include the provision
of video programming.
Cross-Ownership; Reduced Regulations. The Telecommunications Act makes
several other changes to relax ownership restrictions and regulation of cable
systems. It repeals the 1992 Cable Act's three-year holding requirement
pertaining to sales of cable systems. The broadcast/cable cross-ownership
restrictions are eliminated, although the FCC's regulations prohibiting
broadcast/cable common ownership currently remain. The SMATV/cable cross-
ownership and the MMDS/cable cross-ownership restrictions have been eliminated
for cable operators subject to effective competition.
The Telecommunications Act amends the definition of "cable system" so that a
broader class of entities (including some entities which may compete with the
Company) providing video programming will be exempt from regulation as a cable
system under the Communications Act.
Pole Attachments. The 1984 Cable Act requires the FCC to regulate the rates,
terms and conditions imposed by certain public utilities for cable systems'
use of utility pole and conduit space, unless state authorities can
demonstrate under the Federal Pole Attachment Act that they adequately
regulate cable television pole attachment rates, terms and conditions. In some
cases utility companies have increased pole attachment fees for cable systems
that have installed fiber optic cables in connection with the distribution of
non-video services. The FCC recently concluded that, in the absence of state
regulation, it has jurisdiction to determine whether utility companies have
justified their demand for additional rental fees, and that the 1984 Cable Act
does not permit disparate rates based on the type of service provided over the
equipment attached to the utility's pole. Further, in the absence of state
regulation, the FCC administers such pole attachment rates through use of a
formula which it has devised and from time to time revises. The
Telecommunications Act extends the regulation of rates, terms and conditions
of pole attachments to telecommunications service providers, and requires the
FCC to prescribe regulations to govern the charges for pole attachments used
by telecommunications carriers to provide telecommunications services when the
parties fail to resolve the dispute over such charges. The FCC recently
adopted an Order to adopt certain of the Telecommunications Act's pole
attachment provisions. The Telecommunications Act also increases significantly
future pole attachment rates for cable systems which use pole attachments in
connection with the provision of telecommunications services as a result of a
new rate formula charged to telecommunications carriers for the non-useable
space of each pole. These rates are to be phased in after a five-year period.
Miscellaneous Requirements and Provisions. The Telecommunications Act also
imposes other miscellaneous requirements on cable operators, including an
obligation, on request, to fully scramble or block at no charge the audio and
video portion of any channel not specifically subscribed to by a household. In
addition, sexually explicit programming must be scrambled or blocked. If the
cable operator is unable to scramble or block its signal completely, it must
restrict transmission to those hours of the day when children are unlikely to
view the programming, as determined by the FCC. On March 24, 1997, the U.S.
Supreme Court let stand a lower court ruling that allows enforcement of this
provision pending consideration of a constitutional challenge. In response to
this ruling, the FCC has declared that its rules implementing the scrambling
provision will become effective on May 18, 1997. Enforcement of the scrambling
requirement could increase operating expenses for operators of cable
television systems, including the Company, and provide a competitive advantage
to less regulated providers of video programming services. The
Telecommunications Act also directs the FCC to adopt regulations to ensure,
with certain exceptions, that video programming is fully accessible through
closed captioning. The FCC recently released a report to Congress on the level
at which video programming is close captioned and commenced a proceeding to
establish regulations to implement such closed captioning requirements.
Although the new legislation may substantially lessen regulatory burdens,
the cable television industry may be subject to additional competition as a
result thereof. There are numerous rulemakings which have been, and which will
be undertaken by the FCC which will interpret and implement the provisions of
the Telecommunications Act. In addition, certain provisions of the Act (such
as the deregulation of cable programming rates) are not immediately effective.
Further, certain provisions of the Telecommunications Act have been, and are
likely to continue to be, subject to legal challenges. Similarly, certain
provisions of the
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Telecommunications Act could materially affect the Company's ability to sell
the Systems; however, the Company is unable at this time to predict the
outcome of such rulemakings or litigation or the substantive effect (financial
or otherwise) of the new legislation and the rulemakings on the Company.
FCC Implementation. The FCC is presently, and will be, engaged in numerous
proceedings to implement various provisions of the Telecommunications Act.
Recently, the FCC adopted cable television equipment cost aggregation rules
and adopted open video system rules. In addition to the proceedings previously
discussed herein, the FCC has recently initiated a proceeding to implement
most of the Cable Act reform provisions of the Telecommunications Act.
In this proceeding, the FCC has set forth certain interim rules to govern
while the FCC completes its implementation of the Telecommunications Act.
Among other things, the FCC is requiring on an interim basis that for a LEC to
be deemed to be offering "comparable" programming, such programming must
include the signals of local broadcasters. Cable systems that meet all of the
relevant criteria in the new effective competition test are exempt from rate
regulation as of February 8, 1996 (the date the Telecommunications Act was
signed into law by President Clinton). Cable systems may file a petition with
the FCC at any time for a determination of effective competition.
The FCC has also established interim rules governing the filing of rate
complaints by local franchising authorities. Local franchising authorities may
file rate complaints with the FCC when the local franchising authorities
receive more than one subscriber complaint concerning an operator's rate
increase. If the local franchising authority receives more than one subscriber
complaint within the 90-day period and decides to file its own complaint with
the FCC, it must do so within 180 days after the rate increase became
effective. Before filing a complaint with the FCC, the local franchising
authority must first provide the cable operator written notice of its intent
to do so and must give the operator a minimum of 30 days to file with the
local franchising authority the relevant FCC forms used to justify a rate
increase. The local franchising authority must then forward its complaint and
the operator's response to the FCC within the 180 day deadline. The FCC must
issue a final order within 90 days after it receives a local franchising
authority complaint.
For interim purposes, the FCC has established that an operator serving fewer
than 617,000 subscribers is a "small cable operator" if its annual revenues,
when combined with the total annual revenues of all of its affiliates, do not
exceed $250 million in the aggregate. For interim purposes, "affiliate" will
be defined as a 20% or greater equity interest.
In addition to the interim rules discussed above and other miscellaneous
interim rules, the FCC is also engaged in a rulemaking proceeding to create
and implement final rules relating to the cable reform provisions of the
Telecommunications Act. Among other issues, the FCC is considering whether to
establish a LEC market share that must be satisfied before a LEC will be
deemed to constitute "effective competition" to an incumbent cable operator
(which would free the cable operator from rate regulation). The Company cannot
predict the outcome of this FCC proceeding or what its ultimate effect will be
on the Company's business.
Copyright
Cable television systems are subject to Federal copyright licensing covering
carriage of television and radio broadcast signals. In exchange for filing
certain reports and contributing a percentage of their revenues to a Federal
copyright royalty pool, cable operators can obtain blanket permission to
retransmit copyrighted material on broadcast signals. The nature and amount of
future copyright payments for broadcast signal carriage cannot be predicted.
The possible simplification, modification or elimination of the compulsory
copyright license is the subject of continuing legislative review. The
elimination or substantial modification of the cable compulsory license could
adversely affect the Company's ability to obtain suitable programming and
could substantially increase the cost of programming that remained available
for distribution to the Company's customers. Management cannot predict the
result of such legislative activity or the effect of such activity on the
Company's condition (financial or otherwise).
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State and Local Regulation
Cable television systems generally are operated pursuant to non-exclusive
franchises, permits or licenses granted by a municipality or other state or
local government entity. Franchises generally are granted for fixed terms and
in many cases are terminable if the franchisee fails to comply with material
provisions of its franchise agreement. The terms and conditions of franchises
vary materially from jurisdiction to jurisdiction. A number of states subject
cable television systems to the jurisdiction of centralized state governmental
agencies, some of which impose regulation of a character similar to that of a
public utility. Attempts in other states to regulate cable television systems
are continuing and can be expected to increase. CCE-I's Systems in Connecticut
are regulated on a statewide basis and subject to the jurisdiction of the
DPUC. Management cannot predict whether any of the other states in which the
Company currently operates, or in which it may operate in the future, will
engage in such regulation in the future. State and local franchising
jurisdiction is not unlimited, however, and must be exercised consistently
with Federal law. The 1992 Cable Act immunizes franchising authorities from
monetary damage awards arising from regulation of cable television systems or
decisions made on franchise grants, renewals, transfers and amendments.
The foregoing does not purport to describe all present and proposed federal,
state, and local regulations and legislation affecting the cable industry.
Other existing federal regulations, copyright licensing, and, in many
jurisdictions, state and local franchise requirements, are currently the
subject of judicial proceedings, legislative hearings and administrative and
legislative proposals which could change, in varying degrees, the manner in
which cable systems operate. Neither the outcome of these proceedings nor the
impact on the cable television industry or the Company can be predicted.
BACKGROUND AND OWNERSHIP STRUCTURE
The Issuer was organized in 1994 as a Delaware corporation. Ownership
interests in the Issuer are held by Kelso and certain other individuals, on
the one hand, and Charter, on the other hand, which maintain an 85% and 15%
interest in the Issuer, respectively, with distributions on exit varying
depending on rates of return on the stockholders' equity investment in the
Issuer. Kelso and certain other individuals have invested an aggregate of
$68.0 million in the Issuer. Charter has invested an aggregate of $12.0
million in the Issuer. As a result of its investment, Kelso can exercise
effective control over the management and affairs of the Issuer and the
Company. Kelso and certain other individuals own approximately 19.9% of
Charter and have invested an aggregate of $12.0 million in Charter.
The Issuer has indirect interests in CCE-I and CCE-II, which were formed to
acquire and operate cable television systems. The Issuer holds all equity
interests in CAC, which in turn holds all equity interests in Cencom Cable.
CAC and Cencom Cable each hold limited partnership interests in CCE, L.P. CAC
also holds a 1% general partnership interest in CCE, L.P., a 1.22% general
partnership interest in CCE-I and a 1.22% limited partnership interest in CCE-
II. CCT holds limited partnership interests and a 1% general partnership
interest in CCE, L.P. CCT also holds a 1% general partnership interest in CCE-
II and a 1% limited partnership interest in CCE-I. CCE, L.P. holds a 97.78%
limited partnership interest in each of CCE-I and CCE-II. The primary business
activities engaged in by CCE-I and CCE-II are the ownership, development and
operation of cable television systems and a radio station.
EMPLOYEES
The Company has no employees other than employees of CCE-I and CCE-II. As of
December 31, 1996, CCE-I employed an aggregate of 607.5 full-time equivalent
employees of which 41.5 are covered by a collective bargaining arrangement. At
December 31, 1996, CCE-II employed an aggregate of 355.0 full-time equivalent
employees. The Company considers its relationships with its employees to be
good.
Charter acts as the management company for each of CCE-I and CCE-II pursuant
to certain management agreements. See "Certain Relationships and Related
Transactions--Management Agreements." For a discussion of the directors and
executive officers of Charter, see "Management."
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PROPERTIES
The principal physical assets of the Company consist of, among other things,
the components of each of its cable systems, which include a headend,
distribution cables and a local business office. The receiving apparatus is
comprised of a tower and antennas for reception of over-the-air broadcast
television signals and one or more earth stations for reception of satellite
signals. Located near these receiving devices is a building that houses
associated electronic gear and processing equipment. The Company owns the
receiving and distribution equipment of its systems and owns or leases small
parcels of real property for the receiving sites.
Cable is either buried in trenches or is attached to utility poles pursuant
to license agreements with the owners of the poles. The Company owns or leases
the local business office of each system from which it dispatches service
employees, monitors the technical quality of the system, handles customer
service and billing inquiries and administers marketing programs. The office
facilities of some systems include studios for local access program
production, as required under the Company's franchises.
Management believes that the Company's properties are generally in good
condition. The physical components of the Company's cable systems, however,
require maintenance and periodic upgrades to keep pace with technological
advances and to comply with the requirements of certain franchising
authorities. For a discussion of historical capital expenditures, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."
INSURANCE
The Company has insurance covering risks incurred in the ordinary course of
business, including general liability, property coverage and business
interruption insurance. As is typical in the cable television industry, the
Company does not maintain insurance covering its underground plant. Management
believes its insurance coverage is adequate.
LEGAL PROCEEDINGS
The Company is involved from time to time in routine legal matters
incidental to its business. Management, after consultation with its legal
counsel, believes that the resolution of such matters will not have a material
adverse effect on the Company's financial position or results of operations.
On October 20, 1995, a purported class action lawsuit on behalf of the CCIP
limited partners was filed in the Chancery Court of New Castle County,
Delaware. The Action named as defendants the general partner of CCIP, the
proposed purchasers of all the systems owned by CCIP (which includes CCE-I and
certain other affiliates of Charter), Charter and certain individuals,
including the directors and executive officers of the general partner of CCIP.
On February 15, 1996, the Court of Chancery of the State of Delaware in and
for New Castle County dismissed all of the plaintiff's claims for injunctive
relief (including that which sought to prevent the consummation of the
Illinois Acquisition); the plaintiff's claims for money damages which might
result from the proposed sale by CCIP of its assets (including the Illinois
Acquisition) remain pending. In October, 1996, the plaintiff filed a
Consolidated Amended Class Action Complaint. The defendants filed an Answer to
the amended complaint in December 1996. In January 1997, the defendants filed
a Motion for Summary Judgment to dismiss all remaining claims as to all
parties in the Action. Based upon, among other things, the advice of counsel,
each of the defendants to the Action believes the Action to be without merit
and is contesting it vigorously. There can be no assurance, however, that the
plaintiff will not be awarded damages, some or all of which may be payable by
CCE-I, in connection with the Action.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information, as of April 30, 1997,
with respect to the executive and certain other officers and directors of the
Issuer, CAC (which serves as the general partner of CCE and CCE-I), Cencom
Cable and Charter which, as the manager of the Systems, is responsible for
providing advice with respect to the overall management and operations of the
Company:
<TABLE>
<CAPTION>
NAME AGE POSITIONS AND OFFICES
---- --- ---------------------
<C> <C> <S>
Barry L. Babcock..... 50 Chairman and Secretary of the Issuer, CAC, Cencom
Cable and Charter, and director of Cencom Cable and
Charter
Robert C. Bailey..... 60 Senior Vice President--Operations of Issuer, CAC,
Cencom Cable and Charter
Mary Pat Blake....... 41 Senior Vice President--Marketing of Charter and CAC
Senior Vice President--Engineering of Charter and
Thomas R. Jokerst.... 47 CAC
Ralph G. Kelly....... 40 Senior Vice President--Treasurer of the Issuer, CAC,
Cencom Cable and Charter
Jerald L. Kent....... 40 President, Chief Financial Officer and Director of
the Issuer, CAC, Cencom Cable and Charter
Gene F. Knoblauch.... 39 Senior Vice President--Northeast Region of Charter
George E. Matelich... 40 Director of Issuer and CAC
Frank T. Nickell..... 49 Director of Issuer and CAC
Senior Vice President--Central Region of Charter and
Stephen J. Rabbit.... 48 CAC
Curtis S. Shaw....... 48 Senior Vice President, General Counsel and Secretary
of Issuer, CAC, Cencom Cable and Charter
Glenn M. Stinchcomb.. 70 Director of Charter
Thomas R. Wall, IV... 38 Director of Issuer and CAC
Howard L. Wood....... 58 Chairman of the Management Committee and Director of
the Issuer, CAC, Cencom Cable and Charter
</TABLE>
See "Certain Relationships and Related Transactions--Stockholders'
Agreement" for a description of the contractual agreement between the
shareholders of the Issuer relating to the election of Directors.
The following sets forth certain biographical information with respect to
the persons listed above.
BARRY L. BABCOCK is a co-founder and Chairman of Charter, and a member of
its Management Committee, and also serves as General Counsel and Secretary.
Prior to founding Charter, Mr. Babcock was associated with Cencom, where he
served as the Executive Vice President from February 1986 to September 1991,
and was named Chief Operating Officer in May of 1986. Mr. Babcock was one of
Cencom's founders and, prior to the duties he assumed in early 1986, was
responsible for all of Cencom's in-house legal work, contracts and
governmental relations. Mr. Babcock serves as a director of Charter. In 1996,
he was appointed Chairman of the Board of Community Telecommunications
Association (CATA), Cable in the Classroom and the St. Louis Civic
Entrepreneur's Organization. Mr. Babcock, an attorney, received his
undergraduate and JD degrees from the University of Oklahoma. He also served
four years as a line officer in the United States Navy.
ROBERT C. BAILEY is Senior Vice President of Operations of Charter. Mr.
Bailey joined Charter in January 1993. Prior to joining Charter, Mr. Bailey
was associated with Cencom, serving as Group Vice President of Operations from
August 1987 and as of September 1988 as Senior Vice President/Operations. From
1984 to 1987, Mr. Bailey served as Vice President of Construction for Group W
Cable (Chicago office), where he managed all construction projects and related
field service operations in the Chicago area. From 1981 to 1984, Mr. Bailey
served as Vice President of Construction for Group W Cable (corporate office),
with responsibility for all capital projects. Mr. Bailey is a Graduate of
Capital Radio Engineering Institute of Washington, D.C. and Commercial Radio
Institute of Baltimore, Maryland.
MARY PAT BLAKE is Senior Vice President--Marketing of Charter. Ms. Blake
joined Charter in August 1995 and is responsible for all aspects of marketing
and sales. Prior to joining Charter, Ms. Blake was active in the
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emerging business sector, and formed Blake Investments, Inc. in September
1993, which created, operated and sold a branded coffeehouse and bakery. From
September 1990 to August 1993, Ms. Blake served as Director--Marketing for
Brown Shoe Company. Ms. Blake has 18 years of experience with senior
management responsibilities in marketing, sales, finance, systems, and general
management with companies such as The West Coast Group, Pepsico Inc.-Taco Bell
Division, General Mills, Inc. and ADP Network Services, Inc. Ms. Blake
received a BS degree from the University of Minnesota, and an MBA degree from
the Harvard Business School.
THOMAS R. JOKERST is Senior Vice President--Engineering of Charter. Mr.
Jokerst joined Charter in December 1993. Mr. Jokerst is responsible for all
aspects of engineering and technology assessment for Charter. Prior to joining
Charter, from March 1991 to March 1993, Mr. Jokerst served as Vice President,
Office of Science & Technology for Cable Television Laboratories in Boulder,
Colorado. From 1979 to March 1993, Mr. Jokerst was employed by Continental
Cablevision of Illinois, Inc., where his responsibilities included the
creation of a Regional Hub and Headend Interconnect for the St. Louis Region
of Continental Cablevision's systems. Mr. Jokerst is a graduate of Ranken
Technical Institute in St. Louis with a degree in Communications Electronics
and Computer Technology and of Southern Illinois University in Carbondale,
Illinois with a degree in Electronics Technology.
RALPH G. KELLY joined Charter in 1993 as Vice President--Finance, a position
he held until early 1994 when he became Chief Financial Officer of CableMaxx,
Inc., a wireless cable television operator. Mr. Kelly returned as Senior Vice
President--Treasurer of Charter in February 1996 and has overall
responsibility for treasury operations and investor and financial reporting.
Mr. Kelly has worked in the cable industry since 1984 when he joined Cencom as
Controller. Mr. Kelly was promoted to Treasurer of Cencom in 1989, and was
responsible for treasury management, loan compliance, budget administration,
supervision of internal audit and SEC reporting. He has served on the
Accounting Committee of the Board of Directors for National Cable Television
Association. Mr. Kelly is a certified public accountant and was in the audit
division of Arthur Andersen & Co. from 1979 to 1984. Mr. Kelly received his
undergraduate degree in accounting from the University of Missouri--Columbia,
and his MBA from Saint Louis University.
JERALD L. KENT is a co-founder, President, Chief Financial Officer and a
member of the Management Committee of Charter. Prior to founding Charter, Mr.
Kent was associated with Cencom, where he served as Executive Vice President
and Chief Financial Officer. Mr. Kent also served Cencom as Senior Vice
President of Finance from May 1987, Senior Vice President of Acquisitions and
Finance from July 1988, and Senior Vice President and Chief Financial Officer
from January 1989. Prior to that time, Mr. Kent was employed by Arthur
Andersen & Co., certified public accountants, where he attained the position
of tax manager. Mr. Kent, a certified public accountant, received his
undergraduate and MBA degrees with honors from Washington University
(St. Louis).
GENE F. KNOBLAUCH joined Charter in December 1994 as Senior Vice President
of Northeast Operations. He has primary responsibility for all operations in
the States of Connecticut and Massachusetts owned by Charter. Prior to joining
Charter, Mr. Knoblauch was employed by United Video Cablevision, Inc. as Vice
President--Eastern Region Operations from 1990 to 1994. At United Video
Cablevision, Inc. he was responsible for all day-to-day operations and
administration of system operations located in Maine, Massachusetts, New
Hampshire and New York consisting of 82,000 customers. From 1986 to 1990, he
served as Area Manager for a 40,000 customer system operated by ACT in Durham,
North Carolina. Prior to serving as Area Manager, he received extensive Sales
and Marketing experience in a number of management positions he held at
various locations with ACT dating back to 1982. Mr. Knoblauch received a BA
degree from the State University of New York at Plattsburgh. He has served on
the New England Cable Television Association (NECTA) Executive Committee for
the past three years.
GEORGE E. MATELICH has been a director of the Issuer since February 1995.
Mr. Matelich has been a Managing Director of Kelso & Company since 1990. Mr.
Matelich joined Kelso & Company in 1985 as an Associate, and he served as a
Vice President of Kelso & Company from 1986 to 1989. Mr. Matelich is also a
director of CCT, Americold Corporation, Harris Specialty Chemicals, Inc.,
Humphreys Inc., and a Trustee of The University of Puget Sound.
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FRANK T. NICKELL has been a director of the Issuer since February 1995. Mr.
Nickell has been President and a director of Kelso & Company, since March
1989. From 1984 to 1989 Mr. Nickell was a general partner of Kelso & Company.
He is also a director of The Bear Stearns Companies Inc., CCT, Earle M.
Jorgensen Company and Tyler Refrigeration Corporation.
STEPHEN J. RABBIT joined Charter in May 1996 as Senior Vice President of
Central Region. He has primary responsibility for all cable operations in
Charter's Central Region, including St. Louis metropolitan area, Illinois,
Kentucky, Tennessee, Texas, Kansas and Colorado. Prior to joining Charter, Mr.
Rabbit was employed by RCN, Inc., as an Executive Vice President from 1995 to
1996. From 1994 to 1995 he served as Executive Vice President and Chief
Operating Officer of C-Tec Cable Systems, Inc. From 1992 to 1994 he was a
Senior Vice President of Crown Media, Inc. From 1989 to 1992 he was a Vice
President of Operations of Jones Intercable, Inc. and from 1986 to 1989 he was
a General Manager of Storer Cable TV of CT. Mr. Rabbit received a BA from the
University of Bridgeport and an MA from Fairleigh Dickinson University.
CURTIS S. SHAW joined Charter in February 1997 as Senior Vice President,
General Counsel and Secretary, and is responsible for all legal aspects of
Charter's business, including major transactions and the duties of the
corporate secretary. Prior to joining Charter, Mr. Shaw served as corporate
Counsel to NYNEX since 1988. From 1983 until 1988 Mr. Shaw served as Associate
General Counsel for Occidental Chemical Corporation, and, from 1986 until
1988, also as Vice President and General Counsel of its largest operating
division. Mr. Shaw has 24 years of experience as a corporate lawyer,
specializing in mergers and acquisitions, joint ventures, public offerings,
financing, and federal securities and antitrust law. Mr. Shaw received a BA
with honors from Trinity College and JD from Columbia University School of
Law.
GLENN M. STINCHCOMB has been a director of Charter since March 1993. Mr.
Stinchcomb has been a Vice President, Treasurer, and director of the Oklahoma
Publishing Company ("OPUBCO") since October 1991. Mr. Stinchcomb was Chief
Financial Officer and Treasurer of OPUBCO from 1974 to 1991, and Vice
President of OPUBCO from 1986 to 1991. Mr. Stinchcomb is also a director of
American City Business Journals, Inc. Mr. Stinchcomb has been affiliated with
OPUBCO since 1958, and served as director, Vice President and Treasurer until
1995. He remains a director of OPUBCO and also serves as director of Gaylord
and Western Pacific Airlines, Inc.
THOMAS R. WALL, IV has been a director of the Issuer since February 1995.
Mr. Wall has been a Managing Director of Kelso & Company since 1990. From 1986
to 1989, Mr. Wall was a Vice President of Kelso & Company. Mr. Wall is also a
director of CCT, Mitchell Supreme Fuel Company, Mosler Inc., Peebles Inc.,
Tyler Refrigeration Corporation and AMF Holdings Inc.
HOWARD L. WOOD is a co-founder and Chairman of the Management Committee of
Charter. Prior to founding Charter, Mr. Wood was associated with Cencom. Mr.
Wood joined Cencom in July 1987 as President, Chief Financial Officer and
Director and assumed the additional position of Chief Executive Officer
effective January 1, 1989. Prior to that time, Mr. Wood was employed by Arthur
Andersen & Co., certified public accountants, where he served as Partner-in-
Charge of the St. Louis Tax Division from 1973 until joining Cencom. Mr. Wood
has been involved in the cable industry since 1976 when he assisted Robert A.
Brooks in financing the building of the cable television systems of T.C.
Industries, Inc. Mr. Wood is a certified public accountant and a member of the
American Institute of Certified Public Accountants and serves as a director of
Charter, VanLiner Group, Inc., First State Bank and St. Louis Regional
Commerce and Growth Association. He is also a past Chairman of the Board and
former director of the St. Louis College of Pharmacy. Mr. Wood graduated with
honors from Washington University (St. Louis) School of Business.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
During 1996, none of the executive officers of the Issuer has received any
compensation in his or her capacity as an officer or director of the Issuer or
as an employee of the CCE-I System and none of such individuals expects to
receive any compensation in such capacity at any time in the future. Such
individuals are compensated by Charter in their capacities as officers and
employees of Charter. Charter performs management services for the Company and
other companies pursuant to the terms of management agreements including the
management agreement between Charter and CCE-I. See "Business--Management
Agreements" and "Certain Relationships and Related Transactions."
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
THE PARTNERSHIP AGREEMENTS
The Partnership Agreements of CCE-I and CCE-II each provide for, among other
things, distributions to the partners of CCE-I and CCE-II, respectively, in
accordance with their respective interests in such partnerships. Accordingly,
97.78% of all distributions by CCE-I and CCE-II will be made to CCE, L.P. The
Issuer holds through CAC a 1% general partnership interest in CCE, L.P. and a
1.22% general partnership interest in CCE-I. CCT holds a 1% general
partnership interest in CCE, L.P. and a 1% general partnership interest in
CCE-II. Certain distributions as permitted pursuant to the terms of the Credit
Facilities will be made by CCE-I and CCE-II directly to CAC and Cencom Cable,
and such amounts may be distributed by CAC and Cencom Cable to the Issuer in
order to service the Notes.
The Partnership Agreement of CCE, L.P. provides for, among other things, (i)
"Preferred Capital Accounts" for CAC and Cencom Cable, on the one hand, and
CCT, on the other hand, the amounts of which correspond to the amounts owing
pursuant to the Notes and the California Note, respectively (e.g., as of
December 31, 1996, CCT's Preferred Capital Account was in the amount of
$191,261,264, which was the principal amount of the California Note plus
stated accrued interest as of such date, and CAC's and Cencom Cable's
Preferred Capital Accounts were in the amounts of $40,773,599 and $64,069,803,
respectively, which amounts total the aggregate principal amounts of the Notes
plus accrued interest thereon from January 18, 1995 through December 31,
1996); (ii) "Preferred Returns" for those partners with Preferred Capital
Accounts, such Preferred Returns to be equal to the interest accruing during
the relevant period on the Notes and the California Note, respectively; and
(iii) distributions of cash or other property such that (A) to the extent each
of CAC, Cencom Cable and CCT has a positive balance in its Preferred Capital
Account, (1) amounts distributed to CCE, L.P. by CCE-I will be distributed to
CAC and Cencom Cable to the extent of and pro rata in accordance with the
positive balances in their respective Preferred Capital Accounts and (2)
amounts distributed to CCE, L.P. by CCE-II will be distributed to CCT to the
extent of the positive balance in its Preferred Capital Account and (B) to the
extent that any partner in CCE, L.P. has a positive balance in its Preferred
Capital Account, distributions will be made to such partner to the extent of
and in accordance with such positive Preferred Capital Account balance.
Accordingly, while any amounts remain outstanding under both the Notes and the
California Note, distributions to CCE, L.P. from CCE-I will be used solely to
make distributions to CAC and Cencom Cable and distributions to CCE, L.P. from
CCE-II will be used solely to make distributions to CCT. If the California
Note is repaid prior to payment in full of all amounts payable under the
Notes, then all distributions to CCE, L.P. from both CCE-I and CCE-II will be
used to make distributions to CAC and Cencom Cable, and vice versa. Subject to
certain restrictions, CCE, L.P. may establish New CCE Subsidiaries from time
to time, which could have financing arrangements that result in the sharing
with other creditors of distributions to CCE, L.P. from CCE-II and/or such New
CCE Subsidiaries. In connection with the creation of New CCE Subsidiaries, the
CCE, L.P. Partnership Agreement's distribution provisions may be amended. See
"Description of Notes--Certain Covenants--Limitation on Changes to the CCE,
L.P. Partnership Agreement." For financial reporting purposes, CAC's and
Cencom Cable's preferred capital contributions in CCE, L.P. have been
reflected as debt since CCE, L.P. is a guarantor of the Notes. Furthermore,
interest accruing under the California Note is based on the average rate of
interest over the life of the California Note (which approximates 15.43%)
rather than the stated interest rate, which is used in determining the amount
of the Preferred Return. See "Risk Factors--Segregation of Distributions to
Service the Notes and the Guarantees; New CCE Subsidiaries," "Description of
Other Indebtedness," "Description of Notes--General" and "Description of
Notes--the Partnership Agreements." See also "Description of Notes--the
Guarantees" for potential impact of the Guarantees on any distributions.
THE GUARANTEES
Pursuant to the Original HC Crown Loan Agreement, in connection with the
contribution by CAC and Cencom Cable, respectively, of the Crown Systems to
CCE, L.P., and the contribution by CCE, L.P. of the Crown Systems to CCE-I,
each of CAC, Cencom Cable and CCE, L.P. irrevocably guaranteed on a
subordinated basis the obligations on the Notes. The Guarantees, which were
amended and restated on November 15, 1996
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and were further amended and restated on substantially the same terms and
became part of the Indenture immediately prior to the sale of the Old Notes
are limited by their terms to the proceeds of distributions received by the
Guarantors from CCE-I. The CCE, L.P. Guarantee cannot be enforced until the
indefeasible repayment in full in cash of and termination of commitments to
lend under the CCE-I Credit Facility, the CCE-II Credit Facility, any other
senior indebtedness of CCE-II and senior indebtedness of New CCE Subsidiaries.
Thus, unlike the partnership agreement of CCE, L.P. which allows, provided
that the CCE-II Credit Facility is indefeasibly repaid in full, for CCE-II
funds to repay the California Note, the Guarantees do not enable any CCE-II or
New CCE Subsidiaries funds to be applied to the Notes, except as otherwise
provided herein. The CAC Guarantee and the Cencom Cable Guarantee cannot be
enforced until the indefeasible repayment in full of and termination of
commitments to lend under the CCE-I Credit Facility.
STOCKHOLDERS' AGREEMENT
The Issuer, Charter and Kelso have entered into a stockholders' agreement
("Stockholders' Agreement") restricting the transfer by Charter and Kelso of
the common stock of the Issuer held by them except under certain
circumstances. The Stockholders' Agreement provides Charter with certain
rights to sell common stock if Kelso sells common stock to a third party, and
provides Kelso with certain rights to cause Charter to sell its common stock
to a third party if Kelso sells all of its common stock to such third party.
Pursuant to the Stockholders' Agreement, the Issuer has a right of first
refusal to purchase shares in connection with a proposed sale of common stock
by Charter to a third party, and Charter has a right of first negotiation
pursuant to which it may make an offer to purchase common stock owned by Kelso
before Kelso negotiates with a third party with respect to a sale of its
common stock. In the event that the Management Agreement (defined below) is
terminated, or the term of the Management Agreement ends without being
extended by the parties, Charter has the right to cause the Issuer to purchase
its shares of common stock, and the Issuer has the right to cause Charter to
sell its shares of common stock to the Issuer. The Stockholders' Agreement
provides that, in the event of a sale of all of the common stock of the Issuer
by Charter and Kelso, or the sale of all of the assets of the Issuer, any cash
to be paid or distributed to Charter and Kelso shall be allocated based upon
the ownership percentages of Charter and Kelso in the Issuer subject to
certain adjustments based on criteria set forth in the Stockholders'
Agreement.
The Stockholders' Agreement provides that, until the earliest of January 18,
2005, the closing of an initial public offering or the termination of the
Management Agreement, three of the five members of the board of directors of
the Issuer will be chosen by KIA V and two will be chosen by Charter.
REGISTRATION RIGHTS AGREEMENT
The Issuer, Charter and Kelso have entered into a registration rights
agreement ("Registration Rights Agreement") pursuant to which Charter and
Kelso have certain rights with respect to the registration of the shares of
common stock of the Issuer. The Registration Rights Agreement provides that
any stockholder that owns 50% or more of the "Registrable Securities" of the
Issuer (defined as common stock of the Issuer beneficially owned by Charter,
Kelso or their successors or assignees) has the right to make four requests
that the Issuer effect registration under the Securities Act of the
Registrable Securities held by such stockholder. Kelso owns more than 50% of
the stock of the Issuer. The Registration Rights Agreement also provides that
at any time after an initial public offering of equity securities of the
Issuer, Charter will have the right to make up to two requests that the Issuer
effect registration under the Securities Act of any of the Registrable
Securities held by Charter. In the event that the Issuer proposes to register
any of its equity securities under the Securities Act, the Registration Rights
Agreement provides that the Issuer must give notice to all holders of
Registrable Securities and, upon request of any such holder, use its best
efforts to effect the registration of the Registrable Securities held by such
person, subject to customary cut-back provisions.
CONTINGENT PAYMENT AGREEMENT
Pursuant to an agreement entered into among the Gaylord Affiliate, CCE, L.P.
and CCT ("Contingent Payment Agreement") in connection with the California
Note, until such time as the California Note is paid in
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full, the holders of the California Note are entitled to certain protections
upon the occurrence of certain of the following events. The Contingent Payment
Agreement provides for payments to be made to the Gaylord Affiliate if the
California Note remains unpaid and CCT receives a distribution from CCE, L.P.,
CCE-I or CCE-II that is not used by CCT to pay outstanding principal on the
California Note or certain expenses. The Contingent Payment Agreement also
provides that if Kelso or Charter sells any equity securities of CCT, or if
CCT or the Issuer sells any assets, including the partnership interests of
either in subsidiary partnerships, then CCE, L.P. will be required to pay the
Gaylord Affiliate an amount determined according to formulas set forth in the
Contingent Payment Agreement. The ability of CCE, L.P. to make any of the
foregoing payments to the Gaylord Affiliate is limited by the terms of the
Indenture, which preclude certain distributions by CCE, L.P. and CCE-I until
the CCE-I Credit Facility and the Notes are paid in full. See "Description of
the Notes -- Certain Covenants -- Limitation on Restricted Payments." The
Contingent Payment Agreement further provides that upon an initial public
offering by CCT, CCE, L.P. or the Issuer, the Gaylord Affiliate will receive
certain amounts of the publicly-offered securities.
MANAGEMENT AGREEMENTS
Pursuant to certain management agreements entered into between CCE-I and
Charter (the "Management Agreement"), Charter is responsible for managing the
day-to-day operations of the Systems. The term of the Management Agreement is
10 years, subject to earlier termination for Cause (as defined in the
Management Agreement) or upon the sale of the Systems which are the subject of
the Management Agreement. Annual management fees paid to Charter by CCE-I with
respect to the year ended December 31, 1996 were $4.5 million in addition to
an accrued but unpaid bonus of approximately $1.8 million as of December 31,
1996, of which $.7 million was recorded during 1996. The payment of the
bonuses is deferred until termination of the CCE-I Credit Facility. The base
amount of annual management fees payable to Charter was $4,845,000 as of
December 31, 1996.
TRANSACTION AND ADVISORY FEES
In connection with specific acquisitions and financing transactions by CCE-
I, Kelso & Company and Charter are typically each paid financial advisory and
investment banking fees. Such fees are calculated as a percentage of the
transaction, based upon the size of the transaction. Kelso & Company received
investment banking fees of approximately $1.1 million with respect to the year
ended December 31, 1996. Charter received investment banking fees of
approximately $1.1 million with respect to the year ended December 31, 1996.
The financial advisory fees paid to Kelso & Company were approximately $0.5
million with respect to the year ended December 31, 1996. Kelso & Company's
annual financial advisory fee from CCE-I for fiscal year 1997 was initially
established at approximately $552,500 as of December 31, 1996. In the event
New CCE Subsidiaries are formed below CCE, L.P., Kelso & Company will receive
annual financial advisory fees from such New CCE Subsidiaries.
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PRINCIPAL SECURITYHOLDERS
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of December 31, 1996, the ownership of
the Issuer. Kelso and certain other individuals, on the one hand, and Charter,
on the other hand, own 85% and 15%, respectively, of the outstanding capital
stock of the Issuer, with distributions on exit varying depending on rates of
return on the stockholders' equity investment in the Issuer. For a more
detailed discussion of certain ownership interests of the Issuer see
"Business--Background and Ownership Structure."
<TABLE>
<CAPTION>
NAME AND ADDRESS % OF
OF BENEFICIAL OWNERS TYPE OF INTEREST COMMON STOCK
- -------------------- ---------------- ------------
<S> <C> <C>
KELSO INVESTMENT ASSOCIATES V, L.P.(1)............ Common Stock 85.0%(2)
320 Park Avenue
24th Floor
New York, New York 10022
CHARTER COMMUNICATIONS, INC....................... Common Stock 15.0%
12444 Powerscourt Drive
Suite 400
St. Louis, Missouri 63131
</TABLE>
- --------
(1) The General Partner of KIA V is Kelso Partners V, L.P., the general
partners of which are: Frank T. Nickell, George E. Matelich, Thomas R.
Wall, IV and Joseph S. Schuchert, all of whom may be deemed to
beneficially own all the shares held of record by KIA V, all of whom
disclaim such beneficial ownership, and three of whom, Messrs. Nickell,
Matelich and Wall, are directors of the Issuer.
(2) The percentage of Common Stock includes shares owned by another limited
partnership which is an affiliate of KIA V and certain unaffiliated
designees of KIA V. KIA V does not beneficially own the shares of Common
Stock owned by such designees.
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DESCRIPTION OF NOTES
$82.0 million aggregate principal amount of Old Notes were issued pursuant
to the Indenture dated as of February 13, 1997 between the Issuer and Harris
Trust and Savings Bank, as Trustee. The terms of the Notes include those
stated in the Indenture and those made part of the Indenture by reference to
the Trust Indenture Act of 1939, as amended ("Trust Indenture Act") and in
effect on the Closing Date. The Notes are subject to all such terms, and the
following summary of certain provisions of the Indenture does not purport to
be complete and is qualified in its entirety by reference to the Indenture,
including the definitions therein of certain terms used below. The definitions
of certain terms used in the following summary are set forth below under "--
Certain Definitions." The Indenture is an exhibit to the Registration
Statement of which this Prospectus is a part.
The terms of the New Notes are identical in all materials respects to the
Old Notes, except that the New Notes will not contain certain transfer
restrictions and registration and other rights relating to the exchange of the
Old Notes for New Notes. The Trustee will authenticate and deliver New Notes
for original issue only in exchange for a like principal amount of Old Notes.
Any Old Notes that remain outstanding after the consummation of the Exchange
Offer, together with the New Notes, will be treated as a single class of
securities under the Indenture.
GENERAL
The Notes are unsecured obligations of the Issuer and are subordinated in
right and priority of payment to all existing and future indebtedness of the
Issuer, other than indebtedness that by its terms is expressly subordinated to
the Notes. The Notes can only be held or transferred in denominations of $1.0
million or more. The obligations on the Notes are guaranteed on a subordinated
basis by two subsidiaries of the Issuer and by CCE, L.P. Initially, the
Trustee will act as Paying Agent and Registrar for the Notes. The Notes may be
presented for registration or transfer and exchange at the offices of the
Registrar, which initially will be at the Trustee's corporate trust office.
The Issuer may change any Paying Agent and Registrar without notice to holders
of the Notes. The Issuer will pay principal, premium, if any, and interest on
the Notes at the Trustee's corporate office in New York, New York. The Notes
will be issued only in fully registered form, without coupons, in
denominations of $1.0 million or more.
The Issuer and the Guarantors are holding companies that currently conduct
substantially all their business through CCE-I and CCE-II. The Issuer and the
Guarantors control CCE-I (but not CCE-II) and are primarily dependent upon
distributions from CCE-I and its subsidiaries to service the Notes and the
Guarantees. The Notes, except under certain limited circumstances, will not
have the benefit of distributions from CCE-II or any other affiliated entities
that are not controlled by the Issuer or the Guarantors. The Guarantees, by
their terms, are limited to the proceeds of distributions received by the
Guarantors from CCE-I. The CCE, L.P. Guarantee cannot be enforced until the
indefeasible repayment in full of and termination of commitments to lend under
both the CCE-I Credit Facility, the CCE-II Credit Facility, any other senior
indebtedness of CCE-II and any senior indebtedness of New CCE Subsidiaries.
The CAC Guarantee and the Cencom Cable Guarantee cannot be enforced until the
indefeasible repayment in full of and termination of commitments to lend under
the CCE-I Credit Facility. The Issuer's and the Guarantors' only indebtedness
other than the Notes was approximately $55.5 million of deferred income taxes.
As of December 31, 1996, the aggregate indebtedness of CCE-I (including
current liabilities of approximately $28.9 million and other long-term
liabilities of approximately $2.5 million) was approximately $493.5 million.
Subject to certain limitations, the Indenture permits the formation of New
CCE Subsidiaries below CCE, L.P. in the corporate structure and the
contribution of additional assets to existing Subsidiaries of CCE, L.P. New
CCE Subsidiaries may engage in the cable television business or other
businesses. In connection with their
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businesses, New CCE Subsidiaries and, in connection with such asset
contributions to existing Subsidiaries, such existing Subsidiaries may
establish senior credit facilities and other financing arrangements (debt
and/or equity), which may establish a basis for a new or revised preferred
capital account in CCE, L.P. Once the applicable financing arrangement is
repaid, the existence of the aforementioned new or revised preferred capital
account in CCE, L.P. could result in any further distributions to CCE, L.P.
from CCE-II or any New CCE Subsidiaries being shared pro rata between the
Notes and any such new or existing financing arrangements (with such sharing
to be based upon the then outstanding preferred capital accounts in CCE,
L.P.). Holders of the Notes should not rely on any distributions from CCE-II
or any New CCE Subsidiaries for payment of principal or interest on the Notes.
In connection with the creation of New CCE Subsidiaries or the contribution of
additional assets to existing Subsidiaries of CCE, L.P., the CCE, L.P.
Partnership Agreement's distribution provisions may be amended. For example
(and without limiting the arrangements which could be entered into by a New
CCE Subsidiary), in the event one or more New CCE Subsidiaries are formed
below CCE, L.P. in the corporate structure through the acquisition of new
assets or equity interests and the issuance by an affiliate of CCE, L.P. of a
note payable to the sellers of such assets or equity interests (i.e., a
purchase money note, as was the case in the California Transaction and the
Crown Transaction), then the CCE, L.P. Partnership Agreement can be amended,
so that (i) rather than all distributions to CCE, L.P. from CCE-II being
available to service the Notes after payment of the California Note, such
distributions would instead be available pro rata based on preferred capital
accounts to service both the Notes and any new purchase money note owed to
such sellers and (ii) all cash generated by any New CCE Subsidiary would be
used first to repay any senior credit facility entered into by such New CCE
Subsidiary to accomplish the related acquisition. Any amounts thereafter
distributed to CCE, L.P. would be used next to repay any new purchase money
note, and after such new purchase money note is repaid, such distributions
from such New CCE Subsidiary to CCE, L.P. would be available pro rata to
service the Notes, the California Note and any other outstanding purchase
money notes.
Such credit facilities, other financing arrangements and asset contributions
and the existence of new or revised preferred capital accounts will not affect
distributions to the Issuer from CAC, Cencom Cable, CCE, L.P. (to the extent
the funds to be distributed by CCE, L.P. were obtained from CCE-I) or CCE-I.
PRINCIPAL, MATURITY AND INTEREST
The Stated Maturity Date of the Notes is December 31, 1999. Interest accrues
on the Notes at an annual rate of 13%, compounded semi-annually, until the
Stated Maturity Date. If principal plus accrued interest on the Notes is not
paid at the Stated Maturity Date, the annual rate at which interest accrues on
the Notes will initially increase to 18% and will increase by an additional 2%
on each successive anniversary of the Stated Maturity Date (up to 26%),
compounded semi-annually, until the Notes are repaid. In addition to the
foregoing, the interest rate on the Notes shall be increased by the Default
Rate of 3% per annum if certain other events of default occur and are
continuing. The maximum interest rate on the Notes is 29% per annum subject to
any applicable legal restrictions. As of December 31, 1996, accrued interest
on the Notes was $22,843,402. For U.S. Federal income tax purposes, purchasers
of the Notes will be required to include amounts in gross income generally in
advance of the receipt of the cash payments to which the income is
attributable. See "Certain Federal Income Tax Consequences."
The Notes are not entitled to the benefit of any mandatory sinking fund.
OPTIONAL REDEMPTION
The Notes are redeemable, at the Issuer's option in whole at any time or in
part from time to time, without premium or penalty, provided that any such
prepayment of principal shall include all accrued interest on the amount
prepaid.
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SUBORDINATION
Subordination Provisions Applicable to All Senior Debt of the Issuer
The payment of all Obligations on the Notes is subordinated in right of
payment to the prior payment in full in cash of all obligations owing in
respect of the Senior Debt. Upon any distribution to creditors upon
dissolution, winding-up, liquidation or reorganization of the Issuer (whether
voluntary or involuntary and whether in bankruptcy, insolvency or receivership
proceedings or upon an assignment for the benefit of creditors or any other
marshalling of the assets and liabilities of the Issuer or otherwise), all
obligations due in respect of all Senior Debt will first be paid in full in
cash, before any payment or distribution of any kind or character is made on
the account of any Obligations in respect of the Notes. If any default occurs
and is continuing in the payment when due, whether at maturity, acceleration
or otherwise with respect to any Senior Debt, no payment of any kind or
character shall be made by or on behalf of the Issuer or any of its
Subsidiaries with respect to any Obligations in respect of the Notes or to
acquire any of the Notes for cash or property.
By reason of such subordination, in the event of the insolvency of the
Issuer, creditors of the Issuer who are not holders of Senior Debt, including
the holders of the Notes, may recover less, ratably, than holders of Senior
Debt.
Special Subordination Provisions Relating to CCE-I Credit Facility
The Indenture provides that no holder will exercise any right or remedy
against the Issuer or any of its Subsidiaries with respect to the Indenture or
any Note until after the earlier of the CCE-I Credit Facility Termination Date
and January 18, 2019, provided that:
(a) Upon the election of holders of a majority in principal amount of the
Notes, the holders may exercise the right to pursue a claim of specific
performance or an injunction against the Issuer:
(i) unless expressly permitted by the terms of the Indenture, if the
Issuer merges or consolidates with or permits any Restricted Subsidiary
(other than CCE-I and any of its Subsidiaries) to merge or consolidate
with, any entity and the Issuer or such Restricted Subsidiary is not the
survivor of such merger or consolidation (other than a merger between two
Restricted Subsidiaries, a merger between the Issuer and a Restricted
Subsidiary in which the Issuer is the surviving entity or a merger of a
Restricted Subsidiary with another entity in which either such Restricted
Subsidiary is the surviving entity or such other entity becomes a
Restricted Subsidiary of the Issuer); or
(ii) unless expressly permitted by the terms of the Indenture, if the
Issuer sells, leases or otherwise disposes of, or permits any of its
Restricted Subsidiaries to sell, lease or otherwise dispose of assets
(other than cable television assets sold in exchange for other cable
television assets pursuant to an asset swap transaction or series thereof)
which generate Adjusted Consolidated Annualized Operating Cash Flow
(including all such dispositions by the Issuer and its Restricted
Subsidiaries) representing more than 50% of CCE-I's Adjusted Consolidated
Annualized Operating Cash Flow (as determined by reference to the most
recent audited annual financial statements of the Issuer which are required
to be delivered to the holders under the Indenture prior to such sale,
lease or other disposition) in any transaction or series of transactions
(other than sales in the ordinary course of business); or
(iii) if the Issuer incurs, or permits any Restricted Subsidiary to
incur, Indebtedness for Money Borrowed, which, when consolidated with all
Indebtedness for Money Borrowed of the Issuer on an Adjusted Consolidated
basis (excluding the Indebtedness for Money Borrowed represented by or
otherwise arising in respect of the Notes or the Indenture), causes the
Adjusted Consolidated Indebtedness of the Issuer (other than the
Indebtedness represented by the Notes) to exceed at the end of any calendar
quarter period ending after December 31, 1996, 7.0 times its Adjusted
Consolidated Annualized Operating Cash Flow for such quarter; or
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(iv) if the Issuer or its Restricted Subsidiaries (other than CCE-I and
its Subsidiaries) incur Indebtedness for Money Borrowed (other than that
evidenced by the Notes and the Indenture) which is senior in right of
payment of principal or interest by its terms to the Notes, but
subordinated in right of payment of principal or interest by its terms to
the CCE-I Credit Facility; or
(v) if the Issuer breaches the terms of the covenants referenced under
paragraph (c) of "Certain Covenants--Limitation on Asset Sales"; or
paragraph (a) of "Certain Covenants--Limitation on Restricted Payments"
herein.
(b) Upon the occurrence of an Event of Default, the holders may exercise the
right to cause interest to accrue on the unpaid principal amount of the Notes
at the interest rate then in effect, including, if applicable, the Default
Rate of interest described in Section 10.01 of the Indenture and the penalty
rate of interest described in the proviso in paragraph (b) under the section
entitled "Events of Default."
(c) Under the Subordination Agreement, the payment of all Obligations in
respect of the Notes is subordinated in right of payment to the prior
indefeasible payment in full in cash of all obligations of CCE-I under the
CCE-I Credit Facility. In the event of any dissolution of the Issuer, the
lenders under the CCE-I Credit Facility are entitled to collect and receive
any payments or distributions which may be payable with respect to the Notes.
As long as the obligations under the CCE-I Credit Facility have not been
indefeasibly paid in full in cash and all commitments to lend in respect
thereof have not been terminated, the holders may not, prior to January 18,
2019, compel payment of the Notes, or accelerate the maturity of the Notes
upon the occurrence of a default under the Notes (including a payment
default), nor may the holders commence any proceedings (other than as
permitted under clause (a) above) against the Issuer with respect to the
Obligations under the Notes.
(d) In accordance with the Indenture, by accepting a Note each holder
authorizes and directs the Trustee, on such holder's behalf, to take such
action as may be necessary or appropriate to effectuate, as between the
holders of Senior Debt and the holders, the subordination provided in the
subordination provisions of the Indenture, including executing and delivering
a Subordination Agreement, and appoints the Trustee his attorney-in-fact for
any and all such purposes and acknowledges that such holder will be bound by
such provisions and such agreement.
THE GUARANTEES
Pursuant to the Original HC Crown Loan Agreement, in connection with the
contribution by CAC and Cencom Cable, respectively, of the Crown Systems to
CCE, L.P., and the contribution by CCE, L.P. of the Crown Systems to CCE-I,
each of CAC, Cencom Cable and CCE, L.P. irrevocably guaranteed on a
subordinated basis the obligations on the Notes. The Guarantees, which were
amended and restated as of November 15, 1996 and which were further amended
and restated on substantially the same terms and became part of the Indenture
on February 13, 1997, by their terms, are limited to the proceeds of
distributions received by the Guarantors from CCE-I. The CCE, L.P. Guarantee
cannot be enforced until the indefeasible repayment in full in cash of and
termination of commitments to lend under the CCE-I Credit Facility, the CCE-II
Credit Facility, any other senior indebtedness of CCE-II and senior
indebtedness of New CCE Subsidiaries. The CAC Guarantee and the Cencom Cable
Guarantee cannot be enforced until the indefeasible repayment in full in cash
of and termination of commitments to lend under the CCE-I Credit Facility.
THE PARTNERSHIP AGREEMENTS
By the terms of the partnership agreements of CCE-I, CCE-II and CCE, L.P.,
distributions from CCE-I, when permissible, are to go to CAC and Cencom Cable
and distributions from CCE-II, when permissible, are to go to CCT (or a
subsidiary thereof); provided, however, that if the obligations owing under
the Credit Facilities (including refinancings thereof) are indefeasibly paid
in full in cash and all commitments to lend in respect thereof are terminated,
then (x) if the Notes are outstanding and the California Note has been repaid,
all distributions related to CCE-II are to go to CAC and Cencom Cable to make
payments on the Notes (if the California Note has not been repaid, then such
distributions are to go to CCT to make payments on the California
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Note) or (y) if the Notes have been repaid and the California Note is
outstanding, all distributions related to CCE-I are to go to CCT (or a
subsidiary thereof) to make payments on the California Note. Subject to
certain limitations, the Indenture permits the formation of New CCE
Subsidiaries below CCE, L.P. in the corporate structure and the contribution
of additional assets to existing Subsidiaries of CCE, L.P. New CCE
Subsidiaries may engage in the cable television business or other businesses.
In connection with their businesses, New CCE Subsidiaries and, in connection
with such asset contributions to existing Subsidiaries, such existing
Subsidiaries, may establish senior credit facilities and other financing
arrangements (debt or equity), which may establish a basis for a new or
revised preferred capital account in CCE, L.P. Once the applicable financing
arrangement of CCE-II or any New CCE Subsidiary is repaid, the existence of
the aforementioned new or revised preferred capital account could result in
any further distributions to CCE, L.P. from CCE-II or any New CCE Subsidiary
being shared pro rata between the Notes and any such new or existing financing
arrangements (with such sharing to be based upon the then outstanding
preferred capital accounts in CCE, L.P.). Holders of the Notes should not rely
on any distributions from CCE-II or any New CCE Subsidiaries for payment of
principal or interest on the Notes. Moreover, in connection with the creation
of New CCE Subsidiaries or the contribution of additional assets to existing
Subsidiaries of CCE, L.P., the CCE, L.P. Partnership Agreement's distribution
provisions may be amended. See "Certain Covenants--Limitation on Changes to
CCE, L.P. Partnership Agreement." For example (and without limiting the
arrangements which could be entered into by a New CCE Subsidiary), in the
event one or more New CCE Subsidiaries are formed below CCE, L.P. in the
corporate structure through the acquisition of new assets or equity interests
and the issuance by an affiliate of CCE, L.P. of a note payable to the sellers
of such assets or equity interests (i.e., a purchase money note, as was the
case in the California Transaction and the Crown Transaction), then, the CCE,
L.P. Partnership Agreement can be amended, so that (i) rather than all
distributions to CCE, L.P. from CCE-II being available to service the Notes
after payment of the California Note, such distributions would instead be
available pro rata based on preferred capital accounts to service both the
Notes and any new purchase money note owed to such sellers and (ii) all cash
generated by any New CCE Subsidiary would be used first to repay any credit
facility entered into by such New CCE Subsidiary to accomplish the related
acquisition. Any amounts thereafter distributed to CCE, L.P. would be used
next to repay any new purchase money note, and after such new purchase money
note is repaid, such distributions from such New CCE Subsidiary to CCE, L.P.
would be available pro rata to service the Notes, the California Note and any
other outstanding purchase money notes.
Such credit facilities, other financing arrangements and asset contributions
and the existence of new or revised preferred capital accounts will not affect
distributions to the Issuer from CAC, Cencom Cable, CCE, L.P. (to the extent
the funds to be distributed by CCE, L.P. were obtained from CCE-I) or CCE-I.
CERTAIN COVENANTS
The Indenture contains, among others, the following covenants:
Limitation on Additional Indebtedness
(a) The Issuer will not permit the Adjusted Consolidated Indebtedness of the
Issuer (other than any Indebtedness represented by the Notes) at the end of
any calendar quarter after December 31, 1996, to exceed 6.75 times its
Adjusted Consolidated Annualized Operating Cash Flow for such quarter.
(b) The Issuer will not permit any Indebtedness of the Issuer and the
Restricted Subsidiaries (other than that evidenced by the Notes) which is
subordinated to the Senior Debt, whether as to right of payment of principal
or interest or otherwise, to not be subordinated to the Indebtedness evidenced
by the Notes to the same extent that the Indebtedness evidenced by the Notes
is subordinated to the Senior Debt under the subordination provisions of the
Indenture.
(c) The Issuer will not incur any Indebtedness which would be reasonably
expected, in the circumstances at the time of incurrence, to cause the Issuer
to violate the provisions of paragraph (a) of this covenant.
(d) The Issuer will not, on or after the date when the ratio of the Adjusted
Consolidated Indebtedness of the Issuer for Money Borrowed (other than any
Indebtedness represented by the Notes) to its Adjusted Consolidated Annualized
Operating Cash Flow is less than 5.0 to 1, permit the extension of any
maturity date under the CCE-I Credit Facility beyond July 17, 2005 without the
consent of the holders of a majority in principal amount of the Notes.
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Operating Cash Flow
The Issuer will not permit the Adjusted Consolidated Annualized Operating
Cash Flow of the Issuer, for the three months ending on the last day of each
calendar quarter, to be less than 1.2 times its total Adjusted Consolidated
Debt Service for the 12 months ending on such last day.
Limitation on Indebtedness of CCE, L.P.
The Issuer will not permit CCE, L.P. to incur any Indebtedness (including,
without limitation, the issuance of any guarantees) other than (a) the
Guarantee of the Notes issued by CCE, L.P., and (b) Indebtedness to the Issuer
or any of its Subsidiaries to the extent such Indebtedness is subordinate to
CCE, L.P.'s Guarantee of the Notes.
Limitation on Changes to the CCE, L.P. Partnership Agreement
The Issuer will not permit any amendment, modification or other change to
the CCE, L.P. Partnership Agreement, other than amendments, modifications or
other changes (a) which do not alter the priority, amount and timing of
distributions (or remedies with respect thereto) to partners of CCE, L.P. to
be made out of the proceeds of distributions received by CCE, L.P. from its
Subsidiaries (including, without limitation, CCE-I), or (b) in connection with
the creation of one or more New CCE Subsidiaries (and the admission of
additional partners resulting therefrom) or the contribution of additional
assets to an existing Subsidiary of CCE, L.P., provided that (x) no
distributions to CCE, L.P. from such New CCE Subsidiary or CCE-II may be
distributed by CCE, L.P. to its partners other than to repay any outstanding
CCE Purchase Money Indebtedness incurred in connection with acquiring assets
or equity interests owned or to be owned, directly or indirectly, by the New
CCE Subsidiary making the distribution or CCE-II, respectively, and provided
that any such distributions remaining after the payment in full of such CCE
Purchase Money Indebtedness shall be used to repay, on a pro rata basis based
on the aggregate amounts owed, any other CCE Purchase Money Indebtedness
outstanding, and shall thereafter be used to make distributions to CCE, L.P.'s
partners and (y) such amendment, modification or other change does not alter
the priority, amount and timing of distributions (or remedies with respect
thereto) to partners of CCE, L.P. to be made out of the proceeds of
distributions received by CCE, L.P. from CCE-I.
Limitation on Asset Sales
(a) The Issuer will not sell, lease or otherwise dispose of, or permit any
of its Restricted Subsidiaries to sell, lease or otherwise dispose of, an
aggregate (including all such dispositions by the Issuer and its Restricted
Subsidiaries) of more than 10% of CCE-I's assets in any transaction or series
of transactions (other than sales in the ordinary course of business) or sell,
lease or otherwise dispose of any of CCE-I's cable television systems;
provided that (A) the Issuer or any of its Restricted Subsidiaries may
exchange any and all of its cable television systems and related property for
cable television systems and related property of unrelated third parties on
terms that are commercially reasonable to CCE-I; (B) the Issuer and the
Restricted Subsidiaries may make sales of assets but only to the extent they
comply with the paragraph (b) below; (C) the Issuer and its Restricted
Subsidiaries may transfer assets to a "joint venture subsidiary" (defined in
paragraph (c) below) but only to the extent the Issuer complies with the
paragraph (c) below; and (D) the Issuer and the Restricted Subsidiaries may
otherwise make sales if, but only if, the Issuer and the Restricted
Subsidiaries have made arrangements reasonably satisfactory to the holders of
a majority in principal amount of the Notes to apply the entire after-tax
proceeds of any such sale to payment of the outstanding principal of and
accrued interest on the Notes, it being understood that the satisfaction and
discharge of the Indenture in the manner described under "Satisfaction and
Discharge" shall be deemed an arrangement reasonably satisfactory to such
holders for the application of such proceeds pursuant to this clause (D);
provided, further, that, in connection with any such sale, lease or other
disposition of assets by the Issuer or one of its Restricted Subsidiaries to
an Affiliate of such Person (other than a sale, lease or other disposition the
proceeds of which are promptly applied to repay in full in cash all amounts,
including principal and accrued and unpaid interest owing on the Notes,
whether or not then due and payable), such Person shall first obtain an
opinion from an investment banking or brokerage firm which is nationally
recognized for its expertise in the cable television industry to the effect
that such transaction is fair to all holders of Notes from a financial point
of view.
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(b) After the sale by CCE-I of any cable television property owned directly
by it, the Issuer (A) will cause the entire cash net proceeds of such sale to
be used to pay down the Senior Debt and (B) thereafter will maintain the
Senior Debt at a level not in excess of the level to which such Senior Debt
has been paid down plus $20.0 million (the "New Senior Debt Level"); provided
that at any time during the 24 month period following any such sale, the
Issuer may increase the level of Senior Debt beyond the New Senior Debt Level
solely to the extent such increase arises from acquisition borrowings to
acquire cable television properties in any of the Issuer's and its Restricted
Subsidiaries' Areas of Dominant Influence.
(c) Except as permitted under the "Merger or Consolidation" covenant, the
Issuer will not permit the transfer of any or all of the cable television
properties of the Issuer or the Restricted Subsidiaries to one or more
Restricted Subsidiaries which is not wholly owned by the Issuer or such
Restricted Subsidiary (the "joint venture subsidiary(ies)"), unless (A) all
Restricted Subsidiaries of the Issuer which hold an interest in the joint
venture subsidiary or subsidiaries provide a guarantee of, or an assumption
agreement for, the Notes and (B) such transfer does not otherwise materially
disadvantage the holders of the Notes in connection with their rights,
position and powers under the Notes.
Limitation on Restricted Payments
(a) The Issuer will not directly or indirectly, declare or pay any dividend
on, or make any distribution to the holders of any class of its Capital Stock
in respect of such shares of Capital Stock (including pursuant to a merger or
consolidation of the Issuer), other than dividends or distributions payable
solely in Capital Stock of the Issuer. Neither the Issuer nor any of its
Subsidiaries may purchase, redeem or otherwise acquire or retire for value any
of the Capital Stock of the Issuer.
(b) Except for distributions by CCE, L.P. in accordance with the CCE, L.P.
Partnership Agreement, the Issuer will not permit any of its Restricted
Subsidiaries, directly or indirectly, to declare or pay any dividend or make
any distribution other than (i) dividends or distributions to the Issuer or to
another Restricted Subsidiary which declares or pays or distributes the full
amount of any such dividend or makes any such distribution, directly or
indirectly, to the Issuer and the Issuer uses such dividend or distribution
towards the repayment of the Notes, (ii) dividends or distributions by CCE-I
to CCT, as a limited partner of CCE-I, pursuant to the CCE-I Partnership
Agreement and (iii) dividends or distributions by any subsidiary of CCE-I (a
"CCE-I Subsidiary") to CCE-I or another CCE-I Subsidiary that is a parent
company of such CCE-I Subsidiary, provided that the proceeds of such dividends
or distributions in the case of this clause (iii) are (A) retained by CCE-I or
such other CCE-I Subsidiary, (B) used to repay indebtedness of CCE-I or such
other CCE-I Subsidiary or (C) otherwise used in a manner not violative of the
terms of the Indenture.
Change of Control
The Issuer will not, except with the approval of holders of a majority of
the principal amount of the Notes (such approval not to be unreasonably
withheld), suffer, permit or allow to occur any voting arrangement, proxy,
assignment, pledge or other transfer with respect to or of its shares so that
one or more of KIA V and its affiliates, the directors of Kelso & Company and
Charter own and vote directly or indirectly less than 51 percent of the voting
shares (i.e., shares entitled to elect a majority of the directors) of the
Issuer, provided that after the Issuer completes an initial public offering of
the voting shares, such percentage may be less than 51 percent so long as a
majority of the Issuer's directors are nominees of one or more of KIA V and
its affiliates and the directors of Kelso & Company and Charter.
Change of Management
(a) The Issuer will not suffer or permit any company or entity not approved
by the holders of a majority in principal amount of the Notes (such approval
not to be unreasonably withheld), other than Charter to manage any of the
cable television properties of CCE-I. For purposes of this covenant, if one or
more of Howard Wood, Jerald Kent or Barry Babcock (or any other person
reasonably acceptable to the holders of a majority in principal amount of the
Notes) and their heirs at law, collectively, own and vote less than 51 percent
of the voting shares of Charter, the Issuer will be deemed to have violated
this covenant.
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(b) The Issuer will not, without the approval of the holders of a majority
in principal amount of the Notes (such approval not to be unreasonably
withheld), suffer or permit Charter's principal executive or operating
officers not to include at least one of Howard Wood, Barry Babcock or Jerald
Kent.
Change of Ownership of Restricted Subsidiaries
The Issuer will not permit any new investment in a Restricted Subsidiary by
a non-Affiliate, unless such investment is structured in such a way that (x)
there is no adverse impact on the ability of the Issuer to repay the Notes,
(y) the holders of the Notes have an interest as to distributions by such
Restricted Subsidiary arising from the assets created or acquired as a direct
or indirect result of such new investment which is subordinate only to the
CCE-I Credit Facility and the obligations to repay Indebtedness or other forms
of non-Affiliate financing related to such acquisition and (z) the Issuer
continues to Control, directly or indirectly, CCE-I. The Issuer will not and
will not permit any Restricted Subsidiary to dispose of any equity interest,
whether direct or indirect, which it currently holds in CCE-I, other than to
(i) the Issuer, (ii) another Restricted Subsidiary, or (iii) a third party, so
long as such third party contributes cash or other assets to CCE-I and the
equity interest received by such third party in distributions received from
CCE-I will be subordinated to the preferred equity interest of CCE, L.P. in
distributions received from CCE-I.
Transactions with Affiliates
(a) Except as permitted under the "Limitations on Restricted Payments" and
"Merger or Consolidation" covenants and clause (a) of the "Limitation on Asset
Sales" covenant, the Issuer will not permit CCE-I to, at any time engage in
any transaction with an Affiliate, or make an assignment or other transfer of
any of its properties or assets to an Affiliate on terms less advantageous to
CCE-I than would be the case if such transactions had been effected on an
arm's length basis with a non-Affiliate, other than any transaction (including
the payment of fees and expenses) permitted under the CCE-I Credit Facility
from time to time or, after the CCE-I Credit Facility Termination Date,
consistent with past practice. In addition, CCE-I shall receive the full
benefit of any discounts, rebates or special payment terms available to
Charter (in its capacity as manager of the CCE-I Systems) which Charter (in
such capacity) is permitted to pass through to CCE-I.
(b) In addition, the Issuer will not permit any of CCE-I and any of the
Restricted Subsidiaries to make any advance, loan, payment or cash
distribution to Charter or KIA V or any of their respective Affiliates (other
than Restricted Subsidiaries) before all Obligations in respect of the Notes
are paid in full, other than as permitted under paragraph (a) above.
Limitation on Intercompany Indebtedness
The Issuer will not permit any Restricted Subsidiary to incur any
Indebtedness to any Affiliate, other than Indebtedness to another Restricted
Subsidiary or a direct or indirect Restricted Subsidiary of a Restricted
Subsidiary, on terms less advantageous than would be the case if such loan had
been effected on an arm's length basis with a non-Affiliate.
Merger or Consolidation
Except as permitted under clause (a) of the "Limitation on Asset Sales"
covenant, the Issuer will not merge or consolidate with, or permit any
Restricted Subsidiary to merge or consolidate with, any entity (other than a
merger between two Restricted Subsidiaries, a merger between the Issuer and a
Restricted Subsidiary in which the Issuer is the surviving entity or a merger
of a Restricted Subsidiary with another entity in which either such Restricted
Subsidiary is the surviving entity or such other entity becomes a Restricted
Subsidiary of the Issuer).
Restriction on Investing in Radio Operations
The Issuer will neither invest nor permit any Restricted Subsidiary to
invest more than $20.0 million in any Restricted Subsidiary thereof relating
to the operation and ownership of licensed radio station(s) in the St. Louis,
Missouri area.
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Reporting and Information Requirements
To the extent required by law, the Issuer will comply with the requirements
to file reports with the SEC pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and will deliver any
such reports to the Trustee and the holders within 30 days after the filing
thereof with the SEC. If the Issuer does not file any such reports with the
SEC, the Issuer will deliver to the Trustee (which shall make such information
available to securities analysts and prospective purchasers of the Notes) and
the holders, copies of the following: (a) within 45 days after the last day of
each quarter (other than the fourth quarter) in each fiscal year, the
unaudited consolidated statement of operations and statement of cash flows of
the Issuer for such quarterly period and for the period from the beginning of
the fiscal year to the end of such quarter and the unaudited consolidated
balance sheet of the Issuer as of the end of such quarterly period; and (b)
within 90 days after the end of each fiscal year, the consolidated statements
of operations, shareholders' investment and cash flows of the Issuer for such
fiscal year, and the consolidated balance sheet of the Issuer as of the end of
such fiscal year. Certain other information and reports shall also be
delivered to the Trustee and the holders.
EVENTS OF DEFAULT
(a) The following events are defined in the Indenture as "Events of
Default":
(i) The failure to pay, when due, principal of any Note; or
(ii) The failure to pay, when due, interest on any Note, or any other
amount due under the Indenture or under any Note and such failure shall
have continued for a period of three business days; or
(iii) Certain events of bankruptcy, insolvency or reorganization with
respect to the Issuer; or
(iv) A default in the performance or observance of any covenant contained
in the Indenture and which default continues for a period of 30 business
days after notice from any holder to the Issuer; or
(v) A default by the Issuer (as principal or as guarantor or other
surety), unless such default shall have been waived or cured, in any
payment of principal of or interest on any Indebtedness for Money Borrowed
(other than Indebtedness incurred under the Indenture and the Notes) in the
aggregate amount of the lesser of $7.5 million or the amounts provided in
the most nearly comparable provisions of the Senior Debt (the "Senior Debt
Threshold") or, if such obligation or obligations is or are payable or
repayable on demand, shall fail to pay or repay such obligation or
obligations when demanded, in each case allowing any applicable grace
period to lapse, or the Issuer shall default (unless such default has been
waived or cured) in the observance of any covenant, term or condition
contained in any agreement or instrument by which such obligation or
obligations are created, secured or evidenced if the effect of such default
is to cause all or part of such obligation or obligations to become due
before its or their otherwise stated maturity; or
(vi) One or more final judgments for the payment of money shall have been
entered against the Issuer which judgment or judgments in the aggregate
exceed the lesser of $7.5 million or the Senior Debt Threshold in the
aggregate and which remain undischarged for a period (during which
execution shall not be effectively stayed) of 30 days.
(b) The Indenture provides that, subject in all cases to the terms of
Article XIII of the Indenture, if an Event of Default occurs and is continuing
or shall exist, (i) any holder, if an Event of Default occurs under paragraph
(a)(i) or (a)(ii) above or (ii) the holders of a majority in principal amount
of the Notes if an Event of Default occurs and is continuing other than under
paragraph (a)(i) or (a)(ii) above, may, at such holder's option, by written
notice to the Issuer or to the Trustee elect to declare the unpaid principal
amount of the Notes which they hold, interest accrued thereon and all other
amounts owed by the Issuer under the Indenture or under Notes which they hold
to be immediately due and payable. Pursuant to the terms of Article XIII of
the Indenture and the Second Amended and Restated Subordination Agreement made
by the Trustee and dated as of February 13, 1997 (the "Subordination
Agreement"), neither the holders nor the Trustee will be able to take action
to cause the Issuer to make payment of principal or interest upon the
occurrence of an Event of Default until the earlier of January 18, 2019 or
payment in full of all amounts due on all Senior Debt. Until the Stated
Maturity
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Date, if an Event of Default occurs and shall be continuing for any reason
other than under paragraph (a)(i) or (a)(ii) above, all principal, interest
and other amounts due from the Issuer under the Notes shall bear the 13% per
annum stated rate of interest set forth in Section 3.01 of the Indenture plus
the Default Rate of 3% per annum set forth in Section 10.01 of the Indenture.
If the Issuer fails to pay all of the outstanding principal on or prior to the
Stated Maturity Date or all of the accrued and unpaid interest on or prior to
the third day following the Stated Maturity Date, there shall be imposed upon
the unpaid principal amount of each Note (in addition to the 13% per annum
interest rate set forth in Section 3.01 of the Indenture and, for the
applicable period, the 3% per annum Default Rate of interest set forth in
Section 10.01 of the Indenture) a penalty rate of interest as follows (which
shall accrue through the date of repayment and be based on a year of 360
days):
<TABLE>
<CAPTION>
PER ANNUM PENALTY
YEAR ENDING DECEMBER 31, RATE OF INTEREST
------------------------ -----------------
<S> <C>
2000.................................................. 5%
2001.................................................. 7%
2002.................................................. 9%
2003.................................................. 11%
2004 and thereafter................................... 13%
</TABLE>
DEFEASANCE OR COVENANT DEFEASANCE OF INDENTURE
In addition to the Issuer's right to redeem the Notes in whole or in part at
the option of the Issuer at any time, without premium or penalty, the Issuer
may, at its option and at any time, elect to have the Obligations of the
Issuer discharged with respect to the outstanding Notes ("defeasance"). Such
defeasance means that the Issuer shall be deemed to have paid and discharged
the entire indebtedness represented by the outstanding Notes and to have
satisfied all other obligations under the Notes and the Indenture, except for
(i) the rights of holders of the outstanding Notes to receive, solely from the
trust fund described below, payments in respect of the principal of and
interest on such Notes when such payments are due, (ii) the Issuer's
obligations with respect to the Notes concerning issuing temporary Notes,
registration of Notes, mutilated, destroyed, lost or stolen Notes, and the
maintenance of an office or agency for payment and money for security payments
held in trust, (iii) the rights, powers, trusts, duties and immunities of the
Trustee under the Indenture, and (iv) the defeasance provisions of the
Indenture. In addition, the Issuer may, at its option and at any time, elect
to have its obligations released with respect to certain covenants that are
described in the Indenture ("covenant defeasance") and any omission to comply
with such obligations shall not constitute a Default or an Event of Default
with respect to the Notes. In the event that a covenant defeasance occurs,
certain events (not including non-payment, bankruptcy and insolvency events)
described under "--Events of Default" will no longer constitute Events of
Default with respect to the Notes.
In order to exercise either defeasance or covenant defeasance, (i) the
Issuer will irrevocably (x) select a date for the payment of principal of and
accrued interest on the outstanding Notes and (y) deposit with the Trustee, as
trust funds in trust, for the benefit of the holders of the Notes, cash in
United States dollars, U.S. Government Obligations (as defined in the
Indenture), or a combination thereof, in such amounts as will be sufficient,
in the opinion of a nationally recognized firm of independent public
accountants or a nationally recognized investment banking firm, to pay and
discharge the principal of and interest on the outstanding Notes to redemption
or maturity, as the case may be; (ii) the Issuer will have delivered to the
Trustee an opinion of counsel in the United States to the effect that the
holders of the outstanding Notes will not recognize income, gain or loss for
Federal income tax purposes as a result of such defeasance or covenant
defeasance as the case may be, and will be subject to Federal income tax on
the same amounts, in the same manner and at the same times as would have been
the case if such defeasance or covenant defeasance had not occurred (in the
case of defeasance, such opinion must refer to and be based upon a ruling of
the Internal Revenue Service or a change in applicable Federal income tax
laws); (iii) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit or insofar as clause (iii), under the
first paragraph under "--Events of Default" is concerned, at any time during
the period ending on the 91st day after the date of such deposit; (iv) such
defeasance or covenant defeasance shall not result in a breach or violation
of, or constitute a Default under, the
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Indenture or any other agreement or instrument to which the Issuer is a party
or by which it is bound; (v) the Issuer shall have delivered to the Trustee an
opinion of counsel to the effect that (A) the trust funds will not be subject
to any rights of holders of Indebtedness (other than holders of the Notes) and
(B) after the 91st day following the deposit, the trust funds will not be
subject to the effect of any applicable bankruptcy, insolvency, reorganization
or similar laws affecting creditors' rights generally; and (vi) the Issuer
will have delivered to the Trustee an officers' certificate and an opinion of
counsel, each stating that all conditions precedent under the Indenture to
either defeasance or covenant defeasance, as the case may be, have been
complied with and that no violations under agreements governing any other
outstanding Indebtedness would result therefrom.
SATISFACTION AND DISCHARGE
The Indenture will cease to be of further effect (except as to surviving
rights of registration or transfer or exchange of the Notes, as expressly
provided for in the Indenture) as to all outstanding Notes when (i) either (a)
all the Notes theretofore authenticated and delivered (except lost, stolen or
destroyed Notes which have been replaced or paid) have been delivered to the
Trustee for cancellation or (b) all Notes not theretofore delivered to the
Trustee for cancellation have become due and payable and the Issuer has
irrevocably deposited or caused to be deposited with the Trustee an amount in
United States dollars sufficient to pay and discharge the entire indebtedness
on the Notes not theretofore delivered to the Trustee for cancellation, for
the principal of and interest on such Notes to the date of deposit; (ii) the
Issuer has paid or caused to be paid all other sums payable under the
Indenture by the Issuer; and (iii) the Issuer has delivered to the Trustee an
officers' certificate and an opinion of counsel each stating that all
conditions precedent under the Indenture relating to the satisfaction and
discharge of the Indenture have been complied with.
MODIFICATIONS AND AMENDMENTS
Modifications and amendments of the Indenture or the Notes may be made by
the Issuer and the Trustee with the written consent of the holders of not less
than a majority in aggregate principal amount of the outstanding Notes;
provided, however, that no such modification or amendment may, without the
consent of the holder of each outstanding Note affected thereby: (i) change
the Stated Maturity Date or the time at which the principal of, or interest
on, any Note becomes due and payable, or reduce the principal amount thereof
or the rate of interest thereon, or change the coin or currency in which the
principal of any Note or the interest thereon is payable, or impair the right
to institute suit for the enforcement of any such payment when due and payable
(or, in the case of redemption, on or after the redemption date), provided,
however, that this clause (i) shall, in all cases, be subject to the
provisions of clause (d) of "--Certain Covenants--Limitation on Additional
Indebtedness" which, indirectly, could have the effect of changing the time at
which principal of or interest on the Notes becomes due and payable with the
consent of only the holders of a majority in aggregate principal amount of the
Notes; (ii) reduce the percentage in principal amount of outstanding Notes,
the consent of whose holders is required to amend or supplement the Indenture
or the consent of whose holders is required for any waiver of compliance with
certain provisions of the Indenture or certain Defaults thereunder and their
consequences provided for in the Indenture; (iv) modify any of the provisions
relating to supplemental indentures requiring the consent of holders or
relating to the waiver of past defaults or relating to the waiver of certain
covenants, except to increase the percentage of outstanding Notes required for
such actions or to provide that certain other provisions of the Indenture
cannot be modified or waived without the consent of the holder of each Note
affected thereby; (v) except as otherwise permitted under "--Certain
Covenants--Merger or Consolidation", allow the assignment or transfer by the
Issuer of any of its rights and obligations under the Indenture or (vi) modify
or in any other way affect the ranking of the Notes in a manner adverse to the
holders of the Notes.
The holders of a majority in aggregate principal amount of the Notes then
outstanding may waive compliance with certain restrictive covenants and
provisions of the Indenture.
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THE TRUSTEE
The Indenture provides that, except during the continuance of an Event of
Default, the Trustee thereunder will perform only such duties as are
specifically set forth in the Indenture. If an Event of Default has occurred
and is continuing, the Trustee will exercise such rights and powers vested in
it under the Indenture and use the same degree of care and skill in its
exercise as a prudent person would exercise under the circumstances in the
conduct of such person's own affairs.
The Indenture and, upon issuance of the Exchange Notes or effectiveness of a
shelf registration statement, provisions of the Trust Indenture Act
incorporated by reference therein, contain limitations on the rights of the
Trustee, should it become a creditor of the Issuer, to obtain payment of
claims in certain cases or to realize on certain property received by it in
respect of any such claims, as security or otherwise. The Trustee is permitted
to engage in other transactions with the Issuer or any Affiliate of the
Issuer; provided that if it acquires any conflicting interest (as defined in
the Indenture or in the Trust Indenture Act) it must eliminate such conflict
or resign as trustee.
GOVERNING LAW
The Indenture and the Notes will be governed by, and construed in accordance
with, the laws of the State of New York, without giving effect to the conflict
of laws principles thereof.
CERTAIN AGREEMENTS BY CHARTER AND KELSO IN FAVOR OF HC CROWN
Charter and Kelso separately have undertaken, in an agreement with HC Crown,
to cause the Issuer to comply with the reporting requirements and dividend,
merger, divestiture and indebtedness restrictions set forth in the Indenture.
Charter and Kelso have also undertaken, in that agreement, to maintain their
control of the Issuer while the Notes remain outstanding.
BOOK-ENTRY; DELIVERY AND FORM
The Old Notes were deposited on the date of closing of sale of the Old
Notes, and the New Notes will be deposited on the date of closing of the
Exchange Offer, with or on behalf of the Depositary and registered in the name
of Cede & Co., as nominee of the Depositary (such nominee being referred to
herein as the "DTC Nominee").
DTC is (i) a limited purpose trust company organized under the banking laws
of the State of New York (and is a "banking organization" within the meaning
of such laws), (ii) a member of the Federal Reserve System, (iii) a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, as
amended, and (iv) a "Clearing Agency" registered pursuant to Section 17A of
the Exchange Act. DTC was created to hold securities for its participating
organizations (the "participants") and to facilitate the clearance and
settlement of securities transactions between participants through electronic
book-entry changes to the accounts of its participants. DTC's participants
include securities brokers and dealers, commercial banks, trust companies,
clearing corporations and certain other organizations. DTC is owned by a
number of its direct participants and by the New York Stock Exchange, Inc.,
the American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. Access to DTC's system is also available to other entities such
as banks, brokers, dealers and trust companies that clear through or maintain
a custodial relationship with a participant, either directly or indirectly.
Persons who are not participants may beneficially own securities held by or on
behalf of the DTC only through the DTC's direct or indirect participants.
Pursuant to procedures established by the Depositary, (i) upon deposit of
the Global Notes, the Depositary will credit the accounts of participants in
connection with the Notes with portions of the principal amount of the Global
Notes and (ii) ownership of the Notes will be shown on, and the transfer of
ownership thereof will be effected only through, records maintained by the
Depositary (with respect to the interests of the Depositary's participants),
the Depositary's participants and the Depositary's indirect participants.
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So long as DTC's Nominee is the registered owner of the Global Notes, DTC or
DTC's Nominee, as the case may be, is considered the sole owner and holder
under the Indenture of the underlying notes. Unless DTC notifies the Issuer
that it is unwilling or unable to continue serving as depositary for such
Notes, DTC ceases to be a clearing agency registered under the Exchange Act,
the Issuer determines to permit the Global Notes to be exchanged for
certificated Notes, or an Event of Default has occurred and is continuing with
respect to the Notes, owners of beneficial interests in the Global Notes will
not be entitled to have the Notes registered in their names, will not receive
or be entitled to receive physical delivery of certificated Notes in
definitive and fully registered form, and will not be considered to be the
owners or holders of any Notes under the Indenture or such Notes for any
purposes. Neither the Issuer nor the Trustee has any responsibility or
liability for any aspect of the records of DTC or for maintaining, supervising
or reviewing any records of DTC relating to the Notes.
Payments in respect of the principal of, premium, if any, and interest on
the Global Notes are payable by the Trustee to DTC or DTC's Nominee, as the
case may be, as the registered holder under the Indenture. Under the terms of
the Indenture, the Issuer and the Trustee may treat the Persons in whose names
Notes are registered as the owners thereof for the purpose of receiving such
payments. Consequently, neither the Issuer nor the Trustee has any
responsibility or liability for the payment of such amounts to beneficial
owners of Notes (including principal, premium, if any, and interest). The
Issuer believes, however, that it is currently the policy of DTC to
immediately credit the accounts of the relevant participants with such
payments, in amounts proportionate to their respective holdings of beneficial
interests in the relevant security as shown by the records
of DTC. Payments by DTC's direct and indirect participants to beneficial
owners of Notes are governed by standing instructions and customary practice
and are the responsibility of DTC's direct and indirect participants.
CERTIFICATED SECURITIES
Subject to certain conditions, any Person having a beneficial interest in
the Global Notes may, upon request to the Trustee, exchange such beneficial
interest for Notes in the form of Certificated Notes. Upon any such issuance,
the Trustee is required to register such Certificated Notes in the name of,
and cause the same to be delivered to, such Person or Persons (or the nominee
of any thereof). In addition, if (i) the Issuer notifies the Trustee in
writing that DTC is no longer willing or able to act as a depositary and the
Issuer is unable to locate a qualified successor within 90 days or (ii) the
Issuer, at its option, notifies the Trustee in writing that it elects to cause
the issuance of Notes in the form of Certificated Notes under the Indenture,
then, upon surrender by DTC's Nominee of its Global Notes, Notes in such form
will be issued to each Person that DTC's Nominee and DTC identify as being the
beneficial owner of the related Notes.
Neither the Issuer nor the Trustee is liable for any delay by DTC or DTC's
Nominee, as the case may be, in identifying the beneficial owners of Notes and
the Issuer and the Trustee may conclusively rely on, and will be protected in
relying on, instructions from DTC or DTC's Nominee for all purposes.
Neither DTC nor DTC's Nominee will consent or vote in any manner with
respect to the Notes. Pursuant to its customary procedures, in the case of any
matter as to which the consent or vote of holders of the Notes is sought, DTC
will mail an Omnibus Proxy to the Issuer as soon as practicable after the
record date for the determination of holders eligible to consent or vote on
the matter to be acted upon. The Omnibus Proxy serves to assign DTC's
Nominee's right to consent or vote to the direct participants whose accounts
it maintains as of the record date.
Notices of redemption and repurchase with respect to Notes held by direct
participants in the DTC system will be forwarded to DTC's Nominee. In the case
of a partial redemption, DTC's practice is to determine, by lot, the amount of
the beneficial interest in the Notes to be redeemed of each of its direct
participants.
Beneficial owners who elect to participate in a tender offer or purchase of
their securities, must provide notice of such election, through its direct or
indirect participant in DTC's system, to the appropriate depositary, tender or
purchase agent, and effect delivery of their Notes by causing the direct
participant in DTC's system to transfer the indirect participant's interest in
the Notes, as reflected in DTC's records, to such depositary, tender
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or purchase agent. The requirement for physical delivery of certificates
evidencing the Notes in connection with the aforementioned transactions will
be deemed satisfied when the beneficial ownership rights in the Global Notes
are transferred by direct participants on DTC's records.
The conveyance of all notices and other communications by DTC to its direct
participants, among DTC's direct and indirect participants and by DTC's direct
and indirect participants to owners of beneficial interests in the Notes is
governed by customary arrangements among them, subject to statutory or
regulatory requirements in effect with respect thereto from time to time.
Although DTC has agreed to the foregoing procedures to facilitate transfers
of interest in the Global Notes among participants of DTC, it is under no
obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. Neither the Issuer nor the Trustee
has any responsibility for the performance by DTC or its participants of their
respective obligations under the rules and procedures governing their
operations.
SAME-DAY SETTLEMENT AND PAYMENT
The Indenture requires that payments in respect of the Notes represented by
the Global Notes (including principal, premium, if any, and interest) be made
in immediately available funds. With respect to Certificated
Notes, however, the Company makes all payments of principal, premium, if any,
and interest, by mailing a check to each holder's registered address.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearing-house or next-day funds. In contrast, the Notes
are eligible to trade in the PORTAL Market and to trade in DTC's Same-Day
Funds Settlement System, and any permitted secondary market trading activity
in such Notes will, therefore, be required by DTC to be settled in immediately
available funds. The Issuer expects that secondary trading in the Certificated
Notes will also be settled in immediately available funds.
REGISTRATION RIGHTS
Immediately prior to sale of the Old Notes, HC Crown, pursuant to the Letter
Agreement, exercised its demand registration rights with respect to the Notes,
with a view toward the Notes being registered under the Securities Act. HC
Crown and the Issuer agreed that the Issuer would use its reasonable best
efforts to cause to become effective a registration statement with respect to
the Exchange Offer.
Under the Indenture the holders are collectively entitled to a single demand
registration right in addition to the registration rights under the Letter
Agreement, pursuant to which the Issuer and the Guarantors will use their
reasonable best efforts to cause to become effective a shelf registration
statement with respect to the resale of the Notes and use their reasonable
best efforts to keep such shelf registration statement continuously effective
until nine months after the effective date thereof. Expenses related to the
exercise of the additional demand registration right, if exercised, will be at
the expense of the holders of the Notes exercising the demand registration
right.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided.
"Adjusted Consolidated" means, with respect to any Person, such Person and
its Subsidiaries (other than Subsidiaries which are not Restricted
Subsidiaries) on a consolidated basis.
"Affiliate" means, when used with respect to a specified Person, another
Person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the person
specified.
"Anniversary Date" means December 31 in any year or the next succeeding
Business Day if such date is not a Business Day.
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"Annualized Operating Cash Flow" means an amount equal to Operating Cash
Flow for the calendar quarter specified, multiplied by 4.
"Areas of Dominant Influence" has the meaning set forth in 47 CFR 76.55(e).
"CAC" means CCA Acquisition Corp., a Delaware corporation.
"Capital Stock" of any Person means any and all shares, interests,
participations and other equivalents (however designated) of corporate stock,
equity interests in partnerships or other entities or options, convertible
instruments, rights or warrants to purchase such corporate stock, or equity
interests in partnerships or other entities.
"CCE, L.P. Partnership Agreement" means the Agreement of Limited Partnership
of Charter Communications Entertainment, L.P., dated as of September 29, 1995,
as the same may be amended, restated or modified from time to time in
accordance with the Indenture.
"CCE-I Credit Agreement" means that certain amended and restated loan
agreement dated as of September 29, 1995, by and among CCE-I, the CCE-I Credit
Facility Lenders and Toronto Dominion (Texas), Inc., as administrative agent
for the CCE-I Credit Facility Lenders, as amended as of October 31, 1995,
January 16, 1996, March 29, 1996, May 24, 1996, November 27, 1996 and February
7, 1997, and as the same may be amended, extended, renewed, restated,
supplemented or otherwise modified from time to time.
"CCE-I Credit Facility " means the credit facilities extended to CCE-I
pursuant to the CCE-I Credit Agreement.
"CCE-I Credit Facility Lenders" means Toronto Dominion (Texas), Inc. and The
Chase Manhattan Bank (formerly Chemical Bank), as Documentation Agents;
Toronto Dominion (Texas), Inc., The Chase Manhattan Bank (formerly Chemical
Bank), CIBC Inc., Credit Lyonnais Cayman Island Branch and NationsBank, N.A.,
as Managing Agents; Banque Paribas, Union Bank of California, N.A. (formerly,
Union Bank), Fleet Bank, N.A., CoreStates Bank, N.A., ABN AMRO Bank N.V.,
Societe Generale and The First National Bank of Boston, as Co-Agents; Toronto
Dominion (Texas), Inc., as Administrative Agent; and the financial
institutions party to the CCE-I Credit Agreement, together with their
respective successors and assigns.
"CCE-I Credit Facility Termination Date" means the date on which all
Obligations (as such term is defined in the Subordination Agreement) shall
have been indefeasibly paid in full in cash and all commitments to lend in
respect of the CCE-I Credit Facility shall have been terminated.
"CCE-I Partnership Agreement" means the Agreement of Limited Partnership of
CCE-I, dated as of September 29, 1995, as the same shall be amended, restated
or modified from time to time.
"CCE Purchase Money Indebtedness"means any Indebtedness or any Qualifying
Equity Interest incurred or issued by any partners or future partners of CCE,
L.P. or any Persons (other than Charter, KIA V or any of their respective
Affiliates that are not or do not become direct or indirect partners of CCE,
L.P.) controlling such partners, now outstanding or hereafter incurred or
issued in connection with acquiring assets owned or to be owned, directly or
indirectly, by any Subsidiary of CCE, L.P., and shall (i) include (a) the
Indebtedness evidenced by the Notes and (b) any other Indebtedness to or any
Qualifying Equity Interest owned by a seller of such assets and (ii) exclude
Indebtedness to or any Qualifying Equity Interest owned by Charter, KIA V or
any of their respective Affiliates that are not or do not become direct or
indirect partners of CCE, L.P.
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person,
whether through ownership of voting securities, by contract or otherwise, and
"Controlling" and "Controlled" shall have meanings correlative thereto.
"Debt Service" means, without duplication, payment of principal, interest,
fees, premiums and penalties on or with respect to any Indebtedness.
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"GAAP" means generally accepted accounting principles, as in effect in the
U.S. from time to time, consistently applied.
"Holder" means HC Crown or any other holder of a Note or Notes.
"Indebtedness" means, with respect to a Person, (a) all items, which, in
accordance with GAAP would be included in determining total liabilities as
shown on the liability side of a balance sheet of such Person, except (i)
accounts payable which by their terms are less than 60 days past due, (ii)
items of partners' equity or capital stock or surplus, or (iii) items of
general contingency or deferred tax reserves, (b) all direct or indirect
obligations secured by any Lien to which any property or asset owned by such
Person is subject (but if the obligation secured thereby shall not have been
assumed, then only to the extent of the higher of the fair market value or the
book value of the property or asset subject to such Lien), (c) all obligations
of such Person with respect to leases constituting part of a sale and lease-
back arrangement, (d) all reimbursement obligations with respect to
outstanding letters of credit, and (e) all obligations of such Person under
Interest Rate Hedge Agreements.
"Indebtedness for Money Borrowed" means, with respect to any Person, money
borrowed and Indebtedness represented by notes payable and drafts accepted
representing extensions of credit, all obligations evidenced by bonds,
debentures, notes or other similar instruments, all Indebtedness upon which
interest charges are customarily paid, and all Indebtedness issued or assumed
as full or partial payment for property or services, whether or not any such
notes, drafts, obligations or Indebtedness represent Indebtedness for money
borrowed. For purposes of this definition, interest which is accrued but not
paid on the original due date for such interest shall be deemed Indebtedness
for Money Borrowed. Where obligations are evidenced by bonds, debentures,
notes or other similar instruments whose face amount exceeds the amount
received by such Person with respect thereto, only the amount received plus
debt discount amortized as of the calculation date need be taken into account
as Indebtedness for Money Borrowed.
"Interest Expense" means, for any period, the aggregate amount of all
interest paid or accrued in respect of Indebtedness for Money Borrowed and the
portion of payments under Capitalized Lease Obligations which constitutes
imputed interest, in each case, of any Person on an Adjusted Consolidated
basis during such period.
"Interest Rate Hedge Agreement" means the obligations of any Person pursuant
to any arrangement with any other person whereby, directly or indirectly, such
Person is entitled to receive from time to time periodic payments calculated
by applying either a floating or a fixed rate of interest on a stated notional
amount in exchange for periodic payments made by such other person calculated
by applying a fixed or a floating rate of interest on the same notional amount
and shall also include, without limitation, interest rate swaps, caps,
swaptions, captions, floors, collars and similar agreements.
"Lien" means, with respect to any property, any mortgage, lien, pledge,
assignment, charge, security interest, title retention agreement, levy,
execution, seizure, attachment, garnishment or other encumbrance of any kind
in respect of such property, whether or not choate, vested or perfected.
"Net Income" means, as applied to any Person, for any fiscal period, the
aggregate amount of net income (or net loss) after taxes, for such period for
such Person on an Adjusted Consolidated basis.
"Obligations" means all unpaid principal or interest under the Notes, and
all other obligations of the Issuer to any holder arising under the Indenture.
"Operating Cash Flow" means, for any Person in respect of any quarterly or
annual period, as applicable, without duplication, the remainder of (a) the
sum of Net Income of such Person, plus, to the extent deducted in calculating
Net Income of such Person, (i) Interest Expense of such Person, (ii)
depreciation, (iii) amortization, (iv) management fees and financial advisory
fees paid, (v) income tax expense and (vi) other non-cash items, less (b)
extraordinary income, all as determined in accordance with GAAP.
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"Person" means an individual, corporation, partnership, limited liability
company, trust or unincorporated organization, or a government or any agency
or political subdivision thereof.
"Qualifying Equity Interest" means a preferred equity interest in any Person
which, for at least so long as the Notes are outstanding, (i) shall have a
stated liquidation preference and a stated dividend rate and (ii) shall, if
such preferred equity interest is convertible into a common (or equivalent)
equity interest, contain a provision whereby upon such conversion (a) the
preferred capital account, if any, related to the converted portion of such
preferred equity interest shall terminate and (b) such converted portion of
such preferred equity interest shall no longer be a Qualifying Equity
Interest.
"Restricted Subsidiary" means CAC, Cencom Cable, CCE, L.P., CCE-I, any
Subsidiary of CCE-I and any other direct or indirect Subsidiary of the Issuer
which has, or comes to have in the future, a direct or indirect ownership
interest in CCE-I, or any of its Subsidiaries.
"Semi-Annual Date" means each June 30 or the next succeeding business day if
such date is not abusiness day.
"Senior Debt" means all monetary obligations (whether fixed or contingent
and whether outstanding or hereafter created, incurred or assumed) of the
Issuer, including, without limitation, obligations in respect of principal,
interest (including post-petition interest in any proceeding under bankruptcy
law), reimbursement obligations, indemnities, fees and expenses in respect of
any Indebtedness for Money Borrowed of the Issuer and the Restricted
Subsidiaries, whether currently or afterwards outstanding, unless any
instrument creating or affecting such Indebtedness (a) provides that such
Indebtedness is not superior in right of payment to the principal of and
interest on any of the Notes or (b) provides that such Indebtedness is
subordinate in right of payment to the payment of the principal of and
interest on any other Indebtedness for Money Borrowed of the Issuer and its
Subsidiaries. The fact that certain indebtedness is not secured, or is junior
in security to other Indebtedness, shall not be relevant to the issue of
whether it is Senior Debt. Notwithstanding anything to the contrary in the
foregoing, Senior Debt shall not include (a) indebtedness or amounts owed for
compensation to employees, for goods or materials purchased in the ordinary
course of business or for services, (b) indebtedness of the Issuer or any
Restricted Subsidiary to any Restricted Subsidiary, or any, shareholder,
partner or officer of the Issuer or any Restricted Subsidiary, (c) obligations
for television, program and syndicated series exhibition rights or (d)
payments due under or in connection with a cable television franchise,
including any management fees.
"Subordination Agreement" means, collectively, the Amended and Restated
Subordination Agreement dated as of November 15, 1996 by and between HC Crown
and the Company in favor of the CCE-I Credit Facility Lenders and Toronto
Dominion (Texas), Inc., as administrative agent for the CCE-I Credit Facility
Lenders, and each other Subordination Agreement by and between any holder (or
the trustee under the Indenture, on behalf of any such holder) and the Issuer
in favor of the CCE-I Credit Facility Lenders and Toronto Dominion (Texas),
Inc., as administrative agent for the CCE-I Credit Facility Lenders, as the
same may be amended, replaced, restated, supplemented or otherwise modified
from time to time.
"Subsidiary" means, in respect of any Person, any corporation of which such
Person owns more than 50% of the equity interest and any partnership or other
Person to the extent any Person owns more than 50% of the equity interest in
same.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain federal income tax consequences
relevant to the acquisition, ownership and disposition of the New Notes by the
holders acquiring New Notes pursuant to the Exchange Offer but does not
purport to be a complete discussion of all potential tax effects. In this
regard, this discussion does not address the tax consequences to subsequent
purchasers or holders of New Notes. The discussion is based upon provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), existing and
proposed Treasury regulations, rulings and judicial decisions thereunder as of
the date hereof, all of which may be repealed, revoked or modified
retroactively in a manner that could adversely affect a holder of the Notes.
The summary deals only with Notes held as capital assets (generally property
held for investment and not for sale to customers in the ordinary course of a
trade or business) by holders who or which are (i) citizens or residents of
the United States, (ii) domestic corporations, partnerships or other entities
or (iii) otherwise subject to U.S. federal income taxation on a net income
basis in respect of income and gain from the Notes. It does not address all
aspects of the U.S. federal income tax consequences of holding Notes that may
be relevant to a holder's particular circumstances or to holders with special
situations, such as dealers in securities, financial institutions, life
insurance companies, tax-exempt organizations or persons holding Notes as a
position in a "straddle" or "conversion transaction" for tax purposes. The
summary does not address tax consequences of holding Notes under state, local
or foreign tax laws.
Set forth below is a summary of the principal original issue discount
("OID") considerations applicable to holders of the New Notes. The OID rules
are complicated and raise various interpretational questions, and because of
their recent enactment, there remains little authoritative guidance as to
their application in specific factual settings. In addition, the OID rules
depend upon factual inquiries as to which there can be no independent legal
assurance. Accordingly, the precise application of the OID rules to debt
instruments such as the Notes that have complex terms is subject to some
uncertainty. No ruling will be sought from the Internal Revenue Service (the
"IRS") with respect to any of the issues discussed herein. There can be no
assurance that the IRS will not take a different position concerning the
matters discussed below and that such position would not be sustained. Among
other consequences, such an adverse determination could result in the
acceleration of the recognition of, and/or increase in the amount of, OID on
the Notes.
EACH HOLDER SHOULD CONSULT ITS OWN TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES TO IT OF ACQUIRING, OWNING AND DISPOSING OF THE NEW NOTES,
INCLUDING THE EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
EXCHANGE OF NOTES
The substitution of New Notes for Old Notes pursuant to the Exchange Offer
should not be treated as a sale, exchange, disposition or other taxable event
with respect to the holders for Federal income tax purposes. Holders should
not recognize any taxable gain or loss or any interest income as a result of
substituting New Notes for Old Notes pursuant to the Exchange Offer, and a
holder should have the same adjusted tax basis and holding period in the New
Notes as it had in the Old Notes immediately before the substitution and the
New Notes should have the same issue price (and adjusted issue price
immediately after the substitution) and the same amount of OID, if any, as the
Old Notes. The following discussion assumes that the substitution of New Notes
for Old Notes pursuant to the Exchange Offer will not be treated as a sale,
exchange, disposition or other taxable event for Federal income tax purposes,
and that the Old Notes and the New Notes will be treated as the same
securities for Federal income tax purposes.
ORIGINAL ISSUE DISCOUNT ON THE NOTES
The Old Notes originally were issued with OID and, as a result, a holder of
the New Notes (including a cash basis holder) will be required to include such
OID in income (to the extent it accrues during such holder's
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period of ownership of the Notes) as interest income on a constant yield to
maturity method basis, generally in advance of the receipt of the cash
payments to which such income is attributable and generally in increasing
amounts until the retirement of the New Notes.
The total amount of OID with respect to a Note is equal to the excess of the
"stated redemption price at maturity" of such Note over the "issue price" of
such Note. The "stated redemption price at maturity" of a Note is equal to the
sum of all payments, whether denominated as interest or principal, required to
be made on such Note other than payments of "qualified stated interest."
Because interest is not payable on the Notes until December 31, 1999, none of
the stated interest payments will be payments of qualified stated interest and
all such payments are included in the stated redemption price at maturity of
the Notes. Because the Old Notes originally were issued in partial
consideration for non-publicly-traded property, and because the Notes provide
for adequate stated interest, the "issue price" of the Notes is the "stated
principal amount" of the Notes, i.e., the aggregate amount of all payments due
under the Notes, excluding any amount of stated interest.
In general, the amount of OID required to be included in a holder's income
for any taxable year (regardless of whether the holder uses the cash or
accrual method of accounting) is the sum of the daily portions of OID with
respect to the Notes for each day during the taxable year or portion of the
taxable year in which the holder holds such Note. The daily portion is
determined by allocating to each day in any "accrual period" a pro rata
portion of the OID allocable to that accrual period. Accrual periods with
respect to a Note may be of any length selected by the holder and may vary in
length over the term of such Note as long as (i) no accrual period is longer
than one year and (ii) each scheduled payment of interest or principal on such
Note occurs on either the first or final day of an accrual period. The amount
of OID allocable to each accrual period generally will be equal to the product
of the adjusted issue price of a Note at the beginning of an accrual period
and the yield to maturity of such Note (determined on the basis of a
compounding assumption that reflects the length of the accrual period). The
adjusted issue price of a Note at the beginning of an accrual period will be
equal to its original issue price increased by all previously accrued OID
(disregarding any reduction on account of acquisition premium described below)
and reduced by the amount of all previous cash payments on such Note. The
yield to maturity is that interest rate, expressed as a constant annual
interest rate, that when used in computing the present value of all payments
of principal and interest to be paid in connection with the Notes produces an
amount equal to the issue price of the Notes. For purposes of calculating the
amount of OID on the Notes, the Issuer intends to determine the yield and
maturity of the Notes by assuming that the Notes will be retired on December
31, 1999, the stated maturity date of the Notes.
The Issuer will provide certain information to the IRS, and will furnish
annually to certain record holders of the Notes information with respect to
OID accruing during the calendar year. See "Backup Withholding." Because this
information is based upon the adjusted issue price of each Note as if the
current holder of each Old Note was the original holder of the instrument,
current holders of the Old Notes who originally purchased the Old Notes for an
amount other than the adjusted issue price and/or on a date other than the end
of an accrual period may be required to determine for themselves the amount of
OID. See "Acquisition Premium and Market Discount." If the New Notes are
offered in physical form, the Issuer will be required to place a legend on the
New Notes providing information with respect to the computation of OID on the
Notes.
The Notes may be determined to be subject to the rules under the Code
regarding "applicable high yield discount obligations" ("AHYDO") because their
yield to maturity exceeds the relevant applicable Federal rate ("AFR") by more
than five percentage points. Under Section 163(e) and 163(i) of the Code, a C
corporation that is an issuer of debt obligations subject to the AHYDO rules
may not deduct any portion of OID on the obligations until such portion is
actually paid. A debt obligation is generally subject to the AHYDO rules if
(i) its maturity date is more than five years from the date of issue, (ii) its
yield to maturity equals or exceeds the sum of the AFR plus five percentage
points and (iii) it has "significant OID." A debt obligation will have
significant OID for this purpose if, as of the close of any accrual period
ending more than five years after issuance, the total amount of income
includable by a holder with respect to the debt instrument exceeds the sum of
(i) the total amount of "interest" paid under the obligation before the close
of such accrual period and (ii) the product of the issue price of the debt
instrument and its yield to maturity. In addition, if the yield to maturity on
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an AHYDO obligation exceeds the sum of the AFR plus six percentage points, a
portion of the OID, equal to the product of the total OID times the ratio of
(a) the excess of the yield to maturity over the sum of the AFR plus six
percentage points to (b) the yield to maturity, will not be deductible by the
issuer and will be treated for some purposes as dividends to the holders of
the obligations (to the extent that such amounts would have been treated as
dividends to the holders if they had been distributions with respect to the
issuer's stock). Amounts treated as dividends will be nondeductible by the
issuer, and may qualify for the dividends received deduction for corporate
U.S. holders, but will be treated as OID and not as dividends for withholding
tax purposes. The Issuer intends to take the position that the Notes are not
subject to the AHYDO rules because the stated maturity date of the Notes is
less than five years from the date of their issuance.
ACQUISITION PREMIUM AND MARKET DISCOUNT
A holder who originally purchased an Old Note for an amount that was greater
than its adjusted issue price as of the purchase date and less than the sum of
all amounts payable on the instrument after its purchase by the holder will be
considered to have purchased such Note at an "acquisition premium." The amount
of OID that such holder must include in its gross income with respect to such
Note for any taxable year is generally reduced by the portion of such
acquisition premium properly allocable to such year.
If a holder originally purchased an Old Note for an amount that was less
than its "revised issue price" as of the purchase date, the amount of the
difference generally will be treated as "market discount," unless such
difference is less than a specified de minimis amount. The Code provides that
the revised issue price of a Note equals its issue price plus the amount of
OID includable in the income of all holders for periods prior to the purchase
date (disregarding any deduction for acquisition premium). Under the market
discount rules generally, a holder will be required to treat any gain
recognized on the sale, exchange, retirement or other disposition of a New
Note as ordinary income to the extent of the market discount that has accrued
while the instrument was held by such holder and that has not previously been
included in income. In addition, the holder may be required to defer, until
the maturity date of a New Note or its earlier disposition in a taxable
transaction, the deduction of all or a portion of the interest expense on any
indebtedness incurred or continued to purchase or carry such New Note.
The New Notes provide for optional prepayment, in whole or part, prior to
maturity. If the New Notes were prepaid, a holder generally would be required
to include in gross income as ordinary income the portion of the gain
recognized on the redemption to the extent of the accrued market discount on
the Notes, if any.
Any market discount will be considered to accrue ratably during the period
from the date of acquisition to the maturity date of a Note, unless the holder
elects to accrue market discount on a constant interest method. A holder of a
Note may elect to include market discount in income currently as it accrues
(under either the ratable or constant interest method). This election to
include currently, once made, applies to all market discount obligations
acquired in or after the first taxable year to which the election applies and
may not be revoked without the consent of the IRS. If a holder of Notes makes
such an election, the foregoing rules with respect to the recognition of
ordinary income on sales and other dispositions of such instruments, and with
respect to the deferral of interest deductions on debt incurred or maintained
to purchase or carry such debt instruments, would not apply.
ELECTION TO TREAT ALL INTEREST AS OID
A holder of a Note may elect to include all interest that accrues on such
Note in gross income on a constant-yield basis. For purposes of this election,
interest includes stated interest, acquisition discount, OID, de minimis OID,
market discount, de minimis market discount and unstated interest, as adjusted
by any amortizable bond premium or acquisition premium.
In applying the constant-yield method to a Note with respect to which this
election has been made, the issue price of such Note will equal the holder's
basis in such Note immediately after its acquisition, the issue date of such
Note will be the date of its acquisition by the holder, and no payments on
such Note will be treated as payments of qualified stated interest. The
election will generally apply only to a Note with respect to which it is made
and may not be revoked without the consent of the IRS.
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If the election to apply the constant-yield method to all interest on a Note
is made with respect to a Note on which there is market discount, the electing
holder will be treated as having made the election described above under
"Acquisition Premium and Market Discount" to include market discount in income
currently over the life of all debt instruments held or thereafter acquired by
such holder.
SALE, EXCHANGE, REDEMPTION AND RETIREMENT OF NOTES
A holder's adjusted tax basis in a Note will, in general, equal the holder's
cost for such Note, increased by any amounts included in income as OID, market
discount or de minimis market discount which the holder has previously elected
to accrue in gross income on an annual basis and reduced by any cash payments
in respect of such Note. Upon the sale, exchange, redemption, retirement or
other disposition of a New Note, a holder generally will recognize gain or
loss equal to the difference between the amount realized on such sale,
exchange, redemption or retirement (except to the extent of accrued OID on
Notes, which will be taxable as such) and the holder's tax basis in such New
Note. Except as described above regarding market discount, gain or loss
recognized by a holder on the sale, exchange, redemption or retirement of a
New Note will be capital gain or loss and will be long-term capital gain or
loss if such Note had been held for more than one year at the time of such
disposition.
BACKUP WITHHOLDING
In general, information reporting requirements will apply to payments of
principal, the proceeds of a sale before maturity, and the accrual and payment
of OID on a Note with respect to non-corporate holders. "Backup withholding"
at a rate of 31% will apply to such payments if the holder fails to provide an
accurate taxpayer identification number, to report all interest and dividends
required to be shown on its federal income tax returns, or otherwise establish
an exemption. Backup withholding tax is not an additional tax and may be
credited against a holder's regular U.S. federal income tax liability or
refunded, provided appropriate proof is provided under rules established by
the IRS. The amount of OID reported by the Issuer in respect of a Note may not
equal the amount of OID required to be included in income by a holder who
purchased such Note.
THE FOREGOING DISCUSSION OF CERTAIN FEDERAL INCOME TAX CONSIDERATIONS DOES
NOT CONSIDER THE FACTS AND CIRCUMSTANCES OF ANY PARTICULAR HOLDER'S SITUATION
OR STATUS. THE SUMMARY IS BASED ON THE PROVISIONS OF THE CODE, REGULATIONS,
PROPOSED REGULATIONS, RULINGS AND JUDICIAL DECISIONS NOW IN EFFECT, ALL OF
WHICH ARE SUBJECT TO CHANGE, POSSIBLY ON A RETROACTIVE BASIS. EACH CURRENT
HOLDER OF OLD NOTES SHOULD CONSULT ITS OWN TAX ADVISOR WITH RESPECT TO THE TAX
CONSEQUENCES TO IT, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN
AND OTHER TAX LAWS, OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF THE NEW
NOTES.
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DESCRIPTION OF OTHER INDEBTEDNESS
THE CREDIT FACILITIES
Charter Communications Entertainment I, L.P.
CCE-I is the borrower under a credit agreement dated as of September 29,
1995 with a consortium of lenders and Toronto Dominion (Texas), Inc. as the
administrative agent, as amended on October 31, 1995, January 16, 1996, March
29, 1996, May 24, 1996 and November 29, 1996 (the "CCE-I Credit Agreement").
Borrowing Amount
The CCE-I Credit Agreement provides for an eight year term credit facility
in the amount of $280.0 million, an eight year revolving credit facility in
the amount of $140.0 million and a nine year term credit facility in the
amount of $85.0 million. As of December 31, 1996, CCE-I had an aggregate of
approximately $468.0 million of indebtedness outstanding (leaving $37.0
million unused and available for borrowing) under the CCE-I Credit Facility.
Interest Rates
Loans under the CCE-I Credit Facility bear interest at a rate per annum
based upon certain spreads plus a base rate, with the base rate being, at CCE-
I's election, the prime rate of interest, the interest rate on certain
certificates of deposit, or LIBOR. With respect to the eight year term credit
facility and the eight year revolving credit facility, the applicable spreads
are based on the ratio of outstanding amounts under the CCE-I Credit Facility
to annualized operating cash flow with a range of 0 to 1.375%, 1.25 to 2.5%
and 1.125 to 2.375%, respectively. With respect to the nine year term credit
facility, the applicable spreads are 1.75%, 2.875% and 2.75%, respectively. In
addition, a quarterly commitment fee of 0.375% per annum is payable on the
unused portion of the CCE-I Credit Agreement.
Security
The CCE-I Credit Facility is secured by substantially all of the assets of
CCE-I, and a pledge of all partnership interests in CCE-I.
Amortization and Maturity
Commencing with the quarter ending September 30, 1997, quarterly reductions
of the eight year term credit facility and the eight year revolving credit
facility are currently required to be made on the last day of each March,
June, September and December through June 30, 2004. Commencing with the
quarter ending March 31, 1998, quarterly reductions of the nine year term
credit facility are currently required to be made on the last day of each
March, June, September and December through December 31, 2004.
Covenants
The CCE-I Credit Agreement contains certain affirmative and negative
covenants, including, but not limited to, (i) maintenance of ratios of total
debt to annualized operating cash flow, annualized operating cash flow to
fixed charges and annualized operating cash flow to pro forma debt service,
(ii) restrictions on capital expenditures, (iii) limitations on additional
indebtedness, creation of liens and encumbrances, mergers and sales of assets,
acquisitions, investments, guarantees, and operating leases, (iv) restrictions
on payments of management fees (v) limitations on transaction with affiliates
and (vi) limitations on distributions.
Events of Default
The CCE-I Credit Agreement contains certain events of default, including,
but not limited to, failure to perform covenants and payment obligations set
forth in the CCE-I Credit Agreement, commencement of any case or proceeding
pursuant to any Federal or state bankruptcy or insolvency law beyond any
applicable grace
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period, entry of certain judgments, the occurrence of a materially adverse
effect, the occurrence of certain events of default under certain other
contracts, the revocation or expiration of certain licenses, certain changes
in ownership of the borrower and the general partner of the borrower, certain
changes in the partners of the partnership that controls Charter or such
partners' voting equity or economic interests in such partnership, and any
demand on the CCE, L.P. Guarantee.
Use of Proceeds
Proceeds of the CCE-I Credit Facility were initially used to refinance
existing indebtedness which was originally incurred in connection with the
acquisition of the Crown Missouri Systems and the Crown Connecticut Systems,
to finance capital expenditures, for working capital and for certain
investments and acquisitions permitted under the CCE-I Credit Agreement.
Charter Communications Entertainment II, L.P.
CCE-II is the borrower under a credit agreement dated as of September 29,
1995 with a consortium of lenders and NationsBank of Texas, N.A. as the
administrative agent, as amended on February 29, 1996 (the "CCE-II Credit
Agreement").
Borrowing Amount
The CCE-II Credit Agreement provides for an eight year term credit facility
in the amount of $70.0 million, an eight year revolving credit facility in the
amount of $115.0 million and a nine year term credit facility in the amount of
$50.0 million. As of December 31, 1996, CCE-II had an aggregate of
approximately $194.0 million of indebtedness outstanding (leaving $41.0
million unused and available for borrowing) under the CCE-II Credit Facility.
Interest Rates
Loans under the CCE-II Credit Facility bear interest at a rate per annum
based upon certain spreads plus a base rate, with the base rate being, at CCE-
II's election, the prime rate of interest or LIBOR. With respect to the eight
year term credit facility and the eight year revolving credit facility, the
applicable spreads are based on the ratio of debt to annualized operating cash
flow with a range of 0 to .750% and .75 to 1.750%, respectively. With respect
to the nine year term credit facility, the applicable spreads are 1.250% and
2.250%, respectively. In addition, a quarterly commitment fee of 0.375% per
annum is payable on the unused portion of the CCE-II Credit Agreement.
Security
The CCE-II Credit Facility is secured by substantially all of the assets of
CCE-II, and a pledge of all partnership interests in CCE-II.
Amortization and Maturity
Commencing with the quarter ending June 30, 1998, quarterly reductions of
the eight year term credit facility and the eight year revolving credit
facility are currently required to be made on the last day of each March,
June, September and December through September 30, 2003. Commencing with the
quarter ending June 30, 1998, quarterly reductions of the nine year term
credit facility are currently required to be made on the last day of each
March, June, September and December through September 30, 2004.
Covenants
The CCE-II Credit Agreement contains certain affirmative and negative
covenants, including, but not limited to, (i) maintenance of ratios of debt to
annualized operating cash flow, operating cash flow to fixed charges and
annualized operating cash flow to pro forma debt service, (ii) restrictions on
capital expenditures, (iii) limitations on additional indebtedness, creation
of liens and encumbrances, mergers and sales of assets, acquisitions, and
investments, (iv) restrictions on payments of management fees and (v)
limitations on distributions and payments on subordinated indebtedness.
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Events of Default
The CCE-II Credit Agreement contains certain events of default, including,
but not limited to, failure to perform covenants and payment obligations set
forth in the CCE-II Credit Agreement, commencement of a case or proceeding
pursuant to any Federal or state bankruptcy or insolvency law beyond any
applicable grace period, entry of certain judgments, the occurrence of certain
events of default under certain other contracts, the revocation or expiration
of certain licenses, and certain changes in control of CCE-II, including but
not limited to, certain changes in the partners of the partnership that
controls Charter or such partners' voting equity or economic interests in such
partnership.
Use of Proceeds
Proceeds of the CCE-II Credit Facility have been and will be used to finance
capital expenditures, for working capital and for certain investments and
acquisitions permitted under the CCE-II Credit Agreement.
THE CALIFORNIA LOAN AGREEMENT
The California Note was issued under a senior subordinated loan agreement
dated as of September 29, 1995 (the "California Loan Agreement").
General
The California Note is the unsecured obligation of CCT ranking subordinate
in right of payment to all senior indebtedness of CCT. CCT is a holding
company that conducts substantially all of its business through CCE-II, and
the California Note will be effectively subordinated to the claims of
creditors of CCE-II. As of December 31, 1996, CCT had no Indebtedness other
than the California Note.
Any and all payments on the California Note is prohibited until the
obligations owing under the CCE-II Credit Facility (including refinancings
thereof) are paid in full. Moreover, substantially all rights and remedies
under the California Note, including the right to accelerate the maturity upon
an event of default (including a payment default) are suspended until such
obligations under the CCE-II Credit Facility are paid in full.
Maturity, Interest and Principal
The California Note has an aggregate principal amount $165.7 million and
will mature on September 29, 2005. As of December 31, 1996, the amount
outstanding under the California Note was $191.3 million. For financial
reporting purposes, the amount of the California Note is $198.8 million
because interest accruing under the California Note is based on the average
rate of interest over the life of the California Note (which approximates
15.43%) rather than the stated interest rate. Interest on the California Note
will accrue at the following rates per annum, compounded annually:
<TABLE>
<CAPTION>
YEAR FROM CLOSING DATE PER ANNUM RATE
---------------------- --------------
<S> <C>
Years 1--5............................................... 12%
Year 6................................................... 15%
Year 7................................................... 17%
Year 8................................................... 19%
Year 9................................................... 21%
Year 10.................................................. 23%
</TABLE>
For purposes of the foregoing, a "year" shall be the twelve-month period
ending on any Anniversary Date (as defined in the California Loan Agreement).
Interest will be computed on the basis of a 360 day year of twelve 30-day
months, and on each Anniversary Date (as defined in the California Loan
Agreement) unpaid interest shall compound at the then applicable per annum
rate by adding the same to the then unpaid principal balance. Interest shall
be due and payable on the Maturity Date (as defined in the California Loan
Agreement) or upon the earlier maturity of the Indebtedness (as defined in the
California Loan Agreement) evidenced by the California Note. From and after
maturity (by acceleration or otherwise), all principal, interest or any other
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amounts due from CCT under the California Loan Agreement or under the
California Note shall bear interest at an increased rate (as described in
Section 5.02 of California Loan Agreement). In no event shall the interest
payable in respect of the Indebtedness (as defined in the California Loan
Agreement) evidenced by the California Note exceed the maximum amount
collectible under applicable law.
The California Note is not entitled to the benefit of any mandatory sinking
fund.
Prepayment
The California Note is prepayable at CCT's option in whole at any time or in
part from time to time, without premium or penalty, provided that any such
prepayment of principal shall include all accrued interest on the amount
prepaid.
Events of Default
(a) The following are events of default under the California Loan Agreement:
(i) CCT shall fail to pay, when due (whether by acceleration of maturity
or otherwise), principal of or any interest on any Note; or
(ii) CCT shall fail to pay, when due, any other amount due thereunder or
under any Note and such failure shall have continued for a period of three
business days; or
(iii) Any representation or warranty as to a material matter made by CCT
under the California Loan Agreement or any statement made by CCT in any
financial statement, certificate, report, exhibit or document furnished by
CCT to any Holder (as defined in the California Loan Agreement) pursuant to
the California Loan Agreement shall prove to have been false or misleading
in any material respect at the time when made; or
(iv) A case or proceeding shall have been instituted in respect of CCT
(and shall have remained undismissed for a period of 60 consecutive days if
not instituted by CCT):
A. seeking a declaration or entailing a finding that CCT is insolvent
or a similar declaration or finding, or seeking dissolution,
liquidation, reorganization, arrangement, adjustment, composition or
other similar relief with respect to CCT, its assets or its debts under
any law relating to bankruptcy, insolvency, relief of debtors or
protection of creditors, forfeiture of charter, or any other similar
law now or hereafter in effect; or
B. seeking appointment of a receiver, trustee, custodian, liquidator,
assignee, sequestrator or other similar official for CCT or for all or
any substantial part of its property; or
(v) CCT shall become insolvent, shall become generally unable to pay its
debts as they become due or shall not generally pay its debts as they
become due, shall make a general assignment for the benefit of creditors,
shall institute a case or proceeding described in Section (iv)A. above or
shall consent to any such order for relief, declaration, finding or relief
described therein, shall institute a proceeding described in Section (iv)B.
above or shall consent to any such appointment or to the taking of
possession by any such official of all or any substantial part of its
property whether or not any such proceeding is instituted, shall dissolve,
wind-up or liquidate itself or any substantial part of its property, or
shall take any action to authorize or in furtherance of any of the
foregoing; or
(vi) Any default shall occur in the performance or observance of any
covenant contained in Section 4.02 of the California Loan Agreement; or
(vii) Any default shall occur in the performance or observance of any
other covenant or agreement of CCT under the California Loan Agreement and
shall have continued for a period of 30 days after notice from any Holder
(as defined in the California Loan Agreement) to CCT; or
(viii) CCT (i) shall default (as principal or as guarantor or other
surety), unless such default shall have been waived or cured, in any
payment of principal of or interest on any permitted Indebtedness (as
defined
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in the California Loan Agreement) for Money Borrowed (as defined in the
California Loan Agreement) in the aggregate amount of $15 million or, if
such Indebtedness is payable or repayable on demand, shall fail to pay or
repay such Indebtedness when demanded or (ii) shall default (unless such
default has been waived or cured) in the observance of any covenant, term
or condition contained in any agreement or instrument by which such
Indebtedness is created, secured or evidenced if the effect of such default
is to cause, all or part of such Indebtedness to become due before its
otherwise stated maturity; or
(ix) One or more final judgments for the payment of money shall have been
entered against CCT which judgment or judgments exceed $15 million in the
aggregate and which remains undischarged for a period (during which
execution shall not be effectively stayed) of 30 days.
For purposes of Sections (iv), (v), (viii) and (ix), all references to "CCT"
shall be deemed to include any Subsidiary or Subsidiaries which, in the
aggregate, in the most recent fiscal year of CCT accounted for more than 10%
of the revenues of CCT and its Subsidiaries (as defined in the California Loan
Agreement) on a consolidated basis, or at the end of such fiscal year owned
more than 10% of the consolidated assets of CCT, all as shown on the
consolidated financial statements for such year, it being understood, however,
that the word "Subsidiary" or "Subsidiaries" as used in this paragraph shall
not include CCE-I or any future subsidiaries of CCE, L.P. that are not
subsidiaries of CCE-II.
(b) The California Loan Agreement provides that, subject in all cases to the
terms of the section entitled "Subordination," if an Event of Default occurs
and is continuing or shall exist, (i) any holder of the California Note, if an
Event of Default occurs under paragraph (a)(i) or (a)(ii) above, or (ii) if
there is more than one holder of the California Note, the holders of a
majority in principal amount of the California Note if an Event of Default
occurs and is continuing other than under paragraph (a)(i) or (a)(ii) above,
may, at such holder or holders' option, by written notice to CCT elect to
declare the unpaid principal amount of the California Note(s) which it (they)
hold(s), interest accrued thereon and all other amounts owed by CCT under the
California Loan Agreement or under the California Note which it (they) hold(s)
to be immediately due and payable. Upon any such acceleration during years 1-5
any accrued and unpaid interest shall be added to principal, and interest
shall accrue on the aggregate unpaid principal balance of the Indebtedness
evidenced by the California Note, as so adjusted, at the rate of 15% per annum
through year 5 and thereafter at the rates set forth above.
Subordination
The Indebtedness evidenced by the California Note and the payment of the
principal of and interest on the California Note is subordinated in right of
payment, to the extent and in the manner provided in Article VI of the
California Loan Agreement, to the prior payment in full of all amounts then
due on all Senior Debt (as defined in the California Loan Agreement).
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PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired as a result of market-making activities or other
trading activities. The Issuer has agreed that, for a period of 180 days after
the effective date of this Prospectus, it will make this Prospectus, as
amended or supplemented, available to any broker-dealer for use in connection
with any such resale.
The Issuer will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own accounts
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions,
through the writing of
options on the New Notes or a combination of such methods of resale, at market
prices at the time of resale, at prices related to such prevailing market
prices or negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer and/or the
purchasers of any such New Notes. Any broker-dealer that resells New Notes
that were received by it for its own account pursuant to the Exchange Offer
and any broker or dealer that participates in a distribution of such New Notes
may be deemed to be an "underwriter" within the meaning of the Securities Act
and any profit on any such resale of New Notes and any commissions or
concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states that,
by acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act.
For a period of 180 days after the effective date of this Prospectus, the
Issuer will promptly send additional copies of this Prospectus and any
amendment or supplement to this Prospectus to any broker-dealer that requests
such documents in the Letter of Transmittal.
By acceptance of the Exchange Offer, each broker-dealer that receives New
Notes pursuant to the Exchange Offer hereby agrees to notify the Issuer prior
to using the Prospectus in connection with the sale or transfer of New Notes,
and acknowledges and agrees that, upon receipt of notice from the Issuer of
the happening of any event which makes any statement in the Prospectus untrue
in any material respect or which requires the making of any changes in the
Prospectus in order to make the statements therein not misleading (which
notice the Issuer agrees to deliver promptly to such broker-dealer), such
broker-dealer will suspend use of the Prospectus until the Issuer has
delivered an amended or supplemented prospectus to such broker-dealer.
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LEGAL MATTERS
Certain legal matters with respect to the Notes will be passed upon for the
Issuer by Paul, Hastings, Janofsky & Walker LLP, New York, New York.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The financial statements included in this Prospectus and elsewhere in the
Registration Statement, to the extent and for the periods indicated in their
reports, have been audited by Arthur Andersen LLP, KPMG Peat Marwick LLP,
Ernst & Young, LLP, or Piaker & Lyons, P.C., independent certified public
accountants, as indicated in their reports with respect thereto.
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GLOSSARY
The following is a description of certain terms used in this Prospectus.
A LA CARTE--The purchase of individual basic or expanded basic programming
services on a per-channel basis.
BASIC PENETRATION--The measurement of the take-up of basic cable service
expressed by calculating the number of basic service subscribers outstanding
on such date as a percentage of the total number of homes passed in the
system.
BASIC SERVICE--A package of over-the-air broadcast and satellite-delivered
cable television services.
BASIC SUBSCRIBER--A subscriber to a cable or other television distribution
system who receives the basic level of television service and who is usually
charged a flat monthly rate for a number of channels.
CABLE PLANT--A network of co-axial and/or fiber optic cables that transmit
multiple channels carrying images, sound and data between a central facility
and an individual customer's television set. Networks may allow one-way (from
a headend to a residence and/or business) or two-way (from a headend to a
residence and/or business with a data return path to the headend)
transmission.
CLUSTERING--A general term used to describe the strategy of operating cable
television systems in a specific geographic region, thus allowing for the
achievement of economies of scale and operating efficiencies in such areas as
system management, marketing and technical functions.
DIGITAL COMPRESSION--The conversion of the standard analog video signal into
a digital signal, and the compression of that signal so as to facilitate
multiple channel transmission through a single channel's bandwidth.
DIRECT BROADCAST SATELLITE (DBS)--A service by which packages of television
programming are transmitted to individual homes, each serviced by a single
satellite dish.
EBITDA--Represents income (loss) before interest expense, income taxes,
depreciation and amortization, management fees and other income (expense).
FCC--Federal Communications Commission.
HEADEND--A collection of hardware, typically including satellite receivers,
modulators, amplifiers and video cassette playback machines, within which
signals are processed and then combined for distribution within the cable
network.
HOMES PASSED--Homes that can be connected to a cable distribution system
without further extension of the distribution network.
MATV--Master Antenna Television system. A system which uses a master antenna
to pick up television signals for distribution over a cable to a small group
of subscribers, such as an apartment block or hotel.
MMDS--Multichannel Multipoint Distribution Service. A one-way radio
transmission of television channels over microwave frequencies from a fixed
station transmitting to multiple receiving facilities located at fixed points.
OVERBUILD--The construction of a second cable television system in a
franchise area in which such a system had previously been constructed.
PAY-PER-VIEW--Payment made for individual movies, programs or events as
opposed to a monthly subscription for a whole channel or group of channels.
116
<PAGE>
PREMIUM PENETRATION--The measurement of the take-up of premium cable service
expressed by calculating the number of premium units outstanding on such a
date as a percentage of the total number of basic service subscribers.
PREMIUM SERVICE--An individual cable programming service available only for
additional subscription over and above the basic or expanded basic levels of
television service.
PREMIUM UNITS--The number of subscriptions to premium services which are
paid for on an individual basis.
SMATV--Satellite Master Antenna Television system. A video programming
delivery system to multiple dwelling units utilizing satellite transmissions.
VIDEO DIALTONE--A general term used to describe a video programming delivery
system through telephone lines.
LIST OF ENTITIES
The following is a partial list of entities referred to in this Prospectus.
CAC--CCA Acquisition Corp.
CCA--CCA Holdings Corp.
CCE-I--Charter Communications Entertainment I, L.P.
CCE-II--Charter Communications Entertainment II, L.P.
CCE, L.P.--Charter Communications Entertainment, L.P.
CCT--CCT Holdings Corp.
CENCOM CABLE--Cencom Cable Entertainment, Inc.
CHARTER--Charter Communications, Inc.
CROWN MEDIA--Crown Media, Inc.
HC CROWN--HC Crown Corp. (also referred to as the "Selling Securityholder").
KELSO--Kelso Investment Associates V, L.P. and an affiliate.
KIAV--Kelso Investment Associates V, L.P.
LBAC--Long Beach Acquisition Corp.
117
<PAGE>
INDEX TO AUDITED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
CCA HOLDINGS CORP. AND SUBSIDIARIES:
Report of Independent Public Accountants............................... F-3
Consolidated Balance Sheets as of December 31, 1996 and 1995........... F-4
Consolidated Statements of Operations for the Years Ended December 31,
1996 and 1995......................................................... F-6
Consolidated Statements of Shareholders' Investment for the Years Ended
December 31, 1996 and 1995............................................ F-7
Consolidated Statements of Cash Flows for the Years Ended to December
31, 1996 and 1995..................................................... F-8
Notes to Consolidated Financial Statements............................. F-9
CCA ACQUISITION CORP. AND SUBSIDIARIES:
Report of Independent Public Accountants............................... F-23
Consolidated Balance Sheets as of December 31, 1996 and 1995........... F-24
Consolidated Statements of Operations for the Years Ended December 31,
1996 and 1995......................................................... F-26
Consolidated Statements of Shareholder's Investment for the Years Ended
December 31, 1996 and 1995............................................ F-27
Consolidated Statements of Cash Flows for the Years Ended December 31,
1996 and 1995......................................................... F-28
Notes to Consolidated Financial Statements............................. F-30
CENCOM CABLE ENTERTAINMENT, INC.:
Report of Independent Public Accountants............................... F-44
Balance Sheets as of December 31, 1996 and 1995........................ F-45
Statements of Operations for the Years Ended December 31, 1996 and
1995.................................................................. F-46
Statements of Shareholder's Investment for the Years Ended December 31,
1996 and 1995......................................................... F-47
Statements of Cash Flows for the Years Ended December 31, 1996 and
1995.................................................................. F-48
Notes to Financial Statements.......................................... F-49
CHARTER COMMUNICATIONS ENTERTAINMENT, L.P.:
Report of Independent Public Accountants............................... F-55
Balance Sheets as of December 31, 1996 and 1995........................ F-56
Statements of Operations for the Years Ended December 31, 1996 and
1995.................................................................. F-57
Statements of Partners' Capital for the Years Ended December 31, 1996
and 1995.............................................................. F-58
Statements of Cash Flows for the Years Ended December 31, 1996 and
1995.................................................................. F-59
Notes to Financial Statements.......................................... F-60
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.:
Report of Independent Public Accountants............................... F-67
Balance Sheets as of December 31, 1996 and 1995........................ F-68
Statements of Operations for the Years Ended December 31, 1996 and
1995.................................................................. F-69
Statements of Partners' Capital for the Years Ended December 31, 1996
and 1995.............................................................. F-70
Statements of Cash Flows for the Years Ended December 31, 1996 and
1995.................................................................. F-71
Notes to Financial Statements.......................................... F-72
CHARTER COMMUNICATIONS ENTERTAINMENT II, L.P.:
Report of Independent Public Accountants............................... F-84
Balance Sheets as of December 31, 1996 and 1995........................ F-85
Statements of Operations for the Year ended December 31, 1996 and for
the Period from Inception to December 31, 1995........................ F-86
Statements of Partners' Capital for the Year ended December 31, 1996
and for the Period from Inception to December 31, 1995................ F-87
Statements of Cash Flows for the Year ended December 31, 1996 and for
the Period from Inception to December 31, 1995........................ F-88
Notes to Financial Statements.......................................... F-89
CENCOM CABLE ENTERTAINMENT, INC.--MISSOURI SYSTEM:
Report of Independent Public Accountants............................... F-99
Independent Auditors' Report........................................... F-100
Balance Sheet as of December 31, 1994.................................. F-101
Statements of Operations for the Years Ended December 31, 1994 and
1993.................................................................. F-102
Statement of System's Equity for the Years Ended December 31, 1994 and
1993.................................................................. F-103
Statements of Cash Flows for the Years Ended December 31, 1994 and
1993.................................................................. F-104
Notes to Financial Statements.......................................... F-105
</TABLE>
F-1
<PAGE>
<TABLE>
<S> <C>
CENCOM CABLE INCOME PARTNERS, L.P.--ILLINOIS SYSTEM:
Report of Independent Public Accountants............................... F-112
Independent Auditors' Report........................................... F-113
Balance Sheets as of December 31, 1995 and 1994........................ F-114
Statements of Operations for the Years Ended December 31, 1995, 1994
and 1993.............................................................. F-115
Statements of System's Equity for the Years Ended December 31, 1995,
1994 and 1993......................................................... F-116
Statements of Cash Flows for the Years Ended December 31, 1995, 1994
and 1993.............................................................. F-117
Notes to Financial Statements.......................................... F-118
CENCOM CABLE TELEVISION, INC.--LOS ANGELES AND RIVERSIDE SYSTEMS:
Report of Independent Public Accountants............................... F-126
Combined Balance Sheets as of September 29, 1995 and December 31,
1994.................................................................. F-127
Combined Statements of Operations for the Nine Months ended September
29, 1995 and the Years Ended December 31, 1994 and 1993............... F-128
Combined Statements of Systems' Equity for the Nine Months ended
September 29, 1995 and the Years ended December 31, 1994 and 1993..... F-129
Combined Statements of Cash Flows for the Nine Months ended September
29, 1995 and the Years ended December 31, 1994 and 1993............... F-130
Notes to Combined Financial Statements................................. F-131
MISSOURI CABLE TELEVISION SYSTEM TO BE SOLD BY MASADA CABLE PARTNERS,
L.P. TO CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.:
Report of Independent Auditors......................................... F-139
Balance Sheets as of November 29, 1996 and December 31, 1995........... F-140
Statements of Operations for the Period from January 1, 1996 to
November 29, 1996 and for the Years Ended December 31, 1995 and 1994.. F-142
Statements of Changes in System Capital (Deficiency) for the Period
from January 1, 1996 to November 29, 1996 and for the Years Ended
December 31, 1995 and 1994............................................ F-143
Statements of Cash Flows for the Period from January 1, 1996 to
November 29, 1996 and for the Years ended December 31, 1995 and 1994.. F-144
Notes to Financial Statements.......................................... F-145
UNITED VIDEO CABLEVISION, INC.--MASSACHUSETTS AND MISSOURI DIVISIONS:
Independent Auditors' Report........................................... F-150
Divisional Balance Sheets as of October 31, 1995 and December 31, 1994
and 1993.............................................................. F-151
Statements of Divisional Operations for the Ten Months Ended October
31, 1995 and the Years Ended December 31, 1994 and 1993............... F-152
Statements of Divisional Cash Flows for the Ten Months Ended October
31, 1995 and the Years Ended December 31, 1994 and 1993............... F-153
Statements of Divisional Equity for the Ten Months Ended October 31,
1995 and the Years Ended December 31, 1994 and 1993................... F-154
Notes to Divisional Financial Statements............................... F-155
CROWN MEDIA, INC.--WESTERN CONNECTICUT:
Independent Auditors' Report........................................... F-158
Balance Sheets as of December 31, 1994 and 1993........................ F-159
Statements of Operations for the Year Ended December 31, 1994 and the
Period from December 28, 1992 through December 31, 1993............... F-160
Statements of Division Equity for the Year Ended December 31, 1994 and
the Period from December 28, 1992 through December 31, 1993........... F-161
Statements of Cash Flows for the Year Ended December 31, 1994 and the
Period from December 28, 1992 through December 31, 1993............... F-162
Notes to Financial Statements.......................................... F-163
CROWN CABLE, L.P.:
Independent Auditors' Report........................................... F-166
Balance Sheets as of December 31, 1994 and 1993........................ F-167
Statements of Operations for the Year Ended December 31, 1994 and the
Period from December 10, 1992 through December 31, 1993............... F-168
Statements of Partners' Capital for the Year Ended December 31, 1994
and the Period from December 10, 1992 through December 31, 1993....... F-169
Statements of Cash Flows for the Year Ended December 31, 1994 and the
Period from December 10, 1992 through December 31, 1993............... F-170
Notes to Financial Statements.......................................... F-171
</TABLE>
F-2
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To CCA Holdings Corp.:
We have audited the accompanying consolidated balance sheets of CCA Holdings
Corp. (a Delaware corporation) and subsidiaries as of December 31, 1996 and
1995, and the related consolidated statements of operations, shareholders'
investment (deficit) and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of CCA Holdings Corp. and
subsidiaries as of December 31, 1996 and 1995, and the results of their
operations and their cash flows for the years then ended, in conformity with
generally accepted accounting principles.
Arthur Andersen LLP
St. Louis, Missouri,
February 21, 1997
F-3
<PAGE>
CCA HOLDINGS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS--DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents........................... $ 2,934,939 $ 11,430,931
Accounts receivable, net of allowance for doubtful
accounts of $371,166
and $251,419, respectively......................... 5,465,750 3,324,186
Prepaid expenses and other.......................... 490,443 641,558
Net assets of discontinued operation................ 108,827 --
------------ ------------
Total current assets............................. 8,999,959 15,396,675
------------ ------------
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment....................... 206,351,379 178,149,968
Franchise costs, net of accumulated amortization of
$51,761,758 and $21,512,225, respectively.......... 439,232,345 370,268,109
Covenant not to compete, net of accumulated
amortization of $20,000,000 and $10,000,000,
respectively....................................... -- 10,000,000
------------ ------------
645,583,724 558,418,077
------------ ------------
OTHER ASSETS......................................... 9,667,356 7,649,949
------------ ------------
RESTRICTED FUNDS HELD IN ESCROW...................... -- 301,598
------------ ------------
INVESTMENT IN UNCONSOLIDATED LIMITED PARTNERSHIPS.... 78,069,816 84,372,806
------------ ------------
NET NONCURRENT ASSETS OF DISCONTINUED OPERATION...... 1,760,015 --
------------ ------------
$744,080,870 $666,139,105
============ ============
</TABLE>
(Continued on the following page)
F-4
<PAGE>
CCA HOLDINGS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS--DECEMBER 31, 1996 AND 1995
(CONTINUED)
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Current maturities of long-term debt.............. $ 5,880,000 $ --
Accounts payable and accrued expenses............. 18,890,302 13,274,646
Subscriber deposits............................... 473,601 711,663
Payables to affiliates............................ 2,630,149 2,907,529
Other current liabilities......................... 1,401,951 --
------------ ------------
Total current liabilities...................... 29,276,003 16,893,838
------------ ------------
DEFERRED REVENUE................................... 708,339 780,612
------------ ------------
DEFERRED INCOME TAXES.............................. 55,500,000 55,500,000
------------ ------------
LONG-TERM DEBT, less current maturities............ 462,120,000 355,000,000
------------ ------------
DEFERRED MANAGEMENT FEES PAYABLE TO AFFILIATE...... 1,755,000 1,015,000
------------ ------------
NOTE PAYABLE....................................... 82,000,000 82,000,000
------------ ------------
ACCRUED INTEREST ON NOTE PAYABLE................... 22,843,402 10,438,805
------------ ------------
MINORITY INTEREST IN SUBSIDIARY.................... 90,273,351 106,272,025
------------ ------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' INVESTMENT (DEFICIT):
Class A Voting Common Stock, $.01 par value,
100,000 shares authorized; 75,515 shares issued
and outstanding.................................. 755 755
Class B Voting Common Stock, $.01 par value,
20,000 shares authorized; 4,300 shares issued and
outstanding...................................... 43 43
Class C Non-Voting Common Stock, $.01 par value,
5,000 shares authorized; 185 shares issued and
outstanding...................................... 2 2
Additional paid-in capital........................ 79,999,200 79,999,200
Accumulated deficit............................... (80,395,225) (41,761,175)
------------ ------------
Total shareholders' investment (deficit)....... (395,225) 38,238,825
------------ ------------
$744,080,870 $666,139,105
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
F-5
<PAGE>
CCA HOLDINGS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
SERVICE REVENUES:
Basic service..................................... $ 96,560,920 $ 65,075,541
Premium service................................... 19,201,801 15,484,951
Other............................................. 27,260,540 19,128,918
------------ ------------
143,023,261 99,689,410
------------ ------------
EXPENSES:
Operating costs................................... 59,869,348 41,800,111
General and administrative........................ 11,628,513 7,142,567
Depreciation and amortization..................... 65,757,387 51,193,702
Management and financial advisory service fees--
related parties.................................. 5,034,375 6,499,167
------------ ------------
142,289,623 106,635,547
------------ ------------
Loss from operations........................... 733,638 (6,946,137)
------------ ------------
OTHER INCOME (EXPENSE):
Interest income................................... 164,476 503,585
Interest expense.................................. (46,654,019) (35,461,026)
Other, net........................................ (1,058,271) 41,622
------------ ------------
(47,547,814) (34,915,819)
------------ ------------
Loss before equity in loss of unconsolidated
limited partnerships, loss from discontinued
operation, provision for income taxes and
minority interest in loss of subsidiary....... (46,814,176) (41,861,956)
EQUITY IN LOSS OF UNCONSOLIDATED LIMITED PARTNER-
SHIPS............................................. (6,302,990) (1,402,194)
------------ ------------
Loss before provision for income taxes, loss
from discontinued operation, provision for
income taxes and minority interest in loss of
subsidiary.................................... (53,117,166) (43,264,150)
PROVISION FOR INCOME TAXES......................... -- --
------------ ------------
Loss before loss from discontinued operation
and minority interest in loss of subsidiary... (53,117,166) (43,264,150)
LOSS FROM DISCONTINUED OPERATION................... (1,515,558) --
------------ ------------
Loss before minority interest in loss of sub-
sidiary....................................... (54,632,724) (43,264,150)
MINORITY INTEREST IN LOSS OF SUBSIDIARY............ 15,998,674 1,502,975
------------ ------------
Net loss....................................... $(38,634,050) $(41,761,175)
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-6
<PAGE>
CCA HOLDINGS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN ACCUMULATED
STOCK CAPITAL DEFICIT TOTAL
------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
BALANCE, January 1, 1995........ $-- $ -- $ -- $ --
Issuance of common stock....... 800 79,999,200 -- 80,000,000
Net loss....................... -- -- (41,761,175) (41,761,175)
---- ----------- ------------ ------------
BALANCE, December 31, 1995...... 800 79,999,200 (41,761,175) 38,238,825
Net loss....................... -- -- (38,634,050) (38,634,050)
---- ----------- ------------ ------------
BALANCE, December 31, 1996...... $800 $79,999,200 $(80,395,225) $ (395,225)
==== =========== ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-7
<PAGE>
CCA HOLDINGS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.......................................... $(38,634,050) $(41,761,175)
Adjustments to reconcile net loss to net cash
provided by operating activities--
Depreciation and amortization.................... 65,757,387 51,193,702
Loss on sale of property, plant and equipment.... 1,256,945 --
Loss from discontinued operations................ 1,515,558 --
Equity in loss of unconsolidated limited
partnerships..................................... 6,302,990 1,402,194
Minority interest in loss of subsidiary.......... (15,998,674) (1,502,975)
Changes in assets and liabilities, net of effects
from acquisitions--
Accounts receivable, net........................ (1,748,468) (1,387,654)
Prepaid expenses and other...................... 279,406 (250,428)
Accounts payable and accrued expenses........... 4,429,157 4,249,587
Subscriber deposits............................. (257,062) (11,303)
Payables to affiliates, including deferred
management fees................................. 462,620 3,922,529
Other current liabilities....................... 1,401,951 --
Deferred revenue................................ (144,748) 780,612
Accrued interest on note payable................ 12,404,597 10,438,805
------------ ------------
Net cash provided by operating activities..... 37,027,609 27,073,894
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment........ (33,898,020) (22,023,524)
Proceeds from sale of property, plant and
equipment......................................... 986,359 --
Payments for acquisitions, net of cash acquired... (122,017,267) (523,679,458)
Payments of organizational expenses............... (242,875) (1,297,203)
Payments of franchise costs....................... (569,167) (53,266)
Payments of brokerage commissions.................. (310,385) --
Restricted funds held in escrow.................... 301,598 (301,598)
Investment in unconsolidated limited
partnerships...................................... -- (85,775,000)
Minority investment in subsidiary................. -- 107,775,000
------------ ------------
Net cash used in investing activities......... (155,749,757) (525,355,049)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of debt issuance costs................... (2,773,844) (7,287,914)
Borrowings under revolving credit and term loan
facility.......................................... 120,500,000 355,000,000
Payments of revolving credit and term loan
facility.......................................... (7,500,000) --
Borrowings under note payable..................... -- 82,000,000
Issuance of common stock.......................... -- 80,000,000
------------ ------------
Net cash provided by financing activities..... 110,226,156 509,712,086
------------ ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS.......... (8,495,992) 11,430,931
CASH AND CASH EQUIVALENTS, beginning of year....... 11,430,931 --
------------ ------------
CASH AND CASH EQUIVALENTS, end of year............. $ 2,934,939 $ 11,430,931
============ ============
CASH PAID FOR INTEREST............................. $ 33,921,715 $ 22,907,403
============ ============
CASH PAID FOR TAXES................................ $ -- $ --
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-8
<PAGE>
CCA HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION AND BASIS OF PRESENTATION
CCA Holdings Corp. (CCA Holdings), a Delaware corporation, was formed on
November 17, 1994. CCA Holdings commenced operations in January 1995 in
connection with consummation of the Crown Transaction (as defined below). The
accompanying consolidated financial statements include the accounts of CCA
Holdings; its wholly-owned subsidiary, CCA Acquisition Corp. (CAC); CAC's
wholly-owned subsidiary, Cencom Cable Entertainment, Inc. (CCE); and Charter
Communications Entertainment I, L.P. (CCE-I), which is controlled by CAC
through its general partnership interest (collectively referred to as the
"Company"). CCA Holdings is owned approximately 85% by Kelso Investment
Associates V, L.P., an investment fund, together with an affiliate
(collectively referred to as "Kelso" herein) and certain other individuals and
approximately 15% by Charter Communications, Inc. (Charter), manager of CCE-
I's cable television systems (see Note 10). All material intercompany
transactions and balances have been eliminated.
In January 1995, CAC completed the acquisition of certain cable television
systems from Crown Media, Inc. (Crown), a subsidiary of Hallmark Cards,
Incorporated (Hallmark) (the "Crown Transaction"). On September 29, 1995, CAC
and CCT Holdings Corp. (CCT Holdings), an entity affiliated with CCA Holdings
by common ownership, entered into an Asset Exchange Agreement whereby CAC
exchanged a 1% undivided interest in all of its assets for a 1.22% undivided
interest in certain assets to be acquired by CCT Holdings from an affiliate of
Gaylord Entertainment Company, Inc. (Gaylord). Effective September 30, 1995,
CCT Holdings acquired certain cable television systems from Gaylord. Upon
execution of the Asset Purchase Agreement, CAC and CCT Holdings entered into a
series of agreements to contribute the assets acquired under the Crown
Transaction to CCE-I and certain assets acquired in the Gaylord acquisition to
Charter Communications Entertainment II, L.P. (CCE-II). As a result of
entering into these agreements, CCA Holdings owns a 55% interest and CCT
Holdings owns a 45% interest in the combined operations of CCE-I and CCE-II,
respectively. The net loss of CCE-I for the period prior to September 29,
1995, was allocated entirely to CCA Holdings.
As of December 31, 1996, CCE-I provided cable television service to
approximately 125 franchises serving approximately 338,300 basic subscribers
in Connecticut, Illinois, Massachusetts, Missouri and New Hampshire.
CASH EQUIVALENTS
Cash equivalents at December 31, 1996 and 1995, consist primarily of
repurchase agreements with original maturities of 90 days or less. These
investments are carried at cost, which approximates market value. The Company
is subject to loss for amounts invested in repurchase agreements in the event
of nonperformance by the financial institution which acts as the counterparty
under such agreements; however, such noncompliance is not anticipated.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is recorded at cost, including all direct and
certain indirect costs associated with the construction of cable transmission
and distribution facilities, and the cost of new customer installation. The
costs of disconnecting a residence are charged to expense in the period
incurred. Expenditures for repairs and maintenance are charged to expense as
incurred, and equipment replacement costs and betterments are capitalized.
F-9
<PAGE>
CCA HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Depreciation is provided using the composite method on a straight-line basis
over the estimated useful life of the related asset as follows:
<TABLE>
<S> <C>
Trunk and distribution systems................................. 10 years
Subscriber installations....................................... 10 years
Buildings and headends......................................... 10-20 years
Converters..................................................... 5 years
Vehicles and equipment......................................... 4-8 years
Office equipment............................................... 5-10 years
</TABLE>
FRANCHISE COSTS
Costs incurred in obtaining and renewing cable franchises are initially
deferred and amortized over the legal lives of the franchises. Costs relating
to unsuccessful franchise applications are charged to expense when it is
determined that the efforts to obtain the franchise will not be successful.
Franchise rights acquired through the purchase of cable television systems
represent the excess of the cost of properties acquired over the amounts
assigned to the net tangible assets at date of acquisition. Acquired franchise
rights are amortized using the straight-line method over 15 years.
COVENANT NOT TO COMPETE
Covenant not to compete was amortized over the term of the respective
agreement (two years).
OTHER ASSETS
Organizational expenses are being amortized using the straight-line method
over five years. Debt issuance costs are being amortized over the term of the
debt.
During 1995, the Company adopted SFAS No. 121 entitled, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of."
In accordance with SFAS No. 121, the Company periodically reviews the carrying
value of its long-lived assets, identifiable intangibles and franchise costs
in relation to historical financial results, current business conditions and
trends (including the impact of existing legislation and regulation) to
identify potential situations in which the carrying value of such assets may
not be recoverable. If a review indicates that the carrying value of such
assets may not be recoverable, the carrying value of such assets in excess of
their fair value will be recorded as a reduction of the assets' cost as if a
permanent impairment has occurred. No impairments have occurred and
accordingly, no adjustments to the financial statements of the Company have
been recorded relating to SFAS No. 121.
RESTRICTED FUNDS HELD IN ESCROW
In connection with the acquisition of cable television systems from Mineral
Area Cablevision Co., L.P. (Omega) as further discussed in Note 4, the Company
agreed to deposit a portion of the purchase price into an escrow account in
1995 which was transferred to Omega at the closing of the asset purchase in
January 1996.
INVESTMENT IN UNCONSOLIDATED LIMITED PARTNERSHIPS
CCA Holdings has a 1% general partnership interest and a 54% limited
partnership interest in Charter Communications Entertainment, L.P. (CCE,
L.P.). CCT Holdings has a 1% general partnership interest and a 44% limited
partnership interest in CCE, L.P. CCE, L.P. has a 97.78% limited partnership
interest in both CCE-I and CCE-II. CCA Holdings' interest in CCE, L.P.,
together with its 1.22% general partnership interest in CCE-I and its 1.22%
limited partnership interest in CCE-II, provide CCA Holdings with a 55%
interest in both CCE-I
F-10
<PAGE>
CCA HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
and CCE-II. CCT Holdings, owns the remaining 45% interest in both CCE-I and
CCE-II, including a 1% general partnership interest in CCE-II. CCE-II is
controlled by CCT Holdings through its general partnership interest in CCE-II
and provisions in CCE-II's partnership agreement and CCE, L.P. is jointly
controlled by the Company and CCT Holdings through their general partnership
interests in CCE, L.P. and provisions in CCE, L.P.'s partnership agreement;
therefore, CCA Holdings' investment in CCE L.P. and CCE-II is accounted for
using the equity method. Under this method, the investment in CCE L.P. and
CCE-II is originally recorded at cost and is subsequently adjusted to
recognize CCA Holdings' share of net earnings or losses as they occur and
distributions when received.
REVENUES
Cable service revenues are recognized when the related services are
provided.
Installation revenues are recognized to the extent of direct selling costs
incurred. The remainder, if any, is deferred and amortized to income over the
average estimated period that customers are expected to remain connected to
the cable television system.
Franchise fees collected from cable subscribers and paid to local franchises
are reported as revenues.
OTHER INCOME (EXPENSE)
Other includes gain and loss on disposition of fixed assets and other
miscellaneous income and expense items, which are not directly related to the
Company's primary business. A loss of $1,256,945 was recognized on the sale of
two buildings for the year ended December 31, 1996.
INCOME TAXES
Income taxes are recorded in accordance with SFAS No. 109, "Accounting for
Income Taxes."
DERIVATIVE FINANCIAL INSTRUMENTS
The Company manages risk arising from fluctuations in interest rates by
using interest rate swap and cap agreements, as required by its credit
agreement. These agreements are treated as off-balance sheet financial
instruments. The interest rate swap and cap agreements are being accounted for
as a hedge of the debt obligation, and accordingly, the net settlement amount
is recorded as an adjustment to interest expense in the period incurred.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
RECLASSIFICATIONS
Certain reclassifications have been made to the 1995 financial statements to
conform with current year presentation.
2. INVESTMENT IN UNCONSOLIDATED LIMITED PARTNERSHIPS:
Effective September 30, 1995, CCT Holdings acquired certain assets from
Gaylord for approximately $340.9 million, which included cable television
systems in California. As described above, these assets were contributed to
CCE-II. To finance the acquisition, CCE-II entered into a revolving credit and
term loan facility and CCT Holdings executed a subordinated seller note to
Gaylord (the "Gaylord Note").
F-11
<PAGE>
CCA HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
As of December 31, 1996, CCE-II provided cable television service to
approximately 168,100 basic subscribers in southern California.
Summary financial information of CCE-II as of December 31, 1996 and 1995,
and for the period from inception (April 20, 1995) to December 31, 1995, and
for the year ended December 31, 1996, which is not consolidated with the
operating results of the Company, is as follows:
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Current assets............................... $ 10,904,830 $ 11,043,867
Noncurrent assets--primarily investment in
cable television properties................. 338,316,421 348,029,594
------------ ------------
Total assets............................. $349,221,251 $359,073,461
============ ============
Current liabilities.......................... $ 13,098,198 $ 14,217,036
Long-term debt............................... 221,418,000 218,600,000
Other long-term liabilities.................. 383,070 474,460
Partners' capital............................ 114,321,983 125,781,965
------------ ------------
Total liabilities and partners' capital.. $349,221,251 $359,073,461
============ ============
Service revenues............................. $ 90,368,332 $ 21,156,209
============ ============
Income from operations....................... $ 5,039,834 $ 983,638
============ ============
Net loss..................................... $(11,459,982) $ (3,458,535)
============ ============
</TABLE>
3. COMMON STOCK:
The Class A Voting Common Stock (Class A Common Stock) and Class C Non-
Voting Common Stock (Class C Common Stock) have certain preferential rights
upon liquidation of CCA Holdings. In the event of liquidation, dissolution or
"winding up" of CCA Holdings, holders of Class A and Class C Common Stock are
entitled to a preference of $1,000 per share. After such amount is paid,
holders of Class B Voting Common Stock (Class B Common Stock) are entitled to
receive $1,000 per share. Thereafter, Class A and Class C shareholders shall
ratably receive the remaining proceeds.
If upon liquidation, dissolution or "winding up" the assets of CCA Holdings
are insufficient to permit payment to Class A and Class C shareholders for
their full preferential amounts, all assets of CCA Holdings shall then be
distributed ratably to Class A and Class C shareholders. Furthermore, if the
proceeds from liquidation are inadequate to pay Class B shareholders their
full preferential amounts, the proceeds are to be distributed on a pro rata
basis to Class B shareholders.
Upon the occurrence of any Conversion Event (as defined within the Amended
and Restated Certificate of Incorporation) Class C shareholders may convert
any or all of their outstanding shares into the same number of Class A Common
Stock. Furthermore, CCA Holdings may automatically convert outstanding Class C
shares into the same number of Class A shares.
CCA Holdings is restricted from making cash dividends on its common stock
until the balance outstanding under the HC Crown Note (as defined in Note 8)
is repaid.
Charter and Kelso entered into a Stockholders' Agreement providing for
certain restrictions on the transfer, sale or purchase of CCA Holdings' Common
Stock.
F-12
<PAGE>
CCA HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
4. ACQUISITIONS:
In January 1995, CAC completed the acquisition of certain cable television
systems from Crown for an aggregate purchase price of approximately $488.2
million. The assets were later contributed through a series of transactions to
CCE-I effective January 1, 1995. The acquisition of these systems was part of
a series of larger transactions in which Crown sold its cable television
systems to a group of investors, including Charter, CAC, certain affiliates of
Charter, and third parties, for a total purchase price of approximately $900.0
million. To finance this acquisition, CCE-I entered into a revolving credit
and term loan facility (see Note 9), and CCA Holdings executed a subordinated
seller note to an affiliate of Hallmark for $82.0 million.
In October 1995, CCE-I acquired the net assets of certain systems from
United Video Cablevision, Inc. (United), which include cable television
systems in Massachusetts and Missouri, for an aggregate purchase price of
approximately $96.0 million.
In January 1996, CCE-I acquired the net assets of certain systems from
Omega, which include cable television systems in Missouri, for an aggregate
purchase price of approximately $9.4 million.
In March 1996, CCE-I acquired the net assets of the Illinois system from
Cencom Cable Income Partners, L.P. (CCIP), an affiliated entity, for an
aggregate purchase price of approximately $82.1 million (the "CCIP
Acquisition").
In November 1996, CCE-I acquired the net assets of certain systems from
Masada Cable Partners, L.P. (Masada), which include cable television systems
in Missouri, for an aggregate purchase price of approximately $24.2 million.
These acquisitions were accounted for using the purchase method of
accounting, and accordingly, results of operations of the acquired assets have
been included in the financial statements from the respective dates of
acquisition. The following shows the purchase price and the allocation of the
purchase price to assets acquired and liabilities assumed:
<TABLE>
<CAPTION>
CROWN UNITED OMEGA CCIP MASADA
------------ ----------- ---------- ----------- -----------
Purchase price:
<S> <C> <C> <C> <C> <C>
Cash paid to seller.... $341,030,472 $93,542,306 $9,178,086 $80,103,013 $23,625,358
Seller note executed by
CCA Holdings.......... 82,000,000 -- -- -- --
Assumed liabilities,
including deferred
taxes of $55,500,000.. 55,638,033 282,000 32,000 -- 82,950
Transaction costs...... 9,545,039 2,216,101 200,000 2,025,000 480,000
------------ ----------- ---------- ----------- -----------
$488,213,544 $96,040,407 $9,410,086 $82,128,013 $24,188,308
============ =========== ========== =========== ===========
</TABLE>
F-13
<PAGE>
CCA HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
CROWN UNITED OMEGA CCIP MASADA
------------ ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Allocation of purchase
price to assets
acquired:
Cash................... $ 5,073,954 $ 539 $ 200 $ 1,053,410 $ --
Accounts receivable.... 1,933,859 2,673 5,190 387,906 --
Prepaid expenses and
other................. 279,745 111,385 7,440 90,368 30,483
Property, plant and
equipment............. 162,432,874 12,439,879 1,054,878 11,980,833 2,147,338
Franchise costs........ 307,370,555 84,356,513 8,427,122 69,663,726 22,155,487
Covenant not to
compete............... 20,000,000 -- -- -- --
Accounts payable and
accrued expenses...... (8,877,443) (147,616) (84,744) (975,755) (126,000)
Subscriber deposits.... -- (722,966) -- -- (19,000)
Deferred revenue....... -- -- -- (72,475) --
------------ ----------- ---------- ----------- -----------
Purchase price........ $488,213,544 $96,040,407 $9,410,086 $82,128,013 $24,188,308
============ =========== ========== =========== ===========
</TABLE>
The following are the unaudited pro forma operating results as though the
1996 and 1995 acquisitions by CCE-I and CCE-II had been made on January 1 of
the respective year prior to such acquisitions:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31
--------------------------
1996 1995
------------ ------------
(UNAUDITED)
<S> <C> <C>
Service revenues.............................. $151,548,000 $137,021,602
Income (loss) from operations................. $ 446,000 $ (2,049,590)
Net loss...................................... $(39,157,000) $(41,587,611)
</TABLE>
5. PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment is stated at cost and consist of the following
at December 31:
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Trunk and distribution systems................. $125,248,708 $110,330,189
Subscriber installations....................... 45,636,572 34,114,600
Land, buildings and headends................... 33,135,716 21,069,307
Converters..................................... 27,097,454 21,046,326
Vehicles and equipment......................... 7,180,068 4,737,430
Office equipment............................... 7,603,973 5,597,301
Construction-in-progress....................... 3,243,405 --
------------ ------------
249,145,896 196,895,153
Less--Accumulated depreciation................. (42,794,517) (18,745,185)
------------ ------------
$206,351,379 $178,149,968
============ ============
</TABLE>
F-14
<PAGE>
CCA HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
6. OTHER ASSETS:
Other assets consist of the following at December 31:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Debt issuance costs, net of accumulated
amortization of $1,656,817 and $648,064,
respectively...................................... $8,404,941 $6,639,850
Organizational expenses, net of accumulated
amortization of $574,589 and $287,104,
respectively...................................... 965,489 1,010,099
Brokerage commissions, net of accumulated
amortization of $13,459 and $-0-, respectively.... 296,926 --
---------- ----------
$9,667,356 $7,649,949
========== ==========
</TABLE>
7. ACCOUNTS PAYABLE AND ACCRUED EXPENSES:
Accounts payable and accrued expenses consist of the following at December
31:
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Accrued salaries and related benefits............. $ 1,613,024 $ 888,972
Accounts payable.................................. 1,763,895 646,744
Accrued interest.................................. 2,442,525 2,114,818
Programming expenses.............................. 2,726,803 2,046,640
Franchise fees.................................... 3,187,335 2,467,564
Capital expenditures.............................. 3,482,531 3,525,747
Other............................................. 3,674,189 1,584,161
----------- -----------
$18,890,302 $13,274,646
=========== ===========
</TABLE>
8. NOTE PAYABLE:
In connection with the Crown Transaction, the Company entered into an $82.0
million senior subordinated loan agreement with a subsidiary of Hallmark, HC
Crown Corp., and pursuant to such loan agreement issued a senior subordinated
note (the "HC Crown Note"). The HC Crown Note is an unsecured obligation. The
HC Crown Note is limited in aggregate principal amount to $82.0 million and
has a stated maturity date of December 31, 1999 (the "Stated Maturity Date").
Interest accrues at 13% per annum, compounded semiannually, but is not due and
payable until the Stated Maturity Date. If principal plus accrued interest is
not paid at the Stated Maturity Date, the annual rate at which interest
accrues will initially increase to 18% and will increase by an additional 2%
on each successive anniversary of the Stated Maturity Date (up to a maximum of
26%) until the HC Crown Note is repaid; in addition, a 3% default rate of
interest can, in certain instances, be in effect simultaneously with the
stated rate of interest on the HC Crown Note. The HC Crown Note is redeemable
in whole or in part at the option of the Company at any time, without premium
or penalty, provided that accrued interest is paid on the portion of the HC
Crown Note so redeemed.
Borrowings under the HC Crown Note are subject to certain financial and
nonfinancial covenants and restrictions. The most restrictive covenant
requires maintenance of a ratio of debt (excluding the HC Crown Note) to
adjusted consolidated annualized operating cash flow, as defined, not to
exceed 7.25 to 1 at December 31, 1996. In addition to the subordination in
right of payment provisions contained in the HC Crown Note, the HC Crown Note
is subject to a subordination agreement in favor of senior bank debt of CCE-I.
Pursuant to the subordination agreement, substantially all rights and remedies
under the HC Crown Note, including the rights to
F-15
<PAGE>
CCA HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
accelerate the maturity upon an event of default (including a payment of
default), are suspended until the obligations under the Credit Agreement (as
defined herein) are paid in full.
The HC Crown Note is subordinated to the Credit Agreement. Pursuant to the
terms of the Credit Agreement, payments on the HC Crown Note are prohibited
until the indefeasible payment in full in cash, and the termination of
commitments to lend under the Credit Agreement. The HC Crown Note will not
have the benefit of any distributions from CCE-II until repayment in full of
CCE-II's credit facility and the Gaylord Note.
The obligations owing on the HC Crown Note are guaranteed by CAC, CCE and
CCE, L.P. (collectively referred to as the "Guarantors"). The CCE, L.P.
guarantee cannot be enforced until the repayment in full and termination of
the Credit Agreement (as defined herein) and the CCE-II credit facility. The
CAC and CCE guarantees cannot be enforced until the repayment in full and
termination of the Credit Agreement. The guarantees, by their terms, are
limited to the proceeds of distributions received from CCE-I, and income, if
any, generated by the Guarantors. CCA Holdings and the Guarantors are
dependent primarily upon distributions from CCE-I to service the HC Crown
Note.
Subsequent to year-end, HC Crown Corp. sold the majority of the HC Crown
Note through a private placement. The fair value of the HC Crown Note plus
accrued interest, based upon the proceeds received, was approximately $89.5
million at December 31, 1996.
9. LONG-TERM DEBT:
In January 1995, CCE-I entered into a revolving credit and term loan
facility (the "Credit Agreement") with a consortium of banks for borrowings up
to $300.0 million. CCE-I has amended, on several occasions, the Credit
Agreement to allow for total borrowings of $505.0 million for the purpose of
making certain acquisitions. Principal payments are due in quarterly
installments beginning September 30, 1997, and continuing through June 30,
2004. Borrowings under the Credit Agreement bear interest at rates based upon
a certain spread plus a base rate, with the base rate being, at CCE-I's
election, the Base Rate, as defined in the Credit Agreement, LIBOR, or
prevailing bid rates on certificates of deposit. The applicable spread is
based on the ratio of debt to annualized operating cash flow. The interest
rates ranged from 7.63% to 9.42% at December 31, 1996. The weighted average
interest rates and weighted average borrowings were 8.05% and 8.71%, and
approximately $425,067,000 and $272,885,000 during 1996 and 1995,
respectively. As this debt instrument bears interest at current market rates,
its carrying amount approximates fair market value at December 31, 1996 and
1995.
Borrowings under the Credit Agreement are collateralized by the assets of
CCE-I. In addition, CAC, CCE and CCT Holdings have pledged their partnership
interests as additional security to the Credit Agreement.
Borrowings under the Credit Agreement are subject to certain financial and
nonfinancial covenants and restrictions, the most restrictive of which
requires maintenance of a ratio of debt to annualized operating cash flow, as
defined, not to exceed 6.50 to 1 at December 31, 1996. A quarterly commitment
fee of 0.375% per annum is payable on the unused portion of the Credit
Agreement.
F-16
<PAGE>
CCA HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Commencing September 30, 1997, and March 31, 1998, the principal balances of
the term and fund loans, respectively, shall be amortized in consecutive
quarterly installments until paid in full. In addition, commencing September
30, 1997, and at the end of each calendar quarter thereafter, available
borrowings under the revolving credit facility shall be reduced. The following
table sets forth such information on an annual basis.
<TABLE>
<CAPTION>
PERCENTAGE
OF PRINCIPAL DUE PERCENTAGE REDUCTION
--------------------- OF REVOLVING CREDIT
YEAR TERM LOANS FUND LOANS FACILITY COMMITMENT
---- ---------- ---------- --------------------
<S> <C> <C> <C>
1997............................ 2.10% -- % 2.10%
1998............................ 9.00 .50 9.00
1999............................ 12.00 .50 12.00
2000............................ 12.25 1.00 12.25
2001............................ 16.50 1.00 16.50
2002............................ 20.25 1.00 20.25
2003............................ 21.25 17.40 21.25
2004............................ 6.65 78.60 6.65
------ ------ ------
100.00% 100.00% 100.00%
====== ====== ======
</TABLE>
In addition to the foregoing, effective April 30, 1999, and on each April
30th thereafter, CCE-I is required to make a repayment of principal of the
term and fund loans (pro rata) in an amount equal to 75% of Annual Excess Cash
Flow, as defined in the Credit Agreement, for the preceding year if the
leverage ratio is greater than 5.5 to 1, or 50% of Annual Excess Cash Flow if
the leverage ratio is less than 5.5 to 1. These repayments shall be applied to
principal in inverse order of maturity.
Based upon outstanding indebtedness at December 31, 1996, and the
amortization of term loans and fund loans and scheduled reductions in
available borrowings depicted above, aggregate future principal payments on
the Credit Agreement at December 31, 1996, are as follows:
<TABLE>
<CAPTION>
YEAR AMOUNT
---- ------------
<S> <C>
1997.......................................................... $ 5,880,000
1998.......................................................... 25,625,000
1999.......................................................... 34,025,000
2000.......................................................... 47,640,000
2001.......................................................... 70,150,000
Thereafter.................................................... 284,680,000
------------
$468,000,000
============
</TABLE>
F-17
<PAGE>
CCA HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
As a requirement of the Credit Agreement, CCE-I has secured interest rate
protection agreements. The Credit Agreement requires CCE-I to enter into
interest rate protection agreements for notional amounts of not less than 50%
of the outstanding obligations. In addition, the interest rate protection
agreements must provide rate protection for a weighted average period of not
less than 18 months. The fair value of the interest rate caps or swaps is the
estimated amount CCE-I would receive (pay) to eliminate the cap or swap
agreement at the reporting date, taking into account current interest rates
and the credit-worthiness of the counterparties. The following summarizes
certain information pertaining to the interest rate protection agreements as
of December 31, 1996:
<TABLE>
<CAPTION>
FAIR
VALUE/
NOTIONAL FIXED CONTRACT EXPIRATION REDEMPTION
AMOUNT TYPE RATE DATE PRICE
------------ ---- ----- ---------------------------------------- ----------
<C> <C> <C> <S> <C>
$ 25,000,000 Swap 5.5% December 1, 1997........................ $(60,812)
25,000,000 Swap 5.5 December 1, 1997........................ (19,135)
75,000,000 Swap 5.5 December 1, 1998........................ *
25,000,000 Swap 4.9 March 28, 1998.......................... (4,956)
20,000,000 Cap 8.5 April 14, 1998.......................... (8,978)
30,000,000 Cap 8.5 September 23, 1999...................... 42,045
50,000,000 Cap 8.5 February 2, 1999........................ 1,085,601
------------ ----------
$250,000,000 6.6% Weighted Average Fixed Rate............. $1,033,765
============ ==========
</TABLE>
*This contract has not been marked to market since its effective date is
after the reporting date.
Management believes that the counterparties of the interest rate protection
agreements will be able to meet their obligations under the agreements. The
purpose of CCE-I's involvement in these interest rate protection agreements is
to minimize CCE-I's exposure to interest rate fluctuations on its floating
rate debt. Management believes that it has no material concentration of credit
or market risks with respect to its interest rate protection agreements.
10. RELATED-PARTY TRANSACTIONS:
Charter provides management services to CCE-I under the terms of a contract
which provides for base fees equal to $4,845,000 and $3,925,000 as of December
31, 1996 and 1995, respectively, per annum plus an annual bonus equal to 30%
of the excess, if any, of operating cash flow (as defined in the management
agreement) over the projected operating cash flow for the year. Payment of the
annual bonus is deferred until termination of the Credit Agreement due to
restrictions provided within the Credit Agreement. The annual bonus for the
year ended December 31, 1996 and 1995, totaled $740,000 and $1,015,000,
respectively. In addition, CCE-I receives financial advisory services from an
affiliate of Kelso, under terms of a contract which provides for fees equal to
$552,500 and $450,000 at December 31, 1996 and 1995, respectively, per annum.
These agreements were amended during 1996 and 1995 in conjunction with each
acquisition of cable television systems to increase the annual base fees for
Charter and Kelso. Expenses recognized by CCE-I under these contracts during
1996 and 1995 were approximately $5,034,000 and $6,499,000, respectively.
Management and financial advisory service fees currently payable of $1,181,300
and $1,029,000 are included in Payables to affiliates at December 31, 1996 and
1995, respectively.
CCE-I pays certain acquisition advisory fees to an affiliate of Kelso and
Charter, which typically equal approximately 1% of the total purchase price
paid for cable television systems acquired. Total acquisition fees paid to the
affiliate of Kelso in 1996 and 1995 were $1,140,000 and $5,250,000,
respectively. Total acquisition fees paid to Charter in 1996 and 1995 were
$1,140,000 and $950,000, respectively. In addition, Charter received
$4,300,000 of equity interests in CCA Holdings during 1995 in conjunction with
the Crown acquisition.
F-18
<PAGE>
CCA HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CCE-I and all entities affiliated with Charter collectively utilize a
combination of insurance coverage and self-insurance programs for medical,
dental and workers' compensation claims. CCE-I is allocated charges monthly
based upon its total number of employees, historical claims and medical cost
trend rates. Management considers this allocation to be reasonable for the
operations of CCE-I. During 1996 and 1995, CCE-I expensed approximately
$1,401,300 and $840,000, respectively, relating to insurance allocations.
In 1996, CCE-I and other affiliated entities employed the services of
Charter's National Data Center (the "National Data Center"). The National Data
Center performs certain subscriber billing services and provides computer
network, hardware and software support to CCE-I and other affiliated entities.
The cost of these services is allocated based on the number of subscribers.
Management considers this allocation to be reasonable for the operations of
CCE-I. During 1996, CCE-I expensed approximately $340,600 relating to these
services.
CCE-I maintains a regional office. The regional office performs certain
operational services on behalf of CCE-I and other affiliated entities. The
cost of these services is allocated to CCE-I and affiliated entities based on
their number of subscribers. Management considers this allocation to be
reasonable for the operations of CCE-I. During 1996 and 1995, CCE-I expensed
approximately $799,400 and $512,000, respectively, relating to these services.
CCE-II has similar arrangements as discussed above, which have been
reflected in CCE-II's operations.
11. COMMITMENTS AND CONTINGENCIES:
LEASES
CCE-I leases certain facilities and equipment under noncancelable operating
leases. Rent expense incurred under these leases during 1996 and 1995 was
approximately $617,600 and $533,000, respectively.
Approximate aggregate future minimum lease payments are as follows:
<TABLE>
<S> <C>
1997.............................................................. $484,500
1998.............................................................. 438,900
1999.............................................................. 259,600
2000.............................................................. 159,200
2001.............................................................. 111,200
Thereafter........................................................ 422,100
</TABLE>
CCE-I rents utility poles in its operations. Generally, pole rental
agreements are short term, but CCE-I anticipates that such rentals will recur.
Rent expense for pole attachments during 1996 and 1995 was approximately
$1,773,100 and $1,363,000, respectively.
INSURANCE COVERAGE
CCE-I currently does not have, and does not in the near term anticipate
having, property and casualty insurance on its underground distribution plant.
Due to large claims incurred by the property and casualty insurance industry,
the pricing of insurance coverage has become inflated to the point where, in
the judgment of the Company's management, the price is cost prohibitive.
Management believes that its experience and policy with such insurance
coverage is consistent with general industry practices. Management will
continue to monitor the insurance markets to attempt to obtain coverage for
CCE-I's distribution plant at reasonable rates.
LITIGATION
A purported class action lawsuit on behalf of the CCIP limited partners was
filed in 1995 (the "Action"), which sought, among other things, to enjoin
permanently the CCIP Acquisition. On February 15, 1996, all of the plaintiff's
claims for injunctive relief were dismissed (including that which sought to
prevent the consummation of the CCIP Acquisition); the plaintiff's claims for
money damages which may have resulted from the CCIP
F-19
<PAGE>
CCA HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Acquisition remain pending. Each of the defendants in the Action, including
CCE-I believes the Action, which remains pending, to be without merit and is
contesting it vigorously. In October 1996, the plaintiff filed a Consolidated
Amended Class Action Complaint (the "Amended Complaint"). The general partner
of CCIP believes that portions of the Amended Complaint are legally inadequate
and in January 1997 filed a motion for summary judgment to dismiss all
remaining claims in the Action. There can be no assurance, however, that the
plaintiff will not be awarded damages, some or all of which may be payable by
CCE-I, in connection with the Action.
The Company is also a party to lawsuits which are generally incidental to
its business. In the opinion of management, after consulting with legal
counsel, the outcome of these lawsuits will not have a material adverse effect
on the Company's consolidated financial position and results of operations.
SEVERANCE PAYMENT
During 1996, CCE-I and other affiliated entities entered into a Settlement
Agreement and Mutual Release with a former executive, whereby CCE-I will make
severance payments totaling $500,000. The funds are to be paid in 12 equal
installments, which commenced April 1, 1996.
12. REGULATION IN THE CABLE TELEVISION INDUSTRY:
The cable television industry is subject to extensive regulation at the
federal, local and, in some instances, state levels. In addition, recent
legislative and regulatory changes and additional regulatory proposals under
consideration may materially affect the cable television industry.
Congress enacted the Cable Television Consumer Protection and Competition
Act of 1992 (the "1992 Cable Act"), which became effective on December 4,
1992. The 1992 Cable Act generally allows for a greater degree of regulation
of the cable television industry. Under the 1992 Cable Act's definition of
effective competition, nearly all cable systems in the United States are
subject to rate regulation of basic cable services, provided the local
franchising authority becomes certified to regulate basic service rates. The
1992 Cable Act and the Federal Communications Commission's (FCC) rules
implementing the 1992 Cable Act have generally increased the administrative
and operational expenses of cable television systems and have resulted in
additional regulatory oversight by the FCC and local franchise authorities.
While management believes that CCE-I and CCE-II has complied in all material
respects with the rate provisions of the 1992 Cable Act, in jurisdictions that
have not yet chosen to certify, refunds covering a one-year period on basic
services may be ordered upon future certification if CCE-I and CCE-II are
unable to justify their rates through a benchmark or cost-of-service filing
pursuant to FCC rules. Management is unable to estimate at this time the
amount of refunds, if any, that may be payable by CCE-I and CCE-II in the
event certain of their rates are successfully challenged by franchising
authorities or found to be unreasonable by the FCC. Management does not
believe that the amount of any such refunds would have a material adverse
effect on the consolidated financial position or results of operations of the
Company.
The 1992 Cable Act modified the franchise renewal process to make it easier
for a franchising authority to deny renewal. Historically, franchises have
been renewed for cable operators that have provided satisfactory services and
have complied with the terms of the franchise agreement. Although management
believes that the Company has generally met the terms of its franchise
agreements and has provided quality levels of service, and anticipates the
Company's future franchise renewal prospects generally will be favorable,
there can be no assurance that any such franchises will be renewed or, if
renewed, that the franchising authority will not impose more onerous
requirements on the Company than previously existed.
During 1996, Congress passed and the President signed into law the
Telecommunications Act of 1996 (the "Telecommunications Act"), which alters
federal, state, and local laws and regulations pertaining to cable television,
telecommunications and other services. Under the Telecommunications Act,
telephone companies can compete directly with cable operators in the provision
of video programming, subject to certain regulatory safeguards.
F-20
<PAGE>
CCA HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Certain provisions of the Telecommunications Act could materially affect the
growth and operation of the cable television industry and the cable services
provided by the Company. Although the new legislation may substantially lessen
regulatory burdens, the cable television industry may be subject to additional
competition as a result thereof. There are numerous rule makings to be
undertaken by the FCC which will interpret and implement the
Telecommunications Act's provisions. In addition, certain provisions of the
Telecommunications Act (such as the deregulation of cable programming rates)
are not immediately effective. Further, certain of the Telecommunications
Act's provisions have been and are likely to be subject to judicial
challenges. Management is unable at this time to predict the outcome of such
rule makings or litigation or the substantive effect of the new legislation
and the rule makings on the consolidated financial position and results of
operations of the Company.
13. INCOME TAXES:
Income taxes are recorded in accordance with SFAS No. 109. In accordance
with SFAS No. 109, deferred tax assets and liabilities are recognized for the
estimated future tax consequence attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred income tax assets and liabilities are
measured using the enacted tax rates in effect for the year in which those
temporary differences are expected to be recovered or settled. Deferred income
tax expense or benefit is the result of changes in the liability or asset
recorded for deferred taxes. A valuation allowance must be established for any
portion of a deferred tax asset for which it is more likely than not that a
tax benefit will not be realized.
During 1996 and 1995, changes in the Company's temporary differences and
losses from operations, which pertain primarily to depreciation and
amortization, resulted in a deferred tax benefits of approximately $12.5
million and $9.0 million, respectively. These amounts were offset by valuation
allowances of equal amounts.
No current provision (benefit) for income taxes was recorded during 1996 and
1995.
Deferred taxes are comprised of the following at December 31:
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Deferred income tax assets:
Accounts receivable......................... $ 148,000 $ 100,000
Covenant not to compete..................... 6,933,000 3,467,000
Investment in unconsolidated limited
partnership................................ -- 556,000
Accrued expenses and payables to
affiliates................................. 2,273,000 1,978,000
Deferred revenue............................ 283,000 312,000
Deferred management fees payable to
affiliate.................................. 702,000 406,000
Tax loss carryforwards...................... 44,352,000 26,119,000
Valuation allowance......................... (21,528,000) (9,042,000)
------------ ------------
Total deferred income tax assets......... 33,163,000 23,896,000
------------ ------------
Deferred income tax liabilities:
Property, plant and equipment............... (37,191,000) (31,867,000)
Franchise costs............................. (44,362,000) (47,285,000)
Investment in unconsolidated limited
partnerships............................... (3,767,000) --
Minority interest in subsidiary............. (3,343,000) (244,000)
------------ ------------
Total deferred income tax liabilities.... (88,663,000) (79,396,000)
------------ ------------
Net deferred income tax liability........ $(55,500,000) $(55,500,000)
============ ============
</TABLE>
F-21
<PAGE>
CCA HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
At December 31, 1996, the Company had net operating loss (NOL) carryforwards
for regular income tax purposes aggregating approximately $110.9 million,
which expire in various years through 2011. Utilization of the NOLs is subject
to certain limitations. The Company's regular tax NOLs are recognized for
financial statement purposes as a reduction of the deferred tax liability or
an increase of the deferred tax asset.
14. DISCONTINUED OPERATION:
CCE-I approved a plan to discontinue the radio operation maintained by its
subsidiary, Charter Communications Radio St. Louis, LLC. Pursuant to a sales
agreement dated January 23, 1997, such operations will cease upon FCC approval
of the transfer of the radio license.
The net losses of this operation prior to December 31, 1996, are included in
the consolidated statement of operations under "Loss from discontinued
operation." Revenues from such operation were $1,532,572 for the period then
ended. The noncurrent net assets of this operation are comprised primarily of
property, plant and equipment, license fees and other deferred costs. No
material gain or loss is anticipated in connection with the disposition of
these net assets.
15. COMPETITION:
The Connecticut Department of Public Utility Control granted a franchise to
a subsidiary of a local telephone company to serve the entire State of
Connecticut. This provider has proposed to offer its cable service initially
to a primary franchise area of several Connecticut communities, including one
served by CCE-I. Management is unable to predict the ultimate impact of this
development upon the Company's consolidated financial position or results of
operations.
CCE-II's Riverside, California system, providing service to approximately
48,000 basic subscribers, faces competition from a multipoint distribution
system acquired by Pacific Telesis Group. At this time management is uncertain
what impact, if any, this acquisition will have on the Company's consolidated
financial position or results of operations.
16. EMPLOYEE BENEFIT PLANS:
401(K) PLAN
In 1995, CCE-I adopted the Charter Communications, Inc. 401(k) Plan (the
"401(k) Plan") for the benefit of its employees. All employees who have
completed one year of employment are eligible to participate in the 401(k)
Plan. The 401(k) Plan is a tax-qualified retirement savings plan to which
employees may elect to make pretax contributions up to the lesser of 10% of
their compensation or dollar thresholds established under the Internal Revenue
Code. CCE-I contributes an amount equal to 50% of the first 5% contributed by
each employee. During 1996 and 1995, CCE-I contributed approximately $269,900
and $177,000, to the 401(k) Plan, respectively.
APPRECIATION RIGHTS PLAN
In 1996, certain of CCE-I's employees became participants in the 1996
Charter Communications/Kelso & Company Appreciation Rights Plan (the
"Appreciation Rights Plan"). The Appreciation Rights Plan covers certain key
employees and consultants within the group of companies and partnerships
controlled by affiliates of Kelso and managed by Charter (collectively, the
"Investment Group").
F-22
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To CCA Acquisition Corp.:
We have audited the accompanying consolidated balance sheets of CCA
Acquisition Corp. (a Delaware corporation) and subsidiaries as of December 31,
1996 and 1995, and the related consolidated statements of operations,
shareholder's investment (deficit) and cash flows for the years then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of CCA Acquisition Corp. and
subsidiaries as of December 31, 1996 and 1995, and the results of their
operations and their cash flows for the years then ended, in conformity with
generally accepted accounting principles.
Arthur Andersen LLP
St. Louis, Missouri,
February 21, 1997
F-23
<PAGE>
CCA ACQUISITION CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS--DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents........................... $ 2,934,939 $ 11,430,931
Accounts receivable, net of allowance for doubtful
accounts of $371,166 and $251,419, respectively.... 5,465,750 3,324,186
Prepaid expenses and other.......................... 490,443 641,558
Net assets of discontinued operation................ 108,827 --
------------ ------------
Total current assets............................. 8,999,959 15,396,675
------------ ------------
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment....................... 206,351,379 178,149,968
Franchise costs, net of accumulated amortization of
$51,761,758 and $21,512,225, respectively.......... 439,232,345 370,268,109
Covenant not to compete, net of accumulated
amortization of $20,000,000 and $10,000,000,
respectively....................................... -- 10,000,000
------------ ------------
645,583,724 558,418,077
------------ ------------
OTHER ASSETS......................................... 9,667,356 7,649,949
------------ ------------
RESTRICTED FUNDS HELD IN ESCROW...................... -- 301,598
------------ ------------
INVESTMENT IN UNCONSOLIDATED LIMITED PARTNERSHIPS.... 78,069,816 84,372,806
------------ ------------
NET NONCURRENT ASSETS OF DISCONTINUED OPERATION...... 1,760,015 --
------------ ------------
$744,080,870 $666,139,105
============ ============
</TABLE>
(Continued on the following page)
F-24
<PAGE>
CCA ACQUISITION CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS--DECEMBER 31, 1996 AND 1995
(CONTINUED)
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDER'S INVESTMENT (DEFICIT)
CURRENT LIABILITIES:
Current maturities of long-term debt.............. $ 5,880,000 $ --
Accounts payable and accrued expenses............. 18,517,774 $ 13,274,646
Subscriber deposits............................... 473,601 711,663
Payables to affiliates............................ 2,630,149 2,907,529
Other current liabilities......................... 1,401,951 --
------------ ------------
Total current liabilities...................... 28,903,475 16,893,838
------------ ------------
DEFERRED REVENUE................................... 708,339 780,612
------------ ------------
DEFERRED INCOME TAXES.............................. 55,500,000 55,500,000
------------ ------------
LONG-TERM DEBT, less current maturities............ 462,120,000 355,000,000
------------ ------------
DEFERRED MANAGEMENT FEES PAYABLE TO AFFILIATE...... 1,755,000 1,015,000
------------ ------------
NOTE PAYABLE....................................... 82,000,000 82,000,000
------------ ------------
ACCRUED INTEREST ON NOTE PAYABLE................... 22,843,402 10,438,805
------------ ------------
MINORITY INTEREST IN SUBSIDIARY.................... 90,273,351 106,272,025
------------ ------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDER'S INVESTMENT (DEFICIT):
Common stock, $.01 par value, 100 shares
authorized; 100 shares issued
and outstanding.................................. 1 1
Additional paid-in capital........................ 79,999,999 79,999,999
Accumulated deficit............................... (80,022,697) (41,761,175)
------------ ------------
Total shareholder's investment (deficit)....... (22,697) 38,238,825
------------ ------------
$744,080,870 $666,139,105
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
F-25
<PAGE>
CCA ACQUISITION CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
SERVICE REVENUES:
Basic service.................................... $ 96,560,920 $ 65,075,541
Premium service.................................. 19,201,801 15,484,951
Other............................................ 27,260,540 19,128,918
------------ ------------
143,023,261 99,689,410
------------ ------------
EXPENSES:
Operating costs.................................. 59,869,348 41,800,111
General and administrative....................... 11,255,985 7,142,567
Depreciation and amortization.................... 65,757,387 51,193,702
Management and financial advisory service fees--
related parties................................. 5,034,375 6,499,167
------------ ------------
141,917,095 106,635,547
------------ ------------
Income (loss) from continuing operations....... 1,106,166 (6,946,137)
------------ ------------
OTHER INCOME (EXPENSE):
Interest income.................................. 164,476 503,585
Interest expense................................. (46,654,019) (35,461,026)
Other, net....................................... (1,058,271) 41,622
------------ ------------
(47,547,814) (34,915,819)
------------ ------------
Loss before equity in loss of unconsolidated
limited partnerships, provision for income
taxes, loss from discontinued operation and
minority interest in loss of subsidiary....... (46,441,648) (41,861,956)
EQUITY IN LOSS OF UNCONSOLIDATED LIMITED PARTNER-
SHIPS............................................. (6,302,990) (1,402,194)
------------ ------------
Loss before provision for income taxes, loss
from discontinued operation and minority in-
terest in loss of subsidiary.................. (52,744,638) (43,264,150)
PROVISION FOR INCOME TAXES......................... -- --
------------ ------------
Loss before loss from discontinued operation
and minority interest in loss of subsidiary... (52,744,638) (43,264,150)
LOSS FROM DISCONTINUED OPERATION................... (1,515,558) --
------------ ------------
Loss before minority interest in loss of sub-
sidiary....................................... (54,260,196) (43,264,150)
MINORITY INTEREST IN LOSS OF SUBSIDIARY............ 15,998,674 1,502,975
------------ ------------
Net loss....................................... $(38,261,522) $(41,761,175)
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-26
<PAGE>
CCA ACQUISITION CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S INVESTMENT (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN ACCUMULATED
STOCK CAPITAL DEFICIT TOTAL
------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
BALANCE, January 1, 1995........ $-- $ -- $ -- $ --
Issuance of common stock...... 1 79,999,999 -- 80,000,000
Net loss...................... -- -- (41,761,175) (41,761,175)
---- ----------- ------------ ------------
BALANCE, December 31, 1995...... 1 79,999,999 (41,761,175) 38,238,825
Net loss...................... -- -- (38,261,522) (38,261,522)
---- ----------- ------------ ------------
BALANCE, December 31, 1996...... $ 1 $79,999,999 $(80,022,697) $ (22,697)
==== =========== ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-27
<PAGE>
CCA ACQUISITION CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
------------ -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss......................................... $(38,261,522) $ (41,761,175)
Adjustments to reconcile net loss to net cash
provided by operating activities--
Depreciation and amortization................... 65,757,387 51,193,702
Loss on sale of property, plant and equipment... 1,256,945 --
Loss from discontinued operation................ 1,515,558 --
Equity in loss of unconsolidated limited part-
nerships....................................... 6,302,990 1,402,194
Minority interest in loss of subsidiary......... (15,998,674) (1,502,975)
Changes in assets and liabilities, net of ef-
fects from acquisitions--
Accounts receivable, net....................... (1,748,468) (1,387,654)
Prepaid expenses and other..................... 279,406 (250,428)
Accounts payable and accrued expenses.......... 4,056,629 4,249,587
Subscriber deposits............................ (257,062) (11,303)
Payables to affiliates, including deferred man-
agement fees.................................. 462,620 3,922,529
Other current liabilities...................... 1,401,951 --
Deferred revenue............................... (144,748) 780,612
Accrued interest on note payable............... 12,404,597 10,438,805
------------ -------------
Net cash provided by operating activities..... 37,027,609 27,073,894
------------ -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment....... (33,898,020) (22,023,524)
Proceeds from sale of property, plant and equip-
ment............................................ 986,359 --
Payments for acquisitions, net of cash acquired.. (122,017,267) (523,679,458)
Payments of organizational expenses.............. (242,875) (1,297,203)
Payments of franchise costs...................... (569,167) (53,266)
Payments of brokerage commissions................ (310,385) --
Restricted funds held in escrow.................. 301,598 (301,598)
Investment in unconsolidated limited partner-
ships........................................... -- (85,775,000)
Minority investment in subsidiary................ -- 107,775,000
------------ -------------
Net cash used in investing activities......... (155,749,757) (525,355,049)
------------ -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of debt issuance costs.................. (2,773,844) (7,287,914)
Borrowings under revolving credit and term loan
facility........................................ 120,500,000 355,000,000
Payments of revolving credit and term loan facil-
ity............................................. (7,500,000) --
Borrowings under note payable.................... -- 82,000,000
Issuance of common stock......................... -- 80,000,000
------------ -------------
Net cash provided by financing activities..... 110,226,156 509,712,086
------------ -------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVA-
LENTS............................................ (8,495,992) 11,430,931
CASH AND CASH EQUIVALENTS, beginning of year...... 11,430,931 --
------------ -------------
CASH AND CASH EQUIVALENTS, end of year............ $ 2,934,939 $ 11,430,931
============ =============
CASH PAID FOR INTEREST............................ $ 33,921,715 $ 22,907,403
============ =============
CASH PAID FOR TAXES............................... $ -- $ --
============ =============
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-28
<PAGE>
CCA ACQUISITION CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995--(CONTINUED)
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of debt issuance costs.................. $ (2,773,844) $ (7,287,914)
Borrowings under revolving credit and term loan
facility......................................... 120,500,000 355,000,000
Payments of revolving credit and term loan
facility......................................... (7,500,000) --
Borrowings under note payable.................... -- 82,000,000
Issuance of common stock......................... -- 80,000,000
------------ ------------
Net cash provided by financing activities...... 110,226,156 509,712,086
------------ ------------
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS........................................ (8,495,992) 11,430,931
CASH AND CASH EQUIVALENTS, beginning of year....... 11,430,931 --
------------ ------------
CASH AND CASH EQUIVALENTS, end of year............. $ 2,934,939 $ 11,430,931
============ ============
CASH PAID FOR INTEREST............................. $ 33,921,715 $ 22,907,403
============ ============
CASH PAID FOR TAXES................................ $ -- $ --
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-29
<PAGE>
CCA ACQUISITION CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Organization and Basis of Presentation
CCA Acquisition Corp. (CAC), a Delaware corporation, was formed on June 27,
1994, and is a wholly-owned subsidiary of CCA Holdings Corp. (CCA Holdings).
CAC commenced operations in January 1995 in connection with consummation of
the Crown Transaction (as defined below). The accompanying consolidated
financial statements include the accounts of CAC; its wholly-owned subsidiary,
Cencom Cable Entertainment, Inc. (CCE); and Charter Communications
Entertainment I, L.P. (CCE-I), which is controlled by CAC through its general
partnership interest (collectively referred to as the "Company"). CCA Holdings
is owned approximately 85% by Kelso Investment Associates V, L.P., an
investment fund, together with an affiliate (collectively referred to as
"Kelso" herein) and certain other individuals, and approximately 15% by
Charter Communications, Inc. (Charter), manager of CCE-I's cable television
systems (see Note 9). All material intercompany transactions and balances have
been eliminated.
In January 1995, CAC completed the acquisition of certain cable television
systems from Crown Media, Inc. (Crown), a subsidiary of Hallmark Cards,
Incorporated (Hallmark) (the "Crown Transaction"). On September 29, 1995, CAC
and CCT Holdings Corp. (CCT Holdings), an entity affiliated with CCA Holdings
by common ownership, entered into an Asset Exchange Agreement whereby CAC
exchanged a 1% undivided interest in all of its assets for a 1.22% undivided
interest in certain assets to be acquired by CCT Holdings from an affiliate of
Gaylord Entertainment Company, Inc. (Gaylord). Effective September 30, 1995,
CCT Holdings acquired certain cable television systems from Gaylord. Upon
execution of the Asset Purchase Agreement, CAC and CCT Holdings entered into a
series of agreements to contribute the assets acquired under the Crown
Transaction to CCE-I and certain assets acquired in the Gaylord acquisition to
Charter Communications Entertainment II, L.P. (CCE-II). As a result of
entering into these agreements, CAC owns a 55% interest and CCT Holdings owns
a 45% interest in the combined operations of CCE-I and CCE-II, respectively.
The net loss of CCE-I for the period prior to September 29, 1995, was
allocated entirely to CAC.
As of December 31, 1996, CCE-I provided cable television service to
approximately 125 franchises serving approximately 338,300 basic subscribers
in Connecticut, Illinois, Massachusetts, Missouri and New Hampshire.
Cash Equivalents
Cash equivalents at December 31, 1996 and 1995, consist primarily of
repurchase agreements with original maturities of 90 days or less. These
investments are carried at cost, which approximates market value. The Company
is subject to loss for amounts invested in repurchase agreements in the event
of nonperformance by the financial institution which acts as the counterparty
under such agreements; however, such noncompliance is not anticipated.
Property, Plant and Equipment
Property, plant and equipment is recorded at cost, including all direct and
certain indirect costs associated with the construction of cable transmission
and distribution facilities, and the cost of new customer installation. The
costs of disconnecting a residence are charged to expense in the period
incurred. Expenditures for repairs and maintenance are charged to expense as
incurred, and equipment replacement costs and betterments are capitalized.
F-30
<PAGE>
CCA ACQUISITION CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Depreciation is provided using the composite method on a straight-line basis
over the estimated useful life of the related asset as follows:
<TABLE>
<S> <C>
Trunk and distribution systems............................... 10 years
Subscriber installations..................................... 10 years
Buildings and headends....................................... 10-20 years
Converters................................................... 5 years
Vehicles and equipment....................................... 4-8 years
Office equipment............................................. 5-10 years
</TABLE>
Franchise Costs
Costs incurred in obtaining and renewing cable franchises are initially
deferred and amortized over the legal lives of the franchises. Costs relating
to unsuccessful franchise applications are charged to expense when it is
determined that the efforts to obtain the franchise will not be successful.
Franchise rights acquired through the purchase of cable television systems
represent the excess of the cost of properties acquired over the amounts
assigned to the net tangible assets at date of acquisition. Acquired franchise
rights are amortized using the straight-line method over 15 years.
Covenant Not to Compete
Covenant not to compete was amortized over the term of the respective
agreement (two years).
Other Assets
Organizational expenses are being amortized using the straight-line method
over five years. Debt issuance costs are being amortized over the term of the
debt.
During 1995, the Company adopted SFAS No. 121 entitled, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of."
In accordance with SFAS No. 121, the Company periodically reviews the carrying
value of its long-lived assets, identifiable intangibles and franchise costs
in relation to historical financial results, current business conditions and
trends (including the impact of existing legislation and regulation) to
identify potential situations in which the carrying value of such assets may
not be recoverable. If a review indicates that the carrying value of such
assets may not be recoverable, the carrying value of such assets in excess of
their fair value will be recorded as a reduction of the assets' cost as if a
permanent impairment has occurred. No impairments have occurred and
accordingly, no adjustments to the financial statements of the Company have
been recorded relating to SFAS No. 121.
Restricted Funds Held in Escrow
In connection with the acquisition of cable television systems from Mineral
Area Cablevision Co., L.P. (Omega) as further discussed in Note 3, the Company
agreed to deposit a portion of the purchase price into an escrow account in
1995 which was transferred to Omega at the closing of the asset purchase in
January 1996.
Investment in Unconsolidated Limited Partnerships
CAC has a 1% general partnership interest and a 54% limited partnership
interest in Charter Communications Entertainment, L.P. (CCE, L.P.). CCT
Holdings has a 1% general partnership interest and a 44% limited partnership
interest in CCE, L.P. CCE, L.P. has a 97.78% limited partnership interest in
both CCE-I and CCE-II. CAC's interest in CCE, L.P., together with its 1.22%
general partnership interest in CCE-I and its 1.22% limited partnership
interest in CCE-II, provide CAC with a 55% interest in both CCE-I and CCE-II.
CCT Holdings, owns the remaining 45% interest in both CCE-I and CCE-II,
including a 1% general partnership
F-31
<PAGE>
CCA ACQUISITION CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
interest in CCE-II. CCE-II is controlled by CCT Holdings through its general
partnership interest in CCE-II and provisions in CCE-II's partnership
agreement and CCE, L.P. is jointly controlled by the Company and CCT Holdings
through their general partnership interests in CCE, L.P. and provisions in
CCE, L.P.'s partnership agreement; therefore, CAC's investment in CCE L.P. and
CCE-II, is accounted for using the equity method. Under this method, the
investment in CCE L.P. and CCE-II, is originally recorded at cost and is
subsequently adjusted to recognize CAC's share of net earnings or losses as
they occur and distributions when received.
Revenues
Cable service revenues are recognized when the related services are
provided.
Installation revenues are recognized to the extent of direct selling costs
incurred. The remainder, if any, is deferred and amortized to income over the
average estimated period that customers are expected to remain connected to
the cable television system.
Franchise fees collected from cable subscribers and paid to local franchises
are reported as revenues.
Other Income (Expense)
Other includes gain and loss on disposition of fixed assets and other
miscellaneous income and expense items, which are not directly related to the
Company's primary business. A loss of $1,256,945 was recognized on the sale of
two buildings for the year ended December 31, 1996.
Income Taxes
Income taxes are recorded in accordance with SFAS No. 109, "Accounting for
Income Taxes."
Derivative Financial Instruments
The Company manages risk arising from fluctuations in interest rates by
using interest rate swap and cap agreements, as required by its credit
agreement. These agreements are treated as off-balance sheet financial
instruments. The interest rate swap and cap agreements are being accounted for
as a hedge of the debt obligation, and accordingly, the net settlement amount
is recorded as an adjustment to interest expense in the period incurred.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Reclassifications
Certain reclassifications have been made to the 1995 financial statements to
conform with current year presentation.
2. INVESTMENT IN UNCONSOLIDATED LIMITED PARTNERSHIPS:
Effective September 30, 1995, CCT Holdings acquired certain assets from
Gaylord for approximately $340.9 million, which included cable television
systems in California. As described above, these assets were contributed to
CCE-II. To finance the acquisition, CCE-II entered into a revolving credit and
term loan facility and CCT Holdings executed a subordinated seller note to
Gaylord (the "Gaylord Note").
F-32
<PAGE>
CCA ACQUISITION CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
As of December 31, 1996, CCE-II provided cable television service to
approximately 168,100 basic subscribers in southern California.
Summary financial information of CCE-II as of December 31, 1996 and 1995, and
for the period from inception (April 20, 1995) to December 31, 1995, and for
the year ended December 31, 1996, which is not consolidated with the operating
results of the Company, is as follows:
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Current assets................................. $ 10,904,830 $ 11,043,867
Noncurrent assets--primarily investment in
cable television properties................... 338,316,421 348,029,594
------------ ------------
Total assets................................ $349,221,251 $359,073,461
============ ============
Current liabilities............................ $ 13,098,198 $ 14,107,036
Long-term debt................................. 221,418,000 218,600,000
Other long-term liabilities.................... 383,070 584,460
Partners' capital.............................. 114,321,983 125,781,965
------------ ------------
Total liabilities and partners' capital..... $349,221,251 $359,073,461
============ ============
Service revenues............................... $ 90,368,332 $ 21,156,209
============ ============
Income from operations......................... $ 5,039,834 $ 983,638
============ ============
Net loss....................................... $(11,459,982) $ (3,458,535)
============ ============
</TABLE>
3. ACQUISITIONS:
In January 1995, CAC completed the acquisition of certain cable television
systems from Crown for an aggregate purchase price of approximately $488.2
million. The assets were later contributed through a series of transactions to
CCE-I effective January 1, 1995. The acquisition of these systems was part of
a series of larger transactions in which Crown sold its cable television
systems to a group of investors, including Charter, CAC, certain affiliates of
Charter, and third parties, for a total purchase price of approximately $900.0
million. To finance this acquisition, CCE-I entered into a revolving credit
and term loan facility (see Note 8), and CCA Holdings executed a subordinated
seller note to an affiliate of Hallmark for $82.0 million (the "HC Crown
Note").
In October 1995, CCE-I acquired the net assets of certain systems from
United Video Cablevision, Inc. (United), which include cable television
systems in Massachusetts and Missouri, for an aggregate purchase price of
approximately $96.0 million.
In January 1996, CCE-I acquired the net assets of certain systems from
Omega, which include cable television systems in Missouri, for an aggregate
purchase price of approximately $9.4 million (the "CCIP Acquisition").
In March 1996, CCE-I acquired the net assets of the Illinois system from
Cencom Cable Income Partners, L.P. (CCIP), for an aggregate purchase price of
approximately $82.1 million (the "CCIP Acquisition").
In November 1996, CCE-I acquired the net assets of certain systems from
Masada Cable Partners, L.P. (Masada), which include cable television systems
in Missouri, for an aggregate purchase price of approximately $24.2 million.
F-33
<PAGE>
CCA ACQUISITION CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
These acquisitions were accounted for using the purchase method of
accounting, and accordingly, results of operations of the acquired assets have
been included in the financial statements from the respective dates of
acquisition. The following shows the purchase price and the allocation of the
purchase price to assets acquired and liabilities assumed:
<TABLE>
<CAPTION>
CROWN UNITED OMEGA CCIP MASADA
------------ ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Purchase price:
Cash paid to seller.... $341,030,472 $93,542,306 $9,178,086 $80,103,013 $23,625,358
Seller note executed by
CCA Holdings.......... 82,000,000 -- -- -- --
Assumed liabilities,
including deferred
taxes of $55,500,000.. 55,638,033 282,000 32,000 -- 82,950
Transaction costs...... 9,545,039 2,216,101 200,000 2,025,000 480,000
------------ ----------- ---------- ----------- -----------
$488,213,544 $96,040,407 $9,410,086 $82,128,013 $24,188,308
============ =========== ========== =========== ===========
Allocation of purchase
price to assets
acquired:
Cash.................. $ 5,073,954 $ 539 $ 200 $ 1,053,410 $ --
Accounts receivable... 1,933,859 2,673 5,190 387,906 --
Prepaid expenses and
other................ 279,745 111,385 7,440 90,368 30,483
Property, plant and
equipment............ 162,432,874 12,439,879 1,054,878 11,980,833 2,147,338
Franchise costs....... 307,370,555 84,356,513 8,427,122 69,663,726 22,155,487
Covenant not to
compete.............. 20,000,000 -- -- -- --
Accounts payable and
accrued expenses..... (8,877,443) (147,616) (84,744) (975,755) (126,000)
Subscriber deposits... -- (722,966) -- -- (19,000)
Deferred revenue...... -- -- -- (72,475) --
------------ ----------- ---------- ----------- -----------
Purchase price...... $488,213,544 $96,040,407 $9,410,086 $82,128,013 $24,188,308
============ =========== ========== =========== ===========
</TABLE>
The following are the unaudited pro forma operating results as though the
1996 and 1995 acquisitions by CCE-I and CCE-II had been made on January 1 of
the respective year prior to such acquisitions:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
--------------------------
1996 1995
------------ ------------
(UNAUDITED)
<S> <C> <C>
Service revenues................................ $151,548,000 $137,021,602
Income (loss) from operations................... $ 818,000 $ (2,049,590)
Net loss........................................ $(39,529,000) $(41,916,360)
</TABLE>
F-34
<PAGE>
CCA ACQUISITION CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
4. PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment is stated at cost and consist of the following
at December 31:
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Trunk and distribution systems................... $125,248,708 $110,330,189
Subscriber installations......................... 45,636,572 34,114,600
Land, buildings and headends..................... 33,135,716 21,069,307
Converters....................................... 27,097,454 21,046,326
Vehicles and equipment........................... 7,180,068 4,737,430
Office equipment................................. 7,603,973 5,597,301
Construction-in-progress......................... 3,243,405 --
------------ ------------
249,145,896 196,895,153
Less-- Accumulated depreciation.................. (42,794,517) (18,745,185)
------------ ------------
$206,351,379 $178,149,968
============ ============
</TABLE>
5. OTHER ASSETS:
Other assets consist of the following at December 31:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Debt issuance costs, net of accumulated amortization
of $1,656,817 and $648,064, respectively............ $8,404,941 $6,639,850
Organizational expenses, net of accumulated
amortization of $574,589 and $287,104,
respectively........................................ 965,489 1,010,099
Brokerage commissions, net of accumulated
amortization of $13,459 and $-0-, respectively...... 296,926 --
---------- ----------
$9,667,356 $7,649,949
========== ==========
</TABLE>
6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES:
Accounts payable and accrued expenses consist of the following at December
31:
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Accrued salaries and related benefits............... $ 1,283,024 $ 888,972
Accounts payable.................................... 1,763,895 646,744
Accrued interest.................................... 2,442,525 2,114,818
Programming expenses................................ 2,726,803 2,046,640
Franchise fees...................................... 3,187,335 2,467,564
Capital expenditures................................ 3,482,531 3,525,747
Other............................................... 3,631,662 1,584,161
----------- -----------
$18,517,775 $13,274,646
=========== ===========
</TABLE>
F-35
<PAGE>
CCA ACQUISITION CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
7. NOTE PAYABLE:
In connection with the Crown Transaction, CAC issued a guarantee of payment
to the holder of the HC Crown Note. Accordingly, the debt has been reflected
as a liability of the Company in the accompanying financial statements. The HC
Crown Note is also guaranteed by CCE and CCE, L.P. The HC Crown Note is an
unsecured obligation. The HC Crown Note is limited in aggregate principal
amount to $82.0 million and has a stated maturity date of December 31, 1999
(the "Stated Maturity Date"). Interest accrues at 13% per annum, compounded
semiannually, but is not due and payable until the Stated Maturity Date. If
principal plus accrued interest is not paid at the Stated Maturity Date, the
annual rate at which interest accrues will initially increase to 18% and will
increase by an additional 2% on each successive anniversary of the Stated
Maturity Date (up to a maximum of 26%) until the HC Crown Note is repaid; in
addition, a 3% default rate of interest can, in certain instances, be in
effect simultaneously with the stated rate of interest on the HC Crown Note.
The HC Crown Note is redeemable in whole or in part at the option of CCA
Holdings at any time, without premium or penalty, provided that accrued
interest is paid on the portion of the HC Crown Note so redeemed.
Borrowings under the HC Crown Note are subject to certain financial and
nonfinancial covenants and restrictions. The most restrictive covenant
requires maintenance of a ratio of debt (excluding the HC Crown Note) to
adjusted consolidated annualized operating cash flow, as defined, not to
exceed 7.25 to 1 at December 31, 1996. In addition to the subordination in
right of payment provisions contained in the HC Crown Note, the HC Crown Note
is subject to a subordination agreement in favor of senior bank debt of CCE-I.
Pursuant to the subordination agreement, substantially all rights and remedies
under the HC Crown Note, including the rights to accelerate the maturity upon
an event of default (including a payment of default), are suspended until the
obligations under the Credit Agreement (as defined herein) are paid in full.
The HC Crown Note is subordinated to the Credit Agreement. Pursuant to the
terms of the Credit Agreement, payments on the HC Crown Note are prohibited
until the indefeasible payment in full in cash, and the termination of
commitments to lend under the Credit Agreement. The HC Crown Note will not
have the benefit of any distributions from CCE-II until repayment in full of
CCE-II's credit facility and the Gaylord Note.
The obligations owing on the HC Crown Note are guaranteed by CAC, CCE and
CCE, L.P. (collectively referred to as the "Guarantors"). The CCE, L.P.
guarantee cannot be enforced until the repayment in full and termination of
the Credit Agreement (as defined herein) and the CCE-II credit facility. The
CAC and CCE guarantees cannot be enforced until the repayment in full and
termination of the Credit Agreement. The guarantees, by their terms, are
limited to the proceeds of distributions received from CCE-I, and income, if
any, generated by the Guarantors. CCA Holdings and the Guarantors are
dependent primarily upon distributions from CCE-I to service the HC Crown
Note.
Subsequent to year-end, HC Crown Corp. sold the majority of the HC Crown
Note through a private placement. The fair value of the HC Crown Note plus
accrued interest, based upon the proceeds received, was approximately $89.5
million at December 31, 1996.
8. LONG-TERM DEBT:
In January 1995, CCE-I entered into a revolving credit and term loan
facility (the "Credit Agreement") with a consortium of banks for borrowings up
to $300.0 million. CCE-I has amended, on several occasions, the Credit
Agreement to allow for total borrowings of $505.0 million for the purpose of
making certain acquisitions. Principal payments are due in quarterly
installments beginning September 30, 1997, and continuing through June 30,
2004. Borrowings under the Credit Agreement bear interest at rates based upon
a certain spread plus a base rate, with the base rate being, at CCE-I's
election, the Base Rate, as defined in the Credit Agreement, LIBOR, or
prevailing bid rates on certificates of deposit. The applicable spread is
based on the ratio of debt to annualized
operating cash flow. The interest rates ranged from 7.63% and 9.42% at
December 31, 1996. The weighted
F-36
<PAGE>
CCA ACQUISITION CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
average interest rates and weighted average borrowings were 8.05% and 8.71%
and approximately $425,067,000 and $272,885,000 during 1996 and 1995,
respectively. As this debt instrument bears interest at current market rates,
its carrying amount approximates fair market value at December 31, 1996 and
1995.
Borrowings under the Credit Agreement are collateralized by the assets of
CCE-I. In addition, CAC, CCE and CCT Holdings have pledged their partnership
interests as additional security to the Credit Agreement.
Borrowings under the Credit Agreement are subject to certain financial and
nonfinancial covenants and restrictions, the most restrictive of which
requires maintenance of a ratio of debt to annualized operating cash flow, as
defined, not to exceed 6.50 to 1 at December 31, 1996. A quarterly commitment
fee of 0.375% per annum is payable on the unused portion of the Credit
Agreement.
Commencing September 30, 1997, and March 31, 1998, the principal balances of
the term and fund loans, respectively, shall be amortized in consecutive
quarterly installments until paid in full. In addition, commencing September
30, 1997, and at the end of each calendar quarter thereafter, available
borrowings under the revolving credit facility shall be reduced. The following
table sets forth such information on an annual basis.
<TABLE>
<CAPTION>
PERCENTAGE
OF PRINCIPAL DUE PERCENTAGE REDUCTION
--------------------- OF REVOLVING CREDIT
YEAR TERM LOANS FUND LOANS FACILITY COMMITMENT
---- ---------- ---------- --------------------
<S> <C> <C> <C>
1997............................ 2.10% -- % 2.10%
1998............................ 9.00 .50 9.00
1999............................ 12.00 .50 12.00
2000............................ 12.25 1.00 12.25
2001............................ 16.50 1.00 16.50
2002............................ 20.25 1.00 20.25
2003............................ 21.25 17.40 21.25
2004............................ 6.65 78.60 6.65
------ ------ ------
100.00% 100.00% 100.00%
====== ====== ======
</TABLE>
In addition to the foregoing, effective April 30, 1999, and on each April
30th thereafter, CCE-I is required to make a repayment of principal of the
term and fund loans (pro rata) in an amount equal to 75% of Annual Excess Cash
Flow, as defined in the Credit Agreement, for the preceding year if the
leverage ratio is greater than 5.5 to 1, or 50% of Annual Excess Cash Flow if
the leverage ratio is less than 5.5 to 1. These repayments shall be applied to
principal in inverse order of maturity.
Based upon outstanding indebtedness at December 31, 1996, and the
amortization of term loans and fund loans, and scheduled reductions in
available borrowings depicted above, aggregate future principal payments on
the Credit Agreement at December 31, 1996, are as follows:
<TABLE>
<CAPTION>
YEAR AMOUNT
---- ------------
<S> <C>
1997.......................................................... $ 5,880,000
1998.......................................................... 25,625,000
1999.......................................................... 34,025,000
2000.......................................................... 47,640,000
2001.......................................................... 70,150,000
Thereafter.................................................... 284,680,000
------------
$468,000,000
============
</TABLE>
As a requirement of the Credit Agreement, CCE-I has secured interest rate
protection agreements. The Credit Agreement requires CCE-I to enter into
interest rate protection agreements for notional amounts of not
F-37
<PAGE>
CCA ACQUISITION CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
less than 50% of the outstanding obligations. In addition, the interest rate
protection agreements must provide rate protection for a weighted average
period of not less than 18 months. The fair value of the interest rate caps or
swaps is the estimated amount CCE-I would receive (pay) to eliminate the cap
or swap agreement at the reporting date, taking into account current interest
rates and the credit-worthiness of the counterparties. The following
summarizes certain information pertaining to the interest rate protection
agreements as of December 31, 1996:
<TABLE>
<CAPTION>
FAIR
VALUE/
NOTIONAL FIXED REDEMPTION
AMOUNT TYPE RATE CONTRACT EXPIRATION DATE PRICE
------------ ---- ----- --------------------------- ----------
<C> <C> <C> <S> <C>
$ 25,000,000 Swap 5.5% December 1, 1997 $ (60,812)
25,000,000 Swap 5.5 December 1, 1997 (19,135)
75,000,000 Swap 5.5 December 1, 1998 *
25,000,000 Swap 4.9 March 28, 1998 (4,956)
20,000,000 Cap 8.5 April 14, 1998 (8,978)
30,000,000 Cap 8.5 September 23, 1999 42,045
50,000,000 Cap 8.5 February 2, 1999 1,085,601
------------ ----------
$250,000,000 6.6% Weighted Average Fixed Rate $1,033,765
============ ==========
</TABLE>
- --------
* This contract has not been marked to market since its effective date is
after the reporting date.
Management believes that the counterparties of the interest rate protection
agreements will be able to meet their obligations under the agreements. The
purpose of CCE-I's involvement in these interest rate protection agreements is
to minimize CCE-I's exposure to interest rate fluctuations on its floating
rate debt. Management believes that it has no material concentration of credit
or market risks with respect to its interest rate protection agreements.
9. RELATED-PARTY TRANSACTIONS:
Charter provides management services to CCE-I under the terms of a contract
which provides for base fees equal to $4,845,000 and $3,925,000 as of December
31, 1996 and 1995, respectively, per annum plus an annual bonus equal to 30%
of the excess, if any, of operating cash flow (as defined in the management
agreement) over the projected operating cash flow for the year. Payment of the
annual bonus is deferred until termination of the Credit Agreement due to
restrictions provided within the Credit Agreement. The annual bonus for the
year ended December 31, 1996 and 1995, totaled $740,000 and $1,015,000,
respectively. In addition, CCE-I receives financial advisory services from an
affiliate of Kelso under terms of a contract which provides for fees equal to
$552,500 and $450,000 at December 31, 1996 and 1995, respectively, per annum.
These agreements were amended during 1996 and 1995 in conjunction with each
acquisition of cable television systems to increase the annual base fees for
Charter and Kelso. Expenses recognized by CCE-I under these contracts during
1996 and 1995 were approximately $5,034,000 and $6,499,000, respectively.
Management and financial advisory service fees currently payable of $1,181,300
and $1,029,000 are included in Payables to affiliates at December 31, 1996 and
1995, respectively.
CCE-I pays certain acquisition advisory fees to an affiliate of Kelso and
Charter, which typically equal approximately 1% of the total purchase price
paid for cable television systems acquired. Total acquisition fees paid to the
affiliate of Kelso in 1996 and 1995 were $1,140,000 and $5,250,000,
respectively. Total acquisition fees paid to Charter in 1996 and 1995 were
$1,140,000 and $950,000, respectively. In addition, Charter received
$4,300,000 of equity interests in CCA Holdings during 1995 in conjunction with
the Crown acquisition.
CCE-I and all entities affiliated with Charter collectively utilize a
combination of insurance coverage and self-insurance programs for medical,
dental and workers' compensation claims. CCE-I is allocated charges
F-38
<PAGE>
CCA ACQUISITION CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
monthly based upon its total number of employees, historical claims and
medical cost trend rates. Management considers this allocation to be
reasonable for the operations of CCE-I. During 1996 and 1995, CCE-I expensed
approximately $1,401,300 and $840,000, respectively, relating to insurance
allocations.
In 1996, CCE-I and other affiliated entities employed the services of
Charter's National Data Center (the "National Data Center"). The National Data
Center performs certain subscriber billing services and provides computer
network, hardware and software support to CCE-I and other affiliated entities.
The cost of these services is allocated based on the number of subscribers.
Management considers this allocation to be reasonable for the operations of
CCE-I. During 1996, CCE-I expensed approximately $340,600 relating to these
services.
In 1996, certain of CCE-I's employees became participants in the 1996
Charter Communications/Kelso & Company Appreciation Rights Plan (the
"Appreciation Rights Plan"). The Appreciation Rights Plan covers certain key
employees and consultants within the group of companies and partnerships
controlled by affiliates of Kelso and managed by Charter (collectively, the
"Investment Group").
CCE-I maintains a regional office. The regional office performs certain
operational services on behalf of CCE-I and other affiliated entities. The
cost of these services is allocated to CCE-I and affiliated entities based on
their number of subscribers. Management considers this allocation to be
reasonable for the operations of CCE-I. During 1996 and 1995, CCE-I expensed
approximately $799,400 and $512,000, respectively, relating to these services.
CCE-II has similar arrangements as discussed above, which have been
reflected in CCE-II's operations.
10. COMMITMENTS AND CONTINGENCIES:
Leases
CCE-I leases certain facilities and equipment under noncancelable operating
leases. Rent expense incurred under these leases during 1996 and 1995 was
approximately $617,600 and $533,000, respectively.
Approximate aggregate future minimum lease payments are as follows:
<TABLE>
<S> <C>
1997.............................................................. $484,500
1998.............................................................. 438,900
1999.............................................................. 259,600
2000.............................................................. 159,200
2001.............................................................. 111,200
Thereafter........................................................ 422,100
</TABLE>
CCE-I rents utility poles in its operations. Generally, pole rental
agreements are short term, but CCE-I anticipates that such rentals will recur.
Rent expense for pole attachments during 1996 and 1995 was approximately
$1,773,100 and $1,363,000, respectively.
Insurance Coverage
CCE-I currently does not have, and does not in the near term anticipate
having, property and casualty insurance on its underground distribution plant.
Due to large claims incurred by the property and casualty insurance industry,
the pricing of insurance coverage has become inflated to the point where, in
the judgment of the Company's management, the price is cost prohibitive.
Management believes that its experience and policy with such insurance
coverage is consistent with general industry practices. Management will
continue to monitor the insurance markets to attempt to obtain coverage for
CCE-I's distribution plant at reasonable rates.
F-39
<PAGE>
CCA ACQUISITION CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Litigation
A purported class action lawsuit on behalf of the CCIP limited partners was
filed in 1995 (the "Action"), which sought, among other things, to enjoin
permanently the CCIP Acquisition. On February 15, 1996, all of the plaintiff's
claims for injunctive relief were dismissed (including that which sought to
prevent the consummation of the CCIP Acquisition); the plaintiff's claims for
money damages which may have resulted from the CCIP Acquisition remain
pending. Each of the defendants in the Action, including CCE-I believes the
Action, which remains pending, to be without merit and is contesting it
vigorously. In October 1996, the plaintiff filed a Consolidated Amended Class
Action Complaint (the "Amended Complaint"). The general partner of CCIP
believes that portions of the Amended Complaint are legally inadequate and in
January 1997 filed a motion for summary judgment to dismiss all remaining
claims in the Action. There can be no assurance, however, that the plaintiff
will not be awarded damages, some or all of which may be payable by CCE-I, in
connection with the Action.
The Company is also a party to lawsuits which are generally incidental to
its business. In the opinion of management, after consulting with legal
counsel, the outcome of these lawsuits will not have a material adverse effect
on the Company's consolidated financial position and results of operations.
Severance Payment
During 1996, CCE-I and other affiliated entities entered into a Settlement
Agreement and Mutual Release with a former executive, whereby CCE-I will make
severance payments totaling $500,000. The funds are to be paid in 12 equal
installments, which commenced April 1, 1996.
11. REGULATION IN THE CABLE TELEVISION INDUSTRY:
The cable television industry is subject to extensive regulation at the
federal, local and, in some instances, state levels. In addition, recent
legislative and regulatory changes and additional regulatory proposals under
consideration may materially affect the cable television industry.
Congress enacted the Cable Television Consumer Protection and Competition
Act of 1992 (the "1992 Cable Act"), which became effective on December 4,
1992. The 1992 Cable Act generally allows for a greater degree of regulation
of the cable television industry. Under the 1992 Cable Act's definition of
effective competition, nearly all cable systems in the United States are
subject to rate regulation of basic cable services, provided the local
franchising authority becomes certified to regulate basic service rates. The
1992 Cable Act and the Federal Communications Commission's (FCC) rules
implementing the 1992 Cable Act have generally increased the administrative
and operational expenses of cable television systems and have resulted in
additional regulatory oversight by the FCC and local franchise authorities.
While management believes that CCE-I and CCE-II have complied in all
material respects with the rate provisions of the 1992 Cable Act, in
jurisdictions that have not yet chosen to certify, refunds covering a one-year
period on basic services may be ordered upon future certification if CCE-I and
CCE-II are unable to justify their rates through a benchmark or cost-of-
service filing pursuant to FCC rules. Management is unable to estimate at this
time the amount of refunds, if any, that may be payable by CCE-I and CCE-II in
the event certain of their rates are successfully challenged by franchising
authorities or found to be unreasonable by the FCC. Management does not
believe that the amount of any such refunds would have a material adverse
effect on the consolidated financial position or results of operations of the
Company.
The 1992 Cable Act modified the franchise renewal process to make it easier
for a franchising authority to deny renewal. Historically, franchises have
been renewed for cable operators that have provided satisfactory services and
have complied with the terms of the franchise agreement. Although management
believes that
F-40
<PAGE>
CCA ACQUISITION CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CCE-I and CCE-II have generally met the terms of their franchise agreements
and have provided quality levels of service, and anticipates CCE-I's and CCE-
II's future franchise renewal prospects generally will be favorable, there can
be no assurance that any such franchises will be renewed or, if renewed, that
the franchising authority will not impose more onerous requirements on CCE-I
and CCE-II than previously existed.
During 1996, Congress passed and the President signed into law the
Telecommunications Act of 1996 (the "Telecommunications Act"), which alters
federal, state, and local laws and regulations pertaining to cable television,
telecommunications and other services. Under the Telecommunications Act,
telephone companies can compete directly with cable operators in the provision
of video programming, subject to certain regulatory safeguards.
Certain provisions of the Telecommunications Act could materially affect the
growth and operation of the cable television industry and the cable services
provided by CCE-I and CCE-II. Although the new legislation may substantially
lessen regulatory burdens, the cable television industry may be subject to
additional competition as a result thereof. There are numerous rule makings to
be undertaken by the FCC which will interpret and implement the
Telecommunications Act's provisions. In addition, certain provisions of the
Telecommunications Act (such as the deregulation of cable programming rates)
are not immediately effective. Further, certain of the Telecommunications
Act's provisions have been and are likely to be subject to judicial
challenges. Management is unable at this time to predict the outcome of such
rule makings or litigation or the substantive effect of the new legislation
and the rule makings on the consolidated financial position and results of
operations of the Company.
12. INCOME TAXES:
CAC is part of the CCA Holdings consolidated group which files consolidated
income tax returns. Income taxes are recorded in accordance with SFAS No. 109.
In accordance with SFAS No. 109, deferred tax assets and liabilities are
recognized for the estimated future tax consequence attributable to
differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases. Deferred income tax
assets and liabilities are measured using the enacted tax rates in effect for
the year in which those temporary differences are expected to be recovered or
settled. Deferred income tax expense or benefit is the result of changes in
the liability or asset recorded for deferred taxes. A valuation allowance must
be established for any portion of a deferred tax asset for which it is more
likely than not that a tax benefit will not be realized.
During 1996 and 1995, changes in the Company's temporary differences and
losses from operations, which pertain primarily to depreciation and
amortization, resulted in a deferred tax benefits of approximately $7.4
million and $4.9 million, respectively. These amounts were offset by valuation
allowances of equal amounts.
No current provision (benefit) for income taxes was recorded during 1996 and
1995.
F-41
<PAGE>
CCA ACQUISITION CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Deferred taxes are comprised of the following at December 31:
<TABLE>
<S> <C> <C>
1996 1995
------------ ------------
Deferred income tax assets:
Accounts receivable........................ $ 148,000 $ 100,000
Covenant not to compete.................... 6,933,000 3,467,000
Investment in unconsolidated limited
partnerships.............................. -- 556,000
Accrued expenses and payables to
affiliates................................ 2,230,000 1,978,000
Deferred revenue........................... 283,000 312,000
Deferred management fees payable to
affiliate................................. 702,000 406,000
Tax loss carryforwards..................... 35,197,000 21,943,000
Valuation allowance........................ (12,330,000) (4,866,000)
------------ ------------
Total deferred income tax assets......... 33,163,000 23,896,000
------------ ------------
Deferred income tax liabilities:
Property, plant and equipment.............. (37,191,000) (31,867,000)
Franchise costs............................ (44,362,000) (47,285,000)
Investment in unconsolidated limited
partnerships.............................. (3,767,000) --
Minority interest in subsidiary............ (3,343,000) (244,000)
------------ ------------
Total deferred income tax liabilities.... (88,663,000) (79,396,000)
------------ ------------
Net deferred income tax liability........ $(55,500,000) $(55,500,000)
============ ============
</TABLE>
At December 31, 1996, the Company had net operating loss (NOL) carryforwards
for regular income tax purposes aggregating approximately $88.0 million, which
expire in various years through 2011. Utilization of the NOLs is subject to
certain limitations. The Company's regular tax NOLs are recognized for
financial statement purposes as a reduction of the deferred tax liability or
an increase of the deferred tax asset.
13. DISCONTINUED OPERATION:
CCE-I approved a plan to discontinue the radio operation maintained by its
subsidiary, Charter Communications Radio St. Louis, LLC. Pursuant to a sales
agreement dated January 23, 1997, such operations will cease upon FCC approval
of the transfer of the radio license.
The net losses of this operation prior to December 31, 1996, are included in
the consolidated statement of operations under "Loss from discontinued
operation." Revenues from such operation were $1,532,572 for the period then
ended. The noncurrent net assets of this operation are comprised primarily of
property, plant and equipment, license fees and other deferred costs. No
material gain or loss is anticipated in connection with the disposition of
these net assets.
14. COMPETITION:
The Connecticut Department of Public Utility Control granted a franchise to
a subsidiary of a local telephone company to serve the entire state of
Connecticut. This provider has proposed to offer its cable service initially
to a primary franchise area of several Connecticut communities, including one
served by CCE-I. Management is unable to predict when the franchise will be
awarded, and the ultimate impact of this development upon the Company's
consolidated financial position or results of operations.
F-42
<PAGE>
CCA ACQUISITION CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CCE-II's Riverside, California system, providing service to approximately
48,000 basic subscribers, faces competition from a multipoint distribution
system acquired by Pacific Telesis Group. At this time, management is
uncertain what impact, if any, this acquisition will have on the Company's
consolidated financial position or results of operations.
15. 401(K) PLAN:
In 1995, CCE-I adopted the Charter Communications, Inc. 401(k) Plan (the
"401(k) Plan") for the benefit of its employees. All employees who have
completed one year of employment are eligible to participate in the 401(k)
Plan. The 401(k) Plan is a tax-qualified retirement savings plan to which
employees may elect to make pretax contributions up to the lesser of 10% of
their compensation or dollar thresholds established under the Internal Revenue
Code. CCE-I contributes an amount equal to 50% of the first 5% contributed by
each employee. During 1996 and 1995, CCE-I contributed approximately $269,900
and $177,000 to the 401(k) Plan, respectively.
F-43
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Cencom Cable Entertainment, Inc.:
We have audited the accompanying balance sheets of Cencom Cable
Entertainment, Inc. (a Delaware corporation) as of December 31, 1996 and 1995,
and the related statements of operations, shareholder's investment (deficit)
and cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Cencom Cable
Entertainment, Inc. as of December 31, 1996 and 1995, and the results of its
operations and its cash flows for the years then ended, in conformity with
generally accepted accounting principles.
Arthur Andersen LLP
St. Louis, Missouri,
February 21, 1997
F-44
<PAGE>
CENCOM CABLE ENTERTAINMENT, INC.
BALANCE SHEETS--DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
INVESTMENT IN UNCONSOLIDATED LIMITED PARTNERSHIP... $122,582,298 $137,119,099
------------ ------------
$122,582,298 $137,119,099
============ ============
LIABILITIES AND SHAREHOLDER'S INVESTMENT (DEFICIT)
NOTE PAYABLE....................................... $ 82,000,000 $ 82,000,000
------------ ------------
ACCRUED INTEREST ON NOTE PAYABLE................... 22,843,403 10,438,805
------------ ------------
DEFERRED INCOME TAXES.............................. 55,500,000 55,500,000
------------ ------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDER'S INVESTMENT (DEFICIT):
Common stock, $1 par value, 300,000 shares autho-
rized; 245,973 shares
issued and outstanding........................... 245,973 245,973
Additional paid-in capital........................ 21,954,139 21,954,139
Accumulated deficit............................... (59,961,217) (33,019,818)
------------ ------------
Total shareholder's investment (deficit)........ (37,761,105) (10,819,706)
------------ ------------
$122,582,298 $137,119,099
============ ============
</TABLE>
The accompanying notes are an integral part of these balance sheets.
F-45
<PAGE>
CENCOM CABLE ENTERTAINMENT, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
EQUITY IN LOSS OF UNCONSOLIDATED LIMITED
PARTNERSHIP....................................... $(14,536,801) $(22,581,013)
INTEREST EXPENSE.................................. (12,404,598) (10,438,805)
------------ ------------
Net loss...................................... $(26,941,399) $(33,019,818)
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
F-46
<PAGE>
CENCOM CABLE ENTERTAINMENT, INC.
STATEMENTS OF SHAREHOLDER'S INVESTMENT (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN ACCUMULATED
STOCK CAPITAL DEFICIT TOTAL
-------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
BALANCE, January 1, 1995...... $245,973 $21,954,139 $ -- $ 22,200,112
Net loss.................... -- -- (33,019,818) (33,019,818)
-------- ----------- ------------ ------------
BALANCE, December 31, 1995.... 245,973 21,954,139 (33,019,818) (10,819,706)
Net loss.................... -- -- (26,941,399) (26,941,399)
-------- ----------- ------------ ------------
BALANCE, December 31, 1996.... $245,973 $21,954,139 $(59,961,217) $(37,761,105)
======== =========== ============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
F-47
<PAGE>
CENCOM CABLE ENTERTAINMENT, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.......................................... $(26,941,399) $(33,019,818)
Adjustments to reconcile net loss to net cash from
operating activities--
Equity in loss of unconsolidated limited
partnership..................................... 14,536,801 22,581,013
Changes in assets and liabilities--
Accrued interest on note payable................ 12,404,598 10,438,805
------------ ------------
Net cash from operating activities............. -- --
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES............... -- --
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES............... -- --
------------ ------------
CASH, beginning and end of year.................... $ -- $ --
============ ============
CASH PAID FOR INTEREST............................. $ -- $ --
============ ============
CASH PAID FOR TAXES................................ $ -- $ --
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
F-48
<PAGE>
CENCOM CABLE ENTERTAINMENT, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Organization and Basis of Presentation
Cencom Cable Entertainment, Inc. (CCE or the "Company"), a Delaware
corporation, is a wholly owned subsidiary of CCA Acquisition Corp. (CAC). CAC
is a wholly owned subsidiary of CCA Holdings Corp. (CCA Holdings). CCA
Holdings is owned approximately 85% by Kelso Investment Associates V, L.P., an
investment fund, together with an affiliate (collectively referred to as
"Kelso" herein) and certain other individuals and approximately 15% by Charter
Communications, Inc. (Charter), manager of Charter Communications
Entertainment I, L.P.'s (CCE-I) and Charter Communications Entertainment II,
L.P.'s (CCE-II) cable television systems. All material intercompany
transactions and balances have been eliminated.
In January 1995, CAC completed certain acquisitions, including stock and
asset acquisitions of CCE and cable television systems located in Connecticut
from Crown Media, Inc. (Crown), a subsidiary of Hallmark Cards, Incorporated
(Hallmark) (the "Crown Transaction"). CCE's assets were comprised primarily of
cable television systems serving communities in St. Louis County, Missouri
(the "Missouri System"). On September 29, 1995, CAC and CCT Holdings Corp.
(CCT Holdings), an entity affiliated with CCA Holdings by common ownership,
entered into an Asset Exchange Agreement whereby CAC exchanged a 1% undivided
interest in all of its assets (including CCE's assets) for a 1.22% undivided
interest in certain assets to be acquired by CCT Holdings from an affiliate of
Gaylord Entertainment Company, Inc. (Gaylord). In September 1995, CCT Holdings
acquired certain cable television systems from Gaylord. Upon execution of the
Asset Purchase Agreement, CAC and CCT Holdings entered into a series of
agreements to contribute their assets to Charter Communications Entertainment,
L.P. (CCE, L.P.). CCE, L.P. immediately contributed the assets acquired under
the Crown Transaction to CCE-I and certain assets acquired in the Gaylord
acquisition to CCE-II.
The series of transactions representing the contribution of assets to CCE-I
acquired under the Crown Transaction is a reorganization of entities under
common control and has been accounted for in a manner similar to a pooling of
interests. Accordingly, CCE-I's financial statements reflect the activity of
these systems for the entire year. Thus, the net loss of CCE-I generated by
the Missouri System for the period prior to September 29, 1995, was allocated
entirely to CCE.
As a result of these transactions, CCE owns a 33% limited partnership
interest in CCE, L.P., CAC owns a 21% limited partnership interest in CCE,
L.P. and CCT Holdings owns a 44% limited partnership interest in CCE, L.P. In
addition, CAC and CCT Holdings each own a 1% general partnership interest in
CCE, L.P.
Investment in Unconsolidated Limited Partnership
CCE has a 33% limited partnership interest in CCE, L.P. CCE, L.P. is
controlled by CAC and CCT Holdings through their general partnership interests
and provisions within its partnership agreement, therefore, CCE's investment
is accounted for using the equity method of accounting. Under this method, the
investment is originally recorded at cost and is subsequently adjusted to
recognize CCE's share of net earnings or losses as they occur and
distributions when received.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
F-49
<PAGE>
CENCOM CABLE ENTERTAINMENT, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
2. INVESTMENTS IN UNCONSOLIDATED LIMITED PARTNERSHIPS:
Summary financial information of CCE-I and CCE-II as of December 31, 1996
and 1995, and for the years then ended (CCE-I) and for the period from
inception (April 20, 1995) to December 31, 1995, and for the year ended
December 31, 1996 (CCE-II), which is not consolidated with the operating
results of the Company, is as follows:
<TABLE>
<CAPTION>
CCE-I CCE-II
-------------------------- --------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Current assets.......... $ 8,999,959 $ 15,396,675 $ 10,904,830 $ 11,043,867
Noncurrent assets--
primarily investment in
cable television
properties............. 657,011,095 566,369,624 338,316,421 348,029,594
------------ ------------ ------------ ------------
Total assets........ $666,011,054 $581,766,299 $349,221,251 $359,073,461
============ ============ ============ ============
Current liabilities..... $ 28,903,475 $ 15,138,838 $ 13,098,198 $ 14,107,036
Long-term debt.......... 462,120,000 355,000,000 221,418,000 218,600,000
Other long-term
liabilities............. 2,463,339 3,550,612 383,070 584,460
Partners' capital....... 172,524,240 208,076,849 114,321,983 125,781,965
------------ ------------ ------------ ------------
Total liabilities
and partners'
capital............ $666,011,054 $581,766,299 $349,221,251 $359,073,461
============ ============ ============ ============
Service revenues........ $143,023,261 $ 99,689,410 $ 90,368,332 $ 21,156,209
============ ============ ============ ============
Income (loss) from
operations.............. $ 1,106,166 $ (6,946,137) $ 5,039,834 $ 983,638
============ ============ ============ ============
Net loss................ $(35,552,609) $(31,423,151) $(11,459,982) $ (3,458,535)
============ ============ ============ ============
</TABLE>
As of December 31, 1996, CCE-I provided cable television service to
approximately 338,300 basic subscribers in Connecticut, Illinois,
Massachusetts, Missouri and New Hampshire, and CCE-II provided cable
television service to approximately 168,100 basic subscribers in southern
California.
3. ACQUISITIONS BY UNCONSOLIDATED LIMITED PARTNERSHIPS:
In January 1995, CAC completed the acquisition of certain cable television
systems from Crown for an aggregate purchase price of approximately $488.2
million. The assets were later contributed through a series of transactions to
CCE-I. The acquisition of these systems was part of a series of larger
transactions in which Crown sold its cable television systems to a group of
investors, including Charter, CAC, certain affiliates of Charter, and third
parties, for a total purchase price of approximately $900.0 million. To
finance this acquisition, CCE-I entered into a revolving credit and term loan
facility (the "CCE-I Credit Agreement") and CCA Holdings executed a
subordinated seller note (the "HC Crown Note"), pursuant to a senior
subordinated loan agreement with an affiliate of Hallmark for $82.0 million
(see Note 4).
In September 1995, CCT Holdings acquired certain assets from Gaylord for
approximately $340.9 million, which included cable television systems in
southern California. As previously described, these assets were contributed to
CCE-II. To finance the acquisition, CCE-II entered into a revolving credit and
term loan facility (the "CCE-II Credit Agreement") and CCT Holdings executed a
subordinated seller note to Gaylord (the "Gaylord Note").
In October 1995, CCE-I acquired the net assets of certain systems from
United Video Cablevision, Inc., which include cable television systems in
Massachusetts and Missouri, for an aggregate purchase price of
approximately $96.0 million.
F-50
<PAGE>
CENCOM CABLE ENTERTAINMENT, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
In January 1996, CCE-I acquired the net assets of certain systems from
Mineral Area Cablevision Co. L.P., which include cable television systems in
Missouri, for an aggregate purchase price of approximately $9.4 million.
In March 1996, CCE-I acquired the net assets of the Illinois system from
Cencom Cable Income Partners, L.P. (CCIP), an affiliated entity, for an
aggregate purchase price of approximately $82.1 million (the "CCIP
Acquisition").
In November 1996, CCE-I acquired the net assets of certain systems from
Masada Cable Partners, L.P., which include cable television systems in
Missouri, for an aggregate purchase price of approximately $24.2 million.
4. NOTE PAYABLE:
In connection with the Crown Transaction, CCE issued a guarantee of payment
to the holder of the HC Crown Note. Accordingly, the debt has been reflected
as a liability of the Company in the accompanying financial statements. The HC
Crown Note is also guaranteed by CAC and CCE, L.P. The HC Crown Note is an
unsecured obligation. The HC Crown Note is limited in aggregate principal
amount to $82.0 million and has a stated maturity date of December 31, 1999
(the "Stated Maturity Date"). Interest accrues at 13% per annum, compounded
semiannually, but is not due and payable until the Stated Maturity Date. If
principal plus accrued interest is not paid at the Stated Maturity Date, the
annual rate at which interest accrues will initially increase to 18% and will
increase by an additional 2% on each successive anniversary of the Stated
Maturity Date (up to a maximum of 26%) until the HC Crown Note is repaid; in
addition, a 3% default rate of interest can, in certain instances, be in
effect simultaneously with the stated rate of interest on the HC Crown Note.
The HC Crown Note is redeemable in whole or in part at the option of CCA
Holdings at any time, without premium or penalty, provided that accrued
interest is paid on the portion of the HC Crown Note so redeemed.
Borrowings under the HC Crown Note are subject to certain financial and
nonfinancial covenants and restrictions. The most restrictive covenant
requires maintenance of a ratio of debt (excluding the HC Crown Note) to
adjusted consolidated annualized operating cash flow, as defined, not to
exceed 7.25 to 1 at December 31, 1996. In addition to the subordination in
right of payment provisions contained in the HC Crown Note, the HC Crown Note
is subject to a subordination agreement in favor of senior bank debt of CCE-I.
Pursuant to the subordination agreement, substantially all rights and remedies
under the HC Crown Note, including the rights to accelerate the maturity upon
an event of default (including a payment of default), are suspended until the
obligations under the CCE-I Credit Agreement are paid in full.
The HC Crown Note is subordinated to the CCE-I Credit Agreement. Pursuant to
the terms of the CCE-I Credit Agreement, payments on the HC Crown Note are
prohibited until the indefeasible payment in full in cash, and the termination
of commitments to lend under the CCE I Credit Agreement. The HC Crown Note
will not have the benefit of any distributions from CCE-II until repayment in
full of the CCE-II Credit Agreement and the Gaylord Note.
The obligations owing on the HC Crown Note are guaranteed by CAC, CCE and
CCE, L.P. (collectively referred to as the "Guarantors"). The CCE, L.P.
guarantee cannot be enforced until the repayment in full and termination of
the CCE-I Credit Agreement and the CCE-II Credit Agreement. The CAC and CCE
guarantees cannot be enforced until the repayment in full and termination of
the CCE I Credit Agreement. The guarantees, by their terms, are limited to the
proceeds of distributions received from CCE-I, and income, if any, generated
F-51
<PAGE>
CENCOM CABLE ENTERTAINMENT, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
by the Guarantors. CCA Holdings and the Guarantors are dependent primarily
upon distributions from CCE-I to service the HC Crown Note.
Subsequent to year-end, HC Crown Corp. sold the majority of the HC Crown
Note through a private placement. The fair value of the HC Crown Note plus
accrued interest, based upon the proceeds received, was approximately $89.5
million at December 31, 1996.
5. COMMITMENTS AND CONTINGENCIES:
Litigation
A purported class action lawsuit on behalf of the CCIP limited partners was
filed in 1995 (the "Action"), which sought, among other things, to enjoin
permanently the CCIP Acquisition. On February 15, 1996, all of the plaintiff's
claims for injunctive relief were dismissed (including that which sought to
prevent the consummation of the CCIP Acquisition); the plaintiff's claims for
money damages which may have resulted from the CCIP Acquisition remain
pending. Each of the defendants in the Action, including CCE-I, believes the
Action, which remains pending, to be without merit and is contesting it
vigorously. In October 1996, the plaintiff filed a Consolidated Amended Class
Action Complaint (the "Amended Complaint"). The general partner of CCIP
believes that portions of the Amended Complaint are legally inadequate and in
January 1997 filed a motion for summary judgment to dismiss all remaining
claims in the Action. There can be no assurance, however, that the plaintiff
will not be awarded damages, some or all of which may be payable by CCE-I, in
connection with the Action.
The Company is also a party to lawsuits which are generally incidental to
its business. In the opinion of management, after consulting with legal
counsel, the outcome of these lawsuits will not have a material adverse effect
on the Company's financial position and results of operations.
6. REGULATION IN THE CABLE TELEVISION INDUSTRY:
The cable television industry is subject to extensive regulation at the
federal, local and, in some instances, state levels. In addition, recent
legislative and regulatory changes and additional regulatory proposals under
consideration may materially affect the cable television industry.
Congress enacted the Cable Television Consumer Protection and Competition
Act of 1992 (the "1992 Cable Act"), which became effective on December 4,
1992. The 1992 Cable Act generally allows for a greater degree of regulation
of the cable television industry. Under the 1992 Cable Act's definition of
effective competition, nearly all cable systems in the United States are
subject to rate regulation of basic cable services, provided the local
franchising authority becomes certified to regulate basic service rates. The
1992 Cable Act and the Federal Communications Commission's (FCC) rules
implementing the 1992 Cable Act have generally increased the administrative
and operational expenses of cable television systems and have resulted in
additional regulatory oversight by the FCC and local franchise authorities.
Management believes that CCE-I and CCE-II have complied in all material
respects with the rate provisions of the 1992 Cable Act; however, in
jurisdictions that have not yet chosen to certify, refunds covering a one-year
period on basic services may be ordered upon future certification if CCE-I and
CCE-II are unable to justify their rates through a benchmark or cost-of-
service filing pursuant to FCC rules. Management is unable to estimate at this
time the amount of refunds, if any, that may be payable by CCE-I and CCE-II in
the event certain of their
F-52
<PAGE>
CENCOM CABLE ENTERTAINMENT, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
rates are successfully challenged by franchising authorities or found to be
unreasonable by the FCC. Management does not believe that the amount of any
such refunds would have a material adverse effect on the financial position or
results of operations of the Company.
The 1992 Cable Act modified the franchise renewal process to make it easier
for a franchising authority to deny renewal. Historically, franchises have
been renewed for cable operators that have provided satisfactory services and
have complied with the terms of the franchise agreement. Although management
believes that CCE-I and CCE-II have generally met the terms of their franchise
agreements and have provided quality levels of service, and anticipates CCE-
I's and CCE-II's future franchise renewal prospects generally will be
favorable, there can be no assurance that any such franchises will be renewed
or, if renewed, that the franchising authority will not impose more onerous
requirements on CCE-I and CCE-II than previously existed.
During 1996, Congress passed and the President signed into law the
Telecommunications Act of 1996 (the "Telecommunications Act"), which alters
federal, state and local laws and regulations pertaining to cable television,
telecommunication and other services. Under the Telecommunications Act,
telephone companies can complete directly with cable operators in the
provision of video programming, subject to certain regulatory safeguards.
Certain provisions of the Telecommunications Act could materially affect the
growth and operation of the cable television industry and the cable services
provided by CCE-I and CCE-II. Although the new legislation may substantially
lessen regulatory burdens, the cable television industry may be subject to
additional competition as a result thereof. There are numerous rule makings to
be undertaken by the FCC which will interpret and implement the
Telecommunications Act's provisions. In addition, certain provisions of the
Telecommunications Act (such as the deregulation of cable programming rates)
are not immediately effective. Further, certain of the Telecommunications
Act's provisions have been and are likely to be subject to judicial
challenges. Management is unable at this time to predict the outcome of such
rule makings or litigation or the substantive effect of the new legislation
and the rule makings on the financial position and results of operations of
the Company.
7. INCOME TAXES:
CCE is part of the CCA Holdings consolidated group which files consolidated
tax returns. Income taxes are recorded in accordance with SFAS No. 109. In
accordance with SFAS No. 109, deferred tax assets and liabilities are
recognized for the estimated future tax consequence attributable to
differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases. Deferred income tax
assets and liabilities are measured using the enacted tax rates in effect for
the year in which those temporary differences are expected to be recovered or
settled. Deferred income tax expense or benefit is the result of changes in
the liability or asset recorded for deferred taxes. A valuation allowance must
be established for any portion of a deferred tax asset for which it is more
likely than not that a tax benefit will not be realized.
During 1996 and 1995, changes in the Company's temporary differences and
losses from operations, resulted in deferred tax benefits of approximately
$6.1 million and $.7 million, respectively. These amounts were offset by
valuation allowances of equal amounts.
No current provision (benefit) for income taxes was recorded during 1996 and
1995.
F-53
<PAGE>
CENCOM CABLE ENTERTAINMENT, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Deferred income taxes are comprised of the following at December 31:
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Deferred income tax assets:
Tax loss carryforwards............................ $ 24,046,000 $ 17,866,000
Valuation allowance............................... (6,843,000) (663,000)
------------ ------------
Total deferred income tax assets................ 17,203,000 17,203,000
Deferred income tax liabilities:
Investments in unconsolidated limited partner-
ships............................................ (72,703,000) (72,703,000)
------------ ------------
Net deferred income tax liability............... $(55,500,000) $(55,500,000)
============ ============
</TABLE>
At December 31, 1996, the Company had net operating loss (NOL) carryforwards
for regular income tax purposes aggregating approximately $60.1 million, which
expire in various years through 2011. Utilization of the NOLs is subject to
certain limitations. The Company's regular tax NOLs are recognized for
financial statement purposes as a reduction of the deferred tax liability or
an increase of the deferred tax asset.
8. COMPETITION:
The Connecticut Department of Public Utility Control granted a franchise to
a subsidiary of a local telephone company to serve the entire state of
Connecticut. This provider has proposed to offer its cable service initially
to a primary franchise area of several Connecticut communities, including one
served by CCE-I. Management is unable to predict the ultimate impact of this
development upon the Company's financial position or results of operations.
CCE-II's Riverside, California system, providing service to approximately
48,000 basic subscribers, faces competition from a multipoint distribution
system acquired by Pacific Telesis Group. At this time, management is
uncertain what impact, if any, this acquisition will have on the Company's
financial position or results of operations.
F-54
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Charter Communications Entertainment, L.P.:
We have audited the accompanying balance sheets of Charter Communications
Entertainment, L.P. (a Delaware limited partnership) as of December 31, 1996
and 1995, and the related statements of operations, partners' capital and cash
flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Charter Communications
Entertainment, L.P. as of December 31, 1996 and 1995, and the results of its
operations and its cash flows for the years then ended, in conformity with
generally accepted accounting principles.
Arthur Andersen LLP
St. Louis, Missouri,
February 21, 1997
F-55
<PAGE>
CHARTER COMMUNICATIONS ENTERTAINMENT, L.P.
BALANCE SHEETS--DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
INVESTMENT IN UNCONSOLIDATED LIMITED PARTNERSHIPS... $279,854,790 $325,823,701
SUBORDINATED NOTE RECEIVABLE FROM UNCONSOLIDATED
LIMITED PARTNERSHIP................................ 25,000,000 25,000,000
INTEREST RECEIVABLE FROM UNCONSOLIDATED LIMITED
PARTNERSHIP........................................ 2,418,000 500,000
------------ ------------
$307,272,790 $351,323,701
============ ============
LIABILITIES AND PARTNERS' CAPITAL
NOTE PAYABLE........................................ $ 82,000,000 $ 82,000,000
ACCRUED INTEREST ON NOTE PAYABLE.................... 22,843,403 10,438,805
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL:
General partners................................... 624,614 4,928,458
Limited partners--
Ordinary Capital Accounts......................... 10,543,510 83,187,453
------------ ------------
Preferred Capital Account......................... 191,261,263 170,768,985
------------ ------------
Total partners' capital......................... 202,429,387 258,884,896
------------ ------------
$307,272,790 $351,323,701
============ ============
</TABLE>
The accompanying notes are an integral part of these balance sheets.
F-56
<PAGE>
CHARTER COMMUNICATIONS ENTERTAINMENT, L.P.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
EQUITY IN LOSS OF UNCONSOLIDATED LIMITED
PARTNERSHIPS...................................... $(45,968,911) $(34,730,760)
INTEREST EXPENSE.................................. (12,404,598) (10,438,805)
INTEREST INCOME--UNCONSOLIDATED LIMITED
PARTNERSHIP....................................... 1,918,000 500,000
------------ ------------
Net loss.................................... (56,455,509) (44,669,565)
PREFERRED RETURN.................................. (20,492,278) (5,081,095)
------------ ------------
Loss applicable to partners' capital
accounts.................................... $(76,947,787) $(49,750,660)
============ ============
LOSS ALLOCATION TO PARTNERS' CAPITAL ACCOUNTS:
General partners................................ $ (4,303,844) $ (2,782,632)
Limited partners--Preferred Capital Account..... -- --
------------ ------------
NET LOSS APPLICABLE TO LIMITED PARTNERS--ORDINARY
CAPITAL ACCOUNTS................................. $(72,643,943) $(46,968,028)
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
F-57
<PAGE>
CHARTER COMMUNICATIONS ENTERTAINMENT, L.P.
STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
LIMITED PARTNERS
--------------------------
ORDINARY PREFERRED
GENERAL CAPITAL CAPITAL
PARTNERS ACCOUNTS ACCOUNT TOTAL
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
BALANCE, January 1,
1995..................... $ -- $ -- $ -- $ --
Partners' capital
contributions......... 7,711,090 130,155,481 165,687,890 303,554,461
Net loss............... (2,498,438) (42,171,127) -- (44,669,565)
Preference allocation.. (284,194) (4,796,901) 5,081,095 --
----------- ------------ ------------ ------------
BALANCE, December 31,
1995..................... 4,928,458 83,187,453 170,768,985 258,884,896
Net loss............... (3,157,670) (53,297,839) -- (56,455,509)
Preference allocation.. (1,146,174) (19,346,104) 20,492,278 --
----------- ------------ ------------ ------------
BALANCE, December 31,
1996..................... $ 624,614 $ 10,543,510 $191,261,263 $202,429,387
=========== ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
F-58
<PAGE>
CHARTER COMMUNICATIONS ENTERTAINMENT, L.P.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.......................................... $(56,455,509) $(44,669,565)
Adjustments to reconcile net loss to net cash from
operating activities--
Equity in loss of unconsolidated limited
partnerships..................................... 45,968,911 34,730,760
Changes in assets and liabilities--
Interest receivable from unconsolidated limited
partnership..................................... (1,918,000) (500,000)
Accrued interest on note payable................ 12,404,598 10,438,805
------------ ------------
Net cash from operating activities............ -- --
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in unconsolidated limited
partnerships...................................... -- (360,554,461)
------------ ------------
Net cash used in investing activities......... -- (360,554,461)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
General partners' contributions................... -- 7,711,090
Limited partners' contributions................... -- 295,843,371
Issuance of note receivable to unconsolidated
limited partnership............................... -- (47,000,000)
Payments on note receivable from unconsolidated
limited partnership............................... -- 22,000,000
Proceeds from note payable........................ -- 82,000,000
------------ ------------
Net cash provided by financing activities..... -- 360,554,461
------------ ------------
CASH, beginning and end of year.................... $ -- $ --
============ ============
CASH PAID FOR INTEREST............................. $ -- $ --
============ ============
CASH PAID FOR TAXES................................ $ -- $ --
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
F-59
<PAGE>
CHARTER COMMUNICATIONS ENTERTAINMENT, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Organization and Basis of Presentation
In connection with a reorganization under common control, the assets of
certain cable television systems located in Connecticut and Missouri were
contributed from CCA Acquisition Corp. (CAC) and its wholly owned subsidiary,
Cencom Cable Entertainment, Inc. (CCE), respectively, to Charter
Communications Entertainment, L.P. (the "Partnership"). CAC and CCE owned and
operated the systems during the first nine months of 1995. These systems were
immediately contributed to a newly formed partnership, Charter Communications
Entertainment I, L.P. (CCE-I). The Partnership, CAC, CCE and CCE-I are all
indirectly owned approximately 85% by Kelso Investment Associates V, L.P., an
investment fund, together with an affiliate (collectively referred to as
"Kelso" herein) and certain other individuals, and approximately 15% by
Charter Communications, Inc. (Charter). Therefore, this series of transactions
is a reorganization of entities under common control and has been accounted
for in a manner similar to a pooling of interests. Accordingly, the financial
statements reflect the activity of these systems for the entire year.
In January 1995, CAC completed the acquisition of certain cable television
systems from Crown Media, Inc. (Crown), a subsidiary of Hallmark Cards,
Incorporated (Hallmark) (the "Crown Transaction"). On September 29, 1995, CAC
and CCT Holdings Corp. (CCT Holdings), an entity affiliated with CCA Holdings
Corp. (CCA Holdings) by common ownership, entered into an Asset Exchange
Agreement whereby CAC exchanged a 1% undivided interest in all of its assets
for a 1.22% undivided interest in certain assets to be acquired by CCT
Holdings from an affiliate of Gaylord Entertainment Company, Inc. (Gaylord).
In September 1995, CCT Holdings acquired certain cable television systems from
Gaylord. Upon execution of the Asset Purchase Agreement, CAC and CCT Holdings
entered into a series of agreements to contribute the assets acquired under
the Crown Transaction (see Note 3) to CCE-I and certain assets acquired in the
Gaylord acquisition (see Note 3) to Charter Communications Entertainment II,
L.P. (CCE-II). As a result of entering into these agreements, CCA Holdings,
the parent company of CAC, owns a 55% interest and CCT Holdings owns a 45%
interest in the combined operations of CCE-I and CCE-II, respectively. The net
loss of CCE-I for the period prior to September 29, 1995, was allocated
entirely to CCA Holdings.
As a result of these transactions, CCE owns a 33% limited partnership
interest in the Partnership, CAC owns a 21% limited partnership interest in
the Partnership and CCT Holdings owns a 44% limited partnership interest in
the Partnership. CAC and CCT Holdings each own a 1% general partnership
interest in the Partnership.
The Partnership will terminate no later than December 31, 2055, as provided
in its partnership agreement (the "Partnership Agreement").
Investment in Unconsolidated Limited Partnerships
The Partnership has a 97.78% limited partnership interest in both CCE-I and
CCE-II. CCE-I is controlled by CAC and CCE-II is controlled by CCT Holdings
through their general partnership interests and provisions within the various
partnership agreements; therefore, the Partnership's investment in these
entities is accounted for using the equity method of accounting. Under this
method, the investments are originally recorded at cost and are subsequently
adjusted to recognize the Partnership's share of net earnings or losses as
they occur and distributions when received.
Income Taxes
Income taxes are the responsibility of the partners and as such are not
provided in the accompanying financial statements.
F-60
<PAGE>
CHARTER COMMUNICATIONS ENTERTAINMENT, L.P.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
2. INVESTMENTS IN UNCONSOLIDATED LIMITED PARTNERSHIPS:
Summary financial information of CCE-I and CCE-II as of December 31, 1996
and 1995, and for the year then ended (CCE-I), and for the year ended December
31, 1996 and for the period from inception (April 20, 1995) to December 31,
1995 (CCE-II), which is not consolidated with the operating results of the
Partnership, is as follows:
<TABLE>
<CAPTION>
CCE-I CCE-II
-------------------------- --------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Current assets.......... $ 8,999,959 $ 15,396,675 $ 10,904,830 $ 11,043,867
Noncurrent assets--
primarily investment in
cable television
properties............. 657,011,095 566,369,624 338,316,421 348,029,594
------------ ------------ ------------ ------------
Total assets...... $666,011,054 $581,766,299 $349,221,251 $359,073,461
============ ============ ============ ============
Current liabilities..... $ 28,903,475 $ 15,138,838 $ 13,098,198 $ 14,107,036
Long-term debt.......... 462,120,000 355,000,000 221,418,000 218,600,000
Other long-term
liabilities............. 2,463,339 3,550,612 383,070 584,460
Partners' capital....... 172,524,240 208,076,849 114,321,983 125,781,965
------------ ------------ ------------ ------------
Total liabilities
and partners'
capital.......... $666,011,054 $581,766,299 $349,221,251 $359,073,461
============ ============ ============ ============
Service revenues........ $143,023,261 $ 99,689,410 $ 90,368,332 $ 21,156,209
============ ============ ============ ============
Income (loss) from
operations.............. $ 1,106,166 $ (6,946,137) $ 5,039,834 $ 983,638
============ ============ ============ ============
Net loss................ $(35,552,609) $(31,423,151) $(11,459,982) $ (3,458,535)
============ ============ ============ ============
</TABLE>
As of December 31, 1996, CCE-I provided cable television service to
approximately 338,300 basic subscribers in Connecticut, Illinois,
Massachusetts, Missouri and New Hampshire, and CCE-II provided cable
television service to approximately 168,100 basic subscribers in southern
California.
3. ACQUISITIONS BY UNCONSOLIDATED LIMITED PARTNERSHIPS:
In January 1995, CAC completed the acquisition of certain cable television
systems from Crown for an aggregate purchase price of approximately $488.2
million. The assets were later contributed through a series of transactions to
CCE-I. The acquisition of these systems was part of a series of larger
transactions in which Crown sold its cable television systems to a group of
investors, including Charter, CAC, certain affiliates of Charter, and third
parties, for a total purchase price of approximately $900.0 million. To
finance this acquisition, CCE-I entered into a revolving credit and term loan
facility (the "CCE-I Credit Agreement"), and CCA Holdings executed a
subordinated seller note (the "HC Crown Note") pursuant to a senior
subordinated loan agreement with an affiliate of Hallmark for $82.0 million
(see Note 5).
F-61
<PAGE>
CHARTER COMMUNICATIONS ENTERTAINMENT, L.P.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
In September 1995, CCT Holdings acquired certain assets from Gaylord for
approximately $340.9 million, which included cable television systems in
southern California. As previously described, these assets were contributed to
CCE-II. To finance the acquisition, CCE-II entered into a revolving credit and
term loan facility (the CCE-II Credit Agreement), and CCT Holdings executed a
subordinated seller note to Gaylord (the "Gaylord Note").
In October 1995, CCE-I acquired the net assets of certain systems from
United Video Cablevision, Inc., which include cable television systems in
Massachusetts and Missouri, for an aggregate purchase price of approximately
$96.0 million.
In January 1996, CCE-I acquired the net assets of certain systems from
Mineral Area Cablevision Co., L.P., which include cable television systems in
Missouri, for an aggregate purchase price of approximately $9.4 million.
In March 1996, CCE-I acquired the net assets of the Illinois system from
Cencom Cable Income Partners, L.P. (CCIP), an affiliated entity, for an
aggregate purchase price of approximately $82.1 million (the "CCIP
Acquisition").
In November 1996, CCE-I acquired the net assets of certain systems from
Masada Cable Partners, L.P., which include cable television systems in
Missouri, for an aggregate purchase price of approximately $24.2 million.
4. SUBORDINATED NOTE RECEIVABLE FROM UNCONSOLIDATED LIMITED PARTNERSHIP:
In connection with the formation of CCE-II, CCE-II issued a Promissory Note
(the "Note") to the Partnership in the amount of $47.0 million. Immediately
upon closing of the Gaylord acquisition, CCE-II used proceeds from borrowings
under the CCE-II Credit Agreement to repay $22.0 million on the Note. All
principal or interest amounts due under the Note are subordinated with respect
to the CCE-II Credit Agreement. The Note matures on March 31, 2005. The Note
bears interest at an annual rate equal to the weighted average interest rate
payable on the loans outstanding under the CCE-II Credit Agreement which was
7.66% and 8.20% during 1996 and 1995, respectively. The interest rate was
7.41% and 7.82% at December 31, 1996 and 1995, respectively.
5. NOTE PAYABLE:
In connection with the Crown Transaction, the Partnership issued a guarantee
of payment to the holder of the HC Crown Note. Accordingly, the debt has been
reflected as a liability of the Partnership in the accompanying financial
statements. The HC Crown Note is also guaranteed by CAC and CCE. The HC Crown
Note is an unsecured obligation. The HC Crown Note is limited in aggregate
principal amount to $82.0 million and has a stated maturity date of December
31, 1999 (the "Stated Maturity Date"). Interest accrues at 13% per annum,
compounded semiannually, but is not due and payable until the Stated Maturity
Date. If principal plus accrued interest is not paid at the Stated Maturity
Date, the annual rate at which interest accrues will initially increase to 18%
and will increase by an additional 2% on each successive anniversary of the
Stated Maturity Date (up to 26%) until the HC Crown Note is repaid; in
addition, a 3% default rate of interest can, in certain instances, be in
effect simultaneously with the stated rate of interest on the HC Crown Note.
The HC Crown Note is redeemable in whole or in part at the option of CCA
Holdings at any time, without premium or penalty, provided that accrued
interest is paid on the portion of the HC Crown Note so redeemed.
F-62
<PAGE>
CHARTER COMMUNICATIONS ENTERTAINMENT, L.P.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Borrowings under the HC Crown Note are subject to certain financial and
nonfinancial covenants and restrictions. The most restrictive covenant
requires maintenance of a ratio of debt (excluding the HC Crown Note) to
adjusted consolidated annualized operating cash flow, as defined, not to
exceed 7.25 to 1 at December 31, 1996. In addition to the subordination in
right of payment provisions contained in the HC Crown Note, the HC Crown Note
is subject to a subordination agreement in favor of senior bank debt of CCE-I.
Pursuant to the subordination agreement, substantially all rights and remedies
under the HC Crown Note, including the rights to accelerate the maturity upon
an event of default (including a payment of default), are suspended until the
obligations under the CCE-I Credit Agreement, are paid in full.
The HC Crown Note is subordinated to the CCE-I Credit Agreement. Pursuant to
the terms of the CCE-I Credit Agreement payments on the HC Crown Note are
prohibited until the indefeasible payment in full in cash, and the termination
of commitments to lend under the CCE-I Credit Agreement. The HC Crown Note
will not have the benefit of any distributions from CCE-II until repayment in
full of the CCE-II Credit Agreement and the Gaylord Note.
The obligations owing on the HC Crown Note are guaranteed by CAC, CCE and
the Partnership (collectively referred to as the "Guarantors"). The
Partnership's guarantee cannot be enforced until the repayment in full and
termination of the CCE-I Credit Agreement and the CCE-II Credit Agreement. The
CAC and CCE guarantees cannot be enforced until the repayment in full and
termination of the CCE-I Credit Agreement. The guarantees, by their terms, are
limited to the proceeds of distributions received from CCE-I and income, if
any, generated by the Guarantors. CCA Holdings and the Guarantors are
dependent primarily upon distributions from CCE-I to service the HC Crown
Note.
Subsequent to year-end, HC Crown Corp. sold the majority of the HC Crown
Note through a private placement. The fair value of the HC Crown Note plus
accrued interest, based upon the proceeds received, was approximately $89.5
million at December 31, 1996.
6. PARTNERSHIP INTERESTS:
Under the terms of the Partnership Agreement, the profits and losses for
income tax reporting purposes are allocated among the partners in accordance
with their percentage interests subject to any adjustments required by the
Internal Revenue Code and Treasury Regulations.
For financial reporting purposes, profits and losses, and the preferred
return (described below) are allocated in accordance with the liquidation
provisions in the Partnership Agreement.
Proceeds from the liquidation of the Partnership shall be distributed as
follows: (i) to the payment of liquidation expenses; (ii) to the payment of
creditors of the Partnership and the establishment of reserves to provide for
contingent liabilities; (iii) to CCT Holdings, equal to the amount of its
Preferred Capital Account; (iv) to each partner to the extent of such positive
balance in the ratio in which its respective ordinary capital account balance
bears to all such ordinary capital account balances; and (v) the remaining
balance to the partners in accordance with their percentage interests at the
time of liquidation.
CCT Holdings is entitled to an annual preferred return computed in
accordance with the provisions in the Partnership Agreement.
F-63
<PAGE>
CHARTER COMMUNICATIONS ENTERTAINMENT, L.P.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Pursuant to the Partnership Agreement, while any amounts remain outstanding
under both the HC Crown Note and the Gaylord Note, distributions to the
Partnership by CCE-I will be distributed by the Partnership to CAC and CCE
(pro rata) for use solely to service the HC Crown Note and distributions to
the Partnership by CCE-II will be distributed by the Partnership to CCT
Holdings to service the Gaylord Note. If the Gaylord Note is repaid prior to
payment in full of the HC Crown Note, then all distributions to the
Partnership from both CCE-I and CCE-II will be used to service the HC Crown
Note. If the HC Crown Note is repaid prior to payment in full of the Gaylord
Note, then all distributions to the Partnership from both CCE-I and CCE-II
will be used to service the Gaylord Note.
In connection with the Gaylord acquisition, CCT Holdings, the Partnership,
and Gaylord entered into a contingent payment agreement (the "Contingent
Agreement"). The Contingent Agreement indicates CCE, L.P. will pay Gaylord 15%
of any amount distributed to CCT Holdings in excess of the total of the
Gaylord Note, the HC Crown Note and $450.0 million.
7. COMMITMENTS AND CONTINGENCIES:
Litigation
A purported class action lawsuit on behalf of the CCIP limited partners was
filed in 1995 (the "Action"), which sought, among other things, to enjoin
permanently the CCIP Acquisition. On February 15, 1996, all of the plaintiff's
claims for injunctive relief were dismissed (including that which sought to
prevent the consummation of the CCIP Acquisition); the plaintiff's claims for
money damages which may have resulted from the CCIP Acquisition remain
pending. Each of the defendants in the Action, including CCE-I believes the
Action, which remains pending, to be without merit and is contesting it
vigorously. In October 1996, the plaintiff filed a Consolidated Amended Class
Action Complaint (the "Amended Complaint"). The general partner of CCIP
believes that portions of the Amended Complaint are legally inadequate and
filed a motion for summary judgment to dismiss all remaining claims in the
Action in January 1997. There can be no assurance, however, that the
plaintiffs will not be awarded damages, some or all of which may be payable by
CCE-I, in connection with the Action.
The Partnership is also a party to lawsuits which are generally incidental
to its business. In the opinion of management, after consulting with legal
counsel, the outcome of these lawsuits will not have a material adverse effect
on the Partnership's financial position and results of operations.
8. REGULATION IN THE CABLE TELEVISION INDUSTRY:
The cable television industry is subject to extensive regulation at the
federal, local and, in some instances, state levels. In addition, recent
legislative and regulatory changes and additional regulatory proposals under
consideration may materially affect the cable television industry.
Congress enacted the Cable Television Consumer Protection and Competition
Act of 1992 (the "1992 Cable Act"), which became effective on December 4,
1992. The 1992 Cable Act generally allows for a greater degree of regulation
of the cable television industry. Under the 1992 Cable Act's definition of
effective competition, nearly all cable systems in the United States are
subject to rate regulation of basic cable services, provided the local
franchising authority becomes certified to regulate basic service rates. The
1992 Cable Act and the Federal Communications Commission's (FCC) rules
implementing the 1992 Cable Act have generally increased the administrative
and operational expenses of cable television systems and have resulted in
additional regulatory oversight by the FCC and local franchise authorities.
Management believes that CCE-I and CCE-II have complied in all material
respects with the rate provisions of the 1992 Cable Act; however, in
jurisdictions that have not yet chosen to certify, refunds covering a one-year
period on basic services may be ordered upon future certification if CCE-I and
CCE-II are unable to justify their
F-64
<PAGE>
CHARTER COMMUNICATIONS ENTERTAINMENT, L.P.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
rates through a benchmark or cost-of-service filing pursuant to FCC rules.
Management is unable to estimate at this time the amount of refunds, if any,
that may be payable by CCE-I and CCE-II in the event certain of their rates
are successfully challenged by franchising authorities or found to be
unreasonable by the FCC. Management does not believe that the amount of any
such refunds would have a material adverse effect on the financial position or
results of operations of the Partnership.
The 1992 Cable Act modified the franchise renewal process to make it easier
for a franchising authority to deny renewal. Historically, franchises have
been renewed for cable operators that have provided satisfactory services and
have complied with the terms of the franchise agreement. Although management
believes that CCE-I and CCE-II have generally met the terms of their franchise
agreements and have provided quality levels of service, and anticipates CCE-
I's and CCE-II's future franchise renewal prospects generally will be
favorable, there can be no assurance that any such franchises will be renewed
or, if renewed, that the franchising authority will not impose more onerous
requirements on CCE-I and CCE-II than previously existed.
During 1996, Congress passed and the President signed into law the
Telecommunications Act of 1996 (the "Telecommunications Act"), which alters
federal, state, and local laws and regulations pertaining to cable television,
telecommunications and other services. Under the Telecommunications Act,
telephone companies can compete directly with cable operators in the provision
of video programming, subject to certain regulatory safeguards.
Certain provisions of the Telecommunications Act could materially affect the
growth and operation of the cable television industry and the cable services
provided by CCE-I and CCE-II. Although the new legislation may substantially
lessen regulatory burdens, the cable television industry may be subject to
additional competition as a result thereof. There are numerous rule-makings to
be undertaken by the FCC which will interpret and implement the
Telecommunications Act's provisions. In addition, certain provisions of the
Telecommunications Act (such as the deregulation of cable programming rates)
are not immediately effective. Further, certain of the Telecommunications
Act's provisions have been and are likely to be subject to judicial
challenges. Management is unable at this time to predict the outcome of such
rule-makings or litigation or the substantive effect of the new legislation
and the rule-makings on the financial position and results of operations of
the Partnership.
9. NET LOSS FOR INCOME TAX PURPOSES:
The following reconciliation summarizes the differences between the
Partnership's net loss for financial reporting purposes and net loss for
federal income tax purposes for the year ended December 31, 1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Net loss for financial reporting purposes...... $(56,455,509) $(44,669,565)
Differences in net loss of unconsolidated
limited partnerships for financial reporting
and tax reporting............................. (2,767,108) 31,239,817
Differences in expenses for financial reporting
and tax reporting............................. 12,404,598 10,438,805
------------ ------------
Net loss for federal income tax purposes... $(46,818,019) $ (2,990,943)
============ ============
The following summarizes the significant cumulative temporary differences
between the Partnership's financial reporting basis and federal income tax
reporting basis as of December 31, 1996 and 1995:
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Assets:
Investment in unconsolidated limited
partnerships.................................. $ 4,912,673 $ 7,679,781
============ ============
</TABLE>
F-65
<PAGE>
CHARTER COMMUNICATIONS ENTERTAINMENT, L.P.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
10. COMPETITION:
The Connecticut Department of Public Utility Control granted a franchise to
a subsidiary of a local telephone company to serve the entire state of
Connecticut. This provider has proposed to offer its cable service initially
to a primary franchise area of several Connecticut communities, including one
served by CCE-I. Management is unable to predict the ultimate impact of this
development upon the Partnership's financial position or results of
operations.
CCE-II's Riverside, California system, providing service to approximately
48,000 basic subscribers, faces competition from a multipoint distribution
system acquired by Pacific Telesis Group. At this time, management is
uncertain what impact, if any, this acquisition will have on the Partnership's
financial position or results of operations.
11. SIGNIFICANT NONCASH TRANSACTIONS:
The Partnership engaged in the following significant noncash financing
transaction during the years ended December 31:
<TABLE>
<CAPTION>
1996 1995
----------- ----------
<S> <C> <C>
Preference allocation--Preferred Capital Account
(see Note 6)...................................... $20,492,278 $5,081,095
</TABLE>
F-66
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Charter Communications Entertainment I, L.P.:
We have audited the accompanying balance sheets of Charter Communications
Entertainment I, L.P. (a Delaware limited partnership) as of December 31, 1996
and 1995, and the related statements of operations, partners' capital and cash
flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Charter Communications
Entertainment I, L.P. as of December 31, 1996 and 1995, and the results of its
operations and its cash flows for the years then ended, in conformity with
generally accepted accounting principles.
Arthur Andersen LLP
St. Louis, Missouri,
February 21, 1997
F-67
<PAGE>
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
BALANCE SHEETS--DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents........................... $ 2,934,939 $ 11,430,931
Accounts receivable, net of allowance for doubtful
accounts of $371,166
and $251,419....................................... 5,465,750 3,324,186
Prepaid expenses and other.......................... 490,443 641,558
Net assets of discontinued operation................ 108,827 --
------------ ------------
Total current assets............................. 8,999,959 15,396,675
------------ ------------
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment....................... 206,351,379 178,149,968
Franchise costs, net of accumulated amortization of
$51,761,758 and $21,512,225........................ 439,232,345 370,268,109
Covenant not to compete, net of accumulated amorti-
zation of $20,000,000
and $10,000,000.................................... -- 10,000,000
------------ ------------
645,583,724 558,418,077
------------ ------------
OTHER ASSETS......................................... 9,667,356 7,649,949
------------ ------------
RESTRICTED FUNDS HELD IN ESCROW...................... -- 301,598
------------ ------------
NET NONCURRENT ASSETS OF DISCONTINUED OPERATION...... 1,760,015 --
------------ ------------
$666,011,054 $581,766,299
============ ============
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Current maturities of long-term debt................ $ 5,880,000 $ --
Accounts payable and accrued expenses............... 18,517,774 13,274,646
Subscriber deposits................................. 473,601 711,663
Payables to affiliates.............................. 2,630,149 2,907,529
Other current liabilities........................... 1,401,951 --
------------ ------------
Total current liabilities........................ 28,903,475 16,893,838
------------ ------------
DEFERRED REVENUE..................................... 708,339 780,612
------------ ------------
LONG-TERM DEBT....................................... 462,120,000 355,000,000
------------ ------------
DEFERRED MANAGEMENT FEES PAYABLE TO AFFILIATE........ 1,755,000 1,015,000
------------ ------------
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL:
General Partner..................................... 1,862,703 2,797,869
Limited Partners--
Ordinary Capital Accounts.......................... 65,818,135 112,840,175
Preferred Capital Account.......................... 104,843,402 92,438,805
------------ ------------
Total partners' capital.......................... 172,524,240 208,076,849
------------ ------------
$666,011,054 $581,766,299
============ ============
</TABLE>
The accompanying notes are an integral part of these balance sheets.
F-68
<PAGE>
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
SERVICE REVENUES:
Basic service................................... $ 96,560,920 $ 65,075,541
Premium service................................. 19,201,801 15,484,951
Other........................................... 27,260,540 19,128,918
------------ ------------
143,023,261 99,689,410
------------ ------------
EXPENSES:
Operating costs................................. 59,869,348 41,800,111
General and administrative...................... 11,255,985 7,142,567
Depreciation and amortization................... 65,757,387 51,193,702
Management and financial advisory service fees--
related parties................................ 5,034,375 6,499,167
------------ ------------
141,917,095 106,635,547
------------ ------------
Income (loss) from continuing operations...... 1,106,166 (6,946,137)
------------ ------------
OTHER INCOME (EXPENSE):
Interest income................................. 164,476 503,585
Interest expense................................ (34,249,422) (25,022,221)
Other........................................... (1,058,271) 41,622
------------ ------------
(35,143,217) (24,477,014)
------------ ------------
Net loss from continuing operations........... (34,037,051) (31,423,151)
LOSS FROM DISCONTINUED OPERATION.................. (1,515,558) --
------------ ------------
Net loss...................................... (35,552,609) (31,423,151)
PREFERRED RETURN.................................. (12,404,597) (3,020,613)
------------ ------------
Net loss application to partner's capital
accounts..................................... (47,957,206) $(34,443,764)
------------ ------------
NET LOSS ALLOCATION:
General Partner................................. (935,166) (124,031)
Limited Partners--Preferred Capital Account..... -- --
------------ ------------
(935,166) (124,031)
------------ ------------
NET LOSS APPLICABLE TO LIMITED PARTNERS--ORDINARY
CAPITAL ACCOUNTS................................. $(47,022,040) $(34,319,733)
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
F-69
<PAGE>
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
LIMITED PARTNERS
--------------------------
ORDINARY PREFERRED
GENERAL CAPITAL CAPITAL
PARTNER ACCOUNTS ACCOUNT TOTAL
---------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
BALANCE, January 1, 1995.. $ -- $ -- $ -- $ --
Capital contributions.... 2,921,900 147,159,908 89,418,192 239,500,000
Allocation of net loss... (65,129) (31,358,022) -- (31,423,151)
Allocation of preferred
return.................. (58,902) (2,961,711) 3,020,613 --
---------- ------------ ------------ ------------
BALANCE, December 31,
1995...................... 2,797,869 112,840,175 92,438,805 208,076,849
Capital contributions.... -- -- -- --
Allocation of net loss... (693,276) (34,859,333) -- (35,552,609)
Allocation of preferred
return.................. (241,890) (12,162,707) 12,404,597 --
---------- ------------ ------------ ------------
BALANCE, December 31,
1996...................... $1,862,703 $ 65,818,135 $104,843,402 $172,524,240
========== ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
F-70
<PAGE>
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.......................................... $(35,552,609) $(31,423,151)
Adjustments to reconcile net loss to net cash pro-
vided by operating activities--
Depreciation and amortization.................... 65,757,387 51,193,702
Loss on sale of property, plant and equipment.... 1,256,945 --
Loss from discontinued operation................. 1,515,558 --
Changes in assets and liabilities, net of effects
from acquisitions--
Accounts receivable, net........................ (1,748,468) (1,387,654)
Prepaid expenses and other...................... 279,406 (250,428)
Accounts payable and accrued expenses........... 4,056,629 4,249,587
Subscriber deposits............................. (257,062) (11,303)
Payables to affiliates.......................... 462,620 3,922,529
Other current liabilities....................... 1,401,951 --
Deferred revenue................................ (144,748) 780,612
------------ ------------
Net cash provided by operating activities...... 37,027,609 27,073,894
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment........ (33,898,020) (22,023,524)
Proceeds from sale of property, plant and equip-
ment............................................. 986,359 --
Payments for acquisitions, net of cash acquired... (122,017,267) (579,179,458)
Payments of organizational expenses............... (242,875) (1,297,203)
Payments of franchise costs....................... (569,167) (53,266)
Payments of brokerage commissions................. (310,385) --
Restricted funds held in escrow................... 301,598 (301,598)
------------ ------------
Net cash used in investing activities.......... (155,749,757) (602,855,049)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of debt issuance costs................... (2,773,844) (7,287,914)
Borrowings under revolving credit and term loan
facility......................................... 120,500,000 356,000,000
Payments of revolving credit and term loan facili-
ty............................................... (7,500,000) (1,000,000)
Limited Partners' contributions................... -- 236,578,100
General Partner's contribution.................... -- 2,921,900
------------ ------------
Net cash provided by financing activities...... 110,226,156 587,212,086
------------ ------------
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS........................................ (8,495,992) 11,430,931
CASH AND CASH EQUIVALENTS, beginning of year....... 11,430,931 --
CASH AND CASH EQUIVALENTS, end of year............. $ 2,934,939 $ 11,430,931
============ ============
CASH PAID FOR INTEREST............................. $ 33,921,715 $ 22,907,403
============ ============
CASH PAID FOR TAXES................................ $ -- $ --
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
F-71
<PAGE>
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Organization and Basis of Presentation
Charter Communications Entertainment I, L.P. (the "Partnership"), a Delaware
limited partnership, was formed effective January 1995, for the purpose of
acquiring and operating existing cable television systems. The Partnership
commenced operations effective January 1995, with the assignment of its
general and limited partnership interests. The Partnership will terminate no
later than December 31, 2055, as provided in its partnership agreement (the
"Partnership Agreement").
CCA Acquisition Corp. (CAC), the General Partner, holds a 1.22% interest in
the Partnership. CAC is a wholly owned subsidiary of CCA Holdings Corp. (CCA
Holdings). Charter Communications Entertainment, L.P. (CCE) and CCT Holdings
Corp. (CCT Holdings) hold limited partnership interests of 97.78% and 1%,
respectively, in the Partnership. CCT Holdings and CCA Holdings hold
partnership interests of 45% and 55%, respectively, in CCE. CCA Holdings and
CCT Holdings are each owned by Kelso Investment Associates V, L.P., an
investment fund, together with an affiliate (collectively referred to as
"Kelso" herein) and certain other individuals and Charter Communications, Inc.
(Charter), manager of the Partnership's cable television systems (see Note 8).
As of December 31, 1996, the Partnership provided cable television service
to approximately 125 franchises serving approximately 338,300 basic
subscribers in Connecticut, Illinois, Massachusetts, Missouri and New
Hampshire.
Cash Equivalents
Cash equivalents at December 31, 1996 and 1995, consist primarily of
repurchase agreements with original maturities of 90 days or less. These
investments are carried at cost, which approximates market value. The
Partnership is subject to loss for amounts invested in repurchase agreements
in the event of nonperformance by the financial institution which acts as the
counterparty under such agreements; however, such noncompliance is not
anticipated.
Property, Plant and Equipment
Property, plant and equipment is recorded at cost, including all direct and
certain indirect costs associated with the construction of cable transmission
and distribution facilities, and the cost of new customer installation. The
costs of disconnecting a residence are charged to expense in the period
incurred. Expenditures for repairs and maintenance are charged to expense as
incurred, and equipment replacement costs and betterments are capitalized.
Depreciation is provided using the composite method on a straight-line basis
over the estimated useful life of the related asset as follows:
<TABLE>
<S> <C>
Trunk and distribution systems................................ 10 years
Subscriber installations...................................... 10 years
Buildings and headends........................................ 10-20 years
Converters.................................................... 5 years
Vehicles and equipment........................................ 4-8 years
Office equipment.............................................. 5-10 years
</TABLE>
F-72
<PAGE>
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Franchise Costs
Costs incurred in obtaining and renewing cable franchises are initially
deferred and amortized over the legal lives of the franchises. Costs relating
to unsuccessful franchise applications are charged to expense when it is
determined that the efforts to obtain the franchise will not be successful.
Franchise rights acquired through the purchase of cable television systems
represent the excess of the cost of properties acquired over the amounts
assigned to the net tangible assets at date of acquisition. Acquired franchise
rights are amortized using the straight-line method over 15 years.
Covenant Not to Compete
Covenant not to compete was amortized over the term of the respective
agreement (two years).
Other Assets
Organizational expenses are being amortized using the straight-line method
over five years. Debt issuance costs are being amortized over the term of the
debt.
During 1995, the Partnership adopted Statement of Financial Accounting
Standards (SFAS) No. 121 entitled, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed of." In accordance with
SFAS No. 121, the Partnership periodically reviews the carrying value of its
long-lived assets, identifiable intangibles and franchise costs in relation to
historical financial results, current business conditions and trends
(including the impact of existing legislation and regulation) to identify
potential situations in which the carrying value of such assets may not be
recoverable. If a review indicates that the carrying value of such assets may
not be recoverable, the carrying value of such assets in excess of their fair
value will be recorded as a reduction of the assets' cost as if a permanent
impairment has occurred. No impairments have occurred and accordingly, no
adjustments to the financial statements of the Partnership have been recorded
relating to SFAS No. 121.
Restricted Funds Held in Escrow
In connection with the acquisition of cable television systems from Mineral
Area Cablevision Co., L.P. (Omega) as further discussed in Note 3, the
Partnership agreed to deposit a portion of the purchase price into an escrow
account in 1995, which was transferred to Omega at the closing of the asset
purchase in January 1996.
Revenues
Cable service revenues are recognized when the related services are
provided.
Installation revenues are recognized to the extent of direct selling costs
incurred. The remainder, if any, is deferred and amortized to income over the
average estimated period that customers are expected to remain connected to
the cable television system.
Franchise fees collected from cable subscribers and paid to local franchises
are reported as revenues.
Other Income (Expense)
Other includes gain and loss on disposition on fixed assets and other
miscellaneous income and expense items, which are not directly related to the
Partnership's primary business. A loss of $1,256,945 was recognized on the
sale of two buildings for the year ended December 31, 1996.
F-73
<PAGE>
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Derivative Financial Instruments
The Partnership manages risk arising from fluctuations in interest rates by
using interest rate swap and cap agreements, as required by its credit
agreement. These agreements are treated as off-balance sheet financial
instruments. The interest rate swap and cap agreements are being accounted for
as a hedge of the debt obligation, and accordingly, the net settlement amount
is recorded as an adjustment to interest expense in the period incurred.
Income Taxes
Income taxes are the responsibility of the partners and as such are not
provided for in the accompanying financial statements, except for taxes
imposed by the state of Illinois. The state income tax benefit generated by
partnership losses for the year ended December 31, 1996, was offset by a
valuation allowance of an equal amount.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Reclassifications
Certain reclassifications have been made to the 1995 financial statements to
conform with current year presentation.
2. PARTNERSHIP INTERESTS:
Under the terms of the Partnership Agreement, the profits and losses for
income tax reporting purposes are allocated among the partners in accordance
with their percentage interests subject to any adjustments required by the
Internal Revenue Code and Treasury Regulations.
For financial reporting purposes, profits and losses, and the preferred
return (described below) are allocated in accordance with the liquidation
provisions in the Partnership Agreement.
Proceeds from the liquidation of the Partnership shall be distributed as
follows: (i) to the payment of liquidation expenses; (ii) to the payment of
creditors of the Partnership and the establishment of reserves to provide for
contingent liabilities; (iii) to CCE, equal to the amount of its Preferred
Capital Account; (iv) to each partner to the extent of such positive balance
in the ratio in which its respective ordinary capital account balance bears to
all such ordinary capital account balances; and (v) the remaining balance to
the partners in accordance with their percentage interests at the time of
liquidation.
The Partnership Agreement provides for, among other things, distributions to
the respective partners in proportion to their respective partnership
interests, and the creation of a preferred capital account and preferred
distributions related thereto. CCE is entitled to an annual preferred return
computed in accordance with the provisions in the Partnership Agreement. The
effect of these provisions is to direct the proceeds of distributions from the
Partnership to CCE for repayment of the HC Crown Note (as defined herein).
Furthermore, the Credit Agreement (as defined herein) establishes limitations
on distributions.
F-74
<PAGE>
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
3. ACQUISITIONS:
In January 1995, CAC completed the acquisition of certain cable television
systems from Crown Media, Inc. (Crown), a subsidiary of Hallmark Cards,
Incorporated (Hallmark) for an aggregate purchase price of approximately
$488.2 million. The assets were later contributed through a series of
transactions to the Partnership effective January 1, 1995. The acquisition of
these systems was part of a series of larger transactions in which Crown sold
its cable television systems to a group of investors, including Charter, CAC,
certain affiliates of Charter, and third parties, for a total purchase price
of approximately $900.0 million.
To finance this acquisition, the Partnership entered into a revolving credit
and term loan facility (see Note 7), and pursuant to a senior subordinated
loan agreement, CCA Holdings executed a subordinated seller note to HC Crown
Corp., an affiliate of Hallmark for $82.0 million (the "HC Crown Note"). The
obligations of the HC Crown Note are guaranteed by CAC, Cencom Cable
Entertainment, Inc., a wholly owned subsidiary of CAC, and CCE (collectively,
the "Guarantors"). The guarantees, by their terms, are limited to the proceeds
of distributions received from the Partnership, and income, if any, generated
by the Guarantors. CCA Holdings and the Guarantors are dependent primarily on
distributions from the Partnership to service the obligations owing under the
HC Crown Note. Upon repayment in full of the obligations of the revolving
credit and term loan facility and termination of all commitments to lend in
respect thereof, the HC Crown Note will have the benefit of distributions from
the Partnership. The Partnership's assets are not pledged as collateral to the
HC Crown Note.
In October 1995, the Partnership acquired the net assets of certain systems
from United Video Cablevision, Inc. (United) which include cable television
systems in Massachusetts and Missouri for an aggregate purchase price of
approximately $96.0 million.
In January 1996, the Partnership acquired the net assets of Omega, which
include cable television systems in Missouri, for an aggregate purchase price
of approximately $9.4 million.
In March 1996, the Partnership acquired the net assets of the Illinois
system from Cencom Cable Income Partners, L.P. (CCIP), an affiliated entity,
for an aggregate purchase price of approximately $82.1 million.
In November 1996, the Partnership acquired the net assets of certain systems
from Masada Cable Partners, L.P. (Masada), which include cable television
systems in Missouri, for an aggregate purchase price of approximately $24.2
million.
F-75
<PAGE>
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
These acquisitions were accounted for using the purchase method of
accounting, and accordingly, results of operations of the acquired assets have
been included in the financial statements from the respective date of
acquisition. The following shows the purchase price and the allocation of the
purchase price to assets acquired and liabilities assumed:
<TABLE>
<CAPTION>
CROWN UNITED OMEGA CCIP MASADA
------------ ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Purchase price:
Cash paid to seller.... $341,030,472 $93,542,306 $9,178,086 $80,103,013 $23,625,358
Seller note executed by
CCA Holdings.......... 82,000,000 -- -- -- --
Assumed liabilities,
including deferred
income taxes of
$55,500,000 for
Crown................. 55,638,033 282,000 32,000 -- 82,950
Transaction costs...... 9,545,039 2,216,101 200,000 2,025,000 480,000
------------ ----------- ---------- ----------- -----------
$488,213,544 $96,040,407 $9,410,086 $82,128,013 $24,188,308
============ =========== ========== =========== ===========
Allocation of purchase
price to
assets acquired:
Cash.................. $ 5,073,954 $ 539 $ 200 $ 1,053,410 $ --
Accounts receivable... 1,933,859 2,673 5,190 387,906 --
Prepaid expenses and
other................ 279,745 111,385 7,440 90,368 30,483
Property, plant and
equipment............ 162,432,874 12,439,879 1,054,878 11,980,833 2,147,338
Franchise costs....... 307,370,555 84,356,513 8,427,122 69,663,726 22,155,487
Covenant not to
compete.............. 20,000,000 -- -- -- --
Accounts payable and
accrued expenses..... (8,877,443) (147,616) (84,744) (975,755) (126,000)
Subscriber deposits... -- (722,966) -- -- (19,000)
Deferred revenue...... -- -- -- (72,475) --
------------ ----------- ---------- ----------- -----------
Purchase price...... $488,213,544 $96,040,407 $9,410,086 $82,128,013 $24,188,308
============ =========== ========== =========== ===========
</TABLE>
The following is the unaudited pro forma operating results for the 1996 and
1995 acquisitions as though they had been made on January 1 of the respective
year prior to such acquisitions:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
--------------------------
1996 1995
------------ ------------
(UNAUDITED)
<S> <C> <C>
Service revenues................................ $151,548,000 $137,021,602
Income (loss) from operations................... $ 819,000 $ (2,049,590)
Net loss........................................ $(37,743,000) $(41,916,360)
</TABLE>
F-76
<PAGE>
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
4. PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment is stated at cost and consist of the following
at December 31:
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Trunk and distribution systems................... $125,248,708 $110,330,189
Subscriber installations......................... 45,636,572 34,114,600
Land, buildings and headends..................... 33,135,716 21,069,307
Converters....................................... 27,097,454 21,046,326
Vehicles and equipment........................... 7,180,068 4,737,430
Office equipment................................. 7,603,973 5,597,301
Construction-in-progress......................... 3,243,405 --
------------ ------------
249,145,896 196,895,153
Less--Accumulated depreciation................... (42,794,517) (18,745,185)
------------ ------------
$206,351,379 $178,149,968
============ ============
</TABLE>
5. OTHER ASSETS:
Other assets consist of the following at December 31:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Debt issuance costs, net of accumulated amortization
of $1,656,817
and $648,064......................................... $8,404,941 $6,639,850
Organizational expenses, net of accumulated
amortization of $574,589
and $287,104......................................... 965,489 1,010,099
Brokerage commissions, net of accumulated amortization
of $13,459
and $--.............................................. 296,926 --
---------- ----------
$9,667,356 $7,649,949
========== ==========
</TABLE>
6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES:
Accounts payable and accrued expenses consist of the following at December
31:
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Accrued salaries and related benefits............... $ 1,283,024 $ 888,972
Accounts payable.................................... 1,763,895 646,744
Accrued interest.................................... 2,442,525 2,114,818
Programming expenses................................ 2,726,803 2,046,640
Franchise fees...................................... 3,187,335 2,467,564
Capital expenditures................................ 3,482,531 3,525,747
Other............................................... 3,631,661 1,584,161
----------- -----------
$18,517,774 $13,274,646
=========== ===========
</TABLE>
7. LONG-TERM DEBT:
Long-term debt consists of the following at December 31:
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Credit Agreement:
Term loans...................................... $280,000,000 $280,000,000
Fund loans...................................... 85,000,000 75,000,000
Revolving credit facility....................... 103,000,000 --
------------ ------------
468,000,000 355,000,000
Less--Current maturities........................ (5,880,000) --
------------ ------------
$462,120,000 $355,000,000
============ ============
</TABLE>
F-77
<PAGE>
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
In January 1995, the Partnership entered into a revolving credit and term
loan facility (the "Credit Agreement") with a consortium of banks for
borrowings up to $300.0 million. The Credit Agreement has been amended on
several occasions to increase total borrowings to $505.0 million for the
purpose of making certain acquisitions. Principal payments are due in
quarterly installments beginning September 30, 1997, and continuing through
June 30, 2004. Borrowings under the Credit Agreement bear interest at rates
based upon a certain spread plus a base rate, with the base rate being, at the
Partnership's election, the Base
Rate, as defined in the Credit Agreement, LIBOR, or prevailing bid rates on
certificates of deposit. The applicable spread is based on the ratio of debt
to annualized operating cash flow. The interest rates ranged from 7.63% to
9.42% at December 31, 1996. The weighted average interest rates and weighted
average borrowings were 8.05% and 8.71%, and approximately $425.1 million and
$272.9 million during 1996 and 1995, respectively. As this debt instrument
bears interest at current market rates, its carrying amount approximates fair
market value at December 31, 1996 and 1995.
Borrowings under the Credit Agreement are collateralized by the assets of
the Partnership. In addition, CAC, CCE and CCT Holdings have pledged their
partnership interests as additional security to the Credit Agreement.
Borrowings under the Credit Agreement are subject to certain financial and
nonfinancial covenants and restrictions, the most restrictive of which
requires maintenance of a ratio of debt to annualized operating cash flow, as
defined, not to exceed 6.50 to 1 at December 31, 1996. A quarterly commitment
fee of 0.375% per annum is payable on the unused portion of the Credit
Agreement.
Commencing September 30, 1997, and March 31, 1998, the principal balances of
the term and fund loans, respectively, shall be amortized in consecutive
quarterly installments until paid in full. In addition, commencing September
30, 1997, and at the end of each calendar quarter thereafter, available
borrowings under the revolving credit facility shall be reduced. The following
table sets forth such information on an annual basis.
<TABLE>
<CAPTION>
PERCENTAGE OF PRINCIPAL DUE PERCENTAGE REDUCTION
------------------------------ OF REVOLVING CREDIT
YEAR TERM LOANS FUND LOANS FACILITY COMMITMENT
------------- ------------- --------------------
<S> <C> <C> <C>
1997............... 2.10% -- % 2.10%
1998............... 9.00 .50 9.00
1999............... 12.00 .50 12.00
2000............... 12.25 1.00 12.25
2001............... 16.50 1.00 16.50
2002............... 20.25 1.00 20.25
2003............... 21.25 17.40 21.25
2004............... 6.65 78.60 6.65
------------- ------------- ------
100.00% 100.00% 100.00%
============= ============= ======
</TABLE>
In addition to the foregoing, effective April 30, 1999, and on each April
30th thereafter, the Partnership is required to make a repayment of principal
of the outstanding term and fund loans in an amount equal to 75% of Annual
Excess Cash Flow, as defined in the Credit Agreement, for the preceding year
if the leverage ratio is greater than 5.5 to 1, or 50% of Annual Excess Cash
Flow if the leverage ratio is less than 5.5 to 1. These repayments shall be
applied to principal in inverse order of maturity.
F-78
<PAGE>
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Based upon outstanding indebtedness at December 31, 1996, the amortization
of term and fund loans and scheduled reductions in available borrowings
depicted above, aggregate future principal payments on the Credit Agreement at
December 31, 1996, are as follows:
<TABLE>
<CAPTION>
REVOLVING
CREDIT TOTAL
TERM LOANS FUND LOANS FACILITY AMOUNT
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
1997................... $ 5,880,000 $ -- $ -- $ 5,880,000
1998................... 25,200,000 425,000 -- 25,625,000
1999................... 33,600,000 425,000 -- 34,025,000
2000................... 34,300,000 850,000 12,490,000 47,640,000
2001................... 46,200,000 850,000 23,100,000 70,150,000
Thereafter............. 134,820,000 82,450,000 67,410,000 284,680,000
------------ ----------- ------------ ------------
$280,000,000 $85,000,000 $103,000,000 $468,000,000
============ =========== ============ ============
</TABLE>
As a requirement of the Credit Agreement, the Partnership has secured
interest rate protection agreements. The Credit Agreement requires the
Partnership to enter into interest rate protection agreements for notional
amounts of not less than 50% of the outstanding obligations. In addition, the
interest rate protection agreements must provide rate protection for a
weighted average period of not less than 18 months. The fair value of the
interest rate caps or swaps is the estimated amount the Partnership would
(pay) receive to eliminate the cap or swap agreement at the reporting date,
taking into account current interest rates and the credit-worthiness of the
counterparties. The following summarizes certain information pertaining to the
interest rate protection agreements as of December 31, 1996:
<TABLE>
<CAPTION>
FAIR
VALUE/
NOTIONAL FIXED REDEMPTION
AMOUNT TYPE RATE CONTRACT EXPIRATION DATE PRICE
-------- ---- ----- --------------------------- ----------
<S> <C> <C> <C> <C>
$ 25,000,000 Swap 5.5% December 1, 1997 $ (60,812)
25,000,000 Swap 5.5 December 1, 1997 (19,135)
30,000,000 Cap 8.5 March 28, 1998 (4,956)
50,000,000 Cap 8.5 April 14, 1998 (8,978)
25,000,000 Swap 4.9 December 1, 1998 *
75,000,000 Swap 5.5 February 2, 1999 1,085,601
20,000,000 Cap 8.5 September 23, 1999 42,045
------------ ----------
$250,000,000 6.6% Weighted Average Fixed Rate $1,033,765
============ ==========
</TABLE>
- --------
* This contract has not been marked to market since its effective date is
after the reporting date.
Management believes that the counterparties of the interest hedge agreements
will be able to meet their obligations under the agreements. The purpose of
the Partnership's involvement in these interest hedge agreements is to
minimize the Partnership's exposure to interest rate fluctuations on its
floating rate debt. Management believes that it has no material concentration
of credit or market risks with respect to its interest hedge agreements.
8. RELATED-PARTY TRANSACTIONS:
Charter provides management services to the Partnership under the terms of a
contract which provides for base fees equal to $4,845,000 and $3,925,000 as of
December 31, 1996 and 1995, respectively, per annum plus an annual bonus equal
to 30% of the excess, if any, of operating cash flow (as defined in the
management agreement) over the projected operating cash flow for the year.
Payment of the annual bonus is prohibited until termination of the Credit
Agreement due to restrictions provided within the Credit Agreement. The annual
bonus for the year ended December 31, 1996 and 1995, totaled $740,000 and
$1,015,000, respectively. In addition, the Partnership receives financial
advisory services from an affiliate of Kelso under terms of a contract which
F-79
<PAGE>
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
provides for fees equal to $552,500 and $450,000 at December 31, 1996 and
1995, respectively, per annum. These agreements were amended during 1996 and
1995 in conjunction with each acquisition of cable television systems to
increase the annual base fees for Charter and Kelso. Expenses recognized by
the Partnership under these contracts during 1996 and 1995 were approximately
$5,034,000 and $6,499,000, respectively. Management and financial advisory
service fees currently payable of $1,181,300 and $1,029,000 are included in
Payables to affiliates at December 31, 1996 and 1995, respectively.
The Partnership pays certain acquisition advisory fees to an affiliate of
Kelso and Charter, which typically equal approximately 1% of the total
purchase price paid for cable television systems acquired. Total acquisition
fees paid to the affiliate of Kelso in 1996 and 1995 were $1,140,000 and
$5,250,000, respectively. Total acquisition fees paid to Charter in 1996 and
1995 were $1,140,000 and $950,000, respectively. In addition, Charter received
$4,300,000 of equity interests in CCA Holdings during 1995 in conjunction with
the Crown acquisition.
The Partnership and all entities affiliated with Charter collectively
utilize a combination of insurance coverage and self-insurance programs for
medical, dental and workers' compensation claims. The Partnership is allocated
charges monthly based upon its total number of employees, historical claims
and medical cost trend rates. Management considers this allocation to be
reasonable for the operations of the Partnership. During 1996 and 1995, the
Partnership expensed approximately $1,401,300 and $840,000, respectively,
relating to insurance allocations.
In 1996, the Partnership and other affiliated entities employed the services
of Charter's National Data Center (the "National Data Center"). The National
Data Center performs certain subscriber billing services and provides computer
network, hardware and software support for the Partnership and other
affiliated entities. The cost of billing services is allocated based on the
number of subscribers. Management considers this allocation to be reasonable
for the operations of the Partnership. During 1996, the Partnership expensed
approximately $340,600 relating to these services.
In 1996, certain of the Partnership's employees became participants in the
1996 Charter Communications/Kelso & Company Appreciation Rights Plan (the
"Appreciation Rights Plan"). The Appreciation Rights Plan covers certain key
employees and consultants within the group of companies and partnerships
controlled by affiliates of Kelso and managed by Charter (collectively, the
"Investment Group").
The Partnership maintains a regional office. The regional office performs
certain operational services on behalf of the Partnership and other affiliated
entities. The cost of these services is allocated to the Partnership and
affiliated entities based on their number of subscribers. Management considers
this allocation to be reasonable for the operations of the Partnership. During
1996 and 1995, the Partnership expensed approximately $799,400 and $512,000,
respectively, relating to these services.
9. COMMITMENTS AND CONTINGENCIES:
Leases
The Partnership leases certain facilities and equipment under noncancelable
operating leases. Rent expense incurred under these leases during 1996 and
1995 was approximately $617,600 and $533,000, respectively.
Approximate aggregate future minimum lease payments are as follows:
<TABLE>
<S> <C>
AMOUNT
--------
1997................................................................ $484,500
1998................................................................ 438,900
1999................................................................ 259,600
2000................................................................ 159,200
2001................................................................ 111,200
Thereafter.......................................................... 422,100
</TABLE>
F-80
<PAGE>
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The Partnership rents utility poles in its operations. Generally, pole
rental agreements are short term, but the Partnership anticipates that such
rentals will recur. Rent expense for pole attachments during 1996 and 1995 was
approximately $1,773,100 and $1,363,000, respectively.
Insurance Coverage
The Partnership currently does not have, and does not in the near term
anticipate having, property and casualty insurance on its underground
distribution plant. Due to large claims incurred by the property and casualty
insurance industry, the pricing of insurance coverage has become inflated to
the point where, in the judgment of the Partnership's management, the price is
cost prohibitive. Management believes that its experience and policy with such
insurance coverage is consistent with general industry practices. Management
will continue to monitor the insurance markets to attempt to obtain coverage
for the Partnership's distribution plant at reasonable rates.
Litigation
A purported class action lawsuit on behalf of the CCIP limited partners was
filed in 1995 (the "Action"), which sought, among other things, to enjoin
permanently the CCIP Acquisition. On February 15, 1996, all of the plaintiff's
claims for injunctive relief were dismissed (including that which sought to
prevent the consummation of the CCIP Acquisition); the plaintiff's claims for
money damages which may have resulted from the CCIP Acquisition remain
pending. Each of the defendants in the Action, including the Partnership,
believes the Action, which remains pending, to be without merit and is
contesting it vigorously. In October 1996, the plaintiff filed a Consolidated
Amended Class Action Complaint (the "Amended Complaint"). The general partner
of CCIP believes that portions of the Amended Complaint are legally inadequate
and in January 1997 filed a motion for summary judgment to dismiss all
remaining claims in the Action. There can be no assurance, however, that the
plaintiff will not be awarded damages, some or all of which may be payable by
the Partnership, in connection with the Action.
The Partnership is also a party to lawsuits which are generally incidental
to its business. In the opinion of management, after consulting with legal
counsel, the outcome of these lawsuits will not have a material adverse effect
on the Partnership's financial position and results of operations.
Severance Payment
During 1996, the Partnership and other affiliated entities entered into a
Settlement Agreement and Mutual Release with a former executive, whereby the
Partnership will make severance payments totaling $500,000. The funds are to
be paid in 12 monthly installments, which commenced April 1, 1996.
10. REGULATION IN THE CABLE TELEVISION INDUSTRY:
The cable television industry is subject to extensive regulation at the
federal, local and, in some instances, state levels. In addition, recent
legislative and regulatory changes and additional regulatory proposals under
consideration may materially affect the cable television industry.
Congress enacted the Cable Television Consumer Protection and Competition
Act of 1992 (the "1992 Cable Act"), which became effective on December 4,
1992. The 1992 Cable Act generally allows for a greater degree of regulation
of the cable television industry. Under the 1992 Cable Act's definition of
effective competition, nearly all cable systems in the United States are
subject to rate regulation of basic cable services, provided the local
franchising authority becomes certified to regulate basic service rates. The
1992 Cable Act and the Federal Communications Commission's (FCC) rules
implementing the 1992 Cable Act have generally increased the administrative
and operational expenses of cable television systems and have resulted in
additional regulatory oversight by the FCC and local franchise authorities.
F-81
<PAGE>
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
While management believes that the Partnership has complied in all material
respects with the rate provisions of the 1992 Cable Act, in jurisdictions that
have not yet chosen to certify, refunds covering a one-year period on basic
services may be ordered upon future certification if the Partnership is unable
to justify its rates through a benchmark or cost-of-service filing pursuant to
FCC rules. Management is unable to estimate at this time the amount of
refunds, if any, that may be payable by the Partnership in the event certain
of its rates are successfully challenged by franchising authorities or found
to be unreasonable by the FCC. Management does not believe that the amount of
any such refunds would have a material adverse effect on the financial
position or results of operations of the Partnership.
The 1992 Cable Act modified the franchise renewal process to make it easier
for a franchising authority to deny renewal. Historically, franchises have
been renewed for cable operators that have provided satisfactory services and
have complied with the terms of the franchise agreement. Although management
believes that the Partnership has generally met the terms of its franchise
agreements and has provided quality levels of service, and anticipates the
Partnership's future franchise renewal prospects generally will be favorable,
there can be no assurance that any such franchises will be renewed or, if
renewed, that the franchising authority will not impose more onerous
requirements on the Partnership than previously existed.
During 1996, Congress passed and the President signed into law the
Telecommunications Act of 1996 (the "Telecommunications Act"), which alters
federal, state, and local laws and regulations pertaining to cable television,
telecommunications and other services. Under the Telecommunications Act,
telephone companies can compete directly with cable operators in the provision
of video programming, subject to certain regulatory safeguards.
Certain provisions of the Telecommunications Act could materially affect the
growth and operation of the cable television industry and the cable services
provided by the Partnership. Although the new legislation may substantially
lessen regulatory burdens, the cable television industry may be subject to
additional competition as a result thereof. There are numerous rule makings to
be undertaken by the FCC which will interpret and implement the
Telecommunications Act's provisions. In addition, certain provisions of the
Telecommunications Act (such as the deregulation of cable programming rates)
are not immediately effective. Further, certain of the Telecommunications
Act's provisions have been and are likely to be subject to judicial
challenges. Management is unable at this time to predict the outcome of such
rule makings or litigation or the substantive effect of the new legislation
and the rule makings on the financial position and results of operations of
the Partnership.
11. NET LOSS FOR INCOME TAX PURPOSES:
The following reconciliation summarizes the differences between the
Partnership's net loss for financial reporting purposes and net loss for
federal income tax purposes for the year ended December 31, 1996 and 1995:
<TABLE>
<S> <C> <C>
1996 1995
------------ ------------
Net loss for financial reporting purposes...... $(35,552,609) $(31,423,151)
Depreciation differences between financial
reporting and tax reporting................... (9,527,020) (2,376,770)
Differences in losses from property sales
recorded for financial reporting and tax
reporting..................................... 774,144 --
Amortization differences between financial
reporting and tax reporting................... 19,754,275 16,395,856
Differences in expenses recorded for financial
reporting and tax reporting................... 6,192,786 6,484,716
Differences in revenue reported for financial
reporting and tax reporting................... 18,973 780,612
------------ ------------
Net loss for federal income tax purposes....... $(18,339,451) $(10,138,737)
============ ============
</TABLE>
F-82
<PAGE>
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The following summarizes the significant cumulative temporary differences
between the Partnership's financial reporting basis and federal income tax
reporting basis as of December 31, 1996 and 1995:
<TABLE>
<S> <C> <C>
1996 1995
-------------- -------------
ASSETS:
Accounts receivable....................... $ 371,166 $ 251,419
Net assets of discontinued operation...... 303,673 --
Accrued expenses and payables to
affiliates............................... 5,640,188 4,944,033
Deferred revenue.......................... 708,339 780,612
Deferred management fees payable to
affiliate................................ 1,755,000 1,015,000
-------------- -------------
$ 8,778,366 $ 6,991,064
============== =============
LIABILITIES:
Property, plant and equipment............. $ (91,977,838) $ (79,667,302)
Franchise costs........................... (110,904,002) (118,213,073)
-------------- -------------
$(202,881,840) $(197,880,375)
============== =============
</TABLE>
12. DISCONTINUED OPERATION:
The Partnership approved a plan to discontinue the radio operation
maintained by its subsidiary, Charter Communications Radio St. Louis, LLC.
Pursuant to a sales agreement dated January 23, 1997, such operations will
cease upon FCC approval of the transfer of the radio license.
The net losses of this operation prior to December 31, 1996, are included in
the consolidated statement of operations under "Loss from discontinued
operation." Revenues from such operation were $1,532,572 for the period then
ended. The noncurrent net assets of this operation are comprised primarily of
property, plant and equipment, license fees and other deferred costs. No
material gain or loss is anticipated in connection with the disposition of
these net assets.
13. COMPETITION:
The Connecticut Department of Public Utility Control granted a franchise to
a subsidiary of a local telephone company to serve the entire state of
Connecticut. This provider has proposed to offer its cable service initially
to a "primary franchise area" of several Connecticut communities, including
one served by the Partnership. Management is unable to predict the ultimate
impact upon the Partnership's financial position or results of operations.
14. 401(K) PLAN:
In 1995, the Partnership adopted the Charter Communications, Inc. 401(k)
Plan (the "401(k) Plan") for the benefit of its employees. All employees who
have completed one year employment are eligible to participate in the 401(k)
Plan. The 401(k) Plan is a tax-qualified retirement savings plan to which
employees may elect to make pretax contributions up to the lesser of 10% of
their compensation or dollar thresholds established under the Internal Revenue
Code. The Partnership contributes an amount equal to 50% of the first 5%
contributed by each employee. During 1996 and 1995, the Partnership
contributed approximately $269,900 and $177,000 to the 401(k) Plan,
respectively.
15. SIGNIFICANT NONCASH TRANSACTIONS:
The Partnership engaged in the following significant noncash financing
transactions during 1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
----------- ----------
<S> <C> <C>
Preference allocation--Preferred Capital Account
(see Note 2)...................................... $12,404,597 $3,020,613
</TABLE>
F-83
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Charter Communications Entertainment II, L.P.:
We have audited the accompanying balance sheets of Charter Communications
Entertainment II, L.P. (a Delaware limited partnership) as of December 31,
1996 and 1995, and the related statements of operations, partners' capital and
cash flows for the year ended December 31, 1996, and for the period from
inception (April 20, 1995) to December 31, 1995. These financial statements
are the responsibility of the Partnership's management. Our responsibility is
to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Charter Communications
Entertainment II, L.P. as of December 31, 1996 and 1995, and the results of
its operations and its cash flows for the year ended December 31, 1996, and
for the period from inception (April 20, 1995) to December 31, 1995, in
conformity with generally accepted accounting principles.
Arthur Andersen LLP
St. Louis, Missouri,
February 21, 1997
F-84
<PAGE>
CHARTER COMMUNICATIONS ENTERTAINMENT II, L.P.
BALANCE SHEETS--DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents........................... $ 6,050,650 $ 5,897,105
Accounts receivable, net of allowance for doubtful
accounts of $325,137
and $220,697....................................... 3,486,418 3,842,278
Prepaid expenses and other.......................... 1,367,762 1,304,484
------------ ------------
Total current assets.............................. 10,904,830 11,043,867
------------ ------------
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment....................... 119,701,617 112,901,956
Franchise costs, net of accumulated amortization of
$19,628,548
and $3,810,099..................................... 215,279,033 231,773,954
------------ ------------
334,980,650 344,675,910
------------ ------------
OTHER ASSETS......................................... 3,335,771 3,353,684
------------ ------------
$349,221,251 $359,073,461
============ ============
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable and accrued expenses............... $ 11,588,865 $ 12,660,930
Subscriber deposits................................. 418,500 444,339
Payables to affiliates.............................. 1,090,833 1,111,767
------------ ------------
Total current liabilities......................... 13,098,198 14,217,036
------------ ------------
DEFERRED REVENUE..................................... 383,070 474,460
------------ ------------
LONG-TERM DEBT....................................... 194,000,000 193,100,000
------------ ------------
SUBORDINATED NOTE PAYABLE TO LIMITED PARTNER......... 27,418,000 25,500,000
------------ ------------
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL:
General Partner..................................... -- --
Limited Partners--
Ordinary Capital Accounts.......................... -- --
Preferred Capital Account.......................... 114,321,983 125,781,965
------------ ------------
Total partners' capital........................... 114,321,983 125,781,965
------------ ------------
$349,221,251 $359,073,461
============ ============
</TABLE>
The accompanying notes are an integral part of these balance sheets.
F-85
<PAGE>
CHARTER COMMUNICATIONS ENTERTAINMENT II, L.P.
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996, AND
FOR THE PERIOD FROM INCEPTION TO DECEMBER 31, 1995
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
SERVICE REVENUES:
Basic service...................................... $51,070,996 $12,047,565
Premium service.................................... 11,799,695 2,837,578
Other.............................................. 27,497,641 6,271,066
----------- -----------
90,368,332 21,156,209
----------- -----------
EXPENSES:
Operating costs.................................... 42,972,828 9,904,836
General and administrative......................... 7,039,142 1,816,167
Depreciation and amortization...................... 31,716,528 7,441,568
Management and financial advisory service fees--
related parties.................................... 3,600,000 1,010,000
----------- -----------
85,328,498 20,172,571
----------- -----------
Income from operations........................... 5,039,834 983,638
----------- -----------
OTHER INCOME (EXPENSE):
Interest income.................................... 172,008 98,185
Interest expense................................... (16,742,021) (4,540,358)
Other.............................................. 70,197 --
----------- -----------
(16,499,816) (4,442,173)
----------- -----------
Net loss......................................... (11,459,982) (3,458,535)
----------- -----------
PREFERRED RETURN.................................... -- (1,680,890)
----------- -----------
Net loss applicable to partners' capital accounts.. (11,459,982) (5,139,425)
=========== ===========
NET LOSS ALLOCATION:
General Partner.................................... -- (1,292,405)
----------- -----------
Limited Partners--Preferred Capital Account........ (11,459,982) (2,270,286)
(11,459,982) (3,562,691)
----------- -----------
NET LOSS APPLICABLE TO LIMITED PARTNERS--ORDINARY
CAPITAL ACCOUNTS................................... $ -- $(1,576,734)
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-86
<PAGE>
CHARTER COMMUNICATIONS ENTERTAINMENT II, L.P.
STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 1996, AND
FOR THE PERIOD FROM INCEPTION TO DECEMBER 31, 1995
<TABLE>
<CAPTION>
LIMITED PARTNERS
------------------------
ORDINARY PREFERRED
GENERAL CAPITAL CAPITAL
PARTNER ACCOUNTS ACCOUNT TOTAL
---------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
BALANCE, at inception...... $ -- $ -- $ -- $ --
Capital contributions.... 1,292,405 1,576,734 126,371,361 129,240,500
Allocation of net loss... (535,247) (653,002) (2,270,286) (3,458,535)
Allocation of preferred
return................... (757,158) (923,732) 1,680,890 --
---------- ---------- ------------ ------------
BALANCE, December 31,
1995....................... -- -- 125,781,965 125,781,965
Allocation of net loss... -- -- (11,459,982) (11,459,982)
---------- ---------- ------------ ------------
BALANCE, December 31,
1996....................... $ -- $ -- $114,321,983 $114,321,983
========== ========== ============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
F-87
<PAGE>
CHARTER COMMUNICATIONS ENTERTAINMENT II, L.P.
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1996, AND
FOR THE PERIOD FROM INCEPTION TO DECEMBER 31, 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.......................................... $(11,459,982) $ (3,458,535)
Adjustments to reconcile net loss to net cash
provided by operating activities--
Depreciation and amortization.................... 31,716,528 7,441,568
Changes in assets and liabilities, net of effects
from acquisition--
Accounts receivable, net........................ 355,860 (1,442,510)
Prepaid expenses and other...................... (63,278) (549,005)
Accounts payable and accrued expenses........... (437,065) 4,400,371
Subscriber deposits............................. (25,839) (5,972)
Payables to affiliates.......................... (20,934) 1,111,767
Deferred revenue................................ (91,390) (8,179)
Accrued interest on subordinated note payable to
Limited Partner................................. 1,918,000 500,000
------------ ------------
Net cash provided by operating activities...... 21,891,900 7,989,505
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment........ (22,174,686) (4,876,992)
Payment for Gaylord Entertainment, Inc.
acquisition....................................... -- (340,939,879)
Payments of organizational expenses............... (127,854) (315,403)
Other............................................. 16,268 (8,155)
------------ ------------
Net cash used in investing activities.......... (22,286,272) (346,140,429)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit and term loan
facility.......................................... 6,500,000 193,100,000
Payments of revolving credit and term loan
facility.......................................... (5,600,000) --
Proceeds from subordinated note payable to Limited
Partner........................................... -- 47,000,000
Payment of subordinated note payable to Limited
Partner........................................... -- (22,000,000)
Limited Partners' capital contributions........... -- 127,948,095
General Partner's capital contribution............ -- 1,292,405
Payments of debt issuance costs................... (352,083) (3,292,471)
------------ ------------
Net cash provided by financing activities...... 547,917 344,048,029
------------ ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS.......... 153,545 5,897,105
CASH AND CASH EQUIVALENTS, beginning of period..... 5,897,105 --
------------ ------------
CASH AND CASH EQUIVALENTS, end of period........... $ 6,050,650 $ 5,897,105
============ ============
CASH PAID FOR INTEREST............................. $ 17,511,868 $ 298,839
============ ============
CASH PAID FOR TAXES................................ $ -- $ --
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
F-88
<PAGE>
CHARTER COMMUNICATIONS ENTERTAINMENT II, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Organization and Basis of Presentation
Charter Communications Entertainment II, L.P. (the "Partnership"), a
Delaware limited partnership, was formed on April 20, 1995, for the purpose of
acquiring and operating existing cable television systems. The Partnership
commenced operations effective September 30, 1995, through the acquisition of
certain cable television systems in southern California. The Partnership will
terminate no later than December 31, 2055, as provided in its partnership
agreement (the "Partnership Agreement"). CCT Holdings Corp. (CCT Holdings),
the General Partner, holds a 1% interest in the Partnership. Charter
Communications Entertainment, L.P. (CCE) and CCA Acquisition Corp. (CAC) hold
limited partnership interests of 97.78% and 1.22%, respectively, in the
Partnership. CCT Holdings and CAC hold partnership interests of 45% and 55%,
respectively, in CCE. CAC is a wholly owned subsidiary of CCA Holdings Corp.
(CCA Holdings). CCA Holdings and CCT Holdings are each owned by Kelso
Investment Associates V, L.P., an investment fund, together with an affiliate
(collectively referred to as "Kelso" herein) and certain other individuals and
Charter Communications, Inc. (Charter), manager of the cable television
systems (see Note 8).
As of December 31, 1996, the Partnership provided cable television service
to 25 franchises serving approximately 168,100 basic subscribers in southern
California.
Cash Equivalents
Cash equivalents at December 31, 1996 and 1995, consist primarily of
repurchase agreements with original maturities of 90 days or less. These
investments are carried at cost, which approximates market value. The
Partnership is subject to loss for amounts invested in repurchase agreements
in the event of nonperformance by the financial institution which acts as the
counterparty under such agreements; however, such noncompliance is not
anticipated.
Property, Plant and Equipment
Property, plant and equipment is recorded at cost, including all direct and
certain indirect costs associated with the construction of cable transmission
and distribution facilities, and the cost of new customer installation. The
costs of disconnecting a residence are charged to expense in the period
incurred. Expenditures for repairs and maintenance are charged to expense as
incurred, and equipment replacement costs and betterments are capitalized.
Depreciation is provided using the composite method on a straight-line basis
over the estimated useful life of the related asset as follows:
<TABLE>
<S> <C>
Trunk and distribution systems................................. 10 years
Subscriber installations....................................... 10 years
Buildings and headends......................................... 10-20 years
Converters..................................................... 5 years
Vehicles and equipment......................................... 4-8 years
Office equipment............................................... 5-10 years
</TABLE>
F-89
<PAGE>
CHARTER COMMUNICATIONS ENTERTAINMENT II, L.P.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Franchise Costs
Costs incurred in obtaining and renewing cable franchises are initially
deferred and amortized over the legal lives of the franchises. Costs relating
to unsuccessful franchise applications are charged to expense when it is
determined that the efforts to obtain the franchise will not be successful.
Franchise rights acquired through the purchase of cable television systems
represent the excess of the cost of properties acquired over the amounts
assigned to the net tangible assets at date of acquisition. Acquired franchise
rights are amortized using the straight-line method over 15 years.
Other Assets
Organizational expenses are being amortized using the straight-line method
over five years. Debt issuance costs are being amortized over the term of the
debt.
During 1995, the Partnership adopted Statement of Financial Accounting
Standards (SFAS) No. 121 entitled, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed of." In accordance with
SFAS No. 121, the Partnership periodically reviews the carrying value of its
long-lived assets, identifiable intangibles and franchise costs in relation to
historical financial results, current business conditions and trends
(including the impact of existing legislation and regulation) to identify
potential situations in which the carrying value of such assets may not be
recoverable. If a review indicates that the carrying value of such assets may
not be recoverable, the carrying value of such assets in excess of their fair
value will be recorded as a reduction of the assets' cost as if a permanent
impairment has occurred. No impairments have occurred and accordingly, no
adjustments to the financial statements of the Partnership have been recorded
relating to SFAS No. 121.
Revenues
Cable service revenues are recognized when the related services are
provided.
Installation revenues are recognized to the extent of direct selling costs
incurred. The remainder, if any, is deferred and amortized to income over the
average estimated period that customers are expected to remain connected to
the cable television system.
Franchise fees collected from cable subscribers and paid to local franchises
are reported as revenues.
Derivative Financial Instruments
The Partnership manages risk arising from fluctuations in interest rates by
using interest rate swap and cap agreements, as required by its credit
agreement. These agreements are treated as off-balance sheet financial
instruments. The interest rate swap and cap agreements are being accounted for
as a hedge of the debt obligation, and accordingly, the net settlement amount
is recorded as an adjustment to interest expense in the period incurred.
Income Taxes
Income taxes are the responsibility of the partners and as such are not
provided for in the accompanying financial statements.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
F-90
<PAGE>
CHARTER COMMUNICATIONS ENTERTAINMENT II, L.P.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Reclassifications
Certain reclassifications have been made to the 1995 financial statements to
conform with current year presentation.
2.PARTNERSHIP INTERESTS:
Under the terms of the Partnership Agreement, the profits and losses for
income tax reporting purposes are allocated among the partners in accordance
with their percentage interests subject to any adjustments required by the
Internal Revenue Code and Treasury Regulations.
For financial reporting purposes, profits and losses, and the preferred
return (described below) are allocated in accordance with the liquidation
provisions in the Partnership Agreement.
Proceeds from the liquidation of the Partnership shall be distributed as
follows: (i) to the payment of liquidation expenses; (ii) to the payment of
creditors of the Partnership and the establishment of reserves to provide for
contingent liabilities; (iii) to CCE, equal to the amount of its Preferred
Capital Account; (iv) to each partner to the extent of such positive balance
in the ratio in which its respective ordinary capital account balance bears to
all such positive ordinary capital account balances; and (v) the remaining
balance to the partners in accordance with their percentage interests at the
time of liquidation.
The Partnership Agreement provides for, among other things, distributions to
the respective partners in proportion to their respective partnership
interests, and the creation of a preferred capital account and preferred
distributions related thereto. The effect of these provisions is to direct the
proceeds of distributions from the Partnership to CCE for repayment of the
Gaylord Note (as defined herein). Furthermore, the Credit Agreement (as
defined herein) establishes limitations on distributions.
CCE is entitled to an annual preferred return computed in accordance with
the provisions in the Partnership Agreement. The 1996 preferred return of
approximately $24,424,000 and the cumulative preferred return totaling
approximately $30,260,000 have not been reflected in CCE's capital account as
of December 31, 1996, since the General Partner's capital account and Limited
Partners' ordinary capital account have been reduced to $-0-.
3.ACQUISITION:
Effective September 30, 1995, the General Partner acquired the assets of
certain cable television systems from an affiliate of Gaylord Entertainment
Company, Inc. (Gaylord) for an aggregate purchase price of approximately
$340.9 million, which included cable television systems in southern California
which were transferred to the Partnership.
To finance the acquisition, the Partnership entered into a revolving credit
and term loan facility (see Note 7) and the General Partner executed a
subordinated seller note to Gaylord (the "Gaylord Note"). Upon repayment in
full of the obligations of the revolving credit and term loan facility, and
termination of all commitments to lend in respect thereof, the Gaylord Note
will have the benefit of distributions from the Partnership. The Partnership's
assets are not pledged as collateral to this note.
The acquisition was accounted for using the purchase method of accounting,
and accordingly, results of operations of the acquired assets have been
included in the financial statements from the date of acquisition. The
following shows the final purchase price and the allocation of the purchase
price to assets acquired and liabilities assumed:
<TABLE>
<S> <C>
Purchase price:
Cash paid to seller........................................... $177,847,738
Seller note executed by the General Partner................... 156,240,500
Assumed liabilities........................................... 1,020,000
Transaction costs............................................. 5,831,641
------------
$340,939,879
============
</TABLE>
F-91
<PAGE>
CHARTER COMMUNICATIONS ENTERTAINMENT II, L.P.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Amounts allocated to:
<TABLE>
<S> <C>
Accounts receivable............................................ $ 2,399,768
Prepaid expenses and other.................................... 755,479
Property, plant and equipment................................. 111,402,243
Franchise costs............................................... 235,575,898
Accounts payable and accrued expenses......................... (8,260,559)
Subscriber deposits........................................... (450,311)
Deferred revenue.............................................. (482,639)
------------
Purchase price............................................. $340,939,879
============
</TABLE>
The following is the unaudited pro forma operating results for the above
acquisition as though it had been made on January 1, 1995:
<TABLE>
<CAPTION>
FOR THE YEAR
ENDED
DECEMBER 31,
1995
------------
<S> <C>
(UNAUDITED)
Service revenues.............................................. $ 83,017,772
Income from operations........................................ $ 3,021,453
Net loss...................................................... $(14,717,823)
</TABLE>
4.PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment consists of the following at December 31:
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Trunk and distribution systems.................. $ 66,775,942 $ 58,375,261
Subscriber installations........................ 32,957,225 27,078,945
Land, buildings and headends.................... 6,647,140 4,636,945
Converters...................................... 26,886,074 22,116,731
Vehicles and equipment.......................... 2,585,140 1,999,164
Office equipment................................ 2,602,400 2,072,189
------------ ------------
138,453,921 116,279,235
Less--Accumulated depreciation.................. (18,752,304) (3,377,279)
------------ ------------
$119,701,617 $112,901,956
============ ============
</TABLE>
5.OTHER ASSETS:
Other assets consist of the following at December 31:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Debt issuance costs, net of accumulated amortization
of $533,049 and $96,838............................. $3,111,505 $3,195,633
Organizational expenses, net of accumulated
amortization of $218,991 and $157,352............... 224,266 158,051
---------- ----------
$3,335,771 $3,353,684
========== ==========
</TABLE>
F-92
<PAGE>
CHARTER COMMUNICATIONS ENTERTAINMENT II, L.P.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
6.ACCOUNTS PAYABLE AND ACCRUED EXPENSES:
Accounts payable and accrued expenses consist of the following at December
31:
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Accrued interest................................. $ 1,053,672 $ 3,741,519
Accrued salaries and related benefits............ 1,208,099 1,026,385
Accounts payable................................. 1,511,336 172,958
Capital expenditures............................. 1,582,391 1,633,606
Programming expenses............................. 1,882,896 1,672,241
Franchise fees................................... 2,176,770 2,196,814
Other............................................ 2,383,701 2,317,407
------------ ------------
$ 11,798,865 $ 12,760,930
============ ============
7.LONG-TERM DEBT:
Long-term debt consists of the following at December 31:
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Credit Agreement:
Term loans...................................... $120,000,000 $120,000,000
Revolving credit facility....................... 74,000,000 73,100,000
------------ ------------
194,000,000 193,100,000
Less-- Current maturities....................... -- --
------------ ------------
$194,000,000 $193,100,000
============ ============
</TABLE>
During September 1995, the Partnership entered into a revolving credit and
term loan facility (the "Credit Agreement") with a consortium of banks for
borrowings up to $235.0 million. The Credit Agreement provides for the
availability of $120.0 million of term loans and a revolving credit facility
of $115.0 million. Principal payments are due in quarterly installments
beginning June 30, 1998, and continuing through September 30, 2004. Borrowings
under the Credit Agreement bear interest at rates based upon a certain spread
plus a base rate, with the base rate being, at the Partnership's election, the
prime rate of NationsBank of Texas, N.A. (the Administrative Agent bank), the
Federal Funds Effective Rate or Eurodollar rates. The applicable spread is
based on the ratio of debt to annualized operating cash flow. At December 31,
1996, interest rates ranged from 7.19% to 7.75%. The weighted average interest
rates and weighted average borrowings were 7.66% and 8.20%, and approximately
$193.6 million and $193.1 million during 1996 and the period from inception to
December 31, 1995, respectively. As this debt instrument bears interest at
current market rates, its carrying amount approximates fair market value at
December 31, 1996.
Borrowings under the Credit Agreement are collateralized by the assets of
the Partnership. In addition, CCT Holdings, CCE and CAC have pledged their
partnership interests as additional security to the Credit Agreement.
Borrowings under the Credit Agreement are subject to certain financial and
nonfinancial covenants and restrictions, the most restrictive of which
requires maintenance of a ratio of debt to annualized operating cash flow, as
defined, not to exceed 5.25 to 1 at December 31, 1996. A quarterly commitment
fee of 0.375% per annum is payable on the unused portion of the Credit
Agreement.
F-93
<PAGE>
CHARTER COMMUNICATIONS ENTERTAINMENT II, L.P.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Commencing June 30, 1998, the principal balances of the term loans shall be
amortized in consecutive quarterly installments until paid in full. In
addition, commencing June 30, 1998, and at the end of each calendar quarter
thereafter, available borrowings under the revolving credit facility shall be
reduced. The following table sets forth such information on an annual basis.
<TABLE>
<CAPTION>
AMOUNT OF REDUCTION
PRINCIPAL DUE OF REVOLVING CREDIT
YEAR ON TERM LOANS FACILITY COMMITMENT
---- ------------- -------------------
<S> <C> <C>
1998....................................... $ 9,330,000 $ 6,900,000
1999....................................... 12,540,000 10,925,000
2000....................................... 13,380,000 12,995,000
2001....................................... 13,380,000 20,470,000
2002....................................... 13,380,000 29,900,000
2003....................................... 18,990,000 33,810,000
2004....................................... 39,000,000 --
------------ ------------
$120,000,000 $115,000,000
============ ============
</TABLE>
Based upon outstanding indebtedness at December 31, 1996, and the
amortization of term loans and scheduled reductions in available borrowings
depicted above, aggregate future principal payments on the Credit Agreement at
December 31, 1996, are as follows:
<TABLE>
<CAPTION>
REVOLVING
TERMS CREDIT
YEAR LOANS FACILITY TOTAL AMOUNT
---- ------------ ----------- ------------
<S> <C> <C> <C>
1997................................... $ -- $ -- $ --
1998................................... 9,330,000 -- 9,330,000
1999................................... 12,540,000 -- 12,540,000
2000................................... 13,380,000 -- 13,380,000
2001................................... 13,380,000 10,290,000 23,670,000
Thereafter............................. 71,370,000 63,710,000 135,080,000
------------ ----------- ------------
$120,000,000 $74,000,000 $194,000,000
============ =========== ============
</TABLE>
As a requirement of the Credit Agreement, the Partnership has secured
interest rate protection agreements. The Credit Agreement requires the
Partnership to enter into interest rate protection agreements for notional
amounts of not less than 50% of the outstanding borrowings within 180 days
from inception of the Credit Agreement. In addition, the interest rate
protection agreements must provide rate protection for a weighted average
period of not less than 18 months. The fair value of the interest rate swaps
is the estimated amount the Partnership would receive (pay) to eliminate the
swap agreement at the reporting date, taking into account current interest
rates and the creditworthiness of the counterparties. The following summarizes
certain information pertaining to the interest rate protection agreements as
of December 31, 1996:
<TABLE>
<CAPTION>
NOTIONAL FIXED
AMOUNT TYPE RATE CONTRACT EXPIRATION DATE FAIR VALUE/REDEMPTION PRICE
------------ ---- ----- --------------------------- ---------------------------
<S> <C> <C> <C> <C>
$ 25,000,000 Swap 5.18% December 19, 1997 $ 214,548
50,000,000 Swap 6.00 December 15, 1998 (87,530)
25,000,000 Swap 5.48 December 29, 1998 126,056
------------ ---------
$100,000,000 5.67% Weighted Average Fixed Rate $ 253,074
============ =========
</TABLE>
F-94
<PAGE>
CHARTER COMMUNICATIONS ENTERTAINMENT II, L.P.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Management believes that the counterparties of the interest hedge agreements
will be able to meet their obligations under the agreements. The purpose of
the Partnership's involvement in these interest hedge agreements is to
minimize the Partnership's exposure to interest rate fluctuations on its
floating rate debt. Management believes that it has no material concentration
of credit or market risks with respect to these interest hedge agreements.
8.RELATED-PARTY TRANSACTIONS:
Charter provides management services to the Partnership under terms of a
contract which provides for base fees equal to $3,200,000, per annum plus an
annual bonus equal to 30% of the excess, if any, of operating cash flow (as
defined in the management agreement) over the projected operating cash flow
for the year. Payment of the management services bonus is prohibited until
termination of the Credit Agreement due to restrictions provided within the
Credit Agreement. For the year ended December 31, 1996, and for the period
from inception to December 31, 1995, operating cash flows was not in excess of
projected operating cash flow, and thus, no bonus was recognized. In addition,
the Partnership receives financial advisory services from an affiliate of
Kelso, another related party, under terms of a contract which provides for
fees equal to $400,000 per annum. Expenses recognized by the Partnership under
these contracts during 1996 and the period from inception to December 31,
1995, were $3,600,000 and $1,010,000, respectively. Management and financial
advisory service fees currently payable of $900,000 are included in Payables
to affiliates at December 31, 1996 and 1995.
The Partnership pays certain acquisition advisory fees to an affiliate of
Kelso, which typically equal approximately 1% of the total purchase price paid
for cable television systems acquired. Total acquisition fees paid to the
affiliate of Kelso in 1995 were $2.0 million. Charter received $3.0 million in
equity interests in CCT Holdings in conjunction with the Gaylord acquisition.
The Partnership and all entities affiliated with Charter collectively
utilize a combination of insurance coverage and self-insurance programs for
medical, dental and workers' compensation claims. The Partnership is allocated
charges monthly based upon its total number of employees, historical claims
and medical cost trend rates. Management considers this allocation to be
reasonable for the operations of the Partnership. During 1996 and the period
from inception to December 31, 1995, the Partnership expensed approximately
$664,000 and $173,000, respectively, relating to insurance allocations.
In conjunction with the acquisition described in Note 3, the Partnership
executed a promissory note to CCE in the amount of $47.0 million. Immediately
upon closing of the Gaylord acquisition, the Partnership used proceeds from
borrowings under the Credit Agreement to repay $22.0 million on the promissory
note. All principal and interest amounts due under this note are subordinated
with respect to the Credit Agreement set forth in Note 7. The note matures on
March 31, 2005. The note bears interest at an annual rate equal to the
weighted average interest rate payable on the loans outstanding under the
Credit Agreement. Principal and interest amounts due under this note are
included in Subordinated Note Payable to Limited Partner on the accompanying
balance sheets.
In 1996, certain of the Partnership's employees became participants in the
1996 Charter Communications/Kelso & Company Appreciation Rights Plan (the
"Appreciation Rights Plan"). The Appreciation Rights Plan covers certain key
employees and consultants within the group of companies and partnerships
controlled by affiliates of Kelso and managed by Charter (collectively, the
"Investment Group").
In 1996, the Partnership and other affiliated entities employed the services
of Charter's National Data Center (the "National Data Center"). The National
Data Center performs certain subscriber billing services and provider computer
network, hardware and software support for the Partnership and other
affiliated entities. The cost of billing services is allocated based on the
number of subscribers. Management considers this allocation to be reasonable
for the operations of the Partnership. During 1996, the Partnership expensed
approximately $125,000 relating to these services.
F-95
<PAGE>
CHARTER COMMUNICATIONS ENTERTAINMENT II, L.P.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
9.COMMITMENTS AND CONTINGENCIES:
Leases
The Partnership leases certain facilities and equipment under noncancelable
operating leases. Rent expense incurred under these leases during 1996 and the
period from inception to December 31, 1995, was approximately $1,086,000 and
$287,000, respectively.
Approximate aggregate future minimum lease payments are as follows:
<TABLE>
<S> <C>
1997.............................................................. $1,133,600
1998.............................................................. 1,126,700
1999.............................................................. 1,123,000
2000.............................................................. 1,100,300
2001.............................................................. 981,000
Thereafter........................................................ 1,129,000
</TABLE>
The Partnership rents utility poles in its operations. Generally, pole
rental agreements are short term, but the Partnership anticipates that such
rentals will recur. Rent expense for pole attachments during 1996 and the
period from inception to December 31, 1995, were approximately $557,000 and
$115,000, respectively.
Insurance Coverage
The Partnership currently does not have and does not in the near term
anticipate having property and casualty insurance on its underground
distribution plant. Due to large claims incurred by the property and casualty
insurance industry, the pricing of insurance coverage has become inflated to
the point where, in the judgment of the Partnership's management, the price is
cost prohibitive. Management believes that its experience and policy with
respect to such insurance coverage is consistent with general industry
practices. Management will continue to monitor the insurance markets to
attempt to obtain coverage for the Partnership's distribution plant at
reasonable rates.
Litigation
The Partnership is a party to lawsuits which are generally incidental to its
business. In the opinion of management, after consulting with legal counsel,
the outcome of these lawsuits will not have a material adverse effect on the
Partnership's financial position and results of operations.
10.RATE REGULATION IN THE CABLE TELEVISION INDUSTRY:
The cable television industry is subject to extensive regulation at the
federal, local and, in some instances, state levels. In addition, recent
legislative and regulatory changes and additional regulatory proposals under
consideration may materially affect the cable television industry.
Congress enacted the Cable Television Consumer Protection and Competition
Act of 1992 (the "1992 Cable Act"), which became effective on December 4,
1992. The 1992 Cable Act generally allows for a greater degree of regulation
of the cable television industry. Under the 1992 Cable Act's definition of
effective competition, nearly all cable systems in the United States are
subject to rate regulation of basic cable services, provided the local
franchising authority becomes certified to regulate basic service rates. The
1992 Cable Act and the Federal Communications Commission's (FCC) rules
implementing the 1992 Cable Act have generally increased the administrative
and operational expenses of cable television systems and have resulted in
additional regulatory oversight by the FCC and local franchise authorities.
While management believes that the Partnership has complied in all material
respects with the rate provisions of the 1992 Cable Act, in jurisdictions that
have not yet chosen to certify, refunds covering a one-year
F-96
<PAGE>
CHARTER COMMUNICATIONS ENTERTAINMENT II, L.P.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
period on basic services may be ordered upon future certification if the
Partnership is unable to justify its rates through a benchmark or cost-of-
service filing pursuant to FCC rules. Management is unable to estimate at this
time the amount of refunds, if any, that may be payable by the Partnership in
the event certain of its rates are successfully challenged by franchising
authorities or found to be unreasonable by the FCC. Management does not
believe that the amount of any such refunds would have a material adverse
effect on the financial position or results of operations of the Partnership.
The 1992 Cable Act modified the franchise renewal process to make it easier
for a franchising authority to deny renewal. Historically, franchises have
been renewed for cable operators that have provided satisfactory services and
have complied with the terms of the franchise agreement. Although management
believes that the Partnership has generally met the terms of its franchise
agreements and has provided quality levels of service, and anticipates the
Partnership's future franchise renewal prospects generally will be favorable,
there can be no assurance that any such franchises will be renewed or, if
renewed, that the franchising authority will not impose more onerous
requirements on the Partnership than previously existed.
During 1996, Congress passed and the President signed into law the
Telecommunications Act of 1996 (the "Telecommunications Act") which alters
federal, state and local laws and regulations pertaining to cable television,
telecommunications and other services. Under the Telecommunications Act,
telephone companies can compete directly with cable operators in the provision
of video programming, subject to certain regulatory safeguards.
Certain provisions of the Telecommunications Act could materially affect the
growth and operation of the cable television industry and the cable services
provided by the Partnership. Although the new legislation may substantially
lessen regulatory burdens, the cable television industry may be subject to
additional competition as a result thereof. There are numerous rule-makings to
be undertaken by the FCC which will interpret and implement the
Telecommunications Act's provisions. In addition, certain provisions of the
Telecommunications Act (such as the deregulation of cable programming rates)
are not immediately effective. Further, certain of the Telecommunications
Act's provisions have been and are likely to be subject to judicial
challenges. Management is unable at this time to predict the outcome of such
rule-makings or litigation or the substantive effect of the new legislation
and the rule-makings on the financial position and results of operations of
the Partnership.
11.NET LOSS FOR INCOME TAX PURPOSES:
The following reconciliation summarizes the differences between the
Partnership's net loss for financial reporting purposes and net loss for
federal income tax purposes for the year ended December 31, 1996, and for the
period from inception to December 31, 1995:
<TABLE>
<CAPTION>
1996 1995
------------ -----------
<S> <C> <C>
Net loss for financial reporting purposes....... $(11,459,982) $(3,458,535)
Depreciation differences between financial
reporting and tax
reporting...................................... (20,426,991) (839,467)
Amortization differences between financial
reporting and tax reporting.................... 475,629 177,759
Differences in expenses recorded for financial
reporting and tax reporting.................... (33,833) 2,059,052
Differences in revenue reported for financial
reporting and tax reporting.................... (91,395) 474,460
Other........................................... 33,500 --
------------ -----------
Net loss for federal income tax purposes.... $(31,503,072) $(1,586,731)
============ ===========
</TABLE>
F-97
<PAGE>
CHARTER COMMUNICATIONS ENTERTAINMENT II, L.P.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The following summarizes the significant cumulative temporary differences
between the Partnership's financial reporting basis and the federal income tax
reporting basis as of December 31, 1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
------------ -----------
<S> <C> <C>
Assets:
Accounts receivable............................. $ 325,137 $ 220,697
Accrued expenses and payables to affiliates..... 3,151,778 1,825,374
Deferred revenue................................ 383,070 474,460
------------ -----------
$ 3,859,985 $ 2,520,531
============ ===========
Liabilities:
Property, plant and equipment................... $(21,266,975) $ (839,467)
Franchise costs................................. (4,140,301) (9,112,533)
------------ -----------
$(25,407,276) $(9,952,000)
============ ===========
</TABLE>
12.COMPETITION:
The Riverside, California system, providing service to approximately 47,000
basic subscribers, faces competition from a multipoint distribution system
acquired by Pacific Telesis Group. At this time, management is uncertain what
impact, if any, this acquisition will have on the Partnership's financial
position or results of operations.
13.401(K) PLAN:
In 1995, the Partnership adopted the Charter Communications, Inc. 401(k)
Plan (the "Plan") for the benefit of its employees. The Plan is a tax-
qualified retirement savings plan to which employees may elect to make pretax
contributions up to the lesser of 10% of their compensation or dollar
thresholds established under the Internal Revenue Code. The Partnership
contributes an amount equal to 50% of the first 5% contributed by each
employee. During 1996 and the period from inception to December 31, 1995, the
Partnership contributed approximately $165,000 and $34,000, respectively, to
the Plan.
14.SIGNIFICANT NONCASH TRANSACTION:
The Partnership engaged in the following significant noncash financing
transaction during the period from inception to December 31, 1995:
<TABLE>
<CAPTION>
1996 1995
--------- ----------
<S> <C> <C>
Preference allocation--Preferred Capital Account (see
Note 2).............................................. $ -- $1,680,890
</TABLE>
F-98
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Cencom Cable Entertainment, Inc.:
We have audited the accompanying balance sheet of Cencom Cable
Entertainment, Inc.--Missouri System (as defined in Note 1) as of December 31,
1994, and the related statements of operations, system's equity and cash flows
for the year then ended. These financial statements are the responsibility of
the System's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Cencom Cable
Entertainment, Inc.--Missouri System as of December 31, 1994, and the results
of its operations and its cash flows for the year then ended, in conformity
with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
St. Louis, Missouri,
July 31, 1996
F-99
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Cencom Cable Entertainment, Inc.:
We have audited the accompanying statements of operations, System's equity
and cash flows of Cencom Cable Entertainment, Inc.--Missouri System for the
year ended December 31, 1993. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of operations and the cash flows of
Cencom Cable Entertainment, Inc.--Missouri System for the year ended December
31, 1993, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Dallas, Texas
July 26, 1996
F-100
<PAGE>
CENCOM CABLE ENTERTAINMENT, INC.--
MISSOURI SYSTEM
BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31,
1994
------------
ASSETS
<S> <C>
CURRENT ASSETS:
Cash................................................................. $ --
Accounts receivable, net of allowance for doubtful accounts of
$64,824............................................................. 1,120,640
Prepaid expenses and other........................................... 392,970
------------
Total current assets.............................................. 1,513,610
PROPERTY, PLANT AND EQUIPMENT, net.................................... 103,602,349
INTANGIBLE ASSETS, net................................................ 136,734,126
------------
$241,850,085
============
<CAPTION>
LIABILITIES AND SYSTEM'S EQUITY
<S> <C>
CURRENT LIABILITIES--Accounts payable and accrued expenses............ $ 2,182,624
COMMITMENTS AND CONTINGENCIES
SYSTEM'S EQUITY....................................................... 239,667,461
------------
$241,850,085
============
</TABLE>
The accompanying notes are an integral part of this balance sheet.
F-101
<PAGE>
CENCOM CABLE ENTERTAINMENT, INC.--
MISSOURI SYSTEM
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31
--------------------------
1994 1993
------------ ------------
<S> <C> <C>
SERVICE REVENUES................................... $ 55,627,936 $ 54,281,429
------------ ------------
OPERATING EXPENSES:
Operating, general and administrative............ 26,625,458 25,827,879
Depreciation and amortization.................... 36,285,180 36,939,821
Management fee--related party.................... 2,781,397 2,722,796
------------ ------------
65,692,035 65,490,496
------------ ------------
Loss from operations........................... (10,064,099) (11,209,067)
------------ ------------
OTHER INCOME (EXPENSE):
Interest expense................................. (10,154,497) (8,400,499)
Interest income.................................. 19,933 --
Other............................................ 656,568 (78,259)
------------ ------------
(9,477,996) (8,478,758)
------------ ------------
Net loss....................................... $(19,542,095) $(19,687,825)
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
F-102
<PAGE>
CENCOM CABLE ENTERTAINMENT, INC.--
MISSOURI SYSTEM
STATEMENT OF SYSTEM'S EQUITY
<TABLE>
<CAPTION>
SYSTEM'S
EQUITY
------------
<S> <C>
BALANCE, December 31, 1992........................................ $296,375,356
Net activity with Parent........................................ (9,528,237)
Net loss........................................................ (19,687,825)
------------
BALANCE, December 31, 1993........................................ 267,159,294
Net activity with Parent........................................ (7,949,738)
Net loss........................................................ (19,542,095)
------------
BALANCE, December 31, 1994........................................ $239,667,461
============
</TABLE>
The accompanying notes are an integral part of this statement.
F-103
<PAGE>
CENCOM CABLE ENTERTAINMENT, INC.--
MISSOURI SYSTEM
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31
--------------------------
1994 1993
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss......................................... $(19,542,095) $(19,687,825)
Adjustments to reconcile net loss to net cash
provided by operating activities--
Depreciation and amortization.................. 36,285,180 36,939,821
Loss on retirements of property, plant and
equipment..................................... 84,902 232,528
Changes in assets and liabilities--
Accounts receivable, net..................... 477,006 (572,684)
Prepaid expenses and other................... 116,207 20,920
Accounts payable and accrued expenses........ 184,389 64,178
------------ ------------
Net cash provided by operating activities.. 17,605,589 16,996,938
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment....... (9,655,851) (7,468,701)
------------ ------------
Net cash used in investing activities...... (9,655,851) (7,468,701)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in capital account with Parent........ (7,949,738) (9,528,237)
------------ ------------
Net cash used in financing activities...... (7,949,738) (9,528,237)
------------ ------------
CASH, beginning and end of year.................... $ -- $ --
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
F-104
<PAGE>
CENCOM CABLE ENTERTAINMENT, INC.--
MISSOURI SYSTEM
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994 AND 1993
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Organization and Basis of Presentation
The accompanying financial statements include the accounts of a certain
cable television system which is owned and operated by Cencom Cable
Entertainment, Inc. (CCE). The financial statements include the historical
assets, liabilities and operations of the Missouri System (the "System")
providing service to communities in and around St. Louis and northeast
Missouri. In November 1991, Crown Cable, Inc., an indirect wholly owned
subsidiary of Hallmark Cards, Incorporated (Hallmark) acquired Cencom Cable
Associates, Inc. (CCA) such that CCA became a 99% owned subsidiary of Crown
Cable, Inc. CCE is a wholly owned subsidiary of CCA. The stock of CCA was
transferred to Crown Media, Inc., (the "Parent" or Crown) in January 1992. In
November, 1994, CCE merged into CCA with CCA surviving. CCA was subsequently
renamed CCE.
As of December 31, 1994, the System passed approximately 248,000 homes and
serviced approximately 126,000 basic subscribers in approximately 59 franchise
areas.
In January, 1995, Crown sold the stock of CCE. The sale was part of a larger
transaction in which Crown sold its cable television systems to a group of
investors, including Charter Communications, Inc. (Charter), certain
affiliates of Charter and third parties.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Cash Management and System Equity Account
The cash management function for the System is performed by the Parent.
Excess cash funds are transferred to the Parent using the System's equity
account. In addition, the Parent makes disbursements on behalf of the System
for items such as payroll, payroll taxes, employee benefits and other costs.
Such amounts are transferred to the System through the System's equity account
and are recognized in the accompanying statements of operations.
Property, Plant and Equipment
Property, plant and equipment is recorded at cost, including all direct and
certain indirect costs associated with the construction of cable transmission
and distribution facilities, and the cost of new customer installation. The
costs of disconnecting a customer are charged to expense in the period
incurred. Expenditures for repairs and maintenance are charged to expense as
incurred, and equipment replacement costs and betterments are capitalized.
Depreciation is provided using the composite method on a straight-line basis
over the estimated useful lives of the related assets as follows:
<TABLE>
<S> <C>
Trunk and distribution systems................................. 15 years
Subscriber installations....................................... 10 years
Converters..................................................... 5 years
Buildings and headends......................................... 5-20 years
Vehicles and equipment......................................... 4-8 years
Office equipment............................................... 5-10 years
</TABLE>
F-105
<PAGE>
CENCOM CABLE ENTERTAINMENT, INC.--
MISSOURI SYSTEM
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Leasehold improvements are amortized using the straight-line method over
their useful life or lease term, whichever is shorter.
Other Assets
Costs incurred in obtaining and renewing cable franchises are initially
deferred and amortized over the legal lives of the franchises. Franchise
rights acquired through the purchase of cable systems are stated at estimated
fair value at the date of acquisition and amortized using the straight-line
method over the remaining term of the individual franchises acquired.
Goodwill is amortized using the straight-line method over 15 years from the
date of acquisition.
The System's management continually evaluates the recoverability of carrying
amounts and estimated recovery periods of long-term and intangible assets.
Such evaluation is based on System estimates of current liquidation values of
the cable system on a combined, undiscounted basis using a cash flow multiple
approach. Based on this valuation, the System believes that no impairment of
the carrying amount of intangible assets exists at December 31, 1994, and no
adjustment of estimated recovery periods is warranted.
Revenues
Cable service revenues are recognized when the related services are
provided.
Installation revenues are recognized to the extent of direct selling costs
incurred. The remainder, if any, is deferred and amortized to income over the
average estimated period that customers are expected to remain connected to
the cable television system.
Franchise fees collected from cable subscribers and paid to local franchises
are reported as revenues.
Interest Expense
Interest expense allocated to the System has been determined by applying the
ratio of System's subscribers to total CCE subscribers at the date of CCE's
acquisition by Crown to total CCE interest expense for the year. CCE makes
disbursements on behalf of the System for interest expense. Management
considers this allocation method to be reasonable for the operations of the
System. CCE's debt balance totaled $261,130,000 at December 31, 1994. The
borrowings pertaining to the System are reflected within system's equity. The
weighted average interest rate on CCE borrowings was 5.25% and 4.3% during the
years ended December 31, 1994 and 1993, respectively. The interest rate at
December 31, 1994, is 6.0%.
Income Taxes
Income taxes are the responsibility of the Parent and as such are not
provided for in the accompanying financial statements. Crown is part of the
Hallmark consolidated group which files a consolidated federal income tax
return. Crown accounts for income taxes under the asset and liability method
as prescribed by Financial Accounting Standards No. 109, "Accounting for
Income Taxes." Consolidated tax balances of Crown are not allocated to
individual systems or subsidiaries. On a separate, stand-alone basis, the
System would not have recognized any income tax benefit of operating losses as
the System has generated operating losses for income tax purposes since their
inception and is expected to generate such losses for the foreseeable future.
F-106
<PAGE>
CENCOM CABLE ENTERTAINMENT, INC.--
MISSOURI SYSTEM
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
2. PREPAID EXPENSES AND OTHER:
Prepaid expenses and other consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
1994
------------
<S> <C>
Deposits........................................................ $221,670
Prepaid programming............................................. 143,057
Other prepaid expenses and current assets....................... 28,243
--------
$392,970
========
</TABLE>
3. PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
1994
------------
<S> <C>
Trunk and distribution systems................................. $76,587,091
Subscriber installations....................................... 27,672,725
Converters..................................................... 20,824,406
Land, buildings and headends................................... 17,173,797
Vehicles and equipment......................................... 4,559,094
Office equipment............................................... 4,786,441
------------
151,603,554
Less--Accumulated depreciation................................. (48,001,205)
------------
$103,602,349
============
</TABLE>
4. INTANGIBLE ASSETS:
Other assets consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
1994
------------
<S> <C>
Franchise cost, net of accumulated amortization of
$54,746,844................................................. $105,719,281
Goodwill, net of accumulated amortization of $8,024,819...... 31,014,845
------------
$136,734,126
============
</TABLE>
5. ACCOUNTS PAYABLE AND ACCRUED EXPENSES:
Accounts payable and accrued expenses consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
1994
------------
<S> <C>
Accrued franchise fees.......................................... $576,869
Accrued salary, COMMISSION and benefits......................... 502,253
Accounts payable................................................ 267,021
Accrued vacation................................................ 194,332
Accrued copyright fees.......................................... 146,508
Accrued billing expense......................................... 144,607
Other........................................................... 351,034
----------
$2,182,624
==========
</TABLE>
F-107
<PAGE>
CENCOM CABLE ENTERTAINMENT, INC.--
MISSOURI SYSTEM
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
6. RELATED-PARTY TRANSACTIONS:
CCA managed CCE's cable television operations for a standard management fee
equal to 5% of the System's gross service revenues. CCA provided management
services including, but not limited to, accounting, legal, marketing and
negotiation of programming contracts. For the years ended December 31, 1994
and 1993, the System expensed approximately $2,781,000 and $2,723,000,
respectively, related to this arrangement. Management believes these charges
are indicative of the expense which would have been incurred as a stand-alone
entity.
7. COMMITMENTS AND CONTINGENCIES:
Leases
The System leases certain facilities and equipment under noncancelable
operating leases. Rent expense incurred under leases during 1994 and 1993 was
approximately $302,000 and $377,000, respectively. Future minimum lease
payments are as follows:
<TABLE>
<S> <C>
1995................................................................ $308,000
1996................................................................ 211,000
1997................................................................ 7,000
1998................................................................ 1,000
1999................................................................ 1,000
2000 and Thereafter................................................. 1,000
</TABLE>
The System rents utility poles in its operations. Generally, pole rental
agreements are short term, but the System anticipates that such rentals will
recur. Rent expense incurred for pole attachments during 1994 and 1993 was
approximately $611,000 and $525,000, respectively.
Insurance Coverage
The System currently does not have and does not in the near term anticipate
having property and casualty insurance on its underground distribution plant.
Due to large claims incurred by the property and casualty insurance industry,
the pricing of insurance coverage has become inflated to the point where, in
the judgment of the System's management, the price is cost prohibitive.
Management believes that its experience and policy with respect to such
insurance coverage is consistent with general industry practices. Management
will continue to monitor the insurance markets to attempt to obtain coverage
for the System's distribution plant at reasonable rates.
Litigation
The System settled a lawsuit for which the System had previously accrued a
loss contingency. Accordingly, the approximate $650,000 excess of the accrual
over the settlement amount was credited to other income in the accompanying
1994 statement of operations.
The System is a party to lawsuits which are generally incidental to its
business. In the opinion of management, after consulting with legal counsel,
the outcome of these lawsuits will not have a material adverse effect on the
System's financial position and results of operations.
F-108
<PAGE>
CENCOM CABLE ENTERTAINMENT, INC.--
MISSOURI SYSTEM
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
8. REGULATION IN THE CABLE TELEVISION INDUSTRY:
The cable television industry is subject to extensive regulation at the
federal, local and, in some instances, state levels. In addition, recent
legislative and regulatory changes and additional regulatory proposals under
consideration may materially affect the cable television industry.
1992 Cable Act and FCC Regulation
Congress enacted the Cable Television Consumer Protection and Competition
Act of 1992 (the "1992 Cable Act"), which became effective on December 4,
1992. This legislation has caused significant changes to the regulatory
environment in which the cable television industry operates. The 1992 Cable
Act generally allows for a greater degree of regulation of the cable
television industry. Under the 1992 Cable Act's definition of effective
competition, nearly all cable systems in the United States are subject to rate
regulation of basic cable services, provided the local franchising authority
becomes certified to regulate the basic service rates.
The 1992 Cable Act and the Federal Communications Commission's (FCC) rules
implementing the 1992 Cable Act have generally increased the administrative
and operational expenses of cable television systems and have resulted in
additional regulatory oversight by the FCC and local franchise authorities.
Management is unable to predict the ultimate effect of the 1992 Cable Act or
the ultimate outcome of various FCC rule-making proceedings or the litigation
challenging various aspects of the 1992 Cable Act and the FCC's regulations
implementing the 1992 Cable Act.
The 1992 Cable Act and FCC regulations have imposed rate requirements for
basic services and equipment, including rate roll-backs. Under the 1992 Cable
Act, a local franchising authority in a community not subject to "effective
competition" generally is authorized to regulate basic cable rates after
certifying to the FCC that, among other things, it will adopt and administer
rate regulation consistent with FCC rules, and in a manner that will provide a
reasonable opportunity to consider the views of interested parties. Upon
certification, the franchising authority obtains the right to approve the
basic rates charged by the cable system operator. In regulating the basic
service rates, certified local franchise authorities have the authority to
order a rate refund of previously paid rates determined to be in excess of the
maximum permitted reasonable rates. The Telecommunications Act (the
"Telecommunications Act"), passed by Congress on February 1, 1996, and signed
into law by the President on February 8, 1996, broadens the definition of
"effective competition" to include any franchise area where a local exchange
carrier (or its affiliate) provides video programming services to subscribers
by any means, other than through Direct Broadcast Satellite.
Rate regulation of the basic service tier remains subject to regulation by
local franchising authorities under the Telecommunications Act, except in
certain circumstances for "small cable operators." For a defined class of
"small cable operators," the Telecommunications Act immediately eliminates
regulation of cable programming rates. Rates for basic tier of "small cable
operators" are deregulated if the System offered a single tier of services as
of December 31, 1994.
Under the 1992 Cable Act, rates for cable programming services not carried
on the basic tier (nonbasic services) could be regulated by the FCC upon the
filing of a complaint by franchise authorities or subscribers that indicates
the cable operator's rates for these services are unreasonable. Rate
complaints have been filed with the FCC with respect to certain of the
System's cable programming services; several complaints are pending as of the
date of the financial statements. The Telecommunications Act eliminates
regulation of nonbasic programming as of March 31, 1999. In the interim, rate
regulation of the nonbasic programming tier can only be triggered by a
franchising authority complaint to the FCC. If the FCC determines that the
System's nonbasic programming service tier rates are unreasonable, the FCC has
the authority to order the System to reduce nonbasic programming service tier
rates and to refund to customers any overcharges occurring from the filing
date of the rate complaint with the FCC.
F-109
<PAGE>
CENCOM CABLE ENTERTAINMENT, INC.--
MISSOURI SYSTEM
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Under the FCC's initial rate regulations pursuant to the 1992 Cable Act,
regulated cable systems were required to apply a benchmark formula to
determine their maximum permitted rates. Those systems whose rates were above
the benchmark on September 30, 1992, were required to reduce their rates to
the benchmark or by 10%, whichever was less. Under revised rate regulations
adopted February 1994, regulated cable systems were required to set their
rates so that regulated revenues per subscriber did not exceed September 30,
1992, levels, reduced by 17% (taking into account the previous 10% reduction).
Notwithstanding mandated rate regulations, cable operators currently may
adjust their regulated rates to reflect inflation and what the FCC has deemed
to be external costs (such as increases in franchise fees).
In September 1995, the FCC developed an abbreviated cost-of-service form
that permits cable operators to recover costs of significant upgrades that
provide benefits to subscribers of regulated cable services. Cable operators
seeking to raise rates to cover costs of an upgrade would submit only the
costs of the upgrade instead of all current costs. In December 1995, the FCC
revised its cost-of-service rules. At this time, the System's management is
unable to predict the effect of these revised rules on the System's financial
position or results of operations.
In another action in September 1995, the FCC established a new optional rate
adjustment methodology that encourages operators to limit their rate increases
to once a year to reflect inflation and changes in external costs and the
number of channels. The rules permit cable operators to "project reasonably"
changes in their costs for the 12 months following the rate change (in an
effort to eliminate delays in recovering costs). The order allows operators to
recover increases in additional types of franchise-requirement costs.
Permitted pass-through increases include increases in the cost of providing
institutional networks, video services, data services to or from governmental
and educational institutions, and certain other cost increases. The System's
management is unable to predict the effect of these new rules on the System's
business.
In November 1995, the FCC proposed to provide cable operators with the
option of establishing uniform rates for similar service packages offered in
multiple franchise areas located in the same region. Under the FCC's current
rules, cable operators subject to rate regulation must establish rates on a
franchise-specific basis. The proposed rules could lower cable operator's
marketing costs and may also allow operators to better respond to competition
from alternative providers. The System's management is unable to predict if
these proposed rules will ultimately be promulgated by the FCC, and if they
are promulgated, their effect on the System's financial position and results
of operations.
While management believes that the System has complied in all material
respects with the rate provisions of the 1992 Cable Act, in jurisdictions that
have not yet chosen to certify, refunds covering a one-year period on basic
services may be ordered upon future certification if the System is unable to
justify its rates through a benchmark or cost-of-service filing or small
system cost-of-service filing pursuant to FCC rules. Management is unable to
estimate at this time the amount of refunds, if any, that may be payable by
the System in the event certain of its rates are successfully challenged by
franchising authorities or found to be unreasonable by the FCC. Management
does not believe that the amount of any such refunds would have a material
adverse effect on the financial position or results of operations of the
System.
"Must Carry" Requirements/"Retransmission Consents"
Under the 1992 Cable Act, cable television operators are subject to
mandatory signal carriage requirements that allow local commercial and
noncommercial television broadcast stations to elect to require a cable system
to carry the station, subject to certain exceptions, or, in the case of
commercial stations, to negotiate for "retransmission consent" to carry the
station. In addition, there are requirements for cable systems to obtain
F-110
<PAGE>
CENCOM CABLE ENTERTAINMENT, INC.--
MISSOURI SYSTEM
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
retransmission consent for all "distant" commercial television stations,
commercial radio stations and certain low power television stations carried by
such system after October 6, 1993. As a result of the mandatory system
carriage rules, the System has been required to carry television broadcast
stations that otherwise would not have been carried, thereby causing
displacement of possibly more attractive programming. The validity of the
mandatory signal carriage requirements is being litigated; however, the
carriage requirements remain in effect pending the outcome of the proceedings.
Franchise Matters
The 1992 Cable Act modified the franchise renewal process to make it easier
for a franchising authority to deny renewal. Historically, franchises have
been renewed for cable operators that have provided satisfactory services and
have complied with the terms of the franchise agreement. Although management
believes that the System has generally met the terms of its franchise
agreements and has provided quality levels of service, and anticipates the
System's future franchise renewal prospects generally will be favorable, there
can be no assurance that any such franchises will be renewed or, if renewed,
that the franchising authorities will not impose more onerous requirements on
the System than previously existed.
Recent Telecommunications Legislation
The Telecommunications Act alters federal, state, and local laws and
regulations pertaining to cable television, telecommunications and other
services.
Under the Telecommunications Act, telephone companies can compete directly
with cable operators in the provision of video programming. This new
legislation recognizes several multiple entry options for telephone companies
to provide competitive video programming.
The Telecommunications Act eliminates broadcast/cable cross-ownership
restrictions, but leaves in place FCC regulations prohibiting local cross-
ownership between television stations and cable systems.
Certain provisions of the Telecommunications Act could materially affect the
growth and operation of the cable television industry and the cable services
provided by the System. Although the new legislation may substantially lessen
regulatory burdens, the cable television industry may be subject to additional
competition as a result thereof. There are numerous rule makings to be
undertaken by the FCC which will interpret and implement the
Telecommunications Act's provisions. In addition, certain provisions of the
Telecommunications Act (such as the deregulation of cable programming rates)
are not immediately effective. Further, certain of the Telecommunications
Act's provisions have been and are likely to be subject to judicial
challenges. The System's management is unable at this time to predict the
outcome of such rule makings or litigation or the substantive effect of the
new legislation and the rule makings on the financial position and results of
operations of the System.
F-111
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Cencom Cable Income Partners, L.P.:
We have audited the accompanying balance sheets of Cencom Cable Income
Partners, L.P.--Illinois System (as defined in Note 1) as of December 31, 1995
and 1994, and the related statements of operations, System's equity and cash
flows for the years then ended. These combined financial statements are the
responsibility of the System's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Cencom Cable Income
Partners, L.P.--Illinois System as of December 31, 1995 and 1994, and the
results of its operations and its cash flows for the years then ended, in
conformity with generally accepted accounting principles.
Arthur Andersen LLP
St. Louis, Missouri, July 31, 1996
F-112
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Partners Cencom Cable Income Partners, L.P.:
We have audited the accompanying statements of operations, System's equity
and cash flows for Cencom Cable Income Partners, L.P.--Illinois System for the
year ended December 31, 1993. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of operations and the cash flows of
Cencom Cable Income Partners, L.P.--Illinois System for the year ended
December 31, 1993, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Dallas, Texas July 26, 1996
F-113
<PAGE>
CENCOM CABLE INCOME PARTNERS, L.P.--
ILLINOIS SYSTEM
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31
-------------------------
1995 1994
------------ ------------
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash............................................... $ -- $ --
Accounts receivable, net of allowance for doubtful
accounts of $33,462 and $37,079, respectively..... 433,638 412,627
Prepaid expenses and other......................... 67,786 133,811
------------ ------------
Total current assets............................. 501,424 546,438
PROPERTY, PLANT AND EQUIPMENT, net................... 12,586,022 13,661,411
FRANCHISE COSTS, net of accumulated amortization of
$8,532,620 and $8,097,619, respectively............. 643,819 1,078,820
------------ ------------
$ 13,731,265 $ 15,286,669
============ ============
LIABILITIES AND SYSTEM'S EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses.............. $ 868,435 $ 785,604
Subscriber deposits and prepayments................ 187,994 182,983
------------ ------------
Total current liabilities........................ 1,056,429 968,587
DEFERRED REVENUE..................................... 74,545 --
COMMITMENTS AND CONTINGENCIES
SYSTEM'S EQUITY...................................... 12,600,291 14,318,082
------------ ------------
$ 13,731,265 $ 15,286,669
============ ============
</TABLE>
The accompanying notes are an integral part of these balance sheets.
F-114
<PAGE>
CENCOM CABLE INCOME PARTNERS, L.P.--
ILLINOIS SYSTEM
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------------------------
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
SERVICE REVENUES..................... $ 15,464,952 $ 14,357,807 $ 14,375,095
------------ ------------ ------------
OPERATING EXPENSES:
Operating, general and administra-
tive.............................. 7,521,763 7,086,264 6,777,285
Depreciation and amortization...... 4,198,041 4,158,970 4,328,818
Management fee--related party...... 793,303 735,499 719,566
------------ ------------ ------------
12,513,107 11,980,733 11,825,669
------------ ------------ ------------
Income from operations........... 2,951,845 2,377,074 2,549,426
------------ ------------ ------------
OTHER INCOME (EXPENSE):
Interest expense................... (2,161,313) (1,536,742) (1,347,089)
Interest income.................... 68,491 25,002 18,530
Other, net......................... 1,000 4,000 (49,101)
------------ ------------ ------------
(2,091,822) (1,507,740) (1,377,660)
------------ ------------ ------------
Net income....................... $ 860,023 $ 869,334 $ 1,171,766
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
F-115
<PAGE>
CENCOM CABLE INCOME PARTNERS, L.P.--
ILLINOIS SYSTEM
STATEMENTS OF SYSTEM'S EQUITY
<TABLE>
<CAPTION>
SYSTEM'S
EQUITY
------------
<S> <C>
BALANCE, December 31, 1992........................................ $ 18,089,694
Net activity with Parent........................................ (3,259,946)
Net income...................................................... 1,171,766
------------
BALANCE, December 31, 1993........................................ 16,001,514
Net activity with Parent........................................ (2,552,766)
Net income...................................................... 869,334
------------
BALANCE, December 31, 1994........................................ 14,318,082
Net activity with Parent........................................ (2,577,814)
Net income...................................................... 860,023
------------
BALANCE, December 31, 1995........................................ $ 12,600,291
============
</TABLE>
The accompanying notes are an integral part of these statements.
F-116
<PAGE>
CENCOM CABLE INCOME PARTNERS, L.P.--
ILLINOIS SYSTEM
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income............................ $ 860,023 $ 869,334 $ 1,171,766
Adjustments to reconcile net income to
net cash provided by operating activ-
ities--
Depreciation and amortization....... 4,198,041 4,158,970 4,328,818
Changes in assets and liabilities--
Accounts receivable, net.......... (21,011) (43,173) (68,231)
Prepaid expenses and other........ 66,025 (9,646) (4,225)
Accounts payable and accrued ex-
penses........................... 82,831 134,659 167,343
Subscriber deposits and prepay-
ments............................ 5,011 (26) (390)
Deferred revenue.................. 74,545 -- --
----------- ----------- -----------
Net cash provided by operating
activities..................... 5,265,465 5,110,118 5,595,081
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and
equipment............................ (2,616,594) (2,462,071) (2,225,654)
Other................................. (71,057) (95,281) (109,481)
----------- ----------- -----------
Net cash used in investing ac-
tivities....................... (2,687,651) (2,557,352) (2,335,135)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES--
Net change in capital account with
parent............................... (2,577,814) (2,552,766) (3,259,946)
----------- ----------- -----------
Net cash used in financing ac-
tivities....................... (2,577,814) (2,552,766) (3,259,946)
----------- ----------- -----------
CASH, beginning and end of period....... $ -- $ -- $ --
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-117
<PAGE>
CENCOM CABLE INCOME PARTNERS, L.P.--
ILLINOIS SYSTEM
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Organization and Basis of Presentation
The financial statements include the accounts of a certain cable television
system which is owned and operated by Cencom Cable Income Partners, L.P.
(CCIP). Cencom Properties, Inc. is the General Partner (as referred to herein)
of CCIP. These financial statements include the historical assets, liabilities
and operations of the cable television system of Illinois, providing service
to communities in southwestern Illinois, referred to herein as the "System."
As of December 31, 1995, the System passed approximately 75,000 homes and
serviced approximately 44,000 basic subscribers in approximately 28 franchise
areas. The System comprises approximately 40% of the total CCIP subscribers at
December 31, 1995.
On March 29, 1996, CCIP consummated the sale of the System to Charter
Communications Entertainment I, L.P. (CCE-I), an affiliated entity of CCIP for
an aggregate purchase price of approximately $86.0 million, including related
acquisition fees and expenses (the "Sale Transaction"). The purchase price for
the System was determined in the context of two independent appraisals of all
of CCIP's cable television assets (which included systems other than the
System) conducted in accordance with the terms of the limited partnership
agreement of CCIP. The sale was approved by a majority of CCIP's Limited
Partners following the distribution of a Disclosure Statement dated October 3,
1995, as supplemented on November 1, 1995, and on December 18, 1995.
In connection with the Sale Transaction, a class action lawsuit (the
"Action") was filed in November 1995, on behalf of CCIP's Limited Partners
which sought among other things, to permanently enjoin the sale of all of
CCIP's systems. On February 15, 1996, all of the plaintiff's claims for
injunctive relief were dismissed (including that which sought to prevent
consummation of the sale of the System); the plaintiff's claims for an
unspecified amount of monetary damages remain pending. Based upon (among other
things) the advice of legal counsel, each of the defendants to such action
believes the remaining claims to be without merit and is contesting the claims
vigorously.
Cash Management and Systems' Equity Account
The cash management function for the System is performed by the holding
company of CCIP. Excess cash funds are transferred to the holding company of
CCIP using the System's equity account. In addition, the holding company of
CCIP makes disbursements on behalf of the System for certain items such as
payroll, payroll taxes, employee benefits and other costs, and incurs debt
borrowings for the System. Such amounts are transferred to the System through
the System's equity account and are recognized in the appropriate expense
categories in the accompanying statements of operations.
Property, Plant and Equipment
Property, plant and equipment is recorded at cost, including all direct and
certain indirect costs associated with the construction of cable transmission
and distribution facilities, and the cost of new customer installation. The
costs of disconnecting a customer are charged to expense in the period
incurred. Expenditures for repairs and maintenance are charged to expense as
incurred, and equipment replacement costs and betterments are capitalized.
F-118
<PAGE>
CENCOM CABLE INCOME PARTNERS, L.P.--
ILLINOIS SYSTEM
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Depreciation is provided using the composite method on a straight-line basis
over the estimated useful lives of the related assets as follows:
<TABLE>
<S> <C>
Trunk and distribution systems................................. 10 years
Subscriber installations....................................... 10 years
Converters..................................................... 3-5 years
Buildings and headends......................................... 9-20 years
Vehicles and equipment......................................... 4-8 years
Office equipment............................................... 5-10 years
</TABLE>
Franchise Costs
Franchise costs are being amortized using the straight-line method over the
term of the individual franchises.
During 1995, the System adopted Statement of Financial Accounting Standards
(SFAS) No. 121, entitled "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed of." In accordance with SFAS No. 121,
the System's management periodically reviews the carrying value of its long-
lived assets, identifiable intangibles and franchise costs in relation to
historical financial results, current business conditions and trends
(including the impact of existing legislation and regulation) to identify
potential situations in which the carrying value of such assets may not be
recoverable. If a review indicates that the carrying value of such assets may
not be recoverable, the carrying value of such assets in excess of their fair
value will be recorded as a reduction of the assets' cost as if a permanent
impairment has occurred. The adoption of SFAS No. 121 did not impact the
financial statements of the System.
Revenues
Cable service revenues are recognized when the related services are
provided.
Installation revenues are recognized to the extent of direct selling costs
incurred. The remainder, if any, is deferred and amortized to income over the
average estimated period that customers are expected to remain connected to
the cable television system.
Franchise fees collected from cable subscribers and paid to local franchises
are reported as revenues.
General and Administrative Expenses
Included in general and administrative expenses is the allocation of certain
expenses incurred by the holding company of CCIP on behalf of the System.
These expenses were allocated to the System based on the ratio of total
System's subscribers to total CCIP subscribers. Management considers this
allocation method to be reasonable for the operations of the System. Expense
allocated to the System totaled $139,025, $162,458 and $174,706 during 1995,
1994 and 1993, respectively.
Intercompany Interest Expense
Interest expense allocated to the System has been determined by applying the
ratio of the System's total subscribers to total CCIP subscribers at each
year-end to total CCIP interest expense for the respective years. Management
considers this allocation method to be reasonable for the operations of the
System. CCIP makes disbursements on behalf of the System for interest expense.
CCIP maintains a loan agreement with a bank for borrowings up to $80,000,000,
secured by all of CCIP's assets, including the assets of the System. At
December 31, 1995 and 1994, CCIP had borrowings of $76,500,000 and
$72,300,000, respectively, related to this debt agreement. The weighted
average borrowings for CCIP for 1995 and 1994 were $73,993,000 and
$66,358,000, respectively. The borrowings pertaining to the System is
reflected within System's Equity. At December 31, 1995 and 1994, the interest
rate was 6.9375% and ranged from 7.375% to 9.5%, respectively. The weighted
average interest rates of CCIP for 1995, 1994 and 1993 were 7.30%, 5.73% and
4.60%, respectively.
F-119
<PAGE>
CENCOM CABLE INCOME PARTNERS, L.P.--
ILLINOIS SYSTEM
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
In November 1990, CCIP issued $30,000,000 of 9.64% Deferred Interest Senior
Notes, which were collateralized by a first lien on all of CCIP's assets
(other than real property), including the System's assets, and the General
Partner's interest in CCIP. These notes were retired on May 10, 1993, at their
accreted value of $37,760,962 with funds from the bank loan agreement.
Interest expense related to these notes has been allocated to the Systems in
the manner described in the preceding paragraph.
Income Taxes
Income taxes are the responsibility of the partners of CCIP and as such are
not provided for in the accompanying financial statements.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
2. PREPAID EXPENSES AND OTHER:
Prepaid expenses and other consist of the following at December 31:
<TABLE>
<CAPTION>
1995 1994
------- --------
<S> <C> <C>
Prepaid insurance.......................................... $ 5,738 $ 66,409
Prepaid programming........................................ 49,576 46,361
Other prepaid expenses and current assets.................. 12,472 21,041
------- --------
$67,786 $133,811
======= ========
</TABLE>
3. PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment consist of the following at December 31:
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Trunk and distribution systems................... $ 20,936,805 $ 20,014,931
Subscriber installations......................... 8,944,170 7,949,512
Converters....................................... 8,082,233 7,665,703
Land, buildings and headends..................... 4,260,054 4,130,402
Vehicles and equipment........................... 1,354,198 1,241,708
Office equipment................................. 1,000,656 974,767
------------ ------------
44,578,116 41,977,023
Less--Accumulated depreciation................... (31,992,094) (28,315,612)
------------ ------------
$ 12,586,022 $ 13,661,411
============ ============
</TABLE>
F-120
<PAGE>
CENCOM CABLE INCOME PARTNERS, L.P.--
ILLINOIS SYSTEM
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
4. ACCOUNTS PAYABLE AND ACCRUED EXPENSES:
Accounts payable and accrued expenses consist of the following at December
31:
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Accrued franchise fees.................................... $223,888 $222,252
Accounts payable.......................................... 103,733 138,089
Accrued salary, commission and benefits................... 120,480 89,156
Accrued copyright fees.................................... 79,387 73,198
Accrued programming....................................... 52,264 59,219
Other..................................................... 288,683 203,690
-------- --------
$868,435 $785,604
======== ========
</TABLE>
5. SYSTEM'S EQUITY:
As of December 31, 1995 and 1994, CCIP had recorded in its capital accounts
an accumulated deficit of approximately $32,900,000 and $25,200,000,
respectively, represented by earnings net of partner distributions.
6. RELATED-PARTY TRANSACTIONS:
During 1994, Cencom Cable Associates, Inc., a former affiliated entity,
assigned management services under contract with CCIP to the General Partner.
The management service contract provides for the payment of fees equal to 5%
of the System's gross service revenues. Expenses recognized by the System
under this contract were $793,303, $735,499 and $719,566 during 1995, 1994 and
1993, respectively. Management believes these charges are indicative of the
expense which would have been incurred as a stand-alone entity.
7. COMMITMENTS AND CONTINGENCIES:
Leases
The System leases certain facilities and equipment under noncancelable
operating leases. Rent expense incurred under leases during 1995, 1994 and
1993 was $16,767, $10,705 and $16,296, respectively. Approximate future
minimum lease payments are as follows:
<TABLE>
<S> <C>
1996................................................................. $15,300
1997................................................................. 13,800
1998................................................................. 9,700
1999................................................................. 4,900
2000................................................................. 1,500
Thereafter........................................................... --
</TABLE>
The System rents utility poles in its operations. Generally, pole rental
agreements are short term, but the System's management anticipates that such
rentals will recur. Rent expense incurred for pole attachments during 1995,
1994 and 1993 was approximately $124,800, $101,900 and $106,000 respectively.
F-121
<PAGE>
CENCOM CABLE INCOME PARTNERS, L.P.--
ILLINOIS SYSTEM
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Insurance Coverage
The System currently does not have and does not in the near term anticipate
having property and casualty insurance on its underground distribution plant.
Due to large claims incurred by the property and casualty insurance industry,
the pricing of insurance coverage has become inflated to the point where, in
the judgment of the System's management, the insurance coverage is cost
prohibitive. Management believes that its experience and policy with such
issuance coverage is consistent with general industry practices. Management
will continue to monitor the insurance markets to attempt to obtain coverage
for the System's distribution plant at reasonable rates.
Litigation
The System is a party to lawsuits which are generally incidental to its
business. In the opinion of management, after consulting with legal counsel,
the outcome of these lawsuits will not have a material adverse effect on the
System's financial position and results of operations.
8. REGULATION IN THE CABLE TELEVISION INDUSTRY:
The cable television industry is subject to extensive regulation at the
federal, local and, in some instances, state levels. In addition, recent
legislative and regulatory changes and additional regulatory proposals under
consideration may materially affect the cable television industry.
1992 Cable Act and FCC Regulation
Congress enacted the Cable Television Consumer Protection and Competition
Act of 1992 (the "1992 Cable Act"), which became effective on December 4,
1992. This legislation has caused significant changes to the regulatory
environment in which the cable television industry operates. The 1992 Cable
Act generally allows for a greater degree of regulation of the cable
television industry. Under the 1992 Cable Act's definition of effective
competition, nearly all cable systems in the United States are subject to rate
regulation of basic cable services, provided the local franchising authority
becomes certified to regulate basic service rates.
The 1992 Cable Act and the Federal Communications Commission's (FCC) rules
implementing the 1992 Cable Act have generally increased the administrative
and operational expenses of cable television systems and have resulted in
additional regulatory oversight by the FCC and local franchise authorities.
Management is unable to predict the ultimate effect of the 1992 Cable Act or
the ultimate outcome of various FCC rule-making proceedings or the litigation
challenging various aspects of the 1992 Cable Act and the FCC's regulations
implementing the 1992 Cable Act.
The 1992 Cable Act and FCC regulations have imposed rate requirements for
basic services and equipment, including rate roll-backs. Under the 1992 Cable
Act, a local franchising authority in a community not subject to "effective
competition" generally is authorized to regulate basic cable rates after
certifying to the FCC that, among other things, it will adopt and administer
rate regulation consistent with FCC rules, and in a manner that will provide a
reasonable opportunity to consider the views of interested parties. Upon
certification, the franchising authority obtains the right to approve the
basic rates charged by the cable system operator. In regulating the basic
service rates, certified local franchise authorities have the authority to
order a rate refund of previously paid rates determined to be in excess of the
maximum permitted reasonable rates. The Telecommunications Act (the
"Telecommunications Act"), passed by Congress on February 1, 1996, and signed
into law by the President on February 8, 1996, broadens the definition of
"effective competition" to include any franchise area where a local exchange
carrier (or its affiliate) provides video programming services to subscribers
by any means, other than through Direct Broadcast Satellite.
Rate regulation of the basic service tier remains subject to regulation by
local franchising authorities under the Telecommunications Act, except in
certain circumstances for "small cable operators." For a defined class of
F-122
<PAGE>
CENCOM CABLE INCOME PARTNERS, L.P.--
ILLINOIS SYSTEM
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
"small cable operators," the Telecommunications Act immediately eliminates
regulation of cable programming rates. Rates for basic tier of "small cable
operators" are deregulated if the system offered a single tier of services as
of December 31, 1994.
Under the 1992 Cable Act, rates for cable programming services not carried
on the basic tier (nonbasic services) could be regulated by the FCC upon the
filing of a complaint by franchise authorities or subscribers that indicates
the cable operator's rates for these services are unreasonable. Rate
complaints have been filed with the FCC with respect to certain of the
Partnership's cable programming services; several complaints are pending as of
the date of the financial statements. The Telecommunications Act eliminates
regulation of nonbasic programming as of March 31, 1999. In the interim, rate
regulation of the nonbasic programming tier can only be triggered by a
franchising authority complaint to the FCC. If the FCC determines that the
System's nonbasic programming service tier rates are unreasonable, the FCC has
the authority to order the System to reduce nonbasic programming service tier
rates and to refund to customers any overcharges occurring from the filing
date of the rate complaint with the FCC.
Under the FCC's initial rate regulations pursuant to the 1992 Cable Act,
regulated cable systems were required to apply a benchmark formula to
determine their maximum permitted rates. Those systems whose rates were above
the benchmark on September 30, 1992, were required to reduce their rates to
the benchmark or by 10%, whichever was less. Under revised rate regulations
adopted February 1994, regulated cable systems were required to set their
rates so that regulated revenues per subscriber did not exceed September 30,
1992, levels, reduced by 17% (taking into account the previous 10% reduction).
Notwithstanding mandated rate regulations, cable operators currently may
adjust their regulated rates to reflect inflation and what the FCC has deemed
to be external costs (such as increases in franchise fees).
In September 1995, the FCC developed an abbreviated cost-of-service form
that permits cable operators to recover costs of significant upgrades that
provide benefits to subscribers of regulated cable services. Cable operators
seeking to raise rates to cover costs of an upgrade would submit only the
costs of the upgrade instead of all current costs. In December 1995, the FCC
revised its cost-of-service rules. At this time, the System's management is
unable to predict the effect of these revised rules on the System's financial
position or results of operations.
In another action in September 1995, the FCC established a new optional rate
adjustment methodology that encourages operators to limit their rate increases
to once a year to reflect inflation and changes in external costs and the
number of channels. The rules permit cable operators to "project reasonably"
changes in their costs for the 12 months following the rate change (in an
effort to eliminate delays in recovering costs). The order allows operators to
recover increases in additional types of franchise-requirement costs.
Permitted pass-through increases include increases in the cost of providing
institutional networks, video services, data services to or from governmental
and educational institutions, and certain other cost increases. The System's
management is unable to predict the effect of these new rules on the System's
business.
In November 1995, the FCC proposed to provide cable operators with the
option of establishing uniform rates for similar service packages offered in
multiple franchise areas located in the same region. Under the FCC's current
rules, cable operators subject to rate regulation must establish rates on a
franchise-specific basis. The proposed rules could lower cable operator's
marketing costs and may also allow operators to better respond to competition
from alternative providers. The System's management is unable to predict if
these proposed rules will ultimately be promulgated by the FCC, and if they
are promulgated, their effect on the System's financial position and results
of operations.
While management believes that the System has complied in all material
respects with the rate provisions of the 1992 Cable Act, in jurisdictions that
have not yet chosen to certify, refunds covering a one-year period on
F-123
<PAGE>
CENCOM CABLE INCOME PARTNERS, L.P.--
ILLINOIS SYSTEM
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
basic services may be ordered upon future certification if the System is
unable to justify its rates through a benchmark or cost-of-service filing or
small system cost-of-service filing pursuant to FCC rules. Management is
unable to estimate at this time the amount of refunds, if any, that may be
payable by the System in the event certain of its rates are successfully
challenged by franchising authorities or found to be unreasonable by the FCC.
Management does not believe that the amount of any such refunds would have a
material adverse effect on the financial position or results of operations of
the System.
"Must Carry" Requirements/"Retransmission Consents"
Under the 1992 Cable Act, cable television operators are subject to
mandatory signal carriage requirements that allow local commercial and
noncommercial television broadcast stations to elect to require a cable system
to carry the station, subject to certain exceptions, or, in the case of
commercial stations, to negotiate for "retransmission consent" to carry the
station. In addition, there are requirements for cable systems to obtain
retransmission consent for all "distant" commercial television stations,
commercial radio stations and certain low power television stations carried by
such system after October 6, 1993. As a result of the mandatory system
carriage rules, the System has been required to carry television broadcast
stations that otherwise would not have been carried, thereby causing
displacement of possibly more attractive programming. The validity of the
mandatory signal carriage requirements is being litigated; however, the
carriage requirements remain in effect pending the outcome of the proceedings.
Franchise Matters
The 1992 Cable Act modified the franchise renewal process to make it easier
for a franchising authority to deny renewal. Historically, franchises have
been renewed for cable operators that have provided satisfactory services and
have complied with the terms of the franchise agreement. Although management
believes that the System has generally met the terms of its franchise
agreements and has provided quality levels of service, and anticipates the
System's future franchise renewal prospects generally will be favorable, there
can be no assurance that any such franchises will be renewed or, if renewed,
that the franchising authorities will not impose more onerous requirements on
the System than previously existed.
Recent Telecommunications Legislation
The Telecommunications Act alters federal, state, and local laws and
regulations pertaining to cable television, telecommunications and other
services.
Under the Telecommunications Act, telephone companies can compete directly
with cable operators in the provision of video programming. This new
legislation recognizes several multiple entry options for telephone companies
to provide competitive video programming.
The Telecommunications Act eliminates broadcast/cable cross-ownership
restrictions, but leaves in place FCC regulations prohibiting local cross-
ownership between television stations and cable systems.
Certain provisions of the Telecommunications Act could materially affect the
growth and operation of the cable television industry and the cable services
provided by the System. Although the new legislation may substantially lessen
regulatory burdens, the cable television industry may be subject to additional
competition as a result thereof. There are numerous rule makings to be
undertaken by the FCC which will interpret and implement the
Telecommunications Act's provisions. In addition, certain provisions of the
Telecommunications Act (such as the deregulation of cable programming rates)
are not immediately effective. Further, certain of the Telecommunications
Act's provisions have been and are likely to be subject to judicial
challenges. The System's management is unable at this time to predict the
outcome of such rule makings or litigation or the substantive effect of the
new legislation and the rule makings on the financial position and results of
operations of the System.
F-124
<PAGE>
CENCOM CABLE INCOME PARTNERS, L.P.--
ILLINOIS SYSTEM
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
9. NET INCOME FOR INCOME TAX PURPOSES:
The following summarizes the differences between CCIP's net income for
financial reporting and federal income tax purposes for the years ended
December 31:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Net income for financial reporting pur-
poses................................... $3,453,270 $3,811,203 $3,367,720
Depreciation differences between finan-
cial reporting and tax reporting........ 1,804,940 (301,487) 79,190
Amortization differences between finan-
cial reporting and tax reporting........ 57,969 80,844 609,197
Differences in expenses recorded for fi-
nancial reporting and reported for tax
purposes................................ 844,798 85,052 (16,286)
Revenue reported for tax reporting de-
ferred for financial reporting.......... 187,957 -- --
Other.................................... 31,496 7,768 --
---------- ---------- ----------
Net income for federal income tax purpos-
es...................................... $6,380,430 $3,683,380 $4,039,821
========== ========== ==========
</TABLE>
The following summarizes the significant cumulative temporary differences
between CCIP's financial reporting basis and federal income tax reporting basis
as of December 31:
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Assets:
Accounts receivable........................... $ 95,346 $ 87,228
Franchise costs............................... 37,384,139 37,326,170
Accrued expenses.............................. 2,520,653 1,667,737
Deferred revenue.............................. 187,957 --
------------ ------------
$ 40,188,095 $ 39,081,135
============ ============
Liabilities--Property, plant and equipment...... $(19,682,850) $(21,816,974)
============ ============
</TABLE>
As discussed in Note 1, the System comprises approximately 40% of CCIP's
total basic subscribers.
F-125
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and Board of Directors of
Cencom Cable Television, Inc.:
We have audited the accompanying combined balance sheets of Cencom Cable
Television, Inc.--Los Angeles and Riverside Systems as of December 31, 1994,
and September 29, 1995, and the related combined statements of operations,
Systems' equity and cash flows for the two years ended December 31, 1993 and
1994, and for the nine months ended September 29, 1995. These combined
financial statements are the responsibility of the Systems' management. Our
responsibility is to express an opinion on these combined financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of Cencom Cable
Television, Inc.--Los Angeles and Riverside Systems as of December 31, 1994,
and September 29, 1995, and the results of their operations and their cash
flows for the two years ended December 31, 1993 and 1994, and for the nine
months ended September 29, 1995, in conformity with generally accepted
accounting principles.
Arthur Andersen LLP
Dallas, Texas,
November 22, 1995
F-126
<PAGE>
CENCOM CABLE TELEVISION, INC.--LOS ANGELES AND RIVERSIDE SYSTEMS
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 29,
1994 1995
------------ -------------
<S> <C> <C>
CURRENT ASSETS:
Cash.............................................. $ -- $ --
Accounts receivable, net of allowance for doubtful
accounts of $427,936 and $248,355, respectively.. 2,887,129 2,659,333
Prepaid expenses and other........................ 1,749,372 732,128
------------ ------------
Total current assets........................... 4,636,501 3,391,461
PROPERTY, PLANT AND EQUIPMENT, net.................. 117,394,950 111,422,525
FRANCHISE COSTS AND OTHER, net...................... 55,497,894 38,909,434
------------ ------------
$177,529,345 $153,723,420
============ ============
LIABILITIES AND SYSTEMS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses............. $ 6,799,377 $ 5,862,550
Current maturities of long-term debt.............. 126,977 --
Subscriber deposits and prepayments............... 480,716 416,242
------------ ------------
Total current liabilities...................... 7,407,070 6,278,792
NONCURRENT LIABILITIES:
Long-term debt, less current maturities........... 155,521 228,773
Deferred revenue.................................. -- 482,640
------------ ------------
Total noncurrent liabilities................... 155,521 711,413
COMMITMENTS AND CONTINGENCIES
SYSTEMS' EQUITY..................................... 169,966,754 146,733,215
------------ ------------
$177,529,345 $153,723,420
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
F-127
<PAGE>
CENCOM CABLE TELEVISION, INC.--LOS ANGELES AND RIVERSIDE SYSTEMS
COMBINED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
NINE
YEAR ENDED DECEMBER 31, MONTHS ENDED
-------------------------- SEPTEMBER
1993 1994 29, 1995
------------ ------------ ------------
<S> <C> <C> <C>
SERVICE REVENUES...................... $ 74,542,733 $ 78,647,795 $61,861,563
OPERATING EXPENSES:
Operating costs...................... 23,314,140 24,746,916 20,354,512
Selling, general, and administra-
tive................................ 19,772,950 19,671,911 14,627,383
Depreciation and amortization........ 56,518,726 54,092,418 33,379,558
Management fee--related party........ 943,681 1,026,869 2,150,374
------------ ------------ -----------
100,549,497 99,538,114 70,511,827
------------ ------------ -----------
Loss from operations................ (26,006,764) (20,890,319) (8,650,264)
OTHER INCOME (EXPENSE):
Interest income...................... 402 36,193 --
Interest expense..................... (39,935) (31,779) (38,264)
Other................................ (318,223) 8,500 398,079
------------ ------------ -----------
(357,756) 12,914 359,815
------------ ------------ -----------
Net loss............................ $(26,364,520) $(20,877,405) $(8,290,449)
------------ ------------ -----------
</TABLE>
The accompanying notes are an integral part of these statements.
F-128
<PAGE>
CENCOM CABLE TELEVISION, INC.--LOS ANGELES AND RIVERSIDE SYSTEMS
COMBINED STATEMENTS OF SYSTEMS' EQUITY
<TABLE>
<CAPTION>
SYSTEMS'
EQUITY
------------
<S> <C>
BALANCE, December 31, 1992........................................ $242,746,018
Net activity with Parent......................................... (8,405,824)
Net loss......................................................... (26,364,520)
------------
BALANCE, December 31, 1993........................................ 207,975,674
Net activity with Parent......................................... (17,131,515)
Net loss......................................................... (20,877,405)
------------
BALANCE, December 31, 1994........................................ 169,966,754
Net activity with Parent......................................... (14,943,090)
Net loss......................................................... (8,290,449)
------------
BALANCE, September 29, 1995....................................... $146,733,215
============
</TABLE>
The accompanying notes are an integral part of these statements.
F-129
<PAGE>
CENCOM CABLE TELEVISION, INC.--LOS ANGELES AND RIVERSIDE SYSTEMS
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE
YEAR ENDED DECEMBER 31, MONTHS ENDED
-------------------------- SEPTEMBER
1993 1994 29, 1995
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss............................. $(26,364,520) $(20,877,405) $(8,290,449)
Adjustments to reconcile net loss to
net cash provided by operating
activities--
Depreciation and amortization....... 56,518,726 54,092,418 33,379,558
Changes in assets and liabilities--
Accounts receivable, net........... (2,139,746) 1,068,078 227,796
Prepaid expenses and other......... (288,134) (22,632) 1,017,244
Accounts payable and accrued ex-
penses............................ (647,804) 842,710 (936,827)
Subscriber deposits and prepay-
ments............................. 12,655 (157,691) (64,474)
Deferred revenue................... -- -- 482,640
------------ ------------ -----------
Net cash provided by operating ac-
tivities.......................... 27,091,177 34,945,478 25,815,488
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment.. (11,503,376) (17,720,620) (10,818,674)
Acquisition of KTS Corporation....... (7,055,000) 75,814 --
------------ ------------ -----------
Net cash used in investing activi-
ties............................. (18,558,376) (17,644,806) (10,818,674)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of long-term debt............ (126,977) (169,157) (53,724)
Net change in capital account with
Parent.............................. (8,405,824) (17,131,515) (14,943,090)
------------ ------------ -----------
Net cash used in financing activi-
ties............................. (8,532,801) (17,300,672) (14,996,814)
------------ ------------ -----------
NET INCREASE IN CASH AND CASH EQUIVA-
LENTS................................ -- -- --
------------ ------------ -----------
CASH AND CASH EQUIVALENTS, beginning
and end of period.................... $ -- $ -- $ --
------------ ------------ -----------
CASH PAID FOR INCOME TAXES............ $ -- $ 800 $ 800
------------ ------------ -----------
CASH PAID FOR INTEREST................ $ 33,187 $ 34,528 $ 44,268
------------ ------------ -----------
</TABLE>
The accompanying notes are an integral part of these statements.
F-130
<PAGE>
CENCOM CABLE TELEVISION, INC.--LOS ANGELES AND RIVERSIDE SYSTEMS
NOTES TO COMBINED FINANCIAL STATEMENTS
1.SALE OF ASSETS:
On September 29, 1995, Cencom Cable Television, Inc. (CCT) sold
substantially all of its assets to CCT Holdings Corp., an entity jointly owned
by investment partnerships affiliated with Kelso & Company, Inc. and Charter
Communications, Inc. ("Charter"), the manager of CCT's cable systems. Proceeds
from the sale, after a working capital adjustment of $5.5 million, consisted
of $198.8 million in cash and a ten-year, $165.7 million subordinated note
with an interest rate of 12% per year which increases to 15% on the fifth
anniversary and increases 2% on each anniversary thereafter, with principal
and interest payable at maturity. In addition, CCT received the contractual
right to 15% of the net distributable proceeds (after certain debt repayments
and equity distributions) from certain future sales by Charter Communications
Entertainment, L.P., a newly formed joint venture created to operate cable
television systems, to which CCT Holdings Corp. contributed the assets of the
cable systems located in Los Angeles and Riverside, California ("Systems"),
which were purchased from CCT.
Immediately prior to the closing of the sale, CCT's parent paid Charter
$10.6 million to acquire Charter's 2.9% interest in CCT.
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Organization and Basis of Presentation
The accompanying combined financial statements include the accounts of the
Systems, which were owned and operated by CCT. Prior to the closing of the
sale on September 29, 1995, CCT was 97.1% owned by Gaylord Broadcasting
Company (the "Parent"), which is a wholly owned subsidiary of Gaylord
Entertainment Company ("Gaylord"), and 2.9% owned by Charter.
All intersystem balances and transactions have been eliminated for
presentation in the combined financial statements.
As of September 29, 1995, the Systems passed 420,353 homes and serviced
165,265 basic subscribers in 33 franchise areas. The Systems comprise
approximately 89% of total CCT subscribers at September 29, 1995.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Property, Plant and Equipment
Property, plant and equipment is recorded at cost, including all direct and
certain indirect costs associated with the construction of cable transmission
and distribution facilities, and the cost of new customer installation. The
costs of disconnecting a customer are charged to expense in the period
incurred. Expenditures for repairs and maintenance are charged to expense as
incurred, and equipment replacement costs and betterments are capitalized.
F-131
<PAGE>
CENCOM CABLE TELEVISION, INC.--LOS ANGELES AND RIVERSIDE SYSTEMS
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
Depreciation is provided using the composite method on a straight-line basis
over the estimated useful lives of assets as follows:
<TABLE>
<S> <C>
Trunk and distribution system................................... 10 years
Subscriber installations........................................ 10 years
Converters...................................................... 5-10 years
Buildings and headends.......................................... 9-20 years
Vehicles and equipment.......................................... 4-8 years
Office equipment................................................ 5-10 years
</TABLE>
Franchise Costs and Other
Franchise costs are being amortized on a straight-line basis over the
remaining terms of the related franchises, the majority of which expire prior
to December 31, 1999. Noncompete covenants are being amortized on a straight-
line basis over three or five years, depending on the terms of the related
agreements.
During 1995, the Systems' management adopted Statement of Financial
Accounting Standards (SFAS) No. 121 entitled, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed of." In
accordance with SFAS No. 121, the Systems' management periodically reviews the
carrying value of its long-lived assets, identifiable intangibles and
franchise costs in relation to historical financial results, current business
conditions and trends (including the impact of existing legislation and
regulation) to identify potential situations in which the carrying value of
such assets may not be recoverable. If a review indicates that the carrying
value of such assets may not be recoverable, the carrying value of such assets
in excess of their fair value will be recorded as a reduction of the assets'
cost as if a permanent impairment has occurred. The adoption of SFAS No. 121
did not impact the financial statements of the Systems'.
Service Revenues
Cable service revenues are recognized when the related services are
provided. Franchise fees collected from cable subscribers and paid to local
franchises are reported as revenues.
Selling, General and Administrative Expenses
Included in selling, general, and administrative expenses is the allocation
of certain expenses incurred by the holding company of CCT on behalf of the
Systems. These expenses were allocated to the Systems based on the ratio of
total Systems' subscribers to total CCT subscribers. Management considers this
allocation method to be reasonable for the operations of the Systems.
Income Taxes
The Systems have not recorded the benefit of the net operating losses as the
benefit will be retained by the Parent in accordance with the shareholders'
agreement among CCT, Charter, and the Parent.
Cash Management and Systems' Equity Account
The cash management function for the Systems is performed by the holding
company of CCT. Excess cash funds are transferred to the holding company of
CCT using the Systems' equity account. In addition, the holding company of CCT
makes disbursements on behalf of the Systems for certain items such as
programming fees, payroll, payroll taxes, employee benefits, and other costs.
Such amounts are transferred to the Systems through the Systems' equity
account and are recognized in the appropriate expense categories in the
accompanying combined statements of operations.
F-132
<PAGE>
CENCOM CABLE TELEVISION, INC.--LOS ANGELES AND RIVERSIDE SYSTEMS
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
3.PREPAID EXPENSES AND OTHER:
Prepaid expenses and otehr consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 29,
1994 1995
------------ -------------
<S> <C> <C>
Prepaid management fee............................. $ 901,236 $ --
Prepaid programming................................ 206,701 182,657
Prepaid property tax............................... 346,573 --
Deposits........................................... 229,816 148,776
Other.............................................. 65,046 400,695
---------- --------
$1,749,372 $732,128
========== ========
</TABLE>
4.PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 29,
1994 1995
------------ -------------
<S> <C> <C>
Trunk and distribution systems................... $116,037,825 $117,825,006
Subscriber installations......................... 37,452,040 41,788,065
Converters....................................... 36,474,366 40,108,987
Land, buildings and headends..................... 7,323,537 7,373,297
Vehicles and equipment........................... 4,532,000 4,915,015
Office equipment................................. 2,875,564 3,450,381
------------ ------------
204,695,332 215,460,751
Less-Accumulated depreciation.................... (87,300,382) (104,038,226)
------------ ------------
$117,394,950 $111,422,525
============ ============
</TABLE>
5.FRANCHISE COSTS AND OTHER:
Franchise costs and other consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 29,
1994 1995
------------ -------------
<S> <C> <C>
Franchise costs, net of accumulated amortization
of $145,225,911
and $161,743,118, respectively.................... $54,952,146 $38,472,736
Noncompete covenants, net of accumulated
amortization of $169,381
and $278,431, respectively........................ 545,748 436,698
----------- -----------
$55,497,894 $38,909,434
=========== ===========
</TABLE>
During 1994, approximately $49 million of noncompete covenants expired and
the cost and related accumulated amortization were removed from the December
31, 1994, balance sheet.
F-133
<PAGE>
CENCOM CABLE TELEVISION, INC.--LOS ANGELES AND RIVERSIDE SYSTEMS
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES:
Accounts payable and accrued expenses consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 29,
1994 1995
------------ -------------
Accounts payable.................................. $ 419,065 $ 174,353
<S> <C> <C>
Accrued franchise fees............................ 2,267,289 1,601,008
Accrued construction in progress.................. 1,432,163 1,760,849
Accrued salaries and related benefits............. 904,766 628,949
Accrued sales and use tax......................... 464,944 313,210
Accrued program guides............................ 281,040 309,032
Other............................................. 1,030,110 1,075,149
---------- ----------
$6,799,377 $5,862,550
========== ==========
</TABLE>
7. SYSTEMS' EQUITY:
As of September 29, 1995, CCT had recorded in its capital account an
accumulated deficit of approximately $236,670,000, represented by losses and
partner distributions.
8. RELATED-PARTY TRANSACTIONS:
Pursuant to a management agreement (the "Management Agreement"), Crown
Communications, Inc. ("Crown") managed CCT's cable television operations
during 1993 and through November 18, 1994, for a standard management fee equal
to 3% of CCT's operating cash flow, as defined. For the years ended December
31, 1993 and 1994, the Systems expensed $943,681 and $904,209, respectively,
relating to the Management Agreement with Crown. Effective November 19, 1994,
Crown assigned its rights and obligations under the Management Agreement to
Charter, and the Management Agreement was amended to increase the standard
management fee from 3% to 8% of CCT's cash flow, as defined, beginning January
1, 1995. For the period from November 19, 1994, through December 31, 1994, and
January 1, 1995, through September 29, 1995, the Systems expensed $122,660 and
$2,150,374, respectively, relating to the Management Agreement with Charter.
As of December 31, 1994, the Systems had prepaid management fees to Charter of
$901,236.
9. COMMITMENT AND CONTINGENCIES:
Leases
The Systems lease certain facilities and equipment under noncancelable
operating leases. Rent expenses incurred under leases during 1993, 1994 and
1995 were $1,149,951, $1,131,333 and $821,634, respectively. Future minimum
lease payments are as follows:
<TABLE>
<S> <C>
1996............................................................ $ 838,569
1997............................................................ 839,486
1998............................................................ 842,712
1999............................................................ 857,564
2000 and thereafter............................................. 1,707,276
----------
Total....................................................... $5,085,607
==========
</TABLE>
F-134
<PAGE>
CENCOM CABLE TELEVISION, INC.--LOS ANGELES AND RIVERSIDE SYSTEMS
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
The Systems rent utility poles in their operations. Generally, pole rental
agreements are short term, but the Systems' management anticipates that such
rentals will continue to recur. Rent expense incurred for pole attachments
during 1993, 1994 and 1995 were $440,797, $454,393 and $342,478, respectively.
Insurance Coverage
The Systems currently do not have and do not in the near term anticipate
having property and casualty insurance on their underground distribution
plants. Due to large claims incurred by the property and casualty insurance
industry, the pricing of insurance coverage has become inflated to the point
where, in the judgment of the Systems' management, the insurance coverage is
cost prohibitive. Management believes its experience and policy with such
insurance coverage is consistent with general industry practices. Management
will continue to monitor the insurance markets to attempt to obtain coverage
for the Systems' distribution plants at reasonable rates.
Litigation
The Systems are a party to lawsuits which are generally incidental to its
business. In the opinion of management, after consulting with legal counsel,
the outcome of these lawsuits will not have a material adverse effect on the
Systems' financial position and results of operations.
10.REGULATION IN THE CABLE INDUSTRY:
The cable television industry is subject to extensive regulation at the
federal, local and, in some instances, state levels. In addition, recent
legislative and regulatory changes and additional regulatory proposals under
consideration may materially affect the cable television industry.
1992 Cable Act and FCC Regulation
Congress enacted the Cable Television Consumer Protection and Competition
Act of 1992 (the "1992 Cable Act"), which became effective on December 4,
1992. This legislation has caused significant changes to the regulatory
environment in which the cable television industry operates. The 1992 Cable
Act generally allows for a greater degree of regulation of the cable
television industry. Under the 1992 Cable Act's definition of effective
competition, nearly all cable systems in the United States are subject to rate
regulation of basic cable services, provided the local franchising authority
becomes certified to regulate basic service rates.
The 1992 Cable Act and the Federal Communications Commission's (FCC) rules
implementing the 1992 Cable Act have generally increased the administrative
and operational expenses of cable television systems and have resulted in
additional regulatory oversight by the FCC and local franchise authorities.
Management is unable to predict the ultimate effect of the 1992 Cable Act or
the ultimate outcome of various FCC rule-making proceedings or the litigation
challenging various aspects of the 1992 Cable Act and the FCC's regulations
implementing the 1992 Cable Act.
The 1992 Cable Act and FCC regulations have imposed rate requirements for
basic services and equipment, including rate roll-backs. Under the 1992 Cable
Act, a local franchising authority in a community not subject to "effective
competition" generally is authorized to regulate basic cable rates after
certifying to the FCC that, among other things, it will adopt and administer
rate regulation consistent with FCC rules, and in a manner that will provide a
reasonable opportunity to consider the views of interested parties. Upon
certification, the franchising authority obtains the right to approve the
basic rates charged by the cable system operator. In regulating the basic
service rates, certified local franchise authorities have the authority to
order a rate refund of previously paid rates determined to be in excess of the
maximum permitted reasonable rates. The Telecommunications Act of 1996 (the
"Telecommunications Act"), passed by Congress on February 1, 1996,
F-135
<PAGE>
CENCOM CABLE TELEVISION, INC.--LOS ANGELES AND RIVERSIDE SYSTEMS
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
and signed into law by the President on February 8, 1996, broadens the
definition of "effective competition" to include any franchise area where a
local exchange carrier (or its affiliate) provides video programming services
to subscribers by any means, other than through Direct Broadcast Satellite.
Rate regulation of the basic service tier remains subject to regulation by
local franchising authorities under the Telecommunications Act, except in
certain circumstances for "small cable operators." For a defined class of
"small cable operators," the Telecommunications Act immediately eliminates
regulation of cable programming rates. Rates for basic tier of "small cable
operators" are deregulated if the system offered a single tier of services as
of December 31, 1994.
Under the 1992 Cable Act, rates for cable programming services not carried
on the basic tier (non-basic services) could be regulated by the FCC upon the
filing of a complaint by franchise authorities or subscribers that indicates
the cable operator's rates for these services are unreasonable. Rate
complaints have been filed with the FCC with respect to certain of the
Systems' cable programming services; several complaints are pending as of the
date of the financial statements. The Telecommunications Act eliminates
regulation of non-basic programming as of March 31, 1999. In the interim, rate
regulation of the non-basic programming tier can only be triggered by a
franchising authority complaint to the FCC. If the FCC determines that the
Systems' non-basic programming service tier rates are unreasonable, the FCC
has the authority to order the Systems to reduce non-basic programming service
tier rates and to refund to customers any overcharges occurring from the
filing date of the rate complaint with the FCC.
Under the FCC's initial rate regulations pursuant to the 1992 Cable Act,
regulated cable systems were required to apply a benchmark formula to
determine their maximum permitted rates. Those systems whose rates were above
the benchmark on September 30, 1992, were required to reduce their rates to
the benchmark or by 10%, whichever was less. Under revised rate regulations
adopted February 1994, regulated cable systems were required to set their
rates so that regulated revenues per subscriber did not exceed September 30,
1992, levels, reduced by 17% (taking into account the previous 10% reduction).
Notwithstanding mandated rate regulations, cable operators currently may
adjust their regulated rates to reflect inflation and what the FCC has deemed
to be external costs (such as increases in franchise fees).
In September 1995, the FCC developed an abbreviated cost-of-service form
that permits cable operators to recover costs of significant upgrades that
provide benefits to subscribers of regulated cable services. Cable operators
seeking to raise rates to cover costs of an upgrade would submit only the
costs of the upgrade instead of all current costs. In December 1995, the FCC
revised its cost-of-service rules. At this time, the Systems' management is
unable to predict the effect of these revised rules on the Systems' financial
position or results of operations.
In another action in September 1995, the FCC established a new optional rate
adjustment methodology that encourages operators to limit their rate increases
to once a year to reflect inflation and changes in external costs and the
number of channels. The rules permit cable operators to "project reasonably"
changes in their costs for the 12 months following the rate change (in an
effort to eliminate delays in recovering costs). The order allows operators to
recover increases in additional types of franchise-requirement costs.
Permitted pass-through increases include increases in the cost of providing
institutional networks, video services, data services to or from governmental
and educational institutions, and certain other cost increases. The Systems'
management is unable to predict the effect of these new rules on the Systems'
business.
F-136
<PAGE>
CENCOM CABLE TELEVISION, INC.--LOS ANGELES AND RIVERSIDE SYSTEMS
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
In November 1995, the FCC proposed to provide cable operators with the
option of establishing uniform rates for similar service packages offered in
multiple franchise areas located in the same region. Under the FCC's current
rules, cable operators subject to rate regulation must establish rates on a
franchise-specific basis. The proposed rules could lower cable operators'
marketing costs and may also allow operators to better respond to competition
from alternative providers. The Systems' management is unable to predict if
these proposed rules will ultimately be promulgated by the FCC, and if they
are promulgated, their effect on the Systems' financial position and results
of operations.
While management believes that the Systems have complied in all material
respects with the rate provisions of the 1992 Cable Act, in jurisdictions that
have not yet chosen to certify, refunds covering a one-year period on basic
services may be ordered upon future certification if the Systems are unable to
justify their rates through a benchmark or cost-of-service filing or small
system cost-of-service filing pursuant to FCC rules. Management is unable to
estimate at this time the amount of refunds, if any, that may be payable by
the Systems in the event certain of their rates are successfully challenged by
franchising authorities or found to be unreasonable by the FCC. Management
does not believe that the amount of any such refunds would have a material
adverse effect on the financial position or results of operations of the
Systems.
"Must Carry" Requirements/"Retransmission Consents"
Under the 1992 Cable Act, cable television operators are subject to
mandatory signal carriage requirements that allow local commercial and non-
commercial television broadcast stations to elect to require a cable system to
carry the station, subject to certain exceptions, or, in the case of
commercial stations, to negotiate for "retransmission consent" to carry the
station. In addition, there are requirements for cable systems to obtain
retransmission consent for all "distant" commercial television stations,
commercial radio stations and certain low power television stations carried by
such system after October 6, 1993. As a result of the mandatory system
carriage rules, the Systems have been required to carry television broadcast
stations that otherwise would not have been carried, thereby causing
displacement of possibly more attractive programming. The validity of the
mandatory signal carriage requirements is being litigated; however, the
carriage requirements remain in effect pending the outcome of the proceedings.
Franchise Matters
The 1992 Cable Act modified the franchise renewal process to make it easier
for a franchising authority to deny renewal. Historically, franchises have
been renewed for cable operators that have provided satisfactory services and
have complied with the terms of the franchise agreement. Although management
believes that the Systems have generally met the terms of their franchise
agreements and have provided quality levels of service, and anticipates the
Systems' future franchise renewal prospects generally will be favorable, there
can be no assurance that any such franchises will be renewed or, if renewed,
that the franchising authorities will not impose more onerous requirements on
the Systems than previously existed.
Recent Telecommunications Legislation
The Telecommunications Act alters federal, state and local laws and
regulations pertaining to cable television, telecommunications and other
services. Under the Telecommunications Act, telephone companies can compete
directly with cable operators in the provision of video programming. This new
legislation recognizes several multiple entry options for telephone companies
to provide competitive video programming.
The Telecommunications Act eliminates broadcast/cable cross-ownership
restrictions, but leaves in place FCC regulations prohibiting local cross-
ownership between television stations and cable systems.
F-137
<PAGE>
CENCOM CABLE TELEVISION, INC.--LOS ANGELES AND RIVERSIDE SYSTEMS
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
Certain provisions of the Telecommunications Act could materially affect the
growth and operation of the cable television industry and the cable services
provided by the Systems. Although the new legislation may substantially lessen
regulatory burdens, the cable television industry may be subject to additional
competition as a result thereof. There are numerous rule makings to be
undertaken by the FCC which will interpret and implement the
Telecommunications Act's provisions. In addition, certain provisions of the
Telecommunications Act (such as the deregulation of cable programming rates)
are not immediately effective. Further, certain of the Telecommunications
Act's provisions have been and are likely to be subject to judicial
challenges. The Systems' management is unable at this time to predict the
outcome of such rule-makings or litigation or the substantive effect of the
new legislation and the rule-makings on the financial position and results of
operations of the Systems.
F-138
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
Charter Communications Entertainment I, L.P.
We have audited the accompanying balance sheets of the Missouri Cable
Television System to be sold by Masada Cable Partners, L.P. to Charter
Communications Entertainment I, L.P., as of November 29, 1996 and December 31,
1995 and the related statements of operations, changes in system capital
(deficiency) and cash flows for the period ended November 29, 1996 and years
ended December 31, 1995 and 1994. These financial statements are the
responsibility of the System's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
As described in Note 1, the System was a part of Masada Cable Partners, L.P.
as of November 29, 1996 and, as such, had no separate legal status or
existence. Transactions with Masada Cable Partners, L.P. are described in
Notes 4 and 5.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Missouri Cable
Television System to be sold by Masada Cable Partners, L.P. to Charter
Communications Entertainment I, L.P. at November 29, 1996 and December 31,
1995 and the results of its operations and its cash flows for the period ended
November 29, 1996 and years ended December 31, 1995 and 1994, in conformity
with generally accepted accounting principles.
Ernst & Young LLP
Birmingham, Alabama
February 17, 1997
F-139
<PAGE>
MISSOURI CABLE TELEVISION SYSTEM TO BE SOLD BY MASADA CABLE
PARTNERS, L.P. TO CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
BALANCE SHEETS
<TABLE>
<CAPTION>
NOVEMBER 29, DECEMBER 31,
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................... $ 25,478 $ 69,729
Prepaid expenses and other.......................... 32,401 15,377
----------- ----------
Total current assets................................. 57,879 85,106
Net property and equipment (Note 3).................. 2,501,879 3,312,153
Deferred charges:
Franchise costs..................................... 4,869,519 4,869,519
Acquisition costs................................... 110,637 --
Goodwill............................................ 2,826,763 2,826,763
Other deferred charges.............................. 210,834 201,402
----------- ----------
8,017,753 7,897,684
Accumulated amortization............................ (4,718,452) (4,120,568)
----------- ----------
Net deferred charges................................. 3,299,301 3,777,116
$ 5,859,059 $7,174,375
=========== ==========
</TABLE>
F-140
<PAGE>
MISSOURI CABLE TELEVISION SYSTEM TO BE SOLD BY MASADA CABLE
PARTNERS, L.P. TO CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
<TABLE>
<CAPTION>
NOVEMBER 29, DECEMBER 31,
1996 1995
------------ ------------
<S> <C> <C>
LIABILITIES AND SYSTEM DEFICIENCY
Current liabilities:
Accounts payable.................................... $ 25,223 $ 82,742
Subscriber deposits and advance payments............ 37,957 38,422
Accrued interest.................................... 82,949 251,928
Accrued franchise fee............................... 99,098 105,238
Accrued programming fee............................. 74,633 78,581
Accrued pole rent................................... 25,091 32,516
Other accrued liabilities........................... 140,324 343,079
---------- ----------
Total current liabilities............................ 485,275 932,506
Notes payable allocated to the System (Note 4)....... 12,295,000 15,500,000
---------- ----------
Total liabilities.................................... 12,780,275 16,432,506
Contingencies (Note 6)
System capital (deficiency).......................... (6,921,216) (9,258,131)
---------- ----------
$5,859,059 $7,174,375
========== ==========
</TABLE>
See accompanying notes.
F-141
<PAGE>
MISSOURI CABLE TELEVISION SYSTEM TO BE SOLD BY MASADA CABLE
PARTNERS, L.P. TO CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
PERIODS ENDED
-------------------------------------
NOVEMBER
29, DECEMBER 31,
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Subscriber service revenue............... $ 4,381,706 $ 4,558,494 $ 4,572,833
Operating expenses:
Operating costs......................... 1,951,529 1,993,744 1,883,309
Selling, general and administrative..... 443,075 408,840 384,975
Depreciation............................ 2,021,476 2,460,662 2,551,456
Amortization............................ 597,884 636,383 652,211
----------- ----------- -----------
Total operating expenses................. 5,013,964 5,499,629 5,471,951
----------- ----------- -----------
Loss from operations..................... (632,258) (941,135) (899,118)
Other income (expense):
Interest and fees....................... (1,093,796) (2,244,678) (1,574,024)
Other, net (Note 5)..................... (292,865) (304,476) (192,819)
----------- ----------- -----------
Total other income (expense)............. (1,386,661) (2,549,154) (1,766,843)
----------- ----------- -----------
Net loss................................. $(2,018,919) $(3,490,289) $(2,665,961)
=========== =========== ===========
</TABLE>
See accompanying notes.
F-142
<PAGE>
MISSOURI CABLE TELEVISION SYSTEM TO BE SOLD BY MASADA CABLE
PARTNERS, L.P. TO CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
STATEMENTS OF CHANGES IN SYSTEM CAPITAL (DEFICIENCY)
<TABLE>
<CAPTION>
SYSTEM
CAPITAL
(DEFICIENCY)
------------
<S> <C>
Balance, December 31, 1993........................................ $(5,674,798)
Net loss......................................................... (2,665,961)
Net change in current accounts with partnership.................. (2,007,978)
-----------
Balance, December 31, 1994........................................ (10,348,737)
Net loss......................................................... (3,490,289)
Net change in current accounts with partnership.................. 4,580,895
-----------
Balance, December 31, 1995........................................ $(9,258,131)
Net loss......................................................... (2,018,919)
Net change in current accounts with partnership.................. 4,355,834
-----------
Balance, November 29, 1996........................................ $(6,921,216)
===========
</TABLE>
See accompanying notes.
F-143
<PAGE>
MISSOURI CABLE TELEVISION SYSTEM TO BE SOLD BY MASADA CABLE
PARTNERS, L.P. TO CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
PERIODS ENDED
-------------------------------------
NOVEMBER
29, DECEMBER 31,
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss............................... $(2,018,919) $(3,490,289) $(2,665,961)
Net change in current accounts with
partnership........................... 4,355,834 4,580,895 (2,007,978)
Adjustments to reconcile net loss to
net cash provided by (used in)
operating activities:
Depreciation and amortization........ 2,619,360 3,097,045 3,203,667
Gain on sale of fixed assets......... -- (4,478) --
Loss on write-off of deferred
charges............................. -- 120,616 --
Changes in operating assets and
liabilities:
Accounts receivable................. -- 28,261 28,048
Prepaid expenses and other.......... (17,024) (5,201) (395)
Accounts payable.................... (57,519) 47,623 (46,894)
Deposits and advances............... (465) (14,470) (31,017)
Accrued interest.................... (168,979) 156,011 (144,404)
Other accrued liabilities........... (220,268) 326,863 27,894
----------- ----------- -----------
Net cash provided by (used in)
operating activities.................. 4,492,020 4,842,876 (1,637,040)
INVESTING ACTIVITIES
Purchase of property and equipment..... (1,211,202) (367,324) (342,094)
Proceeds from sale of fixed assets..... -- 4,478 --
Additions to deferred charges.......... (120,069) (152,440) (3,174)
----------- ----------- -----------
Net cash used in investing activities.. (1,331,271) (515,286) (345,268)
FINANCING ACTIVITIES
Issuance (payments) of notes payable... (3,205,000) (4,295,440) 1,982,802
----------- ----------- -----------
Net cash provided by (used in)
financing activities.................. (3,205,000) (4,295,440) 1,982,802
----------- ----------- -----------
Increase (decrease) in cash and cash
equivalents........................... (44,251) 32,150 494
Cash and cash equivalents at beginning
of year............................... 69,729 37,579 37,085
----------- ----------- -----------
Cash and cash equivalents at end of
year.................................. $ 25,478 $ 69,729 $ 37,579
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest and fees....... $ 1,262,775 $ 2,088,667 $ 1,718,428
=========== =========== ===========
</TABLE>
See accompanying notes.
F-144
<PAGE>
MISSOURI CABLE TELEVISION SYSTEM TO BE SOLD BY MASADA CABLE
PARTNERS, L.P. TO CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 29, 1996 AND DECEMBER 31, 1995 AND 1994
1. ORGANIZATION AND BASIS OF PRESENTATION
The accompanying financial statements include the accounts of the Missouri
Cable Television System (System) to be sold by Masada Cable Partners, L.P.
(Masada) to Charter Communications Entertainment I, L.P. (Charter) pursuant to
a sale agreement between Masada and Charter. The System has no separate legal
status or existence. These financial statements are presented as if the System
had existed as an entity separate from Masada during the periods presented,
and includes the historical assets, liabilities, sales and expenses that are
directly related to the System's operations. These financial statements
include certain Masada partnership asset, liability and expense allocations,
primarily a portion of Masada's acquisition costs and debt and interest
related thereto.
Masada, a Delaware limited partnership, was organized on April 10, 1988 to
acquire, construct and operate cable television systems. The managing general
partner is Masada Cable Management, Inc. and the co-general partner is BHI
Associates III, L.P. (Bariston).
The financial information presented herein reflects the financial position
and results of operations of the System and is not necessarily indicative of
the financial position or results of operations had the System actually
operated as a separate, stand-alone entity during the reporting periods. The
results of operations for such periods do not necessarily reflect any trends
or future prospects for the System as an independent entity.
On November 29, 1996, Masada Cable Partners L.P. entered into an agreement
for the sale of three cable systems, including the System, for $53,000,000. In
connection with the sale, $25,000,000 of the sale price will be remitted
directly by the purchaser to Canadian Imperial Bank as a reduction of the
outstanding principal balance due under a term loan agreement. A distribution
of $27,000,000 will be made to the limited partners. The purchaser will
deposit $500,000 in a pole agreement escrow account, and $957,000 in an
indemnity escrow account.
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Recognition of Revenue
Subscriber service revenue is recognized in the month the cable service is
provided.
Property and Equipment
Property and equipment is stated at cost. Depreciation is calculated on the
straight-line basis using the following useful lives:
Cable distribution systems............................ 7 years
Computer equipment.................................... 5 years
Transportation equipment.............................. 5 years
Deferred Charges
Deferred charges are recorded at cost. Amortization is provided on a
straight-line basis using the following lives:
Franchise costs....................................... 10 years
Debt issuance costs................................... Term of the related
debt
Acquisition costs..................................... 7 years
Organization costs.................................... 5 years
Goodwill and other.................................... 20 years
F-145
<PAGE>
MISSOURI CABLE TELEVISION SYSTEM TO BE SOLD BY MASADA CABLE
PARTNERS, L.P. TO CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Long-Lived Assets
In March 1995, the Financial Accounting Standards Board issued Statement No.
121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of, which requires impairment losses to be recorded on
long-lived assets used in operations when indicators of impairment are present
and the undiscounted cash flows estimated to be generated by those assets are
less than the assets' carrying amount. Statement 121 also addresses the
accounting for long-lived assets that are expected to be disposed of.
Statement 121 is effective for financial statements for periods beginning on
or after December 15, 1995 although earlier adoption is permitted. Based on
present circumstances, no adjustment to the recorded amounts for System net
property and equipment, franchise costs or goodwill was necessary when
Statement 121 was adopted as of November 29, 1996.
Cash and Cash Equivalents
The System considers all highly liquid investments with a maturity of three
months or less at the time of purchase to be cash equivalents.
Income Taxes
The accompanying financial statements do not include a provision for income
taxes because the taxable income or loss of the System is included in the tax
returns of the partners.
Management Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires the use of management's estimates and
assumptions. Actual results could differ from these estimates.
3.PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
NOVEMBER 29, DECEMBER 31,
1996 1995
------------ ------------
<S> <C> <C>
Property and equipment:
Land $ -- $ --
Buildings and improvements -- --
Cable distribution systems......................... 19,309,052 18,165,951
Other equipment.................................... 199,851 205,668
------------ ------------
19,508,903 18,371,619
Accumulated depreciation........................... (17,007,024) (15,059,466)
------------ ------------
Net property and equipment.......................... $ 2,501,879 $ 3,312,153
============ ============
</TABLE>
4.NOTES PAYABLE TO THE SYSTEM
For purposes of the financial statements presented herein, the System has
been allocated a portion of the term loan and subordinated note payable by
Masada and associated interest and fees. This allocation was determined by
applying the ratio of total System assets to total Masada assets at November
29, 1996 and December 31, 1995 and 1994. The calculation resulted in 49%, 62%
and 42% of the debt and related interest
F-146
<PAGE>
MISSOURI CABLE TELEVISION SYSTEM TO BE SOLD BY MASADA CABLE
PARTNERS, L.P. TO CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
expense being allocated to the Missouri Cable System at November 29, 1996 and
December 31, 1995 and 1994 respectively. In the opinion of management, this
method of allocation is reasonable. Since such debt does not represent a
liability of the System, but rather an allocation of Masada long term debt,
and there are neither repayment terms nor a formal agreement between the
System and Masada, such debt has been classified as noncurrent. Management
believes the market value of its notes payable approximates the carrying value
in the accompanying balance sheets due to the variable rate of interest on the
notes payable.
Notes payable allocated to the System consisted of the following:
<TABLE>
<CAPTION>
NOVEMBER DECEMBER
29, 1996 31, 1995
----------- -----------
<S> <C> <C>
Revolving credit and term loan......................... $12,295,000 $15,500,000
Subordinated note payable.............................. -- --
----------- -----------
$12,295,000 $15,500,000
=========== ===========
</TABLE>
The terms and conditions of Masada's total term loan and subordinated debt
which has been allocated to the System, as described above, are summarized
below.
Revolving Credit and Term Loan
Masada had a revolving credit and term loan agreement (Term Loan Agreement)
with three financial institutions which provided for aggregate borrowings of
up to $53,000,000 on a revolving basis through March 31, 1993. At that time
the then outstanding loan balance of $50,150,000 converted to a term loan
note, scheduled to be paid in twenty-five quarterly installments in amounts
varying from 2.25% to 7.67% of the original principal balance beginning
September 30, 1993.
Concurrent with the sale of the Georgia Cable Television System by Masada in
July 1995, the purchaser remitted directly to Canadian Imperial Bank of
Commerce $17,752,875 towards the principal resulting in a new principal
balance of $25,000,000. On the same day, the existing term loan was replaced
with a new facility for the remaining $25 million, secured by substantially
all remaining transferable assets of Masada as noted below. Interest on the
loan is payable quarterly and the entire principal balance is due on January
31, 1997.
Under the terms of the Term Loan Agreement, Masada has the option to have
interest computed using a LIBOR rate and/or a variable rate. With the LIBOR
selection, the Term Loan Agreement provides for interest to be paid quarterly
at a rate based on LIBOR plus a variable margin ranging from 3.00% to 3.50%.
The LIBOR rate was in effect at November 29, 1996 for all of the principal
amount outstanding and was 8.375 %.
Borrowings under the Term Loan Agreement are secured by senior liens, in
favor of the lender, on substantially all transferable assets of Masada. Under
the terms of the agreement, Masada pays a one-time fee of 1% of the
outstanding balance of the term loans one year after the effective date of the
new loan.
Under the provisions of the agreement, Masada is required to maintain
certain levels of annualized net operating income, as defined, as compared to
total debt (total leverage), senior debt (senior leverage) and net cash flow,
as defined, as compared to debt service (debt service coverage) and certain
ratios of cable subscribers to total debt. Masada is also required to limit
capital expenditures, management and investment banking fees and distributions
to the partners to amounts specified in the agreement.
F-147
<PAGE>
MISSOURI CABLE TELEVISION SYSTEM TO BE SOLD BY MASADA CABLE
PARTNERS, L.P. TO CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Subordinated Notes Payable
In connection with the execution of the Term Loan Agreement, Masada borrowed
$3,000,000 on July 11, 1991 under a subordinated note agreement with an
unaffiliated party which is due December 31, 1999. Under the provisions of
this subordinated agreement, interest accrues at 25% per annum with interest
payments which began on October 31, 1993 under one of three options given to
the Partnership, the minimum being the payment of 10% interest quarterly with
the remaining 15% being converted to additional principal. Masada also has the
option to pay interest currently as it becomes due.
Borrowings under the subordinated note agreement are secured by subordinate
liens, in favor of the lender, on substantially all transferable assets of
Masada.
Proceeds from the sale of another cable television system by Masada in July
1995 have been used to pay the subordinated notes in order to obtain release
of the liens on assets subject to the sale.
Masada is also required to maintain certain ratios of annualized net
operating income (as defined) to total debt and to limit capital expenditures,
additional indebtedness, management and investment banking fees and
distributions to partners to amounts specified in the agreements.
5. RELATED PARTY TRANSACTIONS
Masada Cable Management, Inc. provides management services to Masada for a
fee of 5% of total revenues. Management fee expense incurred by the System was
approximately $219,000 $233,000 and $234,000 in 1996, 1995 and 1994,
respectively, and is included in other expenses in the accompanying statements
of operations. Accrued management fees were approximately $21,000, $7,000 and
$3,000 at November 29, 1996 and December 31, 1995 and 1994 respectively, and
are included in other accrued liabilities in the accompanying balance sheets.
Bariston Associates, Inc. an affiliate of Bariston, provides ongoing
investment banking services to Masada. Fees incurred by the System for these
investment banking services amounted to approximately $48,000, $48,000 and
$48,000 in 1996, 1995, and 1994, respectively, and are included in other
expenses in the accompanying statements of operations.
6. CONTINGENCIES
Congress enacted the Cable Television Consumer Protection and Competition
Act of 1992 (the 1992 Cable Act), which became effective on December 4, 1992.
This legislation caused significant changes to the regulatory environment in
which the cable television industry operates. The 1992 Cable Act generally
allows for a greater degree of regulation of the cable television industry.
Under the 1992 Cable Act's definition of effective competition, nearly all
cable systems in the United States are subject to rate regulation of basic
cable services. In addition, the 1992 Cable Act allows the Federal
Communications Commission (FCC) to regulate rates for nonbasic service tiers
other than premium services in response to complaints filed by franchising
authorities and/or cable subscribers. In April 1993, the FCC adopted
regulations governing rates for basic and nonbasic services. The FCC's rules
became effective on September 1, 1993.
F-148
<PAGE>
MISSOURI CABLE TELEVISION SYSTEM TO BE SOLD BY MASADA CABLE
PARTNERS, L.P. TO CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
On February 22, 1994, the FCC adopted several additional rate orders
including an order which revised its earlier announced regulatory scheme with
respect to rates. The FCC's new regulations will generally require rate
reductions, absent a successful cost-of-service showing of 17% of September
30, 1992 rates, adjusted for inflation, channel modifications, equipment costs
and increases in programming costs. However, the FCC held rate reductions in
abeyance in certain systems. The new regulations became effective on May 15,
1994, but operators could elect to defer rate reductions to July 14, 1994, so
long as they made no changes in their rates and did not restructure service
offerings between May 15 and July 14, 1994.
On February 22, 1994, the FCC also adopted interim cost-of-service
regulations. Rate reductions will not be required where it is successfully
demonstrated that rates for basic and other regulated programming services are
justified and reasonable using cost-of-service standards. The FCC established
an interim industry-wide 11.25% permitted rate of return, and requested
comments on whether this standard and other interim cost-of-service standards
should be made permanent.
Management believes that it has generally complied with all provisions of
the 1992 Cable Act, including its cable programming service rate-setting
provisions.
F-149
<PAGE>
INDEPENDENT AUDITORS' REPORT
July 25, 1996
To the Board of Directors and Stockholders of United Video Cablevision, Inc.
We have audited the accompanying divisional balance sheets of UNITED VIDEO
CABLEVISION, INC.--MASSACHUSETTS AND MISSOURI DIVISIONS as of October 31, 1995
and December 31, 1994 and 1993, and the related statements of divisional
operations, cash flows and equity for the ten months ended October 31, 1995
and for the years ended December 31, 1994 and 1993. These financial statements
are the responsibility of the Divisions' management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
from material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe our audit provides a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the divisional financial position of United Video
Cablevision, Inc.--Massachusetts and Missouri Divisions as of October 31, 1995
and December 31, 1994 and 1993, and the results of its divisional operations
and its cash flows for the ten months ending October 31, 1995 and the years
ending December 31, 1994 and 1993, in conformity with generally accepted
accounting principles.
Piaker & Lyons, P.C.
Vestal, New York
F-150
<PAGE>
UNITED VIDEO CABLEVISION, INC.--
MASSACHUSETTS AND MISSOURI DIVISIONS
DIVISIONAL BALANCE SHEETS
OCTOBER 31, 1995
DECEMBER 31, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents............. $ 31,601 $ 21,455 $ 56,441
------------ ------------ ------------
Accounts receivable (Note 1)
Accounts receivable--trade.......... 30,092 142,218 63,690
Accounts receivable--other.......... 8,024 10,705 3,315
Less: Allowance for doubtful
accounts........................... (16,289) (17,845) (17,808)
------------ ------------ ------------
Net accounts receivable........... 21,827 135,078 49,197
------------ ------------ ------------
Prepaid expenses...................... 95,519 69,250 86,320
------------ ------------ ------------
Total current assets.............. 148,947 225,783 191,958
------------ ------------ ------------
Property, plant and equipment--at cost
Land.................................. 109,619 109,619 149,747
Buildings and improvements............ 294,254 285,581 291,413
Vehicles.............................. 1,075,983 1,132,689 1,078,300
Cable television distribution
systems.............................. 40,601,642 39,334,667 38,100,070
Office furniture, tools and
equipment............................ 501,830 497,427 443,763
Less: Accumulated depreciation (Note 1).. (29,962,342) (27,626,213) (24,257,829)
------------ ------------ ------------
Net property, plant and
equipment........................ 12,620,986 13,733,770 15,805,464
------------ ------------ ------------
Intangible Assets
Goodwill.............................. 15,867,456 15,867,456 15,867,456
Franchise rights...................... 706,532 706,532 719,375
Non compete agreements................ 742,068 742,068 700,510
Deferred loan costs................... 190,666 190,666 --
Less: Accumulated amortization (Note
1)................................... (4,026,772) (3,579,220) (2,922,892)
------------ ------------ ------------
Net intangible assets............. 13,479,950 13,927,502 14,364,449
------------ ------------ ------------
Total assets...................... $ 26,249,883 $ 27,887,055 $ 30,361,871
============ ============ ============
LIABILITIES AND DIVISIONAL EQUITY
Current liabilities
Accounts payable and accrued
expenses............................. $ 639,210 $ 917,370 $ 715,970
Subscriber deposits and unearned
income............................... 728,280 795,177 860,701
Accrued franchise fees................ 103,056 182,848 75,958
Accrued programming fees.............. 366,494 357,622 338,618
------------ ------------ ------------
Total current liabilities......... 1,837,040 2,253,017 1,991,247
Divisional equity....................... 24,412,843 25,634,038 28,370,624
------------ ------------ ------------
Total liabilities and divisional
equity........................... $ 26,249,883 $ 27,887,055 $ 30,361,871
============ ============ ============
</TABLE>
See the accompanying notes to divisional financial statements.
F-151
<PAGE>
UNITED VIDEO CABLEVISION, INC.--
MASSACHUSETTS AND MISSOURI DIVISIONS
STATEMENTS OF DIVISIONAL OPERATIONS
FOR THE TEN MONTHS ENDED OCTOBER 31, 1995 AND
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Revenues (Note 1)...................... $15,632,849 $17,790,050 $17,329,551
Operating expenses
Programming.......................... 3,676,125 4,131,467 3,931,693
Plant and operation.................. 1,701,840 2,281,757 2,308,160
General and administrative........... 2,188,773 2,795,654 2,720,003
Marketing and advertising............ 128,859 254,671 288,307
Corporate overhead (Note 3).......... 627,768 678,582 736,081
Depreciation and amortization (Note
1).................................. 3,004,770 4,847,490 4,482,391
----------- ----------- -----------
Total expenses..................... 11,328,135 14,989,621 14,466,635
----------- ----------- -----------
Operating income....................... 4,304,714 2,800,429 2,862,916
----------- ----------- -----------
Other (income) expense
Interest expense (Note 1)............ 2,827,886 3,599,961 3,638,186
Gain on sale of fixed assets......... (4,181) (25,805) (13,725)
----------- ----------- -----------
Total other (income) expense....... 2,823,705 3,574,156 3,624,461
----------- ----------- -----------
Income (loss) before provision for in-
come taxes............................ 1,481,009 (773,727) (761,545)
Provision for income taxes (Note 1).. 13,424 11,718 (32,927)
----------- ----------- -----------
Net income (loss)...................... $ 1,467,585 $ (785,445) $ (728,618)
=========== =========== ===========
</TABLE>
See the accompanying notes to divisional financial statements.
F-152
<PAGE>
UNITED VIDEO CABLEVISION, INC.--
MASSACHUSETTS AND MISSOURI DIVISIONS
STATEMENTS OF DIVISIONAL CASH FLOWS
FOR THE TEN MONTHS ENDED OCTOBER 31, 1995 AND
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS
Operating activities:
Net income (loss)..................... $ 1,467,585 $ (785,445) $ (728,618)
----------- ----------- -----------
Adjustments to reconcile net income
(loss) to net cash provided by
operations:
Depreciation......................... 2,557,217 4,256,041 3,878,639
Amortization of intangibles.......... 447,553 591,449 603,752
Allowance for doubtful accounts...... (1,556) 37 (1,226)
Gain on sale of assets............... (4,181) (25,805) (13,725)
Changes in operating assets and
liabilities,
Net of effects from acquisition of
corporate entities:
Accounts receivable and other
receivables...................... 114,807 (85,918) 78,207
Prepaid expenses.................. (26,269) 17,070 (9,165)
Accounts payable and accrued
expenses......................... (349,080) 327,294 (250,526)
Subscriber deposits and unearned
income........................... (66,897) (65,524) (77,909)
----------- ----------- -----------
Total adjustments................ 2,671,594 5,014,644 4,208,047
----------- ----------- -----------
Net cash provided by operating
activities...................... 4,139,179 4,229,199 3,479,429
----------- ----------- -----------
Cash flows from investing activities:
Purchase of property, plant and
equipment............................ (1,480,206) (2,559,469) (2,958,045)
Acquisqition of intangible assets..... -- (154,505) (12,843)
Proceeds from sale of assets.......... 39,953 400,930 17,050
----------- ----------- -----------
Net cash used in investing
activities...................... (1,440,253) (2,313,044) (2,953,838)
----------- ----------- -----------
Cash flows from financing activities:
Payments to corporate division, net... (2,688,780) (1,951,141) (537,630)
----------- ----------- -----------
Net increase (decrease) in cash and
cash equivalents...................... 10,146 (34,986) (12,039)
Cash and cash equivalents at beginning
of year.............................. 21,455 56,441 68,480
----------- ----------- -----------
Cash and cash equivalents at end of
year................................. $ 31,601 $ 21,455 $ 56,441
=========== =========== ===========
Supplemental disclosures of cash flow
information:
Interest paid, net of amount
capitalized.......................... $ 2,832,391 $ 3,599,555 $ 3,857,328
Income taxes paid..................... -- -- --
</TABLE>
DISCLOSURE OF ACCOUNTING POLICY:
For the purposes of cash flows, the Divisions consider a highly liquid debt
instrument purchased with a maturity of three months or less to be cash
equivalents.
See the accompanying notes to divisional financial statements.
F-153
<PAGE>
UNITED VIDEO CABLEVISION, INC.--
MASSACHUSETTS AND MISSOURI DIVISIONS
STATEMENTS OF DIVISIONAL EQUITY
FOR THE TEN MONTHS ENDED OCTOBER 31, 1995 AND
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Balance, January 1....................... $25,634,038 $28,370,624 $29,636,872
Net income (loss)........................ 1,467,585 (785,445) (728,618)
Decrease in divisional equity............ (2,688,780) (1,951,141) (537,630)
----------- ----------- -----------
Balance--Ending.......................... $24,412,843 $25,634,038 $28,370,624
=========== =========== ===========
</TABLE>
See the accompanying notes to divisional financial statements.
F-154
<PAGE>
UNITED VIDEO CABLEVISION, INC.--
MASSACHUSETTS AND MISSOURI DIVISIONS
NOTES TO DIVISIONAL FINANCIAL STATEMENTS
OCTOBER 31, 1995
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Activity--The accompanying divisional financial statements include
the Massachusetts and Missouri Divisions of United Video Cablevision, Inc.
(The "Divisions"). The Divisions are engaged in providing cable television
programming services to subscribers in its franchised areas. The Corporate
division allocates debt to the operating divisions based upon the respective
acquisition and construction costs relative to the debt incurred. Accordingly,
interest has been allocated to the operating divisions by the Corporate
division, in that manner. For the purpose of the divisional financial
statements, no debt has been allocated to the Divisions from the corporate
division of United Video Cablevision, Inc.
Concentrations of Credit Risk--The Divisions' trade receivables are
comprised of amounts due from subscribers in varying regions throughout the
states. Concentrations of credit risk with respect to trade receivables are
limited due to the large number of customers comprising the Divisions'
customer base and geographic dispersion.
Use of Estimates--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Revenue Recognition--The Divisions recognize service revenues on the accrual
basis in the month in which the service is to be provided. Payments received
in advance are included in deferred revenue until the month they become due at
which time they are recognized as income.
Capitalization and Depreciation--In accordance with Statement #51 of the
Financial Accounting Standards Board, the Divisions have adopted the policy of
capitalizing certain expenses applicable to the construction and operation of
a cable television system during the period while the cable television system
is partially under construction and partially in service. During 1995, 1994
and 1993, the total capitalized costs amounted to $189,399, $120,406 and
$45,912, respectively.
The Divisions, for financial reporting purposes, provide depreciation on the
straight-line method, which is considered adequate for the recovery of the
cost of the properties over their estimated useful lives. For income tax
purposes, however, the Divisions utilize both accelerated methods and the
accelerated cost recovery system. For the ten months ended October 31, 1995
and the years ended December 31, 1994 and 1993, the provision for depreciation
in the accompanying statements of operations amounted to $2,557,217,
$4,256,041 and $3,878,639, respectively.
F-155
<PAGE>
UNITED VIDEO CABLEVISION, INC.-- MASSACHUSETTS AND MISSOURI DIVISIONS
NOTES TO DIVISIONAL FINANCIAL STATEMENTS--(CONTINUED)
Depreciation lives for financial statement purposes are as follows:
<TABLE>
<S> <C>
Headend equipment
Tower........................................................... 12 Years
Antennae........................................................ 7 Years
Other headend equipment......................................... 8 Years
Trunk and distribution equipment
Traps, descramblers, converters, decoders....................... 5 Years
Other trunk and distribution equipment.......................... 8 Years
Test equipment.................................................... 5 Years
Local origination equipment....................................... 8 Years
Vehicles.......................................................... 3 Years
Furniture and fixtures............................................ 10 Years
Leasehold improvements............................................ 8 Years
Computer and EDP equipment........................................ 5 Years
</TABLE>
Amortization--The Divisions are amortizing to expense various intangible
assets acquired and incurred on a straight-line basis, generally from 5 to 40
years. For the ten months ended October 31, 1995 and the years ended December
31, 1994 and 1993, the provision for amortization in the accompanying
statements of operations amounted to $447,553, $591,449 and $603,752,
respectively.
Income Taxes--The Divisions are a part of United Video Cablevision, Inc.
which has elected to be taxed as a small business corporation under "Sub-
Chapter S" of the Internal Revenue Code effective January 1, 1987, wherein the
stockholders of United Video Cablevision, Inc. are taxed on any earnings or
losses of the Company.
Bad Debts--The Divisions have adopted the reserve method for recognizing bad
debts for financial statement purposes and continues to utilize the direct
write-off method for tax purposes.
NOTE 2--COMMITMENTS
The Divisions are committed to annual pole rentals of approximately
$300,000, $400,000 and $200,000 at October 31, 1995 and December 31, 1994 and
1993, respectively, to various utilities. These agreements are subject to
termination rights by both parties.
The Divisions lease in various systems the land upon which its towers and
antennae are constructed. The annual rental payments under these leases amount
to approximately $17,000, $19,000 and $21,000 at October 31, 1995 and December
31, 1994 and 1993, respectively.
NOTE 3--MANAGEMENT AGREEMENT WITH RELATED PARTY
The Divisions are being provided with certain management and technical
services by a related party by means of a management agreement. During 1995,
1994 and 1993, the allocated billings amounted to $551,548, $667,077 and
$736,081, respectively.
NOTE 4--EMPLOYEES PROFIT SHARING AND 401(K) PLAN
The Divisions participated in a contributory employees' profit sharing plan
for eligible employees until July 1994. Prior to the plan's termination in
1994, the Divisions' contributions to the plan were at the discretion of the
Board of Directors, but could not exceed the maximum allowable deduction
permitted under the Internal
F-156
<PAGE>
UNITED VIDEO CABLEVISION, INC.-- MASSACHUSETTS AND MISSOURI DIVISIONS
NOTES TO DIVISIONAL FINANCIAL STATEMENTS--(CONTINUED)
Revenue Code at the time of the contribution. During 1991, the profit sharing
plan was amended to incorporate a 401(K) feature. The Divisions provided
$35,920, $28,657 and $67,601 in the form of employer matching contributions
and profit sharing contributions for 1995, 1994 and 1993, respectively.
In order to be eligible to participate in the plans, employees must complete
one year of service and attain 21 years of age.
NOTE 5--SALE OF DIVISIONS
On July 13, 1995, United Video Cablevision, Inc. entered into an agreement
by which it sold substantially all of the net assets and associated current
liabilities in its Massachusetts and Missouri franchise areas (the Divisions)
for approximately $94,000,000. Upon the completion of the transaction, United
Video Cablevision, Inc. realized a gain of approximately $63,000,000.
F-157
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Crown Media, Inc.:
We have audited the accompanying balance sheets of Crown Media, Inc.--
Western Connecticut as of December 31, 1994 and 1993, and the related
statements of operations, division equity and cash flows for the year ended
December 31, 1994 and the period from December 28, 1992 through December 31,
1993. These financial statements are the responsibility of the management of
Crown Media, Inc. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Crown Media, Inc.--Western
Connecticut as of December 31, 1994 and 1993 and the results of its operations
and its cash flows for the year ended December 31, 1994 and the period from
December 28, 1992 through December 31, 1993 in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
Dallas, Texas
January 18, 1995
F-158
<PAGE>
CROWN MEDIA, INC.--WESTERN CONNECTICUT
BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
<TABLE>
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................ $ 102,205 $ --
Accounts receivable, net of allowance for doubtful
accounts of $65,862 and $71,776..................... 589,681 483,473
Prepaid expenses..................................... 23,002 219,777
----------- -----------
Total current assets............................... 714,888 703,250
Property and equipment, net (note 3)................... 45,043,268 35,548,957
Intangible assets, net (note 4)........................ 39,500,660 45,000,112
----------- -----------
$85,258,816 $81,252,319
=========== ===========
LIABILITIES AND DIVISION EQUITY
Current liabilities:
Bank overdraft....................................... $ -- $ 3,897,629
Accounts payable and accrued expenses................ 4,003,405 3,006,730
----------- -----------
Total current liabilities.......................... 4,003,405 6,904,359
Division equity (note 5)............................... 81,255,411 74,347,960
Commitments and contingencies (note 6)
----------- -----------
$85,258,816 $81,252,319
=========== ===========
</TABLE>
See accompanying notes to financial statements.
F-159
<PAGE>
CROWN MEDIA, INC.--WESTERN CONNECTICUT
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THE PERIOD FROM
DECEMBER 28,
YEAR ENDED 1992 THROUGH
DECEMBER 31, DECEMBER 31,
1994 1993
------------ ---------------
<S> <C> <C>
Service revenues................................... $20,398,196 $19,744,788
----------- -----------
Operating expenses:
Operating, general and administrative (note 6)... 12,240,210 11,681,267
Depreciation and amortization.................... 9,031,362 8,458,969
----------- -----------
Total operating expenses....................... 21,271,572 20,140,236
----------- -----------
Loss from operations........................... (873,376) (395,448)
----------- -----------
Other income (expense):
Interest expense................................. (2,736,146) (1,983,285)
Other, net....................................... (186,000) 47,784
----------- -----------
(2,922,146) (1,935,501)
----------- -----------
Net loss....................................... $(3,795,522) $(2,330,949)
=========== ===========
</TABLE>
See accompanying notes to financial statements.
F-160
<PAGE>
CROWN MEDIA, INC.--WESTERN CONNECTICUT
STATEMENTS OF DIVISION EQUITY
YEAR ENDED DECEMBER 31, 1994 AND THE PERIOD FROM
DECEMBER 28, 1992 THROUGH DECEMBER 31, 1993
<TABLE>
<S> <C>
Acquisition of assets on December 28, 1992 (note 2)................ $78,187,793
Net change in current accounts with Parent......................... (1,508,884)
Net loss........................................................... (2,330,949)
-----------
Division equity at December 31, 1993............................. 74,347,960
Net change in current accounts with Parent......................... 10,702,973
Net loss........................................................... (3,795,522)
-----------
Division equity at December 31, 1994............................. $81,255,411
===========
</TABLE>
See accompanying notes to financial statements.
F-161
<PAGE>
CROWN MEDIA, INC.--WESTERN CONNECTICUT
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THE PERIOD FROM
DECEMBER 28,
YEAR ENDED 1992 THROUGH
DECEMBER 31, DECEMBER 31,
1994 1993
------------ ---------------
<S> <C> <C>
Cash flows from operating activities:
Net loss....................................... $ (3,795,522) $ (2,330,949)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization................ 9,031,362 8,458,969
Changes in current assets and liabilities:
Accounts receivable, net................... (106,208) (483,473)
Prepaid expenses........................... 196,775 (219,777)
Accounts payable and accrued expenses...... 996,675 2,706,730
------------ ------------
Net cash provided by operating activi-
ties.................................... 6,323,082 8,131,500
------------ ------------
Cash flows from investing activities:
Purchase of equipment.......................... (13,053,554) (10,400,938)
Other.......................................... 27,333 (119,307)
------------ ------------
Net cash used in investing activities.... (13,026,221) (10,520,245)
------------ ------------
Cash flows from financing activities:
Net change in current accounts with Parent..... 10,702,973 (1,508,884)
Increase (decrease) in bank overdraft.......... (3,897,629) 3,897,629
------------ ------------
Net cash provided by financing
activities.............................. 6,805,344 2,388,745
------------ ------------
Net increase in cash and cash equivalents........ 102,205 --
Cash and cash equivalents, beginning of the
year............................................ -- --
------------ ------------
Cash and cash equivalents, end of the year....... $ 102,205 $ --
============ ============
Cash paid for interest........................... $ 2,394,715 $ 1,983,285
============ ============
</TABLE>
See accompanying notes to financial statements.
F-162
<PAGE>
CROWN MEDIA, INC.--WESTERN CONNECTICUT
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994 AND 1993
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Organization
On December 28, 1992, Crown Media, Inc. (the "Parent") acquired from the
former owner the New Milford, Housatonic and Mid-Connecticut cable television
franchises located in western Connecticut. Subsequent to acquisition, these
franchises were consolidated into one franchise which is referred to as Crown
Media, Inc.--Western Connecticut (the "Division"). The Division's financial
statements reflect the operations of the cable television systems comprising
the consolidated franchise from the date of acquisition.
On January 18, 1995, the Parent, including the Division, was sold to two
unaffiliated third parties.
(b) Basis of Accounting
The financial information as of December 31, 1994 and 1993 presented herein
reflects the financial position and results of operations of the Division and
is not necessarily indicative of the financial position or results of
operations had the Division operated as a separate, stand-alone entity during
the reporting period. The results of operations for such period do not
necessarily reflect any trends or future prospects for the Division as an
independent entity.
(c) Revenue Recognition
Revenues are recognized when the related services are provided.
(d) Property and Equipment
Property and equipment is carried at cost, including acquisition cost
allocated to tangible assets acquired. The Division charges depreciation to
operations using the composite method on a straight-line basis over the
estimated useful lives of the related property and equipment as follows:
<TABLE>
<S> <C>
Trunk and distribution systems.................................. 5-15 years
Subscriber installations........................................ 5-15 years
Buildings and headends.......................................... 5-20 years
Converters...................................................... 5 years
Vehicles and equipment.......................................... 3-8 years
Office equipment................................................ 5-10 years
</TABLE>
Replacements, renewals and improvements are capitalized and repairs are
charged to expense as incurred.
(e) Intangible Assets
Costs incurred in obtaining and renewing cable franchises are initially
deferred and amortized over the legal lives of the franchises. Franchise
rights acquired through the purchase of cable systems are stated at estimated
fair value at the date of acquisition and amortized using the straight-line
method over the estimated remaining term of the individual original franchises
acquired. Goodwill is amortized using the straight-line method over 40 years.
The Division continually evaluates the recoverability of its intangible
assets as well as their useful lives using an analysis of projected
undiscounted cash flows from Division operations over the remaining carrying
lives of its intangible assets.
(f) Income Taxes
Income taxes are not provided in the accompanying financial statements as
such taxes are the responsibility of the Parent.
F-163
<PAGE>
CROWN MEDIA, INC.--WESTERN CONNECTICUT
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(g) Cash Management and Equity Account
The cash management function for the Division is performed by the Parent.
Excess cash funds are transferred to the Parent using the Division equity
account. In addition, the Parent makes disbursements on behalf of the Division
for items such as payroll, payroll taxes, employee benefits and other costs.
Such amounts are transferred to the Division through the equity account and
recognized in the accompanying statements of operations.
(2) ACQUISITION
On December 28, 1992, the Division, through its Parent, acquired the assets
of certain cable television systems for consideration of $78,187,793 in a
transaction accounted for as a purchase. Assets of the Division were revalued
based on their estimated fair market values at the date of purchase. The
purchase price was allocated to the Division's assets and liabilities as
follows:
<TABLE>
<S> <C>
Property and equipment........................................ $28,063,232
Franchise costs............................................... 47,954,589
Goodwill...................................................... 2,469,972
Accrued expenses.............................................. (300,000)
-----------
Initial Division equity..................................... $78,187,793
===========
</TABLE>
(3) PROPERTY AND EQUIPMENT
Property and equipment consists of the following at December 31, 1994 and
1993:
<TABLE>
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
Trunk and distribution systems................. $34,234,112 $24,852,634
Subscriber installations....................... 5,293,292 3,738,961
Land, buildings and headends................... 5,499,520 4,845,004
Converters..................................... 4,602,877 3,477,669
Vehicles and equipment......................... 1,478,411 1,249,491
Office equipment............................... 358,154 300,411
Materials, supplies and distribution equip-
ment.......................................... 15,215 --
----------- -----------
Property and equipment, at cost.............. 51,481,581 38,464,170
Accumulated depreciation....................... (6,438,313) (2,915,213)
----------- -----------
Property and equipment, net.................. $45,043,268 $35,548,957
=========== ===========
(4) INTANGIBLE ASSETS
Intangible assets consist of the following at December 31, 1994 and 1993:
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
Franchise costs, net of accumulated amortiza-
tion of $10,919,212 and $5,481,509............ $37,154,687 $42,592,387
Goodwill, net of accumulated amortization of
$123,999 and $62,247.......................... 2,345,973 2,407,725
----------- -----------
$39,500,660 $45,000,112
=========== ===========
</TABLE>
F-164
<PAGE>
CROWN MEDIA, INC.--WESTERN CONNECTICUT
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(5) DIVISION EQUITY
Division equity consists of the following at December 31, 1994 and 1993:
<TABLE>
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
Interest-bearing investment by Parent............ $52,087,793 $52,087,793
Noninterest-bearing investment by Parent......... 26,100,000 26,100,000
Current accounts with Parent..................... 9,194,089 (1,508,884)
Accumulated losses............................... (6,126,471) (2,330,949)
----------- -----------
$81,255,411 $74,347,960
=========== ===========
</TABLE>
The Division is charged interest by the Parent on $52,087,793 of the
Parent's investment at the lesser of the LIBOR rate plus .5% or a base rate
determined by a specific bank. The interest is paid by crediting the Division
equity account on a quarterly basis. At December 31, 1994, the interest rate
was under the LIBOR-based option and was 6%. The remainder of the Division
equity account is noninterest-bearing.
(6) COMMITMENTS AND CONTINGENCIES
The Division leases certain facilities and equipment under non-cancelable
operating leases. Rent expense incurred under these leases for the years ended
December 31, 1994 and 1993 was $102,596 and $79,457, respectively. These lease
agreements, which expire on various dates through 2005, require future annual
minimum rental payments of less than $81,000.
The Parent allocates to the Division a portion of corporate expenses
incurred by the Parent based on the relative number of subscribers in the
Division's cable television systems. Such allocation is paid by the Division
through its equity account and totaled approximately $537,720 and $473,000 for
the years ended December 31, 1994 and 1993, respectively.
In October 1992, Congress enacted the Cable Television Consumer Protection
and Competition Act of 1992 (the "1992 Cable Act"). During May 1993, pursuant
to authority granted to it under the 1992 Cable Act, the Federal
Communications Commission (the "FCC") issued its rate regulation rules which
became effective September 1, 1993. These rules required cable systems not
subject to effective competition, as defined, to set rates for basic and cable
programming services, as well as related equipment and installations, pursuant
to general cost-of-service standards or FCC prescribed benchmarks. These FCC
benchmarks were based on an average 10% competitive differential between
competitive and non-competitive systems. Effective September 1, 1993, cable
systems not electing cost-of-service were required to reduce rates to the
higher of the prescribed benchmarks or rates that were 10% below those in
effect on September 1, 1992.
In February 1994, the FCC announced further changes in its rate regulation
rules and announced its interim cost-of-service standards. In connection with
these changes, the FCC issued revised benchmark formulas, based on a revised
competitive differential of 17%, which became effective May 15, 1994 or July
14, 1994, if certain conditions were met. Regulated cable systems were
required to reduce rates to the higher of the new FCC prescribed benchmarks or
rates that are 17% below those in effect on September 1, 1992.
The Division believes that it has complied with all of the material
provisions of the 1992 Cable Act, including the rate regulation rules
currently in effect. Under the 1992 Cable Act, Congress delegated regulatory
responsibility for the basic service tier and related equipment and
installations to the local franchising authority and regulatory responsibility
for the cable programming service tier to the FCC. If it is determined by the
respective regulatory authority that the rates charged for such regulated
services are inconsistent with the rate regulation rules, the Division could
be responsible for refund liability. The amount of such refunds, if any, is
not currently estimable by the Division.
F-165
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Partners
Crown Cable, L.P.:
We have audited the accompanying balance sheets of Crown Cable, L.P. as of
December 31, 1994 and 1993, and the related statements of operations,
partners' capital and cash flows for the year ended December 31, 1994 and the
period from December 10, 1992 through December 31, 1993. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Crown Cable, L.P. as of
December 31, 1994 and 1993, and the results of its operations and its cash
flows for the year ended December 31, 1994 and the period from December 10,
1992 through December 31, 1993 in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Dallas, Texas
January 18, 1995
F-166
<PAGE>
CROWN CABLE, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
<TABLE>
<CAPTION>
1994 1993
----------- -----------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents............................ $ 142,165 $ --
Accounts receivable, net of allowance for doubtful
accounts of $20,828 and $50,958, respectively....... 300,424 309,194
Prepaid expenses..................................... 28,610 23,956
Intercompany receivable from parent.................. 4,845,742 3,624,115
----------- -----------
Total current assets............................... 5,316,941 3,957,265
Property and equipment, net (note 3)................... 12,579,329 12,073,161
Intangibles and other assets, net (note 4)............. 26,974,928 34,570,187
----------- -----------
$44,871,198 $50,600,613
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Bank overdraft....................................... $ -- $ 1,169,636
Accounts payable and accrued expenses................ 1,935,249 1,648,088
----------- -----------
Total current liabilities.......................... 1,935,249 2,817,724
----------- -----------
Long-term debt (note 5)................................ 41,175,652 41,175,652
Partners' capital (note 6)
General partner...................................... 1,742,695 6,541,165
Limited partner...................................... 17,602 66,072
----------- -----------
Total partners' capital............................ 1,760,297 6,607,237
Commitments and contingencies (note 7)
----------- -----------
$44,871,198 $50,600,613
=========== ===========
</TABLE>
See accompanying notes to financial statements.
F-167
<PAGE>
CROWN CABLE, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
PERIOD FROM
DECEMBER 10,
YEAR ENDED 1992 THROUGH
DECEMBER 31, DECEMBER 31,
1994 1993
------------ ------------
<S> <C> <C>
Service revenues.................................... $11,596,931 $11,600,781
----------- -----------
Operating expenses:
Operating, general and administrative............. 5,298,470 5,760,704
Depreciation and amortization..................... 8,955,775 9,404,808
----------- -----------
Total operating expenses........................ 14,254,245 15,165,512
----------- -----------
Loss from operations............................ (2,657,314) (3,564,731)
----------- -----------
Other income (expense):
Interest expense.................................. (2,162,839) (1,666,836)
Other, net........................................ (26,787) 38,804
----------- -----------
(2,189,626) (1,628,032)
----------- -----------
Net loss........................................ $(4,846,940) $(5,192,763)
=========== ===========
</TABLE>
See accompanying notes to financial statements.
F-168
<PAGE>
CROWN CABLE, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' CAPITAL
YEAR ENDED DECEMBER 31, 1994 AND THE PERIOD FROM
DECEMBER 10, 1992 THROUGH DECEMBER 31, 1993
<TABLE>
<CAPTION>
GENERAL LIMITED
PARTNER PARTNER TOTAL
----------- -------- -----------
<S> <C> <C> <C>
Initial capital contribution, December 10,
1992..................................... $11,682,000 $118,000 $11,800,000
Net loss.................................. (5,140,835) (51,928) (5,192,763)
----------- -------- -----------
Balance, December 31, 1993................ 6,541,165 66,072 6,607,237
Net loss.................................. (4,798,470) (48,470) (4,846,940)
----------- -------- -----------
Balance, December 31, 1994................ $ 1,742,695 $ 17,602 $ 1,760,297
=========== ======== ===========
</TABLE>
See accompanying notes to financial statements.
F-169
<PAGE>
CROWN CABLE, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
PERIOD FROM
DECEMBER 10,
YEAR ENDED 1992 THROUGH
DECEMBER 31, DECEMBER 31,
1994 1993
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss........................................... $(4,846,940) $(5,192,763)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization..................... 8,955,775 9,404,808
Changes in certain assets and liabilities:
Accounts receivable, net......................... 8,770 (460,797)
Prepaid expenses................................. (4,654) 121,458
Accounts payable and accrued expenses............ 287,161 (66,054)
----------- -----------
Net cash provided by operating activities....... 4,400,112 3,806,652
----------- -----------
Cash flows from investing activities:
Purchase of equipment.............................. (1,803,173) (1,258,685)
Other.............................................. (63,511) (93,488)
----------- -----------
Net cash used in investing activities............ (1,866,684) (1,352,173)
----------- -----------
Cash flows from financing activities:
Advances to parent, net............................ (1,221,627) (3,624,115)
Change in bank overdraft........................... (1,169,636) 1,169,636
----------- -----------
Net cash used in financing activities............ (2,391,263) (2,454,479)
----------- -----------
Net change in cash and cash equivalents.............. 142,165 --
Cash and cash equivalents:
Beginning of year.................................. -- --
----------- -----------
End of year........................................ $ 142,165 $ --
=========== ===========
Cash paid for interest............................... $ 1,893,034 $ 1,666,836
=========== ===========
</TABLE>
See accompanying notes to financial statements.
F-170
<PAGE>
CROWN CABLE, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994 AND 1993
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Organization
Crown Cable, L.P., a Delaware limited partnership (the "Partnership"),
formerly Tele-Media Company of Northeast Connecticut, L.P. ("Tele-Media"), was
formed on May 10, 1982 for the purpose of owning and operating existing cable
television systems. The name of the Partnership was changed, effective
December 10, 1992 (note 2). The Partnership will terminate no later than
December 31, 2014 as provided in the Partnership Agreement. The general
partner is Crown Cable Company of Northeastern Connecticut, a wholly-owned
subsidiary of Crown Media, Inc. (the "Parent").
(b) Revenue Recognition
Revenues are recognized when the related services are provided.
(c) Property and Equipment
Property and equipment is carried at cost, including acquisition cost
allocated to tangible assets acquired. The Partnership charges depreciation to
operations using the composite method on a straight-line basis over the
estimated useful lives of the related property and equipment as follows:
<TABLE>
<S> <C>
Trunk and distribution systems.................................. 5-15 years
Subscriber installations........................................ 5-15 years
Buildings and headends.......................................... 5-20 years
Converters...................................................... 5 years
Vehicles and equipment.......................................... 3-8 years
Office equipment................................................ 5-10 years
</TABLE>
Replacements, renewals and improvements are capitalized and repairs are
charged to expense as incurred.
(d) Intangible and Other Assets
Costs incurred in obtaining and renewing cable franchises are initially
deferred and amortized over the legal lives of the franchises. Franchise
rights acquired through purchase of cable systems are stated at estimated fair
value at the date of acquisition and amortized using the straight-line method
over the estimated remaining term of the individual franchises. Goodwill is
amortized using the straight-line method over 40 years. Noncompete agreements
are amortized on a straight-line basis over the original term of the
agreements.
The Partnership continually evaluates the recoverability of its intangible
assets as well as their useful lives using an analysis of projected
undiscounted cash flows from operations over the remaining carrying lives of
its intangible assets.
(e) Income Taxes
Income taxes are not provided in the accompanying financial statements as
such taxes are the responsibility of the partners.
(f) Cash Management and Intercompany Account
The cash management function for the Partnership is performed by the Parent.
Excess cash funds are transferred to the Parent using the Partnership's
intercompany account. In addition, the Parent makes disbursements on behalf of
the Partnership for items such as payroll, payroll taxes, employee benefits
and other costs. To the extent that the disbursements represent expenses
applicable to the business of the Partnership, such amounts are transferred to
the Partnership through its intercompany account and recognized in the
accompanying statement of operations. The net intercompany receivable is
unsecured and non-interest bearing.
F-171
<PAGE>
CROWN CABLE, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(2) ACQUISITION
On December 10, 1992, the general partner and sole limited partner (also a
wholly-owned subsidiary of the Parent) acquired all outstanding partnership
interests of Tele-Media for consideration of $11,800,000 in a transaction
accounted for as a purchase. Assets and liabilities of the Partnership were
revalued based on their estimated fair market values at the date of purchase.
The purchase price was allocated to the Partnership's assets and liabilities
as follows:
<TABLE>
<S> <C>
Net working capital deficit assumed......................... $ (1,727,308)
Property and equipment...................................... 12,205,962
Franchise costs............................................. 32,520,431
Noncompete agreements....................................... 5,425,000
Goodwill.................................................... 4,544,590
Other assets................................................ 6,977
Long-term debt.............................................. (41,175,652)
------------
Initial capital contribution.............................. $ 11,800,000
============
</TABLE>
(3) PROPERTY AND EQUIPMENT
Property and equipment consists of the following at December 31, 1994 and
1993:
<TABLE>
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
Trunk and distribution systems................... $ 9,164,749 $ 8,396,269
Subscriber installations......................... 1,563,975 1,092,307
Land, buildings and headends..................... 1,477,223 1,349,184
Converters....................................... 2,579,715 2,218,852
Vehicles and equipment........................... 409,364 294,526
Office equipment................................. 125,954 113,509
----------- -----------
Property and equipment, at cost................ 15,320,980 13,464,647
Accumulated depreciation......................... (2,741,651) (1,391,486)
----------- -----------
Property and equipment, net.................... $12,579,329 $12,073,161
=========== ===========
</TABLE>
(4) INTANGIBLES AND OTHER ASSETS
Intangibles and other assets consist of the following at December 31, 1994
and 1993:
<TABLE>
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
Franchise costs, net of accumulated amortization of
$11,656,186 and $5,982,876........................ $20,957,733 $26,631,043
Goodwill, net of accumulated amortization of
$233,645 and $120,029............................. 4,310,945 4,424,561
Noncompete agreements, net of accumulated
amortization of $3,718,750 and $1,910,417......... 1,706,250 3,514,583
----------- -----------
$26,974,928 $34,570,187
=========== ===========
</TABLE>
(5) LONG-TERM DEBT
The Partnership has a long-term interest bearing payable with the Parent in
the amount of $41,175,652 as a result of the purchase of partnership interests
on December 10, 1992 (note 2). The liability is unsecured and bears interest
at the lesser of the LIBOR rate plus .5% or a base rate determined by a
specified bank. Interest is
F-172
<PAGE>
CROWN CABLE, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
paid quarterly through the Partnership's intercompany account. At December 31,
1994, the interest rate was under the LIBOR-based option and was 6%. The
liability was due in January 1996; however, as a result of the sale of the
Parent on January 18, 1995, the liability was cancelled.
(6) DISTRIBUTIONS AND ALLOCATIONS
Profits and losses are allocated in proportion to the partners' original
capital contributions on December 10, 1992. Losses are allocated to the
limited partner only to the extent that such allocation would reduce the
limited partner's capital account to zero. All remaining losses are allocated
to the general partner.
The Partnership is required to distribute all cash available for
distribution. Distributions are to be made within 120 days after the end of
each fiscal year and are allocated in the same proportion as profits and
losses.
The Parent charges the Partnership a management fee based on the number of
subscribers in the Partnership's cable systems. Such management fee is paid by
the Partnership through its intercompany account and totaled approximately
$331,000 in 1994 and $299,000 in 1993.
(7) COMMITMENTS AND CONTINGENCIES
The Partnership leases certain facilities and equipment under non-cancelable
operating leases. Rent expense incurred under these leases for the years ended
December 31, 1994 and 1993 were $74,000 and $49,000, respectively. These lease
agreements, which expire on various dates through 2005, require future annual
minimum rental payments of less than $84,000.
The Partnership is a party to lawsuits which are generally incidental to its
business. In the opinion of management, after consulting with legal counsel,
the outcome of these lawsuits will not have a material adverse effect on the
Partnership's financial position.
In October 1992, Congress enacted the Cable Television Consumer Protection
and Competition Act of 1992 (the "1992 Cable Act"). During May 1993, pursuant
to authority granted to it under the 1992 Cable Act, the Federal
Communications Commission (the "FCC") issued its rate regulation rules which
became effective September 1, 1993. These rate regulation rules required cable
systems not subject to effective competition, as defined, to set rates for
basic and cable programming services, as well as related equipment and
installations, pursuant to general cost-of-service standards or FCC prescribed
benchmarks. These FCC benchmarks were based on an average 10% competitive
differential between competitive and non-competitive systems. Effective
September 1, 1993, cable systems not electing cost-of-service were required to
reduce rates to the higher of the prescribed benchmarks or rates that were 10%
below those in effect on September 1, 1992.
In February 1994, the FCC announced further changes in its rate regulation
rules and announced its interim cost-of-service standards. In connection with
these changes, the FCC issued revised benchmark formulas, based on a revised
competitive differential of 17%, which became effective May 15, 1994 or July
14, 1994, if certain conditions were met. Regulated cable systems were
required to reduce rates to the higher of the new FCC prescribed benchmarks or
rates that are 17% below those in effect on September 1, 1992.
The Partnership believes that it has complied with all of the provisions of
the 1992 Cable Act, including the rate regulation rules currently in effect.
Under the 1992 Cable Act, Congress delegated regulatory responsibility for the
basic service tier and related equipment and installations to the local
franchising authority and regulatory responsibility for the cable programming
service tier to the FCC. If it is determined by the respective regulatory
authority that the rates charged for such regulated services are inconsistent
with the rate regulation rules, the Partnership could be responsible for
refund liability. The amount of such refunds, if any, is not currently
estimable by the Partnership.
F-173
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR ANY OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE ISSUER. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES OFFERED
HEREBY IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN
THE AFFAIRS OF THE ISSUER SINCE THE DATE HEREOF.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 24
The Exchange Offer ....................................................... 33
The Company............................................................... 39
Capitalization............................................................ 40
Unaudited Selected Historical and Unaudited Pro Forma Financial Data...... 41
Unaudited Pro Forma Financial Statements ................................. 44
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................................................... 47
Business.................................................................. 57
Management................................................................ 81
Certain Relationships and Related
Transactions............................................................. 84
Principal Securityholders................................................. 87
Description of Notes...................................................... 88
Certain Federal Income Tax Consequences................................... 105
Description of Other Indebtedness......................................... 109
Plan of Distribution...................................................... 114
Legal Matters............................................................. 115
Independent Certified Public Accountants.................................. 115
Glossary.................................................................. 116
List of Entities.......................................................... 117
Index to Audited Financial Statements..................................... F-1
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
An Affiliate of
[LOGO] CHARTER
COMMUNICATIONS
$82,000,000
CCA HOLDINGS CORP.
SENIOR SUBORDINATED NOTES DUE 1999
------------------------
PROSPECTUS
------------------------
JUNE , 1997
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of Delaware provides
that a corporation has the power to indemnify a director, officer, employee or
agent of the corporation and certain other persons serving at the request of
the corporation in related capacities against amounts paid and expenses
incurred in connection with an action or proceeding to which he is or is
threatened to be made a party by reason of such position, if such person shall
have acted in god faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and, in any criminal
proceeding, if such person had no reasonable cause to believe his conduct was
unlawful, provided that, in the case of actions brought by or in the right of
the corporation, no indemnification shall be made with respect to any matter
as to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the adjudicating court
determines that such indemnification is proper under the circumstances. CCA's
Certificate of Incorporation provides that CCA shall indemnify its directors
and officers to the fullest extent permitted by Section 145 of the Delaware
General Corporation Law. CCA's Certificate of Incorporation also provides that
no director shall be liable to the Company or its stockholders for monetary
damages for breach of his fiduciary duty as director, except for liability (i)
of any breach of the director's duty of loyalty to CCA or its stockholders,
(ii) for acts or omissions not in good faith or which involved intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law or (iv) for any transaction in which the
director derived an improper personal benefit.
CAC's Certificate of Incorporation provides that CAC shall indemnify its
directors and officers to the fullest extent permitted by Section 145 of the
Delaware General Corporation Law. CAC's Certificate of Incorporation also
provides that no director shall be liable to the Company or its stockholders
for monetary damages for breach of his fiduciary duty as director, except for
liability (i) for any breach of the director's duty or loyalty to CAC or its
stockholders, (ii) for acts or omissions not in good faith or which involved
intentional misconduct or a knowing violation of law, (iii) under Section 174
of the Delaware General Corporation Law or (iv) for any transaction in which
the director derived an improper personal benefit.
Cencom Cable's Certificate of Incorporation provides that Cencom Cable shall
indemnify its directors and officers to the fullest extent permitted by
Section 145 of the Delaware General Corporation Law. Cencom Cable's
Certificate of Incorporation also provides that no director shall be liable to
the Company or its stockholders for monetary damages for breach of his
fiduciary duty as director, except for liability (i) of any breach of the
director's duty of loyalty to Cencom Cable's or its stockholders, (ii) for
acts or omissions not in good faith or which involved intentional misconduct
or a knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law or (iv) for any transaction in which the director derived an
improper personal benefit.
Section 17-108 of the Revised Limited Partnership Act of the State of
Delaware provides that subject to such standards and restrictions, if any, as
are set forth in its a partnership agreement, a limited partnership may, and
shall have the power to, indemnify and hold harmless any partner or other
person from and against any and all claims and demands whatsoever.
CCE, L.P.'s Agreement of Limited Partnership provides that CCE, L.P. shall
indemnify its directors and officers to the fullest extent permitted by
applicable law. CCE, L.P.'s Agreement of Limited Partnership also provides
that none of the general partners or any of their affiliates or the partners,
officers, directors or employees of such general partner or affiliate shall be
liable to the partnership or any partner for any act or omission taken or
omitted by such person in good faith, provided that such act or omission did
not constitute gross negligence, fraud, willful violation of the law, willful
violation of the Agreement of Limited Partnership or reckless disregard of the
duties of such person.
II-1
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
1.1 Placement Agreement, dated February 10, 1997, among CCA Holdings
Corp., HC Crown Corp. and Furman Selz LLC
3.1 Amended and Restated Certificate of Incorporation of CCA Holdings
Corp.
3.2 Amended and Restated By-laws of CCA Holdings Corp.
3.3 Certificate of Incorporation of CCA Acquisition Corp.
3.4 Amended and Restated By-laws of CCA Acquisition Corp.
3.5 Certificate of Incorporation of Cencom Cable Entertainment, Inc.
3.6 Amended and Restated By-laws of Cencom Cable Entertainment, Inc.
3.7 Certificate of Limited Partnership of Charter Communications
Entertainment, L.P.
3.8 Amendment to Certificate of Limited Partnership of Charter
Communications Entertainment, L.P.
3.9 Agreement of Limited Partnership of Charter Communications
Entertainment, L.P.
4.1 Indenture, dated February 13, 1997, between CCA Holdings Corp. and
Harris Trust and Savings Bank, as Trustee
4.2 Second Amended and Restated Guaranty, dated February 13, 1997, issued
by CCA Acquisition Corp.
4.3 Second Amended and Restated Guaranty, dated February 13, 1997, issued
by Cencom Cable Entertainment, Inc.
4.4 Second Amended and Restated Guaranty, dated February 13, 1997, issued
by Charter Communications Entertainment, L.P.
4.5 Second Amended and Restated Subordination Agreement between Harris
Trust and Savings Bank, as Trustee, CCA Holdings Corp. and Toronto
Dominion (Texas) Inc., as Administrative Agent, dated February 13,
1997
4.6 Letter Agreement, dated November 15, 1996, between CCA Holdings Corp.
and HC Crown Corp.
4.7 Form of Old Note (included in Exhibit 4.1)
4.8 Form of New Note (included in Exhibit 4.1)
*5.1 Legal Opinion
10.1 Amended and Restated Loan Agreement dated as of September 29, 1995
(the "CCE-I Loan Agreement") among Charter Communications
Entertainment I, L.P., as Borrower, Toronto Dominion (Texas), Inc. and
Chemical Bank, as Documentation Agents, Toronto Dominion (Texas),
Inc., Chemical Bank, CIBC Inc., Credit Lyonnais Cayman Island Branch
and Nationsbank, N.A. (Carolinas), as Managing Agents, Banque Paribas
and Union Bank, as Co-Agents, the Signatory Banks thereto, and Toronto
Dominion (Texas), Inc., as Administrative Agent
10.2 First Amendment to the CCE-I Loan Agreement dated as of October 31,
1995
10.3 Second Amendment to the CCE-I Loan Agreement dated as of January 16,
1996
10.4 Third Amendment to the CCE-I Loan Agreement dated as of March 29, 1996
10.5 Fourth Amendment to the CCE-I Loan Agreement dated as of May 24, 1996
10.6 Fifth Amendment to the CCE-I Loan Agreement dated as of November 29,
1996
10.7 Sixth Amendment to the CCE-I Loan Agreement dated as of February 7,
1997
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
10.8 Amended and Restated Shareholders' Agreement dated as of January 18,
1995 between Kelso & Company, L.P., Charter Communications, Inc. and
HC Crown Corp.
10.9 Amended and Restated Management Agreement dated as of September 29,
1995 between Charter Communications Entertainment I, L.P. and Charter
Communications, Inc.
10.10 Amendment Number One to Amended and Restated Management Agreement
dated as of October 31, 1995 between Charter Communications
Entertainment I, L.P. and Charter Communications, Inc.
10.11 Amendment Number Two to Amended and Restated Management Agreement
dated as of March 29, 1996 between Charter Communications
Entertainment I, L.P. and Charter Communications, Inc.
10.12 Amendment Number Three to Amended and Restated Management Agreement
dated as of November 29, 1996 between Charter Communications
Entertainment I, L.P. and Charter Communications, Inc.
10.13 Certificate of Limited Partnership of Charter Communications
Entertainment I, L.P.
10.14 Amendment to the Certificate of Limited Partnership of Charter
Communications Entertainment I, L.P.
10.15 Agreement of Limited Partnership of Charter Communications
Entertainment I, L.P.
10.16 Certificate of Limited Partnership of Charter Communications
Entertainment II, L.P.
10.17 Agreement of Limited Partnership of Charter Communications
Entertainment II, L.P.
10.18 Contingent Payment Agreement dated as of September 29, 1995 among
Charter Communications Entertainment, L.P., CCT Holdings Corp. and
Cencom CableTelevision, Inc.
10.19 Amended and Restated Stockholders' Agreement dated as of September 29,
1995 among CCA Holdings Corp., Kelso Investment Associates V, L.P.,
Kelso Equity Partners V, L.P. and Charter Communications, Inc.
10.20 Registration Rights Agreement dated as of January 18, 1995 (the
"Registration Rights Agreement") among CCA Holdings Corp., Kelso
Investment Associates V, L.P., Kelso Equity Partners V, L.P. and
Charter Communications, Inc.
10.21 Amendment Number One to the Registration Rights Agreement dated as of
September 29, 1995
12.1 Crown Systems, Ratio of Earnings to Fixed Charges Calculation
12.2 CCA Holdings Corp. and subsidiaries, Ratio of Earnings to Fixed
Charges Calculation
21.1 List of Subsidiaries of Registrants
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Ernst & Young LLP
23.3 Consent of KPMG Peat Marwick LLP
23.4 Consent of Piaker & Lyons, P.C.
25.1 Statement of Eligibility of Harris Trust and Savings Bank, as Trustee,
on Form T-1
27.1 Financial Data Schedule CCA Holdings Corp.
27.2 Financial Data Schedule CCA Acquisition Corp.
27.3 Financial Data Schedule Cencom Cable Entertainment, Inc.
27.4 Financial Data Schedule Charter Communications Entertainment, L.P.
99.1 Letter of Transmittal
</TABLE>
- --------
*To be filed by amendment.
(b) Financial Statement Schedules.
Reports of Independent Certified Public Accountants incorporated by
reference herein.
II-3
<PAGE>
ITEM 22. UNDERTAKINGS
The undersigned hereby undertake with respect to the securities offered by
them:
1. Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended (the "Act") may be permitted as to
directors, officers and controlling persons of the registrants pursuant to
the foregoing provisions or otherwise, the Registrants have been advised
that in the opinion of the Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable. In
the event a claim for indemnification against such liabilities (other than
the payment by the Registrants of expenses incurred or paid by a director,
officer or controlling person of the Registrants in the successful defense
of any action, suit, or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered,
the Registrants will, unless in the opinion of its respective counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
2. The Registrants hereby undertake to respond to requests for
information that is incorporated by reference into the prospectus pursuant
to Items 4, 10(b), 11 or 13 of this Form, within one business day of
receipt of such request, and to send the incorporated documents by first
class mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request.
3. The undersigned Registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
4. The undersigned Registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
each of the Registrants' annual report pursuant to section 13(a) or section
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to section
15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of St. Louis, State of
Missouri, on the 9th day of May, 1997.
CCA Holdings Corp.
/s/ Jerald L. Kent
By:__________________________________
Name: Jerald L. Kent
Title: President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
SIGNATURE TITLE DATE
/s/ Jerald L. Kent President, Chief May 9, 1997
- ------------------------------------- Financial Officer
JERALD L. KENT (Principal
Financial Officer)
and Director
/s/ Howard L. Wood Chairman of the May 9, 1997
- ------------------------------------- Management
HOWARD L. WOOD Committee and
Director
/s/ Ralph G. Kelly Senior Vice May 9, 1997
- ------------------------------------- President--
RALPH G. KELLY Treasurer
(Principal
Accounting Officer)
/s/ George E. Matelich Director May 9, 1997
- -------------------------------------
GEORGE E. MATELICH
/s/ Frank T. Nickell Director May 9, 1997
- -------------------------------------
FRANK T. NICKELL
/s/ Thomas R. Wall IV Director May 9, 1997
- -------------------------------------
THOMAS R. WALL IV
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of St. Louis, State of
Missouri, on the 9th day of May, 1997.
CCA Acquisition Corp.
/s/ Jerald L. Kent
By:__________________________________
Name: Jerald L. Kent
Title: President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
SIGNATURE TITLE DATE
/s/ Jerald L. Kent President, Chief May 9, 1997
- ------------------------------------- Financial Officer
JERALD L. KENT (Principal
Financial Officer)
and Director
/s/ Howard L. Wood Chairman of the May 9, 1997
- ------------------------------------- Management
HOWARD L. WOOD Committee and
Director
/s/ Ralph G. Kelly Senior Vice May 9, 1997
- ------------------------------------- President--
RALPH G. KELLY Treasurer
(Principal
Accounting Officer)
/s/ George E. Matelich Director May 9, 1997
- -------------------------------------
GEORGE E. MATELICH
/s/ Frank T. Nickell Director May 9, 1997
- -------------------------------------
FRANK T. NICKELL
/s/ Thomas R. Wall IV Director May 9, 1997
- -------------------------------------
THOMAS R. WALL IV
II-6
<PAGE>
EXHIBIT INDEX
CCA HOLDINGS, CORP.
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NO. DESCRIPTION PAGE NO.
------- ----------- ----------
<C> <S> <C>
1.1 Placement Agreement, dated February 10, 1997, among CCA
Holdings Corp., HC Crown Corp. and Furman Selz LLC.......
3.1 Amended and Restated Certificate of Incorporation of CCA
Holdings Corp............................................
3.2 Amended and Restated By-laws of CCA Holdings Corp........
3.3 Certificate of Incorporation of CCA Acquisition Corp.....
3.4 Amended and Restated By-laws of CCA Acquisition Corp.....
3.5 Certificate of Incorporation of Cencom Cable
Entertainment, Inc.......................................
3.6 Amended and Restated By-laws of Cencom Cable
Entertainment, Inc.......................................
3.7 Certificate of Limited Partnership of Charter
Communications Entertainment, L.P........................
3.8 Amendment to Certificate of Limited Partnership of
Charter Communications
Entertainment, L.P.......................................
3.9 Agreement of Limited Partnership of Charter
Communications Entertainment, L.P........................
4.1 Indenture, dated February 13, 1997, between CCA Holdings
Corp. and Harris Trust and Savings Bank, as Trustee......
4.2 Second Amended and Restated Guaranty, dated February 13,
1997, issued by CCA Acquisition Corp. ...................
4.3 Second Amended and Restated Guaranty, dated February 13,
1997, issued by Cencom Cable Entertainment, Inc. ........
4.4 Second Amended and Restated Guaranty, dated February 13,
1997, issued by Charter Communications Entertainment,
L.P. ....................................................
4.5 Second Amended and Restated Subordination Agreement
between Harris Trust and Savings Bank, as Trustee, CCA
Holdings Corp. and Toronto Dominion (Texas) Inc., as
Administrative Agent, dated February 13, 1997............
4.6 Letter Agreement, dated November 15, 1996, between CCA
Holdings Corp. and
HC Crown Corp............................................
4.7 Form of Old Note (included in Exhibit 4.1)...............
4.8 Form of New Note (included in Exhibit 4.1)...............
*5.1 Legal Opinion............................................
10.1 Amended and Restated Loan Agreement dated as of September
29, 1995 (the "CCE-I Loan Agreement") among Charter
Communications Entertainment I, L.P., as Borrower,
Toronto Dominion (Texas), Inc. and Chemical Bank, as
Documentation Agents, Toronto Dominion (Texas), Inc.,
Chemical Bank, CIBC Inc., Credit Lyonnais Cayman Island
Branch and Nationsbank, N.A. (Carolinas), as Managing
Agents, Banque Paribas and Union Bank, as Co-Agents, the
Signatory Banks thereto, and Toronto Dominion (Texas),
Inc., as Administrative Agent............................
10.2 First Amendment to the CCE-I Loan Agreement dated as of
October 31, 1995.........................................
10.3 Second Amendment to the CCE-I Loan Agreement dated as of
January 16, 1996.........................................
10.4 Third Amendment to the CCE-I Loan Agreement dated as of
March 29, 1996...........................................
10.5 Fourth Amendment to the CCE-I Loan Agreement dated as of
May 24, 1996.............................................
10.6 Fifth Amendment to the CCE-I Loan Agreement dated as of
November 29, 1996........................................
10.7 Sixth Amendment to the CCE-I Loan Agreement dated as of
February 7, 1997.........................................
10.8 Amended and Restated Shareholders' Agreement dated as of
January 18, 1995 between Kelso & Company, L.P., Charter
Communications, Inc. and HC Crown Corp. .................
10.9 Amended and Restated Management Agreement dated as of
September 29, 1995 between Charter Communications
Entertainment I, L.P. and Charter Communications, Inc. ..
10.10 Amendment Number One to Amended and Restated Management
Agreement dated as of October 31, 1995 between Charter
Communications Entertainment I, L.P. and Charter
Communications, Inc. ....................................
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NO. DESCRIPTION PAGE NO.
------- ----------- ----------
<C> <S> <C>
10.11 Amendment Number Two to Amended and Restated Management
Agreement dated as of March 29, 1996 between Charter
Communications Entertainment I, L.P. and Charter
Communications, Inc. ....................................
10.12 Amendment Number Three to Amended and Restated Management
Agreement dated as of November 29, 1996 between Charter
Communications Entertainment I, L.P. and Charter
Communications, Inc. ....................................
10.13 Certificate of Limited Partnership of Charter
Communications Entertainment I, L.P. ....................
10.14 Amendment to the Certificate of Limited Partnership of
Charter Communications Entertainment I, L.P. ............
10.15 Agreement of Limited Partnership of Charter
Communications Entertainment I, L.P. ....................
10.16 Certificate of Limited Partnership of Charter
Communications Entertainment II, L.P. ...................
10.17 Agreement of Limited Partnership of Charter
Communications Entertainment II, L.P. ...................
10.18 Contingent Payment Agreement dated as of September 29,
1995 among Charter Communications Entertainment, L.P.,
CCT Holdings Corp. and Cencom Cable
Television, Inc. ........................................
10.19 Amended and Restated Stockholders' Agreement dated as of
September 29, 1995 among CCA Holdings Corp., Kelso
Investment Associates V, L.P., Kelso Equity Partners V,
L.P. and Charter Communications, Inc.....................
10.20 Registration Rights Agreement dated as of January 18,
1995 (the "Registration Rights Agreement") among CCA
Holdings Corp., Kelso Investment Associates V, L.P.,
Kelso Equity Partners V, L.P. and Charter Communications,
Inc......................................................
10.21 Amendment Number One to the Registration Rights Agreement
dated as of September 29, 1995...........................
12.1 Crown Systems, Ratio of Earnings to Fixed Charges
Calculation..............................................
12.2 CCA Holdings Corp. and subsidiaries, Ratio of Earnings to
Fixed Charges Calculation................................
21.1 List of Subsidiaries of Registrants......................
23.1 Consent of Arthur Andersen LLP...........................
23.2 Consent of Ernst & Young LLP.............................
23.3 Consent of KPMG Peat Marwick LLP.........................
23.4 Consent of Piaker & Lyons, P.C...........................
25.1 Statement of Eligibility of Harris Trust and Savings
Bank, as Trustee, on Form T-1............................
27.1 Financial Data Schedule CCA Holdings Corp. ..............
27.2 Financial Data Schedule CCA Acquisition Corp. ...........
27.3 Financial Data Schedule Cencom Cable Entertainment,
Inc. ....................................................
27.4 Financial Data Schedule Charter Communications
Entertainment, L.P. .....................................
99.1 Letter of Transmittal....................................
</TABLE>
- --------
*To be filed by amendment.
<PAGE>
EXHIBIT 1.1
SENIOR SUBORDINATED NOTES DUE 1999
OF CCA HOLDINGS CORP.
PLACEMENT AGREEMENT
-------------------
February 10, 1997
FURMAN SELZ LLC
230 Park Avenue
New York, New York 10169
Ladies and Gentlemen:
HC Crown Corp. ("HC Crown"), a Delaware corporation and a wholly-owned
subsidiary of Hallmark Cards Incorporated, proposes to sell to Furman Selz LLC
(the "Placement Agent") an aggregate of $82,000,000 aggregate principal amount
of Senior Subordinated Notes due 1999 (the "Notes"), plus accrued interest since
January 18, 1995, the original date of issue of the Original Notes (as defined
herein). CCA Holding Corp. ("CCA"), a Delaware corporation originally sold to
HC Crown on January 18, 1995 Senior Subordinated Notes due 1999 (the "Original
Notes") pursuant to a Senior Subordinated Loan Agreement, dated as of January
18, 1995, between CCA and HC Crown (as amended and restated by the Amended and
Restated HC Loan Agreement dated as of November 15, 1996 (revised), the "HC
Crown Loan Agreement"). Immediately prior to the Closing Time (as defined
herein) the HC Crown Loan Agreement shall be converted into an indenture (the
"Indenture"), between CCA and a trustee. The Notes issued pursuant to the
Indenture will contain substantially the same terms and conditions as are
contained in the HC Crown Loan Agreement and the Original Notes issued
thereunder. Terms used herein but not defined herein shall have the meaning
assigned to them in the Offering Memorandum (as defined herein).
Pursuant to the terms of a Subordination Agreement, dated as of
January 18, 1995 among HC Crown, CCA and certain lenders under a credit facility
of CCE-I (as originally executed and delivered and thereafter amended and
restated, the "Subordination Agreement" and, together with each other
subordination agreement between any holder (or the trustee on behalf of such
holder) of Notes and certain lenders under a credit facility of CCA, the
"Subordination Agreements"), the Notes will be subordinated in right and
priority of payment to all existing indebtedness of CCA, other than indebtedness
that by its terms is expressly subordinated in right and priority of payment to
the Notes. The obligations of the Original
<PAGE>
Notes were, and the obligations of the Notes will be, guaranteed (the
"Guarantees") on a subordinated basis by two subsidiaries of CCA and by a
limited partnership in which CCA owns indirect limited and general partnership
interests. The Notes and the Guarantees are more fully described in the
Offering Memorandum referred to below.
The Notes will be offered and sold by HC Crown to the Placement Agent
without registration under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance upon exemptions from the registration
requirements of the Securities Act. In connection with the sale of the Notes,
CCA has prepared a preliminary offering memorandum dated November 19, 1996 (the
"Preliminary Offering Memorandum") and a final offering memorandum dated the
date hereof (such final offering memorandum, in the form first furnished to the
Placement Agent for use in connection with the offering and sale of the Notes,
or if such form is not so used, in the form subsequently furnished for such use,
the "Offering Memorandum"), each setting forth certain information concerning
CCA, the Notes and HC Crown. CCA hereby confirms that it has authorized the use
of the Preliminary Offering Memorandum and the Offering Memorandum in connection
with the offer and resale of the Notes by the Placement Agent under Rule 144A of
the Securities Act, subject to the provisions of Section 4(c) hereof. Unless
stated to the contrary, all references herein to the Offering Memorandum are to
the Offering Memorandum at the date hereof (the "Execution Time") and are not
meant to include any amendment or supplement thereto subsequent to the Execution
Time. If CCA prepares a supplement dated the date hereof to the Preliminary
Offering Memorandum containing only pricing related information, then the term
"Offering Memorandum" for purposes of this Agreement shall refer collectively to
the Preliminary Offering Memorandum and such supplement.
CCA and HC Crown understand that the Placement Agent proposes to make
an offering of the Notes only on the terms, subject to the conditions and in the
manner set forth in the Offering Memorandum and Section 3 hereof, as soon as the
Placement Agent deems advisable after this Agreement has been executed and
delivered.
Pursuant to the HC Crown Loan Agreement, holders of the Original Notes
were entitled to demand that CCA register the Original Notes pursuant to the
Securities Act on two separate occasions, subject to the terms and provisions
thereof. HC Crown has exercised the first demand registration right with
respect to the Notes All expenses (other than internal expenses of CCA and the
expenses of any annual audit) related to the first such exercise of registration
rights by HC Crown will be paid by or on behalf of HC Crown pursuant to
-2-
<PAGE>
the terms and provisions of a letter agreement dated November 15, 1999 between
CCA and HC Crown (the "Letter Agreement"). Pursuant to the Letter Agreement,
CCA has agreed to comply with HC Crown's request to file and use its best
efforts to effect the registration of notes of CCA having terms substantially
identical to those set forth in the Notes, which will be exchanged for the Notes
(except that such notes as exchanged will not contain terms with respect to
transfer restrictions under applicable securities laws). Additionally, the
holders of the Notes shall be entitled to a second demand registration right
pursuant to the Indenture after March 31, 1997. All expenses (other than
internal expenses of CCA and the expenses of any annual audit) related to the
second demand registration, if exercised, will be paid by the holders of the
Notes exercising such registration rights in accordance with the terms and
provisions of the Indenture.
All references in this Agreement to financial statements and schedules
and other information that is "contained," "included" or "stated" in the
Offering Memorandum (and all other references of like import) shall be deemed to
mean and include all such financial statements and schedules and other
information that is incorporated by reference in the Offering Memorandum; and
all references in this Agreement to amendments or supplements to the Offering
Memorandum shall be deemed to mean and include the filing of any document under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that is
incorporated by reference in the Offering Memorandum.
Section 1. Representations and Warranties. (a) CCA represents and
------------------------------
warrants to and agrees with the Placement Agent that:
(i) CCA is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware with corporate power
and authority under such laws to own, lease and operate its properties and
conduct its business as described in the Offering Memorandum.
(ii) CCA has all corporate power and authority to execute, deliver
and perform its obligations under this Agreement. the Letter Agreement and
the Indenture.
(iii) As of the Closing Time this Agreement, the Indenture and the
Letter Agreement will have been duly authorized, executed and delivered by
CCA and upon such execution by CCA (assuming the due authorization,
execution and delivery thereof by the other-parties thereto) will
constitute the valid and binding obligations of CCA enforceable against CCA
in accordance with their respective terms, except as enforcement
-3-
<PAGE>
thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium, liquidation, receivership or other similar laws now or
hereafter in effect relating to the enforcement of creditors' rights
generally and except as enforcement thereof is subject to general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law), and except as any rights to indemnity and
contribution may be limited by federal and state securities laws and public
policy considerations.
(iv) The execution and delivery by CCA of, and its performance
under this Agreement, the Indenture, and the Letter Agreement, and the
consummation by CCA of the transactions contemplated hereby and thereby, do
not and will not result in any violation of the charter or By-Laws of CCA,
and do not and will not conflict in any material respect with, or result in
a material breach of any of the terms or provisions of, or constitute a
material default under, or result in the creation or imposition of any
material lien, charge or encumbrance upon any property or assets of CCA
under any indenture, mortgage, deed of trust, trust (constructive or
other), loan agreement, lease, franchise, license or other agreement or
instrument to which CCA is a party or by which CCA or any of its properties
are bound, any statute, or any judgment, order, decree, rule or regulation
of any court or governmental agency or body applicable to, or having
jurisdiction over CCA or its properties.
(v) The Notes have been duly authorized, executed and delivered,
have been validly issued and constitute valid and binding obligations of
CCA, entitled to the benefits of the Indenture and enforceable against CCA
in accordance with their terms, except that (a) enforceability thereof may
be limited by (i) bankruptcy, insolvency (including, without limitation,
all laws relating to fraudulent transfers), reorganization, moratorium,
liquidation, receivership or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of
equity (regardless of whether enforceability is considered in a proceeding
at law or in equity), (b) any rights to indemnification and contribution
may be limited by federal and state securities laws and public policy
considerations, (c) any waiver of stay or extension of usury laws contained
in the Indenture may be unenforceable and (d) any liquidated damages
provisions
-4-
<PAGE>
contained therein may be unenforceable, in whole or in part.
(vi) The Notes satisfy the eligibility requirements of Rule
144A(d)(3) under the Securities Act.
(vii) As of their respective dates, none of the Offering
Memorandum or any amendment or supplement thereto, and as of the Closing
Time, the Offering Memorandum, as amended or supplemented to such time,
contained or will contain an untrue statement of a material fact or omitted
or will omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; except that this representation and warranty does not
apply to statements or omissions made in (i) reliance upon and in
conformity with information furnished in writing or confirmed in writing to
CCA by or on behalf of the Placement Agent or HC Crown expressly for use in
the Offering Memorandum or (ii) respect of events, facts or circumstances
relating to the Crown Missouri Systems and the Crown Connecticut Systems
(collectively, the "Crown Systems") during the period prior to January 18,
1995.
(viii) The financial statements of CCA and certain affiliates
included or incorporated by reference in the offering Memorandum present
fairly the consolidated financial position of CCA and such affiliates as of
the dates indicated and the consolidated results of operations and the
consolidated statements of cash flows of CCA and such affiliates for the
periods specified. The selected consolidated financial data of CCA and
certain affiliates included or incorporated by reference in the Offering
Memorandum present fairly the information shown therein and have been
compiled on a basis consistent with that of the audited financial
statements of CCA included or incorporated by reference in the Offering
Memorandum. The consolidated financial statements of CCA included in or
incorporated by reference in the Offering Memorandum have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis throughout the periods involved.
(ix) None of CCA, its affiliates (as such term is defined in Rule
501(b) of Regulation D under the Securities Act ("Regulation D")), or any
person acting on behalf of the foregoing has, directly or indirectly, made
offers or sales of any security, or solicited offers to buy any security,
under circumstances that would require the registration of the Notes under
the Securities Act.
-5-
<PAGE>
(x) None of CCA, its affiliates (as such term is defined in Rule
501(b) of Regulation D under the Securities Act ("Regulation D")), or any
person acting on behalf of CCA has engaged, in connection with the offering
of the Notes or any security of the same class or series as the Notes, (A)
in any form of general solicitation or general advertising within the
meaning of Rule 502(c) under the Securities Act or (B) in any directed
selling efforts within the meaning of Rule 902 under the Securities Act in
the United States in connection with the Notes being offered and sold
pursuant to Regulation S under the Securities Act, and each of them has
complied with the offering restrictions requirement of Regulation S under
the Securities Act, CCA has not entered and will not enter into any
contractual arrangement with respect to the distribution of the Notes
except for this Agreement, the HC Crown Loan Agreement, the Letter
Agreement, the Indenture, and the Subordination Agreements.
(xi) CCA has not taken and will not take, directly or indirectly,
any action designed to cause or result in stabilization or manipulation of
the price of the Notes.
(xii) No authorization, approval, consent or license of any
governmental instrumentality or court (other than under United States
securities or state securities or "blue sky" laws and the rules and
regulations of the NASD), is required for the performance by CCA of its
obligations under this Agreement and the Indenture.
(b) HC Crown represents and warrants to and agrees with the
Placement Agent that:
(i) HC Crown has all corporate power and authority to execute,
deliver and perform its obligations under this Agreement, the Letter
Agreement and the HC Crown Loan Agreement.
(ii) As of the Closing Time, this Agreement and the Letter
Agreement will have been duly authorized, executed and delivered by HC
Crown and upon such execution by HC Crown (assuming the due authorization,
execution and delivery thereof by the other parties thereto) will
constitute the valid and binding obligations of HC Crown enforceable
against HC Crown in accordance with their respective terms, except as
enforcement thereof may be limited by bankruptcy, insolvency (including,
without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium (general or specific), liquidation, receivership
or similar laws reflecting enforcement of creditors' rights generally and
except as
-6-
<PAGE>
enforcement thereof is subject to general principles of equity (regardless
of whether enforcement is considered in a proceeding in equity or at law),
and except as any rights to indemnity and contribution may be limited by
federal and state securities laws and public policy considerations.
(iii) The performance of this Agreement and the consummation of
the transactions contemplated hereby will not result in a material breach
or violation by HC Crown of any of the terms or provisions of, or
constitute a material default by HC Crown under, any indenture, mortgage,
deed of trust, trust (constructive or other), loan agreement, lease,
franchise, license or other agreement or instrument to which HC Crown is a
party or by which HC Crown or any of its properties is bound, any statute,
or any judgment, decree, order, rule or regulation of any court or
governmental agency or body applicable to HC Crown or any of its
properties.
(iv) HC Crown has good and valid title to the Notes proposed to be
sold by HC Crown hereunder and full corporate power and authority to enter
into this Agreement and to sell, assign, transfer and deliver such Notes
hereunder.
(v) Assuming the Placement Agent acquires the Notes from HC Crown
in good faith and without notice of any adverse claim (as such term is
defined in Section 8-302 of the Uniform Commercial Code currently in effect
in the State of New York), upon delivery of such Notes and payment therefor
in accordance with the terms of the Placement Agreement, the Placement
Agent will have acquired good and valid title to such Notes, free and clear
of any pledges, liens, claims, encumbrances, security interests and other
adverse claims other than those created by the action or inaction of the
Placement Agent.
(vi) As of their respective dates, none of the Offering Memorandum
or any amendment or supplement thereto, and as of the Closing Time, the
Offering Memorandum, as amended or supplemented to such time, contained or
will contain an untrue statement of a material fact or omitted or will omit
to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading; except that this representation and warranty does not apply to
statements or omissions made in reliance upon and in conformity with
information furnished in writing or confirmed in writing (x) to CCA or HC
Crown by or on behalf of the Placement Agent
-7-
<PAGE>
expressly for use in the Offering Memorandum or (y) by or on behalf of CCA
expressly for use in the Offering Memorandum.
(vii) None of HC Crown, its affiliates (as such term is defined in
Rule 501(b) of Regulation D), or any person acting on the behalf of HC
Crown (exclusive of the Placement Agent) has engaged, in connection with
the offering of the Notes or any security of the same class or series as
the Notes, (A) in any form of general solicitation or general advertising
within the meaning of Rule 502(c) under the Securities Act or (B) in any
directed selling efforts within the meaning of Rule 902 under the
Securities Act in the United States in connection with the Notes being
offered and sold pursuant to Regulation S under the Securities Act, and
each of them has complied with the offering restrictions requirement of
Regulation S under the Securities Act, HC Crown has not entered and will
not enter into any contractual arrangement with respect to the distribution
of the Notes except for this Agreement, the Indenture, the Letter Agreement
and the HC Crown Loan Agreement.
(viii) None of HC Crown, its affiliates (as such term is defined
in Rule 501(b) of Regulation D under the Securities Act ("Regulation D")),
or any person acting on behalf of the foregoing (exclusive of the Placement
Agent) has, directly or indirectly, made offers or sales of any security,
or solicited offers to buy any security, under circumstances that would
require the registration of the Notes under the Securities Act.
(ix) HC Crown has not taken and will not take, directly or
indirectly, any action designed to or which has constituted or which might
reasonably be expected to cause or result in stabilization or manipulation
of the price of any security of CCA to facilitate the sale or resale of the
Notes.
(x) Assuming the accuracy of the representations and warranties
and compliance with the agreements of CCA set forth in Section 1 hereof and
of the Placement Agent in Section 3 hereof, it is not necessary in
connection with the offer, sale and delivery of the Notes to the Placement
Agent, or in connection with the initial resale of the Notes by the
Placement Agent in accordance with this Agreement, to register the Notes
under the Securities Act.
(xi) HC Crown is not required to be registered under the Investment
Company Act of 1940, as amended.
-8-
<PAGE>
(xii) No authorization, approval, consent or license of any
governmental instrumentality or court (other than under United States
securities or state securities or "blue sky" laws and the rules and
regulations of the NASD), is required for the performance by HC Crown of
its obligations under this Agreement and the Indenture.
(c) Any certificate signed by any officer of HC Crown and
delivered to the Placement Agent or to counsel for the Placement Agent shall be
deemed a representation and warranty by HC Crown to the Placement Agent as to
the matters covered thereby.
Section 2. Sale and Delivery to the Placement Agent; Closing. (a)
-------------------------------------------------
On the basis of the representations and warranties herein contained, and subject
to the terms and conditions herein set forth, HC Crown agrees to sell to the
Placement Agent, and the Placement Agent agrees to purchase from HC Crown, at
the purchase price of $87,711,000 an aggregate of $82,000,000 principal amount
of Notes.
(b) Payment of the purchase price for, and delivery of certificates
for, the Notes shall be made at the offices of Paul, Hastings, Janofsky & Walker
LLP, 399 Park Avenue, New York, New York 10022, at 10:00 A.M., eastern standard
time, on February 13, 1997 or such later date and time not more than two full
business days thereafter as the Placement Agent, HC Crown and CCA shall mutually
determine (such date and time of payment and delivery being herein called the
"Closing Time").
(c) Certificates for the Notes to be purchased by the Placement Agent
shall be in such denominations and registered in such names as the Placement
Agent may request in writing at least two full business days before the Closing
Time. The certificates for the Notes will be made available in New York City
for examination and packaging by the Placement Agent not later than 10:00 A.M.
on the business day immediately prior to the Closing Time.
Section 3. Resale of the Notes. The Placement Agent represents and
-------------------
warrants to, and agrees with, CCA and HC Crown that:
(a) it is a Qualified Institutional Buyer within the meaning of Rule
144A(a)(i) under the Securities Act and an "accredited investor" within the
meaning of Rule 501(a) under the Securities Act;
(b) it has not offered or sold, and will not offer or sell, any Notes
except (i) to persons whom it reasonably believes to be Qualified Institutional
Buyers, (ii) to a
-9-
<PAGE>
limited number of other institutional accredited investors whom it believes to
be "accredited investors" (as defined in Rule 501(a) (1), (2), (3) or (7) of
Regulation D) that, prior to their purchase of the Notes, deliver to it a letter
substantially in a form acceptable to CCA and HC Crown or (iii) to non-U,S,
persons outside the United States to whom it reasonably believes offers and
sales of the Notes may be made in reliance upon Regulation S under the
Securities Act;
(c) none of it, any of its affiliates, or any person acting on its or
their behalf has made or will make offers or sales of the Notes in the United
States by (i) means of any form of general solicitation or general advertising
(within the meaning of Regulation D) or (ii) in any manner involving a public
offering (within the meaning of Section 4(2) under the Securities Act) in the
United States or in any manner which does not comply with the provisions of the
Securities Act or the rules and regulations thereunder;
(d) in connection with the transactions described in Section
3(b)(iii), it will sell Notes in such transactions only in accordance with
Regulation S under the Securities Act and has not offered or sold, and will not
offer or sell, the Notes to, or for the account or benefit of, U.S. persons (i)
as part of its distribution at any time or (ii) otherwise until one year after
the Closing Time, and it will send to each distributor, dealer or other person
receiving a selling concession, fee or remuneration to which it sells the Notes
during the restricted period a confirmation or other notice setting forth the
restrictions on offers and sales of the Notes within the United States or to, or
for the account or benefit of, U.S. persons. Terms used in this paragraph have
the meanings given to them by Regulation S under the Securities Act;
(e) it (i) has not offered or sold and will not offer or sell any
Notes to persons in the United Kingdom, except to persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or payment) for the purposes of their businesses or
otherwise in circumstances which do not constitute an offer to the public in the
United Kingdom for purposes of the Public Offers of Securities Regulations 1995,
(ii) has complied and will comply with all applicable provisions of the
Financial Services Act 1986 of the United Kingdom with respect to anything done
by it in relation to the Notes in, from or otherwise involving the United
Kingdom, and (iii) has only issued or passed on and will only issue or pass on
in the United Kingdom any document in connection with the issue of the Notes to
a person who is of a kind described in Article 8 of the Financial Services Act
1986 (Investment Advertisements) (Exemptions) (No. 2) Order 1995 of the United
Kingdom or is a
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person to whom the document may otherwise lawfully be issued or passed on; and
(f) in the case of a non-bank subsequent purchaser of a Note acting
as a fiduciary for one or more third parties, in connection with an offer and
sale to such purchaser pursuant to clause (b) above, each such third party
shall, in the judgment of the Placement Agent, be an "accredited investor" or a
Qualified Institutional Buyer, as such terms are defined above, or a non-U.S.
person outside the United States.
Section 4. Certain Covenants of CCA and HC Crown. CCA and HC Crown
-------------------------------------
each severally (and not jointly) with respect to itself only covenants, to the
extent applicable, with the Placement Agent as follows:
(a) CCA will furnish to the Placement Agent, HC Crown and their
respective counsel, without charge, as many copies of the Preliminary Offering
Memorandum and the Offering Memorandum and any amendments or supplements thereto
as they may reasonably request (it being understood that CCA's ability to comply
with this clause (a) is subject to receipt of sufficient copies from the
financial printing firm, whose fees and expenses are being paid by or on behalf
of HC Crown).
(b) CCA will give the Placement Agent and HC Crown timely notice of
its intention to prepare any amendment or supplement to the Preliminary Offering
Memorandum or the Offering Memorandum, and will not distribute any such
amendment or supplement to which the Placement Agent or counsel for the
Placement Agent shall reasonably object.
(c) If at any time prior to completion of the distribution of the
Notes by the Placement Agent to purchasers who are not affiliates of the
Placement Agent (as determined by the Placement Agent) any event shall occur or
condition exist as a result of which it is necessary, in the reasonable opinion
of the Placement Agent, counsel for the Placement Agent, HC Crown, counsel for
HC Crown, CCA or counsel for CCA, to amend or supplement the Offering Memorandum
in order that the Offering Memorandum, as then amended or supplemented, will not
include an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, CCA will, subject to
paragraph (b) of this Section 4, promptly prepare such amendment or supplement
as may be necessary to correct such untrue statement or omission (in form and
substance reasonably agreed upon by counsel to the Placement Agent, counsel to
CCA and counsel to HC Crown), so that as so amended or supplemented, the
statements in the Offering Memorandum will
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not include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading and furnish to the
Placement Agent such number of copies of such amendment or supplement as the
Placement Agent may reasonably request (it being understood that CCA's ability
to comply with this clause (c) is subject to receipt of sufficient copies from
the financial printing firm, whose fees and expenses are being paid by or on
behalf of HC Crown), CCA agrees to notify the Placement Agent and HC Crown in
writing to suspend use of the Offering Memorandum as promptly as practicable
after the officers of CCA become aware of any event or circumstances which would
require an amendment or supplement to the Offering Memorandum pursuant to this
paragraph (c), and the Placement Agent and HC Crown hereby agree upon receipt of
such notice from CCA to suspend use of the Offering Memorandum until CCA has
amended or supplemented the Offering Memorandum to correct such misstatement or
omission.
(d) Notwithstanding any provision of paragraph (b) or (c) of this
Section 4 to the contrary, however, CCA's obligations under paragraphs (b) and
(c) of this Section 4 and the Placement Agent's and HC Crown's obligations under
paragraph (c) of this Section 4 shall terminate on the earlier to occur of (i)
the effective date of a registration statement with respect to the Notes filed
pursuant to the Letter Agreement and (ii) the date upon which the Placement
Agent and its affiliates cease to hold Notes acquired as part of their initial
distribution, but in any event (in the case of this clause (ii)) not later than
nine months from the Closing Time.
(e) None of CCA, HC Crown or any of their respective affiliates (as
defined in Rule 501(b) under the Securities Act), nor any person acting on
behalf of the foregoing, will engage in any form of general solicitation or
general advertising (within the meaning of Regulation D) in connection with any
offer or sale of the Notes in the United States, or engage in any directed
selling efforts (as defined in Rule 902 under the Securities Act) with respect
to the Notes prior to the effectiveness of a registration statement with respect
to the Notes, and each of them will comply with the offering restrictions
requirement of Regulation S with respect to the Notes. Terms used in this
clause (e) have the meanings ascribed to them by Regulation S. No covenant is
made hereby with respect to the conduct of the Placement Agent or its affiliates
(as such term is defined in Rule 501(b) under the Securities Act).
(f) None of CCA, HC Crown or any of their respective affiliates (as
defined in Rule 501(b) under the Securities Act), will, directly or indirectly,
make offers or
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sales of any securities, or solicit offers to buy any security, under
circumstances that would require the registration of the Notes under the
Securities Act. No covenant is made hereby with respect to the conduct of the
Placement Agent or its affiliates (as such term is defined in Rule 501(b) under
the Securities Act).
(g) Each Note will bear a legend substantially in the following form
until such legend shall no longer be necessary or advisable because the Notes
are no longer subject to the restrictions on transfer described herein:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR
--------------
SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS EXCEPT AS SET FORTH BELOW, BY ITS ACQUISITION HEREOF, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) or (7) UNDER THE SECURITIES
ACT) (AN "ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING
THIS SECURITY IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT WITHIN
THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE
TRANSFER THIS SECURITY, EXCEPT (A) TO THE ISSUER, OR ANY SUBSIDIARY THEREOF, (B)
INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH
RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR
HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE
OBTAINED FROM THE TRUSTEE OR REGISTRAR), (D) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE
SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE
144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND, IN CONNECTION WITH ANY TRANSFER OF
THIS SECURITY WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THE SECURITY, IF
THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER
MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE ISSUER SUCH
CERTIFICATIONS, WRITTEN LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM
MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, AS USED
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<PAGE>
HEREIN, THE TERMS "OFFSHORE TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE
THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT,
(h) The Placement Agent will arrange for the registration and
qualification of the Notes for offering and sale under the applicable securities
or "blue sky" laws of such states and other U.S. jurisdictions as the Placement
Agent may reasonably designate in connection with the resale of the Notes as
contemplated by this Agreement and the Offering Memorandum and will continue
such qualifications in effect for as long as may be necessary to complete the
distribution of the Notes; provided that in no event shall HC Crown be obligated
--------
to (i) qualify itself or CCA as a foreign corporation or as a dealer in
securities in any jurisdiction where it would not otherwise be required to so
qualify but for this Section 4(i), (ii) file any general consent to service of
process in any jurisdiction where it is not at the Closing Tie then so subject,
(iii) subject itself to taxation in any such jurisdiction if it is not so
subject or (iv) register the Notes under the Securities Act except in accordance
with the Letter Agreement and the Indenture, CCA and HC Crown, as applicable,
shall promptly advise the Placement Agent of the receipt by CCA or HC Crown of
any notification with respect to the suspension of the qualification or
exemption from qualification of the Notes for offering or sale in any
jurisdiction or the institution of any proceeding for such purpose.
Section 5. Payment of Expenses. HC Crown will pay all costs and
-------------------
expenses incident to the performance of the obligations under this Agreement,
including (a) the preparation and printing of the Preliminary Offering
Memorandum and the Offering Memorandum (including financial statements and
exhibits) and any amendments or supplements thereto, and the cost of delivery
thereto to the Placement Agent, (b) the preparation, issuance, printing and
distribution of the Notes and any survey of state securities or "blue sky" laws
or legal investment memoranda ("Blue Sky Survey"), (c) the delivery of the Notes
to the Placement Agent, including any stock transfer taxes payable upon the sale
of the Notes to the Placement Agent, (d) the delivery of the Notes by the
Placement Agent to the purchasers thereof, including any stock transfer taxes
payable upon the sale of the Notes by the Placement Agent, (e) the reasonable
fees and disbursements of CCA's counsel (Paul, Hastings, Janofsky & Walker LLP
and Debevoise & Plimpton, it being understood that HC Crown's obligation to
reimburse the fees and disbursements of Debevoise & Plimpton shall not exceed
$40,000) and accountants, (f) the qualification of the Notes under the
applicable state securities or "blue sky" laws in accordance with Section 4(i)
hereof, including all filing fees and
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<PAGE>
reasonable fees and disbursements of counsel for the Placement Agent in
connection therewith and in connection with the Blue Sky Survey, (g) any filing
fees in connection with any filing for review of the offering with the National
Association of Securities Dealers, Inc. ("NASD"), (h) any fees charged by rating
agencies for rating the Notes, (i) the fees and expenses of the transfer agent
and registrar for the Notes including the reasonable fees and disbursements of
counsel for such transfer agent and registrar in connection herewith and (j) all
fees and expenses of the Placement Agent including the reasonable fees and
disbursements of counsel for the Placement Agent.
If the sale of the Notes provided for herein is not consummated
because this Agreement is terminated pursuant to Section 10(a) (i) hereof or
because any condition to the obligations of the Placement Agent set forth in
Section 6 hereof is not satisfied, other than by reason of a default by the
Placement Agent hereunder, HC Crown shall reimburse the Placement Agent promptly
upon demand for all reasonable out-of-pocket expenses (including reasonable fees
and disbursements of counsel to the Placement Agent) that shall have been
incurred by it in connection with the proposed purchase and sale of the Notes;
provided, however, that in no event shall CCA or any of its affiliates be
obligated with respect to any of such expenses (subject to the immediately
preceding paragraph).
Section 6. Conditions of Placement Agent's Obligations. The
-------------------------------------------
obligations of the Placement Agent to purchase and pay for the Notes that it has
agreed to purchase pursuant to this Agreement are subject to the accuracy in all
material respects of the representations and warranties of CCA and HC Crown
contained herein or in certificates of any officer of CCA, HC Crown or any of
their respective subsidiaries delivered pursuant to the provisions hereof, to
the performance by CCA and HC Crown of their respective obligations hereunder,
and to the following conditions:
(a) At the Closing Time, the Placement Agent and HC Crown shall have
received a signed opinion of Paul, Hastings, Janofsky & Walker LLP, counsel for
CCA, dated as of the Closing Time, in form and substance reasonably satisfactory
to counsel for the Placement Agent and HC Crown, to the effect that:
(i) CCA is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware with corporate power
and authority under such laws to own, lease and operate its properties and
conduct its business, as described in the Offering Memorandum.
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<PAGE>
(ii) CCA is duly qualified to transact business as a foreign
corporation and is in good standing in Massachusetts and California.
(iii) This Agreement, the Letter Agreement and the Indenture have
each been duly authorized, executed and delivered by CCA and constitute a
valid and binding agreement of CCA enforceable against CCA in accordance
with their respective terms, except to the extent that (a) enforcement
thereof may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium, liquidation, receivership, fraudulent conveyance or other
similar laws now or hereafter in effect relating to creditors' rights
generally, (ii) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity) and (iii)
usury laws, (b) any right to indemnity and contribution may be limited by
state or federal securities laws and public policy considerations, (c) any
waiver of stay or extension or usury laws contained in the Indenture may be
unenforceable and (d) any liquidated damages provisions contained therein
may be unenforceable, in whole or in part.
(iv) The Initial Notes have been duly authorized, executed, and
delivered and, when authenticated by the Trustee, will be validly issued
and constitute valid and binding obligations of CCA, entitled to the
benefits of the Indenture and enforceable against CCA in accordance with
their terms, except that (a) enforceability thereof may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium, liquidation,
receivership, fraudulent conveyance or other similar laws now or hereafter
in effect relating to creditors' rights generally, (ii) general principles
of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity) and (iii) usury laws, (b) any right to
indemnity and contribution may be limited by state or federal securities
laws and public policy considerations, (c) any waiver of stay or extension
or usury laws contained in the Indenture may be unenforceable and (d) any
liquidated damages provisions contained therein may be unenforceable, in
whole or in part,
(v) To the knowledge of such counsel, no authorization, approval
consent or license of any governmental instrumentality or court that, in
the opinion of such counsel, is normally applicable to transactions of the
type contemplated by this Agreement (other than under United States
securities or state securities or "blue sky" laws and the rules and
regulations of the NASD, as to which no opinion need be
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<PAGE>
expressed), is required for the performance by CCA of its obligations under
this Agreement and the Indenture.
(vi) The execution and delivery by CCA of, and its performance
under this Agreement, the Indenture, and the Letter Agreement, and the
consummation by CCA of the transactions contemplated hereby and thereby, do
not and will not result in any violation of the charter or By-Laws of CCA,
and do not and will not conflict in any material respect with, or result in
a material breach of any of the terms or provisions of, or constitute a
material default under, or result in the creation or imposition of any
material lien, charge or encumbrance upon any property or assets of CCA
under (A) any agreement or instrument of which such counsel is aware to
which CCA is a party identified in such counsel's opinion, (B) any existing
applicable law (other than state securities Blue Sky laws), or (C) to the
knowledge of such counsel, any judgment, order or decree of which such
counsel is aware under applicable laws of any New York, Delaware or federal
government, governmental instrumentality or court having jurisdiction over
CCA or its properties. Such counsel need express no opinion, however, as
to whether the execution, delivery and performance by CCA of any of the
agreements executed and delivered in connection with the transactions
contemplated hereby will constitute a violation of or a default under any
covenant, restriction or provision with respect to financial ratios or
tests or any aspect of the financial condition or results of operations of
CCA and the Restricted Subsidiaries.
(vii) When the Notes were issued such securities were not of the
same class (within the meaning of Rule 144A under the Securities Act) as
securities of CCA listed on a national securities exchange registered under
Section 6 of the Exchange Act or quoted in a U.S. automated inter-dealer
quotation system.
(viii) The terms of the Indenture, the Letter Agreement and the
Notes have been reviewed by such counsel and conform in all material
respects to the summary descriptions thereof in the Offering Memorandum.
(ix) Statements set forth in the Offering Memorandum, insofar as
such statements constitute a summary of the legal matters, documents or
legal proceedings or refer to statements of regulation, law or legal
conclusions, fairly present the information called for with respect to such
legal matters, documents or legal proceedings and statements, and are
accurate in all material respects.
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<PAGE>
In addition, such opinion shall include a statement, subject to such
qualifications as are customarily applied to such statements by such counsel,
that such counsel have participated in the preparation of the Offering
Memorandum and in conferences with officers and other representatives of CCA,
representatives of the independent public accountants for CCA and certain of its
affiliates, officers and representatives of HC Crown and with the Placement
Agent's representatives at which the contents of the Offering Memorandum and
related matters were discussed and, although such counsel need not pass upon or
assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Offering Memorandum, on the basis of the foregoing,
no facts have come to the attention of such counsel that have caused them to
believe that the Offering Memorandum or any amendment or supplement thereto
(except for the financial statements, notes, schedules, statistical and other
financial data included therein or omitted therefrom, as to which such counsel
need express no statement) at the time any such amended or supplemented Offering
Memorandum was issued or at the Closing Time, contained or contains an untrue
statement of a material tact or omitted or omits to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except that such counsel need express no opinion or belief with
respect to (i) the financial statements, notes, schedules, statistical and other
financial data included therein or omitted therefrom or (ii) events, facts or
circumstances relating to the Crown Systems during the period prior to January
18, 1995.
In giving such opinion, such counsel may state that, insofar as such
opinion involves factual matters, they have relied, to the extent they deem
proper, upon the representations and warranties contained in this Agreement,
certificates of officers of CCA and its affiliates, and certificates of public
officials.
(b) At the Closing Time, the Placement Agent shall have received a
signed opinion of Dow, Lohnes & Albenson, counsel to HC Crown, dated as of the
Closing Time, in form and substance reasonably satisfactory to counsel for the
Placement Agent, to the effect that:
Assuming and based solely upon (a) the accuracy of the representations
and warranties of CCA and HC Crown set forth in Section 1 of this Agreement
and of the Placement Agent set forth in Section 3 of this Agreement, (b)
the due performance by CCA and HC Crown of the covenants and agreements set
forth in Section 4 of this Agreement and the due performance by the
Placement Agent of the covenants and agreements set forth in Section 3 of
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this Agreement, (c) compliance by the Placement Agent with the offering and
transfer procedures and restrictions described in the Offering Memorandum,
(d) the accuracy of the representations and warranties made in accordance
with this Agreement and Offering Memorandum by purchasers to whom the
Placement Agent initially resells Notes and (e) that purchasers to whom the
Placement Agent initially resells Notes receive a copy of the Offering
Memorandum prior to such sale, the offer, sale and delivery of the Notes to
the Placement Agent in the manner contemplated by this Agreement and the
Offering Memorandum and the initial resale of the Notes by the Placement
Agent in the manner contemplated in the Offering Memorandum and this
Agreement, do not require registration under the Securities Act, it being
understood that such counsel need express no opinion as to any subsequent
resale of any Notes.
In addition, such opinion shall include a statement, subject to such
qualifications as are customarily applied to such statements by such counsel,
that such counsel have participated in the preparation of the Offering
Memorandum and in conferences with officers and other representatives of HC
Crown, officers and representatives of CCA and its counsel, representatives of
the independent public accountants for CCA, and with the Placement Agent's
representatives at which the contents of the Offering Memorandum and related
matters were discussed and, although such counsel need not pass upon or assume
any responsibility for the accuracy, completeness or fairness of the statements
contained in the Offering Memorandum, on the basis of the foregoing, no facts
have come to the attention of such counsel that have caused them to believe that
the Offering Memorandum or any amendment or supplement thereto (except for the
financial statements, schedules, statistical and other financial data included
therein or omitted therefrom, as to which such counsel need express no
statement) at the time any such amended or supplemented Offering Memorandum was
issued or at the Closing Time, contained or contains an untrue statement of a
material fact or omitted or omits to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, except that such
counsel need express no opinion or belief with respect to the financial
statements, schedules, statistical and other financial data included therein or
omitted therefrom.
In giving such opinion, such counsel may state that, insofar as such
opinion involves factual matters, they have relied, to the extent they deem
proper, upon representations, warranties and certifications made by HC Crown and
its
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officers and representatives and upon certificates of public officials.
(c) At the Closing Time, the Placement Agent shall have received a
signed opinion of Dwight Arn, in-house counsel to HC Crown, dated as of the
Closing Time, in form and substance reasonably satisfactory to counsel for the
Placement Agent, to the effect that:
(i) HC Crown is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware,
(ii) HC Crown has full corporate power and authority to enter into
this Agreement and to sell, assign, transfer and deliver such Notes
hereunder,
(iii) Assuming the Placement Agent acquires the Notes from HC
Crown in good faith and without notice of any adverse claim (as such term
is defined in Section 8-302 of the Uniform Commercial Code currently in
effect in the State of New York), upon delivery of such Notes and payment
therefor in accordance with the terms of the Placement Agreement, the
Placement Agent will have acquired good and valid title to such Notes, free
and clear of any adverse claims other than those created by the action or
inaction of the Placement Agent,
(iv) This Agreement and the Letter Agreement have each been duly
authorized, executed and delivered by HC Crown and constitute a valid and
binding agreement of HC Crown enforceable against HC Crown in accordance
with its respective terms, except to the extent that (a) enforcement hereof
may be limited by (i) bankruptcy, insolvency, reorganization, moratorium
(general or specific), liquidation, receivership, fraudulent conveyance or
other similar laws now or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity), (b) the
right to indemnity and contribution may be limited by state or federal
securities laws or public policy and (c) any liquidated damages provisions
contained therein ma! he unenforceable, in whole or in part,
(v) The execution and delivery by HC Crown of, and its performance
under, this Agreement, the Letter Agreement and the HC Crown Loan Agreement
and the consummation by HC Crown of the transactions contemplated hereby
and thereby, do not and will not result in any violation of the charter or
By-Laws of HC Crown, and do
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not and will not conflict in any material respect with, or result in a
material breach of any of the terms or provisions of, or constitute a
material default under, or result in the creation or imposition of any
material lien, charge or encumbrance upon any property or assets of HC
Crown under (A) an! agreement or instrument to which HC Crown is a party
specifically identified in such counsel's opinion, (B) any existing federal
law or Missouri law (excluding state securities or "blue sky" laws and the
rules and regulations of the National Association of Securities Dealers, as
to which no opinion need be expressed), or (C) to the knowledge of such
counsel, any judgment, order or decree of any New York, Delaware, Missouri
or federal government, governmental instrumentality or court having
jurisdiction over HC Crown or its properties (excluding state securities or
"blue sky" laws and the rules and regulations of the National Association
of Securities Dealers, as to which no opinion need be expressed), Such
counsel need express no opinion, however, as to whether the execution,
delivery and performance by HC Crown of any of the agreements executed and
delivered in connection with the transactions contemplated hereby will
constitute a violation of or a default under any covenant, restriction or
provision with respect to financial ratios or tests or any aspect of the
financial condition or results of operations of HC Crown,
(vi) HC Crown is not required to be registered under the Investment
Company Act of 1940, as amended,
(vii) To the knowledge of such counsel, no authorization,
approval, consent or license of any governmental instrumentality or court
that, in the opinion of such counsel, is normally applicable to
transactions of the type contemplated by this Agreement (other than under
United States securities or state securities or "blue sky" laws and the
rules and regulations of the NASD, as to which no opinion need be
expressed), is required for the performance by HC Crown of its obligations
under this Agreement and the Indenture,
Such opinion shall be to such effect with respect to other legal
matters relating to this Agreement and the Notes as counsel for the Placement
Agent may reasonably request, In giving such opinion, such counsel may state
that, insofar as such opinion involves factual matters they have relied, to the
extent they deem proper, upon certificates of public officials and affiliates of
HC Crown.
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(d) At the Closing Time, (i) the Offering Memorandum, as it may then
be amended or supplemented, shall not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they are made, not misleading, (ii) except as may be disclosed in the Offering
Memorandum, there shall not have been, since the respective dates as of which
information is given in the Offering Memorandum, any material adverse change in
the condition (financial or otherwise), earnings, business affairs or business
prospects of CCA, and its subsidiaries, considered as one enterprise, whether or
not arising in the ordinary course of business, (iii) CCA and HC Crown, as
applicable, shall each have complied in all material respects with all
agreements and satisfied in all material respects all conditions on its part to
be performed or satisfied at or prior to the Closing Time and (iv) the
representations and warranties of CCA and HC Crown set forth in Section 1(a) and
Section 1(c) shall be accurate in all material respects as though expressly made
at and as of the Closing Time. At the Closing Time, the Placement Agent shall
have received (i) a certificate of the Senior Vice President, Finance and
Acquisition of CCA, dated as of the Closing Time, to such effect, except that
such certificate need not relate to any events, facts or circumstances relating
to the Crown Systems during the period prior to January 18, 1995 and (ii) a
certificate of the Chief Executive Officer and the Chief Financial Officer of HC
Crown, dated as of the Closing Time, to such effect, except that such
certificate need only relate to any events, facts or circumstances relating to
the Crown Systems during the period prior to January 18, 1995 and any other
information furnished to CCA by HC Crown expressly for use in the Offering
Memorandum (or any amendment or supplement thereto), or any Preliminary Offering
Memorandum,
(e) At the time that this Agreement is executed by CCA, the Placement
Agent shall have received from Arthur Andersen LLP a letter, dated such date, in
form and substance reasonably satisfactory to the Placement Agent, confirming
that they are independent public accountants with respect to CCA within the
meaning of the Securities Act and the applicable published rules and regulations
thereunder, and otherwise reasonably satisfactory to the Placement Agent (it
being understood that different offices of Arthur Andersen LLP are the auditors
of CCA and HC Crown),
(f) At the Closing Time, the Placement Agent shall have received from
Arthur Andersen LLP a letter, in form and substance reasonably satisfactory to
the Placement Agent and dated as of the Closing Time, to the effect that they
reaffirm the statements made in the letters furnished pursuant to Section 6(e)
hereof,
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(g) All proceedings taken by CCA and HC Crown, at or prior to the
Closing Time in connection with the authorization and sale of the Notes as
contemplated in this Agreement shall be reasonably satisfactory in form and
substance to the Placement Agent and to counsel for the Placement Agent,
(h) At the Closing Time, each of this Agreement, the Letter Agreement
and the Indenture, shall have been executed and delivered by the parties thereto
and shall be in full force and effect,
(i) At the Closing Time, there shall not be any pending or threatened
legal or governmental proceedings against CCA or HC Crown with respect to any of
the transactions contemplated in this Agreement other than such pending or
threatened legal or governmental proceeding which would not reasonably be deemed
to cause a material adverse effect on CCA or the transactions contemplated
herein,
If any of the conditions specified in this Section 6 shall not have
been fulfilled when and as required by this Agreement, this Agreement may be
terminated by the Placement Agent on notice to CCA and HC Crown at any time at
or prior to the Closing Time, and such termination shall be without liability of
any party to any other party, except as provided in Section S hereof,
Notwithstanding any such termination, the provisions of Sections 7 and 8 hereof
shall remain in effect, The Placement Agent may in its sole discretion waive any
conditions to the obligations of the Placement Agent hereunder.
Section 7. Indemnification
---------------
(a) CCA agrees to indemnify and hold harmless the Placement Agent, HC
Crown, their respective officers, directors, members and stockholders, and each
person, if any, who controls any of them within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act to the extent and in the manner
set forth in clauses (i), (ii) and (iii) below:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of an untrue statement or alleged
untrue statement of a material fact included in any Preliminary Offering
Memorandum or the Offering Memorandum (or any amendment or supplement
thereto), including all documents incorporated therein by reference, or the
omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not
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<PAGE>
misleading, but only after final judgment has been rendered in a litigation
or proceeding in respect thereof;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding b- any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
--------
7(d) below) any such settlement is effected with the prior written consent
of CCA; and
(iii) against any and all expense whatsoever (including, subject
to Section 7(d) hereof, the reasonable fees and disbursements of counsel
chosen by the Placement Agent and HC Crown), reasonably incurred in
investigating preparing or defending against any litigation, or
investigation or proceeding by any governmental agency or body, commenced
or threatened, or any claim whatsoever based upon any such untrue statement
or omission, or any such alleged untrue statement or omission, to the
extent such expense is not paid under clause (i) or (ii) above because the
litigation, investigation or proceeding was terminated without liability
prior to final judgment or settlement;
provided, however, that the foregoing indemnity agreement does not apply to any
loss, liability, claim, damage or expense to the extent arising (i) out of any
untrue statement or omission or alleged untrue statement or omission in respect
of events, facts or circumstances relating to the Crown Systems during the
period prior to January 18, 1995, (ii) out of an untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in conformity
with written information furnished to CCA or HC Crown by the Placement Agent or
HC Crown expressly for use in the Offering Memorandum (or any amendment or
supplement thereto), or any Preliminary Offering Memorandum, or (iii) any breach
by the Placement Agent of any representation, warranty or other provision of
this Agreement; provided further that the foregoing indemnification with respect
-------- -------
to any Preliminary Offering Memorandum shall not inure to the benefit of the
Placement Agent (or any person controlling the Placement Agent) from whom the
person asserting any such losses, claims, damages or liabilities purchased any
of the Notes if a copy of the Offering Memorandum (as then amended or
supplemented if CCA shall have furnished any amendments or supplements thereto)
was not sent or given by or on behalf of the Placement Agent on the initial
resale to such person, if such is required by
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<PAGE>
law, at or prior to the written confirmation of the sale of such Notes to such
person and if the Offering Memorandum (as so amended or supplemented) would have
cured the defect giving rise to such loss, claim, damage or liability.
(b) HC Crown agrees to indemnify and hold harmless the Placement
Agent, CCA, their respective directors, officers, partners, stockholders and
members, and each person, if any, who controls the Placement Agent within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act to
the extent and in the manner set forth in clauses (i!, (ii) and (iii) below:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of an untrue statement or alleged
untrue statement of a material fact included in any Preliminary Offering
Memorandum or the Offering Memorandum (or any amendment or supplement
thereto), including all documents incorporated therein by reference, or the
omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading, but only after final judgment
has been rendered in a litigation or proceeding in respect thereof;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
--------
7(d) below) any such settlement is effected with the prior written consent
of HC Crown;
(iii) against any and all expense whatsoever (including, subject
to Section 7(d) hereof, the reasonable tees and disbursements of counsel
chosen by the Placement Agent), reasonably incurred in investigating,
preparing or defending against any litigation, or investigation or
proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission, to the extent such expense
is not paid under clause (i) or (ii) above because the litigation,
investigation or proceeding was terminated without liability prior to final
judgment or settlement; and
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<PAGE>
(iv) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any breach by the Placement Agent
of its representations and warranties contained in Section 3(c)(ii) hereof,
provided, however, that the indemnification and holding harmless provided
for in this Section 7(b)(iv) shall only be for the benefit of CCA, its
directors, officers, partners, stockholders and members, and each person,
if any, who controls CCA within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act:
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising (i) in respect of the
indemnification and holding harmless of-CCA, its directors, officers, partners,
stockholders and members, and each person, if any, who controls CCA within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
out of any untrue statement or omission or alleged untrue statement or omission
in respect of events, facts or circumstances relating to the Crown Systems
during the period subsequent to January 18, 1995, other than untrue statements
or omissions, or alleged untrue statements or omissions, made in the Offering
Memorandum (or any amendment or supplement thereto) or any Preliminary Offering
Memorandum in reliance upon and in conformity with written information furnished
to CCA by the HC Crown expressly for use in the Offering Memorandum (or any
amendment or supplement thereto), or such Preliminary Offering Memorandum, (ii)
out of an untrue statement or omission or alleged untrue statement or omission
made in reliance upon and in conformity with written information furnished to
CCA or HC Crown by the Placement Agent expressly for use in the Offering
Memorandum (or any amendment or supplement thereto), or any Preliminary Offering
Memorandum: provided, further that the foregoing indemnification with respect to
-------- -------
any Preliminary Offering Memorandum shall not inure to the benefit of the
Placement Agent (or any person controlling the Placement Agent) from whom the
person asserting any such losses, claims, damages or liabilities purchased any
of the Notes if a copy of the Offering Memorandum (as then amended or
supplemented if HC Crown or CCA shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of the Placement
Agent on the initial resale to such person, if such is required by law, at or
prior to the written confirmation of the sale of such Notes to such person and
if the Offering Memorandum (as so amended or supplemented) would have cured the
defect giving rise to such loss, claim, damage or liability.
(c) The Placement Agent agrees to indemnify and hold harmless CCA and
HC Crown, their respective directors,
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<PAGE>
officers, partners, stockholders and members and each person, if any, who
controls any of them within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, against any and all loss, liability, claim,
damage and expense described in the indemnity agreement in Section 7(a) hereof,
as incurred, but only with respect to (i) untrue statements or omissions, or
alleged untrue statements or omissions, made in the Offering Memorandum (or any
amendment or supplement thereto) or any Preliminary Offering Memorandum in
reliance upon and in conformity with written information furnished to CCA or HC
Crown by the Placement Agent expressly for use in the Offering Memorandum (or
any amendment or supplement thereto), or such Preliminary (Offering Memorandum
or (ii) any breach by the Placement Agent of the representations, warranties or
other provisions of this Agreement
(d) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve it from any liability that it may have otherwise than on
account of this indemnity agreement, An indemnifying party may participate at
its own expense in the defense of such action In no event shall the indemnifying
party or parties be liable for the fees and expenses of more than one counsel
for all indemnified parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, if it so elects within a reasonable time
after receipt of such notice, an indemnifying party, jointly with any other
indemnifying parties receiving such notice, may assume the defense of such
action with counsel chosen by it (subject to the approval of the indemnified
parties defendant in such action, which approval shall not be unreasonably
withheld or delayed) unless such indemnified parties reasonably object to such
assumption on the ground that there may be legal defenses available to them
which are different from or are in conflict with those available to such
indemnifying party, If an indemnifying party assumes the defense of such action,
the indemnifying parties shall not be liable for any fees and expenses of
counsel for the indemnified parties incurred thereafter in connection with such
action.
Section 8. Contribution. In order to provide for just and equitable
------------
contribution in circumstances under which the indemnity provided for in Section
7 is for any reason held to be unenforceable by the indemnified parties although
applicable in accordance with its terms, CCA, HC Crown and the Placement Agent
shall contribute to the aggregate losses, liabilities, claims, damages and
expenses of the nature contemplated by such indemnity incurred by CCA, HC Crown,
and
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<PAGE>
the Placement Agent, as incurred, in such proportions that (a) the Placement
Agent is responsible for that portion represented by the percentage that the
Placement Agent's Discount appearing on the cover page of the Offering
Memorandum bears to the offering price appearing thereon and (b) CCA and HC
Crown are severally responsible for the balance on the same basis, if at all, as
each of them would have been obligated to provide indemnification pursuant to
Section 7; provided, however, that no person guilty of fraudulent
--------- --------
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation, for purposes of this Section each person, if any,
who controls the Placement Agent within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act shall have the same rights to
contribution as the Placement Agent, and each director and officer of CCA and HC
Crown and each person who controls CCA or HC Crown within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act shall have the same
rights to contribution as CCA or HC Crown, as the case may be,
Section 9. Representations, Warranties and Agreements to Survive
-----------------------------------------------------
Delivery, The representations, warranties, indemnities, agreements and other
- ---------
statements of CCA and HC Crown or their officers and of the Placement Agent or
its officers set forth in or made pursuant to this Agreement will remain
operation and in full force and effect regardless of any investigation made by
or on behalf of CCA, HC Crown, the Placement Agent or any controlling person
thereof, and will survive delivery of and payment for the Notes.
Section 10. Termination of Agreement. (a) The Placement Agent may
------------------------
terminate this Agreement, by notice to HC Crown, at any time at or prior to the
Closing Time (i) if there has been, since the respective dates as of which
information is given in the Offering Memorandum, any material adverse change in
the condition (financial or otherwise), earnings, business affairs or business
prospects of CCA and its subsidiaries, considered as one enterprise, whether or
not arising in the ordinary course of business, (ii) if there has occurred any
material adverse change in the financial markets in the United States or
internationally or any outbreak of hostilities or escalation of existing
hostilities or other calamity or crisis the effect of which on the financial
markets of the United States or internationally is such as to make it, in the
reasonable judgment of the Placement Agent, impracticable to market the Notes,
or enforce contracts for the sale of the Notes or (iii) if a banking moratorium
has been declared by either federal or New York State authorities, If this
Agreement is terminated pursuant to this Section, such
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<PAGE>
termination shall be without liability of any party to any other party, except
to the extent provided in Section 5, Notwithstanding any such termination, the
provisions of Sections 7 and 8 shall remain in effect.
This Agreement may also be terminated pursuant to the provisions of
Section 6, with the effect stated in such Section.
Section 11. Notices. All notices and other communications under this
-------
Agreement shall be in writing and shall be deemed to have been duly given, upon
receipt, if delivered, mailed or transmitted by any standard form of
telecommunication, Notices to the Placement Agent shall be directed to the
Placement Agent at 230 Park Avenue, New York, New York 10269 (telecopier no.:
(212) 692-9608), attention of B. Andrew H. Spence; notices to CCA shall be
directed to it at CCA Holdings Corp., 12444 Powerscourt Drive, Suite 400, St.
Louis, Missouri 63131 (telecopier no.: (314) 965-8793), attention of Jerald L.
Kent, with a copy to the General Counsel; and notices to HC Crown shall be
directed to it at HC Crown Corp., 2501 McGee, Kansas City, Missouri 64141
(telecopier no.: (816) 274-7171), attention of Dwight Arn, Esq. Copies of all
notices shall be directed to Schulte Roth & Zabel LLP, 900 Third Avenue, New
York, New York 10022 (telecopier no.: (212) 593-5955), attention of Burton
Lehman, to Dow, Lohnes & Albertson PLLC, 1200 New Hampshire Avenue, N.W.,
Washington, D.C. 20036 (telecopier no. (202) 776-2222), attention of Leonard J.
Baxt, Esq. and to Paul, Hastings, Janofsky & Walker LLP, 399 Park Avenue, New
York, New York 10022 (telecopier no.:(212) 319-4090), attention of Joel M.
Simon, Esq.
Section 12. Parties. This Agreement is made solely for the benefit
-------
of the Placement Agent, CCA and HC Crown and, to the extent expressed, any
person who controls CCA, HC Crown or the Placement Agent within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, and the
directors of CCA, HC Crown, their partners, stockholders, members, officers,
employees and trustees, and their respective executors, administrators,
successors and assigns and no other person shall acquire or have any right under
or by virtue of this Agreement. The term "successors and assigns" shall not
include any purchaser, as such purchaser, from the Placement Agent of the Notes.
The parties acknowledge and agree that the Placement Agent has been engaged by
and has acted and will be acting solely on behalf of HC Crown,
Section 13. Governing Law and Time. This Agreement shall be governed
----------------------
by the laws of the State of New York, without effect to the provisions thereof
relating to conflicts
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<PAGE>
of law. Specified times of the day refer to New York City time.
Section 14. Counterparts. This Agreement may be executed in one or
------------
more counterparts and when a counterpart has been executed by each party, all
such counterparts taken together shall constitute one and the same agreement.
If the foregoing is in accordance with the Placement Agent's
understanding of the agreement, please sign and return to us a counterpart
hereof, whereupon this instrument will become a binding agreement among CCA, HC
Crown and the Placement Agent in accordance with its terms.
Very truly yours,
CCA HOLDINGS CORP.
By: /s/ Kent Kalkwarf
_________________________
Name: Kent Kalkwarf
Title: Vice President
HC CROWN CORP.
By: /s/ Dwight Arn
_________________________
Name: Dwight Arn
Title: Vice President
Confirmed and accepted as of
the date first above written:
FURMAN SELZ LLC
By: /s/ William A. Shutzer
____________________________
Name: William A. Shutzer
Title: Executive Vice President
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<PAGE>
EXHIBIT 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION OF
CCA HOLDINGS CORP.
CCA Holdings Corp., a corporation organized and existing under the
laws of the State of Delaware (the "Corporation"), hereby certifies as follows:
1. The name of the Corporation is CCA Holdings Corp.
2. The original Certificate of Incorporation of the Corporation was
filed with the Secretary of State of the State of Delaware on November 17, 1994.
3. This Amended and Restated Certificate of Incorporation restates
and further amends the Certificate of Incorporation of the Corporation as
heretofore amended and has been duly adopted by the Board of Directors and
approved by the stockholders of the Corporation in accordance with the
provisions of Sections 242 and 245 of the General Corporation Law of the State
of Delaware. The text of the Certificate of Incorporation as amended and
restated shall be read in full as follows:
1. The name of the Corporation is CCA Holdings Corp.
2. The address of its registered office in the State of Delaware is
the Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle
County, Delaware 19801. The name of its registered agent at such address
is The Corporation Trust Company.
3. The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
4. The total number of shares of all classes of stock which the
Corporation shall have authority to issue is One Hundred Twenty Five
Thousand (125,000) shares, consisting of One Hundred Thousand (100,000)
shares of Class A Voting Common Stock, par value $.01 per share (the "Class
A Common Stock"), Twenty Thousand (20,000) shares of Class B Voting Common
Stock, par value $.01 per
<PAGE>
share (the "Class B Common Stock"), and Five Thousand (5,000) shares of
Class C Non-Voting Common Stock, par value $.01 per share (the "Class C
Common Stock").
A. Voting Rights of Common Stock. Except as otherwise provided herein or
-----------------------------
may otherwise be required by law, (i) the Class C Common Stock shall have
no voting rights and the holders of Class A Common Stock and Class B Common
Stock shall be entitled to one vote per share on all matters to be voted on
by the stockholders of the Corporation and (ii) the holders of the Class A
Common Stock and the Class B Common Stock shall vote together as a single
class with respect to all matters. Except as otherwise provided herein,
all shares of Class A Common Stock, Class B Common Stock and Class C Common
Stock shall be identical and shall entitle the holders thereof to the same
rights and privileges.
B. Dividend Rights of Common Stock. Subject to any other provisions of
-------------------------------
this Amended and Restated Certificate of Incorporation, as it may be
amended from time to time, holders of the Class A Common Stock, the Class B
Common Stock and the Class C Common Stock shall be entitled to receive such
dividends and other distributions in cash, in property or in shares of
capital stock of the Corporation as may be declared thereon by the Board of
Directors of the Corporation from time to time out of assets or funds of
the Corporation legally available therefor; provided, however, that if
-------- -------
dividends are declared which are payable in shares of any class of Common
Stock, dividends will be declared which are payable at the same rate on
each class of Common Stock, and share dividends payable to holders of each
class will be payable only in shares of such class.
C. Liquidation Rights of Common Stock.
----------------------------------
(i) Preference of Class A Common Stock and Class C Common Stock. In
-----------------------------------------------------------
the event of any liquidation, dissolution or winding up of the Corporation,
whether
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<PAGE>
voluntary or involuntary, the holders of the Class A Common Stock and the
Class C Common Stock then outstanding shall be entitled to be paid out of
the assets of the Corporation available for distribution to its
stockholders, whether such assets are capital, surplus or earnings, before
any payment or declaration and setting apart for payment of any amount
shall be made in respect of the Class B Common Stock, an amount equal to
$1,000.00 per share plus an amount equal to all declared and unpaid
dividends, if any, thereon, shall be tendered to the holders of the Class A
Common Stock and the Class C Common Stock with respect to such liquidation,
dissolution or winding up. If upon any liquidation, dissolution, or winding
up of the Corporation, whether voluntary or involuntary, the assets to be
distributed to the holders of the Class A Common Stock and the Class C
Common Stock shall be insufficient to permit the payment to such
stockholders of the full preferential amounts aforesaid, then all of the
assets of the Corporation to be distributed shall be distributed ratably to
the holders of the Class A Common Stock and the Class C Common Stock on the
basis of the number of shares of Class A Common Stock or Class C Common
Stock, as the case may be, held.
(ii) Preference of Class B Common Stock. After the payment or
----------------------------------
distribution to the holders of the Class A Common Stock and the Class C
Common Stock of the full preferential amounts as provided in the preceding
paragraph (i), in the event of any liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary, the holders of the
shares of Class B Common Stock then outstanding shall be entitled to be
paid out of the assets of the Corporation available for distribution to its
stockholders, whether such assets are capital, surplus or earnings, before
any further payment to the holders of the Class A Common Stock and the
Class C Common Stock, an amount equal to $1,000.00 per share plus an amount
equal to all declared and unpaid dividends, if any, thereon, shall be
tendered to the holders of the shares of Class B Common Stock with respect
to such liquidation, dissolution or winding up. If upon any liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary, the assets to be distributed to the holders of the Class A
Common Stock and the Class C Common Stock shall be sufficient to permit the
payment of the full preferential amounts aforesaid but the assets to be
distributed to the holders of the
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<PAGE>
Class B Common Stock shall be insufficient to permit the payment to such
stockholders of the full preferential amounts aforesaid, then all of the
assets of the Corporation to be distributed shall be distributed ratably to
the holders of the Class B Common Stock on the basis of the number of
shares of Class B Common Stock held.
(iii) Remaining Assets. After the payment or distribution to the
----------------
holders of the Class A Common Stock, the Class C Common Stock and the Class
B Common Stock of the full preferential amounts aforesaid, the holders of
the Class A Common Stock and the Class C Common Stock then outstanding
shall be entitled to receive ratably all remaining assets of the
Corporation to be distributed.
D. Conversion Rights of Class C Common Stock. The holders of the Class C
-----------------------------------------
Common Stock shall have the following conversion rights:
(i) Upon the occurrence of any Conversion Event (as defined herein),
each record holder of Class C Common Stock shall be entitled to convert
into the same number of shares of Class A Common Stock any or all of the
shares of such holder's Class C Common Stock being sold, distributed or
otherwise disposed of or converted in connection with the occurrence of
such Conversion Event. For purposes of this Section D, (a) a "Conversion
Event" shall mean any transfer of shares of Class C Common Stock to any
person or persons who are not affiliates of the transferor, including,
without limitation, pursuant to any public offering or public sale of
securities of the Corporation (including a public offering registered under
the Securities Act of 1933 and a public sale pursuant to Rule 144 under the
Securities Act of 1933 or any similar rule then in force), (b) a "person"
shall mean any natural person or any corporation, partnership, joint
venture, trust, unincorporated organization and any other entity or
organization and (c) an "affiliate," with respect to any person, shall mean
such person's spouse, parents, members of such person's family or such
person's lineal descendants and any other person that directly, or
indirectly through one or more intermediaries, controls, or is controlled
by, or is under common control with, such person. In addition, all of the
Corporation's Class C Common Stock shall be automatically and mandatorily
converted into the same
-4-
<PAGE>
number of shares of Class A Common Stock without any action on the part of
any holder upon notice to such effect by the Corporation to the record
holders of Class C Common Stock.
(ii) Subject to clause (i), each conversion of shares of Class C
Common Stock into shares of Class A Common Stock at the option of the
holder shall be effected by the surrender of the certificate or
certificates representing the shares to the converted at the principal
office of the Corporation at any time (including within a reasonable time
prior to the occurrence of any Conversion Event, if necessary to effect the
conversion of shares related thereto, provided, however, that the holders
-------- -------
of such shares will not be entitled to vote on any matters to be voted on
by the Corporation's stockholders during such interim period, such
certificates being deemed to represent only shares of Class C Common Stock
for such purpose) during normal business hours, together with a written
notice by the holder of such Class C Common Stock stating that a Conversion
Event has occurred or is expected to occur and that such holder desires to
convert the shares, or a stated number of the shares, of such Class C
Common Stock represented by such certificate or certificates into shares of
Class A Common Stock (and including instructions for issuance of the Class
A Common Stock to be issued upon such conversion). Each conversion at the
option of the holder shall be deemed to have been effected as of the close
of business on the later of (a) the date on which the Conversion Event has
occurred and (b) the date on which such certificate or certificates have
been surrendered and such notice has been received, and at such later time
the rights of the holder of the converted Class C Common Stock, as a holder
of Class C Common Stock, shall cease and the person or persons in whose
name or names the certificate or certificates for shares of Class A Common
Stock are to be issued upon such conversion shall be deemed to have become
the holder or holders or record of the shares represented thereby. Promptly
after the Conversion Event has occurred and the surrender of certificates
and the receipt of written notice, the Corporation shall issue and deliver
in accordance with the surrendering holder's instructions (x) the
certificate or certificates for the shares of Class A Common Stock issuable
upon such conversion and (y) a certificate representing any shares of Class
C Common Stock which
-5-
<PAGE>
were represented by the certificate or certificates delivered to the
Corporation in connection with such conversion but which were not
converted. If any shares of Class C Common Stock are converted into shares
of Class A Common Stock in connection with a Conversion Event and such
shares of Class A Common Stock are not actually sold, distributed or
otherwise disposed of so that a Conversion Event does not actually occur,
such shares of Class C Common Stock shall be automatically converted back
into the same number of shares of Class C Common Stock.
Any mandatory conversion of shares of Class C Common Stock into Class
A Common Stock shall be effected by the Corporation delivering to the
holders of such shares, to the last address appearing for such holders on
the books of the Corporation, written notice to the effect that the Board
of Directors has determined to mandatorily convert the Class C Common Stock
into Class A Common Stock and upon and after such notice all of the shares
of Class C Common Stock so converted shall be deemed to be no longer
outstanding, any right to receive dividends thereon shall cease and all
rights and privileges with respect to the Class C Common Stock so converted
shall cease except for the right of the holder thereof to receive any
previously declared but unpaid dividends on the Class C Common Stock, and
the certificates which theretofore had represented Class C Common Stock
shall for all purposes represent only Class A Common Stock; provided,
--------
however, that no dividends on the Common Stock shall be paid to such holder
-------
unless and until the certificates for the Class C Common Stock have been
surrendered to the Corporation, which shall upon such surrender issue
certificates for the Class A Common Stock to such holder and pay to such
holder any dividends on the Class A Common Stock which have been declared
as of a record date, and which otherwise would have been paid, since the
date the shares of Class C Common Stock were deemed to be converted.
(iii) The issuance of certificates upon conversion will be made
without charge to the holders of such shares for any issuance tax in
respect thereof or other cost incurred by the Corporation in connection
with such conversion, except that the holder of any such shares shall be
responsible for the payment of all applicable transfer taxes if the shares
of Common Stock
-6-
<PAGE>
are issued in the name of a person or persons other than such holder.
(iv) The Corporation shall at all times reserve and keep available
out of its authorized but unissued shares of Class A Common Stock solely
for the purpose of issuance upon the conversion of the Class C Common
Stock, such number of shares of Class A Common Stock issuable upon the
conversion of all outstanding shares of Class C Common Stock. All shares of
Class A Common Stock which are so issuable shall, when issued, be duly and
validly issued, fully paid and non-assessable and free from all taxes,
liens and charges. The Corporation shall take all such actions as it deems
necessary or appropriate to assure that all such shares of Class A Common
Stock may be so issued without violation of any applicable law or
governmental regulation or any requirements of any domestic securities
exchange upon which shares of Class A Common Stock may be listed.
(v) Except as provided in the last sentence of the first paragraph of
clause (ii), shares of Class C Common Stock that are converted into shares
of Class A Common Stock as provided herein shall be retired and cancelled
and shall not be reissued.
5. The Corporation is to have perpetual existence.
6. Elections of directors of the Corporation need not be by written
ballot unless the By-laws of the Corporation so provide.
7. (a) A director of the Corporation shall not be personally liable
to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of
the director's duty of loyalty to the Corporation or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
General Corporation Law of the State of Delaware or (iv) for any
transaction from which the director derives an improper personal benefit.
If the General Corporation Law of the State of Delaware is amended after
the date of filing of this Amended and Restated Certificate of
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<PAGE>
Incorporation to authorize corporate action further eliminating or limiting
the personal liability of directors, then the liability of a director of
the Corporation shall be eliminated or limited to the fullest extent
permitted by the General Corporation Law of the State of Delaware as so
amended.
Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing in respect of any act
or omission occurring prior to the time of such repeal or modification.
(b) The Corporation shall indemnify, to the fullest extent now or
hereafter permitted by the General Corporation Law of the State of
Delaware, any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the
fact that he or she is or was or has agreed to become a director or officer
of the Corporation, or is or was serving or has agreed to serve at the
request of the Corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, or by reason of any
action alleged to be taken or omitted in such capacity, and may to the same
extent indemnify any person who was or is a party or is threatened to be
made a party to such an action, suit or proceeding by reason of the fact
that he or she is or was or has agreed to become an employee or agent of
the Corporation, or is or was serving or has agreed to serve at the request
of the Corporation as an employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in
settlement in connection with such action, suit or proceeding or any appeal
therefrom.
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IN WITNESS WHEREOF, CCT Holdings Corp. has caused this Amended and
Restated Certificate of Incorporation to be signed by Jerald L. Kent, its
Executive Vice President, and attested by Theodore W. Browne, II, its
Secretary, this 18th day of January 1995.
By: /s/ Jerald L. Kent
_____________________________
Jerald L. Kent
Executive Vice President
ATTEST:
By: /s/ Theodore W. Browne II
__________________________
Theodore W. Browne, II
Secretary
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THIS PAGE MUST BE KEPT AS THE LAST PAGE OF THE DOCUMENT.
SoftSolution Network ID: NY-101567.1 Type: CER
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EXHIBIT 3.2
AMENDED AND RESTATED BYLAWS
OF
CCA HOLDINGS CORP.
<PAGE>
TABLE OF CONTENTS
-----------------
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<CAPTION>
Page
----
<S> <C>
ARTICLE I OFFICES.................................................. 1
Section 1.01 REGISTERED OFFICE.......................................... 1
Section 1.02 OTHER OFFICES.............................................. 1
ARTICLE II MEETINGS OF STOCKHOLDERS................................. 1
Section 2.01 ANNUAL MEETINGS............................................ 1
Section 2.02 SPECIAL MEETINGS........................................... 1
Section 2.03 NOTICE OF MEETING.......................................... 1
Section 2.04 LIST OF STOCKHOLDERS....................................... 2
Section 2.05 QUORUM..................................................... 2
Section 2.06 ADJOURNMENTS............................................... 2
Section 2.07 VOTING..................................................... 2
Section 2.08 PROXIES.................................................... 3
Section 2.09 JUDGES OF ELECTION......................................... 3
Section 2.10 WRITTEN CONSENT............................................ 3
ARTICLE III BOARD.................................................... 3
Section 3.01 NUMBER..................................................... 3
Section 3.02 ELECTION AND TERM OF OFFICE................................ 3
Section 3.03 VACANCIES AND ADDITIONAL DIRECTORSHIPS..................... 4
Section 3.04 POWERS..................................................... 4
Section 3.05 RESIGNATION OF DIRECTORS................................... 4
Section 3.06 REMOVAL OF DIRECTORS....................................... 4
Section 3.07 COMPENSATION OF DIRECTORS.................................. 4
Section 3.08 RELIANCE ON ACCOUNTS AND REPORTS, ETC...................... 4
ARTICLE IV MEETING OF THE BOARD..................................... 4
Section 4.01 PLACE...................................................... 4
Section 4.02 REGULAR MEETINGS........................................... 5
Section 4.03 SPECIAL MEETINGS........................................... 5
Section 4.04 QUORUM..................................................... 5
Section 4.05 ADJOURNED MEETINGS......................................... 5
Section 4.06 WRITTEN CONSENT............................................ 5
Section 4.07 COMMUNICATIONS EQUIPMENT................................... 5
Section 4.08 WAIVER OF NOTICE........................................... 5
Section 4.09 OFFICERS OF THE BOARD...................................... 5
ARTICLE V COMMITTEES OF THE BOARD.................................. 6
Section 5.01 DESIGNATION, POWER AND ALTERNATE MEMBERS AND
TERM OF OFFICE........................................... 6
Section 5.02 MEETINGS, NOTICES AND RECORDS.............................. 6
Section 5.03 QUORUM AND MANNER OF ACTING................................ 6
Section 5.04 RESIGNATIONS............................................... 7
Section 5.05 REMOVAL.................................................... 7
Section 5.06 VACANCIES.................................................. 7
</TABLE>
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<TABLE>
<S> <C>
ARTICLE VI OFFICERS................................................. 7
Section 6.01 OFFICERS AND MANAGEMENT COMMITTEE.......................... 7
Section 6.02 DUTIES..................................................... 7
Section 6.03 RESIGNATIONS............................................... 8
Section 6.04 REMOVAL.................................................... 8
Section 6.05 VACANCIES.................................................. 8
Section 6.06 SECRETARY.................................................. 8
Section 6.07 ASSISTANT SECRETARIES...................................... 8
Section 6.08 TREASURER.................................................. 8
Section 6.09 ASSISTANT TREASURERS....................................... 9
ARTICLE VII INDEMNIFICATION.......................................... 9
Section 7.01 ACTIONS OTHER THAN BY OR IN THE
RIGHT OF THE CORPORATION............................... 9
Section 7.02 ACTIONS BY OR IN THE RIGHT OF THE CORPORATION............ 9
Section 7.03 DETERMINATION OF RIGHT OF INDEMNIFICATION................ 9
Section 7.04 INDEMNIFICATION AGAINST EXPENSES OF SUCCESSFUL PARTY..... 9
Section 7.05 ADVANCE OF EXPENSES...................................... 10
Section 7.06 OTHER RIGHTS AND REMEDIES................................ 10
Section 7.07 INSURANCE................................................ 10
Section 7.08 CONSTITUENT CORPORATIONS................................. 10
Section 7.09 EMPLOYEE BENEFIT PLANS................................... 10
Section 7.10 BROADEST LAWFUL INDEMNIFICATION.......................... 11
Section 7.11 TERM..................................................... 11
Section 7.12 SEVERABILITY............................................. 11
Section 7.13 AMENDMENTS............................................... 11
ARTICLE VIII DEPOSIT OF CORPORATE FUNDS............................... 12
Section 8.01 BORROWING.................................................. 12
Section 8.02 DEPOSITS................................................... 12
Section 8.03 CHECKS, DRAFTS, ETC........................................ 12
ARTICLE IX CERTIFICATES OF STOCK.................................... 12
Section 9.01 STOCK CERTIFICATES......................................... 12
Section 9.02 BOOKS OF ACCOUNT AND RECORD OF STOCKHOLDERS................ 12
Section 9.03 TRANSFER OF SHARES......................................... 13
Section 9.04 REGULATIONS................................................ 13
Section 9.05 LOST, STOLEN OR DESTROYED CERTIFICATES..................... 13
Section 9.06 STOCKHOLDER'S RIGHT OF INSPECTION.......................... 13
Section 9.07 REPRESENTATIONS OF SHARES OF OTHER CORPORATIONS............ 13
ARTICLE X MISCELLANEOUS............................................ 14
Section 10.01 BUDGETS................................................... 14
Section 10.02 RECORD DATES.............................................. 14
Section 10.03 DIVIDENDS................................................. 14
Section 10.04 FISCAL YEAR............................................... 14
Section 10.05 CORPORATE SEAL............................................ 14
Section 10.06 AMENDMENTS................................................ 14
</TABLE>
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<PAGE>
AMENDED AND RESTATED BYLAWS
OF
CCA HOLDINGS CORP.
a Delaware Corporation
(the "Corporation")
ARTICLE I
OFFICES
1.01 REGISTERED OFFICE. The registered office shall be maintained at
1209 Orange Street, Wilmington, New Castle County, Delaware 19801 and The
Corporation Trust Company is the registered agent.
1.02 OTHER OFFICES. The Corporation may also have other offices,
either within or without the State of Delaware, at such place or places as the
Board of Directors (the "Board") may from time to time appoint or the business
of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.01 ANNUAL MEETING. The date of the annual meeting of the
stockholders for the election of directors and for the transaction of such other
business as properly may come before such meeting shall be determined by
resolution of the Board to be a specific day in each year, if not a legal
holiday, and, if a legal holiday, on the next succeeding business day, at the
time and place and within or without the State of Delaware as may be designed by
the Board and set forth in the notice of the meeting or a duly executed waiver
of notice thereof, provided, however, that in any year, in advance of the date
specified for the annual meeting, the Board may act to change the meeting date
for that year.
2.02 SPECIAL MEETINGS. Special meetings of the stockholders for any
proper purpose or purposes may be called at any time by the Board or an
Executive Officer, to be held on the date, at the time and place within or
without the State of Delaware as the Board or an Executive Officer, whichever
has called the meeting, shall direct. A special meeting of the stockholders
also shall be called whenever stockholders owning a majority of the shares of
the Corporation then issued and outstanding and entitled to vote on all of the
matters to be submitted to stockholders of the Corporation at such special
meeting shall make written application to an Executive Officer. Any such
written request shall state a proper purpose or purposes of the meeting and
shall be delivered to an Executive Officer.
2.03 NOTICE OF MEETING. Notice, signed by the Secretary of the
Corporation or an Executive Officer, of every annual or special meeting of
stockholders shall be prepared in writing and personally delivered; mailed,
postage prepaid; or sent by facsimile transmission to each stockholder entitled
to vote at such meeting not less than ten (10) nor more than sixty (60) days
before the meeting, except as otherwise provided by statute. Every notice of a
meeting of the stockholders shall state the place, date and hour of the meeting,
and in the case of a special meeting, shall also state the purpose or purposes
for which the meeting is called. If mailed, such notice shall be directed to a
stockholder at his address as it shall appear on the stock record book of the
Corporation, unless the stockholder shall have filed with the Secretary a
written request that notice intended for him or her be mailed to some other
address, in which case it shall be mailed to the address designated in such
request. Notice shall be deemed given when personally delivered or deposited in
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the United States mail, as the case may be; provided, however, that such notice
may also be given by telegram, facsimile or other means of electronically
transmitted written copy and in such case shall be deemed given when ordered or,
if a delayed delivery is ordered, as of such delayed delivery time.
2.04 LIST OF STOCKHOLDERS. A complete list of the stockholders
entitled to vote at each meeting of stockholders, arranged in alphabetical order
and showing the address of each such stockholder and the number of shares
registered in the name of each such stockholder, shall be open to the
examination of any stockholder, for any purpose germane to such meeting, during
ordinary business hours, for a period of at least ten (10) days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of such meeting, or, if not
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting and during the whole time
thereof, and may be inspected by any stockholder who is present.
2.05 QUORUM. The presence at any meeting, in person or by proxy, of
the holders of record of a majority of the shares then issued and outstanding
and entitled to vote shall be necessary and sufficient to constitute a quorum
for the transaction of business, except where otherwise provided by statute.
2.06 ADJOURNMENTS. In the absence of a quorum, stockholders
representing a majority of the shares then issued and outstanding and entitled
to vote, present in person or by proxy, or, if no stockholder entitled to vote
is present in person or by proxy, any officer entitled to preside at or act as
secretary of such meeting, may adjourn the meeting from time to time without
notice other than announcement at the meeting, until a quorum shall be present
or represented. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting originally noticed. If the adjournment is for more than thirty (30)
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.
2.07 VOTING.
(a) At each meeting of the stockholders, each stockholder shall be
entitled to vote in person or by proxy each share or fractional share of the
stock of the Corporation which has voting rights on the matter in question and
which shall have been held by him or her and registered in his name on the books
of the Corporation:
(i) on the date fixed pursuant to Section 10.02 of these Bylaws
as the record date for the determination of stockholders entitled to notice of
and to vote at such meeting, or
(ii) if no such record date shall have been so fixed, then (x) at
the close of business on the day next preceding the day on which notice of the
meeting shall be given or (y) if notice of the meeting shall be waived, at the
close of business on the day next preceding the day on which the meeting shall
be held.
(b) Shares of its own stock belonging to the Corporation or to
another corporation, if a majority of the shares entitled to vote in the
election of directors in such other corporation is held, directly or indirectly,
by the Corporation, shall neither be entitled to vote nor be counted for quorum
purposes. Persons holding stock of the Corporation in a fiduciary capacity shall
be entitled to vote such stock. Persons whose stock is pledged shall be entitled
to vote, unless in the transfer by the pledgor on the books of the Corporation
he or she shall have expressly empowered the pledgee to vote thereon, in which
case only the pledgee, or his or her proxy, may represent such stock and vote
thereon. Stock having voting power standing of record in the names of two or
more persons, whether fiduciaries, members of a partnership, joint tenants,
tenants in common,
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<PAGE>
tenants by the entirety or otherwise, or with respect to which two or more
persons have the same fiduciary relationship, shall be voted in accordance with
the provisions of the General Corporation Law of Delaware.
(c) At any meeting of the stockholders all matters except as
otherwise provided in the Certificate of Incorporation, in these Bylaws, or by
law, shall be decided by the vote of a majority in voting interest of the
stockholders present in person or by proxy and entitled to vote thereat and
thereon. The vote at any meeting of the stockholders on any question need not be
by ballot, unless so directed by the chairman of the meeting. On a vote by
ballot, each ballot shall be signed by the stockholder voting, or by his proxy
if there be such proxy, and it shall state the number of shares voted.
2.08 PROXIES. Any stockholder is entitled to vote by proxy, provided
that the instrument authorizing such proxy to act shall have been executed in
writing (which shall include telegram, facsimile or other means of
electronically transmitted written copy) by the stockholder himself or herself
or by his or her duly authorized attorney-in-fact and delivered to the secretary
of the meeting. Except as provided in the Stockholders' Agreement among CCA
Holdings Corp., Kelso Investment Associates V, L.P., Kelso Equity Partners V,
L.P. and Charter Communications, Inc., as amended from time to time (the
"Stockholders' Agreement"), no proxy shall be voted or acted upon after three
years from its date, unless the proxy provides for a longer period. Every proxy
shall be revocable at the pleasure of the stockholder executing it, except as
provided in the Stockholders' Agreement.
The attendance at any meeting of a stockholder who may
theretofore have given a proxy shall not have the effect of revoking the same
unless he shall in writing so notify the secretary of the meeting prior to the
voting of the proxy.
2.09 JUDGES OF ELECTION. The Board may appoint judges of election to
serve at any election of directors and at balloting on any other matter that may
properly come before a meeting of stockholders. If no such appointment shall be
made, or if any of the judges so appointed shall fail to attend, or refuse or be
unable to serve, then such appointment may be made by the presiding officer of
the meeting at the meeting.
2.10 WRITTEN CONSENT. Any action which may be taken at any annual or
special meeting of stockholders may be taken without a meeting and without a
vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Whenever any such action is taken without a meeting by less than unanimous
consent, all stockholders who have not consented in writing must be promptly
informed in writing of such action.
ARTICLE III
BOARD
3.01 NUMBER. The number of directors which shall constitute the
whole Board shall be fixed at five (5) persons, until changed from time to time
by resolution of the Board or stockholders at the annual meeting or any special
meeting called for that purpose; provided, however, that such action shall not
be in contravention of the Stockholders' Agreement.
3.02 ELECTION AND TERM OF OFFICE. Directors shall be elected at the
annual meeting of the stockholders except as provided in Section 3.03 of this
Article III. Each director (whether elected at an annual meeting or to fill a
vacancy or otherwise) shall continue in office until a successor shall have been
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<PAGE>
elected and qualified or until his or her death, resignation or removal in the
manner hereinafter provided, whichever shall first occur.
3.03 VACANCIES AND ADDITIONAL DIRECTORSHIPS. If any vacancy shall
occur among the directors by reason of death, resignation, or removal, or as the
result of an increase in the number of directorships, the directors then in
office shall continue to act and may fill any such vacancy by a vote of the
majority of directors then in office, though less than a quorum (unless
otherwise provided in the Certificate of Incorporation or the Stockholders'
Agreement), and each director so chosen shall hold office until the next annual
election of directors and until his or her successor shall be duly elected and
shall qualify, or until his or her earlier death, resignation or removal.
3.04 POWERS. The business of the Corporation shall be managed by its
Board, which may exercise all powers of the Corporation and do all lawful acts
and things as are not by law or by the Certificate of Incorporation or these
Bylaws reserved to the stockholders.
3.05 RESIGNATION OF DIRECTORS. Any director may resign at any time
by giving written notice of such resignation to the Board or an Executive
Officer. Any such resignation shall take effect at the time specified therein
or, if no time be specified, upon receipt thereof by the Board or an Executive
Officer; and unless specified therein, the acceptance of such resignation shall
not be necessary to make it effective.
3.06 REMOVAL OF DIRECTORS. Unless otherwise provided in the
Stockholders' Agreement, at the annual meeting or any special meeting of the
stockholders, duly called as provided in these Bylaws, any director or directors
may, by the affirmative vote of the holders of a majority of the shares of stock
issued and outstanding and entitled to vote for the election of directors, be
removed from office, either with or without cause. At such meeting a successor
or successors may be elected by a majority of the votes cast, or if any such
vacancy is not so filled, it may be filled by the directors as provided in
Section 3.03 of this Article III, provided such action is not in contravention
of the Stockholders' Agreement.
3.07 COMPENSATION OF DIRECTORS. Directors may receive such
reasonable compensation for their services, whether in the form of salary or a
fixed fee for attendance at Board or Board committee meetings, with expenses, if
any, as the Board may from time to time determine. Nothing herein contained
shall be construed to preclude any director from serving the Corporation in any
other capacity and receiving compensation therefor.
3.08 RELIANCE ON ACCOUNTS AND REPORTS, ETC. A director, or a member
of any committee designed by the Board shall, in the performance of his duties,
be fully protected in relying in good faith upon the records of the Corporation
and upon information, opinions, reports or statements presented to the
Corporation by any of the Corporation's officers or employees, or committees
designated by the Board, or by any other person as to the matters the director
or member reasonably believes are within such other person's professional or
expert competence and who has been selected with reasonable care by or on behalf
of the Corporation.
ARTICLE IV
MEETINGS OF THE BOARD
4.01 PLACE. The Board of the Corporation may hold meetings, both
regular and special, either within or without the State of Delaware.
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4.02 REGULAR MEETINGS. The Board by resolution may provide for the
holding of regular meetings and may fix the times and places at which such
meetings shall be held. Notice of regular meetings shall not be required to be
given if the time and place has been fixed by Board resolution, provided that
whenever the time or place of regular meetings shall be fixed or changed, notice
of such action shall be mailed promptly to each director who shall not have been
present at the meeting at which such action was taken. If the time and place
for regular meetings has not been fixed by the Board, then at least 10 days
written notice addressed to him or her at his or her residence or usual place of
business, unless he or she shall have filed with the Secretary a written request
that notices intended for him or her be mailed to some other address, in which
case it shall be mailed to the address designated in such request, or shall be
sent to him or her at such place by telegram, facsimile or other means of
electronically transmitted written copy.
4.03 SPECIAL MEETINGS. Special meetings of the Board may be called
by any Executive Officer and shall be called by any Executive Officer at the
written request of any director. Except as otherwise required by statute,
notice of each special meeting shall be given to each director, if by mail, when
addressed to him or her at his or her residence or usual place of business,
unless he or she shall have filed with the Secretary a request that notices
intended for him or her be mailed to some other address, in which case it shall
be mailed to the address designated in such request, at least 72 hours before,
or shall be sent to him or her at such place by telegram, facsimile, telephone
or other means of electronically transmitted written copy, or delivered to him
or her personally, at least 48 hours before the date on which the meeting is to
be held. Such notice shall state the time and place of such meeting, but need
not state the purposes thereof, unless otherwise required by statute, the
Certificate of Incorporation of the Corporation or these Bylaws.
4.04 QUORUM. At any meeting of the Board two-thirds (2/3) of the
whole Board shall constitute a quorum for the transaction of business, and the
act of the majority of those present at any meeting at which a quorum is present
shall be sufficient for the act of the Board, except as may be otherwise
specifically provided by statute or by the Certificate of Incorporation of the
Corporation.
4.05 ADJOURNED MEETINGS. If a quorum shall not be present at a
meeting of the Board, the directors present thereat may adjourn the meeting from
time to time, until a quorum shall be present. Seventy-two (72) hours' notice
of any such adjournment shall be given personally to each director who was not
present at the meeting at which such adjournment was taken, and unless announced
at the meeting, to the other directors; provided, that then ten (10) days'
notice shall be given if notice is given by mail.
4.06 WRITTEN CONSENT. Any action required or permitted to be taken
at any meeting of the Board may be taken without a meeting if all the members of
the Board consent thereto in writing, and the writing or writings are filed with
the minutes of the proceedings of the Board.
4.07 COMMUNICATIONS EQUIPMENT. Any one or more members of the Board
may participate in any meeting of the Board by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and participation by such means shall be deemed
to constitute presence in person at such meeting.
4.08 WAIVER OF NOTICE. Notice of any meeting need not be given to
any directors who shall attend such meeting in person or shall waive notice
thereof, before or after such meeting, in writing or by telegram, facsimile or
other means of electronically transmitted written copy.
4.09 OFFICERS OF THE BOARD. The Board shall have a Chairman of the
Board and may, at the discretion of the Board, have one or more Vice Chairmen.
The Chairman of the Board and the Vice Chairmen shall be appointed from time to
time by the Board and shall have such powers and duties as shall be designated
by the Board.
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ARTICLE V
COMMITTEES OF THE BOARD
5.01 DESIGNATION, POWER AND ALTERNATE MEMBERS AND TERM OF OFFICE.
The Board may, by resolution passed by a majority of the whole Board, designate
one (1) or more committees. Each such committee shall consist of one (1) or
more of the directors of the Corporation. Any such committee, to the extent
provided in such resolution, shall have and may exercise the power of the Board
in the management of the business and affairs of the Corporation, and may
authorize the seal of the Corporation to be affixed to all papers which may
require it. The Board may designate one (1) or more directors as alternate
members of any committee who, in the order specified by the Board, may replace
any absent or disqualified member at any meeting of the committee. If at a
meeting of any committee one (1) or more of the members thereof should be absent
or disqualified, and if either the Board has not so designated any alternate
member or members, or the number of absent or disqualified members exceeds the
number of alternate members who are present at such meeting, then the member or
members of such committee (including alternates) present at any meeting and not
disqualified from voting, whether or not he or she or they constitute a quorum,
may unanimously appoint another director to act at the meetings in the place of
any such absent or disqualified member. The term of office of the members of
each committee shall be as fixed from time to time by the Board, subject to the
term of office of the directors and these Bylaws; provided, however, that any
--------
committee member who ceases to be a member of the Board shall ipso facto cease
---- -----
to be a committee member. Each committee shall appoint a secretary, who may be
the Secretary or an Assistant Secretary of the Corporation.
5.02 MEETINGS, NOTICES AND RECORDS. Each committee may provide for
the holding of regular meetings, with or without notice, and a majority of the
members of any such committee may fix the time, place and procedure for any such
meeting. Special meetings of each committee shall be held upon call by or at
the direction of its chairman or, if there be no chairman, by or at the
direction of any two (2) of its members, at the time and place specified in the
respective notices or waivers of notice thereof. Notice of each special meeting
of a committee shall be mailed to each member of such committee, addressed to
him or her at his or her residence or usual place of business, unless he or she
shall have filed with the Secretary a written request that notices intended for
him or her be mailed to some other address, in which case it shall be mailed to
the address designated in such request, at least 72 hours before the day on
which the meeting is to be held, or shall be sent by telegram, facsimile or
other means of electronically transmitted written copy, addressed to him at such
place, or telephoned or delivered to him or her personally, at least 48 hours
before the day on which the meeting is to be held. Notice of any meeting of a
committee need not be given to any member thereof who shall attend the meeting
in person or who shall waive notice thereof by telegram, facsimile or other
means of electronically transmitted written copy. Notice of any adjourned
meeting need not be given. Each committee shall keep a record of its
proceedings.
Each committee may meet and transact any and all business delegated to
that committee by the Board by means of a conference telephone or similar
communications equipment provided that all persons participating in the meeting
are able to hear and communicate with each other. Participation in a meeting by
means of conference telephone or similar communication shall constitute presence
in person at such meeting.
5.03 QUORUM AND MANNER OF ACTING. At each meeting of any committee
the presence of a majority of its members then in office shall be necessary and
sufficient to constitute a quorum for the transaction of business, and the act
of a majority of the members present at any meeting at which a quorum is present
shall be the act of such committee; in the absence of a quorum, a majority of
the members present at the time and place of any meeting may adjourn the meeting
from time to time until a quorum shall be present. Subject to the foregoing and
other provisions of these Bylaws and except as otherwise determined by the
Board, each committee may make rules for the conduct of its business. Any
determination made in writing and signed by all the members of such committee
shall be as effective as if made by such committee at a meeting.
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<PAGE>
5.04 RESIGNATIONS. Any member of a committee may resign at any time
by giving written notice of such resignation to the Corporation, the Board, or
an Executive Officer of the Corporation. Unless otherwise specified in such
notice, such resignation shall take effect upon receipt thereof by the Board or
any Executive Officer of the Corporation.
5.05 REMOVAL. Any member of any committee may be removed at any time
by the affirmative vote of a majority of the whole Board with or without cause.
5.06 VACANCIES. If any vacancy shall occur in any committee by
reason of death, resignation, disqualification, removal or otherwise, the
remaining members of such committee, though less than a quorum, shall continue
to act until such vacancy is filled by the Board.
ARTICLE VI
OFFICERS
6.01 OFFICERS AND MANAGEMENT COMMITTEE. The Board shall determine
the titles and duties of the officers of the Corporation who shall be
responsible for the overall supervision, direction and control of the business
and affairs of the Corporation (hereinafter referred to as the "Executive
Officers"), and shall elect persons to hold such positions. The Corporation
also shall have one or more Executive Vice-Presidents and Senior Vice-
Presidents, as well as a Treasurer and a Secretary. The Board also may, but
shall not be required to, appoint a Management Committee which shall be
comprised of the Executive Officers plus such other officers as may be selected
by the Board or in the absence of Board action by the Chairman of the Management
Committee. Any Executive Officer or Executive Vice President may, if so
designated by the Board, function in the capacity of Chief Executive Officer,
Chief Financial Officer, or Chief Operating Officer. In the absence or
disability of an elected Executive Officer, another Executive Officer shall
perform such other officer's duties. One of the Executive Officers shall
preside at meetings of stockholders.
The officers of the Corporation may also include one or more Regional
or other Vice-Presidents and one or more Assistant Secretaries or Assistant
Treasurers, each of whom shall be elected by the Board or appointed by the
Executive Officers Any number of offices may be held by the same person subject
to any limits imposed by the General Corporation Law of the State of Delaware;
provided that different officers shall have such titles and duties as may be
necessary to enable the Corporation to sign instruments and stock certificates
which comply with Sections 103(a)(2) and 158 of the General Corporation Law of
the State of Delaware.
Each officer of the corporation elected by the Board or appointed by
the Executive Officers shall hold office until his or her successor is duly
elected or appointed and qualified or until his or her earlier resignation or
removal.
The Board may act by resolution to authorize such officers of the
Corporation as are proposed by Charter Communications, Inc., pursuant to Section
9.1 of the Stockholders' Agreement, to act on behalf of the Corporation in
connection with the Management Agreement referenced in the Stockholders'
Agreement.
6.02 DUTIES. All officers, as between themselves and the
Corporation, shall have such authority and perform such duties in the management
of the Corporation as may be provided in these Bylaws, or, to the extent not so
provided, as may be provided by resolution of the Board or the supervising
Executive Officers.
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6.03 RESIGNATIONS. Any officer may resign at any time by giving
written notice of such resignation to the Board or any Executive Officer.
Unless otherwise specified in such written notice, such resignation shall take
effect upon receipt thereof by the Board or any such Executive Officer.
6.04 REMOVAL. All officers serve at the sole pleasure and in the
sole discretion of the Board. Any Executive Officer or other officer elected by
the Board may be removed at any time, either with or without cause, by the vote
of a majority of all of the directors then in office. Any officers appointed by
an Executive Officer may be removed at any time by an Executive Officer with or
without cause. Such power of removal from office shall not be abridged by any
employment contract or other agreement.
6.05 VACANCIES. A vacancy in any office by reason of death,
resignation, removal, disqualification or any other cause shall be filled for
the unexpired portion of the term in the manner prescribed by these Bylaws for
regular election or appointment to such office.
6.06 SECRETARY. The Secretary shall: (a) record all the proceedings
of the meetings of the stockholders, the Board, and all committees of the Board
in a book or books to be kept for that purpose; (b) cause all notices to be duly
given in accordance with the provisions of these Bylaws as required by statute;
(c) whenever any committee shall be appointed in pursuance of a resolution of
the Board, furnish the chairman of such committee with a copy of such
resolution; (d) be custodian of the records and of the seal of the Corporation,
and cause such seal to be affixed to all certificates representing capital stock
of the Corporation prior to the issuance thereof and to all instruments the
execution of which on behalf of the Corporation under its seal shall have been
duly authorized; (e) see that the lists, books, reports, statements,
certificates and other documents and records required by statute are properly
kept and filed; (f) have charge of the stock record and stock transfer books of
the Corporation, and exhibit such stock books at all reasonable times to such
persons who are entitled by statute to have access thereto; and (g) in general,
perform all duties incident to the office of Secretary and such other duties as
are given to him or her by these Bylaws or as from time to time may be assigned
to him or her by the Board or the Executive Officers.
6.07 ASSISTANT SECRETARIES. At the request of the Secretary or in
his or her absence or disability, the Assistant Secretary designated by him or
her (or in the absence of such designation, the Assistant Secretary designated
by the Board or any Executive Officer) shall perform all the duties of the
Secretary, and, when so acting, shall have all the powers of and be subject to
all restrictions upon the Secretary. The Assistant Secretaries shall perform
such other duties as from time to time may be assigned to them by the Board or
the Executive Officers.
6.08 TREASURER. The Treasurer shall: (a) have charge of and
supervision over and be responsible for the funds, securities, receipts and
disbursements of the Corporation; (b) cause the monies and other valuable
effects of the Corporation to be deposited in the name and to the credit of the
Corporation in banks or trust companies or with bankers or other depositories or
to be otherwise dealt with in such manner as the Board may direct; (c) select
authorized depositories of the Corporation and cause the funds of the
Corporation to be disbursed by checks or drafts upon the authorized depositories
of the Corporation, and cause to be taken and preserved proper vouchers for all
monies disbursed; (d) render to the Board and the Executive Officers, whenever
requested, a statement of the financial condition of the Corporation and of all
his or her transactions as Treasurer; (e) cause to be kept at the Corporation's
principal office correct books of account of all its business and transactions
and such duplicate books of account as he or she shall determine and upon
application cause such books or duplicates thereof to be exhibited to any
Director; (f) be empowered, from time to time, to require from the officers or
agents of the Corporation reports or statements giving such information
concerning transactions of the Corporation; and (g) in general, perform all
duties incident to the office of Treasurer and such other duties as are given to
him or her by these Bylaws or as from time to time may be assigned to him by the
Board or the Executive Officers.
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6.09 ASSISTANT TREASURERS. At the request of the Treasurer or any of
the Executive Officers, the Assistant Treasurer shall perform all the duties of
the Treasurer, and, when so acting, shall have all the powers of and be subject
to all restrictions upon the Treasurer. The Assistant Treasurer shall perform
such other duties as from time to time may be assigned by the Board, the
Executive Officers or the Treasurer.
ARTICLE VII
INDEMNIFICATION
Section 7.01 ACTIONS OTHER THAN BY OR IN THE RIGHT OF THE CORPORATION.
The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Corporation) by reason of the
fact that he is or was or has agreed to become a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise or as a member of any committee or
similar body, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in, or not opposed to, the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in, or not opposed to, the best interests of the
Corporation, and, with respect to any criminal action or proceeding, that he had
reasonable cause to believe that his conduct was unlawful.
Section 7.02 ACTIONS BY OR IN THE RIGHT OF THE CORPORATION. The
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor by reason of the
fact that he is or was or has agreed to become a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, or as a member of any committee or
similar body, against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit if he acted in good faith and in a manner he reasonably believed
to be in, or not opposed to, the best interests of the Corporation, except that
no indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
Section 7.03 DETERMINATION OF RIGHT OF INDEMNIFICATION. Any
indemnification under Section 7.01 or 7.02 of these Bylaws (unless ordered by a
court) shall be made by the Corporation only as authorized in the specific case
upon a determination that indemnification of the director, officer, employee or
agent is proper in the circumstances because he has met the applicable standard
of conduct set forth in Sections 7.01 and 7.02 of these Bylaws. Such
determination shall be made (a) by the Board by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or proceeding,
or (b) if such a quorum is not obtainable, or, even if obtainable, a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, or (c) by the stockholders.
Section 7.04 INDEMNIFICATION AGAINST EXPENSES OF SUCCESSFUL PARTY.
Notwithstanding the other provisions of this Article VII, to the extent that a
director, officer, employee or agent of the Corporation has been successful on
the merits or otherwise in defense of any action, suit or proceeding
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referred to in Section 7.01 or 7.02 of these Bylaws, or in defense of any claim,
issue or matter therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith.
Section 7.05 ADVANCE OF EXPENSES. Expenses (including attorneys'
fees) incurred by an officer or director in defending a civil or criminal
action, suit or proceeding may be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding as authorized by the Board
upon receipt of an undertaking by or on behalf of the director or officer, to
repay such amount if it shall ultimately be determined that he is not entitled
to be indemnified by the Corporation as authorized in this Article VII. Such
expenses (including attorneys' fees) incurred by other employees and agents may
be so paid upon such terms and conditions, if any, as the Board deems
appropriate. The Board may authorize the Corporation's counsel to represent
such director, officer, employee or agent in any action, suit or proceeding,
whether or not the Corporation is a party to such action, suit or proceeding.
Section 7.06 OTHER RIGHTS AND REMEDIES. The indemnification and
advancement of expenses provided by, or granted pursuant to, the other Sections
of this Article VII shall not be deemed exclusive and are declared expressly to
be nonexclusive of any other rights to which those seeking indemnification or
advancements of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
Section 7.07 INSURANCE. Upon resolution passed by the Board, the
Corporation may purchase and maintain insurance on behalf of any person who is
or was a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise or as a member of any committee or similar body against any liability
asserted against him and incurred by him in any such capacity, or arising out of
his status as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of this Article VII.
Section 7.08 CONSTITUENT CORPORATIONS. For the purposes of this
Article VII, references to "the Corporation" include in addition to the
resulting corporation, any constituent corporation (including any constituent of
a constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise or as a member of any committee or similar body, shall
stand in the same position under the provisions of this Article VII with respect
to the resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued.
Section 7.09 EMPLOYEE BENEFIT PLANS. For the purposes of this
Article VII, references to "other enterprises" shall include employee benefit
plans; references to "fines" shall include any excise taxes assessed on a person
with respect to any employee benefit plan; and references to "serving at the
request of the Corporation" shall include any service as a director, officer,
employee or agent of the Corporation which imposes duties on, or involves
services by, such director, officer, employee or agent with respect to an
employee benefit plan, its participants or beneficiaries; and a person who
acted in good faith and in a manner he reasonably believed to be in the interest
of the participants and beneficiaries of an employee benefit plan shall be
deemed to have acted in a manner "not opposed to the best interests of the
`Corporation'" as referred to in this Article VII.
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Section 7.10 BROADEST LAWFUL INDEMNIFICATION. In addition to the
foregoing, the Corporation shall, to the broadest and maximum extent permitted
by Delaware law, as the same exists from time to time (but, in case of any
amendment to or change in Delaware law, only to the extent that such amendment
or change permits the Corporation to provide broader rights of indemnification
than is permitted to the Corporation prior to such amendment or change),
indemnify each person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative by reason of the fact that he
is or was a director or officer of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding. In addition, the Corporation shall, to the broadest
and maximum extent permitted by Delaware law, as the same may exist from time to
time (but, in case of any amendment to or change in Delaware law, only to the
extent that such amendment or change permits the Corporation to provide broader
rights of payment of expenses incurred in advance of the final disposition of an
action, suit or proceeding than is permitted to the Corporation prior to such
amendment or change), pay to such person any and all expenses (including
attorneys' fees) incurred in defending or settling any such action, suit or
proceeding in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of the director or
officer, to repay such amount if it shall ultimately be determined by a final
judgment or other final adjudication that he is not entitled to be indemnified
by the Corporation as authorized in this Section 7.10. The first sentence of
this Section 7.10 to the contrary notwithstanding, the Corporation shall not
indemnify any such person with respect to any of the following matters: (a)
remuneration paid to such person if it shall be determined by a final judgment
or other final adjudication that such remuneration was in violation of law; or
(b) any accounting of profits made from the purchase or sale by such person of
the Corporation's securities within the meaning of Section 16(b) of the
Securities Exchange Act of 1934 and amendments thereto or similar provisions of
any federal, state or local statutory law; or (c) actions brought about or
contributed to by the dishonesty of such person, if a final judgment or other
final adjudication adverse to such person establishes that acts of active and
deliberate dishonesty were committed or attempted by such person with actual
dishonest purpose and intent and were material to the adjudication; or (d)
actions based on or attributable to such person having gained any personal
profit or advantage to which he was not entitled, in the event that a final
judgment or other final adjudication adverse to such person establishes that
such person in fact gained such personal profit or other advantage to which he
was not entitled; or (e) any matter in respect of which a final decision by a
court with competent jurisdiction shall determine that indemnification is
unlawful; provided, however, that the Corporation shall perform its obligations
under the second sentence of this Section 7.10 on behalf of such person until
such time as it shall be ultimately determined by a final judgment or other
final adjudication that he is not entitled to be indemnified by the Corporation
as authorized by the first sentence of this Section 7.10 by virtue of any of the
preceding clauses (a) (b) (c) (d) or (e).
Section 7.11 TERM. The indemnification and advancement of expenses
provided by, or granted pursuant to, this Article VII shall, unless otherwise
provided when authorized or ratified, continue as to a person who has ceased to
be a director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
Section 7.12 SEVERABILITY. If any part of this Article VII shall be
found, in any action, suit or proceeding or appeal therefrom or in any other
circumstances or as to any particular officer, director, employee or agent to be
unenforceable, ineffective or invalid for any reason, the enforceability, effect
and validity of the remaining parts or of such parts in other circumstances
shall not be affected, except as otherwise required by applicable law.
Section 7.13 AMENDMENTS. The foregoing provisions of this Article
VII shall be deemed to constitute an agreement between the Corporation and each
of the persons entitled to indemnification hereunder, for as long as such
provisions remain in effect. Any amendment to the foregoing provisions of this
Article VII which limits or otherwise adversely affects the scope of
indemnification or rights of any such
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persons hereunder shall, as to such persons, apply only to claims arising, or
causes of action based on actions or events occurring, after such amendment and
delivery of notice of such amendment is given to the person or persons so
affected. Until notice of such amendment is given to the person or persons whose
rights hereunder are adversely affected, such amendment shall have no effect on
such rights of such persons hereunder. Any person entitled to indemnification
under the foregoing provisions of this Article VII shall, as to any act or
omission occurring prior to the date of receipt of such notice, be entitled to
indemnification to the same extent as had such provisions continued as Bylaws of
the Corporation without such amendment.
ARTICLE VIII
DEPOSIT OF CORPORATE FUNDS
8.01 BORROWING. No loans or advances shall be obtained or contracted
for, by or on behalf of the Corporation and no negotiable paper shall be issued
in its name, unless and except as authorized by the Board. Such authorization
may be general or confined to specific instances.
8.02 DEPOSITS. All funds of the Corporation not otherwise employed
shall be deposited from time to time to its credit in such banks or trust
companies or with such bankers or other depositories as the Board may select, or
as may be selected by any officer or officers or agent or agents authorized to
do so by the Board.
8.03 CHECKS, DRAFTS, ETC. All checks, drafts or other orders for the
payment of money, and all negotiable and non-negotiable notes or other
negotiable or non-negotiable evidences of indebtedness issued in the name of the
Corporation, shall be signed or endorsed by such person or persons and in such
manner as from time to time shall be determined by the Board or the Executive
Officers. The Corporation shall obtain a fidelity bond for such persons with
such signing authority as the Board or the Executive Officers may require.
ARTICLE IX
CERTIFICATES OF STOCK
9.01 STOCK CERTIFICATES. Every holder of capital stock of the
Corporation shall be entitled to have a certificate or certificates in such form
as shall be approved by the Board, certifying the number of shares of capital
stock of the Corporation owned by him or her. The certificates representing
shares of capital stock shall be signed in the name of the Corporation by an
Executive Officer and by the Secretary, an Assistant Secretary, the Treasurer or
an Assistant Treasurer (which signatures may be facsimiles) and sealed with the
seal of the Corporation (which seal may be a facsimile). If any officer,
transfer agent or registrar who shall have signed or whose facsimile signatures
has been placed upon such certificate shall have ceased to be such officer,
transfer agent or registrar before such certificates are issued, they may
nevertheless be issued by the Corporation with the same effect as if such
officer, transfer agent, or registrar were still such at the date of their
issue.
9.02 BOOKS OF ACCOUNT AND RECORD OF STOCKHOLDERS. The books and
records of the Corporation may be kept at such places, within or without the
State of Delaware, as the Board may from time to time determine. The stock
record books and the blank stock certificate books shall be kept by the
Secretary or by any other officer or by the transfer agent or registrar, if any,
designated by the Board. There shall be entered on the stock books of the
Corporation the number of each certificate issued, the number of shares
represented thereby, the name of the person to whom such certificate was issued
and the date of issuance thereof.
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9.03 TRANSFER OF SHARES. Transfers of shares of capital stock of the
Corporation shall be made on the stock records of the Corporation only upon
authorization by the registered holder thereof, or by his attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary or
with the transfer agent, and on surrender of the certificate or certificates for
such shares properly endorsed or accompanied by a duly executed stock transfer
power and the payment of all taxes thereon, if any. Except as otherwise
provided by law, the Corporation shall be entitled to recognize the exclusive
right of a person in whose name any share or shares stand on the record of
stockholders as the owner of such share or shares for all purposes, including,
without limitation, the rights to receive dividends or other distributions, and
to vote as such owner, and the Corporation shall not be bound to recognize any
equitable or legal claim to or interest in any such share or shares on the part
of any other person whether or not the Corporation shall have express or other
notice thereof.
9.04 REGULATIONS. The Board may make such additional rules and
regulations, not inconsistent with these Bylaws, as it may deem expedient
concerning the issue, transfer and registration of certificates for shares of
the capital stock of the Corporation. It may appoint, or authorize any officer
or officers to appoint, one or more transfer agents or one or more registrars
and may further provide that no stock certificate shall be valid until
countersigned by one of such transfer agents and registered by one of such
registrars. Nothing herein shall be construed to prohibit the Corporation from
acting as its own transfer agent or registrar.
9.05 LOST, STOLEN OR DESTROYED CERTIFICATES. The holder of any
certificate representing any share or shares of the capital stock of the
Corporation shall immediately notify the Corporation of any loss, theft, or
destruction of such certificate. The Board may direct that a new certificate or
certificates be issued in the place of any certificate or certificates
theretofore issued by it which the owner thereof shall allege to have been lost,
stolen or destroyed upon the furnishing to the Corporation of an affidavit to
that effect by the person claiming that the certificate has been lost, stolen or
destroyed. When authorizing such issue of a new certificate or certificates,
the Board may, in its discretion, require such owner or his or her legal
representatives to give to the Corporation and its transfer agent(s) and
registrar(s) a bond in such sum, limited or unlimited, and in such form and with
such surety or sureties as the Board in its absolute discretion shall determine,
sufficient to indemnify the Corporation against any claim that may be made
against it on account of the alleged loss, theft or destruction of any such
certificate, or the issuance of a new certificate.
9.06 STOCKHOLDER'S RIGHT OF INSPECTION. Any stockholder of record of
the Corporation, in person or by attorney or other agent, shall, upon written
demand under oath stating the purpose thereof, have the right during the usual
hours for business to inspect for any proper purpose the Corporation's stock
ledger, a list of its stockholders, and its other books and records, and to make
copies or extracts therefrom. A proper purpose shall mean a purpose reasonably
related to such person's interest as a stockholder. In every instance where an
attorney or other agent shall be the person who seeks the right to inspection,
the demand under oath shall be accompanied by a power of attorney or such other
writing which authorized the attorney or other agent to so act on behalf of the
stockholder. The demand under oath shall be directed to the Corporation at its
registered office in Delaware or at its principal place of business.
9.07 REPRESENTATION OF SHARES OF OTHER CORPORATIONS. Any Executive
Officer, Executive Vice President or the Secretary of this Corporation is
authorized to vote, represent and exercise on behalf of this Corporation all
rights incident to all shares of any other corporation or corporations standing
in the name of this Corporation. The authority herein granted to said officers
to vote or represent on behalf of this Corporation any and all shares held by
this Corporation in any other corporation or corporations may be exercised
either by such officers in person or by any person authorized so to do by proxy
or power of attorney duly executed by said officers.
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ARTICLE X
MISCELLANEOUS
10.01 BUDGETS. The Board shall approve all annual and other
significant operating budgets of the Corporation.
10.02 RECORD DATES. In order that the Corporation may determine the
stockholders entitled to notice of, or to vote at, any meeting of stockholders
or any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or to receive payment of any dividend or other distribution
or allotment of any rights, or to exercise any rights in respect of any change,
conversion or exchange of stock or in respect of any other lawful action, the
Board may fix, in advance, a record date, which shall be not more than sixty
(60) nor less than ten (10) days before the date of such meeting, nor more than
sixty (60) days prior to any other action. Only those stockholders of record on
the date so fixed shall be entitled to any of the foregoing rights,
notwithstanding the transfer of any such stock on the books of the Corporation
after any such record date fixed by the Board.
10.03 DIVIDENDS. Subject to any agreement to which the Corporation
is a party or by which it is bound, the Board may declare to be payable, in
cash, in other property or in stock of the Corporation of any class or series,
such dividends in respect of outstanding stock of the Corporation of any class
or series as the Board may at any time deem to be advisable. Before declaring
any such dividend, the Board may cause to be set aside any funds or other
property or assets of the Corporation legally available for the payment of
dividends.
10.04 FISCAL YEAR. The fiscal year of the Corporation shall be
determined by resolution of the Board.
10.05 CORPORATE SEAL. The Corporate Seal shall be circular in form
and shall bear the name of the Corporation and the words and figures denoting
its organization under the laws of the State of Delaware and the year thereof
and otherwise shall be in such form as shall be approved from time to time by
the Board.
10.06 AMENDMENTS. All Bylaws of the Corporation may be amended,
altered or repealed, and new Bylaws may be enacted, by the affirmative vote of
the holders of record of a majority of the issued and outstanding stock of the
Corporation entitled to vote at any annual or special meeting, or by the
affirmative vote of a majority of the directors present at any regular or
special meeting of the Board.
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CERTIFICATE OF SECRETARY
The undersigned certifies:
(1) That the undersigned is duly elected and acting Secretary of CCA
HOLDINGS CORP., a Delaware corporation; and
(2) That the foregoing Amended and Restated Bylaws constitute the
Bylaws of the Corporation adopted by the Board on the 10th day of August, 1995.
IN WITNESS WHEREOF, I have hereunto subscribed my name and
affixed the seal of the Corporation this 10th day of August, 1995.
/s/ Theodore W. Browne, II
_________________________________
Theodore W. Browne, II, Secretary
[SEAL]
<PAGE>
EXHIBIT 3.3
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION OF
CCA ACQUISITION CORP.
CCA Acquisition Corp., a corporation organized and existing under the
laws of the State of Delaware (the "Corporation"), hereby certifies as follows:
1. The name of the Corporation is CCA Acquisition Corp.
2. The original Certificate of Incorporation of the Corporation was
filed with the Secretary of State of the State of Delaware on June 27, 1994.
3. This Amended and Restated Certificate of Incorporation restates
and further amends the Certificate of Incorporation of the Corporation as
heretofore amended and has been duly adopted by the Board of Directors and
approved by the stockholders of the Corporation in accordance with the
provisions of Sections 242 and 245 of the General Corporation Law of the State
of Delaware. The text of the Certificate of Incorporation as amended and
restated shall be read in full as follows:
1. The name of the Corporation is CCA Acquisition Corp.
2. The address of its registered office in the State of Delaware is
the Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle
County, Delaware 19801. The name of its registered agent at such address
is The Corporation Trust Company.
3. The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
4. The Corporation is authorized to issue One Hundred (100) shares
of Common Stock, $.01 par value per share.
5. The Corporation is to have perpetual existence.
<PAGE>
6. Elections of directors of the Corporation need not be by written
ballot unless the By-laws of the Corporation so provide.
7. (a) A director of the Corporation shall not be personally liable
to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of
the director's duty of loyalty to the Corporation or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
General Corporation Law of the State of Delaware or (iv) for any
transaction from which the director derives an improper personal benefit.
If the General Corporation Law of the State of Delaware is amended after
the date of filing of this Amended and Restated Certificate of
Incorporation to authorize corporate action further eliminating or limiting
the personal liability of directors, then the liability of a director of
the Corporation shall be eliminated or limited to the fullest extent
permitted by the General Corporation Law of the State of Delaware as so
amended.
Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing in respect of any act
or omission occurring prior to the time of such repeal or modification.
(b) The Corporation shall indemnify, to the fullest extent now or
hereafter permitted by the General Corporation Law of the State of
Delaware, any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the
fact that he or she is or was or has agreed to become a director or officer
of the Corporation, or is or was serving or has agreed to serve at the
request of the Corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, or by reason of any
action alleged to be taken or omitted in such capacity, and may to the same
extent indemnify any person who was or is a party or is threatened to be
made a party to such an action, suit or proceeding by reason of the fact
that he or she is
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<PAGE>
or was or has agreed to become an employee or agent of the Corporation, or
is or was serving or has agreed to serve at the request of the Corporation
as an employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement in connection with such
action, suit or proceeding or any appeal therefrom.
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<PAGE>
IN WITNESS WHEREOF, CCA Acquisition Corp. has caused this Amended and
Restated Certificate of Incorporation to be signed by Jerald L. Kent, its
Executive Vice President, and attested by Theodore W. Browne, II, its
Secretary, this 9th day of February, 1995.
By: /s/ Jerald L. Kent
__________________________
Jerald L. Kent
Executive Vice President
ATTEST:
By: /s/ Theodore W. Browne, II
___________________________
Theodore W. Browne, II
Secretary
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<PAGE>
EXHIBIT 3.4
AMENDED AND RESTATED BYLAWS
OF
CCA ACQUISITION CORP.
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I OFFICES............................................... 1
Section 1.01 REGISTERED OFFICE....................................... 1
Section 1.02 OTHER OFFICES........................................... 1
ARTICLE II MEETINGS OF STOCKHOLDERS.............................. 1
Section 2.01 ANNUAL MEETINGS......................................... 1
Section 2.02 SPECIAL MEETINGS........................................ 1
Section 2.03 NOTICE OF MEETING....................................... 1
Section 2.04 LIST OF STOCKHOLDERS.................................... 2
Section 2.05 QUORUM.................................................. 2
Section 2.06 ADJOURNMENTS............................................ 2
Section 2.07 VOTING.................................................. 2
Section 2.08 PROXIES................................................. 3
Section 2.09 JUDGES OF ELECTION...................................... 3
Section 2.10 WRITTEN CONSENT......................................... 3
ARTICLE III BOARD................................................. 3
Section 3.01 NUMBER.................................................. 3
Section 3.02 ELECTION AND TERM OF OFFICE............................. 3
Section 3.03 VACANCIES AND ADDITIONAL DIRECTORSHIPS.................. 4
Section 3.04 POWERS.................................................. 4
Section 3.05 RESIGNATION OF DIRECTORS................................ 4
Section 3.06 REMOVAL OF DIRECTORS.................................... 4
Section 3.07 COMPENSATION OF DIRECTORS............................... 4
Section 3.08 RELIANCE ON ACCOUNTS AND REPORTS, ETC................... 4
ARTICLE IV MEETING OF THE BOARD.................................. 4
Section 4.01 PLACE................................................... 4
Section 4.02 REGULAR MEETINGS........................................ 5
Section 4.03 SPECIAL MEETINGS........................................ 5
Section 4.04 QUORUM.................................................. 5
Section 4.05 ADJOURNED MEETINGS...................................... 5
Section 4.06 WRITTEN CONSENT......................................... 5
Section 4.07 COMMUNICATIONS EQUIPMENT................................ 5
Section 4.08 WAIVER OF NOTICE........................................ 5
Section 4.09 OFFICERS OF THE BOARD................................... 5
ARTICLE V COMMITTEES OF THE BOARD............................... 6
Section 5.01 DESIGNATION, POWER AND ALTERNATE MEMBERS AND
TERM OF OFFICE........................................ 6
Section 5.02 MEETINGS, NOTICES AND RECORDS........................... 6
Section 5.03 QUORUM AND MANNER OF ACTING............................. 6
Section 5.04 RESIGNATIONS............................................ 7
Section 5.05 REMOVAL................................................. 7
Section 5.06 VACANCIES............................................... 7
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
ARTICLE VI OFFICERS.............................................. 7
Section 6.01 OFFICERS AND MANAGEMENT COMMITTEE....................... 7
Section 6.02 DUTIES.................................................. 7
Section 6.03 RESIGNATIONS............................................ 8
Section 6.04 REMOVAL................................................. 8
Section 6.05 VACANCIES............................................... 8
Section 6.06 SECRETARY............................................... 8
Section 6.07 ASSISTANT SECRETARIES................................... 8
Section 6.08 TREASURER............................................... 8
Section 6.09 ASSISTANT TREASURERS.................................... 9
ARTICLE VII INDEMNIFICATION....................................... 9
Section 7.01 ACTIONS OTHER THAN BY OR IN THE
RIGHT OF THE CORPORATION.............................. 9
Section 7.02 ACTIONS BY OR IN THE RIGHT OF THE CORPORATION........... 9
Section 7.03 DETERMINATION OF RIGHT OF INDEMNIFICATION............... 9
Section 7.04 INDEMNIFICATION AGAINST EXPENSES OF SUCCESSFUL PARTY.... 9
Section 7.05 ADVANCE OF EXPENSES..................................... 10
Section 7.06 OTHER RIGHTS AND REMEDIES............................... 10
Section 7.07 INSURANCE............................................... 10
Section 7.08 CONSTITUENT CORPORATIONS................................ 10
Section 7.09 EMPLOYEE BENEFIT PLANS.................................. 10
Section 7.10 BROADEST LAWFUL INDEMNIFICATION......................... 11
Section 7.11 TERM.................................................... 11
Section 7.12 SEVERABILITY............................................ 11
Section 7.13 AMENDMENTS.............................................. 11
ARTICLE VIII DEPOSIT OF CORPORATE FUNDS............................ 12
Section 8.01 BORROWING............................................... 12
Section 8.02 DEPOSITS................................................ 12
Section 8.03 CHECKS, DRAFTS, ETC..................................... 12
ARTICLE IX CERTIFICATES OF STOCK................................. 12
Section 9.01 STOCK CERTIFICATES...................................... 12
Section 9.02 BOOKS OF ACCOUNT AND RECORD OF STOCKHOLDERS............. 12
Section 9.03 TRANSFER OF SHARES...................................... 13
Section 9.04 REGULATIONS............................................. 13
Section 9.05 LOST, STOLEN OR DESTROYED CERTIFICATES.................. 13
Section 9.06 STOCKHOLDER'S RIGHT OF INSPECTION....................... 13
Section 9.07 REPRESENTATIONS OF SHARES OF OTHER CORPORATIONS......... 13
ARTICLE X MISCELLANEOUS......................................... 14
Section 10.01 BUDGETS................................................. 14
Section 10.02 RECORD DATES............................................ 14
Section 10.03 DIVIDENDS............................................... 14
Section 10.04 FISCAL YEAR............................................. 14
Section 10.05 CORPORATE SEAL.......................................... 14
Section 10.06 AMENDMENTS.............................................. 14
</TABLE>
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<PAGE>
AMENDED AND RESTATED BYLAWS
OF
CCA ACQUISITION CORP.
a Delaware Corporation
(the "Corporation")
ARTICLE I
OFFICES
1.01 REGISTERED OFFICE. The registered office shall be maintained at
1209 Orange Street, Wilmington, New Castle County, Delaware 19801 and The
Corporation Trust Company is the registered agent.
1.02 OTHER OFFICES. The Corporation may also have other offices,
either within or without the State of Delaware, at such place or places as the
Board of Directors (the "Board") may from time to time appoint or the business
of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.01 ANNUAL MEETING. The date of the annual meeting of the
stockholders for the election of directors and for the transaction of such other
business as properly may come before such meeting shall be determined by
resolution of the Board to be a specific day in each year, if not a legal
holiday, and, if a legal holiday, on the next succeeding business day, at the
time and place and within or without the State of Delaware as may be designed by
the Board and set forth in the notice of the meeting or a duly executed waiver
of notice thereof, provided, however, that in any year, in advance of the date
specified for the annual meeting, the Board may act to change the meeting date
for that year.
2.02 SPECIAL MEETINGS. Special meetings of the stockholders for any
proper purpose or purposes may be called at any time by the Board or an
Executive Officer, to be held on the date, at the time and place within or
without the State of Delaware as the Board or an Executive Officer, whichever
has called the meeting, shall direct. A special meeting of the stockholders
also shall be called whenever stockholders owning a majority of the shares of
the Corporation then issued and outstanding and entitled to vote on all of the
matters to be submitted to stockholders of the Corporation at such special
meeting shall make written application to an Executive Officer. Any such
written request shall state a proper purpose or purposes of the meeting and
shall be delivered to an Executive Officer.
2.03 NOTICE OF MEETING. Notice, signed by the Secretary of the
Corporation or an Executive Officer, of every annual or special meeting of
stockholders shall be prepared in writing and personally delivered; mailed,
postage prepaid; or sent by facsimile transmission to each stockholder entitled
to vote at such meeting not less than ten (10) nor more than sixty (60) days
before the meeting, except as otherwise provided by statute. Every notice of a
meeting of the stockholders shall state the place, date and hour of the meeting,
and in the case of a special meeting, shall also state the purpose or purposes
for which the meeting is called. If mailed, such notice shall be directed to a
stockholder at his address as it shall appear on the stock record book of the
Corporation, unless the stockholder shall have filed with the Secretary a
written
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request that notice intended for him or her be mailed to some other address, in
which case it shall be mailed to the address designated in such request. Notice
shall be deemed given when personally delivered or deposited in the United
States mail, as the case may be; provided, however, that such notice may also be
given by telegram, facsimile or other means of electronically transmitted
written copy and in such case shall be deemed given when ordered or, if a
delayed delivery is ordered, as of such delayed delivery time.
2.04 LIST OF STOCKHOLDERS. A complete list of the stockholders
entitled to vote at each meeting of stockholders, arranged in alphabetical order
and showing the address of each such stockholder and the number of shares
registered in the name of each such stockholder, shall be open to the
examination of any stockholder, for any purpose germane to such meeting, during
ordinary business hours, for a period of at least ten (10) days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of such meeting, or, if not
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting and during the whole time
thereof, and may be inspected by any stockholder who is present.
2.05 QUORUM. The presence at any meeting, in person or by proxy, of
the holders of record of a majority of the shares then issued and outstanding
and entitled to vote shall be necessary and sufficient to constitute a quorum
for the transaction of business, except where otherwise provided by statute.
2.06 ADJOURNMENTS. In the absence of a quorum, stockholders
representing a majority of the shares then issued and outstanding and entitled
to vote, present in person or by proxy, or, if no stockholder entitled to vote
is present in person or by proxy, any officer entitled to preside at or act as
secretary of such meeting, may adjourn the meeting from time to time without
notice other than announcement at the meeting, until a quorum shall be present
or represented. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting originally noticed. If the adjournment is for more than thirty (30)
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.
2.07 VOTING.
(a) At each meeting of the stockholders, each stockholder shall be
entitled to vote in person or by proxy each share or fractional share of the
stock of the Corporation which has voting rights on the matter in question and
which shall have been held by him or her and registered in his name on the books
of the Corporation:
(i) on the date fixed pursuant to Section 10.02 of these Bylaws
as the record date for the determination of stockholders entitled to notice of
and to vote at such meeting, or
(ii) if no such record date shall have been so fixed, then (x) at
the close of business on the day next preceding the day on which notice of the
meeting shall be given or (y) if notice of the meeting shall be waived, at the
close of business on the day next preceding the day on which the meeting shall
be held.
(b) Shares of its own stock belonging to the Corporation or to
another corporation, if a majority of the shares entitled to vote in the
election of directors in such other corporation is held, directly or indirectly,
by the Corporation, shall neither be entitled to vote nor be counted for quorum
purposes. Persons holding stock of the Corporation in a fiduciary capacity shall
be entitled to vote such stock. Persons whose stock is pledged shall be entitled
to vote, unless in the transfer by the pledgor on the books of the Corporation
he or she shall have expressly empowered the pledgee to vote thereon, in which
case only the pledgee, or his or her proxy, may represent such stock and vote
thereon. Stock having voting power standing of record in the
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<PAGE>
names of two or more persons, whether fiduciaries, members of a partnership,
joint tenants, tenants in common, tenants by the entirety or otherwise, or with
respect to which two or more persons have the same fiduciary relationship, shall
be voted in accordance with the provisions of the General Corporation Law of
Delaware.
(c) At any meeting of the stockholders all matters except as
otherwise provided in the Certificate of Incorporation, in these Bylaws, or by
law, shall be decided by the vote of a majority in voting interest of the
stockholders present in person or by proxy and entitled to vote thereat and
thereon. The vote at any meeting of the stockholders on any question need not be
by ballot, unless so directed by the chairman of the meeting. On a vote by
ballot, each ballot shall be signed by the stockholder voting, or by his proxy
if there be such proxy, and it shall state the number of shares voted.
2.08 PROXIES. Any stockholder is entitled to vote by proxy, provided
that the instrument authorizing such proxy to act shall have been executed in
writing (which shall include telegram, facsimile or other means of
electronically transmitted written copy) by the stockholder himself or herself
or by his or her duly authorized attorney-in-fact and delivered to the secretary
of the meeting. No proxy shall be voted or acted upon after three years from
its date, unless the proxy provides for a longer period.
The attendance at any meeting of a stockholder who may
theretofore have given a proxy shall not have the effect of revoking the same
unless he shall in writing so notify the secretary of the meeting prior to the
voting of the proxy.
2.09 JUDGES OF ELECTION. The Board may appoint judges of election to
serve at any election of directors and at balloting on any other matter that may
properly come before a meeting of stockholders. If no such appointment shall be
made, or if any of the judges so appointed shall fail to attend, or refuse or be
unable to serve, then such appointment may be made by the presiding officer of
the meeting at the meeting.
2.10 WRITTEN CONSENT. Any action which may be taken at any annual or
special meeting of stockholders may be taken without a meeting and without a
vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Whenever any such action is taken without a meeting by less than unanimous
consent, all stockholders who have not consented in writing must be promptly
informed in writing of such action.
ARTICLE III
BOARD
3.01 NUMBER. The number of directors which shall constitute the
whole Board shall be fixed at five (5) persons, until changed from time to time
by resolution of the Board or stockholders at the annual meeting or any special
meeting called for that purpose.
3.02 ELECTION AND TERM OF OFFICE. Directors shall be elected at the
annual meeting of the stockholders except as provided in Section 3.03 of this
Article III. Each director (whether elected at an annual meeting or to fill a
vacancy or otherwise) shall continue in office until a successor shall have been
elected and qualified or until his or her death, resignation or removal in the
manner hereinafter provided, whichever shall first occur.
3.03 VACANCIES AND ADDITIONAL DIRECTORSHIPS. If any vacancy shall
occur among the directors by reason of death, resignation, or removal, or as the
result of an increase in the number of
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<PAGE>
directorships, the directors then in office shall continue to act and may fill
any such vacancy by a vote of the majority of directors then in office, though
less than a quorum, and each director so chosen shall hold office until the next
annual election of directors and until his or her successor shall be duly
elected and shall qualify, or until his or her earlier death, resignation or
removal.
3.04 POWERS. The business of the Corporation shall be managed by its
Board, which may exercise all powers of the Corporation and do all lawful acts
and things as are not by law or by the Certificate of Incorporation or these
Bylaws reserved to the stockholders.
3.05 RESIGNATION OF DIRECTORS. Any director may resign at any time
by giving written notice of such resignation to the Board or an Executive
Officer. Any such resignation shall take effect at the time specified therein
or, if no time be specified, upon receipt thereof by the Board or an Executive
Officer; and unless specified therein, the acceptance of such resignation shall
not be necessary to make it effective.
3.06 REMOVAL OF DIRECTORS. At the annual meeting or any special
meeting of the stockholders, duly called as provided in these Bylaws, any
director or directors may, by the affirmative vote of the holders of a majority
of the shares of stock issued and outstanding and entitled to vote for the
election of directors, be removed from office, either with or without cause. At
such meeting a successor or successors may be elected by a majority of the votes
cast, or if any such vacancy is not so filled, it may be filled by the directors
as provided in Section 3.03 of this Article III.
3.07 COMPENSATION OF DIRECTORS. Directors may receive such
reasonable compensation for their services, whether in the form of salary or a
fixed fee for attendance at Board or Board committee meetings, with expenses, if
any, as the Board may from time to time determine. Nothing herein contained
shall be construed to preclude any director from serving the Corporation in any
other capacity and receiving compensation therefor.
3.08 RELIANCE ON ACCOUNTS AND REPORTS, ETC. A director, or a member
of any committee designed by the Board shall, in the performance of his duties,
be fully protected in relying in good faith upon the records of the Corporation
and upon information, opinions, reports or statements presented to the
Corporation by any of the Corporation's officers or employees, or committees
designated by the Board, or by any other person as to the matters the director
or member reasonably believes are within such other person's professional or
expert competence and who has been selected with reasonable care by or on behalf
of the Corporation.
ARTICLE IV
MEETINGS OF THE BOARD
4.01 PLACE. The Board of the Corporation may hold meetings, both
regular and special, either within or without the State of Delaware.
4.02 REGULAR MEETINGS. The Board by resolution may provide for the
holding of regular meetings and may fix the times and places at which such
meetings shall be held. Notice of regular meetings shall not be required to be
given if the time and place has been fixed by Board resolution, provided that
whenever the time or place of regular meetings shall be fixed or changed, notice
of such action shall be mailed promptly to each director who shall not have been
present at the meeting at which such action was taken. If the time and place
for regular meetings has not been fixed by the Board, then at least 10 days
written notice addressed to him or her at his or her residence or usual place of
business, unless he or she shall have filed with the Secretary a written request
that notices intended for him or her be mailed to some other address, in
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<PAGE>
which case it shall be mailed to the address designated in such request, or
shall be sent to him or her at such place by telegram, facsimile or other means
of electronically transmitted written copy.
4.03 SPECIAL MEETINGS. Special meetings of the Board may be called
by any Executive Officer and shall be called by any Executive Officer at the
written request of any director. Except as otherwise required by statute,
notice of each special meeting shall be given to each director, if by mail, when
addressed to him or her at his or her residence or usual place of business,
unless he or she shall have filed with the Secretary a request that notices
intended for him or her be mailed to some other address, in which case it shall
be mailed to the address designated in such request, at least 72 hours before,
or shall be sent to him or her at such place by telegram, facsimile, telephone
or other means of electronically transmitted written copy, or delivered to him
or her personally, at least 48 hours before the date on which the meeting is to
be held. Such notice shall state the time and place of such meeting, but need
not state the purposes thereof, unless otherwise required by statute, the
Certificate of Incorporation of the Corporation or these Bylaws.
4.04 QUORUM. At any meeting of the Board two-thirds (2/3) of the
whole Board shall constitute a quorum for the transaction of business, and the
act of the majority of those present at any meeting at which a quorum is present
shall be sufficient for the act of the Board, except as may be otherwise
specifically provided by statute or by the Certificate of Incorporation of the
Corporation.
4.05 ADJOURNED MEETINGS. If a quorum shall not be present at a
meeting of the Board, the directors present thereat may adjourn the meeting from
time to time, until a quorum shall be present. Seventy-two (72) hours' notice
of any such adjournment shall be given personally to each director who was not
present at the meeting at which such adjournment was taken, and unless announced
at the meeting, to the other directors; provided, that then ten (10) days'
notice shall be given if notice is given by mail.
4.06 WRITTEN CONSENT. Any action required or permitted to be taken
at any meeting of the Board may be taken without a meeting if all the members of
the Board consent thereto in writing, and the writing or writings are filed with
the minutes of the proceedings of the Board.
4.07 COMMUNICATIONS EQUIPMENT. Any one or more members of the Board
may participate in any meeting of the Board by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and participation by such means shall be deemed
to constitute presence in person at such meeting.
4.08 WAIVER OF NOTICE. Notice of any meeting need not be given to
any directors who shall attend such meeting in person or shall waive notice
thereof, before or after such meeting, in writing or by telegram, facsimile or
other means of electronically transmitted written copy.
4.09 OFFICERS OF THE BOARD. The Board shall have a Chairman of the
Board and may, at the discretion of the Board, have one or more Vice Chairmen.
The Chairman of the Board and the Vice Chairmen shall be appointed from time to
time by the Board and shall have such powers and duties as shall be designated
by the Board.
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<PAGE>
ARTICLE V
COMMITTEES OF THE BOARD
5.01 DESIGNATION, POWER AND ALTERNATE MEMBERS AND TERM OF OFFICE.
The Board may, by resolution passed by a majority of the whole Board, designate
one (1) or more committees. Each such committee shall consist of one (1) or
more of the directors of the Corporation. Any such committee, to the extent
provided in such resolution, shall have and may exercise the power of the Board
in the management of the business and affairs of the Corporation, and may
authorize the seal of the Corporation to be affixed to all papers which may
require it. The Board may designate one (1) or more directors as alternate
members of any committee who, in the order specified by the Board, may replace
any absent or disqualified member at any meeting of the committee. If at a
meeting of any committee one (1) or more of the members thereof should be absent
or disqualified, and if either the Board has not so designated any alternate
member or members, or the number of absent or disqualified members exceeds the
number of alternate members who are present at such meeting, then the member or
members of such committee (including alternates) present at any meeting and not
disqualified from voting, whether or not he or she or they constitute a quorum,
may unanimously appoint another director to act at the meetings in the place of
any such absent or disqualified member. The term of office of the members of
each committee shall be as fixed from time to time by the Board, subject to the
term of office of the directors and these Bylaws; provided, however, that any
--------
committee member who ceases to be a member of the Board shall ipso facto cease
---- -----
to be a committee member. Each committee shall appoint a secretary, who may be
the Secretary or an Assistant Secretary of the Corporation.
5.02 MEETINGS, NOTICES AND RECORDS. Each committee may provide for
the holding of regular meetings, with or without notice, and a majority of the
members of any such committee may fix the time, place and procedure for any such
meeting. Special meetings of each committee shall be held upon call by or at
the direction of its chairman or, if there be no chairman, by or at the
direction of any two (2) of its members, at the time and place specified in the
respective notices or waivers of notice thereof. Notice of each special meeting
of a committee shall be mailed to each member of such committee, addressed to
him or her at his or her residence or usual place of business, unless he or she
shall have filed with the Secretary a written request that notices intended for
him or her be mailed to some other address, in which case it shall be mailed to
the address designated in such request, at least 72 hours before the day on
which the meeting is to be held, or shall be sent by telegram, facsimile or
other means of electronically transmitted written copy, addressed to him at such
place, or telephoned or delivered to him or her personally, at least 48 hours
before the day on which the meeting is to be held. Notice of any meeting of a
committee need not be given to any member thereof who shall attend the meeting
in person or who shall waive notice thereof by telegram, facsimile or other
means of electronically transmitted written copy. Notice of any adjourned
meeting need not be given. Each committee shall keep a record of its
proceedings.
Each committee may meet and transact any and all business delegated to
that committee by the Board by means of a conference telephone or similar
communications equipment provided that all persons participating in the meeting
are able to hear and communicate with each other. Participation in a meeting by
means of conference telephone or similar communication shall constitute presence
in person at such meeting.
5.03 QUORUM AND MANNER OF ACTING. At each meeting of any committee
the presence of a majority of its members then in office shall be necessary and
sufficient to constitute a quorum for the transaction of business, and the act
of a majority of the members present at any meeting at which a quorum is present
shall be the act of such committee; in the absence of a quorum, a majority of
the members present at the time and place of any meeting may adjourn the meeting
from time to time until a quorum shall be present. Subject to the foregoing and
other provisions of these Bylaws and except as otherwise determined by the
Board, each committee may make rules for the conduct of its business. Any
determination made in writing and signed by all the members of such committee
shall be as effective as if made by such committee at a meeting.
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<PAGE>
5.04 RESIGNATIONS. Any member of a committee may resign at any time
by giving written notice of such resignation to the Corporation, the Board, or
an Executive Officer of the Corporation. Unless otherwise specified in such
notice, such resignation shall take effect upon receipt thereof by the Board or
any Executive Officer of the Corporation.
5.05 REMOVAL. Any member of any committee may be removed at any time
by the affirmative vote of a majority of the whole Board with or without cause.
5.06 VACANCIES. If any vacancy shall occur in any committee by
reason of death, resignation, disqualification, removal or otherwise, the
remaining members of such committee, though less than a quorum, shall continue
to act until such vacancy is filled by the Board.
ARTICLE VI
OFFICERS
6.01 OFFICERS AND MANAGEMENT COMMITTEE. The Board shall determine
the titles and duties of the officers of the Corporation who shall be
responsible for the overall supervision, direction and control of the business
and affairs of the Corporation (hereinafter referred to as the "Executive
Officers"), and shall elect persons to hold such positions. The Corporation
also shall have one or more Executive Vice-Presidents and Senior Vice-
Presidents, as well as a Treasurer and a Secretary. The Board also may, but
shall not be required to, appoint a Management Committee which shall be
comprised of the Executive Officers plus such other officers as may be selected
by the Board or in the absence of Board action by the Chairman of the Management
Committee. Any Executive Officer or Executive Vice President may, if so
designated by the Board, function in the capacity of Chief Executive Officer,
Chief Financial Officer, or Chief Operating Officer. In the absence or
disability of an elected Executive Officer, another Executive Officer shall
perform such other officer's duties. One of the Executive Officers shall
preside at meetings of stockholders.
The officers of the Corporation may also include one or more Regional
or other Vice-Presidents and one or more Assistant Secretaries or Assistant
Treasurers, each of whom shall be elected by the Board or appointed by the
Executive Officers. Any number of offices may be held by the same person
subject to any limits imposed by the General Corporation Law of the State of
Delaware; provided that different officers shall have such titles and duties as
may be necessary to enable the Corporation to sign instruments and stock
certificates which comply with Sections 103(a)(2) and 158 of the General
Corporation Law of the State of Delaware.
Each officer of the corporation elected by the Board or appointed by
the Executive Officers shall hold office until his or her successor is duly
elected or appointed and qualified or until his or her earlier resignation or
removal.
6.02 DUTIES. All officers, as between themselves and the
Corporation, shall have such authority and perform such duties in the management
of the Corporation as may be provided in these Bylaws, or, to the extent not so
provided, as may be provided by resolution of the Board or the supervising
Executive Officers.
6.03 RESIGNATIONS. Any officer may resign at any time by giving
written notice of such resignation to the Board or any Executive Officer.
Unless otherwise specified in such written notice, such resignation shall take
effect upon receipt thereof by the Board or any such Executive Officer.
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6.04 REMOVAL. All officers serve at the sole pleasure and in the
sole discretion of the Board. Any Executive Officer or other officer elected by
the Board may be removed at any time, either with or without cause, by the vote
of a majority of all of the directors then in office. Any officers appointed by
an Executive Officer may be removed at any time by an Executive Officer with or
without cause. Such power of removal from office shall not be abridged by any
employment contract or other agreement.
6.05 VACANCIES. A vacancy in any office by reason of death,
resignation, removal, disqualification or any other cause shall be filled for
the unexpired portion of the term in the manner prescribed by these Bylaws for
regular election or appointment to such office.
6.06 SECRETARY. The Secretary shall: (a) record all the proceedings
of the meetings of the stockholders, the Board, and all committees of the Board
in a book or books to be kept for that purpose; (b) cause all notices to be duly
given in accordance with the provisions of these Bylaws as required by statute;
(c) whenever any committee shall be appointed in pursuance of a resolution of
the Board, furnish the chairman of such committee with a copy of such
resolution; (d) be custodian of the records and of the seal of the Corporation,
and cause such seal to be affixed to all certificates representing capital stock
of the Corporation prior to the issuance thereof and to all instruments the
execution of which on behalf of the Corporation under its seal shall have been
duly authorized; (e) see that the lists, books, reports, statements,
certificates and other documents and records required by statute are properly
kept and filed; (f) have charge of the stock record and stock transfer books of
the Corporation, and exhibit such stock books at all reasonable times to such
persons who are entitled by statute to have access thereto; and (g) in general,
perform all duties incident to the office of Secretary and such other duties as
are given to him or her by these Bylaws or as from time to time may be assigned
to him or her by the Board or the Executive Officers.
6.07 ASSISTANT SECRETARIES. At the request of the Secretary or in
his or her absence or disability, the Assistant Secretary designated by him or
her (or in the absence of such designation, the Assistant Secretary designated
by the Board or any Executive Officer) shall perform all the duties of the
Secretary, and, when so acting, shall have all the powers of and be subject to
all restrictions upon the Secretary. The Assistant Secretaries shall perform
such other duties as from time to time may be assigned to them by the Board or
the Executive Officers.
6.08 TREASURER. The Treasurer shall: (a) have charge of and
supervision over and be responsible for the funds, securities, receipts and
disbursements of the Corporation; (b) cause the monies and other valuable
effects of the Corporation to be deposited in the name and to the credit of the
Corporation in banks or trust companies or with bankers or other depositories or
to be otherwise dealt with in such manner as the Board may direct; (c) select
authorized depositories of the Corporation and cause the funds of the
Corporation to be disbursed by checks or drafts upon the authorized depositories
of the Corporation, and cause to be taken and preserved proper vouchers for all
monies disbursed; (d) render to the Board and the Executive Officers, whenever
requested, a statement of the financial condition of the Corporation and of all
his or her transactions as Treasurer; (e) cause to be kept at the Corporation's
principal office correct books of account of all its business and transactions
and such duplicate books of account as he or she shall determine and upon
application cause such books or duplicates thereof to be exhibited to any
Director; (f) be empowered, from time to time, to require from the officers or
agents of the Corporation reports or statements giving such information
concerning transactions of the Corporation; and (g) in general, perform all
duties incident to the office of Treasurer and such other duties as are given to
him or her by these Bylaws or as from time to time may be assigned to him by the
Board or the Executive Officers.
6.09 ASSISTANT TREASURERS. At the request of the Treasurer or any of
the Executive Officers, the Assistant Treasurer shall perform all the duties of
the Treasurer, and, when so acting, shall have all the powers of and be subject
to all restrictions upon the Treasurer. The Assistant Treasurer shall perform
such other duties as from time to time may be assigned by the Board, the
Executive Officers or the Treasurer.
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ARTICLE VII
INDEMNIFICATION
Section 7.01 ACTIONS OTHER THAN BY OR IN THE RIGHT OF THE CORPORATION.
The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Corporation) by reason of the
fact that he is or was or has agreed to become a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise or as a member of any committee or
similar body, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in, or not opposed to, the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in, or not opposed to, the best interests of the
Corporation, and, with respect to any criminal action or proceeding, that he had
reasonable cause to believe that his conduct was unlawful.
Section 7.02 ACTIONS BY OR IN THE RIGHT OF THE CORPORATION. The
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor by reason of the
fact that he is or was or has agreed to become a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, or as a member of any committee or
similar body, against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit if he acted in good faith and in a manner he reasonably believed
to be in, or not opposed to, the best interests of the Corporation, except that
no indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
Section 7.03 DETERMINATION OF RIGHT OF INDEMNIFICATION. Any
indemnification under Section 7.01 or 7.02 of these Bylaws (unless ordered by a
court) shall be made by the Corporation only as authorized in the specific case
upon a determination that indemnification of the director, officer, employee or
agent is proper in the circumstances because he has met the applicable standard
of conduct set forth in Sections 7.01 and 7.02 of these Bylaws. Such
determination shall be made (a) by the Board by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or proceeding,
or (b) if such a quorum is not obtainable, or, even if obtainable, a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, or (c) by the stockholders.
Section 7.04 INDEMNIFICATION AGAINST EXPENSES OF SUCCESSFUL PARTY.
Notwithstanding the other provisions of this Article VII, to the extent that a
director, officer, employee or agent of the Corporation has been successful on
the merits or otherwise in defense of any action, suit or proceeding referred to
in Section 7.01 or 7.02 of these Bylaws, or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection therewith.
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<PAGE>
Section 7.05 ADVANCE OF EXPENSES. Expenses (including attorneys'
fees) incurred by an officer or director in defending a civil or criminal
action, suit or proceeding may be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding as authorized by the Board
upon receipt of an undertaking by or on behalf of the director or officer, to
repay such amount if it shall ultimately be determined that he is not entitled
to be indemnified by the Corporation as authorized in this Article VII. Such
expenses (including attorneys' fees) incurred by other employees and agents may
be so paid upon such terms and conditions, if any, as the Board deems
appropriate. The Board may authorize the Corporation's counsel to represent
such director, officer, employee or agent in any action, suit or proceeding,
whether or not the Corporation is a party to such action, suit or proceeding.
Section 7.06 OTHER RIGHTS AND REMEDIES. The indemnification and
advancement of expenses provided by, or granted pursuant to, the other Sections
of this Article VII shall not be deemed exclusive and are declared expressly to
be nonexclusive of any other rights to which those seeking indemnification or
advancements of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
Section 7.07 INSURANCE. Upon resolution passed by the Board, the
Corporation may purchase and maintain insurance on behalf of any person who is
or was a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise or as a member of any committee or similar body against any liability
asserted against him and incurred by him in any such capacity, or arising out of
his status as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of this Article VII.
Section 7.08 CONSTITUENT CORPORATIONS. For the purposes of this
Article VII, references to "the Corporation" include in addition to the
resulting corporation, any constituent corporation (including any constituent of
a constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise or as a member of any committee or similar body, shall
stand in the same position under the provisions of this Article VII with respect
to the resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued.
Section 7.09 EMPLOYEE BENEFIT PLANS. For the purposes of this
Article VII, references to "other enterprises" shall include employee benefit
plans; references to "fines" shall include any excise taxes assessed on a person
with respect to any employee benefit plan; and references to "serving at the
request of the Corporation" shall include any service as a director, officer,
employee or agent of the Corporation which imposes duties on, or involves
services by, such director, officer, employee or agent with respect to an
employee benefit plan, its participants or beneficiaries; and a person who
acted in good faith and in a manner he reasonably believed to be in the interest
of the participants and beneficiaries of an employee benefit plan shall be
deemed to have acted in a manner "not opposed to the best interests of the
'Corporation' " as referred to in this Article VII.
Section 7.10 BROADEST LAWFUL INDEMNIFICATION. In addition to the
foregoing, the Corporation shall, to the broadest and maximum extent permitted
by Delaware law, as the same exists from time to time (but, in case of any
amendment to or change in Delaware law, only to the extent that such amendment
or change permits the Corporation to provide broader rights of indemnification
than is permitted to the Corporation prior to such amendment or change),
indemnify each person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil,
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<PAGE>
criminal, administrative or investigative by reason of the fact that he is or
was a director or officer of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding. In addition, the Corporation shall, to the broadest
and maximum extent permitted by Delaware law, as the same may exist from time to
time (but, in case of any amendment to or change in Delaware law, only to the
extent that such amendment or change permits the Corporation to provide broader
rights of payment of expenses incurred in advance of the final disposition of an
action, suit or proceeding than is permitted to the Corporation prior to such
amendment or change), pay to such person any and all expenses (including
attorneys' fees) incurred in defending or settling any such action, suit or
proceeding in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of the director or
officer, to repay such amount if it shall ultimately be determined by a final
judgment or other final adjudication that he is not entitled to be indemnified
by the Corporation as authorized in this Section 7.10. The first sentence of
this Section 7.10 to the contrary notwithstanding, the Corporation shall not
indemnify any such person with respect to any of the following matters: (a)
remuneration paid to such person if it shall be determined by a final judgment
or other final adjudication that such remuneration was in violation of law; or
(b) any accounting of profits made from the purchase or sale by such person of
the Corporation's securities within the meaning of Section 16(b) of the
Securities Exchange Act of 1934 and amendments thereto or similar provisions of
any federal, state or local statutory law; or (c) actions brought about or
contributed to by the dishonesty of such person, if a final judgment or other
final adjudication adverse to such person establishes that acts of active and
deliberate dishonesty were committed or attempted by such person with actual
dishonest purpose and intent and were material to the adjudication; or (d)
actions based on or attributable to such person having gained any personal
profit or advantage to which he was not entitled, in the event that a final
judgment or other final adjudication adverse to such person establishes that
such person in fact gained such personal profit or other advantage to which he
was not entitled; or (e) any matter in respect of which a final decision by a
court with competent jurisdiction shall determine that indemnification is
unlawful; provided, however, that the Corporation shall perform its obligations
under the second sentence of this Section 7.10 on behalf of such person until
such time as it shall be ultimately determined by a final judgment or other
final adjudication that he is not entitled to be indemnified by the Corporation
as authorized by the first sentence of this Section 7.10 by virtue of any of the
preceding clauses (a) (b) (c) (d) or (e).
Section 7.11 TERM. The indemnification and advancement of expenses
provided by, or granted pursuant to, this Article VII shall, unless otherwise
provided when authorized or ratified, continue as to a person who has ceased to
be a director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
Section 7.12 SEVERABILITY. If any part of this Article VII shall be
found, in any action, suit or proceeding or appeal therefrom or in any other
circumstances or as to any particular officer, director, employee or agent to be
unenforceable, ineffective or invalid for any reason, the enforceability, effect
and validity of the remaining parts or of such parts in other circumstances
shall not be affected, except as otherwise required by applicable law.
Section 7.13 AMENDMENTS. The foregoing provisions of this Article
VII shall be deemed to constitute an agreement between the Corporation and each
of the persons entitled to indemnification hereunder, for as long as such
provisions remain in effect. Any amendment to the foregoing provisions of this
Article VII which limits or otherwise adversely affects the scope of
indemnification or rights of any such persons hereunder shall, as to such
persons, apply only to claims arising, or causes of action based on actions or
events occurring, after such amendment and delivery of notice of such amendment
is given to the person or persons so affected. Until notice of such amendment
is given to the person or persons whose rights hereunder are adversely affected,
such amendment shall have no effect on such rights of such persons hereunder.
Any person entitled to indemnification under the foregoing provisions of this
Article VII shall, as to any act or
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omission occurring prior to the date of receipt of such notice, be entitled to
indemnification to the same extent as had such provisions continued as Bylaws of
the Corporation without such amendment.
ARTICLE VIII
DEPOSIT OF CORPORATE FUNDS
8.01 BORROWING. No loans or advances shall be obtained or contracted
for, by or on behalf of the Corporation and no negotiable paper shall be issued
in its name, unless and except as authorized by the Board. Such authorization
may be general or confined to specific instances.
8.02 DEPOSITS. All funds of the Corporation not otherwise employed
shall be deposited from time to time to its credit in such banks or trust
companies or with such bankers or other depositories as the Board may select, or
as may be selected by any officer or officers or agent or agents authorized to
do so by the Board.
8.03 CHECKS, DRAFTS, ETC. All checks, drafts or other orders for the
payment of money, and all negotiable and non-negotiable notes or other
negotiable or non-negotiable evidences of indebtedness issued in the name of the
Corporation, shall be signed or endorsed by such person or persons and in such
manner as from time to time shall be determined by the Board or the Executive
Officers. The Corporation shall obtain a fidelity bond for such persons with
such signing authority as the Board or the Executive Officers may require.
ARTICLE IX
CERTIFICATES OF STOCK
9.01 STOCK CERTIFICATES. Every holder of capital stock of the
Corporation shall be entitled to have a certificate or certificates in such form
as shall be approved by the Board, certifying the number of shares of capital
stock of the Corporation owned by him or her. The certificates representing
shares of capital stock shall be signed in the name of the Corporation by an
Executive Officer and by the Secretary, an Assistant Secretary, the Treasurer or
an Assistant Treasurer (which signatures may be facsimiles) and sealed with the
seal of the Corporation (which seal may be a facsimile). If any officer,
transfer agent or registrar who shall have signed or whose facsimile signatures
has been placed upon such certificate shall have ceased to be such officer,
transfer agent or registrar before such certificates are issued, they may
nevertheless be issued by the Corporation with the same effect as if such
officer, transfer agent, or registrar were still such at the date of their
issue.
9.02 BOOKS OF ACCOUNT AND RECORD OF STOCKHOLDERS. The books and
records of the Corporation may be kept at such places, within or without the
State of Delaware, as the Board may from time to time determine. The stock
record books and the blank stock certificate books shall be kept by the
Secretary or by any other officer or by the transfer agent or registrar, if any,
designated by the Board. There shall be entered on the stock books of the
Corporation the number of each certificate issued, the number of shares
represented thereby, the name of the person to whom such certificate was issued
and the date of issuance thereof.
9.03 TRANSFER OF SHARES. Transfers of shares of capital stock of the
Corporation shall be made on the stock records of the Corporation only upon
authorization by the registered holder thereof, or by his attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary or
with the transfer agent, and on surrender of the certificate or certificates for
such shares properly endorsed or accompanied by a duly executed stock transfer
power and the payment of all taxes thereon, if any. Except as
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otherwise provided by law, the Corporation shall be entitled to recognize the
exclusive right of a person in whose name any share or shares stand on the
record of stockholders as the owner of such share or shares for all purposes,
including, without limitation, the rights to receive dividends or other
distributions, and to vote as such owner, and the Corporation shall not be bound
to recognize any equitable or legal claim to or interest in any such share or
shares on the part of any other person whether or not the Corporation shall have
express or other notice thereof.
9.04 REGULATIONS. The Board may make such additional rules and
regulations, not inconsistent with these Bylaws, as it may deem expedient
concerning the issue, transfer and registration of certificates for shares of
the capital stock of the Corporation. It may appoint, or authorize any officer
or officers to appoint, one or more transfer agents or one or more registrars
and may further provide that no stock certificate shall be valid until
countersigned by one of such transfer agents and registered by one of such
registrars. Nothing herein shall be construed to prohibit the Corporation from
acting as its own transfer agent or registrar.
9.05 LOST, STOLEN OR DESTROYED CERTIFICATES. The holder of any
certificate representing any share or shares of the capital stock of the
Corporation shall immediately notify the Corporation of any loss, theft, or
destruction of such certificate. The Board may direct that a new certificate or
certificates be issued in the place of any certificate or certificates
theretofore issued by it which the owner thereof shall allege to have been lost,
stolen or destroyed upon the furnishing to the Corporation of an affidavit to
that effect by the person claiming that the certificate has been lost, stolen or
destroyed. When authorizing such issue of a new certificate or certificates,
the Board may, in its discretion, require such owner or his or her legal
representatives to give to the Corporation and its transfer agent(s) and
registrar(s) a bond in such sum, limited or unlimited, and in such form and with
such surety or sureties as the Board in its absolute discretion shall determine,
sufficient to indemnify the Corporation against any claim that may be made
against it on account of the alleged loss, theft or destruction of any such
certificate, or the issuance of a new certificate.
9.06 STOCKHOLDER'S RIGHT OF INSPECTION. Any stockholder of record of
the Corporation, in person or by attorney or other agent, shall, upon written
demand under oath stating the purpose thereof, have the right during the usual
hours for business to inspect for any proper purpose the Corporation's stock
ledger, a list of its stockholders, and its other books and records, and to make
copies or extracts therefrom. A proper purpose shall mean a purpose reasonably
related to such person's interest as a stockholder. In every instance where an
attorney or other agent shall be the person who seeks the right to inspection,
the demand under oath shall be accompanied by a power of attorney or such other
writing which authorized the attorney or other agent to so act on behalf of the
stockholder. The demand under oath shall be directed to the Corporation at its
registered office in Delaware or at its principal place of business.
9.07 REPRESENTATION OF SHARES OF OTHER CORPORATIONS. Any Executive
Officer, Executive Vice President or the Secretary of this Corporation is
authorized to vote, represent and exercise on behalf of this Corporation all
rights incident to all shares of any other corporation or corporations standing
in the name of this Corporation. The authority herein granted to said officers
to vote or represent on behalf of this Corporation any and all shares held by
this Corporation in any other corporation or corporations may be exercised
either by such officers in person or by any person authorized so to do by proxy
or power of attorney duly executed by said officers.
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ARTICLE X
MISCELLANEOUS
10.01 BUDGETS. The Board shall approve all annual and other
significant operating budgets of the Corporation.
10.02 RECORD DATES. In order that the Corporation may determine the
stockholders entitled to notice of, or to vote at, any meeting of stockholders
or any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or to receive payment of any dividend or other distribution
or allotment of any rights, or to exercise any rights in respect of any change,
conversion or exchange of stock or in respect of any other lawful action, the
Board may fix, in advance, a record date, which shall be not more than sixty
(60) nor less than ten (10) days before the date of such meeting, nor more than
sixty (60) days prior to any other action. Only those stockholders of record on
the date so fixed shall be entitled to any of the foregoing rights,
notwithstanding the transfer of any such stock on the books of the Corporation
after any such record date fixed by the Board.
10.03 DIVIDENDS. Subject to any agreement to which the Corporation
is a party or by which it is bound, the Board may declare to be payable, in
cash, in other property or in stock of the Corporation of any class or series,
such dividends in respect of outstanding stock of the Corporation of any class
or series as the Board may at any time deem to be advisable. Before declaring
any such dividend, the Board may cause to be set aside any funds or other
property or assets of the Corporation legally available for the payment of
dividends.
10.04 FISCAL YEAR. The fiscal year of the Corporation shall be
determined by resolution of the Board.
10.05 CORPORATE SEAL. The Corporate Seal shall be circular in form
and shall bear the name of the Corporation and the words and figures denoting
its organization under the laws of the State of Delaware and the year thereof
and otherwise shall be in such form as shall be approved from time to time by
the Board.
10.06 AMENDMENTS. All Bylaws of the Corporation may be amended,
altered or repealed, and new Bylaws may be enacted, by the affirmative vote of
the holders of record of a majority of the issued and outstanding stock of the
Corporation entitled to vote at any annual or special meeting, or by the
affirmative vote of a majority of the directors present at any regular or
special meeting of the Board.
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CERTIFICATE OF SECRETARY
The undersigned certifies:
(1) That the undersigned is duly elected and acting Secretary of CCA
Acquisition Corp., a Delaware corporation; and
(2) That the foregoing Amended and Restated Bylaws constitute the
Bylaws of the Corporation adopted by the Board on the 10th day of August, 1995.
IN WITNESS WHEREOF, I have hereunto subscribed my name and
affixed the seal of the Corporation this 10th day of August, 1995
/s/ Theodore W. Browne, II
_________________________________
Theodore W. Browne, II, Secretary
[SEAL]
<PAGE>
AMENDED AND RESTATED BYLAWS
OF
CCA ACQUISITION CORP.
<PAGE>
EXHIBIT 3.5
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION OF
CENCOM CABLE ENTERTAINMENT, INC.
Cencom Cable Entertainment, Inc., a corporation organized and existing
under the laws of the State of Delaware (the "Corporation"), hereby certifies as
follows:
1. The name of the Corporation is Cencom Cable Entertainment, Inc.
2. The original Certificate of Incorporation of the corporation was filed
with the Secretary of the State of Delaware on May 3, 1982.
3. This amended and Restated Certificate of Incorporation amends and
restates the Certificate of Incorporation of the Corporation heretofore amended
and restated and has been duly adopted by the Board of Directors and approved by
the stockholders of the Corporation in accordance with the provisions of Section
242 and 245 of the General Corporation Law of the State of Delaware. The text
of the Certificate of Incorporation, as amended and restated, shall read in full
as follows:
1. The name of the Corporation is Cencom Cable Entertainment, Inc.
2. The address of the registered office of the Corporation in the State
of Delaware is the Corporation Trust Center, 1209 Orange Street, Wilmington, New
Castle County, Delaware 19801. The name of its registered agent at such address
is The Corporation Trust Company.
3. The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
4. The total number of shares which the Corporation shall have authority
to issue is Three Hundred Thousand (300,000) shares of Common Stock with a par
value of One Dollar ($1.00) per share, amounting in the aggregate to Three
Hundred Thousand Dollars $300,000.00.
5. The Corporation is to have perpetual existence.
6. The number of directors which shall constitute the whole Board of
Directors shall be fixed by and in the manner provided in the Bylaws of the
Corporation.
7. In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, repeal, alter,
amend and rescind the Bylaws of the Corporation.
<PAGE>
8. Election of directors at an annual or special meeting of the
stockholders need not be by written ballot unless the Bylaws of the Corporation
shall so provide.
9. No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director; provided, however, that this Section 9 shall not eliminate
or limit the liability of a director (i) for any breach of the director's duty
of loyalty to the Corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of the law, (iii) under Section 174 of the General Corporation Law of the State
of Delaware, or (iv) for any transaction from which the director derives an
improper personal benefit. If the General Corporation Law of the State of
Delaware is amended after the date of filing of this Certificate of
Incorporation to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the General Corporation Law of the State of Delaware as so amended.
Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing in respect of any act or
omission occurring prior to the time of such repeal or modification.
10. The Corporation shall, to the fullest extent now or hereafter
permitted by Section 145 of the General Corporation Law of the State of
Delaware, as amended from time to time, indemnify all persons whom it may
indemnify pursuant thereto.
11. The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation in the manner now
or hereafter prescribed by statute, and all rights conferred on stockholders
herein are granted subject to this reservation.
IN WITNESS WHEREOF, said Cencom Cable Entertainment, Inc. has caused this
Amended and Restated Certificate of Incorporation to be signed by Theodore W.
Browne, II, its Executive Vice President, and attested by Marcy Lifton, its
Assistant Secretary, this 11th day of April, 1996.
CENCOM CABLE ENTERTAINMENT, INC.
ATTEST: By: /s/ Theodore W. Browne, II
-----------------------------------
Theodore W. Browne, II
/s/ Marcy Lifton
- ---------------------------------
Marcy Lifton, Assistant Secretary
2
<PAGE>
EXHIBIT 3.6
AMENDED AND RESTATED BYLAWS
OF
CENCOM CABLE ENTERTAINMENT, INC.
<PAGE>
TABLE OF CONTENTS
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<TABLE>
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Page
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<S> <C>
ARTICLE I OFFICES............................................. 1
Section 1.01 REGISTERED OFFICE...................................... 1
Section 1.02 OTHER OFFICES.......................................... 1
ARTICLE II MEETINGS OF STOCKHOLDERS............................ 1
Section 2.01 ANNUAL MEETINGS........................................ 1
Section 2.02 SPECIAL MEETINGS....................................... 1
Section 2.03 NOTICE OF MEETING...................................... 1
Section 2.04 LIST OF STOCKHOLDERS................................... 2
Section 2.05 QUORUM................................................. 2
Section 2.06 ADJOURNMENTS........................................... 2
Section 2.07 VOTING................................................. 2
Section 2.08 PROXIES................................................ 3
Section 2.09 JUDGES OF ELECTION..................................... 3
Section 2.10 WRITTEN CONSENT........................................ 3
ARTICLE III BOARD............................................... 3
Section 3.01 NUMBER................................................. 3
Section 3.02 ELECTION AND TERM OF OFFICE............................ 3
Section 3.03 VACANCIES AND ADDITIONAL DIRECTORSHIPS................. 4
Section 3.04 POWERS................................................. 4
Section 3.05 RESIGNATION OF DIRECTORS............................... 4
Section 3.06 REMOVAL OF DIRECTORS................................... 4
Section 3.07 COMPENSATION OF DIRECTORS.............................. 4
Section 3.08 RELIANCE ON ACCOUNTS AND REPORTS, ETC.................. 4
ARTICLE IV MEETING OF THE BOARD................................ 4
Section 4.01 PLACE.................................................. 4
Section 4.02 REGULAR MEETINGS....................................... 4
Section 4.03 SPECIAL MEETINGS....................................... 5
Section 4.04 QUORUM................................................. 5
Section 4.05 ADJOURNED MEETINGS..................................... 5
Section 4.06 WRITTEN CONSENT........................................ 5
Section 4.07 COMMUNICATIONS EQUIPMENT............................... 5
Section 4.08 WAIVER OF NOTICE....................................... 5
Section 4.09 OFFICERS OF THE BOARD.................................. 5
ARTICLE V COMMITTEES OF THE BOARD............................. 6
Section 5.01 DESIGNATION, POWER AND ALTERNATE MEMBERS AND
TERM OF OFFICE...................................... 6
Section 5.02 MEETINGS, NOTICES AND RECORDS.......................... 6
Section 5.03 QUORUM AND MANNER OF ACTING............................ 6
Section 5.04 RESIGNATIONS........................................... 7
Section 5.05 REMOVAL................................................ 7
Section 5.06 VACANCIES.............................................. 7
</TABLE>
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<TABLE>
<S> <C>
ARTICLE VI OFFICERS............................................ 7
Section 6.01 OFFICERS AND MANAGEMENT COMMITTEE...................... 7
Section 6.02 DUTIES................................................. 7
Section 6.03 RESIGNATIONS........................................... 7
Section 6.04 REMOVAL................................................ 8
Section 6.05 VACANCIES.............................................. 8
Section 6.06 SECRETARY.............................................. 8
Section 6.07 ASSISTANT SECRETARIES.................................. 8
Section 6.08 TREASURER.............................................. 8
Section 6.09 ASSISTANT TREASURERS................................... 8
ARTICLE VII INDEMNIFICATION..................................... 9
Section 7.01 ACTIONS OTHER THAN BY OR IN THE RIGHT OF
THE CORPORATION..................................... 9
Section 7.02 ACTIONS BY OR IN THE RIGHT OF THE CORPORATION.......... 9
Section 7.03 DETERMINATION OF RIGHT OF INDEMNIFICATION.............. 9
Section 7.04 INDEMNIFICATION AGAINST EXPENSES OF SUCCESSFUL PARTY... 9
Section 7.05 ADVANCE OF EXPENSES.................................... 10
Section 7.06 OTHER RIGHTS AND REMEDIES.............................. 10
Section 7.07 INSURANCE.............................................. 10
Section 7.08 CONSTITUENT CORPORATIONS............................... 10
Section 7.09 EMPLOYEE BENEFIT PLANS................................. 10
Section 7.10 BROADEST LAWFUL INDEMNIFICATION........................ 10
Section 7.11 TERM................................................... 11
Section 7.12 SEVERABILITY........................................... 11
Section 7.13 AMENDMENTS............................................. 11
ARTICLE VIII DEPOSIT OF CORPORATE FUNDS.......................... 12
Section 8.01 BORROWING.............................................. 12
Section 8.02 DEPOSITS............................................... 12
Section 8.03 CHECKS, DRAFTS, ETC.................................... 12
ARTICLE IX CERTIFICATES OF STOCK............................... 12
Section 9.01 STOCK CERTIFICATES..................................... 12
Section 9.02 BOOKS OF ACCOUNT AND RECORD OF STOCKHOLDERS............ 12
Section 9.03 TRANSFER OF SHARES..................................... 13
Section 9.04 REGULATIONS............................................ 13
Section 9.05 LOST, STOLEN OR DESTROYED CERTIFICATES................. 13
Section 9.06 STOCKHOLDER'S RIGHT OF INSPECTION...................... 13
Section 9.07 REPRESENTATIONS OF SHARES OF OTHER CORPORATIONS........ 13
ARTICLE X MISCELLANEOUS....................................... 14
Section 10.01 BUDGETS............................................... 14
Section 10.02 RECORD DATES.......................................... 14
Section 10.03 DIVIDENDS.............................................. 14
Section 10.04 FISCAL YEAR........................................... 14
Section 10.05 CORPORATE SEAL........................................ 14
Section 10.06 AMENDMENTS............................................ 14
</TABLE>
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<PAGE>
AMENDED AND RESTATED BYLAWS
OF
CENCOM CABLE ENTERTAINMENT, INC.
a Delaware Corporation
(the "Corporation")
ARTICLE I
OFFICES
1.01 REGISTERED OFFICE. The registered office shall be maintained at
1209 Orange Street, Wilmington, New Castle County, Delaware 19801 and The
Corporation Trust Company is the registered agent.
1.02 OTHER OFFICES. The Corporation may also have other offices,
either within or without the State of Delaware, at such place or places as the
Board of Directors (the "Board") may from time to time appoint or the business
of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.01 ANNUAL MEETING. The date of the annual meeting of the
stockholders for the election of directors and for the transaction of such other
business as properly may come before such meeting shall be determined by
resolution of the Board to be a specific day in each year, if not a legal
holiday, and, if a legal holiday, on the next succeeding business day, at the
time and place and within or without the State of Delaware as may be designed by
the Board and set forth in the notice of the meeting or a duly executed waiver
of notice thereof, provided, however, that in any year, in advance of the date
specified for the annual meeting, the Board may act to change the meeting date
for that year.
2.02 SPECIAL MEETINGS. Special meetings of the stockholders for any
proper purpose or purposes may be called at any time by the Board or an
Executive Officer, to be held on the date, at the time and place within or
without the State of Delaware as the Board or an Executive Officer, whichever
has called the meeting, shall direct. A special meeting of the stockholders
also shall be called whenever stockholders owning a majority of the shares of
the Corporation then issued and outstanding and entitled to vote on all of the
matters to be submitted to stockholders of the Corporation at such special
meeting shall make written application to an Executive Officer. Any such
written request shall state a proper purpose or purposes of the meeting and
shall be delivered to an Executive Officer.
2.03 NOTICE OF MEETING. Notice, signed by the Secretary of the
Corporation or an Executive Officer, of every annual or special meeting of
stockholders shall be prepared in writing and personally delivered; mailed,
postage prepaid; or sent by facsimile transmission to each stockholder entitled
to vote at such meeting not less than ten (10) nor more than sixty (60) days
before the meeting, except as otherwise provided by statute. Every notice of a
meeting of the stockholders shall state the place, date and hour of the meeting,
and in the case of a special meeting, shall also state the purpose or purposes
for which the meeting is called. If mailed, such notice shall be directed to a
stockholder at his address as it shall appear on the stock record book of the
Corporation, unless the stockholder shall have filed with the Secretary a
written
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<PAGE>
request that notice intended for him or her be mailed to some other address, in
which case it shall be mailed to the address designated in such request. Notice
shall be deemed given when personally delivered or deposited in the United
States mail, as the case may be; provided, however, that such notice may also be
given by telegram, facsimile or other means of electronically transmitted
written copy and in such case shall be deemed given when ordered or, if a
delayed delivery is ordered, as of such delayed delivery time.
2.04 LIST OF STOCKHOLDERS. A complete list of the stockholders
entitled to vote at each meeting of stockholders, arranged in alphabetical order
and showing the address of each such stockholder and the number of shares
registered in the name of each such stockholder, shall be open to the
examination of any stockholder, for any purpose germane to such meeting, during
ordinary business hours, for a period of at least ten (10) days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of such meeting, or, if not
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting and during the whole time
thereof, and may be inspected by any stockholder who is present.
2.05 QUORUM. The presence at any meeting, in person or by proxy, of
the holders of record of a majority of the shares then issued and outstanding
and entitled to vote shall be necessary and sufficient to constitute a quorum
for the transaction of business, except where otherwise provided by statute.
2.06 ADJOURNMENTS. In the absence of a quorum, stockholders
representing a majority of the shares then issued and outstanding and entitled
to vote, present in person or by proxy, or, if no stockholder entitled to vote
is present in person or by proxy, any officer entitled to preside at or act as
secretary of such meeting, may adjourn the meeting from time to time without
notice other than announcement at the meeting, until a quorum shall be present
or represented. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting originally noticed. If the adjournment is for more than thirty (30)
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.
2.07 VOTING.
(a) At each meeting of the stockholders, each stockholder shall be
entitled to vote in person or by proxy each share or fractional share of the
stock of the Corporation which has voting rights on the matter in question and
which shall have been held by him or her and registered in his name on the books
of the Corporation:
(i) on the date fixed pursuant to Section 10.02 of these
Bylaws as the record date for the determination of stockholders entitled to
notice of and to vote at such meeting, or
(ii) if no such record date shall have been so fixed, then (x)
at the close of business on the day next preceding the day on which notice of
the meeting shall be given or (y) if notice of the meeting shall be waived, at
the close of business on the day next preceding the day on which the meeting
shall be held.
(b) Shares of its own stock belonging to the Corporation or to
another corporation, if a majority of the shares entitled to vote in the
election of directors in such other corporation is held, directly or indirectly,
by the Corporation, shall neither be entitled to vote nor be counted for quorum
purposes. Persons holding stock of the Corporation in a fiduciary capacity shall
be entitled to vote such stock. Persons whose stock is pledged shall be entitled
to vote, unless in the transfer by the pledgor on the books of the Corporation
he or she shall have expressly empowered the pledgee to vote thereon, in which
case only the pledgee, or his or her proxy, may represent such stock and vote
thereon. Stock having voting power standing of record in the names of two or
more persons, whether fiduciaries, members of a partnership, joint tenants,
tenants in common,
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<PAGE>
tenants by the entirety or otherwise, or with respect to which two or more
persons have the same fiduciary relationship, shall be voted in accordance with
the provisions of the General Corporation Law of Delaware.
(c) At any meeting of the stockholders all matters except as
otherwise provided in the Certificate of Incorporation, in these Bylaws, or by
law, shall be decided by the vote of a majority in voting interest of the
stockholders present in person or by proxy and entitled to vote thereat and
thereon. The vote at any meeting of the stockholders on any question need not be
by ballot, unless so directed by the chairman of the meeting. On a vote by
ballot, each ballot shall be signed by the stockholder voting, or by his proxy
if there be such proxy, and it shall state the number of shares voted.
2.08 PROXIES. Any stockholder is entitled to vote by proxy, provided
that the instrument authorizing such proxy to act shall have been executed in
writing (which shall include telegram, facsimile or other means of
electronically transmitted written copy) by the stockholder himself or herself
or by his or her duly authorized attorney-in-fact and delivered to the secretary
of the meeting. No proxy shall be voted or acted upon after three years from
its date, unless the proxy provides for a longer period.
The attendance at any meeting of a stockholder who may
theretofore have given a proxy shall not have the effect of revoking the same
unless he shall in writing so notify the secretary of the meeting prior to the
voting of the proxy.
2.09 JUDGES OF ELECTION. The Board may appoint judges of election to
serve at any election of directors and at balloting on any other matter that may
properly come before a meeting of stockholders. If no such appointment shall be
made, or if any of the judges so appointed shall fail to attend, or refuse or be
unable to serve, then such appointment may be made by the presiding officer of
the meeting at the meeting.
2.10 WRITTEN CONSENT. Any action which may be taken at any annual or
special meeting of stockholders may be taken without a meeting and without a
vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Whenever any such action is taken without a meeting by less than unanimous
consent, all stockholders who have not consented in writing must be promptly
informed in writing of such action.
ARTICLE III
BOARD
3.01 NUMBER. The number of directors which shall constitute the
whole Board shall be fixed at three (3) persons, until changed from time to time
by resolution of the Board or stockholders at the annual meeting or any special
meeting called for that purpose.
3.02 ELECTION AND TERM OF OFFICE. Directors shall be elected at the
annual meeting of the stockholders except as provided in Section 3.03 of this
Article III. Each director (whether elected at an annual meeting or to fill a
vacancy or otherwise) shall continue in office until a successor shall have been
elected and qualified or until his or her death, resignation or removal in the
manner hereinafter provided, whichever shall first occur.
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<PAGE>
3.03 VACANCIES AND ADDITIONAL DIRECTORSHIPS. If any vacancy shall
occur among the directors by reason of death, resignation, or removal, or as the
result of an increase in the number of directorships, the directors then in
office shall continue to act and may fill any such vacancy by a vote of the
majority of directors then in office, though less than a quorum, and each
director so chosen shall hold office until the next annual election of directors
and until his or her successor shall be duly elected and shall qualify, or until
his or her earlier death, resignation or removal.
3.04 POWERS. The business of the Corporation shall be managed by its
Board, which may exercise all powers of the Corporation and do all lawful acts
and things as are not by law or by the Certificate of Incorporation or these
Bylaws reserved to the stockholders.
3.05 RESIGNATION OF DIRECTORS. Any director may resign at any time
by giving written notice of such resignation to the Board or an Executive
Officer. Any such resignation shall take effect at the time specified therein
or, if no time be specified, upon receipt thereof by the Board or an Executive
Officer; and unless specified therein, the acceptance of such resignation shall
not be necessary to make it effective.
3.06 REMOVAL OF DIRECTORS. At the annual meeting or any special
meeting of the stockholders, duly called as provided in these Bylaws, any
director or directors may, by the affirmative vote of the holders of a majority
of the shares of stock issued and outstanding and entitled to vote for the
election of directors, be removed from office, either with or without cause. At
such meeting a successor or successors may be elected by a majority of the votes
cast, or if any such vacancy is not so filled, it may be filled by the directors
as provided in Section 3.03 of this Article III.
3.07 COMPENSATION OF DIRECTORS. Directors may receive such
reasonable compensation for their services, whether in the form of salary or a
fixed fee for attendance at Board or Board committee meetings, with expenses, if
any, as the Board may from time to time determine. Nothing herein contained
shall be construed to preclude any director from serving the Corporation in any
other capacity and receiving compensation therefor.
3.08 RELIANCE ON ACCOUNTS AND REPORTS, ETC. A director, or a member
of any committee designed by the Board shall, in the performance of his duties,
be fully protected in relying in good faith upon the records of the Corporation
and upon information, opinions, reports or statements presented to the
Corporation by any of the Corporation's officers or employees, or committees
designated by the Board, or by any other person as to the matters the director
or member reasonably believes are within such other person's professional or
expert competence and who has been selected with reasonable care by or on behalf
of the Corporation.
ARTICLE IV
MEETINGS OF THE BOARD
4.01 PLACE. The Board of the Corporation may hold meetings, both
regular and special, either within or without the State of Delaware.
4.02 REGULAR MEETINGS. The Board by resolution may provide for the
holding of regular meetings and may fix the times and places at which such
meetings shall be held. Notice of regular meetings shall not be required to be
given if the time and place has been fixed by Board resolution, provided that
whenever the time or place of regular meetings shall be fixed or changed, notice
of such action shall bemailed promptly to each director who shall not have been
present at the meeting at which such action was taken. If the time and place
for regular meetings has not been fixed by the Board, then at least 10 days
written
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<PAGE>
notice addressed to him or her at his or her residence or usual place of
business, unless he or she shall have filed with the Secretary a written request
that notices intended for him or her be mailed to some other address, in which
case it shall be mailed to the address designated in such request, or shall be
sent to him or her at such place by telegram, facsimile or other means of
electronically transmitted written copy.
4.03 SPECIAL MEETINGS. Special meetings of the Board may be called
by any Executive Officer and shall be called by any Executive Officer at the
written request of any director. Except as otherwise required by statute,
notice of each special meeting shall be given to each director, if by mail, when
addressed to him or her at his or her residence or usual place of business,
unless he or she shall have filed with the Secretary a request that notices
intended for him or her be mailed to some other address, in which case it shall
be mailed to the address designated in such request, at least 72 hours before,
or shall be sent to him or her at such place by telegram, facsimile, telephone
or other means of electronically transmitted written copy, or delivered to him
or her personally, at least 48 hours before the date on which the meeting is to
be held. Such notice shall state the time and place of such meeting, but need
not state the purposes thereof, unless otherwise required by statute, the
Certificate of Incorporation of the Corporation or these Bylaws.
4.04 QUORUM. At any meeting of the Board two-thirds (2/3) of the
whole Board shall constitute a quorum for the transaction of business, and the
act of the majority of those present at any meeting at which a quorum is present
shall be sufficient for the act of the Board, except as may be otherwise
specifically provided by statute or by the Certificate of Incorporation of the
Corporation.
4.05 ADJOURNED MEETINGS. If a quorum shall not be present at a
meeting of the Board, the directors present thereat may adjourn the meeting from
time to time, until a quorum shall be present. Seventy-two (72) hours' notice
of any such adjournment shall be given personally to each director who was not
present at the meeting at which such adjournment was taken, and unless announced
at the meeting, to the other directors; provided, that then ten (10) days'
notice shall be given if notice is given by mail.
4.06 WRITTEN CONSENT. Any action required or permitted to be taken
at any meeting of the Board may be taken without a meeting if all the members of
the Board consent thereto in writing, and the writing or writings are filed with
the minutes of the proceedings of the Board.
4.07 COMMUNICATIONS EQUIPMENT. Any one or more members of the Board
may participate in any meeting of the Board by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and participation by such means shall be deemed
to constitute presence in person at such meeting.
4.08 WAIVER OF NOTICE. Notice of any meeting need not be given to
any directors who shall attend such meeting in person or shall waive notice
thereof, before or after such meeting, in writing or by telegram, facsimile or
other means of electronically transmitted written copy.
4.09 OFFICERS OF THE BOARD. The Board shall have a Chairman of the
Board and may, at the discretion of the Board, have one or more Vice Chairmen.
The Chairman of the Board and the Vice Chairmen shall be appointed from time to
time by the Board and shall have such powers and duties as shall be designated
by the Board.
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<PAGE>
ARTICLE V
COMMITTEES OF THE BOARD
5.01 DESIGNATION, POWER AND ALTERNATE MEMBERS AND TERM OF OFFICE.
The Board may, by resolution passed by a majority of the whole Board, designate
one (1) or more committees. Each such committee shall consist of one (1) or
more of the directors of the Corporation. Any such committee, to the extent
provided in such resolution, shall have and may exercise the power of the Board
in the management of the business and affairs of the Corporation, and may
authorize the seal of the Corporation to be affixed to all papers which may
require it. The Board may designate one (1) or more directors as alternate
members of any committee who, in the order specified by the Board, may replace
any absent or disqualified member at any meeting of the committee. If at a
meeting of any committee one (1) or more of the members thereof should be absent
or disqualified, and if either the Board has not so designated any alternate
member or members, or the number of absent or disqualified members exceeds the
number of alternate members who are present at such meeting, then the member or
members of such committee (including alternates) present at any meeting and not
disqualified from voting, whether or not he or she or they constitute a quorum,
may unanimously appoint another director to act at the meetings in the place of
any such absent or disqualified member. The term of office of the members of
each committee shall be as fixed from time to time by the Board, subject to the
term of office of the directors and these Bylaws; provided, however, that any
--------
committee member who ceases to be a member of the Board shall ipso facto cease
---- -----
to be a committee member. Each committee shall appoint a secretary, who may be
the Secretary or an Assistant Secretary of the Corporation.
5.02 MEETINGS, NOTICES AND RECORDS. Each committee may provide for
the holding of regular meetings, with or without notice, and a majority of the
members of any such committee may fix the time, place and procedure for any such
meeting. Special meetings of each committee shall be held upon call by or at
the direction of its chairman or, if there be no chairman, by or at the
direction of any two (2) of its members, at the time and place specified in the
respective notices or waivers of notice thereof. Notice of each special meeting
of a committee shall be mailed to each member of such committee, addressed to
him or her at his or her residence or usual place of business, unless he or she
shall have filed with the Secretary a written request that notices intended for
him or her be mailed to some other address, in which case it shall be mailed to
the address designated in such request, at least 72 hours before the day on
which the meeting is to be held, or shall be sent by telegram, facsimile or
other means of electronically transmitted written copy, addressed to him at such
place, or telephoned or delivered to him or her personally, at least 48 hours
before the day on which the meeting is to be held. Notice of any meeting of a
committee need not be given to any member thereof who shall attend the meeting
in person or who shall waive notice thereof by telegram, facsimile or other
means of electronically transmitted written copy. Notice of any adjourned
meeting need not be given. Each committee shall keep a record of its
proceedings.
Each committee may meet and transact any and all business delegated to
that committee by the Board by means of a conference telephone or similar
communications equipment provided that all persons participating in the meeting
are able to hear and communicate with each other. Participation in a meeting by
means of conference telephone or similar communication shall constitute presence
in person at such meeting.
5.03 QUORUM AND MANNER OF ACTING. At each meeting of any committee
the presence of a majority of its members then in office shall be necessary and
sufficient to constitute a quorum for the transaction of business, and the act
of a majority of the members present at any meeting at which a quorum is present
shall be the act of such committee; in the absence of a quorum, a majority of
the members present at the time and place of any meeting may adjourn the meeting
from time to time until a quorum shall be present. Subject to the foregoing and
other provisions of these Bylaws and except as otherwise determined by the
Board, each committee may make rules for the conduct of its business. Any
determination made in writing and signed by all the members of such committee
shall be as effective as if made by such committee at a meeting.
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<PAGE>
5.04 RESIGNATIONS. Any member of a committee may resign at any time
by giving written notice of such resignation to the Corporation, the Board, or
an Executive Officer of the Corporation. Unless otherwise specified in such
notice, such resignation shall take effect upon receipt thereof by the Board or
any Executive Officer of the Corporation.
5.05 REMOVAL. Any member of any committee may be removed at any time
by the affirmative vote of a majority of the whole Board with or without cause.
5.06 VACANCIES. If any vacancy shall occur in any committee by
reason of death, resignation, disqualification, removal or otherwise, the
remaining members of such committee, though less than a quorum, shall continue
to act until such vacancy is filled by the Board.
ARTICLE VI
OFFICERS
6.01 OFFICERS AND MANAGEMENT COMMITTEE. The Board shall determine
the titles and duties of the officers of the Corporation who shall be
responsible for the overall supervision, direction and control of the business
and affairs of the Corporation (hereinafter referred to as the "Executive
Officers"), and shall elect persons to hold such positions. The Corporation
also shall have one or more Executive Vice-Presidents and Senior Vice-
Presidents, as well as a Treasurer and a Secretary. The Board also may, but
shall not be required to, appoint a Management Committee which shall be
comprised of the Executive Officers plus such other officers as may be selected
by the Board or in the absence of Board action by the Chairman of the Management
Committee. Any Executive Officer or Executive Vice President may, if so
designated by the Board, function in the capacity of Chief Executive Officer,
Chief Financial Officer, or Chief Operating Officer. In the absence or
disability of an elected Executive Officer, another Executive Officer shall
perform such other officer's duties. One of the Executive Officers shall
preside at meetings of stockholders.
The officers of the Corporation may also include one or more Regional
or other Vice-Presidents and one or more Assistant Secretaries or Assistant
Treasurers, each of whom shall be elected by the Board or appointed by the
Executive Officers Any number of offices may be held by the same person subject
to any limits imposed by the General Corporation Law of the State of Delaware;
provided that different officers shall have such titles and duties as may be
necessary to enable the Corporation to sign instruments and stock certificates
which comply with Sections 103(a)(2) and 158 of the General Corporation Law of
the State of Delaware.
Each officer of the corporation elected by the Board or appointed by
the Executive Officers shall hold office until his or her successor is duly
elected or appointed and qualified or until his or her earlier resignation or
removal.
6.02 DUTIES. All officers, as between themselves and the
Corporation, shall have such authority and perform such duties in the management
of the Corporation as may be provided in these Bylaws, or, to the extent not so
provided, as may be provided by resolution of the Board or the supervising
Executive Officers.
6.03 RESIGNATIONS. Any officer may resign at any time by giving
written notice of such resignation to the Board or any Executive Officer.
Unless otherwise specified in such written notice, such resignation shall take
effect upon receipt thereof by the Board or any such Executive Officer.
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6.04 REMOVAL. All officers serve at the sole pleasure and in the
sole discretion of the Board. Any Executive Officer or other officer elected by
the Board may be removed at any time, either with or without cause, by the vote
of a majority of all of the directors then in office. Any officers appointed by
an Executive Officer may be removed at any time by an Executive Officer with or
without cause. Such power of removal from office shall not be abridged by any
employment contract or other agreement.
6.05 VACANCIES. A vacancy in any office by reason of death,
resignation, removal, disqualification or any other cause shall be filled for
the unexpired portion of the term in the manner prescribed by these Bylaws for
regular election or appointment to such office.
6.06 SECRETARY. The Secretary shall: (a) record all the proceedings
of the meetings of the stockholders, the Board, and all committees of the Board
in a book or books to be kept for that purpose; (b) cause all notices to be duly
given in accordance with the provisions of these Bylaws as required by statute;
(c) whenever any committee shall be appointed in pursuance of a resolution of
the Board, furnish the chairman of such committee with a copy of such
resolution; (d) be custodian of the records and of the seal of the Corporation,
and cause such seal to be affixed to all certificates representing capital stock
of the Corporation prior to the issuance thereof and to all instruments the
execution of which on behalf of the Corporation under its seal shall have been
duly authorized; (e) see that the lists, books, reports, statements,
certificates and other documents and records required by statute are properly
kept and filed; (f) have charge of the stock record and stock transfer books of
the Corporation, and exhibit such stock books at all reasonable times to such
persons who are entitled by statute to have access thereto; and (g) in general,
perform all duties incident to the office of Secretary and such other duties as
are given to him or her by these Bylaws or as from time to time may be assigned
to him or her by the Board or the Executive Officers.
6.07 ASSISTANT SECRETARIES. At the request of the Secretary or in
his or her absence or disability, the Assistant Secretary designated by him or
her (or in the absence of such designation, the Assistant Secretary designated
by the Board or any Executive Officer) shall perform all the duties of the
Secretary, and, when so acting, shall have all the powers of and be subject to
all restrictions upon the Secretary. The Assistant Secretaries shall perform
such other duties as from time to time may be assigned to them by the Board or
the Executive Officers.
6.08 TREASURER. The Treasurer shall: (a) have charge of and
supervision over and be responsible for the funds, securities, receipts and
disbursements of the Corporation; (b) cause the monies and other valuable
effects of the Corporation to be deposited in the name and to the credit of the
Corporation in banks or trust companies or with bankers or other depositories or
to be otherwise dealt with in such manner as the Board may direct; (c) select
authorized depositories of the Corporation and cause the funds of the
Corporation to be disbursed by checks or drafts upon the authorized depositories
of the Corporation, and cause to be taken and preserved proper vouchers for all
monies disbursed; (d) render to the Board and the Executive Officers, whenever
requested, a statement of the financial condition of the Corporation and of all
his or her transactions as Treasurer; (e) cause to be kept at the Corporation's
principal office correct books of account of all its business and transactions
and such duplicate books of account as he or she shall determine and upon
application cause such books or duplicates thereof to be exhibited to any
Director; (f) be empowered, from time to time, to require from the officers or
agents of the Corporation reports or statements giving such information
concerning transactions of the Corporation; and (g) in general, perform all
duties incident to the office of Treasurer and such other duties as are given to
him or her by these Bylaws or as from time to time may be assigned to him by the
Board or the Executive Officers.
6.09 ASSISTANT TREASURERS. At the request of the Treasurer or any of
the Executive Officers, the Assistant Treasurer shall perform all the duties of
the Treasurer and, when so acting, shall have all the powers of the be subject
to all restrictions upon the Treasurer. The Assistant Treasurer shall perform
such other duties as from time to time may be assigned by the Board, the
Executive Officers of the Treasurer.
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<PAGE>
ARTICLE VII
INDEMNIFICATION
Section 7.01 ACTIONS OTHER THAN BY OR IN THE RIGHT OF THE
CORPORATION. The Corporation shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Corporation) by reason of the
fact that he is or was or has agreed to become a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise or as a member of any committee or
similar body, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in, or not opposed to, the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in, or not opposed to, the best interests of the
Corporation, and, with respect to any criminal action or proceeding, that he had
reasonable cause to believe that his conduct was unlawful.
Section 7.02 ACTIONS BY OR IN THE RIGHT OF THE CORPORATION. The
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor by reason of the
fact that he is or was or has agreed to become a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, or as a member of any committee or
similar body, against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit if he acted in good faith and in a manner he reasonably believed
to be in, or not opposed to, the best interests of the Corporation, except that
no indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
Section 7.03 DETERMINATION OF RIGHT OF INDEMNIFICATION. Any
indemnification under Section 7.01 or 7.02 of these Bylaws (unless ordered by a
court) shall be made by the Corporation only as authorized in the specific case
upon a determination that indemnification of the director, officer, employee or
agent is proper in the circumstances because he has met the applicable standard
of conduct set forth in Sections 7.01 and 7.02 of these Bylaws. Such
determination shall be made (a) by the Board by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or proceeding,
or (b) if such a quorum is not obtainable, or, even if obtainable, a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, or (c) by the stockholders.
Section 7.04 INDEMNIFICATION AGAINST EXPENSES OF SUCCESSFUL PARTY.
Notwithstanding the other provisions of this Article VII, to the extent that a
director, officer, employee or agent of the Corporation has been successful on
the merits or otherwise in defense of any action, suit or proceeding referred to
in Section 7.01 or 7.02 of these Bylaws, or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection therewith.
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<PAGE>
Section 7.05 ADVANCE OF EXPENSES. Expenses (including attorneys'
fees) incurred by an officer or director in defending a civil or criminal
action, suit or proceeding may be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding as authorized by the Board
upon receipt of an undertaking by or on behalf of the director or officer, to
repay such amount if it shall ultimately be determined that he is not entitled
to be indemnified by the Corporation as authorized in this Article VII. Such
expenses (including attorneys' fees) incurred by other employees and agents may
be so paid upon such terms and conditions, if any, as the Board deems
appropriate. The Board may authorize the Corporation's counsel to represent
such director, officer, employee or agent in any action, suit or proceeding,
whether or not the Corporation is a party to such action, suit or proceeding.
Section 7.06 OTHER RIGHTS AND REMEDIES. The indemnification and
advancement of expenses provided by, or granted pursuant to, the other Sections
of this Article VII shall not be deemed exclusive and are declared expressly to
be nonexclusive of any other rights to which those seeking indemnification or
advancements of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
Section 7.07 INSURANCE. Upon resolution passed by the Board, the
Corporation may purchase and maintain insurance on behalf of any person who is
or was a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise or as a member of any committee or similar body against any liability
asserted against him and incurred by him in any such capacity, or arising out of
his status as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of this Article VII.
Section 7.08 CONSTITUENT CORPORATIONS. For the purposes of this
Article VII, references to "the Corporation" include in addition to the
resulting corporation, any constituent corporation (including any constituent of
a constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise or as a member of any committee or similar body, shall
stand in the same position under the provisions of this Article VII with respect
to the resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued.
Section 7.09 EMPLOYEE BENEFIT PLANS. For the purposes of this
Article VII, references to "other enterprises" shall include employee benefit
plans; references to "fines" shall include any excise taxes assessed on a person
with respect to any employee benefit plan; and references to "serving at the
request of the Corporation" shall include any service as a director, officer,
employee or agent of the Corporation which imposes duties on, or involves
services by, such director, officer, employee or agent with respect to an
employee benefit plan, its participants or beneficiaries; and a person who
acted in good faith and in a manner he reasonably believed to be in the interest
of the participants and beneficiaries of an employee benefit plan shall be
deemed to have acted in a manner "not opposed to the best interests of the
'Corporation' " as referred to in this Article VII.
Section 7.10 BROADEST LAWFUL INDEMNIFICATION. In addition to the
foregoing, the Corporation shall, to the broadest and maximum extent permitted
by Delaware law, as the same exists from time to time (but, in case of any
amendment to or change in Delaware law, only to the extent that such amendment
or change permits the Corporation to provide broader rights of indemnification
than is permitted to the Corporation prior to such amendment or change),
indemnify each person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative by reason of the fact that he
is or was a director or officer of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of
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<PAGE>
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding. In addition, the Corporation shall, to the broadest
and maximum extent permitted by Delaware law, as the same may exist from time to
time (but, in case of any amendment to or change in Delaware law, only to the
extent that such amendment or change permits the Corporation to provide broader
rights of payment of expenses incurred in advance of the final disposition of an
action, suit or proceeding than is permitted to the Corporation prior to such
amendment or change), pay to such person any and all expenses (including
attorneys' fees) incurred in defending or settling any such action, suit or
proceeding in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of the director or
officer, to repay such amount if it shall ultimately be determined by a final
judgment or other final adjudication that he is not entitled to be indemnified
by the Corporation as authorized in this Section 7.10. The first sentence of
this Section 7.10 to the contrary notwithstanding, the Corporation shall not
indemnify any such person with respect to any of the following matters: (a)
remuneration paid to such person if it shall be determined by a final judgment
or other final adjudication that such remuneration was in violation of law; or
(b) any accounting of profits made from the purchase or sale by such person of
the Corporation's securities within the meaning of Section 16(b) of the
Securities Exchange Act of 1934 and amendments thereto or similar provisions of
any federal, state or local statutory law; or (c) actions brought about or
contributed to by the dishonesty of such person, if a final judgment or other
final adjudication adverse to such person establishes that acts of active and
deliberate dishonesty were committed or attempted by such person with actual
dishonest purpose and intent and were material to the adjudication; or (d)
actions based on or attributable to such person having gained any personal
profit or advantage to which he was not entitled, in the event that a final
judgment or other final adjudication adverse to such person establishes that
such person in fact gained such personal profit or other advantage to which he
was not entitled; or (e) any matter in respect of which a final decision by a
court with competent jurisdiction shall determine that indemnification is
unlawful; provided, however, that the Corporation shall perform its obligations
under the second sentence of this Section 7.10 on behalf of such person until
such time as it shall be ultimately determined by a final judgment or other
final adjudication that he is not entitled to be indemnified by the Corporation
as authorized by the first sentence of this Section 7.10 by virtue of any of the
preceding clauses (a) (b) (c) (d) or (e).
Section 7.11 TERM. The indemnification and advancement of expenses
provided by, or granted pursuant to, this Article VII shall, unless otherwise
provided when authorized or ratified, continue as to a person who has ceased to
be a director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
Section 7.12 SEVERABILITY. If any part of this Article VII shall be
found, in any action, suit or proceeding or appeal therefrom or in any other
circumstances or as to any particular officer, director, employee or agent to be
unenforceable, ineffective or invalid for any reason, the enforceability, effect
and validity of the remaining parts or of such parts in other circumstances
shall not be affected, except as otherwise required by applicable law.
Section 7.13 AMENDMENTS. The foregoing provisions of this Article
VII shall be deemed to constitute an agreement between the Corporation and each
of the persons entitled to indemnification hereunder, for as long as such
provisions remain in effect. Any amendment to the foregoing provisions of this
Article VII which limits or otherwise adversely affects the scope of
indemnification or rights of any such persons hereunder shall, as to such
persons, apply only to claims arising, or causes of action based on actions or
events occurring, after such amendment and delivery of notice of such amendment
is given to the person or persons so affected. Until notice of such amendment
is given to the person or persons whose rights hereunder are adversely affected,
such amendment shall have no effect on such rights of such persons hereunder.
Any person entitled to indemnification under the foregoing provisions of this
Article VII shall, as to any act or omission occurring prior to the date of
receipt of such notice, be entitled to indemnification to the same extent as had
such provisions continued as Bylaws of the Corporation without such amendment.
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<PAGE>
ARTICLE VIII
DEPOSIT OF CORPORATE FUNDS
8.01 BORROWING. No loans or advances shall be obtained or contracted
for, by or on behalf of the Corporation and no negotiable paper shall be issued
in its name, unless and except as authorized by the Board. Such authorization
may be general or confined to specific instances.
8.02 DEPOSITS. All funds of the Corporation not otherwise employed
shall be deposited from time to time to its credit in such banks or trust
companies or with such bankers or other depositories as the Board may select, or
as may be selected by any officer or officers or agent or agents authorized to
do so by the Board.
8.03 CHECKS, DRAFTS, ETC. All checks, drafts or other orders for the
payment of money, and all negotiable and non-negotiable notes or other
negotiable or non-negotiable evidences of indebtedness issued in the name of the
Corporation, shall be signed or endorsed by such person or persons and in such
manner as from time to time shall be determined by the Board or the Executive
Officers. The Corporation shall obtain a fidelity bond for such persons with
such signing authority as the Board or the Executive Officers may require.
ARTICLE IX
CERTIFICATES OF STOCK
9.01 STOCK CERTIFICATES. Every holder of capital stock of the
Corporation shall be entitled to have a certificate or certificates in such form
as shall be approved by the Board, certifying the number of shares of capital
stock of the Corporation owned by him or her. The certificates representing
shares of capital stock shall be signed in the name of the Corporation by an
Executive Officer and by the Secretary, an Assistant Secretary, the Treasurer or
an Assistant Treasurer (which signatures may be facsimiles) and sealed with the
seal of the Corporation (which seal may be a facsimile). If any officer,
transfer agent or registrar who shall have signed or whose facsimile signatures
has been placed upon such certificate shall have ceased to be such officer,
transfer agent or registrar before such certificates are issued, they may
nevertheless be issued by the Corporation with the same effect as if such
officer, transfer agent, or registrar were still such at the date of their
issue.
9.02 BOOKS OF ACCOUNT AND RECORD OF STOCKHOLDERS. The books and
records of the Corporation may be kept at such places, within or without the
State of Delaware, as the Board may from time to time determine. The stock
record books and the blank stock certificate books shall be kept by the
Secretary or by any other officer or by the transfer agent or registrar, if any,
designated by the Board. There shall be entered on the stock books of the
Corporation the number of each certificate issued, the number of shares
represented thereby, the name of the person to whom such certificate was issued
and the date of issuance thereof.
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<PAGE>
9.03 TRANSFER OF SHARES. Transfers of shares of capital stock of the
Corporation shall be made on the stock records of the Corporation only upon
authorization by the registered holder thereof, or by his attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary or
with the transfer agent, and on surrender of the certificate or certificates for
such shares properly endorsed or accompanied by a duly executed stock transfer
power and the payment of all taxes thereon, if any. Except as otherwise
provided by law, the Corporation shall be entitled to recognize the exclusive
right of a person in whose name any share or shares stand on the record of
stockholders as the owner of such share or shares for all purposes, including,
without limitation, the rights to receive dividends or other distributions, and
to vote as such owner, and the Corporation shall not be bound to recognize any
equitable or legal claim to or interest in any such share or shares on the part
of any other person whether or not the Corporation shall have express or other
notice thereof.
9.04 REGULATIONS. The Board may make such additional rules and
regulations, not inconsistent with these Bylaws, as it may deem expedient
concerning the issue, transfer and registration of certificates for shares of
the capital stock of the Corporation. It may appoint, or authorize any officer
or officers to appoint, one or more transfer agents or one or more registrars
and may further provide that no stock certificate shall be valid until
countersigned by one of such transfer agents and registered by one of such
registrars. Nothing herein shall be construed to prohibit the Corporation from
acting as its own transfer agent or registrar.
9.05 LOST, STOLEN OR DESTROYED CERTIFICATES. The holder of any
certificate representing any share or shares of the capital stock of the
Corporation shall immediately notify the Corporation of any loss, theft, or
destruction of such certificate. The Board may direct that a new certificate or
certificates be issued in the place of any certificate or certificates
theretofore issued by it which the owner thereof shall allege to have been lost,
stolen or destroyed upon the furnishing to the Corporation of an affidavit to
that effect by the person claiming that the certificate has been lost, stolen or
destroyed. When authorizing such issue of a new certificate or certificates,
the Board may, in its discretion, require such owner or his or her legal
representatives to give to the Corporation and its transfer agent(s) and
registrar(s) a bond in such sum, limited or unlimited, and in such form and with
such surety or sureties as the Board in its absolute discretion shall determine,
sufficient to indemnify the Corporation against any claim that may be made
against it on account of the alleged loss, theft or destruction of any such
certificate, or the issuance of a new certificate.
9.06 STOCKHOLDER'S RIGHT OF INSPECTION. Any stockholder of record of
the Corporation, in person or by attorney or other agent, shall, upon written
demand under oath stating the purpose thereof, have the right during the usual
hours for business to inspect for any proper purpose the Corporation's stock
ledger, a list of its stockholders, and its other books and records, and to make
copies or extracts therefrom. A proper purpose shall mean a purpose reasonably
related to such person's interest as a stockholder. In every instance where an
attorney or other agent shall be the person who seeks the right to inspection,
the demand under oath shall be accompanied by a power of attorney or such other
writing which authorized the attorney or other agent to so act on behalf of the
stockholder. The demand under oath shall be directed to the Corporation at its
registered office in Delaware or at its principal place of business.
9.07 REPRESENTATION OF SHARES OF OTHER CORPORATIONS. Any Executive
Officer, Executive Vice President or the Secretary of this Corporation is
authorized to vote, represent and exercise on behalf of this Corporation all
rights incident to all shares of any other corporation or corporations standing
in the name of this Corporation. The authority herein granted to said officers
to vote or represent on behalf of this Corporation any and all shares held by
this Corporation in any other corporation or corporations may be exercised
either by such officers in person or by any person authorized so to do by proxy
or power of attorney duly executed by said officers.
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<PAGE>
ARTICLE X
MISCELLANEOUS
10.01 BUDGETS. The Board shall approve all annual and other
significant operating budgets of the Corporation.
10.02 RECORD DATES. In order that the Corporation may determine the
stockholders entitled to notice of, or to vote at, any meeting of stockholders
or any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or to receive payment of any dividend or other distribution
or allotment of any rights, or to exercise any rights in respect of any change,
conversion or exchange of stock or in respect of any other lawful action, the
Board may fix, in advance, a record date, which shall be not more than sixty
(60) nor less than ten (10) days before the date of such meeting, nor more than
sixty (60) days prior to any other action. Only those stockholders of record on
the date so fixed shall be entitled to any of the foregoing rights,
notwithstanding the transfer of any such stock on the books of the Corporation
after any such record date fixed by the Board.
10.03 DIVIDENDS. Subject to any agreement to which the Corporation
is a party or by which it is bound, the Board may declare to be payable, in
cash, in other property or in stock of the Corporation of any class or series,
such dividends in respect of outstanding stock of the Corporation of any class
or series as the Board may at any time deem to be advisable. Before declaring
any such dividend, the Board may cause to be set aside any funds or other
property or assets of the Corporation legally available for the payment of
dividends.
10.04 FISCAL YEAR. The fiscal year of the Corporation shall be
determined by resolution of the Board.
10.05 CORPORATE SEAL. The Corporate Seal shall be circular in form
and shall bear the name of the Corporation and the words and figures denoting
its organization under the laws of the State of Delaware and the year thereof
and otherwise shall be in such form as shall be approved from time to time by
the Board.
10.06 AMENDMENTS. All Bylaws of the Corporation may be amended,
altered or repealed, and new Bylaws may be enacted, by the affirmative vote of
the holders of record of a majority of the issued and outstanding stock of the
Corporation entitled to vote at any annual or special meeting, or by the
affirmative vote of a majority of the directors present at any regular or
special meeting of the Board.
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<PAGE>
CERTIFICATE OF SECRETARY
The undersigned certifies:
(1) That the undersigned is duly elected and acting Secretary of
Cencom Cable Entertainment, Inc., a Delaware corporation; and
(2) That the foregoing Bylaws constitute the Amended and Restated
Bylaws of the Corporation adopted by the Board on the 10th day of August, 1995.
IN WITNESS WHEREOF, I have hereunto subscribed my name and
affixed the seal of the Corporation this 10th day of August, 1995.
/s/ Theodore W. Browne, II
---------------------------------
Theodore W. Browne, II, Secretary
[SEAL]
<PAGE>
EXHIBIT 3.7
CERTIFICATE OF LIMITED PARTNERSHIP
OF
CHARTER COMMUNICATIONS ENTERTAINMENT, L.P.
This Certificate of Limited Partnership of Charter Communications
Entertainment, L.P. (the "Partnership"), dated as of April 19, 1995, is being
duly executed and filed by CCT Holdings Corp., and CCA Holdings Corp., each a
Delaware corporation, as general partners, to form a limited partnership
pursuant to the Delaware Revised Uniform Limited Partnership Act, Title 6
Delaware Code, Chapter 17.
1. The name of the limited partnership is Charter Communications
Entertainment, L.P.
2. The address of the Partnership's registered office in the State
of Delaware is the Corporation Trust Center, 1209 Orange Street, Wilmington, New
Castle County, Delaware 19801. The name of the Partnership's registered agent
for service of process at such address is The Corporation Trust Company.
3. The name and business address of the general partners of the
Partnership is:
CCT Holdings Corp.
c/o Charter Communications, Inc.
12444 Powerscourt Drive
St. Louis, Missouri 63131
CCA Holdings Corp.
c/o Charter Communications, Inc.
12444 Powerscourt Drive
St. Louis, Missouri 63131
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Limited Partnership of Charter Communications Entertainment, L.P. as of the date
first above written.
CHARTER COMMUNICATIONS
ENTERTAINMENT, L.P.
By: CCT Holdings Corp.,
a general partner
By: /s/ Neil A. Torpey
-------------------------------
Name: Neil A. Torpey
Title: Assistant Secretary
By: CCA Holdings Corp.,
a general partner
By: /s/ Neil A. Torpey
-------------------------------
Name: Neil A. Torpey
Title: Assistant Secretary
<PAGE>
EXHIBIT 3.8
AMENDMENT
TO THE
CERTIFICATE OF LIMITED PARTNERSHIP
OF
CHARTER COMMUNICATIONS ENTERTAINMENT, L.P.
The undersigned, desiring to amend the Certificate of Limited Partnership of
Charter Communications Entertainment, L.P. pursuant to the provisions of Section
17-202 of the Revised Uniform Limited Partnership Act of the State of Delaware,
does hereby certify as follows:
FIRST: The name of the limited partnership is Charter Communications
Entertainment, L.P.
SECOND: Article 3 of the Certificate of Limited Partnership shall be amended
to read in its entirety as follows:
"3. The name and business address of the sole general partner of the
Partnership is:
CCA Acquisition Corp.
c/o Charter Communications, Inc.
12444 Powerscourt Drive, Suite 400
St. Louis, Missouri 63131"
IN WITNESS WHEREOF, the undersigned executed this Amendment to the Certificate
of Limited Partnership on this 29th day of September, 1995.
CHARTER COMMUNICATIONS
ENTERTAINMENT, L.P.
By: CCA Acquisition Corp.,
general partner
By: /s/ Robert C. Bailey
___________________________________
Robert C. Bailey
Sr. Vice President
<PAGE>
EXHIBIT 3.9
================================================================================
AGREEMENT
OF LIMITED PARTNERSHIP
OF
CHARTER COMMUNICATIONS ENTERTAINMENT, L.P.
Dated as of September 29, 1995
================================================================================
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
<S> <C>
Article I
Formation of the Partnership........................................ 1
----------------------------
1.1 Formation...................................................... 1
1.2 Partnership Name............................................... 1
1.3 Purpose........................................................ 1
1.4 Place of Business.............................................. 2
1.5 Registered Office and Registered Agent......................... 2
1.6 Term........................................................... 2
1.7 Partnership Powers............................................. 2
Article II
Capital............................................................. 3
2.1 Capital Contributions.......................................... 3
2.2 Additional Capital............................................. 4
2.3 Liability, etc................................................. 4
2.4 Withdrawal of Capital.......................................... 4
2.5 Priority....................................................... 4
2.6 Capital Accounts............................................... 4
2.7 Adjustments.................................................... 5
Article III
Accounting, Distributions and Taxes................................. 5
3.1 Allocations of Net Profits and Net Losses...................... 5
3.2 Qualified Income Offsets, Restorative Allocations.............. 7
3.3 Partnership Minimum Gain....................................... 7
3.4 Minimum Gain Attributable to Partner Nonrecourse Debt.......... 7
3.5 Nonrecourse Deductions......................................... 8
3.6 Partner Nonrecourse Deductions................................. 8
3.7 Section 754 Adjustments........................................ 8
</TABLE>
<PAGE>
<TABLE>
<S> <C>
3.8 Tax Allocations; Section 704(c)................................ 8
3.9 Distributions.................................................. 9
3.10 Accounting Method............................................. 10
3.11 Certain Federal Income Tax Matters............................ 10
3.12 Election under Section 754.................................... 10
3.13 Tax Withholdings.............................................. 10
Article IV
General Partners.................................................... 11
4.1 Management..................................................... 11
4.2 Vote of General Partners....................................... 11
4.3 Reliance on Authority of General Partners...................... 11
4.4 Interested Party Contracts..................................... 11
4.5 Expenditures By General Partners............................... 12
4.6 Other Relationships............................................ 12
4.7 Proscriptions.................................................. 12
4.8 Bank Accounts.................................................. 12
Article V
Restrictions Regarding Transfer, Substitution, etc.................. 13
5.1 Transfer of Interests or Resignations or
Withdrawals by General Partners............................... 13
5.2 Substitution of General Partners............................... 13
5.3 Transfer of Interests by Limited Partners...................... 13
5.4 Substitution of Limited Partners............................... 13
Article VI
Initial Public Offering............................................. 14
Article VII
Indemnification..................................................... 14
7.1 Exculpatory Provisions......................................... 14
7.2 Indemnification of General Partners............................ 14
7.3 Advance of Expenses............................................ 15
7.4 Non-Exclusivity................................................ 15
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
7.5 Satisfaction from Partnership Assets........................... 15
7.6 Notices of Claims, etc......................................... 15
7.7 Exculpation and Indemnification of Manager..................... 16
Article VIII
Dissolution and Liquidation......................................... 16
8.1 Events of Dissolution; Accounting.............................. 16
8.2 Liquidating Trustee............................................ 16
8.3 Distribution in Liquidation.................................... 17
Article IX
Power of Attorney................................................... 18
Article X
Construction........................................................ 18
10.1 Headings...................................................... 18
10.2 Notices....................................................... 18
10.3 Governing Law................................................. 20
10.4 Entire Understanding and Amendment............................ 20
10.5 Miscellaneous................................................. 20
Article XI
Definitions......................................................... 21
</TABLE>
SCHEDULE A -- Partners, Capital Contributions and Capital Accounts
iii
<PAGE>
AGREEMENT OF LIMITED PARTNERSHIP
OF
CHARTER COMMUNICATIONS ENTERTAINMENT, L.P.
AGREEMENT OF LIMITED PARTNERSHIP, dated as of September 29, 1995,
among CCA Acquisition Corp., a Delaware corporation ("CAC"), and CCT Holdings
Corp., a Delaware corporation ("CCT"), as general partners (which entities,
together with any other entities who, in accordance with the terms hereof, may
be admitted hereafter as general partners, are herein collectively referred to
as the "General Partners"), and the entities identified as limited partners in
Schedule A hereto, as limited partners (which entities, together with any other
entities who, in accordance with the terms hereof, may be admitted hereafter as
limited partners, are herein collectively referred to as the "Limited
Partners").
Capitalized terms used herein without definition are defined in
Article XI.
Article I
----------
Formation of the Partnership
----------------------------
1.1 Formation. The parties to this Agreement hereby form a limited
---------
partnership (the "Partnership") pursuant to and in accordance with the
provisions of the Delaware Revised Uniform Limited Partnership Act (as amended
from time to time, the "Act"). The Certificate of Limited Partnership of the
Partnership was filed with the Secretary of State of the State of Delaware on
April 20, 1995.
1.2 Partnership Name. The name of the Partnership shall be Charter
----------------
Communications Entertainment, L.P.
<PAGE>
1.3 Purpose. The purpose of the Partnership is, directly or
-------
indirectly, to acquire, finance, franchise, construct, develop, own, alter,
repair, maintain, promote, program, operate, manage, lease, sell, exchange or
otherwise dispose of cable television systems and to engage in such activities
as the General Partners, subject to the terms set forth herein, deem necessary,
advisable or incidental to the foregoing.
1.4 Place of Business. The principal place of business of the
-----------------
Partnership shall be c/o Charter Communications, Inc., 12444 Powerscourt
Drive, Suite 400, St. Louis, Missouri 63131, or such other place or places as
may be designated at any time and from time to time by the General Partners.
The General Partners will inform the Limited Partners of any change in the
principal office of the Partnership.
1.5 Registered Office and Registered Agent. The registered office of
--------------------------------------
the Partnership in the State of Delaware shall be c/o The Corporation Trust
Company, Corporation Trust Company Center, 1209 Orange Street, Wilmington, New
Castle County, Delaware 19801, and the registered agent for service of process
on the Partnership in the State of Delaware at such address is The Corporation
Trust Company.
1.6 Term. Unless sooner terminated by the unanimous consent of the
----
General Partners, the Partnership shall continue until the earliest to occur of:
(a) The assignment for the benefit of creditors by a General Partner,
appointment of a receiver for or adjudication of bankruptcy of a General
Partner which appointment or order remains unstayed for more than 90 days,
or seizure by a judgment creditor of a General Partner's interest in the
Partnership;
2
<PAGE>
(b) The sale, exchange or involuntary conversion of all, or
substantially all, of the assets of the Partnership;
(c) The resignation or withdrawal of the last remaining General
Partner; or
(d) December 31, 2055.
1.7 Partnership Powers. In furtherance of the Partnership's purpose
------------------
specified in Section 1.3, the Partnership shall have all of the powers available
to it as a limited partnership under the laws of the State of Delaware,
including, without limitation, the power to engage in all activities and
transactions necessary or advisable to carry out the Partnership's purpose. The
General Partners are authorized to exercise all such powers in the name and on
behalf of the Partnership, including, without limitation, the authority:
(a) to invest in any other entity and to sell, transfer, assign,
convey, exchange or otherwise dispose of any or all of the properties or
assets of the Partnership or its Subsidiaries for cash, stock, securities
or any combination thereof on such terms and conditions as may, at any time
and from time to time, be determined by the unanimous consent of the
General Partners;
(b) (i) to enter into any instruments or agreements constituting
-
Indebtedness; (ii) to apply the proceeds of any borrowings under any
--
instruments or agreements evidencing or creating any Indebtedness in such
manner and for such purposes as any General Partner shall determine; (iii)
---
to grant security interests in assets of the Partnership or its
Subsidiaries to secure the obligations of the Partnership, CAC, CCT, CCA
Holdings Corp., Cencom Cable Entertainment, Inc. or the Subsidiaries with
respect to any Indebtedness; and (iv) to guarantee the obligations
--
3
<PAGE>
of the Partnership, CAC, CCT or the Subsidiaries with respect to any
Indebtedness;
(c) to enter into, deliver, perform and carry out contracts and
agreements of every kind necessary or incidental to the Partnership's
purpose;
(d) to open, maintain, and close bank accounts and draw checks or
other orders for the payment of money; and
(e) to take or perform such acts and to execute such agreements,
certificates, documents and instruments necessary or advisable to carry out
the Partnership's purpose.
Article II
----------
Capital
-------
2.1 Capital Contributions. As of the date of this Agreement, each
---------------------
Partner shall have contributed or caused to be contributed to the capital of the
Partnership property having an agreed upon value equal to the amount set forth
opposite such Partner's name on Schedule A hereto.
2.2 Additional Capital. No additional capital contributions or
------------------
assessments therefor beyond the amounts provided for in Section 2.1 shall be
required from any Partner. No additional capital contribution will be accepted
from any person (including the Partners) except for capital contributions
approved by the unanimous consent of the General Partners. Upon the making of
any additional capital contribution by any Partner, the General Partner shall
amend Schedule A to reflect the capital contribution of such Partner.
2.3 Liability, etc. The Limited Partners shall not have any personal
--------------
liability with respect to the liabili-
4
<PAGE>
ties or the obligations of the Partnership. The Partners shall not be required
to lend funds to the Partnership for any purpose. The Limited Partners, in their
capacity as such, shall not (a) take part in the management of the business of
the Partnership, except to the extent provided herein and as permitted under the
Act, (b) transact any business for the Partnership or (c) have the power to sign
for or to bind the Partnership.
2.4 Withdrawal of Capital. No Partner shall be entitled to the
---------------------
return of such Partner's capital contribution except by reason of the
distribution to such Partner of cash or other property pursuant to Section 3.9
or 8.3 or upon the unanimous written consent of the General Partners. No Partner
shall have the right to receive a distribution of property other than cash from
the Partnership.
2.5 Priority. Except as expressly otherwise provided herein, there
--------
shall be no priority of one or more of the Partners over the other Partners as
to return of contributions, withdrawals or distributions of cash or other
property.
2.6 Capital Accounts. There shall be established and maintained for
----------------
each Partner on the books of the Partnership a capital account (each, a "Capital
Account"), which shall be comprised of two subaccounts, an Ordinary Capital
Account and a Preferred Capital Account. The opening balance in each Partner's
Capital Account shall be as shown in Schedule A hereto. Whenever this Agreement
refers to the balance in a Partner's Capital Account, such reference shall mean
the sum of the balances of such Partner's Ordinary Capital Account and Preferred
Capital Account.
2.7 Adjustments. (a) As of each Adjustment Date, the balance of
-----------
each Ordinary Capital Account shall be adjusted by (i) increasing such balance
- ----------
by such Partner's (x) allocable share of Net Profits (allocated in accordance
-
with Section 3.1) and (y) the amount of money or the fair
-
5
<PAGE>
market value of any property contributed to the Partnership by such Partner (net
of any liabilities secured by such contributed property that the Partnership is
considered to assume or take subject to under Section 752 of the Code) and (ii)
--
decreasing such balance by (x) the amount of cash or the fair market value of
- ---------- -
property distributed or deemed distributed to such Partner pursuant to Sections
3.9 (other than Sections 3.9(b)(i) or (ii)) and 8.3 (net of any liabilities
secured by such distributed property that the distributee Partner is considered
to assume or take subject to under Section 752 of the Code) and (y) such
-
Partner's allocable share of Net Losses (allocated in accordance with Section
3.1). Each Partner's Capital Account shall be further adjusted with respect to
any special allocations pursuant to Sections 3.2 through 3.7.
(b) As of each Adjustment Date, the balance of each Preferred Capital
Account shall be adjusted by (i) increasing such balance by any Preferred Return
- ----------
during the relevant Fiscal Period and (ii) decreasing such balance by any
-- ----------
payments made pursuant to Section 3.9(b)(i) or (ii) during the relevant Fiscal
Period. Such increase shall and any related payment pursuant to Section
3.9(b)(i) or (ii) shall be treated for all purposes of this Agreement as a
payment described in Section 707(c) of the Code.
(c) Any question with respect to a Partner's Capital Account shall be
resolved by the General Partners, collectively, in good faith and in their
reasonably exercised discretion, applying principles consistent with this
Agreement. The provisions of this Agreement relating to the maintenance of
Capital Accounts are intended to comply with Treasury Regulations Section 1.704-
1(b) and shall be interpreted and applied in a manner consistent with such
Treasury Regulations.
Article III
-----------
Accounting, Distributions and Taxes
-----------------------------------
6
<PAGE>
3.1 Allocations of Net Profits and Net Losses. (a) The Net Profit
-----------------------------------------
and Net Loss of the Partnership, including each item of income, gain, loss,
credit and deduction, shall be allocated with respect to each Fiscal Year as of
the end of such Fiscal Year.
(b) Net Profit and Net Loss of the Partnership shall be allocated
among the Partners so as to reduce, proportionately, in the case of a Net
Profit, the difference between their respective Target Capital Accounts and
Partially Adjusted Capital Accounts and, in the case of a Net Loss, the
difference between their respective Partially Adjusted Capital Accounts and
Target Capital Accounts as of the end of such Fiscal Year. No portion of Net
Profit or Net Loss for any Fiscal Year shall be allocated to a Partner, in the
case of a Net Profit, whose Partially Adjusted Capital Account is greater than
or equal to its Target Capital Account or, in the case of a Net Loss, whose
Target Capital Account is greater than or equal to its Partially Adjusted
Capital Account for such Fiscal Year.
(c) If (i) the Partnership has a Net Profit for any Fiscal Year
-
(determined prior to giving effect to this Section 3.1(c)) and, notwithstanding
the application of Section 3.1(b), the balance of any Partner's Partially
Adjusted Capital Account is greater than the balance of its Target Capital
Account, then the Partner with such excess balance shall be specially allocated
items of Partnership expense or loss (to the extent available) equal to the
difference between its Partially Adjusted Capital Account and its Target
Capital Account; (ii) the Partnership has a Net Loss for any Fiscal Year
--
(determined prior to giving effect to this Section 3.1(c)) and, notwithstanding
the application of Section 3.1(b), the balance of any Partner's Partially
Adjusted Capital Account is less than the balance of its Target Capital Account,
then the Partner with such deficient balance shall be specially allocated items
of Partnership income or gain for such Fiscal Year (to the extent available)
equal to the difference between its Partially Adjusted Capital Account and its
Target Capital Account; and (iii) the Part
---
7
<PAGE>
nership has neither a Net Profit nor a Net Loss for any Fiscal Year (determined
prior to giving effect to this Section 3.1(c)) and, notwithstanding the
application of Section 3.1(b), the balance of any Partner's Partially Adjusted
Capital Account differs from the balance of its Target Capital Account, then
the Partner with an excess or deficient balance, as the case may be, shall be
specially allocated items of Partnership expense or loss or income or gain, as
the case may be, for such Fiscal Year (to the extent available) equal to the
difference between its Partially Adjusted Capital Account and its Target Capital
Account.
3.2 Qualified Income Offsets, Restorative Allocations. (a) If (i)
-------------------------------------------------- -
any Partner unexpectedly receives any adjustment, allocation or distribution
described in Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6)
and (ii) such adjustment, allocation or distribution causes or increases a
--
deficit in such Partner's Adjusted Capital Account as of the end of the Fiscal
Period to which such adjustment, allocation or distribution relates (a
"Deficit"), then items of gross income for such Fiscal Period and each
subsequent Fiscal Period shall be specifically allocated to each such Partner
pro rata in proportion to its Deficits in an amount and manner sufficient to
- --- ----
eliminate, to the extent required by the Treasury Regulations, such Deficit as
quickly as possible, provided that an allocation pursuant to this Section 3.2
--------
shall be made only if and to the extent that such Partner would have a Deficit
after all other allocations provided for in this Article III have been
tentatively made as if this Section 3.2 were not in this Agreement.
(b) Any special allocations of items of income or gain pursuant to
this Section 3.2 shall be taken into account in computing subsequent
allocations pursuant to this Agreement, so that the net amount for any item so
allocated and all other items allocated to each Partner pursuant to this
Agreement shall be equal, to the extent possible, to the net amount that would
have been allocated to each Part-
8
<PAGE>
ner pursuant to the provisions of this Agreement if such special allocations had
not occurred.
3.3 Partnership Minimum Gain. Except as otherwise provided in
------------------------
Treasury Regulations Section 1.704-2(f), if there is a net decrease in
Partnership Minimum Gain during any Partnership Fiscal Year, each Partner shall
be specially allocated items of Partnership income and gain for such period
(and, if necessary, subsequent periods) in proportion to, and to the extent of,
an amount equal to the portion of such Partner's share of the net decrease in
Partnership Minimum Gain, determined in accordance with Treasury Regulations
Section 1.704-2(g). This Section 3.3 is intended to comply with the chargeback
of items of income and gain requirement in Treasury Regulations Section 1.704-
2(f) and shall be interpreted consistently therewith.
3.4 Minimum Gain Attributable to Partner Nonrecourse Debt. Except as
-----------------------------------------------------
otherwise provided in Treasury Regulations Section 1.704-2(i), if there is a net
decrease in Minimum Gain Attributable to Partner Nonrecourse Debt during any
Partnership Fiscal Year, each Partner with a share of Minimum Gain Attributable
to Partner Nonrecourse Debt shall be specially allocated items of Partnership
income and gain for such period (and, if necessary, subsequent periods) in
proportion to, and to the extent of, an amount equal to the portion of such
Partner's share of the net decrease in the Minimum Gain Attributable to Partner
Nonrecourse Debt, determined in accordance with Treasury Regulations Section
1.704-2(i)(4). This Section 3.4 is intended to comply with the chargeback of
items of income and gain requirement in Treasury Regulations Section 1.704-
2(i)(4) and shall be interpreted consistently therewith.
3.5 Nonrecourse Deductions. Nonrecourse Deductions for any Fiscal
----------------------
Year shall be allocated to the Partners in the same ratios that Net Profits are
allocated for the Fiscal Year in accordance with Treasury Regulations Section
1.704-2(b)(1).
9
<PAGE>
3.6 Partner Nonrecourse Deductions. Partner Nonrecourse Deductions
------------------------------
for any Fiscal Year shall be allocated 100% to the Partner that bears the
economic risk of loss (as defined in Treasury Regulations Section 1.704-2(b))
with respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse
Deductions are attributable in accordance with Treasury Regulations Section
1.704-2(i). If more than one Partner bears the economic risk of loss with
respect to a Partner Nonrecourse Debt, such Partner Nonrecourse Deductions
attributable thereto shall be allocated between or among such Partners in
accordance with the ratios in which they share such economic risk of loss.
3.7 Section 754 Adjustments. To the extent an adjustment to the
-----------------------
adjusted basis of any Partnership asset pursuant to Section 734(b) of the Code
or Section 743(c) of the Code is required, pursuant to Treasury Regulations
Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital
Accounts, the amount of such adjustment to Capital Accounts shall be treated as
an item of gain (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases such basis) and such gain or loss shall be specially
allocated to the Partners in a manner consistent with the manner in which their
Adjusted Capital Accounts are required to be adjusted pursuant to Treasury
Regulations Section 1.704-1(b)(2)(iv)(m).
3.8 Tax Allocations; Section 704(c). (a) Except as provided in
-------------------------------
subsection (b) below, the income, gains, losses, credits and deductions
recognized by the Partnership shall be allocated among the Partners, for U.S.
federal, state and local income tax purposes, to the extent permitted under the
Code and the Treasury Regulations, in the same manner that each such item
affects the balances in the Partners' Capital Accounts.
(b) In accordance with Section 704(c) of the Code and the Treasury
Regulations thereunder, income, gain, loss and deduction with respect to any
property contributed to the capital of the Partnership shall, solely for tax
10
<PAGE>
purposes, be allocated among the Partners so as to take account of any variation
between the adjusted basis of such property to the Partnership for federal
income tax purposes and its fair market value as determined by the General
Partners.
3.9 Distributions. The General Partners may from time to time by
-------------
unanimous consent declare distributions of cash or other Partnership property.
Such distributions shall be made or applied as follows:
(a) First, all distributions received from the Subsidiaries for
Permitted Expenses shall be distributed in a manner designed to permit payment
of such expenses.
(b) Following the Partnership's distribution of amounts pursuant to
Section 3.9(a) above, the Partnership shall make all other distributions in the
following order of priority:
(i) to the extent that each of CAC, Cencom Cable and CCT has a
positive balance in its Preferred Capital Account, (x) amounts distributed
-
to the Partnership by CCE I, L.P., to the extent not previously applied
pursuant to subsection (a) above, shall be distributed to CAC and Cencom
Cable to the extent of, and pro rata in accordance with, the positive
balances in their respective Preferred Capital Accounts and (y) amounts
-
distributed to the Partnership by CCE II, L.P., to the extent not
previously applied pursuant to subsection (a) above, shall be distributed
to CCT to the extent of the positive balance in its Preferred Capital
Account;
(ii) to the extent that any Partner has a positive balance in its
Preferred Capital Account, to any such Partner having a positive balance in
its Preferred Capital Account to the extent of, and pro rata in accordance
with, such positive Preferred Capital Account balances;
11
<PAGE>
(iii) to the Partners until each such Partner shall have received
amounts pursuant to this clause (iii) sufficient to place such Partner in
the same position it would have been in had the preceding clause (i) or
(ii) not been in this Agreement and pro rata among such Partners in
accordance with their respective Percentage Interests; and
(iv) thereafter, to the Partners in accordance with their Percentage
Interests.
3.10 Accounting Method. The books of account of the Partnership shall
-----------------
be kept pursuant to the accrual method of accounting. Except to the extent
required by law, the Partnership shall not change its accounting principles in a
manner adverse to any Partner without the consent of such Partner.
3.11 Certain Federal Income Tax Matters. The Partners understand and
----------------------------------
intend that under the Code the Partnership constitutes a "limited
partnership." CCT shall be the "tax matters partner" of the Partnership
pursuant to Section 6231(a)(7) of the Code. Each Partner hereby consents to
such designation and agrees that upon the request of CCT it will execute,
certify, acknowledge, deliver, swear to, file and record at the appropriate
public offices such documents as may be necessary or appropriate to evidence
such consent.
3.12 Election under Section 754. The General Partners, on behalf of
--------------------------
the Partnership, may in their sole discretion file an election under Section 754
of the Code in accordance with the procedures set forth in the applicable
Treasury Regulations.
3.13 Tax Withholdings. The Partnership shall at all times be entitled
----------------
to make payments with respect to any Partner in amounts required to discharge
any legal obligation of the Partnership pursuant to any provision of the Code
or any other tax provision or any provision enacted in
12
<PAGE>
the future imposing a similar obligation on the Partnership to withhold or make
payments to any governmental authority with respect to any U.S. federal, state
and local tax liability of such Partner arising as a result of such Partner's
interest in the Partnership. Each such payment shall be deemed to be a loan by
the Partnership to such Partner and shall not be deemed to be a distribution.
The amount of such payments made with respect to any Partner, plus interest at
an annual rate equal to the interest rate publicly announced by Toronto Dominion
(Texas), Inc. from time to time as its base rate on each such amount from the
date of each such payment until such amount is repaid to the Partnership, shall
be repaid to the Partnership by (i) deduction from the current or next
-
succeeding distribution or distributions otherwise payable to such Partner
pursuant to this Agreement or (ii) earlier payment of such amounts and interest
--
by the Partner to the Partnership.
Article IV
-----------
General Partners
----------------
4.1 Management. The management and control of and the determination
----------
of policy with respect to the Partnership and its affairs shall be vested
exclusively in the General Partners and in connection therewith the General
Partners may exercise all of the powers and authority set forth in Section 1.7.
Notwithstanding the foregoing, the General Partners may retain the Manager to
manage the Partnership and its Subsidiaries and may delegate such powers and
authority to the Manager and assign such duties to the Manager as the General
Partners in their reasonable discretion deem necessary or advisable, such
powers, authority and duties to be set forth, and limited in the manner set
forth, in the Management Agreements.
4.2 Vote of General Partners. Unless expressly otherwise provided
------------------------
herein, whenever this Agreement shall provide for any action, decision, approval
or consent to be
13
<PAGE>
taken, made or given by the General Partners, such action, decision, approval or
consent may be taken, made or given by any General Partner.
4.3 Reliance on Authority of General Partners. Nothing herein
-----------------------------------------
contained shall impose any obligation on any person or firm doing business with
the Partnership to inquire as to whether or not the General Partners have
exceeded their authority in executing or causing to be executed any contract,
lease, deed or other instrument on behalf of the Partnership, and any such third
person shall be fully protected in relying upon such authority.
4.4 Interested Party Contracts. The General Partners may by
--------------------------
unanimous consent cause the Partnership to enter into contracts and transactions
with any of the General Partners or any of their respective affiliates, provided
--------
that the terms of any such contract or transaction are entered into in good
faith, and are fair and reasonable to the Partnership.
4.5 Expenditures By General Partners. The General Partners shall be
--------------------------------
entitled to reimbursement by the Partnership for any reasonable expenditures
incurred by the General Partners on behalf of the Partnership which are paid by
or on behalf of the General Partners other than out of the funds of the
Partnership. No General Partner shall be compensated for its services as a
General Partner of the Partnership.
4.6 Other Relationships. Each General Partner shall devote so much
-------------------
of its time to the business of the Partnership as in the judgment of such
General Partner the conduct of the Partnership's business shall reasonably
require. Any General Partner may engage in other business ventures of any
nature and description independently or with others, and neither the Partnership
nor any of the other Partners shall have any rights in and to such independent
ventures or the income or profits derived therefrom. Except as otherwise
specifically provided herein, nothing contained
14
<PAGE>
in this Agreement shall, or shall be deemed to, prohibit, restrict or limit in
any manner any business or investment activities of either of the General
Partners or any of their respective affiliates, including, without limitation,
rendering any business, management or consulting advice to the Partnership or
its Subsidiaries.
4.7 Proscriptions. Without the written consent of or ratification by
-------------
90% or more of the Percentage Interests of the Limited Partners, the General
Partners shall have no authority to do any act in contravention of this
Agreement or of the Act.
4.8 Bank Accounts. All funds of the Partnership shall be deposited
-------------
in the Partnership name in such bank account or accounts and in such bank or
banks as shall be designated from time to time by the General Partners. All
withdrawals therefrom shall be made upon the signature of a General Partner or
of such other person or persons as the General Partners may from time to time
designate. The Partnership's funds shall not be commingled with funds not
belonging to the Partnership and shall be used only for the affairs or business
of the Partnership as herein provided.
Article V
----------
Restrictions Regarding Transfer, Substitution, etc.
---------------------------------------------------
5.1 Transfer of Interests or Resignations or Withdrawals by General
---------------------------------------------------------------
Partners. Without the prior written consent of all of the other General
- --------
Partners and a Majority in Interest, no General Partner may (a) sell, transfer,
-
assign, convey, or otherwise dispose of, all or a portion of its general partner
interest in the Partnership or (b) resign or withdraw from the Partnership.
-
5.2 Substitution of General Partners. Without the prior written
--------------------------------
consent of all of the other General Partners and a Majority in Interest, no
General Partner may
15
<PAGE>
substitute a general partner in its stead. No party shall become an additional
or substitute General Partner hereof unless and until it has executed such
certificates and other documents and performed such acts as may be necessary in
the judgment of the remaining General Partner(s) to constitute such party as a
general partner, and to preserve the status of the Partnership as a limited
partnership.
5.3 Transfer of Interests by Limited Partners. Without the prior
-----------------------------------------
written consent of all of the General Partners, which consent may be granted or
withheld in their sole discretion, no Limited Partner may sell, transfer,
assign, convey, or otherwise dispose of, all or a portion of its limited partner
interest in the Partnership; provided, however, such consent will be granted for
-------- -------
any transfer by a Limited Partner of its entire limited partner interest to
another Partner or to any successor in interest upon the sale or transfer of
substantially all the assets of such Limited Partner, or the merger or
consolidation of such Limited Partner with such successor.
5.4 Substitution of Limited Partners. Without the prior written
--------------------------------
consent of all of the General Partners, which consent may be granted or withheld
in their sole discretion, no Limited Partner may substitute a limited partner in
its stead and no additional Limited Partners may be admitted to the Partnership.
No party shall become an additional or substitute Limited Partner hereof unless
and until it has executed such certificates and other documents and performed
such acts as may be necessary to constitute such party as a limited partner, and
to preserve the status of the Partnership as a limited partnership.
Article VI
----------
Initial Public Offering
-----------------------
In the event of a determination by the unanimous consent of the
General Partners to cause a transfer of all or substantially all
16
<PAGE>
or substantially all of the assets of the partnership or the interests in the
partnership to a corporation ("Newco") in anticipation of an initial public
offering of the stock of such corporation (an "IPO"), each Partner shall take
such steps to affect the IPO as may be requested by the General Partners,
including, without limitation, transferring its interests in the Partnership to
Newco in exchange for capital stock of Newco.
Article VII
-----------
Indemnification
---------------
7.1 Exculpatory Provisions. None of the General Partners or any of
----------------------
their respective affiliates, or the partners, officers, directors, employees or
control persons (as such term is defined in the Securities Act of 1933, as
amended, and the rules and regulations thereunder) of such General Partner or
affiliate (collectively, the "Indemnified Persons") shall be liable, directly or
indirectly, to the Partnership or any Partner for any act or omission (in
relation to the Partnership or this Agreement) taken or omitted by such
Indemnified Person in good faith, provided that such act or omission did not
--------
constitute gross negligence, fraud, willful violation of the law, willful
violation of this Agreement or reckless disregard of the duties of such
Indemnified Person.
7.2 Indemnification of General Partners. The Partnership shall, to
-----------------------------------
the fullest extent permitted by applicable law, indemnify and hold harmless each
Indemnified Person against all claims, liabilities and expenses of whatever
nature ("Claims") relating to activities undertaken in connection with the
Partnership, including but not limited to amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and counsel, accountants'
and experts' and other fees, costs and expenses reasonably incurred in
connection with the investigation, defense or disposition (including by
settlement) of any
17
<PAGE>
action, suit or other proceeding, whether civil or criminal, before any court or
administrative body in which such Indemnified Person may be or may have been
involved, as a party or otherwise, or with which such Indemnified Person may be
or may have been threatened, while acting as such Indemnified Person, provided
--------
that no indemnity shall be payable hereunder against any liability incurred by
such Indemnified Person by reason of gross negligence, fraud, willful violation
of the law, willful violation of this Agreement, reckless disregard of the
duties of such Indemnified Person or with respect to any matter as to which such
Indemnified Person shall have been adjudicated not to have acted in good faith,
and provided further that as to any action, suit or other proceeding disposed of
--------
by settlement or a compromise payment, pursuant to a consent decree or
otherwise, no indemnification (whether for such payment or for any other Claim)
shall be provided unless there has been a determination that such compromise is
in or not opposed to the best interests of the Partnership and that such
Indemnified Person has acted in good faith and did not involve gross negligence,
fraud, willful violation of the law, willful violation of this Agreement or
reckless disregard of the duties of such Indemnified Person.
7.3 Advance of Expenses. Expenses incurred by an Indemnified Person
-------------------
in defense or settlement of any Claim that may be subject to a right of
indemnification hereunder may be advanced by the Partnership prior to the final
disposition thereof upon receipt of an undertaking by or on behalf of the
Indemnified Person to repay such amount if it shall ultimately be determined
that the Indemnified Person is not entitled to be indemnified by the
Partnership.
7.4 Non-Exclusivity. The right of any Indemnified Person to the
---------------
indemnification provided herein shall be cumulative of, and in addition to, any
and all rights to which such Indemnified Person may otherwise be entitled by
contract or as a matter of law or equity and shall extend to such Indemnified
Person's successors, assigns and legal representatives.
18
<PAGE>
7.5 Satisfaction from Partnership Assets. All judgments against the
------------------------------------
Partnership or an Indemnified Person, in respect of which such Indemnified
Person is entitled to indemnification, shall first be satisfied from Partnership
assets before the Indemnified Person is responsible therefor.
7.6 Notices of Claims, etc. Promptly after receipt by an Indemnified
-----------------------
Person of notice of the commencement of any action or proceeding or threatened
action or proceeding involving a Claim referred to in this Article VII, such
Indemnified Person will, if a claim for indemnification in respect thereof is to
be made against the Partnership, give written notice to the Partnership of the
commencement of such action, provided that the failure of any Indemnified Person
--------
to give notice as provided herein shall not relieve the Partnership of its
obligations under this Article VII, except to the extent that the Partnership is
actually prejudiced by such failure to give notice. Each such Indemnified
Person shall keep the General Partners apprised of the progress of any such
proceeding.
7.7 Exculpation and Indemnification of Manager. Notwithstanding the
------------------------------------------
foregoing provisions of this Article VII, the liability of the Manager to the
Partnership and the Partnership's obligation to indemnify the Manager acting
solely in its capacity as Manager with respect to any action or inaction in
connection with the performance of the services and duties contemplated by the
Management Agreements shall be governed by the provisions of the Management
Agreements. For purposes of this Section 7.7, the Manager shall include its
officers, directors, employees and affiliates.
Article VII
-----------
Dissolution and Liquidation
---------------------------
19
<PAGE>
8.1 Events of Dissolution; Accounting. (a) The Partnership shall
---------------------------------
dissolve upon the earliest to occur of the events described in Section 1.6.
(b) In the event of the dissolution and liquidation of the
Partnership, a proper accounting shall be made of the Capital Account of each
Partner and of the Net Profits or Net Losses of the Partnership from the date of
the last previous accounting to the date of dissolution. Financial statements
presenting such accounting shall be audited and shall include a report of a
nationally recognized accounting firm.
8.2 Liquidating Trustee. Upon the dissolution and liquidation of the
-------------------
Partnership's business for any reason, the General Partners shall act as
liquidating trustees, or, if there shall then be no General Partner, the Limited
Partners may elect a liquidating trustee. The liquidating trustee(s) shall have
full power to sell, assign and encumber Partnership assets.
8.3 Distribution in Liquidation. In the event of the termination of
---------------------------
the Partnership pursuant to this Article VIII or for any other reason, the
Partnership assets shall be liquidated. The proceeds of such liquidation shall
be distributed as follows:
(a) first, to the payment of the expenses of the liquidation;
(b) second, to the (i) payment of creditors of the Partnership and
-
(ii) establishment of reserves to provide for contingent liabilities, if
--
any, in the order of priority as provided by law;
(c) third, to each Partner whose Preferred Capital Account balance
shall be greater than zero (determined after all adjustments for the Fiscal
Period in which such
20
<PAGE>
dissolution occurs) to the extent of such positive balance in accordance
with the priorities set forth in Sections 3.9(b)(i) and (ii);
(d) fourth, to each Partner whose Ordinary Capital Account balance
shall be greater than zero (as such Ordinary Capital Account has been
adjusted pursuant to Section 2.7, after giving effect to allocations
pursuant to Article III) to the extent of such positive balance in the
ratio which its respective Ordinary Capital Account balance bears to all
such positive Ordinary Capital Account balances; and
(e) thereafter, to the Partners in accordance with their Percentage
Interests at the time of liquidation.
Payments to Partners described in subsections (a) through (e) above
may be made in cash or in kind if so determined by the General Partners or a
liquidating trustee appointed pursuant to Section 8.2. Any distributions to
Partners upon liquidation shall be made by the end of the taxable year in which
the liquidation of the Partnership occurs (or, if later, within 90 days after
the date of such liquidation).
Article IX
----------
Power of Attorney
-----------------
Concurrently with the execution of this Agreement, each Limited
Partner hereby appoints the General Partners as its true and lawful attorneys
coupled with an interest, in its name, place and stead to sign, execute,
acknowledge, swear to and file any and all documents which in the reasonable
discretion of such attorneys are required to be signed, executed, acknowledged,
sworn to or filed by each Limited Partner to discharge the purposes of the
Partnership as hereinabove stated. Without limitation, among the documents
which the General Partners may execute on behalf
21
<PAGE>
of each Limited Partner shall be a Certificate of Limited Partnership and all
amendments thereto required by applicable law or by the provisions of this
Agreement.
Article X
---------
Construction
------------
10.1 Headings. The headings, titles and subtitles herein are
--------
inserted for convenience of reference only and shall not control or affect the
meaning or construction of any of the provisions hereof.
10.2 Notices. All notices, requests, demands, letters, waivers and
-------
other communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if (a) delivered
-
personally, (b) mailed, by certified or registered mail with postage prepaid,
-
(c) sent by next-day or overnight mail or delivery or (d) transmitted by
- -
telecopy or telegram, as follows:
(i) If to the General Partners, to each of them:
c/o Charter Communications, Inc.
12444 Powerscourt Drive
Suite 400
St. Louis, Missouri 63131
Attention: Jerald L. Kent
with a copy to:
Kelso & Company
350 Park Avenue, 21st Floor
New York, New York 10022
Attention: James J. Connors, II, Esq.
22
<PAGE>
Paul, Hastings, Janofsky & Walker
399 Park Avenue
New York, New York 10022
Attention: Neil A. Torpey, Esq.
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Richard D. Bohm, Esq.
(ii) If to the Limited Partners, to each of them:
c/o Charter Communications, Inc.
12444 Powerscourt Drive
Suite 400
St. Louis, Missouri 63131
Attention: Jerald L. Kent
with a copy to:
Kelso & Company
350 Park Avenue, 21st Floor
New York, New York 10022
Attention: James J. Connors, II, Esq.
Paul, Hastings, Janofsky & Walker
399 Park Avenue
New York, New York 10022
Attention: Neil A. Torpey, Esq.
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Richard D. Bohm, Esq.
23
<PAGE>
or to such other person or address as any party shall specify by notice in
writing to the other Partners. All such notices, requests, demands, letters,
waivers and other communications shall be deemed to have been received (w) if by
-
personal delivery on the day after such delivery, (x) if by certified or
-
registered mail, on the fifth business day after the mailing thereof, (y) if by
-
next-day or overnight mail or delivery, on the day delivered or (z) if by
-
telecopy or telegram, on the next day following the day on which such telecopy
or telegram was sent, provided that a copy is also sent by certified or
registered mail.
10.3 Governing Law. This Agreement, and its validity, construction
-------------
and performance, shall be governed by the laws of the State of Delaware, without
regard to the conflict of laws rules thereof.
10.4 Entire Understanding and Amendment. This Agreement embodies the
----------------------------------
entire agreement and understanding of the parties hereto in respect of the
subject matter contained herein. There are no restrictions, promises,
representations, warranties, covenants or undertakings among the parties hereto
relating to the subject matter contained herein, other than those expressly set
forth or referred to herein. This Agreement supersedes all prior agreements and
understandings among the parties with respect to such subject matter. This
Agreement may be amended or modified with the written consent of the General
Partners. Notwithstanding the foregoing, this Agreement may not be amended or
modified without the prior written consent of all of the General Partners, which
consent may be granted or withheld in their sole discretion, and, if in the
judgment of the General Partners such amendment or modification would materially
and adversely affect the rights of a Limited Partner, a Majority in Interest.
10.5 Miscellaneous. Except as provided in Article V, this Agreement
-------------
may not be assigned or transferred by operation of law or otherwise. This
Agreement is not intended to confer upon any other person except the parties
24
<PAGE>
hereto any rights or remedies hereunder. If any provision of this Agreement or
the application thereof to any person or circumstance shall be prohibited by or
invalid under applicable law, the remainder of this Agreement or the application
of such provision to other persons or circumstances shall not be affected
thereby. This Agreement may be executed in one or more counterparts, all of
which shall constitute one and the same instrument. Each counterpart may consist
of a number of copies each signed by less than all, but together signed by all,
the parties hereto.
Article XI
----------
Definitions
-----------
As used in this Agreement and the Schedules hereto, the following
terms shall have the following meanings:
Act: as defined in Section 1.1 of this Agreement.
---
Adjusted Capital Account: means, with respect to any Partner, as of
------------------------
the end of any Fiscal Year, such Partner's Capital Account balance (whether
positive or negative) as of the end of such Fiscal Year, (i) increased by the
- ---------
sum of (A) such Partner's share of Partnership Minimum Gain and (B) any amount
- -
for which such Partner is personally liable with respect to liabilities of the
Partnership as of the end of such Fiscal Year (except to the extent that such
amount would duplicate the amount of any increase under clause (A) above) and
(ii) decreased by such Partner's share of the reasonably expected net
- --- ---------
allocations and distributions described in Treasury Regulations Sections 1.704-
1(b)(2)(ii)(d)(4), (5) and (6).
Adjustment Date: means (a) the close of business on the last day of
--------------- -
each Fiscal Year of the Partnership, (b) the day before the effective date of
-
the admission
25
<PAGE>
of any additional Partner to the Partnership, (c) the day before any
-
distribution is made by the Partnership or (d) any other date selected by the
-
General Partners, in their reasonable discretion, for an interim closing of the
Partnership books. For purposes of this definition, the day before the date of
this Agreement shall be considered an Adjustment Date.
CAC: as defined in the first paragraph of this Agreement.
---
Capital Account: as defined in Section 2.6 of this Agreement.
---------------
CCE I, L.P.: means Charter Communications Entertainment I, L.P., a
-----------
Delaware limited partnership.
CCE II, L.P.: means Charter Communications Entertainment II, L.P., a
------------
Delaware limited partnership.
CCE II Loan Agreement: means the Loan Agreement, dated as of
---------------------
September 29, 1995, among CCE II, L.P., Chemical Bank as Documentation Agent,
and Nationsbank of Texas, N.A., as Administrative Agent, and the lenders named
therein, including any amendment, renewal, extension, substitution, refinancing,
replacement or other modification thereof.
CCT: as defined in the first paragraph of this Agreement.
---
Cencom Cable: means Cencom Cable Entertainment, Inc., a Delaware
------------
corporation.
Cencom Loan Agreement: means the Senior Subordinated Loan Agreement,
---------------------
dated as of September 29, 1995, between CCT and Cencom Cable Television, Inc.,
including any amendment, renewal, extension, substitution, refinancing,
replacement or other modification thereof.
26
<PAGE>
Claims: as defined in Section 7.2 of this Agreement.
------
Code: means the Internal Revenue Code of 1986, as amended.
----
Deficit: as defined in Section 3.2 of this Agreement.
-------
Fiscal Period: means a period beginning on the day following any
-------------
Adjustment Date and ending on the next succeeding Adjustment Date.
Fiscal Year: means a year beginning on January 1 of one calendar year
-----------
and ending on December 31 of the same calendar year, provided, however, that the
-------- -------
term "Fiscal Year" shall mean with respect to the Partnership's first period of
operations the period commencing on the date hereof and ending on December 31
of the same calendar year.
General Partners: as defined in the first paragraph of this
----------------
Agreement.
Hallmark Loan Agreement: means the Senior Subordinated Loan
-----------------------
Agreement, dated as of January 18, 1995, between CCA Holdings Corp. and H C
Crown Corp., including any amendment, renewal, extension, substitution,
refinancing, replacement or other modification thereof.
Indebtedness: means any indebtedness, whether or not for money
------------
borrowed, including any amendment, renewal, extension, substitution,
refinancing, replacement or other modification thereof, directly or indirectly
created, incurred or assumed by any entity, including, without limitation,
indebtedness arising under or pursuant to the TD Loan Agreement, the Hallmark
Loan Agreement, the CCE II Loan Agreement and the Cencom Loan Agreement.
Indemnified Party: as defined in Section 7.1 of this Agreement.
-----------------
27
<PAGE>
IPO: as defined in Article VI of this Agreement.
---
Limited Partners: as defined in the first paragraph of this
----------------
Agreement.
Majority in Interest: means a majority in interest of the Limited
--------------------
Partners, based on their Percentage Interests.
Management Agreements: means (i) the Amended and Restated Management
--------------------- -
Agreement, dated as of September 29, 1995, as the same shall be amended from
time to time, between CCE I, L.P. and the Manager and (ii) the Management
--
Agreement, dated as of September 29, 1995, as the same shall be amended from
time to time, between CCE II, L.P. and the Manager.
Manager: means Charter Communications, Inc., a Delaware corporation,
-------
or any successor manager approved by the unanimous consent of the General
Partners.
Minimum Gain Attributable to Partner Nonrecourse Debt: means that
-----------------------------------------------------
amount determined in accordance with the principles of Treasury Regulations
Section 1.704-2(i)(3), (4) and (5).
Net Profits and Losses: means, for any Fiscal Period, (a) the
---------------------- -
Partnership's share of the net income and net loss for such Fiscal Period of
each Subsidiary that is a partnership for federal income tax purposes, as
determined in accordance with the operating agreement for such Subsidiary, and
(b) in the case of any other item, the net income or net loss of the Partnership
-
for such Fiscal Period, including any items that are separately stated for
purposes of Section 702(a) of the Code, as determined in accordance with federal
income tax accounting principles with the following adjustments:
(i) any income of the Partnership that is exempt from federal income
tax shall be included as income;
28
<PAGE>
(ii) any expenditures of the Partnership described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant
to Treasury Regulations Section 1.704-1(b)(2)(iv)(1) shall be treated as
current expenses;
(iii) no effect shall be given to any adjustments made pursuant to
Section 734 or Section 743 of the Code;
(iv) the basis of property contributed to the Partnership shall
initially be treated as equal to the agreed upon valuation of such property
as reflected on Schedule A hereto and all gain, loss, depreciation and
amortization on such property shall be determined based on such agreed upon
value in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)(g);
(v) if the Partnership distributes any property in kind, the
Partnership shall be deemed to have sold such property for its fair market
value immediately before such distribution and the proceeds of such deemed
sale shall be deemed to have been distributed to the Partners for all
purposes of this Agreement; and
(vi) notwithstanding any other provisions of this definition, any
items which are specially allocated pursuant to Sections 3.2 through 3.8
shall not be taken into account.
Newco: as defined in Article VI of this Agreement.
-----
Nonrecourse Deductions: has the meaning set forth in Treasury
----------------------
Regulations Section 1.704-2(b)(1).
Nonrecourse Liability: has the meaning set forth in Treasury
---------------------
Regulations Section 1.704-2(b)(3).
29
<PAGE>
Ordinary Capital Account: as described in Section 2.6 of this
------------------------
Agreement.
Partially Adjusted Capital Account: shall mean, with respect to any
----------------------------------
Partner and any Adjustment Date, the Capital Account of such Partner as of the
beginning of the Fiscal Year ending on such Adjustment Date, adjusted as set
forth in Section 2.7 for all Capital Contributions and distributions during such
Fiscal Year and for any special allocations pursuant to Sections 3.2 through 3.7
but before giving effect to any allocations of Net Profit or Net Loss for such
Fiscal Year pursuant to Section 3.1.
Partner Nonrecourse Debt: means debt of the Partnership within the
------------------------
meaning of Treasury Regulations Section 1.704-2(b)(4).
Partner Nonrecourse Deductions: has the meaning set forth in Treasury
------------------------------
Regulations Sections 1.704-2(i)(1) and 1.704-2(i)(2).
Partners: means the General Partners and the Limited Partners.
--------
Partnership: as defined in Section 1.1 of this Agreement.
-----------
Partnership Minimum Gain: has the meaning set forth in Sections
------------------------
1.704-2(b)(2) and 1.704-2(d) of the Treasury Regulations.
Percentage Interest: means each Partner's proportionate share of the
-------------------
Net Profits or Net Losses of the Partnership, as set forth in Schedule A hereto.
Permitted Expenses: means, to the extent permitted pursuant to any
------------------
instrument or agreement constituting Indebtedness, general and administrative
expenses, all U.S. federal and state income taxes, state franchise taxes,
accounting fees, fees and expenses of technical and other
30
<PAGE>
consultants, and fees and expenses of other professionals of the Partnership,
the General Partners and Cencom Cable, including, without limitation, those fees
and expenses due and payable under the Management Agreements.
Preferred Capital Account: as defined in Section 2.6 of this
-------------------------
Agreement.
Preferred Return: means, for any Fiscal Period, (i) in the case of
---------------- -
CAC or Cencom Cable, as the case may be, the product of (x) the interest
-
accruing during such Fiscal Period under the Hallmark Loan Agreement and (y) a
-
fraction, the numerator of which is the positive Preferred Capital Account
balance of CAC or Cencom Cable, as the case may be, and the denominator of which
is the sum of the positive Preferred Capital Account balances of CAC and Cencom
Cable and (ii), in the case of CCT, the interest accruing during such period
--
under the Cencom Loan Agreement.
Subsidiaries: means CCE I and CCE II and any other corporation,
------------
partnership, limited liability company or other entity of which the Partnership
owns, directly or indirectly, more than 50% of the equity.
Target Capital Account: shall mean, with respect to any Partner and
----------------------
any Adjustment Date, an amount (which may be either a positive or a deficit
balance) equal to the amount such Partner would receive as a distribution if all
assets of the Partnership as of such Adjustment Date were sold for cash equal to
the Partnership's gross book values of such assets, all Partnership liabilities
were satisfied to the extent required by their terms and the net proceeds were
distributed pursuant to Section 3.9.
TD Loan Agreement: means the Amended and Restated Loan Agreement,
-----------------
dated as of September 29, 1995, among CCE I, L.P., Toronto Dominion (Texas),
Inc. as documentation agent and managing agent and the other banks signatory
thereto, including any amendment, renewal, extension, substitution, refinancing,
replacement or other modification thereof.
31
<PAGE>
Treasury Regulations: means the Regulations of the Treasury
--------------------
Department of the United States issued pursuant to the Code.
32
<PAGE>
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as
of the day and year first above written.
GENERAL PARTNERS: LIMITED PARTNERS:
CCA ACQUISITION CORP. CCT HOLDINGS CORP.
By/s/ Theodore W. Browne, II By/s/ Theodore W. Browne, II
-------------------------- --------------------------
Executive Vice President Executive Vice President
CCT HOLDINGS CORP. CCA ACQUISITION CORP.
By/s/ Theodore W. Browne, II By/s/ Theodore W. Browne, II
-------------------------- --------------------------
Executive Vice President Executive Vice President
CENCOM CABLE ENTERTAINMENT, INC.
By/s/ Theodore W. Browne, II
--------------------------
Executive Vice President
33
<PAGE>
SCHEDULE A
General Partner
---------------
<TABLE>
<CAPTION>
Initial Initial
Initial Ordinary Preferred
Percentage Capital Capital Capital
Partner Interest Contribution Account Account
------- -------- ------------ ------- -------
<S> <C> <C> <C> <C>
CCA 1%
Acquisition
Corp.
CCT Holdings
Corp. 1%
</TABLE>
Limited Partner
---------------
<TABLE>
<CAPTION>
Initial Initial
Initial Ordinary Preferred
Percentage Capital Capital Capital
Partner Interest Contribution Account Account
------- -------- ------------ ------- -------
<S> <C> <C> <C> <C>
CCA
Acquisition
Corp. 21%
Cencom Cable
Entertainment,
Inc. 33%
CCT Holdings
Corp. 44%
</TABLE>
<PAGE>
EXHIBIT 4.1
CCA HOLDINGS CORP.
as Issuer
Harris Trust and Savings Bank, as Trustee
INDENTURE
Dated as of February 13, 1997
$82,000,000
Series A Senior Subordinated Notes due 1999
and
Series B Senior Subordinated Notes due 1999
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01. Definitions....................................... 1
Section 1.02. Other Definitions................................. 12
Section 1.03. Rules of Construction............................. 13
Section 1.04. Form of Documents Delivered to Trustee............ 14
Section 1.05. Acts of Holders................................... 15
Section 1.06. Notices, etc., to the Trustee and the
Issuer............................................ 16
Section 1.07. Notice to Holders; Waiver......................... 17
Section 1.08. Conflict with TIA................................. 17
Section 1.09. Effect of Headings and Table of
Contents.......................................... 17
Section 1.10. Successors and Assigns............................ 18
Section 1.11. Separability Clause............................... 18
Section 1.12. Benefits of Indenture............................. 18
Section 1.13. GOVERNING LAW..................................... 18
Section 1.14. No Recourse Against Others........................ 18
Section 1.15. Independence of Covenants......................... 19
Section 1.16. Exhibits.......................................... 19
Section 1.17. Counterparts...................................... 19
Section 1.18. Duplicate Originals............................... 19
Section 1.19. Incorporation by Reference of TIA................. 19
ARTICLE II
FORM OF SECURITIES
Section 2.01. Form and Dating................................... 19
Section 2.02. Execution and Authentication; Aggregate
Principal Amount.................................. 21
Section 2.03. Restrictive Legends............................... 22
Section 2.04. Book-Entry Provisions for Global
Security.......................................... 24
Section 2.05. Special Transfer Provisions....................... 25
ARTICLE III
THE NOTES
Section 3.01. Terms............................................. 27
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Section 3.02. Denominations..................................... 28
Section 3.03. Temporary Notes................................... 28
Section 3.04. Registration, Registration of Transfer
and Exchange...................................... 29
Section 3.05. Mutilated, Destroyed, Lost and Stolen
Notes............................................. 30
Section 3.06. Method of Payment................................. 31
Section 3.07. Persons Deemed Owners............................. 31
Section 3.08. Cancellation...................................... 32
Section 3.09. Legal Holidays.................................... 32
Section 3.10. CUSIP Number...................................... 32
ARTICLE IV
DEFEASANCE OR COVENANT DEFEASANCE
Section 4.01. Issuer's Option to Effect Defeasance or
Covenant Defeasance............................... 33
Section 4.02. Defeasance and Discharge.......................... 33
Section 4.03. Covenant Defeasance............................... 34
Section 4.04. Conditions to Defeasance or Covenant
Defeasance........................................ 34
Section 4.05. Deposited Money and U.S. Government
Obligations To Be Held in Trust; Other
Miscellaneous Provisions.......................... 36
Section 4.06. Reinstatement..................................... 37
ARTICLE V
REMEDIES
Section 5.01. Events of Default................................. 38
Section 5.02. Consequences of an Event of Default............... 39
Section 5.03. Collection of Indebtedness and Suits
for Enforcement by Trustee........................ 40
Section 5.04. Trustee May File Proofs of Claims................. 41
Section 5.05. Trustee May Enforce Claims Without
Possession of Notes............................... 42
Section 5.06. Application of Money Collected.................... 42
Section 5.07. Limitation on Suits............................... 43
Section 5.08. Unconditional Right of Holders To
Receive Principal and Interest.................... 44
Section 5.09. Restoration of Rights and Remedies................ 44
Section 5.10. Rights and Remedies Cumulative.................... 44
Section 5.11. Delay or Omission Not Waiver...................... 45
Section 5.12. Control by Majority............................... 45
</TABLE>
-ii-
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Section 5.13. Waiver of Past Defaults............................45
Section 5.14. Undertaking for Costs..............................46
ARTICLE VI
THE TRUSTEE
Section 6.01. Certain Duties and Responsibilities................46
Section 6.02. Notice of Defaults.................................47
Section 6.03. Certain Rights of Trustee..........................47
Section 6.04. Trustee Not Responsible for Recitals,
Dispositions of Notes or Application of
Proceeds Thereof...................................50
Section 6.05. Trustee and Agents May Hold Notes;
Collections; etc...................................50
Section 6.06. Money Held in Trust................................50
Section 6.07. Compensation and Indemnification of
Trustee and Its Prior Claim........................50
Section 6.08. Conflicting Interests..............................51
Section 6.09. Corporate Trustee Required;
Eligibility........................................52
Section 6.10. Resignation and Removal; Appointment of
Successor Trustee..................................52
Section 6.11. Acceptance of Appointment by Successor.............54
Section 6.12. Successor Trustee by Merger, etc...................55
Section 6.13. Preferential Collection of Claims
Against Issuer.....................................55
ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND ISSUER
Section 7.01. Preservation of Information; Issuer To
Furnish Trustee Names and Addresses of
Holders............................................56
Section 7.02. Communications of Holders..........................56
Section 7.03. Reports by Trustee.................................56
Section 7.04. Reports by Issuer..................................57
ARTICLE VIII
SUCCESSOR ENTITY
Section 8.01. Merger and Consolidation...........................57
Section 8.02. Successor Entity Substituted.......................57
</TABLE>
-iii-
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.01. Without Consent of Holders.........................58
Section 9.02. With Consent of Holders............................58
Section 9.03. Compliance with TIA................................60
Section 9.04. Revocation and Effect of Consents;
Record Date for Consents...........................60
Section 9.05. Notation on or Exchange of Notes...................61
Section 9.06. Trustee May Sign Amendments, etc...................61
ARTICLE X
COVENANTS
Section 10.01. Payment of Principal and Interest..................62
Section 10.02. Maintenance of Office or Agency....................62
Section 10.03. Money for Note Payments To Be Held in
Trust..............................................63
Section 10.04. Corporate Existence................................64
Section 10.05. Change of Ownership................................65
Section 10.06. Management of Cable Properties.....................65
Section 10.07. Annualized Cash Flow...............................65
Section 10.08. Reporting and Information Requirements.............66
Section 10.09. [Intentionally Omitted.]...........................68
Section 10.10. Changes in CCE, L.P. Partnership
Agreement..........................................68
Section 10.11. Limitation on Indebtedness.........................68
Section 10.12. Limitation on Restricted Payments..................69
Section 10.13. Limitation on Transaction with
Affiliates.........................................71
Section 10.14. Disposition of Proceeds of Asset Sales.............71
Section 10.15. Change of Control..................................72
Section 10.16. Sale of Assets.....................................72
ARTICLE XI
SATISFACTION AND DISCHARGE
Section 11.01. Satisfaction and Discharge of Indenture............73
Section 11.02. Application of Trust Money.........................74
</TABLE>
-iv-
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE XII
REGISTRATION
Section 12.01. Cooperation in Registration....................... 75
ARTICLE XIII
SUBORDINATION
Section 13.01. Special Provisions Relating to the CCE-
I Credit Facility................................. 79
Section 13.02. Agreement to Subordinate; Authorization
to Trustee to Take Action to Effectuate
Subordination..................................... 81
Section 13.03. Definitions of Senior Debt........................ 81
Section 13.04. Liquidation; Dissolution; Bankruptcy.............. 82
Section 13.05. Default on Senior Debt............................ 83
Section 13.06. Subrogation....................................... 83
Section 13.07. Relative Rights................................... 84
ARTICLE XIV
GUARANTEE
Section 14.01. Guarantee of Notes................................ 84
Section 14.02. Future Guarantees................................. 84
ARTICLE XV
REDEMPTION OF NOTES
Section 15.01. Applicability of Article.......................... 85
Section 15.02. Optional Redemption............................... 85
Section 15.03. Election to Redeem; Notice to Trustee............. 85
Section 15.04. Selection by Trustee of Notes To Be
Redeemed.......................................... 85
Section 15.05. Notice of Redemption.............................. 86
Section 15.06. Deposit of Redemption............................. 87
Section 15.07. Notes Payable on Redemption....................... 87
Section 15.08. Notes Redeemed in Part............................ 87
TESTIMONIUM.............................................................109
</TABLE>
-v-
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SIGNATURES............................................................. 109
Exhibit A - Form of Initial Note............................. A-1
Exhibit B - Form of Exchange Note............................ B-1
Exhibit C - Form of Certificate To Be Delivered in
Connection with Transfers to Non-QIB
Accredited Investors.......................... C-1
Exhibit D - Form of Certificate To Be Delivered in
Connection with Transfers Pursuant to
Regulation S.................................. D-1
Exhibit E - Form of Subordination Agreement.................. E-1
Exhibit F-I - Form of Guaranty (CCA Acquisition)............... F-1
Exhibit F-II - Form of Guaranty (CCE, L.P.)..................... F-5
Exhibit F-III - Form of Guaranty (Cencom Cable).................. F-9
Exhibit F-IV - Form of Guaranty
(New Restricted Subsidiary)......................F-13
</TABLE>
Note: This Table of Contents shall not, for any purpose, be
deemed to be part of the Indenture.
-vi-
<PAGE>
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
Trust Indenture Act of 1939 Section Indenture Section
- ----------------------------------- -----------------
<S> <C> <C>
(S)310 (a)(1) ............................................... 6.09
(a)(2) ............................................... 6.09
(a)(3) ............................................... Not Applicable
(a)(4) ............................................... Not Applicable
(a)(5) ............................................... 6.09
(b) ............................................... 6.08, 6.10
(c) ............................................... Not Applicable
(S)311 (a) ............................................... 6.13
(b) ............................................... 6.13
(c) ............................................... Not Applicable
(S)312 (a) ............................................... 7.01
(b) ............................................... 7.02
(c) ............................................... 7.02
(S)313 (a) ............................................... 7.03
(b) ............................................... 7.03
(c) ............................................... 7.03
(d) ............................................... 7.03
(S)314 (a) ............................................... 7.04
(a)(4) ............................................... 10.08
(b) ............................................... Not Applicable
(c)(1) ............................................... 1.04, 4.04
(c)(2) ............................................... 1.04, 4.04
(c)(3) ............................................... Not Applicable
(d) ............................................... Not Applicable
(e) ............................................... 1.04
(S)315 (a) ............................................... 6.01(a)
(b) ............................................... 6.02
(c) ............................................... 6.01(b)
(d) ............................................... 6.01(c)
(e) ............................................... 5.14
(S)316 (a) (last
sentence) ............................................... 1.01
(a)(1)(A) ............................................... 5.12, 5.13
(a)(1)(B) ............................................... 5.13
(a)(2) ............................................... Not Applicable
(b) ............................................... 5.08
(c) ............................................... 9.04
(S)317 (a)(1) ............................................... 5.03
(a)(2) ............................................... 5.04
(b) ............................................... 10.03
(S)318 (a) ............................................... 1.08
</TABLE>
Note: This Cross-Reference Table shall not, for any purpose, be deemed
to be a part of the Indenture.
-1-
<PAGE>
INDENTURE, dated as of February 13, 1997, by and between CCA HOLDINGS
CORP., a Delaware corporation (the "Issuer"), and Harris Trust and Savings Bank,
------
as trustee (the "Trustee").
-------
The Issuer has duly authorized the creation of an issue of Series A Senior
Subordinated Notes due 1999 (the "Initial Notes") and Series B Senior
-------------
Subordinated Notes due 1999 (the "Exchange Notes" and together with the Initial
--------------
Notes, the "Notes") and, to provide therefor, the Issuer has duly authorized the
-----
execution and delivery of this Indenture.
All corporate actions necessary have been done to make the Notes, when
executed by the Issuer and authenticated and delivered hereunder and duly issued
by the Issuer, the valid obligation of the Issuer and to make this Indenture a
valid agreement of the Issuer, in accordance with the terms hereof.
Each party hereto agrees as follows for the benefit of the other party and
for the equal and ratable benefit of the Holders of the Notes:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01. Definitions.
-----------
"Adjusted Consolidated" means, with respect to any Person, such Person and
---------------------
its Subsidiaries (other than Subsidiaries which are not Restricted Subsidiaries)
on a consolidated basis.
"Affiliate" means, when used with respect to a specified Person, another
---------
Person that directly, or indirectly through one or more intermediaries, Controls
or is Controlled by or is under common Control with the Person specified.
"Agent" means any Paying Agent or Registrar of the Notes.
-----
"Anniversary Date" means December 31 in any year or the next succeeding
----------------
Business Day if such date is not a Business Day.
"Annualized Operating Cash Flow" means an amount equal to Operating Cash
------------------------------
Flow for the calendar quarter specified, multiplied by four (4).
"Areas of Dominant Influence" has the meaning set forth in 47 CFR 76.55(e).
---------------------------
-1-
<PAGE>
"Bankruptcy Law" means Title 11 of the United States Code or any similar
--------------
United States federal or state law relating to bankruptcy, insolvency,
receivership, winding-up, liquidation, reorganization or relief of debtors or
the law of any other jurisdiction relating to bankruptcy, insolvency,
receivership, winding-up, liquidation, reorganization or relief of debtors or
any amendment to, succession to or change in any such law.
"Bankruptcy Order" means any court order made in a proceeding pursuant to
----------------
or within the meaning of any Bankruptcy Law, containing an adjudication of
bankruptcy or insolvency, or providing for liquidation, receivership, winding-
up, dissolution or reorganization, or appointing a Custodian of a debtor or of
all or any substantial part of a debtor's property, or providing for the
staying, arrangement, adjustment or composition of indebtedness or other relief
of a debtor.
"Board of Directors" means the board of directors, management committee or
------------------
similar governing body or any authorized committee thereof responsible for the
management of the business and affairs of the Issuer.
"Board Resolution" means a copy of a resolution certified by the Secretary
----------------
or an Assistant Secretary of the Issuer to have been duly adopted by the Board
of Directors or an authorized committee thereof and to be in full force and
effect on the date of such certification, and delivered to the Trustee.
"Business Day" means any day other than a Saturday, Sunday, public holiday
------------
under the laws of the State of Missouri and the State of Illinois or other day
on which banking institutions are authorized or obligated to close in St. Louis,
Missouri, and Chicago, Illinois.
"Capital Stock" of any Person means any and all shares, interests,
-------------
participations and other equivalents (however designated) of corporate stock,
equity interests in partnerships or other entities or options, convertible
instruments, rights or warrants to purchase such corporate stock, or equity
interests in partnerships or other entities.
"Capitalized Lease Obligation" means the portion of any obligation of the
----------------------------
Issuer or the Restricted Subsidiaries as lessee under a lease which at the time
would be required to be capitalized on the balance sheet of such lessee in
accordance with GAAP.
-2-
<PAGE>
"CCA Acquisition" means CCA Acquisition Corp., a Delaware corporation.
---------------
"CCE, L.P." means Charter Communications Entertainment, L.P., a Delaware
---------
limited partnership.
"CCE, L.P. Partnership Agreement" means the Agreement of Limited
-------------------------------
Partnership of CCE, L.P., dated as of September 29, 1995, as the same may be
amended, restated or modified from time to time in accordance with this
Indenture.
"CCE-I" means Charter Communications Entertainment I, L.P., a Delaware
-----
limited partnership.
"CCE-I Bank Facility Lenders" means Toronto Dominion (Texas), Inc. and The
---------------------------
Chase Manhattan Bank (formerly, Chemical Bank), as Documentation Agents, Toronto
Dominion (Texas), Inc., The Chase Manhattan Bank (formerly, Chemical Bank), CIBC
Inc., Credit Lyonnais Cayman Island Branch and NationsBank, N.A., as Managing
Agents, Banque Paribas, Union Bank of California, N.A. (formerly, Union Bank),
Fleet Bank, N.A., CoreStates Bank, N.A., ABN AMRO Bank, N.V., Societe Generale
and The First National Bank of Boston, as Co-Agents, Toronto Dominion (Texas),
Inc., as Administrative Agent and the financial institutions party to the CCE-I
Credit Agreement, together with their respective successors and assigns.
"CCE-I Credit Agreement" means that certain amended and restated loan
----------------------
agreement dated as of September 29, 1995, by and among CCE-I, the CCE-I Bank
Facility Lenders and Toronto Dominion (Texas), Inc., as administrative agent for
the CCE-I Bank Facility Lenders, as amended as of October 31, 1995, January 16,
1996, March 29, 1996, May 24, 1996, November 29, 1996 and February 7, 1997, and
as the same may be amended, extended, renewed, restated, supplemented or
otherwise modified from time to time.
"CCE-I Credit Facility" means the credit facilities extended to CCE-I
---------------------
pursuant to the CCE-I Credit Agreement.
"CCE-I Credit Facility Termination Date" means the date on which all
--------------------------------------
Obligations (as such term is defined in the Subordination Agreement) shall have
been indefeasibly paid in full in cash and all commitments to lend in respect of
the CCE-I Credit Facility shall have been terminated.
"CCE-I Partnership Agreement" means the Agreement of Limited Partnership of
---------------------------
CCE-I, dated as of September 29, 1995,
-3-
<PAGE>
as the same may be amended, restated or modified from time to time.
"CCE Purchase Money Indebtedness" means any Indebtedness or any Qualifying
-------------------------------
Equity Interest incurred or issued by any partners or future partners of CCE,
L.P. or any Persons (other than Charter, KIAV or any of their respective
Affiliates that are not or do not become direct or indirect partners of CCE,
L.P.) controlling such partners, now outstanding or hereafter incurred or issued
in connection with acquiring assets owned or to be owned, directly or
indirectly, by any Subsidiary of CCE, L.P., and shall (i) include (a) the
Indebtedness evidenced by the Notes and (b) any other Indebtedness to or any
Qualifying Equity Interest owned by a seller of such assets and (ii) exclude
Indebtedness to or any Qualifying Equity Interest owned by Charter, KIAV or any
of their respective Affiliates that are not or do not become direct or indirect
partners of CCE, L.P.
"Cencom Cable" means Cencom Cable Entertainment, Inc., a Delaware
------------
corporation.
"Charter" means Charter Communications, Inc., a Delaware corporation.
-------
"Company Request" or "Company Order" means a written request or order of
--------------- -------------
the Issuer delivered to the Trustee.
"Control" means the possession, directly or indirectly, of the power to
-------
direct or cause the direction of the management or policies of a Person, whether
through ownership of voting securities, by contract or otherwise, and
"Controlling" and "Controlled" shall have meanings correlative thereto.
"Corporate Trust Office" means the office of the Trustee at which at any
----------------------
particular time its corporate trust business shall be principally administered,
which office at the date of execution of this Indenture is located at 311 West
Monroe Street, Chicago, Illinois 60606.
"Custodian" means any receiver, interim receiver, receiver and manager,
---------
receiver-manager, trustee, assignee, liquidator, sequestrator or similar
official under any Bankruptcy Law or any other Person with like powers whether
appointed judicially or out of court and whether pursuant to an interim or final
appointment.
-4-
<PAGE>
"Debt Service" means, without duplication, payment of principal, interest,
------------
fees, premiums and penalties on or with respect to any Indebtedness.
"Default" means any event that is or with the passing of time or giving of
-------
notice or both would be an Event of Default.
"Depository" means The Depository Trust Company, its nominees and
----------
successors.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
"Exchange Notes" has the meaning provided in the second introductory
--------------
paragraph of this Indenture.
"GAAP" means generally accepted accounting principles, as in effect in the
----
United States from time to time, consistently applied.
"Global Note" has the meaning provided in Section 2.01.
-----------
"Holder" or "Noteholder" means a Person in whose name a Note is registered
------ ----------
in the Note Register.
"Indebtedness" means, with respect to a Person, (a) all items, which, in
------------
accordance with GAAP would be included in determining total liabilities as shown
on the liability side of a balance sheet of such Person, except (i) accounts
payable which by their terms are less than sixty (60) days past due, (ii) items
of partners' equity or capital stock or surplus, or (iii) items of general
contingency or deferred tax reserves, (b) all direct or indirect obligations
secured by any Lien to which any property or asset owned by such Person is
subject (but if the obligation secured thereby shall not have been assumed, then
only to the extent of the higher of the fair market value or the book value of
the property or asset subject to such Lien), (c) all obligations of such Person
with respect to leases constituting part of a sale and lease-back arrangement,
(d) all reimbursement obligations with respect to outstanding letters of credit,
and (e) all obligations of such Person under Interest Rate Hedge Agreements.
"Indebtedness for Money Borrowed" means, with respect to any Person, money
-------------------------------
borrowed and Indebtedness represented by notes payable and drafts accepted
representing extensions of credit, all obligations evidenced by bonds,
debentures, notes or other similar instruments, all Indebtedness upon which
interest charges are customarily paid, and all Indebtedness
-5-
<PAGE>
issued or assumed as full or partial payment for property or services, whether
or not any such notes, drafts, obligations or Indebtedness represent
Indebtedness for money borrowed. For purposes of this definition, interest
which is accrued but not paid on the original due date for such interest shall
be deemed Indebtedness for Money Borrowed. Where obligations are evidenced by
bonds, debentures, notes or other similar instruments whose face amount exceeds
the amount received by such Person with respect thereto, only the amount
received plus debt discount amortized as of the calculation date need be taken
into account as Indebtedness for Money Borrowed.
"Indenture" means this instrument as originally executed (including all
---------
exhibits and schedules hereto) and as it may from time to time be supplemented
or amended by one or more indentures supplemental hereto entered into pursuant
to the applicable provisions hereof.
"Initial Holder" means HC Crown Corp., a Delaware corporation.
--------------
"Initial Notes" has the meaning provided in the second introductory
-------------
paragraph of this Indenture.
"Institutional Accredited Investor" means an institution that is an
---------------------------------
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
"Interest Expense" means, for any period, the aggregate amount of all
----------------
interest paid or accrued in respect of Indebtedness for Money Borrowed and the
portion of payments under Capitalized Lease Obligations which constitutes
imputed interest, in each case, of any Person on an Adjusted Consolidated basis
during such period.
"Interest Rate Hedge Agreement" means the obligations of any Person
-----------------------------
pursuant to any arrangement with any other Person whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such other
person calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall also include, without limitation, interest rate swaps,
caps, swaptions, captions, floors, collars and similar agreements.
"Issuer" means the Person named as the "Issuer" in the first introductory
------
paragraph of this Indenture, until a
-6-
<PAGE>
successor Person shall have become such pursuant to the applicable provisions of
this Indenture, and thereafter "Issuer" means such successor Person.
"KIAV" means Kelso Investment Associates V, L.P., a Delaware limited
----
partnership.
"Lien" means, with respect to any property, any mortgage, lien, pledge,
----
assignment, charge, security interest, title retention agreement, levy,
execution, seizure, attachment, garnishment or other encumbrance of any kind in
respect of such property, whether or not choate, vested or perfected.
"Net Income" means, as applied to any Person, for any fiscal period, the
----------
aggregate amount of net income (or net loss) after taxes, for such period for
such Person on an Adjusted Consolidated basis.
"Non-U.S. Person" means a person who is not a U.S. person, as defined in
---------------
Regulation S.
"Notes" means the Initial Notes and the Exchange Notes treated as a single
-----
class of securities, as amended or supplemented from time to time in accordance
with the terms hereof, that are issued pursuant to this Indenture.
"Obligations" means all unpaid principal and interest under the Notes, and
-----------
all other obligations of the Issuer to any Holder arising under this Indenture.
"Offering Memorandum" means the offering memorandum dated February 10,
-------------------
1997, pursuant to which the Initial Notes were offered and sold by the Initial
Holder, and any supplement thereto.
"Officer" means, with respect to any Person, the Chairman, the Chairman of
-------
the Board, the Chairman of the Management Committee, the Chief Executive
Officer, the President, any Vice President, the Chief Financial Officer, the
Treasurer, the Controller, or the Secretary of such Person (or, if such Person
is a partnership, of the general partner of such Person), or any other officer
designated by the Board of Directors serving in a similar capacity.
"Officers' Certificate" means a certificate signed by the Chairman, the
---------------------
Chairman of the Board, the Chairman of the Management Committee, the Chief
Executive Officer, the President, the Chief Financial Officer, the Treasurer or
a
-7-
<PAGE>
Vice President, and by the Secretary or an Assistant Secretary, of the Issuer,
and delivered to the Trustee.
"Operating Cash Flow" means, for any Person in respect of any quarterly or
-------------------
annual period, as applicable, without duplication, the remainder of (a) the sum
of Net Income of such Person, plus, to the extent deducted in calculating Net
Income of such Person, (i) Interest Expense of such Person, (ii) depreciation,
(iii) amortization, (iv) management fees and financial advisory fees paid, (v)
income tax expense, and (vi) other non-cash items, less (b) extraordinary
income, all as determined in accordance with GAAP.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
------------------
for the Issuer (including the general counsel, or other senior in-house counsel,
of the Issuer or CCE-I) or the Trustee, and who shall be acceptable to the
Trustee, which opinion is delivered to the Trustee.
"Outstanding" means, as of the date of determination, all Notes theretofore
-----------
authenticated and delivered under this Indenture, except:
(i) Notes theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
(ii) Notes, or portions thereof, for whose payment or redemption
money in the necessary amount has been theretofore deposited with the
Trustee or any Paying Agent (other than the Issuer or any Affiliate
thereof) in trust for the Holders of such Notes, provided, that if such
--------
Notes are to be redeemed, notice of such redemption has been duly and
irrevocably given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made;
(iii) Notes with respect to which the Issuer has effected
defeasance or covenant defeasance as provided in Article IV, to the extent
provided in Sections 4.02 and 4.03; and
(iv) Notes in exchange for or in lieu of which other Notes have
been authenticated and delivered pursuant to this Indenture, other than any
such Notes in respect of which there shall have been presented to the
Trustee proof satisfactory to it that such Notes are held by a bona fide
---- ----
purchaser in whose hands the Notes are valid obligations of the Issuer;
-8-
<PAGE>
provided, that in determining whether the Holders of the requisite principal
- --------
amount of Outstanding Notes have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, Notes owned by the Issuer or any
other obligor under the Notes or any Affiliate of the Issuer or such other
obligor shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only Notes
which the Trustee knows to be so owned shall be so disregarded. Notes so owned
which have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Trustee the pledgee's right so to
act with respect to such Notes and that the pledgee is not the Issuer or any
other obligor under the Notes or any Affiliate of the Issuer or such other
obligor.
"Paying Agent" means any Person authorized by the Issuer to pay the
------------
principal of or interest on any Notes on behalf of the Issuer.
"Person" means any individual, corporation, partnership, limited liability
------
company, trust or unincorporated organization, or a government or any agency or
political subdivision thereof.
"Predecessor Note" means, with respect to any particular Note, every
----------------
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purposes of this definition, any Note
authenticated and delivered under Section 3.05 in exchange for a mutilated Note
or in lieu of a lost, destroyed or stolen Note shall be deemed to evidence the
same debt as the mutilated, lost, destroyed or stolen Note.
"Private Placement Legend" means the legend initially set forth on the
------------------------
Initial Notes in the form set forth in Section 2.03.
"Qualified Institutional Buyer" or "QIB" shall have the meaning specified
----------------------------- ---
in Rule 144A under the Securities Act.
"Qualifying Equity Interest" means a preferred equity interest in any
--------------------------
Person which, for at least so long as the Notes are outstanding (i) shall have a
stated liquidation preference and a stated dividend rate, and (ii) shall, if
such preferred equity interest is convertible into a common (or equivalent)
equity interest, contain a provision whereby upon such conversion (a) the
preferred capital account, if any,
-9-
<PAGE>
related to the converted portion of such preferred equity interest shall
terminate and (b) such converted portion of such preferred equity interest shall
no longer be a Qualifying Equity Interest.
"Redemption Date" means, with respect to any Note to be redeemed, any date
---------------
fixed for such redemption by or pursuant to this Indenture and the terms of the
Notes.
"Redemption Price" means, with respect to any Note to be redeemed, the
----------------
price at which it is to be redeemed pursuant to this Indenture and the terms of
the Notes.
"Registrar" has the meaning provided in Section 3.04.
---------
"Regular Record Date" means each April 21 and October 21 in any year.
-------------------
"Regulation S" means Regulation S under the Securities Act.
------------
"Responsible Officer" means, with respect to the Trustee, the chairman or
-------------------
vice chairman of the board of directors, the chairman or vice chairman of the
executive committee of the board of directors, the president, any vice
president, the secretary, any assistant secretary, the treasurer, any assistant
treasurer, the cashier, any assistant cashier, any trust officer or assistant
trust officer, the controller and any assistant controller or any other officer
of the Trustee customarily performing functions similar to those performed by
any of the above designated officers and also means, with respect to a
particular corporate trust matter, any other officer of the Trustee to whom any
corporate trust matter is referred because of his or her knowledge of and
familiarity with the particular subject.
"Restricted Security" has the meaning assigned to such term in Rule
-------------------
144(a)(3) under the Securities Act, provided, that the Trustee shall be entitled
--------
to request and conclusively rely on an Opinion of Counsel with respect to
whether any Initial Note constitutes a Restricted Security.
"Restricted Subsidiary" means CCA Acquisition, Cencom Cable, CCE, L.P.,
---------------------
CCE-I, any Subsidiary of CCE-I and any other, direct or indirect, Subsidiary of
the Issuer which has, or comes to have in the future, a direct or indirect
ownership interest in CCE-I or its Subsidiaries.
"Rule 144A" means Rule 144A under the Securities Act.
---------
-10-
<PAGE>
"SEC" means the Securities and Exchange Commission, as from time to time
---
constituted, or, if at any time after the execution of this Indenture such
commission is not existing and performing the applicable duties now assigned to
it, then the body or bodies performing such duties at such time.
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Semi-Annual Date" means each June 30th or the next succeeding Business Day
----------------
if such date is not a Business Day.
"Special Record Date" means a date fixed by the Trustee for determination
-------------------
of the Holders of record of the Notes prior to a Redemption Date.
"Stated Maturity Date" means December 31, 1999.
--------------------
"Subordinated Indebtedness" means any Indebtedness of which the Issuer is
-------------------------
an obligor that by its terms is expressly subordinated in right and priority of
payment to the Notes.
"Subordination Agreement" means, collectively, (i) the Amended and Restated
-----------------------
Subordination Agreement dated as of November 15, 1996 by and between HC Crown
Corp., a Delaware corporation and the Issuer in favor of the CCE-I Bank Facility
Lenders and Toronto Dominion (Texas), Inc., as administrative agent for the CCE-
I Bank Facility Lenders, and (ii) each other Subordination Agreement by and
between any Holder (or the Trustee, on behalf of any such Holder) and the Issuer
in favor of the CCE-I Bank Facility Lenders and Toronto Dominion (Texas), Inc.,
as administrative agent for the CCE-I Bank Facility Lenders, in each case, as
the same may be amended, replaced, restated, supplemented or otherwise modified
from time to time.
"Subsidiary" means, in respect of any Person, any corporation of which such
----------
Person owns more than 50% of the equity interest and any partnership or other
Person to the extent said Person owns more than 50% of the equity interest in
same.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939, as
------------------- ---
amended, and as in effect from time to time.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
-------
this Indenture, until a successor Trustee shall have become such pursuant to the
applicable provisions
-11-
<PAGE>
of this Indenture, and thereafter "Trustee" means such successor Trustee.
"U.S. Government Obligations" means securities that are (i) direct
---------------------------
obligations of the United States of America for the timely payment of which its
full faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the timely payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act) as custodian with respect to any such U.S.
Government Obligation or a specific payment of principal of or interest on any
such U.S. Government Obligation held by such custodian for the account of the
holder of such depository receipt, provided that (except as required by law)
--------
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific payment
of principal of or interest on the U.S. Government Obligation evidenced by such
depository receipt.
Section 1.02. Other Definitions.
-----------------
<TABLE>
<CAPTION>
DEFINED
TERM IN SECTION
---- ----------
<S> <C>
"Act"....................................... 1.05
"Agent Members"............................. 2.04
"Authenticating Agent"...................... 2.02
"covenant defeasance"....................... 4.03
"Default Rate".............................. 10.01
"Defaulted Interest"........................ 3.06
"defeasance"................................ 4.01
"Defeased Notes"............................ 4.01
"due" and/or "payable"...................... 3.01
"Event of Default".......................... 5.01
"Guarantees"................................ 14.01
"Global Note................................ 2.01
"joint venture subsidiary(ies)"............. 8.01
"New Senior Debt Level"..................... 10.14
"New Restricted Subsidiary Guarantee........ 14.02
"Non-Global Purchasers"..................... 2.01
"Notice of Default"......................... 5.01
"Offshore Physical Note".................... 2.01
</TABLE>
-12-
<PAGE>
<TABLE>
DEFINED
TERM IN SECTION
---- ----------
<S> <C>
"Offshore Physical Note Holder"............. 2.01
"Payment Date".............................. 4.04
"Physical Notes"............................ 2.01
"Registrar "................................ 3.04
"Registration Expenses"..................... 12.01
"Senior Debt"............................... 13.03
"Senior Debt Threshold...................... 5.01
"U.S. Physical Notes"....................... 2.01
</TABLE>
Section 1.03. Rules of Construction.
---------------------
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(b) all other terms used herein which are defined in the TIA, either
directly or by reference therein, have the meanings assigned to them
therein;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP;
(d) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision;
(e) all references to "$" or "dollars" refer to the lawful currency
of the United States of America;
(f) the words "include," "included" and "including" as used herein
shall be deemed in each case to be followed by the phrase "without
limitation"; and
(g) any reference to an Article, Section, subsection, Exhibit or
Annex refers to such Article, Section, subsection, Exhibit or Annex of this
Indenture unless otherwise specified.
-13-
<PAGE>
Section 1.04. Form of Documents Delivered to Trustee.
--------------------------------------
Upon any request or application by the Issuer to the Trustee to take any
action under this Indenture, the Issuer shall furnish to the Trustee (a) an
Officers' Certificate in form and substance reasonably satisfactory to the
Trustee stating that, in the opinion of the signers, all conditions precedent,
if any, provided for in this Indenture relating to the proposed action have been
complied with, (b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of counsel, all such
conditions have been complied with, and (c) where applicable, a certificate or
opinion by an accountant that complies with Section 314(c) of the TIA.
Each certificate and Opinion of Counsel with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(a) a statement that the Person making such certificate or rendering
such Opinion of Counsel has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements contained in such certificate or
Opinion of Counsel are based;
(c) a statement that, in the opinion of such Person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been complied with.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
-14-
<PAGE>
Any certificate or opinion of an officer of the Issuer may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Issuer stating that the
information with respect to such factual matters is in the possession of the
Issuer, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated, with
proper identification of each matter covered therein, and form one instrument.
Section 1.05. Acts of Holders.
---------------
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Holders may
be embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in Person or by an agent duly appointed in writing;
and, except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are received by the Trustee and,
where it is hereby expressly required, to the Issuer. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Holders signing such instrument or
instruments. Proof of execution (as provided below in subsection (b) of this
Section 1.05) of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and (subject to Section
6.01) conclusive in favor of the Trustee and the Issuer, if made in the manner
provided in this Section 1.05.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any reasonable manner which the Trustee
deems sufficient including, without limitation, by verification from a notary
public or signature guarantee.
-15-
<PAGE>
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Note shall bind every future Holder of the
same Note or the Holder of every Note issued upon the transfer thereof or in
exchange therefor or in lieu thereof to the same extent as the original Holder,
in respect of anything done, suffered or omitted to be done by the Trustee, any
Paying Agent or the Issuer in reliance thereon, whether or not notation of such
action is made upon such Note.
Section 1.06. Notices, etc., to the Trustee and the Issuer.
--------------------------------------------
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with:
(a) the Trustee by any Holder or by the Issuer shall be sufficient
for every purpose hereunder if made, given, furnished or filed, in writing
(by means of facsimile transmission (which shall be deemed to have been
duly given or made upon receipt), sent by U.S. mail (postage prepaid), or
sent prepaid via a nationally recognized private courier service), to or
with the Trustee at the Corporate Trust Office or at any other address
previously furnished in writing to the Holders and the Issuer by the
Trustee or at the Office of any drop agent specified to the Holders and the
Issuer from time to time; and
(b) the Issuer by the Trustee or by any Holder shall be sufficient
for every purpose (except as otherwise expressly provided herein) hereunder
if in writing (by means of facsimile transmission (which shall be deemed to
have been duly given or made upon receipt), sent by U.S. mail (postage
prepaid), or sent prepaid via a nationally recognized private courier
service), to the Issuer, c/o Charter Communications, Inc., addressed to it
at: 12444 Powerscourt Drive, Suite 400, St. Louis, Missouri 63131,
Attention: Chief Financial Officer, or at any other address previously
furnished in writing to the Trustee by the Issuer.
-16
<PAGE>
Section 1.07. Notice to Holders; Waiver.
-------------------------
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise expressly provided herein)
if in writing and mailed, first-class postage prepaid, or sent prepaid via a
nationally recognized private courier service, to each Holder affected by such
event, at the address of such Holder as it appears in the Note Register, not
later than the latest date, and not earlier than the earliest date, prescribed
for the giving of such notice. In any case where notice to Holders is given by
mail, neither the failure to mail such notice, nor any defect in any notice so
mailed, to any particular Holder shall affect the sufficiency of such notice
with respect to other Holders. Any notice when mailed to a Holder in the
aforesaid manner shall be conclusively deemed to have been received by such
Holder whether or not actually received by such Holder. Where this Indenture
provides for notice in any manner, such notice may be waived in writing by the
Person entitled to receive such notice, either before or after the event, and
such waiver shall be the equivalent of such notice. Waivers of notice by
Holders shall be filed with the Trustee, but such filing shall not be a
condition precedent to the validity of any action taken in reliance upon such
waiver.
In case by reason of the suspension of regular mail service or by reason of
any other cause, it shall be impracticable to mail notice of any event as
required by any provision of this Indenture, then any method of giving such
notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
Section 1.08. Conflict with TIA.
-----------------
If any provision hereof limits, qualifies or conflicts with any provision
of the TIA or another provision which is required or deemed to be included in
this Indenture by any of the provisions of the TIA, such provision or
requirement of the TIA shall control.
If any provision of this Indenture modifies or excludes any provision of
the TIA that may be so modified or excluded, such provision of the TIA shall be
deemed to apply to this Indenture as so modified or excluded, as the case may
be.
Section 1.09. Effect of Headings and Table of Contents.
----------------------------------------
The Article and Section headings herein and the table of contents are for
reference purposes only and shall not control
-17-
<PAGE>
or affect the construction of this Indenture or the interpretation hereof in any
respect.
Section 1.10. Successors and Assigns.
----------------------
All covenants and agreements in this Indenture by the Issuer and Trustee
shall bind their respective successors and assigns, whether so expressed or not.
Section 1.11. Separability Clause.
-------------------
In case any provision in this Indenture or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
Section 1.12. Benefits of Indenture.
---------------------
Nothing in this Indenture or in the Notes issued pursuant hereto, express
or implied, shall give to any Person (other than the parties hereto and their
successors hereunder, any Paying Agent and the Holders) any benefit or any legal
or equitable right, remedy or claim under this Indenture.
Section 1.13. GOVERNING LAW.
-------------
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF). THE TRUSTEE, THE ISSUER,
ANY OTHER OBLIGOR IN RESPECT OF THE NOTES AND THE HOLDERS AGREE TO SUBMIT TO THE
NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR STATE COURT LOCATED
IN THE BOROUGH OF MANHATTAN, IN THE CITY OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS INDENTURE OR THE NOTES.
Section 1.14. No Recourse Against Others.
--------------------------
No director, officer, partner, affiliate, employee or stockholder of the
Issuer or of any other obligor on the Notes as such, shall have any liability
for any obligations of the Issuer or such other obligor under the Notes or this
Indenture. Each holder of Notes by accepting a Note waives and releases all
such liability, and such waiver and release is part of the consideration for the
issuance of the Notes.
-18-
<PAGE>
Section 1.15. Independence of Covenants.
-------------------------
All covenants and agreements in this Indenture shall be given independent
effect so that if a particular action or condition is not permitted by any of
such covenants, the fact that it would be permitted by an exception to, or be
otherwise within the limitations of, another covenant shall not avoid the
occurrence of a Default if such action is taken or condition exists.
Section 1.16. Exhibits.
--------
All exhibits attached hereto are by this reference made a part hereof with
the same effect as if herein set forth in full.
Section 1.17. Counterparts.
------------
This Indenture may be executed in any number of counterparts, each of which
shall be an original; but such counterparts shall together constitute but one
and the same instrument.
Section 1.18. Duplicate Originals.
-------------------
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
Section 1.19. Incorporation by Reference of TIA.
---------------------------------
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in, and made a part of, this Indenture. Any terms
incorporated by reference in this Indenture that are defined by the TIA, defined
by TIA reference to another statute or defined by SEC rule under the TIA have
the meanings so assigned to them therein.
ARTICLE II
FORM OF SECURITIES
Section 2.01. Form and Dating.
---------------
The Initial Notes and the Trustee's certificate of authentication relating
thereto shall be substantially in the form of Exhibit A hereto. The Exchange
Notes and the Trustee's certificate of authentication relating thereto shall be
-19-
<PAGE>
substantially in the form of Exhibit B hereto. The Notes may have notations,
legends or endorsements required by law, stock exchange rule or depository rule
or usage. The Issuer and the Trustee shall approve the form of the Notes and
the Issuer shall approve any notation, legend or endorsement on them. Each Note
shall be dated the date of its issuance and shall show the date of its
authentication.
The terms and provisions contained in the Notes, in the forms annexed
hereto as Exhibits A and B, shall constitute, and are hereby expressly made, a
part of this Indenture and, to the extent applicable, the Issuer and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby.
Initial Notes offered and sold in reliance on Rule 144A shall be issued
initially in the form of one or more permanent global Notes in registered form,
substantially in the form set forth in Exhibit A (the "Global Note"), and
-----------
deposited with the Trustee, as custodian for the Depository, duly executed by
the Issuer and authenticated by the Trustee as hereinafter provided. The
aggregate principal amount of the Global Note may from time to time be increased
or decreased by adjustments made on the records of the Trustee, as custodian for
the Depository, as hereinafter provided.
Initial Notes originally purchased by or transferred to (i) Institutional
Accredited Investors who are not QIBs, (ii) except as described below, Persons
outside the United States pursuant to sales in accordance with Regulation S
under the Securities Act or (iii) any other Persons who are not QIBs
(collectively, "Non-Global Purchasers") will be issued in registered form
---------------------
without coupons substantially in the form of Exhibit A (the "U.S. Physical
-------------
Notes"). Upon the transfer to a QIB of U.S Physical Notes initially issued to a
- -----
Non-Global Purchaser, such U.S. Physical Notes will be exchanged for an interest
in the Global Note or in the Notes in the custody of the Trustee representing
the principal amount of Notes being transferred.
Initial Notes originally purchased by Persons outside the United States
pursuant to sales in accordance with Regulation S under the Securities Act will
be represented upon issuance by a temporary global note certificate
substantially in the form of Exhibit A (the "Offshore Physical Notes" and
-----------------------
together with the U.S. Physical Notes, the "Physical Notes") which will not be
--------------
exchangeable for U.S. Physical Notes or the Global Note until the expiration of
the "40-day restricted period" within the meaning of Rule 903(c)(3) of
------------------------
Regulation S under the
-20-
<PAGE>
Securities Act. The Offshore Physical Notes will be registered in the name of,
and be held by, an offshore physical note holder (the "Offshore Physical Note
----------------------
Holder") until the expiration of such 40-day period, at which time the Offshore
- ------
Physical Notes will be delivered to the Trustee in exchange for either
definitive certificated Notes registered in the names requested by the Offshore
Physical Note Holder or, in the case of any such Notes to be registered in the
name of a QIB, an interest in the Global Note representing the principal amount
of Notes so being exchanged. In addition, until the expiration of such 40-day
period, transfers of interests in the Offshore Physical Notes can only be
effected through the Offshore Physical Note Holder in accordance with the
requirements of Section 2.05.
Section 2.02. Execution and Authentication; Aggregate Principal Amount.
--------------------------------------------------------
Two Officers, or an Officer and an Assistant Secretary, shall sign, or one
Officer shall sign and one Officer or an Assistant Secretary (each of whom,
shall, in each case, have been duly authorized by all requisite corporate
actions) shall attest to, the Notes for the Issuer by manual or facsimile
signature.
If an Officer or Assistant Secretary whose signature is on a Note was an
Officer or Assistant Secretary at the time of such execution but no longer holds
that office or position at the time the Trustee authenticates the Note, the Note
shall nevertheless be valid.
A Note shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication and the Note. The signature
shall be conclusive evidence that the Note has been authenticated under this
Indenture.
The Trustee shall authenticate (i) Initial Notes for original issue in the
aggregate principal amount not to exceed $82,000,000, and (ii) Exchange Notes
from time to time for issue only in exchange for a like principal amount of
Initial Notes, in each case upon written orders of the Issuer in the form of an
Officers' Certificate. The Officers' Certificate shall specify the amount of
Notes to be authenticated, the date on which the Notes are to be authenticated
and the aggregate principal amount of the Notes outstanding on the date of
authentication, whether the Notes are to be Initial Notes or Exchange Notes, and
shall further specify the amount of such Notes to be issued as the Global Notes,
Offshore
-21-
<PAGE>
Physical Notes or U.S. Physical Notes. The aggregate principal amount of Notes
outstanding at any time may not exceed $82,000,000, except as provided in
Section 3.05.
The Trustee may appoint an authenticating agent (the "Authenticating
--------------
Agent") reasonably acceptable to the Issuer to authenticate Notes. Unless
- -----
otherwise provided in the appointment, an Authenticating Agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such Authenticating
Agent. An Authenticating Agent has the same rights as an Agent to deal with the
Issuer or with any Affiliate of the Issuer.
Section 2.03. Restrictive Legends.
-------------------
Each Global Note and U.S. Physical Note that constitutes a Restricted
Security shall bear the following legend (the "Private Placement Legend") on the
------------------------
face thereof until the date which is three years after the original issuance of
the Initial Notes unless otherwise agreed by the Issuer and the Holder thereof:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
--------------
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3)
OR (7) UNDER THE SECURITIES ACT) (AN "ACCREDITED INVESTOR") OR (C) IT IS
NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE
TRANSACTION, (2) AGREES THAT IT WILL NOT WITHIN THREE YEARS AFTER THE
ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE TRANSFER THIS
SECURITY, EXCEPT (A) TO THE ISSUER, OR ANY SUBSIDIARY THEREOF, (B) INSIDE
THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH
RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES
(OR HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO
THE RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER CAN
BE OBTAINED FROM THE TRUSTEE OR REGISTRAR), (D) OUTSIDE THE UNITED STATES
IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE
-22-
<PAGE>
904 OF REGULATION S UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION
FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM
THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY WITHIN THREE YEARS
AFTER THE ORIGINAL ISSUANCE OF THE SECURITY, IF THE PROPOSED TRANSFEREE IS
AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE TRUSTEE AND THE ISSUER SUCH CERTIFICATIONS,
WRITTEN LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO
THEM BY REGULATION S UNDER THE SECURITIES ACT.
Each Global Note shall also bear the following legend on the face thereof:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY, OR BY ANY SUCH NOMINEE OF
THE DEPOSITORY, OR BY THE DEPOSITORY OR NOMINEE OF SUCH SUCCESSOR
DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF
SUCH SUCCESSOR DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
---
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN
THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.
HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY
-23-
<PAGE>
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET
FORTH IN SECTION 2.05 OF THE INDENTURE.
Section 2.04. Book-Entry Provisions for Global Security.
-----------------------------------------
(a) The Global Note initially shall (i) be registered in the name of the
Depository or the nominee of such Depository, (ii) be delivered to the Trustee
as custodian for such Depository, and (iii) bear legends as set forth in Section
2.03.
Members of, or participants in, the Depository ("Agent Members") shall have
-------------
no rights under this Indenture with respect to any Global Note held on their
behalf by the Depository, or the Trustee as its custodian, or under the Global
Note, and the Depository may be treated by the Issuer, the Trustee and any Agent
of the Issuer or the Trustee as the absolute owner of the Global Note for all
purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent
the Issuer, the Trustee or any Agent of the Issuer or the Trustee from giving
effect to any written certification, proxy or other authorization furnished by
the Depository or impair, as between the Depository and its Agent Members, the
operation of customary practices governing the exercise of the rights of a
holder of any Note.
(b) Transfers of the Global Note shall be limited to transfers in whole,
but not in part, to the Depository, its successors or their respective nominees.
Interests of beneficial owners in the Global Note may be transferred or
exchanged for Physical Notes in accordance with the rules and procedures of the
Depository and the provisions of Section 2.05. In addition, Physical Notes
shall be transferred to all beneficial owners in exchange for their beneficial
interests in the Global Note if (i) the Depository notifies the Issuer that it
is unwilling or unable to continue as Depository for the Global Note and a
successor depositary is not appointed by the Issuer within 90 days of such
notice or (ii) an Event of Default has occurred and is continuing and the
Registrar has received a written request from the Depository to issue Physical
Notes.
(c) In connection with any transfer or exchange of a portion of the
beneficial interest in the Global Note to beneficial owners pursuant to
paragraph (b), the Registrar shall (if one or more Physical Notes are to be
issued) reflect on its books and records the date and a decrease in the
principal amount of the Global Note in an amount equal to the principal amount
of the beneficial interest in the Global Note
-24-
<PAGE>
to be transferred, and the Issuer shall execute, and the Trustee shall
authenticate and deliver, one or more Physical Notes of like tenor and amount.
(d) In connection with the transfer of the entire Global Note to
beneficial owners pursuant to paragraph (b), the Global Note shall be deemed to
be surrendered to the Trustee for cancellation, and the Issuer shall execute,
and the Trustee shall authenticate and deliver, to each beneficial owner
identified by the Depository in exchange for its beneficial interest in the
Global Note, an equal aggregate principal amount of Physical Notes of authorized
denominations.
(e) Any Physical Note constituting a Restricted Security delivered in
exchange for an interest in the Global Note pursuant to paragraph (b) or (c)
shall, except as otherwise provided by paragraphs (a)(i)(x) and (c) of Section
2.05, bear the legend regarding transfer restrictions applicable to the Physical
Notes set forth in Section 2.03.
(f) The Holder of the Global Note may grant proxies and otherwise
authorize any person, including Agent Members and persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Notes.
Section 2.05. Special Transfer Provisions.
---------------------------
(a) Transfers to Non-QIB Institutional Accredited Investors and Non-U.S.
--------------------------------------------------------------------
Persons. The following provisions shall apply with respect to the registration
- -------
of any proposed transfer of an Initial Note constituting a Restricted Security
to any Institutional Accredited Investor which is not a QIB or to any Non-U.S.
Person:
(i) the Registrar shall register the transfer of any Note constituting
a Restricted Security, whether or not such Note bears the Private Placement
Legend, if (x) the requested transfer is after the date which is three
years after the original issuance of the Initial Notes or (y) (1) in the
case of a transfer to an Institutional Accredited Investor which is not a
QIB (excluding Non-U.S. Persons), the proposed transferee has delivered to
the Registrar a certificate substantially in the form of Exhibit C hereto
or (2) in the case of a transfer to a Non-U.S. Person, the proposed
transferor has delivered to the Registrar a certificate substantially in
the form of Exhibit D hereto; and
-25-
<PAGE>
(ii) if the proposed transferor is an Agent Member holding a beneficial
interest in the Global Note, upon receipt by the Registrar of (x) the
certificate, if any, required, by paragraph (i) above and (y) written
instructions given in accordance with the Depository's and the Registrar's
procedures,
whereupon (a) the Registrar shall reflect on its books and records the date and
(if the transfer does not involve a transfer of outstanding Physical Notes) a
decrease in the principal amount of the Global Note in an amount equal to the
principal amount of the beneficial interest in the Global Note to be
transferred, and (b) the Issuer shall execute and the Trustee shall authenticate
and deliver one or more Physical Notes of like tenor and amount.
(b) Transfers to QIBs. The following provisions shall apply with respect
-----------------
to the registration of any proposed transfer of a Note constituting a Restricted
Security to a QIB (excluding transfers to Non-U.S. Persons):
(i) the Registrar shall register the transfer if such transfer is
being made by a proposed transferor who has checked the box provided for on
the form of Note stating, or has otherwise advised the Issuer and the
Registrar in writing, that the sale has been made in compliance with the
provisions of Rule 144A to a transferee who has signed the certification
provided for on the form of Note stating, or has otherwise advised the
Issuer and the Registrar in writing, that it is purchasing the Note for its
own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a QIB within the
meaning of Rule 144A, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such
information regarding the Issuer as it has requested pursuant to Rule 144A
or has determined not to request such information and that it is aware that
the transferor is relying upon its foregoing representations in order to
claim the exemption from registration provided by Rule 144A; and
(ii) if the proposed transferee is an Agent Member, and the Notes to
be transferred consist of Physical Notes which after transfer are to be
evidenced by an interest in the Global Note, upon receipt by the Registrar
of written instructions given in accordance with the Depository's and the
Registrar's procedures, the Registrar shall reflect on its books and
records the date
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and an increase in the principal amount of the Global Note in an amount
equal to the principal amount of the Physical Notes to be transferred, and
the Trustee shall cancel the Physical Notes so transferred.
(c) Private Placement Legend. Upon the transfer, exchange or replacement
------------------------
of Initial Notes not bearing the Private Placement Legend, the Registrar shall
deliver Initial Notes that do not bear the Private Placement Legend. Upon the
transfer, exchange or replacement of Initial Notes bearing the Private Placement
Legend, the Registrar shall deliver only Initial Notes that bear the Private
Placement Legend unless (i) the requested transfer is after the date which is
three years after the original issuance of the Notes or (ii) there is delivered
to the Registrar an Opinion of Counsel (which shall be furnished at the expense
of the transferring Holder) reasonably satisfactory to the Issuer and the
Trustee to the effect that neither such legend nor the related restrictions on
transfer are required in order to maintain compliance with the provisions of the
Securities Act.
(d) General. By its acceptance of any Initial Note bearing the Private
-------
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture. The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.04 or this Section 2.05.
The Issuer shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time during the
Registrar's normal business hours upon the giving of reasonable written notice
to the Registrar.
ARTICLE III
THE NOTES
Section 3.01. Terms.
-----
The aggregate principal amount of Notes which may be authenticated and
delivered under this Indenture is limited to $82,000,000 in aggregate principal
amount, except for Notes authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Notes pursuant to Section
3.03, 3.04, 3.05, 9.05, or 15.08. The Exchange Notes will only be issued in
exchange for an equal principal amount of Initial Notes.
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The unpaid principal amount of the Notes shall bear interest for each day
until due at the rate of 13% per annum. Interest will accrue from the most
recent date to which interest has been paid, or if no interest has been paid,
from January 18, 1995. Interest will be computed on the basis of a 360-day year
of twelve 30-day months, and unpaid interest shall compound on each Anniversary
Date and on each Semi-Annual Date at the then applicable per annum rate. Unless
due and payable earlier under the terms of this Indenture or the Notes but
subject, in all cases, to the terms of Article XIII, the Issuer shall pay on the
Stated Maturity Date the unpaid principal amount, together with accrued and
unpaid interest. If payment is not so made, the Notes shall be subject to
penalty as provided in Section 5.02. Notwithstanding anything set forth in this
Indenture or the Notes to the contrary, principal of and interest on the Notes
shall not be "due" and/or "payable" until the earlier of (i) the earliest date
on or after the Stated Maturity Date which is on or after the CCE-I Credit
Facility Termination Date and (ii) January 18, 2019.
Section 3.02. Denominations.
-------------
The Notes shall be issuable only in registered form without coupons and
only in denominations of $1,000,000 or more.
Section 3.03. Temporary Notes.
---------------
Pending the preparation of definitive Notes, the Issuer may execute, and
upon Company Order the Trustee shall authenticate and deliver, temporary Notes.
Temporary Notes may be printed, lithographed, typewritten, mimeographed or
otherwise produced, in any authorized denomination, substantially of the tenor
of the definitive Notes in lieu of which they are issued and with such
appropriate insertions, omissions, substitutions and other variations as the
officers executing such Notes may determine, as conclusively evidenced by their
execution of such Notes.
If temporary Notes are issued, the Issuer will cause definitive Notes to be
prepared without unreasonable delay. After the preparation of definitive Notes,
the temporary Notes shall be exchangeable for definitive Notes upon surrender of
the temporary Notes at the office or agency of the Issuer designated for such
purpose pursuant to Section 10.02, without charge to the Holders. Upon
surrender for cancellation of any one or more temporary Notes the Issuer shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
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like principal amount of definitive Notes of authorized denominations. Until so
exchanged, the temporary Notes shall in all respects be entitled to the same
benefits under this Indenture as definitive Notes.
Section 3.04. Registration, Registration of Transfer and Exchange.
---------------------------------------------------
The Issuer shall cause to be kept at the Corporate Trust Office a register
(the register maintained in such office and in any other office or agency
designated pursuant to Section 10.02 being herein sometimes referred to as the
"Note Register") in which, subject to such reasonable regulations as the Person
- --------------
appointed as being responsible for the keeping of the Note Register (the
"Registrar") may prescribe, the Issuer shall provide for the registration of
- ----------
Notes and of transfers of Notes. The Trustee is hereby initially appointed
Registrar for the purpose of registering Notes and transfers of Notes as herein
provided.
Upon surrender for registration of transfer of any Note at the office or
agency of the Issuer designated pursuant to Section 10.02, the Issuer shall
execute, and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Notes of any authorized
denomination or denominations, of a like aggregate principal amount.
At the option of the Holder, Notes in certificated form may be exchanged
for other Notes of any authorized denomination or denominations, of a like
aggregate principal amount, upon surrender of the Notes to be exchanged at such
office or agency. Whenever any Notes are so surrendered for exchange, the
Issuer shall execute, and the Trustee shall authenticate and deliver, the Notes
which the Holder making the exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Issuer, evidencing the same Indebtedness,
and entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange and no such transfer or exchange
shall constitute a repayment of any obligation or create any new obligations of
the Issuer.
Every Note presented or surrendered for registration of transfer, or for
exchange or redemption, shall (if so required by the Issuer or the Registrar) be
duly endorsed or be accompanied by a written instrument of transfer in form
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satisfactory to the Issuer and the Registrar, duly executed by the Holder
thereof or its attorney duly authorized in writing.
Upon the registration of transfer or exchange or redemption of Notes, the
Issuer may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange of Notes, and any other expenses (including the fees and
expenses of the Trustee) connected therewith, other than exchanges pursuant to
Section 3.03 or 9.05 not involving any transfer.
The Issuer shall not be required to register the transfer of or exchange
any Note so selected for redemption in whole or in part, except the unredeemed
portion of Notes being redeemed in part.
When Notes are presented to the Registrar with a request to register the
transfer or to exchange them for an equal principal amount of Notes of other
authorized denominations, the Registrar shall register the transfer or make the
exchange as requested if its requirements for such transactions are met. To
permit registrations of transfers and exchanges, the Issuer shall execute and
the Trustee shall authenticate Notes at the Registrar's request.
Section 3.05. Mutilated, Destroyed, Lost and Stolen Notes.
-------------------------------------------
If (a) any mutilated Note is surrendered to the Trustee, or (b) the Issuer
and the Trustee receive evidence to their satisfaction of the destruction, loss
or theft of any Note, and there is delivered to the Issuer and the Trustee, such
security or indemnity, in each case, as may be required by them to save each of
them harmless from any loss which any of them may suffer if a Note is replaced,
then, in the absence of notice to the Issuer or the Trustee that such Note has
been acquired by a bona fide purchaser, the Issuer shall execute and upon a
Company Order the Trustee shall authenticate and deliver, in exchange for any
such mutilated Note or in lieu of any such destroyed, lost or stolen Note, a
replacement Note of like tenor and principal amount, bearing a number not
contemporaneously outstanding.
Upon the issuance of any replacement Notes under this Section, the Issuer
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses
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(including the fees and expenses of the Trustee) connected therewith.
Every replacement Note issued pursuant to this Section in lieu of any
destroyed, lost or stolen Note shall constitute an original additional
contractual obligation of the Issuer, whether or not the destroyed, lost or
stolen Note shall be at any time enforceable by anyone, and shall be entitled to
all benefits of this Indenture equally and proportionately with any and all
other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.
Section 3.06. Method of Payment.
-----------------
All payments and prepayments to be made in respect of principal, interest,
fees or other amounts due from the Issuer hereunder or under any Note shall be
payable before 12:00 noon Central Time, on the day when due without presentment,
demand for payment, protest or notices of protest, nonpayment or dishonor of any
kind, all of which are hereby expressly waived, and an action therefor shall
immediately accrue, subject, in all cases, to the terms of Articles VI and XIII.
Such payments shall be made in U.S. dollars, without set-off of any nature.
Payments shall be made in immediately available funds to such U.S. bank account
of which three Business Days' prior written notice has been given by any Holder;
otherwise they shall be made by check at the last known address of a Holder.
Section 3.07. Persons Deemed Owners.
---------------------
Prior to and at the time of due presentment for registration of transfer,
the Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the
Person in whose name any Note is registered in the Note Register as the owner of
such Note for the purpose of receiving payment of principal of and (subject to
Section 3.06) interest on such Note and for all other purposes whatsoever,
whether or not such Note shall be overdue, and neither the Issuer, the Trustee
nor any agent of the Issuer or the Trustee shall be affected by notice to the
contrary.
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Section 3.08. Cancellation.
------------
All Notes surrendered for payment, redemption, registration of transfer or
exchange shall be delivered to the Trustee and, if not already cancelled, shall
be promptly cancelled by it. The Issuer may at any time deliver to the Trustee
for cancellation any Notes previously authenticated and delivered hereunder
which the Issuer may have acquired in any manner whatsoever, and all Notes so
delivered shall be promptly cancelled by the Trustee. No Notes shall be
authenticated in lieu of or in exchange for any Notes cancelled as provided in
this Section 3.08, except as expressly permitted by this Indenture. All
cancelled Notes held by the Trustee shall be destroyed in accordance with the
applicable governmental record retention regulations and certification of their
destruction shall be delivered to the Issuer unless by a Company Order the
Issuer shall direct that the cancelled Notes be returned to it. The Trustee
shall provide to the Issuer a list of all Notes that have been cancelled from
time to time as requested by the Issuer.
Section 3.09. Legal Holidays.
--------------
Any action or payment required to be made under this Indenture or the Notes
on a day which is not a Business Day, may (notwithstanding any other provision
of this Indenture or of the Notes) be taken or made on the next succeeding
Business Day with the same force and effect as if made on the day required.
Section 3.10. CUSIP Number.
------------
The Issuer in issuing the Notes may use a "CUSIP" number (if then generally
in use), and if so, the Trustee may use the CUSIP numbers in notices of
redemption or exchange as a convenience to Holders, provided, that any such
notice may state that no representation is made as to the correctness or
accuracy of the CUSIP number printed in the notice or on the Notes, and that
reliance may be placed only on the other identification numbers printed on the
Notes. All Notes shall bear identical CUSIP numbers. The Issuer shall promptly
notify the Trustee in writing of any change in the CUSIP number of the Notes.
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ARTICLE IV
DEFEASANCE OR COVENANT DEFEASANCE
Section 4.01. Issuer's Option to Effect Defeasance or Covenant Defeasance.
-----------------------------------------------------------
The Issuer may, at its option, at any time terminate certain of the
obligations of the Issuer with respect to the outstanding Notes, as set forth in
this Article, and elect to have either Section 4.02 or Section 4.03 be applied
to all of the Outstanding Notes (the "Defeased Notes"), upon compliance with the
--------------
conditions set forth below in Section 4.04.
Section 4.02. Defeasance and Discharge.
------------------------
Upon the Issuer's exercise under Section 4.01 of the option applicable to
this Section 4.02, the Issuer shall be deemed to have been released and
discharged from its obligations with respect to the Defeased Notes on the date
the conditions set forth below are satisfied (hereinafter, "defeasance"). For
----------
this purpose, such defeasance means that the Issuer shall be deemed to have paid
and discharged the entire indebtedness represented by the Defeased Notes, which
shall thereafter be deemed to be "Outstanding" only for the purposes of Section
4.05 and the other Sections of this Indenture referred to in (a) and (b) below,
and to have satisfied all its other obligations under such Notes and this
Indenture insofar as such Notes are concerned (and the Trustee, at the expense
of the Issuer, shall execute proper instruments acknowledging the same), except
for the following, which shall survive until otherwise terminated or discharged
hereunder: (a) the rights of Holders of Defeased Notes to receive, solely from
the trust fund described in Section 4.04 and as more fully set forth in such
Section, payments in respect of the principal of and interest on such Notes when
such payments are due, (b) the Issuer's obligations with respect to such
Defeased Notes under Sections 3.03, 3.04, 3.05, 7.01, 10.01, 10.02 and 10.03,
(c) the rights, powers, trusts, duties and immunities of the Trustee hereunder,
including, without limitation, the Trustee's rights under Section 6.07, and (d)
this Article IV. Subject to compliance with this Article IV, the Issuer may
exercise its option under this Section 4.02 notwithstanding the prior exercise
of its option under Section 4.03 with respect to the Notes.
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Section 4.03. Covenant Defeasance.
-------------------
Upon the Issuer's exercise under Section 4.01 of the option applicable to
this Section 4.03, the Issuer shall be released from its obligations under any
covenant or provision contained in Sections 10.04 through 10.16 and the
provisions of Article VIII shall not apply, with respect to the Defeased Notes
on and after the date the conditions set forth below are satisfied (hereinafter,
"covenant defeasance"), and the Notes shall thereafter be deemed not to be
-------------------
"Outstanding" for the purposes of any direction, waiver, consent or declaration
or Act of Holders (and the consequences of any thereof) in connection with such
covenants, but shall continue to be deemed "Outstanding" for all other purposes
hereunder. For this purpose, such covenant defeasance means that, with respect
to the Outstanding Notes, the Issuer may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Section
5.01(e) but, except as specified above, the remainder of this Indenture and such
Outstanding Notes shall be unaffected thereby.
Section 4.04. Conditions to Defeasance or Covenant Defeasance.
-----------------------------------------------
The following shall be the conditions to application of either Section 4.02
or Section 4.03 to the Outstanding Notes:
(a) The Issuer shall have irrevocably (i) selected a date for the
payment of principal of and accrued interest on the Defeased Notes (the
"Payment Date") and (ii) deposited or caused to be deposited with the
Trustee (or another trustee satisfying the requirements of Section 6.09 who
shall agree to comply with the provisions of this Article IV applicable to
it) as trust funds in trust for the purpose of making the following
payments, specifically pledged as security for, and dedicated solely to,
the benefit of the Holders of such Notes, (x) cash, in United States
dollars, in an amount, or (y) U.S. Government Obligations maturing as to
principal and interest in such amounts of money and at such times as are
sufficient without consideration of any reinvestment of such interest, to
pay principal of and interest on Defeased Notes not later than one day
before
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<PAGE>
the Payment Date, or (z) a combination thereof, sufficient, in the opinion
of a nationally recognized firm of independent public accountants or a
nationally recognized investment banking firm expressed in a written
certification thereof delivered to the Trustee, to pay and discharge and
which shall be applied by the Trustee (or other qualifying trustee) to pay
and discharge, the principal of and interest on the Defeased Notes on the
Payment Date in accordance with the terms of this Indenture and the Notes,
provided, that the Trustee (or other qualifying trustee) shall have
received an irrevocable written order from the Issuer instructing the
Trustee (or other qualifying trustee) to apply such cash or the proceeds of
such U.S. Government Obligations to said payments with respect to the
Notes; and provided further, that from and after the time of deposit, the
-------- -------
cash or U.S. Government Obligations deposited shall not be subject to the
rights of the holders of other Indebtedness of the Issuer;
(b) No Default or Event of Default shall have occurred and be
continuing on the date of such deposit or, insofar as Section 5.01(c) or
(d) are concerned, at any time during the period ending on the ninety-first
day after the date of such deposit;
(c) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a Default or Event of Default under,
this Indenture or any other agreement or instrument to which the Issuer is
a party or by which it is bound;
(d) In the case of an election under Section 4.02, the Issuer shall
have delivered to the Trustee an Opinion of Counsel in the United States
stating that (i) the Issuer has received from, or there has been published
by, the Internal Revenue Service a ruling or (ii) since the date hereof,
there has been a change in the applicable Federal income tax law, in either
case to the effect that, and based thereon such opinion shall confirm that,
the Holders of the Outstanding Notes will not recognize income, gain or
loss for Federal income tax purposes as a result of such defeasance and
will be subject to Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such defeasance
had not occurred;
(e) In the case of an election under Section 4.03, the Issuer shall
have delivered to the Trustee an Opinion
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of Counsel in the United States to the effect that the Holders of the
Outstanding Notes will not recognize income, gain or loss for Federal
income tax purposes as a result of such covenant defeasance and will be
subject to Federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such covenant defeasance
had not occurred;
(f) The Issuer shall have delivered to the Trustee an Opinion of
Counsel in form and substance reasonably acceptable to the Trustee to the
effect that (i) the trust funds established pursuant to this Article will
not be subject to any rights of any other holders of Indebtedness of the
Issuer, and (ii) after the 91st day following the deposit, the trust funds
established pursuant to this Article will not be subject to the effect of
any applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally; and
(g) The Issuer shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that (i) all conditions
precedent provided for relating to either the defeasance under Section 4.02
or the covenant defeasance under Section 4.03, as the case may be, have
been complied with and (ii) if any other Indebtedness of the Issuer shall
then be outstanding or committed, such defeasance or covenant defeasance
will not violate the provisions of the agreements or instruments evidencing
such Indebtedness.
Opinions required to be delivered under this Section shall be in compliance
with the requirements set forth in Section 1.04 and this Section 4.04.
Section 4.05. Deposited Money and U.S. Government Obligations To Be Held
----------------------------------------------------------
in Trust; Other Miscellaneous Provisions.
- ----------------------------------------
Subject to the provisions of the last paragraph of Section 10.03, all money
and U.S. Government Obligations (including the proceeds thereof) deposited with
the Trustee (or such other Person that would qualify to act as successor trustee
under Article VI, collectively for purposes of this Section 4.05, the "Trustee")
-------
pursuant to Section 4.04 in respect of the Defeased Notes shall be held in trust
and applied by the Trustee, in accordance with the provisions of such Notes and
this Indenture, to the payment, either directly or through any Paying Agent
(other than the Issuer or any
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Affiliate of the Issuer) as the Trustee may determine, to the Holders of such
Notes of all sums due and to become due thereon in respect of principal and
interest, but such money need not be segregated from other funds except to the
extent required by law.
The Issuer shall pay and indemnify the Trustee and hold it harmless against
any tax, fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 4.04 or the principal and interest
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the Holders of the Defeased Notes.
Anything in this Article IV to the contrary notwithstanding, the Trustee
shall deliver or pay to the Issuer from time to time upon Company Request any
money or U.S. Government Obligations held by it as provided in Section 4.04
which, in the opinion of a nationally recognized firm of independent' public
accountants satisfactory to the Trustee expressed in a written certification
thereof delivered to the Trustee, are in excess of the amount thereof which
would then be required to be deposited to effect an equivalent defeasance or
covenant defeasance.
Section 4.06. Reinstatement.
-------------
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 4.02 or 4.03, as the case may
be, by reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, then the
obligations of the Issuer under this Indenture and the Notes shall be revived
and reinstated as though no deposit had occurred pursuant to Section 4.02 or
4.03, as the case may be, until such time as the Trustee or Paying Agent is
permitted to apply all such money and U.S. Government Obligations in accordance
with Section 4.02 or 4.03, as the case may be, provided, that if the Issuer
--------
makes any payment of principal of or interest on any Note following the
reinstatement of its obligations, the Issuer shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money and U.S.
Government Obligations held by the Trustee or Paying Agent.
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ARTICLE V
REMEDIES
Section 5.01. Events of Default.
-----------------
An Event of Default shall mean the occurrence or existence of one or more
of the following events or conditions (whatever the reason for such Event of
Default and whether voluntary, involuntary or effected by operation of law):
(a) the Issuer shall fail to pay, when due, principal of any Note; or
(b) the Issuer shall fail to pay, when due, interest on any Note, or
any other amount due under this Indenture or under any Note and such
failure shall have continued for a period of three Business Days; or
(c) a proceeding shall have been instituted in respect of the Issuer
(and shall have remained undismissed for a period of 60 consecutive days if
not instituted by the Issuer):
(i) seeking a declaration or entailing a finding that the Issuer
is insolvent or a similar declaration or finding, or seeking dissolution,
reorganization, arrangement, adjustment, composition or other similar
relief with respect to the Issuer, its assets or its debts under any law
relating to bankruptcy, insolvency, relief of debtors or protection of
creditors, forfeiture of charter, or any other similar law now or hereafter
in effect, or
(ii) seeking appointment of a receiver, trustee, custodian,
liquidator, assignee, sequestrator or other similar official for the Issuer
or for all or any substantial part of its property; or
(d) the Issuer shall become insolvent, shall become generally unable
to pay its debts as they become due or shall not generally pay its debts as
they become due, shall make a general assignment for the benefit of
creditors, shall institute a proceeding described in Section 5.01(c)(i) or
shall consent to any such order for relief, declaration, finding or relief
described therein, shall institute a proceeding described in Section
5.01(c)(ii) or shall consent to any such appointment or to the taking of
possession by any such official of all
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or any substantial part of its property whether or not any such proceeding
is instituted, shall dissolve, wind-up or liquidate itself or any
substantial part of its property, or shall take any action in furtherance
of any of the foregoing; or
(e) any default shall occur in the performance or observance of any
covenant contained in Article X and shall have continued for a period of
thirty Business Days after notice from any Holder to the Issuer; or
(f) the Issuer (i) shall default (as principal or as guarantor or
other surety), unless such default shall have been waived or cured, in any
payment of principal of or interest on any Indebtedness for Money Borrowed
(other than Indebtedness incurred under this Indenture and the Notes) in
the aggregate amount of the lesser of $7,500,000 or the Senior Debt
Threshold (as defined below) or, if such obligation or obligations is or
are payable or repayable on demand, shall fail to pay or repay such
obligation or obligations when demanded, in each case allowing any
applicable grace period to lapse, or (ii) shall default (unless such
default has been waived or cured) in the observance of any covenant, term
or condition contained in any agreement or instrument by which such
obligation or obligations are created, secured or evidenced if the effect
of such default is to cause all or part of such obligation or obligations
to become due before its or their otherwise stated maturity; or
(g) one or more final judgments for the payment of money shall have
been entered against the Issuer which judgment or judgments in the
aggregate exceed the lesser of $7,500,000 or the Senior Debt Threshold (as
defined below) in the aggregate and which remain undischarged for a period
(during which execution shall not be effectively stayed) of 30 days.
For purposes of Sections 5.01(f) and (g), the references to "Senior Debt
Threshold" shall mean the amounts provided in the most nearly comparable
provisions of the Senior Debt.
Section 5.02. Consequences of an Event of Default.
-----------------------------------
Subject, in all cases, to the terms of Article XIII, if an Event of Default
specified in Section 5.01 shall occur and be continuing or shall exist, (i) any
Holder, if an Event of Default occurs under Section 5.01(a) or 5.01(b) or (ii)
the Holders of a majority in principal amount of the Notes if an
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Event of Default occurs and is continuing other than under Section 5.01(a) or
5.01(b), may, at its or their option, by written notice to the Issuer and/or to
the Trustee elect to declare the unpaid principal amount of the Notes which such
Holders hold, interest accrued thereon and all other amounts owed by the Issuer
under this Indenture or under the Notes which such Holders hold to be
immediately due and payable; provided, that if the Issuer fails to pay all of
--------
the outstanding principal on or prior to the Stated Maturity date or all of the
accrued and unpaid interest on or prior to the third day following the Stated
Maturity Date, there shall be imposed upon the unpaid principal amount of each
Note (in addition to the 13% per annum interest rate set forth in Section 3.01
and, if applicable, the Default Rate of interest as set forth in Section 10.01)
a penalty rate of interest as follows (which shall accrue through the date of
repayment and be based on a year of 360 days of twelve 30-day months):
<TABLE>
<CAPTION>
Year Ending December 31 Per Annum Penalty Rate
----------------------- ----------------------
<S> <C>
2000 5%
2001 7%
2002 9%
2003 11%
2004 and thereafter 13%
</TABLE>
Section 5.03. Collection of Indebtedness and Suits for Enforcement by
-------------------------------------------------------
Trustee.
- -------
The Issuer covenants that if:
(a) default is made in the payment of any interest on any Note when
such interest becomes due and payable and such default continues for a
period of 30 days or more, or
(b) default is made in the payment of the principal of any Note when
such principal becomes due and payable,
the Issuer, subject in all cases, to Article XIII, will, upon demand of the
Trustee, pay to the Trustee, for the benefit of the Holders of such Notes, the
whole amount then due and payable on such Notes for principal and interest, with
interest on the overdue principal at the rate then borne by the Notes; and, in
addition thereto, such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
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Subject, in all cases, to Article XIII, if the Issuer fails to pay such
amounts forthwith upon such demand, the Trustee, in its own name and as trustee
of an express trust, may, but is not obligated under this paragraph to,
institute a judicial proceeding for the collection of the sums so due and unpaid
and may, but is not obligated under this paragraph to, prosecute such proceeding
to judgment or final decree, and may, but is not obligated under this paragraph
to, enforce the same against the Issuer or any other obligor upon the Notes and
collect the moneys adjudged or decreed to be payable in the manner provided by
law out of the property of the Issuer or any other obligor upon the Notes,
wherever situated.
Subject, in all cases, to Article XIII, if an Event of Default occurs and
is continuing, the Trustee may in its discretion, but is not obligated under
this paragraph to, (i) proceed to protect and enforce its rights and the rights
of the Holders under this Indenture by such appropriate private or judicial
proceedings as the Trustee shall deem most effective to protect and enforce such
rights, whether for the specific enforcement of any covenant or agreement
contained in this Indenture or in aid of the exercise of any power granted
herein, or (ii) proceed to protect and enforce any other proper remedy. No
recovery of any such judgment upon any property of the Issuer shall affect or
impair any rights, powers or remedies of the Trustee or the Holders.
Section 5.04. Trustee May File Proofs of Claims.
---------------------------------
Subject, in all cases, to Article XIII, in case of the pendency of any
receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement,
adjustment, composition or other judicial proceeding relative to the Issuer or
any other obligor upon the Notes, or the property of the Issuer or of such other
obligor or their creditors, the Trustee (irrespective of whether the principal
of the Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall have made
any demand on the Issuer for the payment of overdue principal or interest) shall
be entitled and empowered, by intervention in such proceeding or otherwise, but
is not obligated under this paragraph
(a) to file and prove a claim for the whole amount of principal and
interest owing and unpaid in respect of the Notes and to file such other
papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the
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<PAGE>
Trustee, its agents and counsel) and of the Holders allowed in such
judicial proceeding, and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any Custodian in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay the
Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 6.07.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee to vote in respect
of the claim of any Holder in any such proceeding; provided, however, that the
-------- -------
Trustee may, on behalf of the Holders and subject, in all cases, to Article
XIII, vote for the election of a trustee in bankruptcy or similar official and
may be a member of the creditors' committee.
Section 5.05. Trustee May Enforce Claims Without Possession of Notes.
------------------------------------------------------
All rights of action and claims under this Indenture or the Notes may be
prosecuted and enforced by the Trustee without the possession of any of the
Notes or the production thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own name and as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Notes in respect of which such judgment has been recovered.
Section 5.06. Application of Money Collected.
------------------------------
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal or interest,
upon presentation of the Notes and the notation thereon of the
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payment if only partially paid and upon surrender thereof if fully paid:
First: to the Trustee for amounts due under Section 6.07;
Second: to Holders for interest accrued on the Notes, ratably,
without preference or priority of any kind, according to the amounts due
and payable on the Notes for interest;
Third: to Holders for principal amounts owing under the Notes,
ratably, without preference or priority of any kind, according to the
amounts due and payable on the Notes for principal; and
Fourth: the balance, if any, to the Issuer.
The Trustee, upon prior written notice to the Issuer, may fix a record date
and payment date for any payment to Noteholders pursuant to this Section 5.06.
Section 5.07. Limitation on Suits.
-------------------
No Holder of any Notes shall have any right to institute any proceeding,
judicial or otherwise, with respect to this Indenture, or for the appointment of
a receiver or trustee, or for any other remedy hereunder, unless, and subject,
in all cases, to Article XIII,
(a) such Holder has previously given written notice to the Trustee of
a continuing Event of Default;
(b) the Holders of not less than a majority of the principal amount of
the Outstanding Notes shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name
as Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(d) the Trustee for 15 days after its receipt of any notice or request
referred to in subsection (a) or (b) above and an offer of indemnity
referred to in subsection (c) above has failed to institute any such
proceeding; and
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(e) no direction inconsistent with such written request has been given
to the Trustee during such 15-day period by the Holders of a majority in
aggregate principal amount of the Outstanding Notes;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture or any Note to affect, disturb or prejudice the rights of any
other Holders, or to obtain or to seek to obtain priority or preference over any
other Holders or to enforce any right under this Indenture or any Note except in
the manner provided in this Indenture and for the equal and ratable benefit of
all the Holders.
Section 5.08. Unconditional Right of Holders To Receive Principal and
-------------------------------------------------------
Interest.
- --------
Subject, in all cases, to Article XIII, notwithstanding any other provision
in this Indenture, the Holder of any Note shall have the right, which is
absolute and unconditional, to receive cash payment, in United States dollars,
of the principal of and (subject to Section 3.06) interest on such Note when due
and payable, and to institute suit for the enforcement of any such payment, and
such rights shall not be impaired without the consent of such Holder.
Section 5.09. Restoration of Rights and Remedies.
----------------------------------
If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture or any Note and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case the Issuer, the
Trustee and the Holders shall, subject to any determination in such proceeding,
be restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
Section 5.10. Rights and Remedies Cumulative.
------------------------------
Except as provided in Section 3.05, no right or remedy herein conferred
upon or reserved to the Trustee or to the Holders is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment
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of any right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 5.11. Delay or Omission Not Waiver.
----------------------------
No delay or omission of the Trustee or of any Holder of any Note to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article V or by law
to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.
Section 5.12. Control by Majority.
-------------------
The Holders of not less than a majority in aggregate principal amount of
the Outstanding Notes shall have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, provided, that:
--------
(a) such direction shall not be in conflict with any rule of law or
with this Indenture or any Note or expose the Trustee to liability; and
(b) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
Section 5.13. Waiver of Past Defaults.
-----------------------
The Holders of not less than a majority in aggregate principal amount of
the Outstanding Notes may on behalf of the Holders of all the Notes waive any
past Default hereunder and its consequences, except a Default:
(a) in the payment of the principal of or interest on any Note; or
(b) in respect of a covenant or provision under this Indenture which
cannot be modified or amended without the consent of the Holder of each
Outstanding Note affected.
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<PAGE>
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
Default or Event of Default or impair any right consequent thereon.
Section 5.14. Undertaking for Costs.
---------------------
All parties to this Indenture agree, and each Holder of any Note by his
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in principal amount of the Outstanding Notes, or to
any suit instituted by any Holder for the enforcement of the payment of the
principal of or interest on any Note on or after the date when due and payable.
ARTICLE VI
THE TRUSTEE
Section 6.01. Certain Duties and Responsibilities.
-----------------------------------
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture, and no implied covenants
or obligations shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture; but in
the case of any such certificates or
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<PAGE>
opinions which by provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to examine the
same to determine whether or not they conform to the requirements of this
Indenture.
(b) In case an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent Person would
exercise or use under the circumstances in the conduct of such Person's own
affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that no provision of this
Indenture shall require the Trustee to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it.
(d) Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section
6.01.
Section 6.02. Notice of Defaults.
------------------
Within 30 days after the occurrence of any Default, the Trustee shall
transmit by mail to all Holders, as their names and addresses appear in the Note
Register, notice of such Default hereunder known to the Trustee, provided, that,
--------
except in the case of a Default in the payment of the principal of or interest
on any Note, the Trustee shall be protected in withholding such notice if and so
long as a trust committee of Responsible Officers of the Trustee in good faith
determines that the withholding of such notice is in the interest of the
Holders.
Section 6.03. Certain Rights of Trustee.
-------------------------
Subject to Section 6.01 and the provisions of Section 315 of the TIA:
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(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
approval, appraisal, bond, debenture, note, coupon, security, other
evidence of indebtedness or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties;
(b) any request or direction of the Issuer mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order of the Issuer
and any resolution of the Board of Directors of the Issuer may be
sufficiently evidenced by a Board Resolution of the Issuer thereof;
(c) before the Trustee acts or refrains from acting, the Trustee may
consult, at the expense of the Issuer, with counsel and any written advice
of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon in accordance
with such advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall
have offered to the Trustee security or indemnity reasonable to it against
the costs, expenses and liabilities which might be incurred by the Trustee
in compliance with such request or direction;
(e) the Trustee shall not be liable for any action taken or omitted by
it in good faith and believed by it to be authorized or within the
discretion, rights or powers conferred upon it by this Indenture other than
any liabilities arising out of its own negligence;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
approval, appraisal, bond, debenture, note, coupon, security, other
evidence of indebtedness or other paper or document unless requested in
writing to do so by the Holders of not less than a majority in aggregate
principal amount of the Notes then outstanding, provided,
--------
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<PAGE>
that, if the payment within a reasonable time to the Trustee of the costs,
expenses or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured to
the Trustee by the security afforded to it by the terms of this Indenture,
the Trustee may require reasonable indemnity against such expenses or
liabilities as a condition to proceeding; the reasonable expenses of every
such investigation shall be paid by the Issuer or, if paid by the Trustee
or any predecessor Trustee, shall be repaid by the Issuer upon demand,
provided, further, the Trustee in its discretion may make such further
-------- -------
inquiry or investigation into such facts or matters as it may deem fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and
premises of the Issuer, personally or by agent or attorney during the
reasonable business hours of the Issuer;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder;
(h) the permissive rights of the Trustee to do things enumerated in
this Indenture shall not be construed as a duty;
(i) except for a default under Sections 501(a) or 501(b) or any other
event of which the Trustee has actual knowledge, the Trustee shall not be
deemed to have notice of any default or Event of Default unless
specifically notified in writing by the Issuer or the holders of not less
than a majority in aggregate principal amount of the Notes outstanding; and
(j) the Trustee shall not be required to give any bond or surety in
respect of the performance of its powers and duties hereunder.
As used herein, the term "actual knowledge" means the actual fact or statement
of knowing, without any duty to make any investigation with regard thereto.
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Section 6.04. Trustee Not Responsible for Recitals, Dispositions of Notes
-----------------------------------------------------------
or Application of Proceeds Thereof.
- ----------------------------------
The recitals contained herein and in the Notes, except the Trustee's
certificates of authentication, shall be taken as the statements of the Issuer,
and the Trustee assumes no responsibility for their correctness. The Trustee
makes no representations as to the validity or sufficiency of this Indenture or
of the Notes, except that the Trustee represents that it is duly authorized to
execute and deliver this Indenture, authenticate the Notes and perform its
obligations hereunder and that the statements made by it in a Statement of
Eligibility and Qualification on Form T-1 supplied to the Issuer in connection
with the registration of any Notes issued hereunder are true and accurate
subject to the qualifications set forth therein. The Trustee shall not be
accountable for the use or application by the Issuer of Notes or the proceeds
thereof.
Section 6.05. Trustee and Agents May Hold Notes; Collections; etc.
----------------------------------------------------
The Trustee, any Paying Agent, the Registrar or any other agent of the
Issuer, in its individual or any other capacity, may become the owner or pledgee
of Notes, with the same rights it would have if it were not the Trustee, Paying
Agent, the Registrar or such other agent and, subject to Sections 6.08 and 6.13
and Sections 310 and 311 of the TIA, may otherwise deal with the Issuer and
receive, collect, hold and retain collections from the Issuer with the same
rights it would have if it were not the Trustee, the Paying Agent, the Registrar
or such other agent.
Section 6.06. Money Held in Trust.
-------------------
All moneys received by the Trustee shall, until used or applied as herein
provided, be held in trust for the purposes for which they were received, but
need not be segregated from other funds except to the extent required herein or
by law. The Trustee shall not be under any liability for interest on any moneys
received by it hereunder.
Section 6.07. Compensation and Indemnification of Trustee and Its Prior
---------------------------------------------------------
Claim.
- -----
The Issuer covenants and agrees: (a) to pay to the Trustee from time to
time, and the Trustee shall be entitled to, reasonable compensation for all
services rendered by it hereunder (which shall not be limited by any provision
of law
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in regard to the compensation of a trustee of an express trust); (b) to
reimburse the Trustee and each predecessor Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by or on behalf
of it in accordance with any of the provisions of this Indenture (including the
reasonable compensation and the expenses and disbursements of its counsel and of
all agents and other Persons not regularly in its employ), except any such
reasonable expense, disbursement or advance as may arise from its negligence or
bad faith; and (c) to indemnify the Trustee and each predecessor Trustee for,
and to hold it harmless against, any loss, liability or expense incurred without
negligence or bad faith on its part, arising out of or in connection with the
acceptance or administration of this Indenture or the trusts hereunder and its
duties hereunder, including enforcement of this Section 6.07. The obligations
of the Issuer under this Section to compensate and indemnify the Trustee and
each predecessor Trustee and to pay or reimburse the Trustee and each
predecessor Trustee for expenses, disbursements and advances shall constitute an
additional obligation hereunder and shall survive the satisfaction and discharge
of this Indenture. To secure the obligations of the Issuer to the Trustee under
this Section 6.07, the Trustee shall have a prior Lien upon all property and
funds held or collected by the Trustee as such, except funds and property paid
by the Issuer and held in trust for the benefit of the Holders of particular
Notes under this Indenture. All such payments and reimbursements shall be made
with interest at the base (Prime) rate charged at the time by the Trustee or an
affiliate of the Trustee for loans to commercial customers. The Trustee shall
be entitled to file a proof of claim in any bankruptcy proceeding as a secured
creditor for its reasonable compensation, fees and expenses under this Section
6.07.
When the Trustee incurs expenses under Section 5.01(c) or (d), the expenses
(including reasonable fees and expenses of its counsel) and the compensation for
the service in connection therewith are intended to constitute expense of
administration under any applicable bankruptcy law.
Section 6.08. Conflicting Interests.
---------------------
The Trustee shall be subject to and comply with the provisions of Section
310(b) of the TIA.
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Section 6.09. Corporate Trustee Required; Eligibility.
---------------------------------------
There shall at all times be a Trustee hereunder which shall be eligible to
act as Trustee under TIA Sections 310(a)(l) and 310(a)(5) and which shall have a
combined capital, surplus and undivided profits of at least $50,000,000, and
have an office or agency at which Notes may be presented for transfer and
redemption and at which demands may be made in the City of New York. If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of United States Federal, state, territorial or District of
Columbia supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such corporation shall be deemed to
be its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Trustee shall cease to be eligible
in accordance with the provisions of this Section, the Trustee shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.
Section 6.10. Resignation and Removal; Appointment of Successor Trustee.
---------------------------------------------------------
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 6.11.
(b) The Trustee, or any trustee or trustees hereinafter appointed, may at
any time resign by giving written notice thereof to the Issuer at least 20
Business Days prior to the date of such proposed resignation. Upon receiving
such notice of resignation, the Issuer shall promptly appoint a successor
trustee by written instrument, a copy of which shall be delivered to the
resigning Trustee and a copy to the successor trustee. If an instrument of
acceptance by a successor Trustee shall not have been delivered to the Trustee
within 20 Business Days after the giving of such notice of resignation, the
resigning Trustee may, or any Holder who has been a bona fide Holder of a Note
for at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the appointment of a
successor Trustee. Such court may thereupon, after such notice, if any, as it
may deem proper, appoint a successor trustee.
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(c) The Trustee may be removed at any time by an Act of the Holders of a
majority in principal amount of the Outstanding Notes, delivered to the Trustee
and to the Issuer.
(d) If at any time:
(1) the Trustee shall fail to comply with the provisions of Section
310(b) of the TIA in accordance with Section 6.06 after written request
therefor by the Issuer or by any Holder who has been a bona fide Holder of
a Note for at least six months, or
(2) the Trustee shall cease to be eligible under Section 6.09 and
shall fail to resign after written request therefor by the Issuer or by any
such Holder, or
(3) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent, or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose or
rehabilitation, conservation or liquidation,
then, in any case, (i) the Issuer may remove the Trustee, or (ii) subject to
Section 5.14, the Holder of any Note who has been a bona fide Holder of a Note
for at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee. Such court may thereupon,
after such notice, if any, as it may deem proper and prescribe, remove the
Trustee and appoint a successor trustee.
(e) If the Trustee shall be removed or become incapable of acting, or if a
vacancy shall occur in the office of Trustee for any cause, the Issuer shall
promptly appoint a successor Trustee. If, within one year after such removal or
incapability, or the occurrence of such vacancy, the Issuer shall fail to
appoint a successor Trustee, a successor Trustee shall be appointed by Act of
the Holders of not less than a majority in principal amount of the Outstanding
Notes delivered to the Issuer and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment, become the
successor Trustee and supersede the successor Trustee appointed by the Issuer.
If no successor Trustee shall have been so appointed by the Issuer or the
Holders of the Notes and accepted appointment in the manner hereinafter
provided, the Holder of any Note who has been a bona fide Holder for at least
six months may,
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subject to Section 5.14, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
(f) The Issuer shall give notice of each resignation and each removal of
the Trustee and each appointment of a successor Trustee by written notice (by
means of facsimile transmission (which shall be deemed to have been duly given
or made upon receipt), sent by U.S. mail (postage prepaid), or sent prepaid via
a nationally recognized private courier service) of such event to the Holders of
Notes as their names and addresses appear in the Note Register. Each notice
shall include the name of the successor Trustee and the address of its Corporate
Trust Office.
Section 6.11. Acceptance of Appointment by Successor.
--------------------------------------
Every successor Trustee appointed hereunder shall execute, acknowledge and
deliver to the Issuer and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee as if originally named as Trustee hereunder; but,
nevertheless, on the written request of the Issuer or the successor Trustee,
upon payment of amounts due it pursuant to Section 6.07, such retiring Trustee
shall duly assign, transfer and deliver to the successor Trustee all moneys and
property at the time held by it hereunder and shall execute and deliver an
instrument transferring to such successor Trustee all the rights, powers, duties
and obligations of the retiring Trustee. Upon request of any such successor
Trustee, the Issuer shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor Trustee all such rights
and powers. Any Trustee ceasing to act shall, nevertheless, retain a prior
claim upon all property or funds held or collected by such Trustee to secure any
amounts then due it pursuant to the provisions of Section 6.07.
No successor Trustee with respect to the Notes shall accept appointment as
provided in this Section 6.11 unless at the time of such acceptance such
successor Trustee shall be eligible to act as Trustee under this Article.
Upon acceptance of appointment by any successor Trustee as provided in this
Section 6.11, the Issuer shall give notice thereof to the Holders of the Notes,
by mailing such notice to
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such Holders at their addresses as they shall appear on the Note Register. If
the acceptance of appointment is substantially contemporaneous with the
resignation, then the notice called for by the preceding sentence may be
combined with the notice called for by Section 6.10(f). If the Issuer fails to
give such notice within 10 days after acceptance of appointment by the successor
Trustee, the successor Trustee shall cause such notice to be given at the
expense of the Issuer.
Section 6.12. Successor Trustee by Merger, etc.
---------------------------------
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion, or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder without
the execution or filing of any paper or any further act on the part of any of
the parties hereto, provided such corporation shall be eligible under this
--------
Article to serve as Trustee hereunder.
In case at the time such successor to the Trustee under this Section 6.12
shall succeed to the trusts created by this Indenture any of the Notes shall
have been authenticated but not delivered, any such successor to the Trustee may
adopt the certificate of authentication of any predecessor Trustee and deliver
such Notes so authenticated; and, in case at that time any of the Notes shall
not have been authenticated, any successor to the Trustee under this Section
6.12 may authenticate such Notes either in the name of any predecessor hereunder
or in the name of the successor Trustee; and in all such cases such certificate
shall have the full force which it is anywhere in the Notes or in this Indenture
provided that the certificate of the Trustee shall have.
Section 6.13. Preferential Collection of Claims Against Issuer.
------------------------------------------------
The Trustee shall comply with Section 311(a) of the TIA, excluding any
creditor relationship listed in Section 311(b) of that Act. If the present or
any future Trustee shall resign or be removed, it shall be subject to Section
311(a) of the TIA to the extent provided therein.
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ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND ISSUER
Section 7.01. Preservation of Information; Issuer To Furnish Trustee Names
------------------------------------------------------------
and Addresses of Holders.
- ------------------------
(a) The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders, provided, that if and for so long as the Trustee shall be the
--------
Registrar, the Note Register shall satisfy the requirements relating to such
list. Neither the Issuer nor the Trustee shall be under any responsibility with
regard to the accuracy of such list.
(b) The Issuer will furnish or cause to be furnished to the Trustee
(i) semiannually, not more than 10 days after each Regular Record
Date, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders as of such Regular Record Date; and
(ii) at such other times as the Trustee may request in writing,
within 30 days after receipt by the Issuer of any such request, a list in
similar form and content as of a date not more than 15 days prior to the
time such list is furnished;
provided, that if and so long as the Trustee shall be the Registrar, no such
list need be furnished pursuant to this Section 7.01(b).
Section 7.02. Communications of Holders.
-------------------------
Holders may communicate with other Holders with respect to their rights
under this Indenture or under the Notes pursuant to Section 312(b) of the TIA.
The Issuer and the Trustee and any and all other Persons benefited by this
Indenture shall have the protection afforded by Section 312(c) of the TIA.
Section 7.03. Reports by Trustee.
------------------
Within 60 days after each May 15, the Trustee shall mail to all Holders, as
their names and addresses appear in the Note Register, a brief report dated as
of such date that complies with Section 313(a) of the TIA, provided, that if no
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such event as described in Section 313(a) of the TIA has occurred within such
period then no such report need be transmitted. The Trustee shall also comply
with Sections 313(b), 313(c) and 313(d) of the TIA. At the time of its mailing
to Holders, a copy of each report shall be filed with the Issuer, the SEC and
with each national securities exchange, if any, on which the Notes are listed.
The Issuer shall notify the Trustee if the Notes become listed on any stock
exchange and the Trustee shall comply with Section 313(d) of the TIA.
Section 7.04. Reports by Issuer.
-----------------
The Issuer shall file with the Trustee copies of the reports and of the
information and documents which the Issuer is required to provide to any Person
under Section 10.08.
ARTICLE VIII
SUCCESSOR ENTITY
Section 8.01. Merger and Consolidation.
------------------------
Except as permitted under Section 10.16(a), the Issuer shall not merge or
consolidate with, or permit any Restricted Subsidiary to merge or consolidate
with, any entity (other than a merger between two Restricted Subsidiaries, a
merger between the Issuer and a Restricted Subsidiary in which the Issuer is the
surviving entity or a merger of a Restricted Subsidiary with another entity in
which either such Restricted Subsidiary is the surviving entity or such other
entity becomes a Restricted Subsidiary of the Issuer).
Section 8.02. Successor Entity Substituted.
----------------------------
Upon any consolidation or merger in accordance with Section 8.01, the
successor Person or Persons formed by such consolidation or into which such
Issuer is merged shall succeed to, and be substituted for, and may exercise
every right and power of, and shall assume all of the liabilities and
obligations of, such Issuer under this Indenture and the Notes with the same
effect as if such successor had been named as such Issuer in this Indenture and
the Notes. When a successor assumes all the obligations of its predecessor under
this Indenture and the Notes, the predecessor shall be released from those
obligations.
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ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.01. Without Consent of Holders.
--------------------------
The Issuer and the Trustee may amend or supplement this Indenture or the
Notes without notice to or consent of any Holder:
(a) to cure any ambiguity, defect or inconsistency, provided, that
--------
such amendment or supplement does not adversely affect the rights of any
Holder in any material respect;
(b) to comply with Article VIII;
(c) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(d) to comply with any requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA;
(e) to make any change that would provide any additional benefit or
rights to the Holders or that does not adversely affect the rights of any
Holder;
(f) to provide for issuance of the Exchange Notes, which will have
terms substantially identical in all material respects to the Initial Notes
(except that the transfer restrictions contained in the Initial Notes will
be eliminated, as appropriate), and which will be treated together with any
outstanding Initial Notes, as a single issue of securities; or
(g) to make any other change that does not, in the opinion of the
Trustee, adversely affect in any material respect the rights of any Holders
hereunder.
The Issuer shall be required to deliver to the Trustee an Opinion of
Counsel stating that any such change under this Section 9.01 does not adversely
affect the rights of any Holder.
Section 9.02. With Consent of Holders.
-----------------------
Subject to Section 5.08, the Issuer and the Trustee may amend any of this
Indenture, the Notes, the Guarantees
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(including, without limitation, releasing any Guarantor from its obligations
under its Guarantee) or the Subordination Agreement with the written consent of
the Holders of not less than a majority in aggregate principal amount of the
Outstanding Notes, and the Holders of not less than a majority in aggregate
principal amount of the Outstanding Notes by written notice to the Trustee may
waive future compliance by the Issuer with any provision of this Indenture or
the Notes.
Notwithstanding the provisions of this Section 9.02, without the consent of
each Holder affected, an amendment or waiver, including a waiver pursuant to
Section 5.13, may not:
(i) change the Stated Maturity Date or the time at which the
principal of, or interest on, any Note becomes due and payable, or reduce
the principal amount thereof or the rate of interest thereon, or change the
coin or currency in which the principal of any Note or the interest thereon
is payable, or impair the right to institute suit for the enforcement of
any such payment when due and payable (or, in the case of redemption, on or
after the redemption date); provided, however, that this clause (i) shall,
-------- -------
in all cases, be subject to the provisions of Section 10.11(d) which,
indirectly, could have the effect of changing the time at which principal
of or interest on the Notes becomes due and payable with the consent of
only the Holders of a majority in aggregate principal amount of the Notes;
(ii) reduce the percentage in principal amount of outstanding
Notes, the consent of whose holders is required to amend or supplement this
Indenture or the consent of whose holders is required for any waiver of
compliance with certain provisions of this Indenture or certain Defaults
hereunder and their consequences provided for in this Indenture;
(iii) modify any of the provisions relating to supplemental
indentures requiring the consent of holders or relating to the waiver of
past defaults or relating to the waiver of certain covenants, except to
increase the percentage of outstanding Notes required for such actions or
to provide that certain other provisions of this Indenture cannot be
modified or waived without the consent of the holder of each Note affected
thereby;
(iv) except as otherwise permitted under Article VIII, allow
the assignment or transfer by the
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Issuer of any of its rights and obligations under this Indenture; or
(v) modify or in any other way affect the ranking of the Notes
in a manner adverse to the Holders.
It shall not be necessary for the consent of the Holders under this Section
9.02 to approve the particular form of any proposed amendment, supplement or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section 9.02 becomes
effective, the Issuer shall mail to the Holders of each Note affected thereby,
with a copy to the Trustee, a notice briefly describing the amendment,
supplement or waiver. Any failure of the Issuer to mail such notice, or any
defect therein, shall not, however, in any way impair or affect the validity of
any supplemental indenture.
Section 9.03. Compliance with TIA.
-------------------
Every amendment of or supplement to this Indenture or the Notes shall
comply with the TIA as then in effect and as and to the extent applicable to
this Indenture.
Section 9.04. Revocation and Effect of Consents; Record Date for Consents.
-----------------------------------------------------------
Until an amendment, supplement or waiver becomes effective, a consent to it
by a Holder is a continuing consent by such Holder and every subsequent Holder
of that Note or portion of that Note that evidences the same debt as the
consenting Holder's Note, even if notation of the consent is not made on any
Note. Subject to the following paragraph, any such Holder or subsequent Holder
may revoke the consent as to his Note or portion of a Note prior to such
amendment, supplement or waiver becoming effective. Such revocation shall be
effective only if the Trustee receives the notice of revocation before the date
the amendment, supplement or waiver becomes effective. Notwithstanding the
above, nothing in this paragraph shall impair the right of any Holder under
Section 316(b) of the TIA.
The Issuer may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then notwithstanding the
second and third sentences of the immediately preceding paragraph, those persons
who were Holders at such record date (or their duly
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designated proxies), and only those persons, shall be entitled to consent to
such amendment, supplement or waiver or to revoke any consent previously given,
whether or not such Persons continue to be Holders after such record date. Such
consent shall be effective only for actions taken within 90 days after such
record date.
After an amendment, supplement or waiver becomes effective, it shall bind
every Holder, unless it makes a change described in any of clauses (i) through
(v) of Section 9.02, in which case, the amendment, supplement or waiver shall
bind every subsequent Holder of a Note or portion of a Note that evidences the
same debt as the consenting Holder's Note.
Section 9.05. Notation on or Exchange of Notes.
--------------------------------
If an amendment, supplement or waiver changes the terms of a Note, the
Trustee shall (in accordance with the specific direction of the Issuer) request
the Holder of the Note to deliver it to the Trustee. The Trustee shall (in
accordance with the specific direction of the Issuer) place an appropriate
notation on the Note about the changed terms and return it to the Holder.
Alternatively, if the Issuer or the Trustee so determines, the Issuer in
exchange for the Note shall issue and the Trustee shall authenticate a new Note
that reflects the changed terms. Failure to make the appropriate notation or
issue a new Note shall not affect the validity and effect of such amendment,
supplement or waiver.
Section 9.06. Trustee May Sign Amendments, etc.
---------------------------------
The Trustee shall sign any amendment, supplement or waiver authorized
pursuant to this Article IX if the amendment, supplement or waiver does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may, but need not, sign it. In signing or refusing to
sign such amendment, supplement or waiver, the Trustee shall be entitled to
receive, and shall be fully protected in relying upon, an Officers' Certificate
and an Opinion of Counsel stating that the execution of any amendment,
supplement or waiver is authorized or permitted by this Indenture, that it is
not inconsistent herewith and that it will be valid and binding upon the Issuer
in accordance with its terms.
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ARTICLE X
COVENANTS
Section 10.01. Payment of Principal and Interest.
---------------------------------
The Issuer shall duly and punctually pay the principal of and interest on
the Notes in accordance with the terms of the Notes and this Indenture. Subject
to the terms of Article XIII, (i) if any of the Events of Default set forth in
Sections 5.01(c), (d), (e), (f) and/or (g) shall occur and be continuing, or
(ii) if, at such time as the provisions of Section 13.01 and the Subordination
Agreement are no longer in effect, any of the Events of Default set forth in
Section 5.01(a) and/or (b) shall occur and be continuing, all principal,
interest or any other amounts due from the Issuer hereunder or under the Notes
shall bear interest for each day until paid (before and after judgment), at a
rate per annum then in effect according to the terms of Section 3.01 or 5.02 (as
the case may be), plus a rate per annum (based on a year of 360 days of twelve
----
30-day months) equal to 3% of the unpaid principal amount of the Notes (the
"Default Rate").
- -------------
Section 10.02. Maintenance of Office or Agency.
-------------------------------
The Issuer shall maintain in The City of New York, an office or agency
where Notes may be presented or surrendered for payment, where Notes may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Issuer in respect of the Notes and this Indenture may be
served. The office of the Trustee shall be such office or agency of the Issuer,
unless the Issuer shall designate and maintain some other office or agency for
one or more of such purposes, in which case, the Issuer shall give prompt
written notice to the Trustee of any change in the location of any such office
or agency. If at any time the Issuer shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office, and the Issuer hereby appoints the Trustee as its agent
to receive all such presentations, surrenders, notices and demands.
The Issuer may also from time to time designate one or more other offices
or agencies (in or outside of The City of New York) where the Notes may be
presented or surrendered for any or all such purposes, and may from time to time
rescind such designation, provided, that no such designation or rescission shall
in any manner relieve the Issuer of its
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obligation to maintain an office or agency in the Borough of Manhattan in The
City of New York for such purposes. The Issuer shall give prompt written notice
to the Trustee of any such designation or rescission and any change in the
location of any such other office or agency.
Section 10.03. Money for Note Payments To Be Held in Trust.
-------------------------------------------
If the Issuer shall at any time act as its own Paying Agent, the Issuer
shall, on or before any due date of the principal of or interest on any of the
Notes, segregate and hold in trust for the benefit of the Holders entitled
thereto a sum sufficient to pay the principal or interest so becoming due until
such sums shall be paid to such Persons or otherwise disposed of as herein
provided, and shall promptly notify the Trustee of its action or failure so to
act.
If the Issuer is not acting as Paying Agent, the Issuer shall, on or before
the day preceding each due date of the principal of or interest on, any Notes,
deposit with a Paying Agent a sum in same day funds sufficient to pay the
principal or interest so becoming due, such sum to be held in trust for the
benefit of the Holders entitled to such principal or interest, and (unless such
Paying Agent is the Trustee) the Issuer shall promptly notify the Trustee of
such action or any failure so to act.
If the Issuer is not acting as Paying Agent, the Issuer shall cause any
Paying Agent other than the Trustee to execute and deliver to the Trustee an
instrument in which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section 10.03, that such Paying Agent shall:
(a) hold all sums held by it for the payment of the principal of or
interest on Notes in trust for the benefit of the Holders entitled thereto
until such sums shall be paid to such Holders or otherwise disposed of as
herein provided;
(b) give the Trustee notice of any Default by the Issuer (or any
other obligor upon the Notes) in the making of any payment of principal of
or interest on the Notes;
(c) at any time during the continuance of any such Default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent; and
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(d) acknowledge, accept and agree to comply in all respects with the
provisions of this Indenture relating to the duties, rights and liabilities
of such Paying Agent.
The Issuer may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Issuer or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Issuer or such Paying
Agent; and, upon such payment by the Issuer or any Paying Agent to the Trustee,
the Issuer or such Paying Agent shall be released from all further liability
with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Issuer, in trust for the payment of the principal of or interest on any Note
and remaining unclaimed for two years after such principal or interest has
become due and payable shall be paid to the Issuer upon receipt of a Company
Request therefor, or (if then held by the Issuer) shall be discharged from such
trust; and the Holder of such Note shall thereafter, as an unsecured general
creditor, look only to the Issuer for payment thereof, and all liability of the
Trustee or such Paying Agent with respect to such trust money, and all liability
of the Issuer as trustee thereof, shall thereupon cease, provided, that the
--------
Trustee or such Paying Agent, before being required to make any such repayment,
shall at the expense of the Issuer cause to be published once, in the New York
Times and the Wall Street Journal (national edition), notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such notification or publication, any
unclaimed balance of such money then remaining shall be repaid to the Issuer.
Section 10.04. Corporate Existence.
-------------------
Subject to Article VIII, the Issuer shall do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate existence
and the corporate, partnership or other existence of each of the Restricted
Subsidiaries, and the rights (charter and statutory), licenses and franchises of
the Issuer and each of the Restricted Subsidiaries, provided, that the Issuer
--------
shall not be required to preserve any such right, license or franchise if the
Board of Directors of the Person holding such right, license or franchise shall
determine that the preservation thereof is no
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longer desirable in the conduct of the business of the Issuer and the Restricted
Subsidiaries as a whole and that the loss thereof is not disadvantageous in any
material respect to the Holders, provided, further, that the foregoing shall not
-------- -------
prohibit a sale, transfer or conveyance of a Restricted Subsidiary or any of the
Issuer's or a Restricted Subsidiary's assets or capital stock in compliance with
the terms of this Indenture.
Section 10.05. Change of Ownership.
-------------------
Except with the approval of Holders of a majority of the principal amount
of the Notes (such approval not to be unreasonably withheld), the Issuer shall
not suffer, permit or allow to occur any voting arrangement, proxy, assignment,
pledge or other transfer with respect to or of its shares so that one or more of
KIAV and its Affiliates, the directors of Kelso & Companies, Inc. and Charter
owns and votes directly or indirectly less than fifty-one percent of the voting
shares (i.e., shares entitled to elect a majority of the directors) of the
Issuer, provided that after the Issuer completes an initial public offering,
--------
such percentage may be less than fifty-one percent so long as a majority of the
Issuer's directors are nominees of one or more of KIAV and its Affiliates, the
directors of Kelso & Companies, Inc. and Charter.
Section 10.06. Management of Cable Properties.
------------------------------
The Issuer shall not suffer or permit any company or entity, other than
Charter, not approved by the Holders of a majority in principal amount of the
Notes (such approval not to be unreasonably withheld) to manage any of the cable
television properties of CCE-I (for purposes of this Section 10.06, if one or
more of Howard Wood, Jerald Kent or Barry Babcock (or any other person approved
by the Holders of a majority in principal amount of the Notes) and their heirs
at law collectively own and vote less than fifty-one percent of the voting
shares of Charter, the Issuer will be deemed to have violated this Section
10.06).
Section 10.07. Annualized Cash Flow.
--------------------
The Issuer shall not permit the Adjusted Consolidated Annualized Operating
Cash Flow of the Issuer, for the three months ending on the last day of each
calendar quarter, to be less than 1.2 times its total Adjusted Consolidated Debt
Service for the 12 months ending on such last day.
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Section 10.08. Reporting and Information Requirements.
--------------------------------------
So long as any of the Notes are then outstanding, the Issuer shall deliver
to the Trustee and each Holder of $1,000,000 or more in unpaid principal amount
of the Notes:
(a) as soon as available but in any event within 45 days after the end of
each quarterly accounting period (other than the fourth quarter) in each fiscal
year, the unaudited consolidated statement of operations and statement of cash
flows of the Issuer for such quarterly period and for the period from the
beginning of the fiscal year to the end of such quarter, and the unaudited
consolidated balance sheet of the Issuer as of the end of such quarterly period,
and all such statements shall be prepared in accordance with GAAP, consistently
applied; provided, that such statements shall not include footnotes and shall be
--------
subject to normal year-end adjustments;
(b) at the time delivered to the applicable creditor, a copy of any
certificate, report or other correspondence relating to compliance with any
Senior Debt or any other Indebtedness of the Issuer and any of its Restricted
Subsidiaries;
(c) within 90 days after the end of each fiscal year, the consolidated
statements of operations, shareholders' investment and cash flows of the Issuer
for such fiscal year, and the consolidated balance sheet of the Issuer as of the
end of such fiscal year, all prepared in accordance with GAAP, consistently
applied, and accompanied by (i) a certified audit report from the Issuer's
auditors, which shall be a firm of recognized national standing, and (ii) a
certificate from such accounting firm, addressed to the Issuer's board of
directors, stating that in the course of its examination nothing came to its
attention that caused it to believe that there was any default by the Issuer in
the fulfillment of or compliance with Sections 10.07 and 10.11(a) of this
Indenture or, if such accountants have reason to believe any such default by the
Issuer exists, a certificate specifying the nature and period of existence
thereof;
(d) promptly (but in any event within ten (10) Business Days) after the
discovery or receipt of notice of any default under any material agreement
(including any default under the terms and provisions of the Notes and this
Indenture) to which it or any of the Restricted Subsidiaries is a party or any
other material adverse event or circumstance affecting the Issuer or any
Restricted Subsidiary (including the filing of
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any material litigation against the Issuer or any Restricted Subsidiary), an
Officer's Certificate specifying the nature and period of existence thereof and
what actions the Issuer and the Restricted Subsidiaries have taken and propose
to take with respect thereto;
(e) within 30 days after transmission thereof, copies of all financial
statements, proxy statements, reports and any other general written
communications which the Issuer sends to its stockholders (if it is a reporting
company under the Exchange Act) and copies of all registration statements and
all regular, special or periodic reports which it files, or any of its officers
or directors file with respect to the Issuer, with the SEC or with any
securities exchange on which any of its securities are then listed, and copies
of all press releases and other statements made available generally by the
Issuer to the public concerning material developments in the Issuer's business;
it being understood that the delivery of such reports shall satisfy the
requirements of paragraphs (a), (c) and (i) of this Section 10.08;
(f) within five (5) Business Days after execution, copies of all documents
and instruments governing any Senior Debt;
(g) all written requests for amendments, consents and waivers relating to
(i) the CCE-I Credit Agreement to be executed pursuant to the terms thereof and
(ii) the CCE, L.P. Partnership Agreement to be executed pursuant to the terms
thereof; and in each such case, copies of any such amendments, consents and
waivers, contemporaneously with the delivery of such amendments, consents and
waivers to the Persons indicated therein; provided, however, that in lieu of any
-------- -------
such amendment, consent or waiver the Company may, at its option, provide a
summary thereof;
(h) within 45 days after the end of each quarterly accounting period in
each fiscal year, a certificate as to compliance with Section 8.01 and Article
X, including a calculation under the covenants of Sections 10.07 and 10.11(a);
and
(i) within 30 days after the date on which the Issuer would have been
required to file a report on Form 8-K with the SEC had the Issuer been subject
to such a requirement relating to (i) a change of control event, (ii) a
significant asset disposition or acquisition directly by the Issuer or any of
the Restricted Subsidiaries, (iii) the appointment of a receiver, fiscal agent
or similar officer for the Issuer, or
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(iv) any resignation or dismissal of the Issuer's principal independent
accountants, a notice of the occurrence of any such event together with a
general description with reasonable detail describing such event.
Section 10.09. [Intentionally Omitted.]
Section 10.10. Changes in CCE, L.P. Partnership Agreement.
------------------------------------------
The Issuer shall not permit any amendment, modification or other change to
the CCE, L.P. Partnership Agreement other than amendments, modifications or
other changes (a) which do not alter the priority, amount and timing of
distributions (or remedies with respect thereto) to partners of CCE, L.P. to be
made out of the proceeds of distributions received by CCE, L.P. from its
Subsidiaries (including but not limited to CCE-I), except as permitted by
subclause (b) of this Section 10.10 or (b) in connection with the creation of
one or more new Subsidiaries of CCE, L.P. (each a "New CCE Subsidiary") (and the
admission of additional partners resulting therefrom) or the contribution of
assets to an existing subsidiary of CCE, L.P., provided that (x) no
--------
distributions to CCE, L.P. from such New CCE Subsidiary or CCE-II may be
distributed by CCE, L.P. to its partners other than to repay any outstanding CCE
Purchase Money Indebtedness incurred in connection with acquiring assets or
equity interests owned or to be owned, directly or indirectly, by the New CCE
Subsidiary making the distribution or CCE-II, respectively, and, provided, that
--------
any such distributions remaining after the payment in full of such CCE Purchase
Money Indebtedness shall be used to repay on a pro rata basis, based on the
aggregate amounts owed, any other CCE Purchase Money Indebtedness outstanding,
and shall thereafter be used to make distributions to CCE, L.P.'s partners and
(y) such amendment, modification or other change does not alter the priority,
amount and timing of distributions (or remedies with respect thereto) to
partners of CCE, L.P. to be made out of the proceeds of distributions received
by CCE, L.P. from CCE-I;
Section 10.11. Limitation on Indebtedness.
--------------------------
The Issuer shall not:
(a) permit the Adjusted Consolidated Indebtedness of the Issuer
(other than any Indebtedness represented by the Notes) at the end of any
calendar quarter after December 31, 1996 to exceed 6.75 times its Adjusted
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Consolidated Annualized Operating Cash Flow for such quarter;
(b) permit any Indebtedness of the Issuer and the Restricted
Subsidiaries (other than that evidenced by the Notes) which is subordinated
to the Senior Debt, whether as to right of payment of principal or interest
or otherwise, to not be subordinated to the Indebtedness evidenced by the
Notes to the same extent that the Indebtedness evidenced by the Notes is
subordinated to the Senior Debt under Article XIII;
(c) incur any Indebtedness which would be reasonably expected, in the
circumstances at the time of incurrence, to cause the Issuer to violate the
provisions of clause (a) above;
(d) on or after the date when the ratio of the Adjusted Consolidated
Indebtedness of the Issuer for Money Borrowed (other than any Indebtedness
represented by the Notes) to its Adjusted Consolidated Annualized Operating
Cash Flow is less than 5.0 to 1, permit the extension of any maturity date
under the CCE-I Credit Facility beyond July 17, 2005 without the consent of
the Holders of a majority in principal amount of the Notes;
(e) permit CCE, L.P. to incur any Indebtedness (including, without
limitation, the issuance of any guarantees) other than (A) the Guarantee of
the Notes issued by CCE, L.P., and (B) Indebtedness to the Issuer or any of
its Subsidiaries to the extent such Indebtedness is subordinate to CCE,
L.P.'s Guarantee of the Notes.
Section 10.12. Limitation on Restricted Payments.
---------------------------------
The Issuer shall not:
(a) directly or indirectly, declare or pay any dividend on, or make
any distribution to the holders of any class of its Capital Stock in
respect of such shares of Capital Stock (including pursuant to a merger or
consolidation of the Issuer), other than dividends or distributions payable
solely in Capital Stock of the Issuer. Neither the Issuer nor any of its
Subsidiaries may purchase, redeem or otherwise acquire or retire for value
any of the Capital Stock of the Issuer;
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(b) except for distributions by CCE, L.P. in accordance with the CCE,
L.P. Partnership Agreement, permit any of its Restricted Subsidiaries,
directly or indirectly, to declare or pay any dividend or make any
distribution other than (i) dividends or distributions to the Issuer or to
another Restricted Subsidiary, which declares or pays or distributes the
full amount of any such dividend or makes any such distribution, directly
or indirectly, to the Issuer and the Issuer uses such dividend or
distribution towards the repayment of the Notes, (ii) dividends or
distributions by CCE-I to CCT Holdings Corp., as a limited partner of CCE-
I, pursuant to the CCE-I Partnership Agreement, and (iii) dividends or
distributions by any subsidiary of CCE-I (a "CCE-I Subsidiary") to CCE-I or
another CCE-I Subsidiary that is a parent company of such CCE-I Subsidiary,
provided that the proceeds of such dividends or distributions in the case
--------
of this clause (iii) are (A) retained by CCE-I or such other CCE-I
Subsidiary, (B) used to repay indebtedness of CCE-I or such other CCE-I
Subsidiary or (C) otherwise used in a manner not violative of the terms of
this Indenture;
(c) permit any new investment in a Restricted Subsidiary by a non-
Affiliate, unless such investment is structured in such a way that (x)
there is no adverse impact on the ability of the Issuer to repay the Notes,
(y) the Holders of the Notes have an interest as to distributions by such
Restricted Subsidiary arising from the assets created or acquired as a
direct or indirect result of such new investment which is subordinate only
to the CCE-I Credit Facility and the obligations to repay Indebtedness or
other forms of non-Affiliate financing related to such acquisition and (z)
the Issuer continues to Control, directly or indirectly, CCE-I. The Issuer
will not and will not permit any Restricted Subsidiary to dispose of any
equity interest, whether direct or indirect, which it currently holds in
CCE-I, other than to (i) the Issuer, (ii) another Restricted Subsidiary, or
(iii) a third party, so long as such third party contributes cash and/or
other assets to CCE-I and the equity interest received by such third party
in distributions received from CCE-I shall be subordinated to the preferred
equity interest of CCE, L.P. in distributions received from CCE-I;
(d) permit any of CCE-I and any of the Restricted Subsidiaries to
make any advance, loan, payment or cash distribution to Charter or KIAV or
any of their
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respective Affiliates (other than Restricted Subsidiaries) before all the
Obligations in respect of the Notes are paid in full, other than as
permitted by Section 10.13(a); or
(e) invest or permit any Restricted Subsidiary to invest more than
$20,000,000 in any Restricted Subsidiary thereof relating to the operation
and ownership of licensed radio station(s) in the St. Louis, Missouri,
area.
Section 10.13. Limitation on Transaction with Affiliates.
-----------------------------------------
(a) The Issuer shall not, except as permitted under Sections 8.01,
10.12(a), 10.12(b), 10.12(d) and 10.16(a), permit CCE-I to, at any time, engage
in any transaction with an Affiliate, or make an assignment or other transfer of
any of its properties or assets to an Affiliate on terms less advantageous to
CCE-I than would be the case if such transactions had been effected on an arm's
length basis with a non-Affiliate, other than any transaction (including the
payment of fees and expenses) permitted under the CCE-I Credit Agreement from
time to time or, after the CCE-I Credit Facility Termination Date, consistent
with past practice. In addition, CCE-I shall receive the full benefit of any
discounts, rebates or special payment terms available to Charter (in its
capacity as manager of the cable systems owned by CCE-I) which Charter (in such
capacity) is permitted to pass through to CCE-I.
(b) The Issuer shall not permit any Restricted Subsidiary to incur
Indebtedness to an Affiliate, other than Indebtedness to another Restricted
Subsidiary or a direct or indirect Restricted Subsidiary of a Restricted
Subsidiary, on terms less advantageous than would be the case if such loan had
been effected on an arm's length basis with a non-Affiliate.
Section 10.14. Disposition of Proceeds of Asset Sales.
--------------------------------------
After the sale by CCE-I of any cable television property owned directly by
it, the Issuer (A) shall cause the entire cash net proceeds of such sale to be
used to pay down the Senior Debt and (B) thereafter shall maintain the Senior
Debt at a level not in excess of the level to which such Senior Debt has been
paid down plus $20,000,000 (the "New Senior Debt Level"); provided, that at any
--------------------- --------
time during the 24 month period following any such sale, the Issuer may increase
the level of Senior Debt beyond the New Senior Debt Level solely to the
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extent such increase arises from acquisition borrowings to acquire cable
television properties in any of the Issuer's and its Restricted Subsidiaries'
Areas of Dominant Influence.
Section 10.15. Change of Control.
-----------------
Without the approval of the Holders of a majority in principal amount of
the Notes (such approval not to be unreasonably withheld), the Issuer shall not
suffer or permit Charter's principal executive or operating officers not to
include at least one of Howard Wood, Barry Babcock or Jerald Kent.
Section 10.16. Sale of Assets.
--------------
(a) The Issuer shall not sell, lease or otherwise dispose of, or
permit any of the Restricted Subsidiaries to sell, lease or otherwise
dispose of, an aggregate (including all such dispositions by the Issuer and
the Restricted Subsidiaries) of more than 10% of CCE-I's assets in any
transaction or series of transactions (other than sales in the ordinary
course of business) or sell, lease or otherwise dispose of any of CCE-I's
cable television systems, provided that (A) the Issuer or any of the
--------
Restricted Subsidiaries may exchange any and all of its cable television
systems and related property for cable television systems and related
property of unrelated third parties on terms that are commercially
reasonable to CCE-I; (B) the Issuer and the Restricted Subsidiaries may
make sales of assets but only to the extent they comply with Section 10.14;
(C) the Issuer and the Restricted Subsidiaries may transfer assets to a
"joint venture subsidiary" (as defined below) but only to the extent the
Issuer complies with Section 10.16(b) below; and (D) the Issuer and the
Restricted Subsidiaries may otherwise make sales if but only if the Issuer
and the Restricted Subsidiaries have made arrangements reasonably
satisfactory to the Holders of a majority in principal amount of the Notes
to apply the entire after-tax proceeds of any such sale to payment of the
outstanding principal of and accrued interest on the Notes, it being
understood that the satisfaction and discharge of this Indenture in
accordance with Article XI hereof shall be deemed an arrangement reasonably
satisfactory to such Holders for the application of such proceeds pursuant
to this clause (D); provided, further, that, in connection with any such
-------- -------
sale, lease or other disposition of assets by the Issuer or one of the
Restricted Subsidiaries to an Affiliate of such Person
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(other than a sale, lease or other disposition the proceeds of which are
promptly applied to repay in full in cash all amounts, including principal
and accrued and unpaid interest owing on the Notes, whether or not then due
and payable), such Person shall first obtain an opinion from an investment
banking or brokerage firm which is nationally recognized for its expertise
in the cable television industry to the effect that such transaction is
fair to all Holders of Notes from a financial point of view.
(b) Except as permitted under Section 8.01, the Issuer shall not
permit the transfer of any or all of the cable television properties of the
Issuer or the Restricted Subsidiaries to one or more Restricted
Subsidiaries which is not wholly owned by the Issuer or such Restricted
Subsidiary ("joint venture subsidiary(ies)"), unless (A) all Restricted
-----------------------------
Subsidiaries of the Issuer which hold an interest in the joint venture
subsidiary or subsidiaries provide a guarantee of, or an assumption
agreement for, the Notes and (B) such transfer does not otherwise
materially disadvantage the Holders of the Notes in connection with their
rights, position and powers under the Notes.
ARTICLE XI
SATISFACTION AND DISCHARGE
Section 11.01. Satisfaction and Discharge of Indenture.
---------------------------------------
This Indenture shall cease to be of further effect (except as to surviving
rights of registration of transfer or exchange of Notes herein expressly
provided for, the Issuer's obligations under Section 6.07, and the Trustee's and
Paying Agent's obligations under Section 4.06) and the Trustee, on written
demand of and at the expense of the Issuer, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture, when
(a) either
(i) all Notes theretofore authenticated and delivered (other
than (A) Notes which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 3.05 and (B) Notes for whose
payment in United States dollars has theretofore been irrevocably deposited
in trust or segregated and held in
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trust by the Issuer and thereafter repaid to the Issuer or discharged from
such trust, as provided in Section 10.03) have been delivered to the
Trustee for cancellation; or
(ii) all such Notes not theretofore delivered to the Trustee for
cancellation have become due and payable and the Issuer has irrevocably
deposited or caused to be deposited with the Trustee in trust for the
purpose an amount in United States dollars sufficient to pay and discharge
the entire Indebtedness on such Notes not theretofore delivered to the
Trustee for cancellation, for the principal of and interest on such Notes
to the date of such deposit;
(b) the Issuer has paid or caused to be paid all other sums payable
hereunder by the Issuer; and
(c) the Issuer has delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel each stating that all conditions precedent herein provided
for relating to the satisfaction and discharge of this Indenture have been
complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Issuer to the Trustee under Section 6.07 and, if money shall
have been deposited with the Trustee pursuant to subclause (a)(ii) of this
Section 11.01, the obligations of the Trustee under Section 11.02 and the last
paragraph of Section 10.03 shall survive.
Section 11.02. Application of Trust Money.
--------------------------
Subject to the provisions of the last paragraph of Section 10.03, all money
deposited with the Trustee pursuant to Section 11.01 shall be held in trust and
applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Issuer acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal of and interest on
the Notes for whose payment such money has been deposited with the Trustee.
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ARTICLE XII
REGISTRATION
Section 12.01. Cooperation in Registration.
---------------------------
(a) Until such time as there are Exchange Notes outstanding, the Issuer
shall use reasonable best efforts to cooperate with any Holder or the proposed
transferee of one or more of the Initial Notes to facilitate a proposed
transfer, provided that the Issuer will not be required to register the Initial
Notes under the Securities Act or any state or other securities laws. To this
end, the Issuer shall make available to any proposed transferee or Holder (i)
all information reasonably requested by such Holder and required under Section
10.08, (ii) its appropriate executive officers to be interviewed, at reasonable
times and intervals, by proposed transferees (acting in a coordinated fashion)
about the affairs and status of the Issuer, and (iii) any other information
reasonably required by a Holder in order to transfer any of the Notes in
compliance with Rule 144A of the Securities Act. Any transfer taxes payable in
connection with a Holder's transfer of its Note(s) shall be the responsibility
of such Holder.
(b) After March 31, 1997, if any Holder or Holders of $15,000,000 or more
in unpaid principal amount of the Notes desire to register same under the
Securities Act, the Issuer shall comply with such Holder's written request for
same, and shall use its best efforts to effect such registration and the sale of
such Notes in accordance with the intended method of disposition thereof, and
pursuant thereto the Issuer shall as expeditiously as possible:
(i) prepare and file with the SEC a registration statement
with respect to such Notes and use its reasonable best efforts to cause
such registration statement to become effective (provided that before
filing a registration statement or prospectus or any amendments or
supplements thereto, the Issuer shall furnish to the counsel selected by
the Holders of a majority in principal amount of the Notes covered by such
registration statement copies of all such documents proposed to be filed,
which documents shall be subject to the review of such counsel);
(ii) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be
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necessary to keep such registration statement effective for a period of not
less than nine months and comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such
registration statement during such period in accordance with the intended
methods of disposition by the sellers thereof set forth in such
registration statement;
(iii) furnish to each seller of such Notes such number of copies
of such registration statement, each amendment and supplement thereto, the
prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such seller may
reasonably request in order to facilitate the disposition of the Notes
owned by such seller;
(iv) use its reasonable best efforts to register or qualify
such Notes under such other securities or blue sky laws of such
jurisdictions as any seller reasonably requests and do any and all other
acts and things which may be reasonably necessary or advisable to enable
such seller to consummate the disposition in such jurisdictions of the
Notes owned by such seller (provided that the Issuer shall not be required
to (i) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph, (ii) subject
itself to taxation in any such jurisdiction, or (iii) consent to service of
process in any such jurisdiction);
(v) notify each seller of such Notes at any time when a
prospectus relating thereto is required to be delivered under the
Securities Act after the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue
statement of a material fact or omits any fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading, and, at the request of any such seller, the Issuer
shall prepare a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Notes, such prospectus shall
not contain an untrue statement of a material fact or omit to state any
fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(vi) enter into such customary agreements (including
underwriting agreements in customary form which contain customary
indemnification provisions) and
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take all such other actions as the Holders of a majority in aggregate
principal amount of the Notes being sold or the underwriters, if any,
reasonably request in order to expedite or facilitate the disposition of
such Notes;
(vii) make available for inspection by any seller of such Notes,
any underwriter participating in any disposition pursuant to such
registration statement, and any attorney, accountant or other agent
retained by any such seller or underwriter, all financial and other
records, pertinent corporate documents and properties of the Issuer, and
cause the Issuer's officers, directors, employees and independent
accountants to supply all information reasonably requested by any such
seller, underwriter, attorney, accountant or agent in connection with such
registration statement;
(viii) obtain a cold comfort letter from the Issuer's
independent public accountants in customary form and covering such matters
of the type customarily covered by cold comfort letters as the sellers of a
majority of the Notes being sold reasonably request; and
(ix) enter into such agreements, trust indentures, and other
documents (including a reformulation of the Notes and this Indenture into
such form and with such additional provisions) and file such statements,
registration documents and other material as are reasonably requested by
the managing underwriter in order to comply with the Trust Indenture Act
and to effect a sale under the Securities Act.
(c) All expenses incident to the Issuer's performance of or compliance with
Section 12.01(b), including without limitation all registration and filing fees,
fees and expenses of compliance with securities or blue sky laws, printing
expenses, messenger and delivery expenses, and fees and disbursements of counsel
for the Issuer and all independent certified public accountants, underwriters
(excluding discounts and commissions) and other persons retained by the Issuer
(all such expenses being herein called "Registration Expenses"), shall be borne
---------------------
by the sellers of the Notes except that the Issuer shall, in any event, pay its
internal expenses (including, without limitation all salaries of its officers
and employees performing legal or accounting duties) and the expense of any
annual audit; provided, that the Issuer shall be required to pay the fees and
--------
expenses of any indenture trustee appointed in connection with any such
registration of the Notes.
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Each Holder of Notes included in any registration described in Section
12.01(b) will pay those Registration Expenses allocable to the registration of
such Holder's Notes so included, and any Registration Expenses not so allocable
will be borne by all sellers of Notes included in such registration in
proportion to the aggregate selling price of the Initial Notes of each such
Holder to be so registered.
(d) In connection with the registration of Notes described in Section
12.01(b), the Issuer agrees to indemnify, to the extent permitted by law, each
Holder of such Notes, its officers and directors and each person who controls
such Holder (within the meaning of the Securities Act) against all losses,
claims, damages, liabilities and expenses caused by any untrue or alleged untrue
statement of material fact contained in any registration statement, prospectus
or preliminary prospectus or any amendment thereof or supplement thereto or any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as the
same are caused by or contained in any information furnished in writing to the
Issuer by such Holder expressly for use therein or by such Holder's failure to
deliver a copy of any registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto after the Issuer has
furnished such Holder with a sufficient number of copies of the same. In
connection with an underwritten offering pursuant to the registration of Notes
described in Section 12.01(b), the Issuer shall indemnify such underwriters,
their officers and directors and each person who controls such underwriters
(within the meaning of the Securities Act) to the same extent as provided above
with respect to the indemnification of the Holders of such Notes. In connection
therewith, each Holder of such Notes agrees to indemnify, to the extent
permitted by law, the Issuer, its officers and directors and each person who
controls the Issuer (within the meaning of the Securities Act) from and against
all losses, claims, damages, liabilities and expenses caused by or contained in
any information furnished in writing to the Issuer by such Holder expressly for
use in any registration statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or by such Holder's failure to deliver a
copy of the registration statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto after the Issuer has furnished such
Holder with a sufficient number of copies of the same.
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(e) The Issuer's obligations under Section 12.01(b) shall not extend to
more than one registration completed under the Securities Act.
ARTICLE XIII
SUBORDINATION
Section 13.01. Special Provisions Relating to the CCE-I Credit Facility.
--------------------------------------------------------
Notwithstanding anything which may be construed to the contrary in this
Article or any other provision of this Indenture or otherwise, on and prior to
the CCE-I Credit Facility Termination Date, all of the Holders' rights vis-a-vis
---------
the Issuer and the CCE-I Bank Facility Lenders shall be subordinate to the CCE-I
Credit Facility and governed by the terms of the Subordination Agreement (the
terms and provisions of which are expressly incorporated by reference herein)
and this Section 13.01. Without limiting the foregoing, the terms of Sections
13.02 through 13.07 shall be inapplicable to the Indebtedness arising under the
CCE-I Credit Facility. On and prior to the earlier of (i) the CCE-I Credit
Facility Termination Date and (ii) January 18, 2019, no Holder shall exercise
any right or remedy against the Issuer or any of its Subsidiaries with respect
to this Indenture or any Note, provided, that:
--------
(a) Upon the election of Holders of a majority in principal amount of the
Notes, the Holders may exercise the right to pursue a claim of specific
performance or an injunction against the Issuer:
(i) unless expressly permitted by the terms hereof, if the
Issuer merges or consolidates with or permits any Restricted Subsidiary
(other than CCE-I and any of its Subsidiaries) to merge or consolidate
with, any entity and the Issuer or such Restricted Subsidiary is not the
survivor of such merger or consolidation (other than a merger between two
Restricted Subsidiaries, a merger between the Issuer and a Restricted
Subsidiary in which the Issuer is the surviving entity or a merger of a
Restricted Subsidiary with another entity in which either such Restricted
Subsidiary is the surviving entity or such other entity becomes a
Restricted Subsidiary of the Issuer); or
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(ii) unless expressly permitted by the terms hereof, if the
Issuer sells, leases or otherwise disposes of, or permits any of the
Restricted Subsidiaries to sell, lease or otherwise dispose of assets
(other than cable television assets sold in exchange for other cable
television assets pursuant to an asset swap transaction or series thereof)
which generate Adjusted Consolidated Annualized Operating Cash Flow
(including all such dispositions by the Issuer and its Restricted
Subsidiaries) representing more than 50% of CCE-I's Adjusted Consolidated
Annualized Operating Cash Flow (as determined by reference to the most
recent audited annual financial statements of the Issuer which are required
to be delivered to the Holders prior to such sale, lease or other
disposition) in any transaction or series of transactions (other than sales
in the ordinary course of business); or
(iii) if the Issuer incurs, or permits any Restricted Subsidiary
to incur, Indebtedness for Money Borrowed which, when, consolidated with
all Indebtedness for Money Borrowed of the Issuer on an Adjusted
Consolidated basis (excluding the Indebtedness for Money Borrowed
represented by or otherwise arising in respect of the Notes and this
Indenture), causes the Adjusted Consolidated Indebtedness of the Issuer
(other than the Indebtedness represented by the Notes) to exceed at the end
of any calendar quarter period ending after December 31, 1996, 7.0 times
its Adjusted Consolidated Annualized Operating Cash Flow for such quarter;
or
(iv) if the Issuer or its Restricted Subsidiaries (other than
CCE-I and its Subsidiaries) incur Indebtedness for Money Borrowed (other
than that evidenced by the Notes and this Indenture) which is senior in
right of payment of principal or interest by its terms to the Notes but
subordinated in right of payment of principal or interest by its terms to
the CCE-I Credit Facility; or
(v) if the Issuer breaches the terms of Section 10.12(a) or
Section 10.16(b).
(b) Upon the occurrence of an Event of Default, the Holders may exercise
the right to cause interest to accrue on the unpaid principal amount of the
Notes at the interest rate then in effect, including, if applicable, the Default
Rate of interest described in Section 10.01 and the penalty rate of interest
described in the proviso to Section 5.02; and
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(c) The Holders may exercise such other rights and remedies against the
Issuer as are expressly permitted to them under the Subordination Agreement.
In connection with any such action by a Holder for specific performance or
an injunction, the Issuer shall waive any requirement of a bond and acknowledges
that the Holders would be irreparably damaged by any such violation.
Notwithstanding any effect of this Section 13.01 or of the Subordination
Agreement, the Issuer agrees that any statute of limitations with respect to any
Event of Default shall be tolled so long as any debt is outstanding under the
CCE-I Credit Facility.
Section 13.02. Agreement to Subordinate; Authorization to Trustee to Take
----------------------------------------------------------
Action to Effectuate Subordination.
- ----------------------------------
(a) The Issuer agrees, and each Holder by accepting a Note agrees, that
the Indebtedness evidenced by the Notes and the payment of the principal of and
interest on each of the Notes is subordinated in right of payment, to the extent
and in the manner provided in this Article, to the prior payment in full of all
amounts then due on all Senior Debt. This Article shall constitute a continuing
offer to all persons who become holders of or who continue to hold, Senior Debt,
and the provisions of this Article XIII are intended to be for the benefit of,
and shall be enforceable directly by, the holders of Senior Debt.
(b) Each Holder by accepting a Note authorizes and directs the Trustee for
and on such Holders' behalf to take such action as may be necessary or
appropriate to effectuate, as between the holders of Senior Debt and the
Holders, the subordination provided in this Article XIII (including, without
limitation, executing and delivering a Subordination Agreement, substantially in
the form of Exhibit E, in the name and on behalf of such Holder) and appoints
the Trustee his attorney-in-fact for any and all such purposes.
Section 13.03. Definitions of Senior Debt.
--------------------------
"Senior Debt" means all monetary obligations (whether fixed or contingent
and whether outstanding on the date hereof or hereafter created, incurred or
assumed), including, without limitation, obligations in respect of principal,
interest (including post-petition interest in any proceeding under bankruptcy
law), reimbursement obligations, indemnities, fees and expenses in respect of
any Indebtedness for Money Borrowed of the Issuer and the Restricted
Subsidiaries, whether
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outstanding on an even date herewith or afterwards, unless any instrument
creating or affecting such Indebtedness (a) provides that such Indebtedness is
not superior in right of payment to the principal of and interest on any of the
Notes or (b) provides that such Indebtedness is subordinate in right of payment
to the payment of the principal of and interest on any other Indebtedness for
Money Borrowed of the Issuer and its Subsidiaries. The fact that certain
Indebtedness is not secured, or is junior in security to other Indebtedness,
shall not be relevant to the issue of whether it is Senior Debt. Notwithstanding
anything to the contrary in the foregoing, Senior Debt shall not include (a)
indebtedness or amounts owed for compensation to employees, for goods or
materials purchased in the ordinary course of business or for services, (b)
indebtedness of the Issuer or any Restricted Subsidiary to any Restricted
Subsidiary, or any shareholder, partner or officer of the Issuer or any
Restricted Subsidiary, (c) obligations for television, program and syndicated
series exhibition rights or (d) payments due under or in connection with a cable
television franchise, including any management fees.
Section 13.04. Liquidation; Dissolution; Bankruptcy.
------------------------------------
Upon any distribution to creditors upon dissolution, winding-up,
liquidation or reorganization of the Issuer (whether voluntary or involuntary
and whether in bankruptcy, insolvency or receivership proceedings or upon an
assignment for the benefit of creditors or any other marshalling of the assets
and liabilities of the Issuer or otherwise):
(1) holders of Senior Debt shall receive payment in full in cash of the
principal of and interest (including interest accruing after the commencement of
any such proceeding) to the date of payment on the Senior Debt and all other
amounts due in respect of the Senior Debt before Holders shall be entitled to
receive any payment; and
(2) until the Senior Debt is paid in full in cash, any distribution to
which Holders would be entitled but for this Article shall be made to holders of
Senior Debt as their interests may appear, except that pursuant to a plan of
reorganization under applicable bankruptcy law, the Holders of Notes may receive
securities containing provisions that are no more favorable to Holders of the
Notes than those in the Notes, including, without limitation, provisions that
subordinate such securities to Senior Debt to the same extent as the Notes, so
long as the rights of the holders of Senior Debt are not altered by such
reorganization.
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For purposes of this Article XIII, a distribution may consist of cash,
securities or other property, by set-off or otherwise.
Section 13.05. Default on Senior Debt.
----------------------
Upon the final maturity of any Senior Debt by lapse of time, acceleration
or otherwise, all such Senior Debt shall first be paid in full before any
payment is made by the Issuer or any of its Restricted Subsidiaries or any
Person acting on behalf of the Issuer or any of its Restricted Subsidiaries on
account of the principal of or interest on the Notes or any payment is made to
acquire any of the Notes.
The Issuer may not nor may it permit any of its Restricted Subsidiaries or
any Person acting on behalf of the Issuer or any of its Restricted Subsidiaries
to, directly or indirectly, pay principal of or interest on the Notes or acquire
any Notes, cash or property (other than Capital Stock of the Issuer or other
securities of the Issuer that are subordinated to Senior Debt to at least the
same extent as the Securities) if an event which constitutes, or which, with the
giving of notice or the lapse of time or both or after giving effect to a
payment on account of the Notes, would constitute, a default or event of default
in respect of any Senior Debt, as defined in the instrument or agreement under
which the same is outstanding, has occurred and is continuing that automatically
accelerates or permits holders of such Senior Debt to accelerate the maturity of
such Senior Debt (other than as described in the immediately preceding
paragraph).
The Issuer shall resume payments on the Notes and may acquire them if such
default is cured or waived in writing.
Section 13.06. Subrogation.
-----------
At such time as all Senior Debt is paid in full and until the Notes are
paid in full, Holders shall be subrogated to the rights of holders of Senior
Debt to receive distributions applicable to Senior Debt to the extent that
distributions otherwise payable to the Holders have been applied to the payment
of Senior Debt. A distribution made under this Article to holders of Senior
Debt which otherwise would have been made to Holders is not, as between the
Issuer and Holders, a payment by the Issuer on Senior Debt.
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Section 13.07. Relative Rights.
---------------
This Article defines the relative rights of Holders and holders of Senior
Debt. Nothing in this Article shall:
(1) impair, as between the Issuer and Holders, the obligation of the
Issuer, which is absolute and unconditional, to pay principal of and interest on
the Notes in accordance with their terms;
(2) affect the relative rights of Holders and creditors of the Issuer
other than holders of Senior Debt except as provided in Section 13.06; or
(3) prevent any Holder from exercising its available remedies upon an
Event of Default, subject to the rights of holders of Senior Debt under this
Article.
If the Issuer fails because of this Article to pay principal of or interest
on a Note when due under this Indenture, the failure is still an Event of
Default.
ARTICLE XIV
GUARANTEE
Section 14.01. Guarantee of Notes.
------------------
CCA Acquisition Corp., CCE, L.P. and Cencom Cable have each issued
guarantees substantially in the forms attached hereto as Exhibits F-I, F-II and
F-III, respectively (together with any New Restricted Subsidiary Guarantee (as
defined below), the "Guarantees") which guarantee on a subordinated basis to the
same extent as provided in Article XIII, to each Holder of a Note, but only to
the extent set forth therein, payment and performance of the Notes.
Section 14.02. Future Guarantees.
-----------------
Upon and after the occurrence of the CCE-I Credit Facility Termination Date
and upon acquisition or formation of each Restricted Subsidiary thereafter, the
Issuer shall cause any Restricted Subsidiary that is not then party to a
Guarantee to provide the Trustee with written evidence in the form attached
hereto as Exhibit F-IV (a "New Restricted Subsidiary Guarantee") of its
guarantee of the Notes under this Article XIV.
-84-
<PAGE>
ARTICLE XV
REDEMPTION OF NOTES
Section 15.01. Applicability of Article.
------------------------
Redemption of Notes at the election of the Issuer or otherwise, as
permitted or required by any provision of this Indenture, shall be made in
accordance with such provision and this Article.
Section 15.02. Optional Redemption.
-------------------
The Notes will be redeemable at the option of the Issuer, in whole or in
part, at any time at a price equal to 100% of the face amount thereof, plus
accrued and unpaid interest to the Redemption Date.
Section 15.03. Election to Redeem; Notice to Trustee.
-------------------------------------
The election of the Issuer to redeem any Notes pursuant to Section 15.02
shall be evidenced by a Board Resolution of the Issuer and an Officers'
Certificate. In case of any redemption at the election of the Issuer, the
Issuer shall, at least 45 days prior to the Redemption Date fixed by the Issuer
(unless a shorter notice period shall be satisfactory to the Trustee), notify
the Trustee in writing of such Redemption Date and of the principal amount of
Notes to be redeemed.
Section 15.04. Selection by Trustee of Notes To Be Redeemed.
--------------------------------------------
In the event that less than all of the Notes are to be redeemed at any
time, selection of such Notes for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which the Notes are listed or, if the Notes are not then listed on a
national securities exchange, on a pro rata basis, by lot or by such method as
--- ----
the Trustee shall deem fair and appropriate, provided that, at the election of
--------
the Issuer, Notes the redemption of which would cause the unredeemed portion of
the principal amount thereof to be $1,000,000 or less may be redeemed in whole.
If any Note is to be redeemed in part only, the notice of redemption that
relates to such Note shall state the portion of the principal amount thereof to
be redeemed. A new Note in a principal amount equal to the unredeemed portion
thereof will be issued in the name of the holder thereof upon cancellation of
the original Note. On and after the Redemption Date, if the Issuer does not
default in
-85-
<PAGE>
the payment of the Redemption Price, interest will cease to accrue on Notes or
portions thereof called for redemption.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to redemption of Notes shall relate, in the case of any
Note redeemed or to be redeemed only in part, to the portion of the principal
amount of such Note which has been or is to be redeemed.
Section 15.05. Notice of Redemption.
--------------------
Notice of redemption shall be mailed by first-class mail, postage prepaid,
mailed at least 30 but not more than 60 days before the Redemption Date, to each
Holder of Notes to be redeemed at its registered address.
All notices of redemption shall state:
(a) the Special Record Date;
(b) the Redemption Date;
(c) the Redemption Price;
(d) if less than all outstanding Notes are to be redeemed, the
identification of the particular Notes to be redeemed;
(e) in the case of a Note to be redeemed in part, the principal amount of
such Note to be redeemed and that after the Redemption Date upon surrender of
such Note, a new Note or Notes in the aggregate principal amount equal to the
unredeemed portion thereof will be issued;
(f) that Notes called for redemption must be surrendered to the Paying
Agent to collect the Redemption Price;
(g) that on the Redemption Date the Redemption Price will become due and
payable upon each such Note or portion thereof, and that (unless the Issuer
shall default in payment of the Redemption Price) interest thereon shall cease
to accrue on and after said date;
(h) the place or places where such Notes are to be surrendered for payment
of the Redemption Price;
(i) the CUSIP number, if any, relating to such Notes; and
-86-
<PAGE>
(j) the paragraph of the Notes pursuant to which the Notes are being
redeemed.
Notice of redemption of Notes to be redeemed shall be given by the Issuer
or, at the Issuer's written request, by the Trustee in the name and at the
expense of the Issuer.
The notice, if mailed in the manner herein provided, shall be conclusively
presumed to have been given, whether or not the Holder receives such notice. In
any case, failure to give such notice by mail or any defect in the notice to the
Holder of any Note designated for redemption as a whole or in part shall not
affect the validity of the proceedings for the redemption of any other Note.
Section 15.06. Deposit of Redemption Price.
---------------------------
On or prior to the day preceding any Redemption Date, the Issuer shall
deposit with the Trustee or with a Paying Agent (or, if the Issuer is acting as
its own Paying Agent, segregate and hold in trust as provided in Section 10.03)
an amount of money in same day funds sufficient to pay the Redemption Price of,
and accrued interest on, all the Notes or portions thereof which are to be
redeemed on that date.
Section 15.07. Notes Payable on Redemption Date.
--------------------------------
Notice of redemption having been given as aforesaid, the Notes to be
redeemed shall, on the Redemption Date, become payable at the Redemption Price
therein specified and from and after such date (unless the Issuer shall default
in the payment of the Redemption Price) such Notes shall cease to bear interest.
Upon surrender of any such Note for redemption in accordance with said notice,
such Note shall be paid by the Issuer at the Redemption Price, plus accrued and
unpaid interest.
If any Note called for redemption shall not be so paid upon surrender
thereof for redemption, the principal and premium, if any, shall, until paid,
bear interest from the Redemption Date at the rate then borne by such Note.
Section 15.08. Notes Redeemed in Part.
----------------------
Any Note which is to be redeemed only in part shall be surrendered to the
Paying Agent at the office or agency maintained for such purpose pursuant to
Section 10.02 (with, if the Issuer, the Registrar or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form
-87-
<PAGE>
satisfactory to, the Issuer, the Registrar or the Trustee duly executed by the
Holder thereof or such Holder's attorney duly authorized in writing), and the
Issuer shall execute, and the Trustee shall authenticate and deliver to the
Holder of such Note without service charge, a new Note or Notes, of any
authorized denomination as requested by such Holder in aggregate principal
amount equal to, and in exchange for, the portion of the principal of the Note
so surrendered that is not redeemed.
-88-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
CCA HOLDINGS CORP.
By: /s/ Kent Kalkwarf
-----------------------------
Name: Kent Kalkwarf
Title: Senior Vice President
CENCOM CABLE ENTERTAINMENT, INC.
By: /s/ Kent Kalkwarf
-----------------------------
Name: Kent Kalkwarf
Title: Senior Vice President
(with respect to Article XIV hereof only)
CCA ACQUISITION CORP.
By: /s/ Kent Kalkwarf
-----------------------------
Name: Kent Kalkwarf
Title: Senior Vice President
(with respect to Article XIV hereof only)
CHARTER COMMUNICATIONS
ENTERTAINMENT, L.P.
By: CCA Acquisition Corp.,
a general partner
By: /s/ Kent Kalkwarf
-----------------------------
Name: Kent Kalkwarf
Title: Senior Vice President
(with respect to Article XIV hereof only)
-89-
<PAGE>
HARRIS TRUST AND SAVINGS BANK, as Trustee
By: /s/ J. Bartolini
--------------------------------
Name: J. Bartolini
Title:Vice President
-90-
<PAGE>
EXHIBIT A
CUSIP NO.:
CCA HOLDINGS CORP.
SERIES A SENIOR SUBORDINATED NOTE DUE 1999
No. $______________
CCA HOLDINGS CORP., a Delaware corporation (the "Issuer," which term
------
includes any successor entity), for value received promises to pay to
or registered assigns, the principal sum of Dollars, plus
accrued interest thereon, on December 31, 1999, subject to Article XIII of the
within-mentioned Indenture. Interest shall accrue from January 18, 1995, at the
rate of 13% per annum, until the principal hereof is paid or duly provided for.
Interest shall be computed on the basis of a 360-day year of twelve 30-day
months.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which will for all purposes have the same effect as if
set forth at this place.
IN WITNESS WHEREOF, the Issuer has caused this Note to be signed manually
or by facsimile by its duly authorized officers and a facsimile of its corporate
seal to be affixed hereto or imprinted hereon.
CCA HOLDINGS CORP.
By:____________________________
Name:
Title:
Dated: February 13, 1997 By:____________________________
Name:
Title:
Certificate of Authentication
This is one of the Series A Senior Subordinated Notes due 1999 referred to
in the within-mentioned Indenture.
Harris Trust and Savings
Bank, as Trustee
Dated: February 13, 1997 By:_______________________
Authorized Signatory
A-1
<PAGE>
A-2 (REVERSE OF NOTE)
SERIES A SENIOR SUBORDINATED NOTE DUE 1999
1. Indenture. This Note is one of a duly authorized issue of Notes of the
---------
Issuer designated as its Series A Senior Subordinated Notes due 1999 (the
"Notes"), limited (except as otherwise provided in the Indenture referred to
-----
below) in aggregate principal amount to $82,000,000, which may be issued under
an indenture (the "Indenture") dated as of February 13, 1997, between the Issuer
---------
and Harris Trust and Savings Bank, as trustee (the "Trustee," which term
-------
includes any successor Trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties, obligations and immunities
thereunder of the Issuer, the Trustee, and the Holders of the Notes, and of the
terms upon which the Notes are, and are to be, authenticated and delivered.
All capitalized terms used in this Note which are defined in the Indenture
and not otherwise defined herein shall have the meanings assigned to them in the
Indenture.
No reference herein to the Indenture and no provisions of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency, herein prescribed.
2. Redemption.
----------
(a) Optional Redemption. The Notes will be redeemable at the option of the
-------------------
Issuer, in whole or in part, at any time at par value, plus accrued and unpaid
interest to the Redemption Date.
(b) Sinking Fund. The Issuer will not be required to make any mandatory
------------
sinking fund payments in respect of the Notes.
(c) Interest Payments. In the case of any redemption of the Notes,
-----------------
interest accrued but not paid on or prior to the Redemption Date will be payable
to the Holders of such Notes, or one or more Predecessor Notes, of record at the
close of business on the Special Record Date. Notes (or portions thereof) for
whose redemption and payment provision is made in accordance with the Indenture
shall cease to bear interest from and after the Redemption Date.
A-2
<PAGE>
(d) Partial Redemption. In the event of redemption of the Note in part
------------------
only, a new Note or Notes for the unredeemed portion hereof shall be issued in
the name of the Holder hereof upon the cancellation hereof.
3. Defaults and Remedies. Subject to Article XIII of the Indenture, if
---------------------
an Event of Default shall occur and be continuing, the principal of all of the
outstanding Notes, plus all accrued and unpaid interest, if any, to the date the
Notes become due and payable, may be declared due and payable in the manner and
with the effect provided in the Indenture.
4. Defeasance. The Indenture contains provisions for defeasance at any
----------
time of (a) the entire indebtedness of the Issuer on this Note and (b) certain
restrictive covenants and related Defaults and Events of Default, in each case
upon compliance by the Issuer with certain conditions set forth therein.
5. Amendments and Waivers. The Issuer and the Trustee (if a party
----------------------
thereto) may, without the consent of the Holders of any Outstanding Notes,
amend, waive or supplement the Indenture or the Notes for certain specified
purposes, including, among other things, curing ambiguities, defects or
inconsistencies, maintaining the qualification of the Indenture under the Trust
Indenture Act of 1939, as amended, and making any change that does not adversely
affect the rights of any Holder. Other amendments and modifications of the
Indenture or the Notes may be made by the Issuer and the Trustee with the
consent of the Holders of not less than a majority of the aggregate principal
amount of the Outstanding Notes, subject to certain exceptions requiring the
consent of the Holders of the particular Notes to be affected. Any such consent
or waiver by or on behalf of the Holder of this Note shall be conclusive and
binding upon such Holder and upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent or waiver is made upon this
or such Note.
6. Denominations, Transfer and Exchange. The Notes are issuable only in
------------------------------------
registered form without coupons and, except in the case of Notes issued pursuant
to Section 2(d) above, in denominations of $1,000,000 or more. As provided in
the Indenture and subject to certain limitations therein set forth, the Notes
are exchangeable for a like aggregate principal amount of Notes of a different
authorized denomination, as requested by the Holder surrendering the same.
A-3
<PAGE>
The transfer of this Note is registrable on the Note Register of the
Issuer, upon surrender of this Note for registration of transfer at the office
or agency of the Issuer maintained for such purpose in the Borough of Manhattan
in The City of New York or at such other office or agency of the Issuer as may
be maintained for such purpose, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Issuer and the Note Registrar
duly executed by, the Holder hereof or his attorney duly authorized in writing,
and thereupon one or more new Notes, of authorized denominations and for the
same aggregate principal amount, will be issued to the designated transferee or
transferees.
7. Persons Deemed Owners. Prior to and at the time of due presentment of
---------------------
this Note for registration of transfer, the Issuer, the Trustee and any agent of
the Issuer or the Trustee may treat the Person in whose name this Note is
registered as the owner hereof for all purposes, whether or not this Note shall
be overdue, and neither the Issuer, the Trustee nor any agent shall be affected
by notice to the contrary.
8. Registration Rights. The Issuer will be obligated to use its best
-------------------
efforts to consummate an exchange offer pursuant to which the Holder of this
Note shall have the right to exchange this Note for the Issuer's Series B Senior
Subordinated Notes due 1999 (the "Exchange Notes"), which will have been
--------------
registered under the Securities Act, in like principal amount and having terms
identical in all material respects as the Initial Notes.
9. No Recourse Against Others. No limited partner, officer or employee of
--------------------------
the Issuer (or any direct or indirect investor therein, including Charter and
KIAV), nor any director, officer, partner, affiliate, employee or stockholder of
a general partner, shall have any liability for any obligations of the Issuer
under the Notes or the Indenture. Each holder of Notes by accepting a Note
waives and releases all such liability, and such waiver and release is part of
the consideration for the issuance of the Notes.
10. Subordination. All of the Holders' rights vis-a-vis the Issuer and
-------------
the CCE-I Bank Facility Lenders shall be subordinate to the CCE-I Credit
Facility and other Senior Debt and shall be governed by and subject to the terms
of the Subordination Agreement and Article XIII of the Indenture.
11. Guarantees. CCA Acquisition Corp., CCE, L.P. and Cencom Cable have
----------
each issued limited guarantees with respect to this Note in accordance with
Article XIV of the Indenture.
A-4
<PAGE>
12. GOVERNING LAW. THE INDENTURE AND THIS NOTE SHALL BE GOVERNED BY, AND
-------------
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF). THE TRUSTEE,
THE ISSUER, ANY OTHER OBLIGOR IN RESPECT OF THE NOTES AND THE HOLDERS AGREE TO
SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR STATE
COURT LOCATED IN THE BOROUGH OF MANHATTAN, IN THE CITY OF NEW YORK IN ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THE INDENTURE OR THIS NOTE.
THE INDEBTEDNESS EVIDENCED BY THIS INSTRUMENT IS SUBORDINATED TO THE
PRIOR PAYMENT IN FULL OF THE OBLIGATIONS (AS DEFINED IN THE SUBORDINATION
AGREEMENT HEREINAFTER REFERRED TO) PURSUANT TO, AND TO THE EXTENT PROVIDED
IN, THE SECOND AMENDED AND RESTATED SUBORDINATION AGREEMENT DATED AS OF
FEBRUARY 13, 1997 BY AND BETWEEN HARRIS TRUST AND SAVINGS BANK, AS TRUSTEE,
AND CCA HOLDINGS CORP., A DELAWARE CORPORATION, IN FAVOR OF TORONTO
DOMINION (TEXAS), INC., THE CHASE MANHATTAN BANK (FORMERLY CHEMICAL BANK),
CIBC INC., CREDIT LYONNAIS CAYMAN ISLAND BRANCH, NATIONSBANK, N.A., BANQUE
PARIBAS, UNION BANK OF CALIFORNIA, N.A. (FORMERLY UNION BANK), CORESTATES
BANK, N.A., THE LONG-TERM CREDIT BANK OF JAPAN, LTD., MERCANTILE BANK OF
ST. LOUIS NATIONAL ASSOCIATION, FLEET BANK, N.A., FIRST NATIONAL BANK OF
MARYLAND, VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME TRUST, BANQUE
FRANCAISE DU COMMERCE EXTERIEUR, PRIME INCOME TRUST, SENIOR DEBT PORTFOLIO,
AERIES FINANCE LTD., ING CAPITAL ADVISORS, INC., ABN AMRO BANK N.V.,
SOCIETE GENERALE, THE FIRST NATIONAL BANK OF BOSTON, CAPTIVA FINANCE, LTD.,
BANQUE NATIONALE DE PARIS, THE SUMITOMO BANK, LIMITED, CHICAGO BRANCH,
CHASE SECURITIES, INC. AND THE ING CAPITAL SENIOR SECURED HIGH INCOME FUND,
L.P. (COLLECTIVELY, AND TOGETHER WITH THEIR RESPECTIVE SUCCESSORS AND
ASSIGNS, THE "LENDERS"), TORONTO DOMINION (TEXAS), INC. AND THE CHASE
MANHATTAN BANK (FORMERLY CHEMICAL BANK), AS DOCUMENTATION AGENTS, TORONTO
DOMINION (TEXAS), INC., THE CHASE MANHATTAN BANK (FORMERLY CHEMICAL BANK),
CIBC INC., CREDIT LYONNAIS CAYMAN ISLAND BRANCH, AND NATIONSBANK, N.A., AS
MANAGING AGENTS, BANQUE PARIBAS, UNION BANK OF CALIFORNIA, N.A. (FORMERLY
UNION BANK), CORESTATES BANK, N.A., FLEET BANK, N.A., ABN AMRO BANK N.V.,
SOCIETE GENERALE AND THE FIRST NATIONAL BANK OF BOSTON, AS CO-AGENTS, AND
TORONTO DOMINION (TEXAS), INC., AS ADMINISTRATIVE AGENT, AND THEIR
RESPECTIVE SUCCESSORS AND ASSIGNS.
A-5
<PAGE>
ASSIGNMENT FORM
If you the holder want to assign this Note, fill in the form below and have your
signature guaranteed:
I or we assign and transfer this Note to
________________________________________________________________________________
(Insert assignee's social security or tax ID number) ___________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code) and irrevocably appoint
________________________________________________________________________________
agent to transfer this Note on the books of the Issuer. The agent may substitute
another to act for such agent.
Date:______________ Your signature:__________________________
(Sign exactly as your name appears
on the other side of this Note)
By:__________________________
NOTICE: To be executed
by an executive officer.
NOTICE: Signature(s) must be guaranteed by an institution which is a participant
in the Securities Transfer Agent Medallion Program ("STAMP") or similar program.
-----
In connection with any transfer of this Note occurring prior to the date
which is the earlier of (i) the date of the declaration by the SEC of the
effectiveness of a registration statement under the Securities Act of 1933, as
amended (the "Securities Act") covering resales of this Note (which
--------------
effectiveness shall not have been suspended or terminated at the date of the
transfer) and (ii) February 13, 2000, the undersigned confirms that it has not
utilized any general solicitation or general advertising in connection with the
transfer:
A-6
<PAGE>
[Check One]
(1) ___ to the Issuer or a subsidiary thereof; or
(2) ___ pursuant to and in compliance with Rule 144A under the Securities Act
of 1933, as amended; or
(3) __ to an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as
amended) that has furnished to the Trustee a signed letter containing
certain representations and agreements (the form of which letter can
be obtained from the Trustee); or
(4) __ outside the United States to a "foreign person" in compliance with
Rule 904 of Regulation S under the Securities Act of 1933, as amended;
or
(5) -- pursuant to the exemption from registration provided by Rule 144 under
the Securities Act of 1933, as amended; or
(6) -- pursuant to an effective registration statement under the Securities
Act of 1933, as amended; or
(7) -- pursuant to another available exemption from the registration
requirements of the Securities Act of 1933, as amended.
If box (3), (4), (5) or (7) is checked, the Issuer or the Trustee may require,
prior to registering any such transfer of Notes, in its sole discretion, such
written legal opinions, certifications (including an investment letter in the
case of box (3) or (4)) and other information as the Trustee or the Issuer have
reasonably requested to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, as amended.
A-7
<PAGE>
If none of the foregoing boxes are checked, the Trustee or Registrar will refuse
to register this Note in the name of any person other than the Registered Holder
hereof unless and until the conditions to any such transfer of registration set
forth herein and in Section 2.05 of the Indenture shall have been satisfied.
Dated: ______________ Signed: __________________________________
(Sign exactly as name appears on
the other side of this Security)
Signature Guarantee: ____________________________________
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this Note for
its own account or an account with respect to which it exercises sole investment
discretion and that it and any such account is a "qualified institutional buyer"
within the meaning of Rule 144A under the Securities Act of 1933, as amended and
is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Issuer as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Date:___________________ ________________________________
NOTICE: To be executed by
an executive officer
A-8
<PAGE>
EXHIBIT B
CUSIP NO.:
FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED, AND THE RULES AND REGULATIONS THEREUNDER, THIS SECURITY IS
BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT; FOR EACH $1,000,000 PRINCIPAL AMOUNT
OF THIS SECURITY: (1) THE ISSUE PRICE IS $1,000,000; (2) THE AMOUNT OF ORIGINAL
ISSUE DISCOUNT IS $865,680.76; (3) THE ISSUE DATE IS JANUARY 18, 1995; AND (4)
THE YIELD TO MATURITY (COMPOUNDED SEMI-ANNUALLY) IS 13%.
CCA HOLDINGS CORP.
SERIES B SENIOR SUBORDINATED NOTE DUE 1999
No. $______________
CCA HOLDINGS CORP., a Delaware corporation (the "Issuer," which term
------
includes any successor entity), for value received promises to pay to
or registered assigns, the principal sum of Dollars, plus accrued
interest thereon, on December 31, 1999, subject to Article XIII of the within-
mentioned Indenture. Interest shall accrue from January 18, 1995, at the rate
of 13% per annum, until the principal hereof is paid or duly provided for.
Interest shall be computed on the basis of a 360-day year of twelve 30-day
months.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which will for all purposes have the same effect as if
set forth at this place.
IN WITNESS WHEREOF, the Issuer has caused this Note to be signed manually
or by facsimile by its duly authorized officers and a facsimile of its corporate
seal to be affixed hereto or imprinted hereon.
CCA HOLDINGS CORP.
By:_____________________
Name:
Title:
Dated: February 13, 1997 By:_____________________
Name:
Title:
Certificate of Authentication
This is one of the Series B Senior Subordinated Notes due 1999 referred to
in the within-mentioned Indenture.
Harris Trust and Savings Bank,
as Trustee
Dated: February 13, 1997 By:_______________________
Authorized Signatory
B-1
<PAGE>
A-2 (REVERSE OF NOTE)
SERIES B SENIOR SUBORDINATED NOTE DUE 1999
1. Indenture. This Note is one of a duly authorized issue of Notes of the
---------
Issuer designated as its Series B Senior Subordinated Notes due 1999 (the
"Notes"), limited (except as otherwise provided in the Indenture referred to
-----
below) in aggregate principal amount to $82,000,000, which may be issued under
an indenture (the "Indenture") dated as of February 13, 1997, between the Issuer
---------
and Harris Trust and Savings Bank, as trustee (the "Trustee," which term
-------
includes any successor Trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties, obligations and immunities
thereunder of the Issuer, the Trustee, and the Holders of the Notes, and of the
terms upon which the Notes are, and are to be, authenticated and delivered.
All capitalized terms used in this Note which are defined in the Indenture
and not otherwise defined herein shall have the meanings assigned to them in the
Indenture.
No reference herein to the Indenture and no provisions of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency, herein prescribed.
2. Redemption.
----------
(a) Optional Redemption. The Notes will be redeemable at the option of the
-------------------
Issuer, in whole or in part, at any time at par value, plus accrued and unpaid
interest to the Redemption Date.
(b) Sinking Fund. The Issuer will not be required to make any mandatory
------------
sinking fund payments in respect of the Notes.
(c) Interest Payments. In the case of any redemption of the Notes,
-----------------
interest accrued but not paid on or prior to the Redemption Date will be payable
to the Holders of such Notes, or one or more Predecessor Notes, of record at the
close of business on the Special Record Date. Notes (or portions thereof) for
whose redemption and payment provision is made in accordance with the Indenture
shall cease to bear interest from and after the Redemption Date.
B-2
<PAGE>
(d) Partial Redemption. In the event of redemption of the Note in part
------------------
only, a new Note or Notes for the unredeemed portion hereof shall be issued in
the name of the Holder hereof upon the cancellation hereof.
3. Defaults and Remedies. Subject to Article XIII of the Indenture, if an
---------------------
Event of Default shall occur and be continuing, the principal of all of the
outstanding Notes, plus all accrued and unpaid interest, if any, to the date the
Notes become due and payable, may be declared due and payable in the manner and
with the effect provided in the Indenture.
4. Defeasance. The Indenture contains provisions for defeasance at any
----------
time of (a) the entire indebtedness of the Issuer on this Note and (b) certain
restrictive covenants and related Defaults and Events of Default, in each case
upon compliance by the Issuer with certain conditions set forth therein.
5. Amendments and Waivers. The Issuer and the Trustee (if a party
----------------------
thereto) may, without the consent of the Holders of any Outstanding Notes,
amend, waive or supplement the Indenture or the Notes for certain specified
purposes, including, among other things, curing ambiguities, defects or
inconsistencies, maintaining the qualification of the Indenture under the Trust
Indenture Act of 1939, as amended, and making any change that does not adversely
affect the rights of any Holder. Other amendments and modifications of the
Indenture or the Notes may be made by the Issuer and the Trustee with the
consent of the Holders of not less than a majority of the aggregate principal
amount of the Outstanding Notes, subject to certain exceptions requiring the
consent of the Holders of the particular Notes to be affected. Any such consent
or waiver by or on behalf of the Holder of this Note shall be conclusive and
binding upon such Holder and upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent or waiver is made upon this
or such Note.
6. Denominations, Transfer and Exchange. The Notes are issuable only in
------------------------------------
registered form without coupons and, except in the case of Notes issued pursuant
to Section 2(d) above, in denominations of $1,000,000 or more. As provided in
the Indenture and subject to certain limitations therein set forth, the Notes
are exchangeable for a like aggregate principal amount of Notes of a different
authorized denomination, as requested by the Holder surrendering the same.
B-3
<PAGE>
The transfer of this Note is registrable on the Note Register of the
Issuer, upon surrender of this Note for registration of transfer at the office
or agency of the Issuer maintained for such purpose in the Borough of Manhattan
in The City of New York or at such other office or agency of the Issuer as may
be maintained for such purpose, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Issuer and the Registrar duly
executed by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Notes, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.
7. Persons Deemed Owners. Prior to and at the time of due presentment of
---------------------
this Note for registration of transfer, the Issuer, the Trustee and any agent of
the Issuer or the Trustee may treat the Person in whose name this Note is
registered as the owner hereof for all purposes, whether or not this Note shall
be overdue, and neither the Issuer, the Trustee nor any agent shall be affected
by notice to the contrary.
8. No Recourse Against Others. No limited partner, officer or employee of
--------------------------
the Issuer (or any direct or indirect investor therein, including Charter and
KIAV), nor any director, officer, partner, affiliate, employee or stockholder of
a general partner, shall have any liability for any obligations of the Issuer
under the Notes or the Indenture. Each holder of Notes by accepting a Note
waives and releases all such liability, and such waiver and release is part of
the consideration for the issuance of the Notes.
9. Subordination. All of the Holders' rights vis-a-vis the Issuer and
-------------
the CCE-I Bank Facility Lenders shall be subordinate to the CCE-I Credit
Facility and other Senior Debt and shall be governed by and subject to the terms
of the Subordination Agreement and Article XIII of the Indenture.
10. Guarantees. CCA Acquisition Corp., CCE, L.P. and Cencom Cable have
----------
each issued limited guarantees with respect to this Note in accordance with
Article XIV of the Indenture.
11. GOVERNING LAW. THE INDENTURE AND THIS NOTE SHALL BE GOVERNED BY, AND
-------------
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF). THE TRUSTEE,
THE ISSUER, ANY OTHER OBLIGOR IN RESPECT OF THE NOTES AND THE HOLDERS AGREE TO
SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR STATE
COURT LOCATED IN THE BOROUGH OF MANHATTAN, IN THE CITY OF NEW YORK IN ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THE INDENTURE OR THIS NOTE.
B-4
<PAGE>
THE INDEBTEDNESS EVIDENCED BY THIS INSTRUMENT IS SUBORDINATED TO THE
PRIOR PAYMENT IN FULL OF THE OBLIGATIONS (AS DEFINED IN THE SUBORDINATION
AGREEMENT HEREINAFTER REFERRED TO) PURSUANT TO, AND TO THE EXTENT PROVIDED
IN, THE SECOND AMENDED AND RESTATED SUBORDINATION AGREEMENT DATED AS OF
FEBRUARY 13, 1997 BY AND BETWEEN HARRIS TRUST AND SAVINGS BANK, AS TRUSTEE,
AND CCA HOLDINGS CORP., A DELAWARE CORPORATION, IN FAVOR OF TORONTO
DOMINION (TEXAS), INC., THE CHASE MANHATTAN BANK (FORMERLY CHEMICAL BANK),
CIBC INC., CREDIT LYONNAIS CAYMAN ISLAND BRANCH, NATIONSBANK, N.A., BANQUE
PARIBAS, UNION BANK OF CALIFORNIA, N.A. (FORMERLY UNION BANK), CORESTATES
BANK, N.A., THE LONG-TERM CREDIT BANK OF JAPAN, LTD., MERCANTILE BANK OF
ST. LOUIS NATIONAL ASSOCIATION, FLEET BANK, N.A., FIRST NATIONAL BANK OF
MARYLAND, VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME TRUST, BANQUE
FRANCAISE DU COMMERCE EXTERIEUR, PRIME INCOME TRUST, SENIOR DEBT PORTFOLIO,
AERIES FINANCE LTD., ING CAPITAL ADVISORS, INC., ABN AMRO BANK N.V.,
SOCIETE GENERALE, THE FIRST NATIONAL BANK OF BOSTON, CAPTIVA FINANCE, LTD.,
BANQUE NATIONALE DE PARIS, THE SUMITOMO BANK, LIMITED, CHICAGO BRANCH,
CHASE SECURITIES, INC. AND THE ING CAPITAL SENIOR SECURED HIGH INCOME FUND,
L.P. (COLLECTIVELY, AND TOGETHER WITH THEIR RESPECTIVE SUCCESSORS AND
ASSIGNS, THE "LENDERS"), TORONTO DOMINION (TEXAS), INC. AND THE CHASE
MANHATTAN BANK (FORMERLY CHEMICAL BANK), AS DOCUMENTATION AGENTS, TORONTO
DOMINION (TEXAS), INC., THE CHASE MANHATTAN BANK (FORMERLY CHEMICAL BANK),
CIBC INC., CREDIT LYONNAIS CAYMAN ISLAND BRANCH, AND NATIONSBANK, N.A., AS
MANAGING AGENTS, BANQUE PARIBAS, UNION BANK OF CALIFORNIA, N.A. (FORMERLY
UNION BANK), CORESTATES BANK, N.A., FLEET BANK, N.A., ABN AMRO BANK N.V.,
SOCIETE GENERALE AND THE FIRST NATIONAL BANK OF BOSTON, AS CO-AGENTS, AND
TORONTO DOMINION (TEXAS), INC., AS ADMINISTRATIVE AGENT, AND THEIR
RESPECTIVE SUCCESSORS AND ASSIGNS.
B-5
<PAGE>
ASSIGNMENT FORM
If you the holder want to assign this Note, fill in the form below and have your
signature guaranteed:
I or we assign and transfer this Note to
________________________________________________________________________________
(Insert assignee's social security or tax ID number) ___________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code) and irrevocably appoint
________________________________________________________________________________
agent to transfer this Note on the books of the Issuer. The agent may substitute
another to act for such agent.
Date:______________________ Your signature:_____________________________
(Sign exactly as your name
appears on the other side
of this Note)
By:____________________________
NOTICE: To be executed by
an executive officer.
NOTICE: Signature(s) must be guaranteed by an institution which is a participant
in the Securities Transfer Agent Medallion Program ("STAMP") or similar program.
-----
B-6
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE TO BE
DELIVERED IN CONNECTION WITH
TRANSFERS TO NON-QIB ACCREDITED INVESTORS
-----------------------------------------
_______________________
_______________________
_______________________
_______________________
Attention: Indenture Trust Division
Re: CCA Holdings Corp.(the "Issuer")
Series A Senior Subordinated
Notes due 1999 (the "Notes")
--------------------------------
Ladies and Gentlemen:
In connection with our proposed purchase of $____________ aggregate
principal amount of the Notes, we confirm that:
1. We have received a copy of the offering memorandum (the "Offering
--------
Memorandum"), dated February 10, 1997, relating to the Notes and such other
----------
information as we deem necessary in order to make our investment decision.
We acknowledge that we have read and agreed to the matters stated in the
section entitled "Notice to Investors" of the Offering Memorandum.
2. We understand that any subsequent transfer of the Notes is subject
to certain restrictions and conditions set forth in the Indenture dated as
of February 13, 1997 relating to the Notes (the "Indenture") and the
---------
undersigned agrees to be bound by, and not to resell, pledge or otherwise
transfer the Notes except in compliance with, such restrictions and
conditions and the Securities Act of 1933, as amended (the "Securities
----------
Act").
3. We understand that the Notes have not been registered under the
Securities Act, and that the Notes may not be offered or sold except as
permitted in the following sentence. We agree, on our own behalf and on
behalf of any accounts for which we are acting as hereinafter stated, that
if we should sell any Notes within three years after the original issuance
of the Notes, we will do so only (A) to the Issuer or any subsidiary
thereof, (B) inside the United States in
C-1
<PAGE>
accordance with Rule 144A under the Securities Act to a "qualified
institutional buyer" (as defined therein), (C) inside the United States to
an "institutional accredited investor" (as defined below) that, prior to
such transfer, furnishes (or has furnished on its behalf by a U.S. broker-
dealer) to you a signed letter substantially in the form of this letter,
(D) outside the United States in accordance with Rule 904 of Regulation S
under the Securities Act, (E) pursuant to the exemption from registration
provided by Rule 144 under the Securities Act (if available), or (F)
pursuant to an effective registration statement under the Securities Act,
and we further agree to provide to any person purchasing any of the Notes
from us a notice advising such purchaser that resales of the Notes are
restricted as stated herein.
4. We understand that, on any proposed resale of any Notes, we will
be required to furnish to you and the Issuer such certification, written
legal opinions and other information as you and the Issuer may reasonably
require to confirm that the proposed sale complies with the foregoing
restrictions. We further understand that the Notes purchased by us will
bear a legend to the foregoing effect.
5. We are an institutional "accredited investor" (as defined in Rule
-------------------
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) (an
"institutional accredited investor") and have such knowledge and experience
in financial and business matters as to be capable of evaluating the merits
and risks of our investment in the Notes, and we and any accounts for which
we are acting are each able to bear the economic risk of our or its
investment, as the case may be.
6. We are acquiring the Notes purchased by us for our own account or
for one or more accounts (each of which is an "institutional accredited
------------------------
investor") as to each of which we exercise sole investment discretion.
--------
You, the Issuer and counsel for the Issuer are entitled to rely upon this
letter and are irrevocably authorized to produce this letter or a copy
hereof to any interested party in any administrative or legal proceedings
or
C-2
<PAGE>
official inquiry with respect to the matters covered hereby.
7. We are not acquiring the Notes for distribution in any manner that
would require registration or qualification under, or otherwise violate,
applicable federal or state securities laws, without prejudice to our
rights to dispose of such Notes or a portion thereof to a transferee or
transferees, in accordance with such laws if at some future time we deem it
advisable to do so.
Very truly yours,
[Name of Transferee]
By:_________________
Authorized Signature
C-3
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE TO BE DELIVERED
IN CONNECTION WITH TRANSFERS
PURSUANT TO REGULATION S
------------------------
_____________________________
_____________________________
_____________________________
_____________________________
Attention: Indenture Trust Division
Re: CCA Holdings Corp.(the "Issuer")
------
Series A Senior Subordinated Notes due 1999 (the "Notes")
---------------------------------------------------------
Ladies and Gentlemen:
In connection with our proposed sale of $ aggregate
principal amount of the Notes, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the U.S. Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, we represent that:
--------------
(1) the offer of the Notes was not made and the sale will not be
made to a person in the United States or to or for the benefit of a
U.S. person as defined in Regulation S;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting
on our behalf reasonably believed that the transferee was outside the
United States, or (b) the transaction was executed in, on or through
the facilities of a designated off-shore securities market and neither
we nor any person acting on our behalf knows that the transaction has
been pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United
States in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
D-1
<PAGE>
(5) we have advised the transferee of the transfer restrictions
applicable to the Notes.
You, the Issuer and counsel for the Issuer are entitled to rely upon this
letter and are irrevocably authorized to produce this letter or a copy hereof to
any interested party in any administrative or legal proceedings or official
inquiry with respect to the matters covered hereby. Terms used in this
certificate have the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:_________________
Authorized Signature
D-2
<PAGE>
EXHIBIT F-1
SECOND AMENDED AND RESTATED
GUARANTY
Reference is made to (i) the Indenture dated as of February 13, 1997
(the "Indenture") between CCA Holdings Corp. ("CCA") and Harris Trust and
Savings Bank, as trustee, and (ii) the Amended and Restated Guaranty dated
November 15, 1996 (the "Predecessor Guaranty") issued by CCA Acquisition Corp.,
a Delaware corporation (the "Guarantor") for the benefit of HC Crown Corp. ("HC
Crown") pursuant to the Amended and Restated HC Crown Loan Agreement between CCA
and HC Crown dated as of November 15, 1996 (the "Loan Agreement"). Pursuant to
Article XIV of the Indenture, for value received, the Guarantor for the benefit
of the holders of the Notes hereby irrevocably guarantees the prompt and
complete payment and performance when due, whether by acceleration or otherwise,
of the Notes, but subject in all cases to the terms of Article XIII of the
Indenture. Capitalized terms used and not defined herein shall have the
meanings assigned to them in the Indenture.
1. The Guarantor's obligations under this Guaranty shall be
unconditional, irrespective of the validity or enforceability of any other
provision of the Notes, but subject in all cases to the terms of Article XIII of
the Indenture and Sections 9 and 10 below.
2. This Guaranty is a guaranty of payment and shall remain in full
force and effect until all amounts payable by CCA under the Notes have been
validly, finally and irrevocably paid in full, and shall not be affected in any
way by the absence of any action to obtain such amounts from CCA or by any
variation, extension, waiver, compromise or release of any or all of the
obligations of CCA under the Notes or of any security from time to time
therefor. The Guarantor waives all requirements as to promptness, diligence,
presentment, demand for payment, protest and notice of any kind with respect to
the Notes.
3. This Guaranty shall not be affected by the occurrence of any
Event of Default or by any present or future action of any governmental
authority or court amending, varying, reducing or otherwise affecting, or
purporting to amend, vary, reduce or otherwise affect, any of the obligations of
CCA under the Notes or by any other circumstance (other than by complete,
irrevocable payment) that might otherwise constitute a legal or equitable
discharge or defense of a surety or a guarantor. If CCA merges or consolidates
with or into another entity, loses its separate legal identity or ceases to
exist,
F-1
<PAGE>
the Guarantor shall nonetheless continue to be liable for the payment of all
amounts payable by CCA under the Notes, but subject in all cases to the terms of
the Indenture.
4. This Guaranty shall remain in full force and effect or shall be
reinstated (as the case may be) if at any time any payment of CCA, in whole or
in part, is rescinded or must otherwise be returned by the Trustee upon the
insolvency, bankruptcy or reorganization of CCA or otherwise, all as though such
payment had not been made.
5. This Guaranty shall be binding on the Guarantor and its
successors and assigns and shall inure to the benefit of the holders of the
Notes and their respective successors and assigns, except that the Guarantor may
not delegate any obligations hereunder without the prior written consent of the
Trustee.
6. Any suit, action or proceeding against the Guarantor with respect
to this Guaranty or on any judgment entered by any court in respect thereof may
be brought in the Supreme Court of the State of New York, County of New York, or
in the United States District Court for the Southern District of New York and
the Guarantor submits to the nonexclusive jurisdiction of such courts for the
purpose of any such suit, action or proceeding or judgment.
7. The Guarantor hereby waives any right the Guarantor may have
to jury trial.
8. This Guaranty shall be governed by and interpreted and construed
in accordance with the law of the State of New York, without giving effect to
principles of conflicts of laws.
9. Notwithstanding anything contained herein which may be construed
to the contrary, no right or remedy shall be exercised against the Guarantor or
any of its successors or assigns hereunder on or prior to the CCE-I Credit
Facility Termination Date.
10. Notwithstanding anything contained herein which may be construed
to the contrary, any payments in respect of this Guaranty to be made by the
Guarantor shall only be serviced by (i) the proceeds of dividends or
distributions received, directly or indirectly, from any Restricted Subsidiary
of the Guarantor and (ii) any income directly generated by the Guarantor
(provided that for purposes of this clause (ii) only, "income directly generated
by the Guarantor" shall not
F-2
<PAGE>
include any dividends or distributions received from a Subsidiary of the
Guarantor).
11. Upon execution of this Guaranty and the Indenture, any and all
guaranties issued by the Guarantor (including, without limitation, the
Predecessor Guaranty) pursuant to the terms and conditions of the Loan Agreement
shall be null and void and any and all obligations with respect thereto shall
cease to be in effect.
F-3
<PAGE>
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be
executed by its duly authorized officer as of the 13th day of February, 1997.
CCA ACQUISITION CORP.
By:____________________________
Name: Kent Kalkwarf
Title: Senior Vice President
F-4
<PAGE>
EXHIBIT F-11
SECOND AMENDED AND RESTATED
GUARANTY
Reference is made to (i) the Indenture dated as of February 13, 1997
(the "Indenture") between CCA Holdings Corp. ("CCA") and Harris Trust and
Savings Bank, as trustee, and (ii) the Amended and Restated Guaranty dated
November 15, 1996 (the "Predecessor Guaranty") issued by Charter Communications
Entertainment, L.P., a Delaware partnership (the "Guarantor") for the benefit of
HC Crown Corp. ("HC Crown") pursuant to the Amended and Restated HC Crown Loan
Agreement between CCA and HC Crown dated as of November 15, 1996 (the "Loan
Agreement"). Pursuant to Article XIV of the Indenture, for value received, the
Guarantor for the benefit of the holders of the Notes hereby irrevocably
guarantees the prompt and complete payment and performance when due, whether by
acceleration or otherwise, of the Notes, but subject in all cases to the terms
of Article XIII of the Indenture. Capitalized terms used and not defined herein
shall have the meanings assigned to them in the Indenture.
1. The Guarantor's obligations under this Guaranty shall be
unconditional, irrespective of the validity or enforceability of any other
provision of the Notes, but subject in all cases to the terms of Article XIII of
the Indenture and Sections 9 and 10 below.
2. This Guaranty is a guaranty of payment and shall remain in full
force and effect until all amounts payable by CCA under the Notes have been
validly, finally and irrevocably paid in full, and shall not be affected in any
way by the absence of any action to obtain such amounts from CCA or by any
variation, extension, waiver, compromise or release of any or all of the
obligations of CCA under the Notes or of any security from time to time
therefor. The Guarantor waives all requirements as to promptness, diligence,
presentment, demand for payment, protest and notice of any kind with respect to
the Notes.
3. This Guaranty shall not be affected by the occurrence of any
Event of Default or by any present or future action of any governmental
authority or court amending, varying, reducing or otherwise affecting, or
purporting to amend, vary, reduce or otherwise affect, any of the obligations of
CCA under the Notes or by any other circumstance (other than by complete,
irrevocable payment) that might otherwise constitute a legal or equitable
discharge or defense of a surety or a guarantor. If CCA merges or consolidates
with or into another
F-5
<PAGE>
entity, loses its separate legal identity or ceases to exist, the Guarantor
shall nonetheless continue to be liable for the payment of all amounts payable
by CCA under the Notes, but subject in all cases to the terms of the Indenture.
4. This Guaranty shall remain in full force and effect or shall be
reinstated (as the case may be) if at any time any payment of CCA, in whole or
in part, is rescinded or must otherwise be returned by the Trustee upon the
insolvency, bankruptcy or reorganization of CCA or otherwise, all as though such
payment had not been made.
5. This Guaranty shall be binding on the Guarantor and its
successors and assigns and shall inure to the benefit of the holders of the
Notes and their respective successors and assigns, except that the Guarantor may
not delegate any obligation s hereunder without the prior written consent of the
Trustee.
6. Any suit, action or proceeding against the Guarantor with respect
to this Guaranty or on any judgment entered by any court in respect thereof may
be brought in the Supreme Court of the State of New York, County of New York, or
in the United States District Court for the Southern District of New York and
the Guarantor submits to the nonexclusive jurisdiction of such courts for the
purpose of any such suit, action or proceeding or judgment.
7. The Guarantor hereby waives any right the Guarantor may have to
jury trial.
8. This Guaranty shall be governed by and interpreted and construed
in accordance with the law of the State of New York, without giving effect to
principles of conflicts of laws.
9. Notwithstanding anything contained herein which may be construed
to the contrary, no right or remedy shall be exercised against the Guarantor or
any of its successors or assigns hereunder on or prior to the CCE-I Credit
Facility Termination Date, on or prior to the Tranche B Maturity Date under a
certain Credit Agreement dated as of September 29, 1995 among certain lenders
and Charter Communications Entertainment II, L.P., a subsidiary of the Guarantor
("CCE-II"), as amended by the First Amendment thereto dated as of February 29,
1996, by such lenders and Charter Communications Entertainment II, L.P., on or
prior to the indefeasible payment in full in cash and termination of any other
senior indebtedness of CCE-II or any senior indebtedness of any New CCE
Subsidiary (as defined in the Indenture) as each of the
F-6
<PAGE>
same may be amended, extended, renewed, restated, supplemented or otherwise
modified from time to time.
10. Notwithstanding anything contained herein which may be construed
to the contrary, any payments in respect of this Guaranty to be made by the
Guarantor shall only be serviced by (i) the proceeds of dividends or
distributions received, directly or indirectly, from any Restricted Subsidiary
of the Guarantor and (ii) any income directly generated by the Guarantor
(provided that for purposes of this clause (ii) only, "income directly generated
by the Guarantor" shall not include any dividends or distributions received from
a Subsidiary of the Guarantor, or payments of principal or interest by CCE-II to
the Guarantor in connection with the $25 million intercompany loan from the
Guarantor to CCE-II which is outstanding as of the date hereof).
11. Upon execution of this Guaranty and the Indenture, any and all
guaranties issued by the Guarantor (including, without limitation, the
Predecessor Guaranty) pursuant to the terms and conditions of the Loan Agreement
shall be null and void and any and all obligations with respect thereto shall
cease to be in effect.
F-7
<PAGE>
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be
executed by its duly authorized officer as of the 13th day of February, 1997.
CHARTER COMMUNICATIONS
ENTERTAINMENT, L.P.
By: CCA Acquisition Corp.,
a general partner
By:____________________________
Name: Kent Kalkwarf
Title: Senior Vice President
F-8
<PAGE>
EXHIBIT F-111
SECOND AMENDED AND RESTATED
GUARANTY
Reference is made to (i) the Indenture dated as of February 13, 1997
(the "Indenture") between CCA Holdings Corp. ("CCA") and Harris Trust and
Savings Bank, as trustee, and (ii) the Amended and Restated Guaranty dated
November 15, 1996 (the "Predecessor Guaranty") issued by Cencom Cable
Entertainment, Inc., a Delaware corporation (the "Guarantor") for the benefit of
HC Crown Corp. ("HC Crown") pursuant to the Amended and Restated HC Crown Loan
Agreement between CCA and HC Crown dated as of November 15, 1996 (the "Loan
Agreement"). Pursuant to Article XIV of the Indenture, for value received, the
Guarantor for the benefit of the holders of the Notes hereby irrevocably
guarantees the prompt and complete payment and performance when due, whether by
acceleration or otherwise, of the Notes, but subject in all cases to the terms
of Article XIII of the Indenture. Capitalized terms used and not defined herein
shall have the meanings assigned to them in the Indenture.
1. The Guarantor's obligations under this Guaranty shall be
unconditional, irrespective of the validity or enforceability of any other
provision of the Notes, but subject in all cases to the terms of Article XIII of
the Indenture and Sections 9 and 10 below.
2. This Guaranty is a guaranty of payment and shall remain in full
force and effect until all amounts payable by CCA under the Notes have been
validly, finally and irrevocably paid in full, and shall not be affected in any
way by the absence of any action to obtain such amounts from CCA or by any
variation, extension, waiver, compromise or release of any or all of the
obligations of CCA under the Notes or of any security from time to time
therefor. The Guarantor waives all requirements as to promptness, diligence,
presentment, demand for payment, protest and notice of any kind with respect to
the Notes.
3. This Guaranty shall not be affected by the occurrence of any
Event of Default or by any present or future action of any governmental
authority or court amending, varying, reducing or otherwise affecting, or
purporting to amend, vary, reduce or otherwise affect, any of the obligations of
CCA under the Notes or by any other circumstance (other than by complete,
irrevocable payment) that might otherwise constitute a legal or equitable
discharge or defense of a surety or a guarantor. If CCA merges or consolidates
with or into another
F-9
<PAGE>
entity, loses its separate legal identity or ceases to exist, the Guarantor
shall nonetheless continue to be liable for the payment of all amounts payable
by CCA under the Notes, but subject in all cases to the terms of the Indenture.
4. This Guaranty shall remain in full force and effect or shall be
reinstated (as the case may be) if at any time any payment of CCA, in whole or
in part, is rescinded or must otherwise be returned by the Trustee upon the
insolvency, bankruptcy or reorganization of CCA or otherwise, all as though such
payment had not been made.
5. This Guaranty shall be binding on the Guarantor and its
successors and assigns and shall inure to the benefit of the holders of the
Notes and their respective successors and assigns, except that the Guarantor may
not delegate any obligations hereunder without the prior written consent of the
Trustee.
6. Any suit, action or proceeding against the Guarantor with respect
to this Guaranty or on any judgment entered by any court in respect thereof may
be brought in the Supreme Court of the State of New York, County of New York, or
in the United States District Court for the Southern District of New York and
the Guarantor submits to the nonexclusive jurisdiction of such courts for the
purpose of any such suit, action or proceeding or judgment.
7. The Guarantor hereby waives any right the Guarantor may have to
jury trial.
8. This Guaranty shall be governed by and interpreted and construed
in accordance with the law of the State of New York, without giving effect to
principles of conflicts of laws.
9. Notwithstanding anything contained herein which may be construed
to the contrary, no right or remedy shall be exercised against the Guarantor or
any of its successors or assigns hereunder on or prior to the CCE-I Credit
Facility Termination Date.
10. Notwithstanding anything contained herein which may be construed
to the contrary, any payments in respect of this Guaranty to be made by the
Guarantor shall only be serviced by (i) the proceeds of dividends or
distributions received, directly or indirectly, from any Restricted Subsidiary
of the Guarantor and (ii) any income directly generated by the Guarantor
(provided that for purposes of this clause (ii) only, "income directly generated
by the Guarantor" shall not
F-10
<PAGE>
include any dividends or distributions received from a Subsidiary of the
Guarantor).
11. Upon execution of this Guaranty and the Indenture, any and all
guaranties issued by the Guarantor (including, without limitation, the
Predecessor Guaranty) pursuant to the terms and conditions of the Loan Agreement
shall be null and void and any and all obligations with respect thereto shall
cease to be in effect.
F-11
<PAGE>
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be
executed by its duly authorized officer as of the 13th day of February, 1997.
CENCOM CABLE ENTERTAINMENT, INC.
By:_____________________________
Name: Kent Kalkwarf
Title: Senior Vice President
F-12
<PAGE>
EXHIBIT F-IV
FORM OF NEW RESTRICTED SUBSIDIARY GUARANTY
Reference is made to the Indenture dated as of February 13, 1997 (the
"Indenture") between CCA Holdings Corp. ("CCA") and Harris Trust and Savings
Bank (the "Trustee"), as trustee for the holders of the Notes (as defined in the
Indenture). Pursuant to Article XIV of the Indenture, for value received,
____________ (the "Guarantor") for the benefit of the holders of the Notes
hereby irrevocably guarantees the prompt and complete payment and performance
when due, whether by acceleration or otherwise, of the Notes, but subject in all
cases to the terms of Article XIII of the Indenture. Except as otherwise
provided in this Guaranty, capitalized terms defined in the Indenture shall have
the same respective meanings in this Guaranty.
1. The Guarantor's obligations under this Guaranty shall be
unconditional, irrespective of the validity or enforceability of any other
provision of the Notes, but subject in all cases to the terms of Article XIII of
Indenture and Section 9.
2. This Guaranty is a guaranty of payment and shall remain in full
force and effect until all amounts payable by CCA under the Notes have been
validly, finally and irrevocably paid in full, and shall not be affected in any
way by the absence of any action to obtain such amounts from CCA or by any
variation, extension, waiver, compromise or release of any or all of the
obligations of CCA under the Notes or of any security from time to time
therefor. The Guarantor waives all requirements as to promptness, diligence,
presentment, demand for payment, protest and notice of any kind with respect to
the Notes.
3. This Guaranty shall not be affected by the occurrence of any
Event of Default or by any present or future action of any governmental
authority or court amending, varying, reducing or otherwise affecting, or
purporting to amend, vary, reduce or otherwise affect, any of the obligations of
CCA under the Notes or by any other circumstance (other than by complete,
irrevocable payment) that might otherwise constitute a legal or equitable
discharge or defense of a surety or a guarantor. If CCA merges or consolidates
with or into another entity, loses its separate legal identity or ceases to
exist, the Guarantor shall nonetheless continue to be liable for the payment of
all amounts payable by CCA under the Notes, but
F-13
<PAGE>
subject in all cases to the terms of Article XIII of the Indenture.
4. This Guaranty shall remain in full force and effect or shall be
reinstated (as the case may be) if at any time any payment of CCA, in whole or
in part, is rescinded or must otherwise be returned by the Trustee upon the
insolvency, bankruptcy or reorganization of CCA or otherwise, all as though such
payment had not been made.
5. This Guaranty shall be binding on the Guarantor and its
successors and assigns and shall inure to the benefit of the holders of the
Notes and their respective successors and assigns, except that the Guarantor may
not delegate any obligations hereunder without the prior written consent of the
Trustee.
6. Any suit, action or proceeding against the Guarantor with respect
to this Guaranty or on any judgment entered by any court in respect thereof may
be brought in the Supreme Court of the State of New York, County of New York, or
in the United States District Court for the Southern District of New York and
the Guarantor submits to the nonexclusive jurisdiction of such courts for the
purpose of any such suit, action or proceeding or judgment.
7. The Guarantor hereby waives any right the Guarantor may have
to jury trial.
8. This Guaranty shall be governed by and interpreted and construed
in accordance with the law of the State of New York, without giving effect to
principles of conflicts of laws.
9. Notwithstanding anything contained herein which may be construed
to the contrary, any payments in respect of this Guaranty to be made by the
Guarantor shall be limited to funds that are (i) the proceeds of dividends or
distributions received, directly or indirectly, from any Restricted Subsidiary
of the Guarantor and (ii) income directly generated by the Guarantor (provided
that for purposes of this clause (ii) only, "income directly generated by the
Guarantor" shall not include any dividends or distributions received from a
Subsidiary of the Guarantor).
F-14
<PAGE>
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be
executed by its duly authorized officer as of the ____ day of ________, ____.
____________________________
By:__________________________
Name:
Title:
F-15
<PAGE>
EXHIBIT 4.2
SECOND AMENDED AND RESTATED
GUARANTY
Reference is made to (i) the Indenture dated as of February 13, 1997 (the
"Indenture") between CCA Holdings Corp. ("CCA") and Harris Trust and Savings
Bank, as trustee, and (ii) the Amended and Restated Guaranty dated November 15,
1996 (the "Predecessor Guaranty") issued by CCA Acquisition Corp., a Delaware
corporation (the "Guarantor") for the benefit of HC Crown Corp. ("HC Crown")
pursuant to the Amended and Restated HC Crown Loan Agreement between CCA and HC
Crown dated as of November 15, 1996 (the "Loan Agreement"). Pursuant to Article
XIV of the Indenture, for value received, the Guarantor for the benefit of the
holders of the Notes hereby irrevocably guarantees the prompt and complete
payment and performance when due, whether by acceleration or otherwise, of the
Notes, but subject in all cases to the terms of Article XIII of the Indenture.
Capitalized terms used and not defined herein shall have the meanings assigned
to them in the Indenture.
1. The Guarantor's obligations under this Guaranty shall be unconditional,
irrespective of the validity or enforceability of any other provision of the
Notes, but subject in all cases to the terms of Article XIII of the Indenture
and Sections 9 and 10 below.
2. This Guaranty is a guaranty of payment and shall remain in full force
and effect until all amounts payable by CCA under the Notes have been validly,
finally and irrevocably paid in full, and shall not be affected in any way by
the absence of any action to obtain such amounts from CCA or by any variation,
extension, waiver, compromise or release of any or all of the obligations of CCA
under the Notes or of any security from time to time therefor. The Guarantor
waives all requirements as to promptness, diligence, presentment, demand for
payment, protest and notice of any kind with respect to the Notes.
3. This Guaranty shall not be affected by the occurrence of any Event of
Default or by any present or future action of any governmental authority or
court amending, varying, reducing or otherwise affecting, or purporting to
amend, vary, reduce or otherwise affect, any of the obligations of CCA under the
Notes or by any other circumstance (other than by complete, irrevocable payment)
that might otherwise constitute a legal or equitable discharge or defense of a
surety or a guarantor. If CCA merges or consolidates with or into another
entity, loses its separate legal identity or ceases to exist, the Guarantor
shall nonetheless continue to be liable for the
F-1
<PAGE>
payment of all amounts payable by CCA under the Notes, but subject in all cases
to the terms of the Indenture.
4. This Guaranty shall remain in full force and effect or shall be
reinstated (as the case may be) if at any time any payment of CCA, in whole or
in part, is rescinded or must otherwise be returned by the Trustee upon the
insolvency, bankruptcy or reorganization of CCA or otherwise, all as though such
payment had not been made.
5. This Guaranty shall be binding on the Guarantor and its successors and
assigns and shall inure to the benefit of the holders of the Notes and their
respective successors and assigns, except that the Guarantor may not delegate
any obligations hereunder without the prior written consent of the Trustee.
6. Any suit, action or proceeding against the Guarantor with respect to
this Guaranty or on any judgment entered by any court in respect thereof may be
brought in the Supreme Court of the State of New York, County of New York, or in
the United States District Court for the Southern District of New York and the
Guarantor submits to the nonexclusive jurisdiction of such courts for the
purpose of any such suit, action or proceeding or judgment.
7. The Guarantor hereby waives any right the Guarantor may have to jury
trial.
8. This Guaranty shall be governed by and interpreted and construed in
accordance with the law of the State of New York, without giving effect to
principles of conflicts of laws.
9. Notwithstanding anything contained herein which may be construed to the
contrary, no right or remedy shall be exercised against the Guarantor or any of
its successors or assigns hereunder on or prior to the CCE-I Credit Facility
Termination Date.
10. Notwithstanding anything contained herein which may be construed to
the contrary, any payments in respect of this Guaranty to be made by the
Guarantor shall only be serviced by (i) the proceeds of dividends or
distributions received, directly or indirectly, from any Restricted Subsidiary
of the Guarantor and (ii) any income directly generated by the Guarantor
(provided that for purposes of this clause (ii) only, "income directly generated
by the Guarantor" shall not include any dividends or distributions received from
a Subsidiary of the Guarantor).
F-2
<PAGE>
11. Upon execution of this Guaranty and the Indenture, any and all
guaranties issued by the Guarantor (including, without limitation, the
Predecessor Guaranty) pursuant to the terms and conditions of the Loan Agreement
shall be null and void and any and all obligations with respect thereto shall
cease to be in effect.
F-3
<PAGE>
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be executed
by its duly authorized officer as of the 13th day of February, 1997.
CCA ACQUISITION CORP.
By: /s/ Kent Kalkwarf
----------------------------
Name: Kent Kalkwarf
Title: Senior Vice President
F-4
<PAGE>
EXHIBIT 4.3
SECOND AMENDED AND RESTATED
GUARANTY
Reference is made to (i) the Indenture dated as of February 13, 1997 (the
"Indenture") between CCA Holdings Corp. ("CCA") and Harris Trust and Savings
Bank, as trustee, and (ii) the Amended and Restated Guaranty dated November 15,
1996 (the "Predecessor Guaranty") issued by Charter Communications
Entertainment, L.P., a Delaware partnership (the "Guarantor") for the benefit of
HC Crown Corp. ("HC Crown") pursuant to the Amended and Restated HC Crown Loan
Agreement between CCA and HC Crown dated as of November 15, 1996 (the "Loan
Agreement"). Pursuant to Article XIV of the Indenture, for value received, the
Guarantor for the benefit of the holders of the Notes hereby irrevocably
guarantees the prompt and complete payment and performance when due, whether by
acceleration or otherwise, of the Notes, but subject in all cases to the terms
of Article XIII of the Indenture. Capitalized terms used and not defined herein
shall have the meanings assigned to them in the Indenture.
1. The Guarantor's obligations under this Guaranty shall be unconditional,
irrespective of the validity or enforceability of any other provision of the
Notes, but subject in all cases to the terms of Article XIII of the Indenture
and Sections 9 and 10 below.
2. This Guaranty is a guaranty of payment and shall remain in full force
and effect until all amounts payable by CCA under the Notes have been validly,
finally and irrevocably paid in full, and shall not be affected in any way by
the absence of any action to obtain such amounts from CCA or by any variation,
extension, waiver, compromise or release of any or all of the obligations of CCA
under the Notes or of any security from time to time therefor. The Guarantor
waives all requirements as to promptness, diligence, presentment, demand for
payment, protest and notice of any kind with respect to the Notes.
3. This Guaranty shall not be affected by the occurrence of any Event of
Default or by any present or future action of any governmental authority or
court amending, varying, reducing or otherwise affecting, or purporting to
amend, vary, reduce or otherwise affect, any of the obligations of CCA under the
Notes or by any other circumstance (other than by complete, irrevocable payment)
that might otherwise constitute a legal or equitable
discharge or defense of a surety or a guarantor. If CCA merges or consolidates
with or into another entity, loses its separate legal identity or ceases to
exist, the Guarantor shall nonetheless continue to be liable for the
F-5
<PAGE>
payment of all amounts payable by CCA under the Notes, but subject in all cases
to the terms of the Indenture.
4. This Guaranty shall remain in full force and effect or shall be
reinstated (as the case may be) if at any time any payment of CCA, in whole or
in part, is rescinded or must otherwise be returned by the Trustee upon the
insolvency, bankruptcy or reorganization of CCA or otherwise, all as though such
payment had not been made.
5. This Guaranty shall be binding on the Guarantor and its successors and
assigns and shall inure to the benefit of the holders of the Notes and their
respective successors and assigns, except that the Guarantor may not delegate
any obligations hereunder without the prior written consent of the Trustee.
6. Any suit, action or proceeding against the Guarantor with respect to
this Guaranty or on any judgment entered by any court in respect thereof may be
brought in the Supreme Court of the State of New York, County of New York, or in
the United States District Court for the Southern District of New York and the
Guarantor submits to the nonexclusive jurisdiction of such courts for the
purpose of any such suit, action or proceeding or judgment.
7. The Guarantor hereby waives any right the Guarantor may have to jury
trial.
8. This Guaranty shall be governed by and interpreted and construed in
accordance with the law of the State of New York, without giving effect to
principles of conflicts of laws.
9. Notwithstanding anything contained herein which may be construed to the
contrary, no right or remedy shall be exercised against the Guarantor or any of
its successors or assigns hereunder on or prior to the CCE-I Credit Facility
Termination Date, on or prior to the Tranche B Maturity Date under a certain
Credit Agreement dated as of September 29, 1995 among certain lenders and
Charter Communications Entertainment II, L.P., a subsidiary of the Guarantor
("CCE-II"), as amended by the First Amendment thereto dated as of February 29,
1996, by such lenders and Charter Communications Entertainment II, L.P., on or
prior to the indefeasible payment in full in cash and termination of any other
senior indebtedness of CCE-II or any senior indebtedness of any New CCE
Subsidiary (as defined in the Indenture) as each of the same may be amended,
extended, renewed, restated, supplemented or otherwise modified from time to
time.
F-6
<PAGE>
10. Notwithstanding anything contained herein which may be construed to
the contrary, any payments in respect of this Guaranty to be made by the
Guarantor shall only be serviced by (i) the proceeds of dividends or
distributions received, directly or indirectly, from any Restricted Subsidiary
of the Guarantor and (ii) any income directly generated by the Guarantor
(provided that for purposes of this clause (ii) only, "income directly generated
by the Guarantor" shall not include any dividends or distributions received from
a Subsidiary of the Guarantor, or payments of principal or interest by CCE-II to
the Guarantor in connection with the $25 million intercompany loan from the
Guarantor to CCE-II which is outstanding as of the date hereof).
11. Upon execution of this Guaranty and the Indenture, any and all
guaranties issued by the Guarantor (including, without limitation, the
Predecessor Guaranty) pursuant to the terms and conditions of the Loan Agreement
shall be null and void and any and all obligations with respect thereto shall
cease to be in effect.
F-7
<PAGE>
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be executed
by its duly authorized officer as of the 13th day of February, 1997.
CHARTER COMMUNICATIONS
ENTERTAINMENT, L.P.
By: CCA Acquisition Corp.,
a general partner
By: /s/ Kent Kalkwarf
----------------------------
Name: Kent Kalkwarf
Title: Senior Vice President
F-8
<PAGE>
EXHIBIT 4.4
SECOND AMENDED AND RESTATED
GUARANTY
Reference is made to (i) the Indenture dated as of February 13, 1997 (the
"Indenture") between CCA Holdings Corp. ("CCA") and Harris Trust and Savings
Bank, as trustee, and (ii) the Amended and Restated Guaranty dated November 15,
1996 (the "Predecessor Guaranty") issued by Cencom Cable Entertainment, Inc., a
Delaware corporation (the "Guarantor") for the benefit of HC Crown Corp. ("HC
Crown") pursuant to the Amended and Restated HC Crown Loan Agreement between CCA
and HC Crown dated as of November 15, 1996 (the "Loan Agreement"). Pursuant to
Article XIV of the Indenture, for value received, the Guarantor for the benefit
of the holders of the Notes hereby irrevocably guarantees the prompt and
complete payment and performance when due, whether by acceleration or otherwise,
of the Notes, but subject in all cases to the terms of Article XIII of the
Indenture. Capitalized terms used and not defined herein shall have the
meanings assigned to them in the Indenture.
1. The Guarantor's obligations under this Guaranty shall be unconditional,
irrespective of the validity or enforceability of any other provision of the
Notes, but subject in all cases to the terms of Article XIII of the Indenture
and Sections 9 and 10 below.
2. This Guaranty is a guaranty of payment and shall remain in full force
and effect until all amounts payable by CCA under the Notes have been validly,
finally and irrevocably paid in full, and shall not be affected in any way by
the absence of any action to obtain such amounts from CCA or by any variation,
extension, waiver, compromise or release of any or all of the obligations of CCA
under the Notes or of any security from time to time therefor. The Guarantor
waives all requirements as to promptness, diligence, presentment, demand for
payment, protest and notice of any kind with respect to the Notes.
3. This Guaranty shall not be affected by the occurrence of any Event of
Default or by any present or future action of any governmental authority or
court amending, varying, reducing or otherwise affecting, or purporting to
amend, vary, reduce or otherwise affect, any of the obligations of CCA under the
Notes or by any other circumstance (other than by complete, irrevocable payment)
that might otherwise constitute a legal or equitable discharge or defense of a
surety or a guarantor. If CCA merges or consolidates with or into another
entity, loses its separate legal identity or ceases to exist, the Guarantor
shall nonetheless continue to be liable for the
F-9
<PAGE>
payment of all amounts payable by CCA under the Notes, but subject in all cases
to the terms of the Indenture.
4. This Guaranty shall remain in full force and effect or shall be
reinstated (as the case may be) if at any time any payment of CCA, in whole or
in part, is rescinded or must otherwise be returned by the Trustee upon the
insolvency, bankruptcy or reorganization of CCA or otherwise, all as though such
payment had not been made.
5. This Guaranty shall be binding on the Guarantor and its successors and
assigns and shall inure to the benefit of the holders of the Notes and their
respective successors and assigns, except that the Guarantor may not delegate
any obligations hereunder without the prior written consent of the Trustee.
6. Any suit, action or proceeding against the Guarantor with respect to
this Guaranty or on any judgment entered by any court in respect thereof may be
brought in the Supreme Court of the State of New York, County of New York, or in
the United States District Court for the Southern District of New York and the
Guarantor submits to the nonexclusive jurisdiction of such courts for the
purpose of any such suit, action or proceeding or judgment.
7. The Guarantor hereby waives any right the Guarantor may have to jury
trial.
8. This Guaranty shall be governed by and interpreted and construed in
accordance with the law of the State of New York, without giving effect to
principles of conflicts of laws.
9. Notwithstanding anything contained herein which may be construed to the
contrary, no right or remedy shall be exercised against the Guarantor or any of
its successors or assigns hereunder on or prior to the CCE-I Credit Facility
Termination Date.
10. Notwithstanding anything contained herein which may be construed to
the contrary, any payments in respect of this Guaranty to be made by the
Guarantor shall only be serviced by (i) the proceeds of dividends or
distributions received, directly or indirectly, from any Restricted Subsidiary
of the Guarantor and (ii) any income directly generated by the Guarantor
(provided that for purposes of this clause (ii) only, "income directly generated
by the Guarantor" shall not include any dividends or distributions received from
a Subsidiary of the Guarantor).
F-10
<PAGE>
11. Upon execution of this Guaranty and the Indenture, any and all
guaranties issued by the Guarantor (including, without limitation, the
Predecessor Guaranty) pursuant to the terms and conditions of the Loan Agreement
shall be null and void and any and all obligations with respect thereto shall
cease to be in effect.
F-11
<PAGE>
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be executed
by its duly authorized officer as of the 13th day of February, 1997.
CENCOM CABLE ENTERTAINMENT, INC.
By: /s/ Kent Kalwarf
---------------------------
Name: Kent Kalkwarf
Title: Senior Vice President
F-12
<PAGE>
EXHIBIT 4.5
SECOND AMENDED AND RESTATED SUBORDINATION AGREEMENT
SECOND AMENDED AND RESTATED SUBORDINATION AGREEMENT, dated as of
February 13, 1997 (this "Agreement"), made by Harris Trust and Savings Bank (the
"Trustee"), in its capacity as trustee for, and on behalf of, the Subordinated
Bondholders (as herein defined), and CCA Holdings Corp., a Delaware corporation
(the "Parent Company Borrower"), in favor of Toronto Dominion (Texas), Inc., The
Chase Manhattan Bank (formerly Chemical Bank), CIBC Inc., Credit Lyonnais Cayman
Island Branch, NationsBank, N.A., Banque Paribas, Union Bank of California, N.A.
(formerly Union Bank), Corestates Bank, N.A., The Long-Term Credit Bank of
Japan, Ltd., Mercantile Bank of St. Louis National Association, Fleet Bank,
N.A., First National Bank of Maryland, Van Kampen American Capital Prime Rate
Income Trust, Banque Francaise du Commerce Exterieur, Prime Income Trust, Senior
Debt Portfolio, Aeries Finance Ltd., ING Capital Advisors, Inc., ABN AMRO Bank
N.V., Societe Generale, The First National Bank of Boston, Captiva Finance Ltd.,
Banque Nationale de Paris, The Sumitomo Bank, Limited, Chicago Branch, Chase
Securities, Inc., and The ING Capital Senior Secured High Income Fund, L.P.
(together with any financial institution which subsequently becomes a "Bank"
under the Credit Agreement, as such term is defined therein, the "Lenders"),
Toronto Dominion (Texas), Inc. and The Chase Manhattan Bank (formerly Chemical
Bank), as Documentation Agents (the "Documentation Agents"), Toronto Dominion
(Texas), Inc., The Chase Manhattan Bank (formerly Chemical Bank), CIBC Inc.,
Credit Lyonnais Cayman Island Branch, and NationsBank, N.A., as Managing Agents
(the "Managing Agents"), Banque Paribas, Union Bank of California, N.A.
(formerly Union Bank), ABN AMRO Bank N.V., Societe Generale, Fleet Bank, N.A.,
CoreStates Bank, N.A., and The First National Bank of Boston, as Co-Agents (the
"Co-Agents"), and Toronto Dominion (Texas), Inc., as Administrative Agent for
the Documentation Agents, the Managing Agents, the Co-Agents and the Lenders
(the "Administrative Agent" and, collectively with the Documentation Agents, the
Managing Agents and the Co-Agents, the "Agents"). References to the "Trustee"
herein are to the Trustee in its capacity as trustee for the Subordinated
Bondholders; provided, however, the Trustee shall have no responsibility for,
nor liability with respect to, any breach of the provisions of this Agreement by
any Subordinated Bondholders.
RECITALS
--------
(1) The Agents and the Lenders have entered into a Loan Agreement
dated as of January 18, 1995 and such Loan
<PAGE>
Agreement was amended and restated by the Agents and the Lenders as of September
29, 1995 (as such amended and restated Loan Agreement may hereafter be amended,
extended, renewed, restated, supplemented or otherwise modified from time to
time, the "Credit Agreement") with Charter Communications Entertainment I, L.P.,
a Delaware limited partnership (the "Subsidiary Borrower"), an indirect
Subsidiary of the Parent Company Borrower. Capitalized terms used herein which
are defined in the Credit Agreement and not otherwise defined or limited herein
are used herein as therein defined.
(2) The Parent Company Borrower was indebted to H C Crown Corp., a
Delaware corporation (the "Predecessor Subordinated Creditor") in an aggregate
principal amount of approximately $82,000,000, as evidenced by that certain
Senior Subordinated Loan Agreement dated as of January 18, 1995 (the "Original
Crown Loan Agreement"), as such Senior Subordinated Loan Agreement was amended
and restated by the parties thereto as of November 15, 1996 (as such Senior
Subordinated Loan Agreement was so amended and restated, the "Predecessor Loan
Agreement") between the Parent Company Borrower and the Predecessor Subordinated
Creditor, and all Senior Subordinated Notes or other promissory notes issued
pursuant thereto. CCA Acquisition Corp. ("CAC"), Cencom Cable Entertainment,
Inc. ("Cencom") and Charter Communications Entertainment, L.P. ("CCE")
guaranteed the obligations of the Parent Company Borrower under the Original
Crown Loan Agreement pursuant to guarantees dated as of January 18, 1995, as
amended and restated by the parties thereto as of November 15, 1996 (the
"Predecessor Guarantees"). All indebtedness and other obligations of the Parent
Company Borrower or any of its Subsidiaries to the Predecessor Subordinated
Creditor then or thereafter existing and arising in respect of the Subordinated
Debt Documents (as such term was defined in the Predecessor Loan Agreement)
(whether created directly or acquired by assignment or otherwise), and interest,
fees, premiums, if any, thereon and other amounts payable in respect thereof or
in connection therewith are hereinafter referred to as the "Predecessor
Subordinated Debt".
(3) As a restatement of the Predecessor Subordinated Debt, at the
demand of the Predecessor Subordinated Creditor, the Parent Company Borrower is
to duly authorize the creation of an issue of Series A 13% Senior Subordinated
Notes due 1999 (the "Initial Subordinated Notes") and Series B 13% Senior
Subordinated Notes due 1999 (the "Exchange Subordinated Notes" and
-2-
<PAGE>
together with the Initial Subordinated Notes, the "Subordinated Notes") as of
the date hereof. Upon the issuance of the Subordinated Notes, the Predecessor
Subordinated Creditor shall sell all or a portion thereof to Furman Selz LLC as
placement agent who will, in turn, sell such Notes to individual institutional
investors (as holders of the Subordinated Notes, the Predecessor Subordinated
Creditor, such institutional investors and their respective successors and
assigns are referred to herein collectively as the "Subordinated Bondholders"),
and the Parent Company Borrower is to enter into an indenture dated as of
February 13, 1997 with the Trustee, as trustee for the Subordinated Bondholders
(as amended, extended, renewed, restated, supplemented or otherwise modified
from time to time, the "Indenture" and the Indenture and the Subordinated Notes
are collectively referred to herein as the "Subordinated Debt Documents").
Further, in connection therewith the Predecessor Guarantees are being amended
and restated as of the date hereof in the forms of Exhibits F-I, F-II and F-III
attached to the Indenture. All indebtedness and other obligations of the Parent
Company Borrower or any of its Subsidiaries to the Subordinated Bondholders now
or hereafter existing and arising in respect of the Subordinated Debt Documents
(whether created directly or acquired by assignment or otherwise), and interest,
fees and premiums, if any, thereon and other amounts payable in respect thereof
or in connection therewith, are hereinafter referred to as the "Subordinated
Debt".
(4) The Predecessor Subordinated Debt was subject to the terms of
that certain Subordination Agreement dated as of January 18, 1995, as such
Subordination Agreement was amended and restated as of November 15, 1996 (as
such Subordination Agreement was so amended and restated, the "Predecessor
Subordination Agreement"). Concurrently with the amending and restating of the
Predecessor Loan Agreement, and in conjunction with the execution of the
Indenture and the issuance of the Subordinated Notes, the Predecessor
Subordination Agreement is being amended and restated by the terms hereof to
document the continued subordination of the Subordinated Debt.
(5) The Trustee is entering into this Agreement pursuant to Section
13.02(b) of the Indenture and at the direction of the Subordinated Bondholders.
(6) The Administrative Agent is entering into this Agreement pursuant
to Section 2(b) of the Sixth
-3-
<PAGE>
Amendment to Loan Agreement dated as of February 7, 1997 and at the direction of
the Lenders.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Lenders to make Advances under the Credit Agreement, the Trustee and
the Parent Company Borrower each hereby agrees as follows:
SECTION 1. Agreement to Subordinate. The Trustee acknowledges that
------------------------
the Indenture provides, and the Parent Company Borrower agrees, that the
Subordinated Debt is and shall be subordinate, to the extent and in the manner
hereinafter set forth, to the prior payment in full of all obligations of the
Subsidiary Borrower now or hereafter existing under the Credit Agreement, the
Notes and the other Loan Documents, whether for principal, interest (including,
without limitation, interest accruing after the filing of a petition initiating
any Bankruptcy Proceeding, as such term is defined in Section 3(a) hereof,
whether or not such interest accrues after the filing of such petition for
purposes of the Federal Bankruptcy Code or is an allowed claim in such
proceeding), fees, expenses or otherwise (collectively, the "Obligations"). For
the purposes of this Agreement, the Obligations shall not be deemed to have been
paid in full until all Commitments under the Credit Agreement shall have been
terminated and the Agents and the Lenders shall have received indefeasible
payment of the Obligations in full in cash.
SECTION 2. No Payment on the Subordinated Debt.
-----------------------------------
(a) No payment (including any payment that may be payable by reason
of any other indebtedness of the Parent Company Borrower or any of its
Subsidiaries being subordinated to payment of the Subordinated Debt) shall be
made by or for the account of the Parent Company Borrower or any of its
Subsidiaries for or on account of any Subordinated Debt, unless and until the
Trustee shall have received written notice from the Parent Company Borrower,
acknowledged by the Administrative Agent, that the Obligations have been paid in
full; provided, however, that prior to the receipt of any such written notice,
the Trustee, subject to the terms of this Section 2, shall be entitled in all
respects to assume that no such facts exist.
(b) The Trustee shall not take or receive from or for the account of
the Parent Company Borrower or any of its Subsidiaries, directly or indirectly,
in cash or other property or by set-off or in any other manner, including,
-4-
<PAGE>
without limitation, from or by way of collateral, payment of all or any of the
Subordinated Debt, unless and until the Trustee shall have received written
notice from the Parent Company Borrower, acknowledged by the Administrative
Agent, that the Obligations have been paid in full; provided, however, that
prior to the receipt of any such written notice, the Trustee, subject to the
terms of this Section 2, shall be entitled in all respects to assume that no
such facts exist.
(c) The Trustee shall be entitled to rely on the delivery to it of
written notice(s) to the Trustee by a senior officer of the Parent Company
Borrower acknowledged by a senior officer of the Administrative Agent.
SECTION 3. In Furtherance of Subordination. The Trustee agrees as
-------------------------------
follows:
(a) In the event of any dissolution, winding up, liquidation,
arrangement, reorganization, adjustment, protection, relief or composition of
the Parent Company Borrower or any of its Subsidiaries or its respective debts,
whether voluntary or involuntary, in any bankruptcy, insolvency, arrangement,
reorganization, receivership, relief or other similar case or proceeding under
any Federal or state bankruptcy or similar law or upon an assignment for the
benefit of creditors or any other marshalling of the assets and liabilities of
the Parent Company Borrower or any such Subsidiary (each, a "Bankruptcy
Proceeding") or otherwise:
(i) The Administrative Agent is hereby irrevocably authorized
and empowered (in its own name or in the name of the Trustee or
otherwise), but shall have no obligation, (A) to demand, sue for,
collect and receive every payment or distribution of any kind (whether
in cash, property or securities) that otherwise would be payable or
deliverable upon or with respect to the Subordinated Debt in any such
case, proceeding, assignment, marshalling or otherwise (including any
payment that may be payable by reason of any other indebtedness of the
Parent Company Borrower or any such Subsidiary being subordinated to
payment of the Subordinated Debt) and give acquittance therefor and
(B) to file claims and proofs of claim and take such other action
(including, without limitation, voting the Subordinated Debt or
enforcing any security
-5-
<PAGE>
interest or other lien securing payment of the Subordinated Debt) as
it may deem necessary or advisable for the exercise or enforcement of
any of the rights or interests of the Agents and the Lenders
hereunder, and the Administrative Agent is hereby irrevocably
appointed as the Trustee's attorney-in-fact with full power of
substitution for such purposes, so long as such Bankruptcy Proceeding
is related to or affiliated with, in any manner whatsoever, any
Subsidiary of the Parent Company Borrower or any Bankruptcy Proceeding
involving any Subsidiary of the Parent Company Borrower.
Notwithstanding the foregoing, the Trustee shall be entitled to itself
file claims and proofs of claim with respect to the Subordinated Debt
and to vote the Subordinated Debt in the event of any Bankruptcy
Proceeding with respect to the Parent Company Borrower only, so long
as such Bankruptcy Proceeding is in no way related to or affiliated
with any Bankruptcy Proceeding with respect to any Subsidiary of the
Parent Company Borrower.
(ii) The Trustee shall duly and promptly take such action as the
Administrative Agent may request (A) to collect the Subordinated Debt
for the account of the Agents and the Lenders and, to the extent any
Bankruptcy Proceeding is related to or affiliated with, in any manner
whatsoever, a Bankruptcy Proceeding with respect to any Subsidiary of
the Parent Company Borrower, to file appropriate claims or proofs of
claim in respect of the Subordinated Debt, (B) to execute and deliver
to the Administrative Agent such powers of attorney, assignments, or
other instruments as the Administrative Agent may request in order to
enforce any and all claims with respect to, and any security interests
and other liens securing payment of, the Subordinated Debt, and (C) to
collect and receive any and all payments or distributions which may be
payable or deliverable upon or with respect to the Subordinated Debt.
(b) All payments or distributions upon or with respect to the
Subordinated Debt which are received by the Trustee contrary to the provisions
of this Agreement shall be received in trust for the benefit of the Agents and
the Lenders, shall be segregated from other funds and property held by the
Trustee and shall be forthwith paid over to the
-6-
<PAGE>
Administrative Agent in the same form as so received (with any necessary
endorsement or assignment necessary to effect a transfer) to be applied (in the
case of cash) to, or held as collateral (in the case of non-cash property or
securities) for, the payment or prepayment of the Obligations in accordance with
the terms of the Credit Agreement.
(c) The Trustee acknowledges that the Indenture provides that the
Subordinated Debt at all times shall be unsecured and shall not be supported by
any guaranty by any Subsidiary of the Parent Company Borrower, and, further,
that if at any time the Trustee is in possession of any assets of the Parent
Company Borrower or any of its Subsidiaries or any assets constituting
collateral for the Obligations prior to the payment in full of the Obligations,
the Trustee shall hold such assets in trust for the benefit of the Agents and
the Lenders, segregated from other property held by the Trustee, and shall
deliver such assets to the Administrative Agent upon written request.
(d) The Administrative Agent is hereby authorized to demand specific
performance of this Agreement, whether or not the Parent Company Borrower shall
have complied with any of the provisions hereof applicable to it, at any time
when the Trustee shall have failed to comply with any of the provisions of this
Agreement applicable to it. The Trustee hereby irrevocably waives any defense
based on the adequacy of a remedy at law, which might be asserted as a bar to
such remedy of specific performance.
SECTION 4. No Commencement of Any Proceeding. The Trustee agrees
---------------------------------
that, until the earlier of (i) the Obligations having been paid in full or (ii)
January 18, 2019, the Trustee will not: (a) accelerate the maturity of all or
any of the Subordinated Debt and will not take, sue for, ask or demand from the
Parent Company Borrower or any of its Subsidiaries payment of all or any of the
Subordinated Debt; (b) exercise any rights or remedies against the Parent
Company Borrower or any of its Subsidiaries arising under or in connection with
the Subordinated Debt Documents or otherwise in respect of the Subordinated
Debt, other than as expressly set forth in Article XIII of the Indenture; or (c)
commence, or join with any creditor other than the Agents and the Lenders in
commencing, directly or indirectly cause the Parent Company Borrower or any such
Subsidiary to commence, or assist the Parent Company Borrower or any such
Subsidiary in commencing, any Bankruptcy Proceeding; provided, however,
-7-
<PAGE>
that in the event a Bankruptcy Proceeding is already in effect with respect to
the Subsidiary Borrower, the Trustee may commence or assist the Parent Company
Borrower in commencing a Bankruptcy Proceeding with respect to the Parent
Company Borrower as well.
SECTION 5. Rights of Subrogation. The Trustee agrees that no payment
---------------------
or distribution to any Agent or any Lender pursuant to the provisions of this
Agreement shall entitle the Trustee to exercise any right of subrogation in
respect thereof until the Obligations shall have been paid in full. The Trustee
agrees that the subordination provisions contained herein shall not be affected
by any action or failure to act by any Agent or any Lender which results, or may
result, in affecting, impairing or extinguishing any right of reimbursement or
subrogation or other right or remedy of the Trustee.
SECTION 6. Subordination Legend; Further Assurances. The Trustee
----------------------------------------
acknowledges that the Indenture provides and the Parent Company Borrower agrees
that it will cause each instrument evidencing Subordinated Debt to be endorsed
with the following legend:
"The indebtedness evidenced by this instrument is subordinated to the
prior payment in full of the Obligations (as defined in the Subordination
Agreement hereinafter referred to) pursuant to, and to the extent provided
in, the Second Amended and Restated the Subordination Agreement dated as of
February 13, 1997 by and between Harris Trust and Savings Bank, as trustee,
and CCA Holdings Corp., a Delaware corporation, in favor of Toronto
Dominion (Texas), Inc., The Chase Manhattan Bank (formerly Chemical Bank),
CIBC Inc., Credit Lyonnais Cayman Island Branch, NationsBank, N.A., Banque
Paribas, Union Bank of California, N.A. (formerly Union Bank), CoreStates
Bank, N.A., The Long-Term Credit Bank of Japan, Ltd., Mercantile Bank of
St. Louis National Association, Fleet Bank, N.A., First National Bank of
Maryland, Van Kampen American Capital Prime Rate Income Trust, Banque
Francaise du Commerce Exterieur, Prime Income Trust, Senior Debt Portfolio,
Aeries Finance Ltd., ING Capital Advisors, Inc., ABN AMRO Bank N.V.,
Societe Generale, The First National Bank of Boston, Captiva Finance, Ltd.,
Banque Nationale de Paris, The Sumitomo Bank, Limited, Chicago Branch,
Chase Securities, Inc. and The ING Capital Senior Secured High Income Fund,
L.P. (collectively, and together with their respective
-8-
<PAGE>
successors and assigns, the "Lenders"), Toronto Dominion (Texas), Inc. and
The Chase Manhattan Bank (formerly Chemical Bank), as Documentation Agents,
Toronto Dominion (Texas), Inc., The Chase Manhattan Bank (formerly Chemical
Bank), CIBC Inc., Credit Lyonnais Cayman Island Branch, and NationsBank,
N.A., as Managing Agents, Banque Paribas, Union Bank of California, N.A.
(formerly Union Bank), CoreStates Bank, N.A., Fleet Bank, N.A., ABN AMRO
Bank N.V., Societe Generale and The First National Bank of Boston, as Co-
Agents, and Toronto Dominion (Texas), Inc., as Administrative Agent, and
their respective successors and assigns."
The Parent Company Borrower will further mark, and cause each of its
Subsidiaries to mark, its books of account in such a manner as shall be
effective to give proper notice of the effect of this Agreement and will, in the
case of any Subordinated Debt which is not evidenced by any instrument, upon the
Administrative Agent's request, cause such Subordinated Debt to be evidenced by
an appropriate instrument or instruments endorsed with the above legend. The
Trustee and the Parent Company Borrower each will, at its expense and at any
time and from time to time, promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary or desirable,
or that the Administrative Agent may request, in order to protect any right or
interest granted or purported to be granted hereby or to enable the
Administrative Agent to exercise and enforce its rights and remedies hereunder.
SECTION 7. Agreements in Respect of Subordinated Debt.
------------------------------------------
(a) The Trustee will not:
(i) Cancel or otherwise discharge any of the Subordinated Debt
(except upon payment in full thereof paid to the Administrative Agent
as contemplated by Section 3(b) hereof), convert or exchange any of
the Subordinated Debt into or for any other indebtedness or equity
interest or subordinate any of the Subordinated Debt to any
indebtedness of the Parent Company Borrower or any of its Subsidiaries
other than the Obligations;
(ii) Permit the sale, assignment, pledge, encumbrance or other
disposition of any of the Subordinated Debt unless such sale,
-9-
<PAGE>
assignment, pledge, encumbrance or disposition (x) is to a Person or
entity other than the Parent Company Borrower or any of its
Subsidiaries or Affiliates, which Person or entity executes and
delivers to the Administrative Agent, immediately upon any such sale,
assignment, pledge, encumbrance or disposition, a Subordination
Agreement substantially in the form of this Agreement; and (y) any
such assignment or sale or other disposition is made with respect to a
principal amount of the Subordinated Debt of not less than $1,000,000;
or
(iii) Permit the terms of any of the Subordinated Debt or any
document relating thereto, including, without limitation, the
Subordinated Debt Documents, to be amended, modified or changed in any
respect without the prior written consent of all of the Lenders which
consent may be withheld in the sole discretion of any such Person;
provided, however, that the Trustee and the Parent Company Borrower
-------- -------
may amend, modify or change the terms of the Subordinated Debt or any
document relating thereto so long as such amendments, modifications or
changes are purely of an administrative nature or (1) extend the
maturity of principal due thereunder, (2) decrease the rate of
interest payable by the Parent Company Borrower thereunder, (3) modify
any reporting requirement or notice provisions contained therein, (4)
loosen any covenant of the Parent Company Borrower thereunder, or (5)
forgive any Indebtedness of the Parent Company Borrower arising
thereunder.
(b) The Trustee shall promptly notify the Administrative Agent in
writing of the occurrence of each and every default, event of default, or the
occurrence of any event which with the giving of notice or passage of time would
constitute a default or an event of default of which the Trustee has actual
knowledge in accordance with Section 6.03(i) of the Indenture (including, in any
event, a default under Section 5.01(a) or 5.01(b) of the Indenture)
(hereinafter, a "Default").
SECTION 8. Agreement by the Parent Company Borrower. The Parent
----------------------------------------
Company Borrower agrees that it will not make, and will not permit any of its
Subsidiaries to make, any payment of any of the Subordinated Debt, or take,
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<PAGE>
or permit any of its Subsidiaries to take, any other action, in contravention of
the provisions of this Agreement.
SECTION 9. Obligations Hereunder Not Affected. All rights and
----------------------------------
interests of the Agents and the Lenders hereunder, and all agreements and
obligations of the Trustee and the Parent Company Borrower under this Agreement,
shall remain in full force and effect irrespective of:
(i) any lack of validity or enforceability of the Credit
Agreement, the Notes, the Loan Documents or any other agreement or
instrument relating thereto;
(ii) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations, or any other
amendment or waiver of or any consent to any departure from the Credit
Agreement, the Notes or any other Loan Document, including, without
limitation, any increase in the Obligations resulting from the
extension of additional credit to the Subsidiary Borrower or any of
its Subsidiaries or otherwise;
(iii) any taking, exchange, release or non-perfection of any
other collateral, or any taking, release or amendment or waiver of or
consent to departure from any guaranty, for all or any of the
Obligations;
(iv) any manner of application of collateral, or proceeds
thereof, to all or any of the Obligations, or any manner of sale or
other disposition of any collateral for all or any of the Obligations
or any other assets of the Subsidiary Borrower or any of its
Subsidiaries;
(v) any change, restructuring or termination of the corporate
or partnership structure or existence of the Parent Company Borrower
or any of its Subsidiaries;
(vi) any reduction, limitation, impairment or termination of any
Obligations for any reason, including any claim of waiver, release,
surrender, alteration or compromise; or
(vii) any other circumstance which might otherwise constitute a
defense available to, or a
-11-
<PAGE>
discharge of, the Parent Company Borrower, the Subsidiary Borrower or
the Trustee;
and shall not be subject to (and the Parent Company Borrower, for itself and on
behalf of its Subsidiaries, hereby waives any right to or claim of) any defense
or set-off, counterclaim, recoupment or termination whatsoever by reason of any
invalidity, illegality, nongenuineness, irregularity, compromise,
unenforceability of, or any other event or occurrence affecting, any of the
Obligations. This Agreement shall continue to be effective or shall be
reinstated, as the case may be, if at any time any payment of any of the
Obligations is rescinded or must otherwise be returned by any Agent or Lender
upon the insolvency, bankruptcy or reorganization of, or in connection with any
other Bankruptcy Proceeding involving, the Parent Company Borrower or any of its
Subsidiaries, including, without limitation, the Subsidiary Borrower and its
Subsidiaries, or otherwise, all as though such payment had not been made.
SECTION 10. Waiver. The Trustee and the Parent Company Borrower (for
------
itself and on behalf of its Subsidiaries) each hereby waives promptness,
diligence, notice of acceptance, notice of the existence, creation or non-
payment of all or any of the Obligations, and any other notice with respect to
any of the Obligations and this Agreement and any requirement that any Agent or
Lender protect, secure, perfect or insure any security interest or lien or any
property subject thereto or exhaust any right or remedy or take any action
against the Parent Company Borrower, any of its Subsidiaries or any other person
or entity or any collateral; provided, however, that this Section 10 shall not
constitute a waiver by the Trustee of any notice expressly required to be
delivered to the Trustee under any other provision of this Agreement.
SECTION 11. Representations and Warranties. The Parent Company
------------------------------
Borrower hereby represents and warrants to the Agents and the Lenders as
follows:
(a) True and complete copies of all instruments evidencing the
Subordinated Debt as of the date hereof, including, without limitation, the
Subordinated Debt Documents, have been furnished to the Agents and the Lenders.
There exists no Default in respect of any such Subordinated Debt.
(b) The Subordinated Bondholders are and at all times will be the
legal and beneficial owner of the
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<PAGE>
Subordinated Debt, free and clear of any lien, security interest, option or
other charge or encumbrance, except to the extent of any sale, assignment or
other disposition of Subordinated Debt made in accordance with Section 7(a)(ii)
above.
(c) There are no conditions precedent to the effectiveness of this
Agreement that have not been satisfied or waived.
The Parent Company Borrower further represents and warrants to the Agents and
the Lenders that the Subordinated Debt now outstanding has been duly authorized
and issued by the Parent Company Borrower, and constitutes the legal, valid and
binding obligation of the Parent Company Borrower, enforceable against the
Parent Company Borrower, in accordance with its terms.
SECTION 12. Amendments, Etc. No amendment or waiver of any provision
---------------
of this Agreement, and no consent to any departure by the Trustee or the Parent
Company Borrower herefrom, shall in any event be effective unless the same shall
be in writing and signed by the Administrative Agent (with consent of the
Lenders in accordance with Section 7 hereof), the Trustee and the Parent Company
Borrower, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
SECTION 13. Expenses. The Parent Company Borrower agrees upon demand
--------
to pay to the Agents and the Lenders the amount of any and all expenses,
including the reasonable fees and expenses of its counsel and of any experts or
agents, which the Agents and the Lenders may incur in connection with (i) the
administration of this Agreement, (ii) the exercise or enforcement of any of the
rights of any Agent or Lender hereunder or (iii) the failure by the Trustee or
the Parent Company Borrower to perform or observe any of the provisions hereof.
SECTION 14. Addresses for Notices. All notices and other
---------------------
communications provided for hereunder shall be in writing and mailed (registered
or certified mail, return receipt requested), telecopied or delivered by hand,
if to the Trustee, to it at 311 West Monroe Street, 12th Fl., Chicago, IL 60606,
Attention: Indenture Trust Division, Facsimile No. (312) 461-3525, if to the
Parent Company Borrower, to it c/o Charter Communications, Inc., 12444
Powerscourt Drive, Suite 400, St. Louis, Missouri 63131,
-13-
<PAGE>
Attention: Jerald L. Kent, Facsimile No. (314) 965-8793, with a copy to the
General Counsel, if to the Administrative Agent, to it at 909 Fanin Street,
Suite 1700, Houston, Texas 77010, Attention: Manager, Agency Division, Facsimile
No. (713) 951-9921, or if to any other Agent or any Lender, to it at its address
specified in the Credit Agreement, or as to each party, at such other address as
shall be designated by such party in a written notice to each other party
complying as to delivery with the terms of this Section. All such notice and
other communications shall be effective, upon the earlier of actual receipt or
three days after deposit in the mail, one day after being entrusted to a
reputable commercial overnight delivery service or when sent by telecopy, each
in the manner provided above.
SECTION 15. No Waiver; Remedies. No failure on the part of any Agent
-------------------
or Lender to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof or give rise to an estoppel, nor be construed as an
agreement to modify the terms of this Agreement; nor shall any single or partial
exercise of any right or remedy hereunder preclude any other or further exercise
thereof or the exercise of any other right or remedy. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law or in
equity.
SECTION 16. Continuing Agreement; Assignments Under the Credit
--------------------------------------------------
Agreement. This Agreement is a continuing agreement and shall (i) remain in
- ---------
full force and effect until the payment in full of the Obligations, (ii) be
binding upon the Trustee, the Parent Company Borrower and their respective
successors and assigns, and (iii) inure to the benefit of, and be enforceable
by, the Agents and the Lenders and their respective successors, transferees and
assigns. Without limiting the generality of the foregoing clause (iii), each of
the Agents and the Lenders may assign or otherwise transfer all or any portion
of its rights and obligations under the Credit Agreement (including, without
limitation, all or any portion of its Commitments, the Advances and any Note to
be held by it) to any other person or entity, and such other person or entity
shall thereupon become vested with all the rights in respect thereof granted to
such Agent or such Lender, as applicable, herein or otherwise.
SECTION 17. Priorities. The priorities herein specified are
----------
applicable irrespective of the time of creation of any indebtedness of the
Parent Company Borrower or any of its Subsidiaries.
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<PAGE>
SECTION 18. Severability. Any provision of this Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall be ineffective to the
extent of such prohibition or unenforceability in that jurisdiction without
invalidating the remaining provisions hereof in that jurisdiction or affecting
the validity or unenforceability of such provision in any other jurisdiction.
SECTION 19. Counterparts. This Agreement may be executed in any
------------
number of counterparts, each of which shall be deemed to be an original, but all
such separate counterparts shall together constitute but one and the same
instrument.
SECTION 20. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
-------------
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK, WITHOUT REGARD TO
ITS CONFLICTS OF LAW PRINCIPLES.
SECTION 21. Further Assurances. The Parent Company Borrower and the
------------------
Trustee shall execute and deliver to the Agents and the Lenders such further
documents and instruments and shall take such further action as the
Administrative Agent may at any time or from time to time reasonably request in
order to carry out the provisions and intent of this Agreement.
SECTION 22. Financial Reports. The Administrative Agent hereby
-----------------
agrees that, to the extent it has received such items from the Parent Company
Borrower or the Subsidiary Borrower, it will, upon the reasonable written
request of the Trustee, provide the Trustee with financial information of the
types described in Sections 10.08(a) and (c) of the Indenture in the event such
information has not already been provided to the Trustee. Any such request by
the Trustee shall not be made more often than once during any fiscal quarter of
the Parent Company Borrower.
SECTION 23. Extension of Senior Debt Maturity. The Agents and the
---------------------------------
Lenders agree that in the event that, subsequent to the initial funding of the
Term Loan under the Credit Agreement, the ratio of Total Debt of the Subsidiary
Borrower and its Subsidiaries on a consolidated basis (excluding the
Subordinated Debt) to Annualized Operating Cash Flow of the Subsidiary Borrower
and its Subsidiaries on a consolidated basis is less than 5.0:1 at any time, the
consent of holders of a majority in principal amount of the
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<PAGE>
Subordinated Debt shall be required in order to extend the Maturity Date after
July 17, 2005.
SECTION 24. Representation of Harris Trust and Savings Bank. Harris
-----------------------------------------------
Trust and Savings Bank ("Harris"), solely in its role as the Trustee hereby
represents and warrants that the waivers and agreements solely on its part set
forth herein constitute binding obligations of Harris, as the Trustee,
enforceable against Harris, as the Trustee, in accordance with their terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting the enforcement of
creditors' rights generally and to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
-16-
<PAGE>
IN WITNESS WHEREOF, the Trustee and the Parent Company Borrower each has
caused this Agreement to be duly executed and delivered by its officers
thereunto duly authorized as of the date first above written.
HARRIS TRUST AND SAVINGS BANK, not in its
individual capacity, but solely in its capacity as
Trustee.
By: /s/ J. Bartolini
---------------------------------
Name: J. Bartolini
---------------------------
Title: Vice President
--------------------------
Attest: /s/ C. Potter
-----------------------------
Name: C. POTTER
----------------------
Title: ASSISTANT SECRETARY
---------------------
CCA HOLDINGS CORP.,
a Delaware corporation
By: _________________________________
Name: Kent Kalkwarf
Title: Senior Vice President
Attest: _____________________________
Name: Marcy Lifton
Title: Vice President and
Assistant Secretary
Acknowledged and Agreed as of
the 13th day of February, 1997.
TORONTO DOMINION (TEXAS), INC., as
Administrative Agent, for itself and the other Agents
and Lenders
By: ______________________________________
Its: ________________________________
<PAGE>
IN WITNESS WHEREOF, the Trustee and the Parent Company Borrower each has
caused this Agreement to be duly executed and delivered by its officers
thereunto duly authorized as of the date first above written.
HARRIS TRUST AND SAVINGS BANK, not in its
individual capacity, but solely in its capacity as
Trustee.
By: _________________________________
Name: ___________________________
Title: __________________________
Attest: ____________________________
Name:_______________________
Title:______________________
CCA HOLDINGS CORP.,
a Delaware corporation
By: /s/ Kent Kalkwarf
---------------------------------
Name: Kent Kalkwarf
Title: Senior Vice President
Attest: /s/ Marcy Lifton
-----------------------------
Name: Marcy Lifton
Title: Vice President and
Assistant Secretary
Acknowledged and Agreed as of
the 13th day of February, 1997.
TORONTO DOMINION (TEXAS), INC., as
Administrative Agent, for itself and the other Agents
and Lenders
By: ______________________________________
Its: ________________________________
<PAGE>
IN WITNESS WHEREOF, the Trustee and the Parent Company Borrower each has
caused this Agreement to be duly executed and delivered by its officers
thereunto duly authorized as of the date first above written.
HARRIS TRUST AND SAVINGS BANK, not in its
individual capacity, but solely in its capacity as
Trustee.
By:
_________________________________
Title:___________________________
Attest:
____________________________
Title:______________________
CCA HOLDINGS CORP.,
a Delaware corporation
By: _________________________________
Title: __________________________
Attest: _____________________________
Title: _____________________
Acknowledged and Agreed as of
the 13th day of February, 1997.
TORONTO DOMINION (TEXAS), INC., as
Administrative Agent, for itself and the other Agents
and Lenders
By: /s/ Diane Baley
--------------------------------------
Its: VP
--------------------------------
<PAGE>
EXHIBIT 4.6
CCA Holdings Corp.
c/o Charter Communications, Inc.
12444 Powerscourt Drive, Suite 400
St. Louis, Missouri 63131
November 15, 1996
HC Crown Corp.
c/o Hallmark Cards, Incorporated
2501 McGee Trafficway
Kansas City, Missouri 64108
Attention: General Counsel
Ladies and Gentlemen:
Reference is made to that certain Amended and Restated Senior
Subordinated Loan Agreement between CCA Holdings Corp., a Delaware corporation
("CCA"), and HC Crown Corp., a Delaware corporation ("HC Crown"), originally
dated as of January 18, 1995 (the "Original Agreement"), and amended and
restated as of November 15, 1996 (the "Agreement"). This letter hereby further
describes the rights and duties of the parties to the Agreement as set forth
below. All capitalized terms used herein and not otherwise defined shall have
the meanings assigned to such terms in the Agreement.
CCA has prepared, at the request and with the cooperation of HC Crown,
a private placement offering memorandum (the "Offering Memorandum"), dated
November 18, 1996, pursuant to Rule 144A under the Securities Act of 1933, as
amended (the "Securities Act"), for the sale of the Notes held by HC Crown.
Pursuant to Section 4.02(b) of the Original Agreement, HC Crown was entitled to
two demand registrations of the Notes. The registration described below will
fulfill one such demand registration obligation, with the remaining demand
registration being that described in Section 4.02(b) of the Agreement. The
demand registration right described below is in addition to the demand
registration right described in Section 4.02(b) of the Agreement.
The parties hereby agree as follows:
1. At HC Crown's request, CCA shall (a) comply with HC Crown's
request to file a registration statement (the "Exchange Offer
Registration Statement") under the Securities Act with respect to
an offer to exchange the Notes sold pursuant to the Offering
Memorandum (the "Exchange Offer") for senior subordinated notes
of CCA, with substantially
1
<PAGE>
identical terms to the Notes (the "Exchange Notes") (except that
the Exchange Notes will not contain terms with respect to
transfer restrictions under applicable securities laws), (b) use
its best efforts to effect the registration of the Exchange Notes
in connection with the Exchange Offer pursuant to the Securities
Act and (c) otherwise take all such further actions related to
the Exchange Offer described in the Section of the draft
preliminary Offering Memorandum, a copy of which is attached
hereto as Exhibit A (the "Preliminary Offering Memorandum"),
entitled "Exchange Offer; Registration Rights" to be taken by it;
2. In the event that applicable interpretations of the staff of the
Securities and Exchange Commission do not permit CCA to effect
such an Exchange Offer, then, if HC Crown requests, CCA shall,
subject to the provisions of paragraph 4 hereof, file a shelf
registration statement covering resales of the Notes (a "Shelf
Registration Statement"), use reasonable best efforts to cause
such Shelf Registration Statement to be declared effective under
the Securities Act and use reasonable best efforts to keep
effective such Shelf Registration Statement for nine (9) months;
3. The Exchange Offer Registration Statement, or Shelf Registration
Statement which is filed because CCA is not permitted to effect
the Exchange Offer (as described in Section 2 of this letter),
shall fulfill one demand registration right under the Original
Agreement and shall be in addition to the demand registration
right provided for by Section 4.02(b) of the Agreement and by the
Indenture (as defined in the Preliminary Offering Memorandum);
and
4. All expenses incident to CCA's performance of or compliance with
the registration provisions of this letter agreement, including,
without limitation, all registration and filing fees, fees and
expenses of compliance with securities or blue sky laws, printing
expenses, messenger and delivery expenses, and fees and
2
<PAGE>
disbursements of counsel for CCA and all independent certified
public accountants, underwriters (excluding discounts and
commissions) and other persons retained by CCA (all such expenses
being herein called "Registration Expenses"), are to be borne by
HC Crown in connection with the Exchange Offer, except that CCA
will, in any event, pay its internal expenses, including, without
limitation all salaries of its officers and employees performing
legal or accounting duties) and the expenses of any annual audit;
provided that CCA will be required to pay the fees and expenses
of any trustee appointed in connection with the registration of
the Notes.
If the foregoing reflects your understanding of the matters set forth
herein, please indicate your acceptance by signing below.
Very truly yours,
CCA HOLDINGS CORP.
By: /s/ Kent Kalkwarf
------------------------
Name: Kent Kalkwarf
Title: Senior Vice President
Accepted and agreed as of
the date first above written
HC CROWN CORP.
By: /s/ Dwight Arn
------------------------
Name: Dwight Arn
Title: Vice President
3
<PAGE>
THIS PAGE MUST BE KEPT WITH THE DOCUMENT.
AMENDED AND RESTATED LOAN AGREEMENT
04/25/97 12:58 pm
<PAGE>
Exhibit 10.1
AMENDED AND RESTATED
LOAN AGREEMENT
AMONG
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P., AS BORROWER,
TORONTO DOMINION (TEXAS), INC. AND CHEMICAL BANK,
AS DOCUMENTATION AGENTS,
TORONTO DOMINION (TEXAS), INC.,
CHEMICAL BANK, CIBC INC.,
CREDIT LYONNAIS CAYMAN ISLAND BRANCH AND
NATIONSBANK, N.A. (CAROLINAS),
AS MANAGING AGENTS,
BANQUE PARIBAS AND UNION BANK,
AS CO-AGENTS,
THE SIGNATORY BANKS HERETO
AND
TORONTO DOMINION (TEXAS), INC.,
AS ADMINISTRATIVE AGENT
As of September 29, 1995
INDEX
-----
<TABLE>
<CAPTION>
Page
----
<S> <C>
RECITALS ................................................ 1
ARTICLE 1 Definitions..................................... 3
ARTICLE 2 Loans........................................... 24
2.1 The Loans....................................... 24
2.2 Manner of Borrowing and Disbursement............ 25
2.3 Interest........................................ 28
2.4 Commitment Fee.................................. 30
2.5 Revolving Loan Commitment Reductions............ 31
2.6 Prepayment...................................... 32
2.7 Repayment....................................... 32
2.8 Notes; Loan Accounts............................ 35
2.9 Manner of Payment............................... 35
2.10 Reimbursement................................... 37
2.11 Pro Rata Treatment.............................. 38
2.12 Capital Adequacy................................ 39
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 3 Conditions Precedent............................ 40
3.1 Conditions Precedent to Initial Advance and
Closing......................................... 40
3.2 Conditions Precedent to Each Advance............ 43
ARTICLE 4 Representations and Warranties.................. 44
4.1 Representations and Warranties.................. 44
4.2 Survival of Representations and Warranties,
etc............................................. 52
ARTICLE 5 General Covenants............................... 52
5.1 Preservation of Existence and Similar Matters... 53
5.2 Business; Compliance with Applicable Law........ 53
5.3 Maintenance of Properties....................... 53
5.4 Accounting Methods and Financial Records........ 53
5.5 Insurance....................................... 54
5.6 Payment of Taxes and Claims..................... 54
5.7 Visits and Inspections.......................... 55
5.8 Payment of Indebtedness; Loans.................. 55
5.9 Use of Proceeds................................. 55
5.10 Management Services............................. 55
5.11 Indemnity....................................... 55
5.12 Interest Rate Hedging........................... 56
5.13 Covenants Regarding Formation of Subsidiaries... 56
5.14 Payment of Wages................................ 57
ARTICLE 6 Information Covenants........................... 58
6.1 Quarterly Financial Statements and Information.. 58
6.2 Annual Financial Statements and Information;
Certificate of No Default....................... 58
6.3 Monthly Operating Reports....................... 59
6.4 Performance Certificates........................ 59
6.5 Copies of Other Reports......................... 60
6.6 Notice of Litigation and Other Matters.......... 62
ARTICLE 7 Negative Covenants.............................. 63
7.1 Indebtedness of the Borrower.................... 63
7.2 Limitation on Liens............................. 64
7.3 Amendment and Waiver............................ 64
7.4 Liquidation, Change in Ownership, Disposition
or Acquisition of Assets........................ 65
7.5 Limitation on Guaranties........................ 66
7.6 Investments..................................... 67
</TABLE>
-ii-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
7.7 Restricted Payments and Purchases............... 67
7.8 Leverage Ratio.................................. 69
7.9 Annualized Operating Cash Flow to Fixed Charges
Ratio........................................... 69
7.10 Annualized Operating Cash Flow to Pro Forma
Debt Service.................................... 70
7.11 Affiliate Transactions.......................... 70
7.12 Real Estate..................................... 70
7.13 Limitation on Leases............................ 70
7.14 ERISA Liabilities............................... 71
7.15 Capital Expenditures............................ 71
7.16 No Limitation on Upstream Dividends by
Subsidiaries.................................... 71
ARTICLE 8 Default......................................... 72
8.1 Events of Default............................... 72
8.2 Remedies........................................ 78
ARTICLE 9 The Agents...................................... 79
9.1 Appointment and Authorization................... 79
9.2 Interest Holders................................ 80
9.3 Consultation with Counsel....................... 80
9.4 Documents....................................... 80
9.5 Agents and Affiliates........................... 80
9.6 Responsibilities of the......................... 80
9.7 Collateral...................................... 81
9.8 Action by the Administrative Agent.............. 81
9.9 Notice of Default or Event of Default........... 81
9.10 Responsibility Disclaimed....................... 82
9.11 Indemnification................................. 82
9.12 Credit Decision................................. 83
9.13 Successor Administrative Agent and
Documentation Agents............................ 83
9.14 Managing Agents................................. 84
9.15 Co-Agents....................................... 84
ARTICLE 10 Change in Circumstances Affecting Fixed Rate
Advances........................................ 84
10.1 Fixed Rate Basis Determination Inadequate or
Unfair.......................................... 84
10.2 Illegality...................................... 84
10.3 Increased Costs................................. 85
10.4 Effects on Other Advances....................... 86
10.5 Claims for Increased Costs and Taxes............ 87
</TABLE>
-iii-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 11 Miscellaneous................................... 87
11.1 Notices......................................... 87
11.2 Expenses........................................ 90
11.3 Waivers......................................... 91
11.4 Set-Off......................................... 92
11.5 Assignment...................................... 92
11.6 Accounting Principles; Calculations............. 94
11.7 Counterparts.................................... 95
11.8 Governing Law................................... 95
11.9 Severability.................................... 95
11.10 Interest........................................ 95
11.11 Headings........................................ 96
11.12 Amendment and Waiver............................ 96
11.13 Entire Agreement................................ 97
11.14 Other Relationships............................. 97
11.15 Agreement to Transfer and Consent............... 97
ARTICLE 12 Waiver of Jury Trial............................ 98
12.1 Waiver of Jury Trial............................ 98
</TABLE>
EXHIBITS
Exhibit A - Form of Assignment of Rights by General Partner
Exhibit B - Form of Assignment of Rights by Limited Partner
Exhibit C - Form of Certificate of Financial Condition
Exhibit D - Form of Request for Advance
Exhibit E - Form of Revolving Loan Notes
Exhibit F - Form of Security Agreement
Exhibit G - Form of Subordination Agreement
Exhibit H - Form of Subordination of Management and Financial Advisory
Fees Agreement
Exhibit I - Form of Term Loan Notes
Exhibit J - Form of General Partner Loan Certificate
Exhibit K - Form of Limited Partners Loan Certificate
Exhibit L - Form of Manager Loan Certificate
Exhibit M - Form of Monthly Operating Report
Exhibit N - Form of Assignment and Assumption Agreement
-iv-
<PAGE>
SCHEDULES
Schedule 1 - Licenses
Schedule 2 - Pole Agreements
Schedule 3 - Subsidiaries
Schedule 4 - Overbuilding
Schedule 5 - Lien Search Results
Schedule 6 - Real Property
Schedule 7 - Litigation
Schedule 8 - Agreements with Affiliates
-v-
<PAGE>
AMENDED AND RESTATED
LOAN AGREEMENT
BY AND AMONG
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P. (THE "BORROWER"),
TORONTO DOMINION (TEXAS), INC. AND CHEMICAL BANK,
AS DOCUMENTATION AGENTS,
(THE "DOCUMENTATION AGENTS"),
TORONTO DOMINION (TEXAS), INC.,
CHEMICAL BANK, CIBC INC.,
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
AND NATIONSBANK, N.A. (CAROLINAS),
AS MANAGING AGENTS (THE "MANAGING AGENTS"),
BANQUE PARIBAS AND UNION BANK,
as CO-AGENTS (THE "CO-AGENTS"),
THE SIGNATORY BANKS HERETO (THE "BANKS")
AND
TORONTO DOMINION (TEXAS), INC.,
AS ADMINISTRATIVE AGENT (THE "ADMINISTRATIVE AGENT"),
RECITALS
WHEREAS, CCA Acquisition Corp., a Delaware corporation (the "General
Partner"), the Documentation Agents, the Managing Agents, the Co-Agents, the
Administrative Agent and the Banks are all parties to that certain Loan
Agreement dated as of January 18, 1995 (the "Prior Loan Agreement"); and
WHEREAS, pursuant to this Agreement, the Documentation Agents, the Managing
Agents, the Co-Agents, the Administrative Agent and the Banks have consented to
the transfer on the Agreement Date (as defined herein) of substantially all of
the assets and all of the liabilities of the General Partner, other than the
General Partner's ownership of the stock of Cencom (as defined herein),
including, without limitation, the General Partner's liabilities under the Prior
Loan Agreement, to CCELP (as defined herein) and to the transfer on the
Agreement Date of the remainder of the General Partner's assets (other than the
General Partner's ownership of the stock of Cencom) to CCT (as defined herein),
all of which assets and liabilities shall be transferred by CCELP and CCT,
respectively, to the Borrower on the Agreement Date; and
WHEREAS, pursuant to this Agreement, the Documentation Agents, the Managing
Agents, the Co-Agents, the Administrative Agent and the Banks have consented to
the transfer on the Agreement Date of all assets and liabilities of Cencom to
CCELP, which assets and liabilities shall be transferred on the Agreement Date
to the Borrower; and
<PAGE>
WHEREAS, immediately upon the transfer to CCELP and CCT of all of the
assets and liabilities of the General Partner and Cencom, as described above,
CCELP and CCT shall transfer all such assets and liabilities to the Borrower;
and
WHEREAS, pursuant to this Agreement, the Borrower has agreed, effective
upon completion of the transfer of all assets and liabilities from the General
Partner and Cencom to CCELP and CCT and the subsequent transfer of all such
assets and liabilities to the Borrower, to assume the Obligations (as defined in
the Prior Loan Agreement) of the General Partner and to be bound by all of the
terms and conditions set forth in the Prior Loan Agreement; and
WHEREAS, the Documentation Agents, the Managing Agents, the Co-Agents, the
Administrative Agent and the Banks have agreed to amend and restate the Prior
Loan Agreement in its entirety as set forth herein; and
WHEREAS, the Borrower acknowledges and agrees that the Security Interest
(as defined in the Prior Loan Agreement) granted to the Banks pursuant to the
Prior Loan Agreement, shall remain outstanding and in full force and effect in
accordance with the Prior Loan Agreement and shall continue to secure the
Obligations (as defined herein); and
WHEREAS, the Borrower acknowledges and agrees that (i) the Obligations (as
defined herein) represent, among other things, the amendment, restatement,
renewal, extension, consolidation and modification of the Obligations (as
defined in the Prior Loan Agreement) arising in connection with the Prior Loan
Agreement and the other Loan Documents (as defined in the Prior Loan Agreement)
executed in connection therewith; (ii) the parties hereto intend that the Prior
Loan Agreement and the other Loan Documents (as defined in the Prior Loan
Agreement) executed in connection therewith and the collateral pledged
thereunder shall secure, without interruption or impairment of any kind, all
existing Indebtedness under the Prior Loan Agreement and the other Loan
Documents (as defined in the Prior Loan Agreement) executed in connection
therewith as so amended, restated, renewed, extended, consolidated and modified
hereunder, together with all other Obligations hereunder; (iii) all Liens
evidenced by the Prior Loan Agreement and the other Loan Documents (as defined
in the Prior Loan Agreement) executed in connection therewith are hereby
ratified, confirmed and continued; and (iv) the Loan Documents (as defined
herein) are intended to restate, renew, extend, consolidate, amend and modify
the Prior Loan Agreement and the other Loan Documents (as defined in the Prior
Loan Agreement) executed in connection therewith; and
-2-
<PAGE>
WHEREAS, the parties hereto intend that (i) the provisions of the Prior
Loan Agreement and the other Loan Documents (as defined in the Prior Loan
Agreement) executed in connection therewith, to the extent restated, renewed,
extended, consolidated, amended and modified hereby, are hereby superseded and
replaced by the provisions hereof and of the Loan Documents (as defined herein);
and (ii) the Notes (as hereinafter defined) amend, renew, extend, modify,
replace, are substituted for and supersede in their entirety, but do not
extinguish the indebtedness arising under, the promissory notes issued pursuant
to the Prior Loan Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each of the parties hereto, the
parties hereby amend and restate the Prior Loan Agreement as follows:
ARTICLE 1
Definitions
-----------
For the purposes of this Agreement:
"Administrative Agent" shall mean Toronto Dominion (Texas), Inc., a
--------------------
Delaware corporation, acting as administrative agent for the other Agents and
the Banks.
"Administrative Agent's Office" shall mean the office of the Administrative
-----------------------------
Agent located at Toronto Dominion (Texas), Inc., 909 Fannin, Suite 1700,
Houston, Texas 77010, or such other office as may be designated pursuant to the
provisions of Section 11.1 of this Agreement.
"Advance" or "Advances" shall mean amounts advanced by the Banks to the
------- --------
Borrower pursuant to Article 2 hereof on the occasion of any borrowing.
"Affiliate" shall mean any Person directly or indirectly controlling,
---------
controlled by, or under common control with, the Borrower. For purposes of this
definition, "control" when used with respect to any Person includes, without
limitation, the direct or indirect beneficial ownership of more than five
percent (5%) of the voting securities or voting equity of such Person or the
power to direct or cause the direction of the management and policies of such
Person, whether by contract or otherwise.
"Agents" shall mean, collectively, the Documentation Agents, the Managing
------
Agents, the Co-Agents and the Administrative Agent.
-3-
<PAGE>
"Agreement" shall mean this Amended and Restated Loan Agreement.
---------
"Agreement Date" shall mean the date as of which this Agreement is dated.
--------------
"Annual Excess Cash Flow" shall mean, for any fiscal year of the Borrower
-----------------------
and its Subsidiaries on a consolidated basis, as determined based upon the
audited annual financial statements for such year required to be provided under
Section 6.2 hereof, the remainder of (a) the Operating Cash Flow for such year,
but without giving effect to the last sentence of the definition of "Operating
Cash Flow," less (b) the sum, without duplication, of the following items for
such year: (i) Capital Expenditures made; (ii) management fees and expenses
paid in cash to the Manager pursuant to the Financial Advisory Agreement; (iii)
financial advisory fees and expenses paid in cash to Kelso pursuant to the
Financial Advisory Agreement; (iv) cash Interest Expense paid; (v) scheduled
repayments of principal on Indebtedness for Money Borrowed to the extent
actually paid, which shall mean, with respect to the Loans, principal payments
required pursuant to Sections 2.5(a) and 2.7(a) hereof; (vi) scheduled payments
under Capitalized Lease Obligations to the extent actually paid; (vii) voluntary
prepayments of the Term Loan under Section 2.6 hereof; (viii) voluntary
prepayments of the Revolving Loans under Section 2.6 hereof, provided that there
is a corresponding reduction of the Revolving Loan Commitment; and (ix) Tax
Distributions made with respect to such fiscal year.
"Annualized Operating Cash Flow" shall mean an amount equal to Operating
------------------------------
Cash Flow for the calendar quarter specified, multiplied by four (4).
"Applicable Law" shall mean, in respect of any Person, all provisions of
--------------
constitutions, statutes, rules, regulations and orders of governmental bodies or
regulatory agencies applicable to such Person, including, without limiting the
foregoing, the Licenses, the Federal Communications Act of 1934 and Title 47 of
the United States Code, and all orders and decrees of all courts and arbitrators
in proceedings or actions to which the Person in question is a party or by which
it is bound.
"Applicable Margin" shall mean the interest rate margin applicable to Base
-----------------
Rate Advances, LIBOR Advances and CD Rate Advances, as the case may be, in each
case determined in accordance with Section 2.3(g) hereof.
"Assessment Rate" shall mean, for any Interest Period for a CD Rate
---------------
Advance, the highest current annual assessment rate (rounded upward, if
necessary, to the nearest hundredth (1/100th)
-4-
<PAGE>
of one percent) payable by any Bank which is a bank to the Federal Deposit
Insurance Corporation (or any successor) for insuring time deposits made in
dollars at offices of such Bank in the United States as determined by the
Administrative Agent on the first day of such Interest Period.
"Asset Sales" shall have the meaning ascribed to such term in Section
-----------
2.7(b) hereof.
"Assignment of Rights by General Partner" shall mean that certain
---------------------------------------
Assignment of Rights by General Partner between CCA Holdings Corp., a Delaware
corporation, which is the sole general partner of the Borrower, on the one hand,
and the Administrative Agent, on the other hand, substantially in the form of
Exhibit A attached hereto.
- ---------
"Assignment of Rights by Limited Partner" shall mean, collectively, the
---------------------------------------
Assignment of Rights by Limited Partner between CCT, which is a limited partner
of the Borrower, on the one hand, and the Administrative Agent, on the other
hand, and the Assignment of Rights by Limited Partner between CCELP, which is a
limited partner of the Borrower, on the one hand, and the Administrative Agent,
on the other hand, each one substantially in the form of Exhibit B attached
---------
hereto.
"Authorized Officer" shall mean any officer of the Borrower holding the
------------------
office of Vice President or above.
"Authorized Signatory" shall mean such senior officer of the General
--------------------
Partner as may be duly authorized and designated in writing by the General
Partner to execute documents, agreements and instruments on behalf of the
Borrower or any of its Subsidiaries, as applicable.
"Banks" shall mean those financial institutions whose names are set forth
-----
on the signature pages hereof as "Banks" and any assignees thereof pursuant to
and in accordance with Section 11.5 hereof; and "Bank" shall mean any one of the
----
foregoing Banks.
"Base Rate" shall mean, at any time, the greater of (a) the rate of
---------
interest adopted by The Toronto-Dominion Bank as its reference rate for the
determination of interest rates for loans of varying maturities in United States
dollars to United States residents of varying degrees of creditworthiness and
being quoted at such time by The Toronto-Dominion Bank as its "prime rate," and
(b) the sum of (i) the Federal Funds Rate and (ii) five-eighths of one percent
(5/8%). The Base Rate is not necessarily the lowest rate of interest charged to
borrowers of The Toronto-Dominion Bank.
-5-
<PAGE>
"Base Rate Advance" shall mean an Advance which the Borrower requests to be
-----------------
made as a Base Rate Advance or is reborrowed as a Base Rate Advance in
accordance with the provisions of Section 2.2 hereof, and which shall be in a
principal amount of at least $1,000,000 and in an integral multiple of $100,000,
except for a Base Rate Advance which is in an amount equal to the unused amount
of the Term Loan Commitment or the Revolving Loan Commitment, which Advance may
be in such amount, as applicable.
"Base Rate Basis" shall mean a simple interest rate equal to the sum of (a)
---------------
the Base Rate and (b) the Applicable Margin. The Base Rate Basis shall be
adjusted automatically as of the opening of business on the effective date of
each change in the Base Rate and the Applicable Margin to account for such
changes.
"Basic Subscriber" shall mean a dwelling unit, including an apartment which
----------------
is separately billed for cable television services within an apartment building,
in respect of which the Borrower or any of its Subsidiaries has in effect an
agreement to provide one or more of the basic cable television subscription
services offered by the Borrower or such Subsidiary and for which the Borrower
or any of its Subsidiaries or, during the period prior to the Agreement Date,
the General Partner, has received at least one full month's payment at the rate
customarily charged by such Person within the applicable franchise area, except
for those dwelling units for which payment is more than sixty (60) days past
due, or for which notices of termination of service have been sent by the
Borrower, any such Subsidiary, the General Partner or the customer. As to bulk
subscribers, such as hotels, motels, and apartments, billed on a bulk basis, the
number of Basic Subscribers for the Borrower and its Subsidiaries shall be
computed by dividing the monthly basic cable revenues received by the Borrower
and its Subsidiaries from any such bulk subscribers by the average monthly
subscription price received by the Borrower and its Subsidiaries from other
Basic Subscribers within the portion of the System serving such bulk subscriber.
"Borrower" shall mean Charter Communications Entertainment I, L.P., a
--------
Delaware limited partnership, having the General Partner as its sole general
partner and the Limited Partners as its sole limited partners.
"Business Day" shall mean a day on which banks and foreign exchange markets
------------
are open for the transaction of business required for this Agreement in London,
England, St. Louis, Missouri, Houston, Texas and New York, New York, as relevant
to the determination to be made or the action to be taken.
"Capital Expenditures" shall mean, in respect of any Person, expenditures
--------------------
for the purchase or construction of fixed assets,
-6-
<PAGE>
plant and equipment which are capitalized in accordance with GAAP.
"Capitalized Lease Obligation" shall mean that portion of any obligation of
----------------------------
a Person as lessee under a lease which at the time would be required to be
capitalized on the balance sheet of such lessee in accordance with GAAP.
"CCELP" shall mean Charter Communications Entertainment, L.P., a Delaware
-----
limited partnership.
"CCT" shall mean CCT Holdings Corp., a Delaware corporation.
---
"CD Rate" shall mean, for any Interest Period, the interest rate per annum
-------
determined by the Administrative Agent to be the average of the prevailing rates
bid at 10:00 a.m. (New York time) or as soon thereafter as practicable, on the
Business Day on which the relevant Interest Period commences, by two or more New
York certificate of deposit dealers of recognized standing for the purchase at
face value from each of the Reference Banks of its certificates of deposit
having a maturity comparable to the duration of the Interest Period and in the
amount of the CD Rate Advance requested by the Borrower.
"CD Rate Advance" shall mean an Advance which the Borrower requests to be
---------------
made as a CD Rate Advance or which is reborrowed as a CD Rate Advance, in
accordance with the provisions of Section 2.2 hereof, and which shall be in a
principal amount of at least $1,000,000.00 and in an integral multiple of
$100,000.00.
"CD Rate Basis" shall mean a simple per annum interest rate (rounded
-------------
upward, if necessary, to the nearest one-hundredth (1/100th) of one percent)
equal to the sum of (a) the quotient of (i) the CD Rate divided by (ii) one
minus the Domestic Reserve Percentage, stated as a decimal, plus (b) the
Assessment Rate, plus (c) the Applicable Margin. The CD Rate Basis shall apply
to Interest Periods of thirty (30), sixty (60), ninety (90), one hundred eighty
(180), two hundred seventy (270) and, subject to availability as determined by
the Administrative Agent, three hundred sixty (360) days and, once determined,
shall remain unchanged during the applicable Interest Period, except for changes
to reflect adjustments in the Domestic Reserve Percentage, the Applicable
Margin, and the Assessment Rate.
"Cencom" shall mean Cencom Cable Entertainment, Inc., a Delaware
------
corporation.
"Certificate of Financial Condition" shall mean a certificate of financial
----------------------------------
condition of the Borrower and its
-7-
<PAGE>
Subsidiaries on a consolidated basis, substantially in the form of Exhibit C
---------
attached hereto, and signed by an Authorized Signatory of the Borrower.
"Charter Communications Group" shall mean Charter Communications Group, a
----------------------------
Missouri general partnership.
"Co-Agents" shall mean Banque Paribas and Union Bank, and "Co-Agent" shall
--------- --------
mean any one of the foregoing Co-Agents.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
----
to time.
"Collateral" shall mean any property of any kind constituting collateral
----------
for the Obligations under this Agreement or any of the Security Documents.
"Commission" shall mean the Federal Communications Commission or any
----------
successor thereto.
"Commitment Ratios" shall mean the percentages in which the Banks are
-----------------
severally bound to make Advances to the Borrower under the Revolving Loan
Commitment and in which the Banks made the Term Loan, as set forth below
(together with dollar amounts) as of the Agreement Date:
<TABLE>
<CAPTION>
Portion of Revolving Term Loan Revolving Loan
Term Loan Loan Total Dollar Commitment Commitment
Banks Commitment Commitment Commitment Ratio Ratio
- ----------------------------- -------------- ------------- ------------ ------------- ---------------
<S> <C> <C> <C> <C> <C>
Toronto Dominion (Texas), $ 9,856,000.01 $ 703,999.99 $ 10,560,000 3.520000001% 3.519999983%
Inc.
Chemical Bank 13,189,333.33 2,370,666.67 15,560,000 4.710476190% 11.853333333%
CIBC Inc. 33,189,333.33 2,370,666.67 35,560,000 11.853333333% 11.853333333%
Credit Lyonnais Cayman 33,189,333.33 2,370,666.67 35,560,000 11.853333333% 11.853333333%
Island Branch
NationsBank, N.A. 33,189,333.33 2,370,666.67 35,560,000 11.853333333% 11.853333333%
(Carolinas)
Banque Paribas 19,026,666.67 2,073,333.33 21,100,000 6.795238095% 10.366666667%
Union Bank 29,026,666.67 2,073,333.33 31,100,000 10.366666667% 10.366666667%
CoreStates Bank, N.A. 14,000,000.00 1,000,000.00 15,000,000 5.000000000% 5.000000000%
The Long-Term Credit 14,000,000.00 1,000,000.00 15,000,000 5.000000000% 5.000000000%
Bank of Japan, Ltd.
Mercantile Bank of St. 14,000,000.00 1,000,000.00 15,000,000 5.000000000% 5.000000000%
Louis National Association
</TABLE>
-8-
<PAGE>
<TABLE>
<CAPTION>
Portion of Revolving Term Loan Revolving Loan
Term Loan Loan Total Dollar Commitment Commitment
Banks Commitment Commitment Commitment Ratio Ratio
- ----------------------------- -------------- ------------- ------------ ------------- ---------------
<S> <C> <C> <C> <C> <C>
NatWest Bank N.A. 14,000,000.00 1,000,000.00 15,000,000 5.000000000% 5.000000000%
First National Bank of 14,000,000.00 1,000,000.00 15,000,000 5.000000000% 5.000000000%
Maryland
Van Kampen Merritt Prime 30,000,000.00 0.00 30,000,000 10.714285714% 0.000000000%
Rate Income Trust
Banque Francaise du 9,333,333.33 666,666.67 10,000,000 3.333333332% 3.333333350%
Commerce Exterieur
===========================================================================
Total $ 280,000,000 $ 20,000,000 $300,000,000 100% 100%
</TABLE>
"Commitments" shall mean, collectively, the Term Loan Commitment and the
-----------
Revolving Loan Commitment.
"Default" shall mean any Event of Default, and any of the events specified
-------
in Section 8.1 hereof regardless of whether there shall have occurred any
passage of time or giving of notice or both that would be necessary for such
event to be an Event of Default.
"Default Rate" shall mean a simple per annum interest rate equal to the sum
------------
of (a) the Base Rate Basis (calculated using the highest Applicable Margin for
the Base Rate Basis set forth in Section 2.3(g) hereof, without giving effect to
the Leverage Ratio then in effect) plus (b) two percent (2%).
"Documentation Agents" shall mean Toronto Dominion (Texas), Inc. and
--------------------
Chemical Bank, and "Documentation Agent" shall mean either one of the foregoing
-------------------
Documentation Agents.
"Domestic Reserve Percentage" shall mean, for any day, the percentage which
---------------------------
is in effect on such day, as prescribed by the Board of Governors of the Federal
Reserve System (or any successor thereto) for determining the maximum reserve
requirement (including, without limitation, any basic, supplemental, emergency
or marginal reserves) for a member bank of the Federal Reserve System with
deposits exceeding $5 billion in respect of new non-personal time deposits in
dollars in the United States having a maturity comparable to the duration of the
Interest Period and in an amount of $250,000.00 or more. The CD Rate Basis for
any CD Rate Advance shall be adjusted automatically on and as of the effective
date of any change in the Domestic Reserve Percentage.
-9-
<PAGE>
"Environmental Laws" shall mean all environmental, health and safety laws,
------------------
regulations, resolutions, and ordinances applicable to the Borrower or any of
its Subsidiaries, or any of their respective assets or properties, including,
without limitation, all laws, regulations, resolutions, ordinances and decrees
relating to the release of any toxic or hazardous waste or other chemical
substance, pollutant or contaminant into the environment or the generation,
treatment, storage or disposal of any toxic or Hazardous Substances.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
-----
in effect on the Agreement Date and as amended thereafter from time to time.
"Event of Default" shall mean any of the events specified in Section 8.1
----------------
hereof, provided that any requirement for notice or lapse of time has been
satisfied.
"Federal Funds Rate" shall mean, as of any date, the weighted average of
------------------
the rates on overnight federal funds transactions with the members of the
Federal Reserve System arranged by federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by the Administrative Agent from three (3) federal
funds brokers of recognized standing selected by the Administrative Agent.
"Financial Advisory Agreement" shall mean that certain Financial Advisory
----------------------------
Agreement dated as of the Agreement Date between Kelso and the Borrower, whereby
Kelso agrees to provide financial advisory services to the Borrower and its
Subsidiaries.
"Fixed Charges" shall mean with respect to the Borrower and its
-------------
Subsidiaries on a consolidated basis, for any period, without duplication, the
sum of (a) cash Interest Expense paid during such period, (b) Capital
Expenditures made during such period, (c) scheduled payments of principal made
on its Indebtedness for Money Borrowed during such period to the extent actually
paid, which shall mean, with respect to the Loans, principal required to be paid
pursuant to Sections 2.5(a) and 2.7(a) hereof and, with respect to the Revolving
Loans in particular, the principal amount required to be paid with respect
thereto during any such period shall be deemed to be the difference, if
positive, between (i) the aggregate principal amount of the Revolving Loans
outstanding on the first day of such period, and (ii) the amount of the
Revolving Loan Commitment on the last day of such period, (d) Tax Distributions
made during such period, (e) management
-10-
<PAGE>
fees and expenses paid in cash to the Manager during such period, (f) financial
advisory fees and expenses paid in cash to Kelso during such period, and (g) the
portion of scheduled payments with respect to Capitalized Lease Obligations
which constitutes imputed principal for such period to the extent actually paid.
"Fixed Rate Advances" shall mean LIBOR Advances and CD Rate Advances.
-------------------
"GAAP" shall mean, as in effect from time to time, generally accepted
----
accounting principles in the United States, consistently applied.
"General Partner" shall mean CCA Acquisition Corp., a Delaware corporation.
---------------
"Guaranty" or "Guaranteed," as applied to an obligation, shall mean and
-------- ----------
include (a) a guaranty, direct or indirect, in any manner, of any part or all of
such obligation or (b) any other agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of non-performance) of any part
or all of such obligation, including, without limiting the foregoing, any
reimbursement obligations as to amounts drawn down by beneficiaries of
outstanding letters of credit.
"Hallmark Subordinated Debt" shall have the meaning ascribed to the term
--------------------------
"Subordinated Debt" in the Subordination Agreement.
"Hazardous Substance" shall mean any hazardous substance, hazardous or
-------------------
toxic waste, hazardous material, pollutant or contaminant, as those or similar
terms are used in the Environmental Laws and shall include, without limitation,
asbestos and asbestos-related products, chlorofluorocarbons, oils or petroleum-
derived compounds, polychlorinated biphenyls, pesticides and radon.
"Holdings" shall mean CCA Holdings Corp., a Delaware corporation.
--------
"Indebtedness" shall mean, with respect to any Person, without duplication,
------------
the sum of (a) all items, which, in accordance with GAAP, would be included in
determining total liabilities as shown on the liability side of a balance sheet
of such Person, except (i) accounts payable which by their terms are less than
sixty (60) days past due or which are being contested in good faith and as to
which adequate reserves shall have been set aside in accordance with GAAP, if
any such reserves are so required to be set aside in accordance with GAAP, (ii)
items of
-11-
<PAGE>
stockholders' equity or capital stock or surplus, or (iii) items of general
contingency or deferred tax reserves, (b) all direct or indirect obligations
secured by any Lien to which any property or asset owned by such Person is
subject (but if the obligation secured thereby shall not have been assumed, then
only to the extent of the higher of the fair market value or the book value of
the property or asset subject to such Lien), (c) all Capitalized Lease
Obligations of such Person and all obligations of such Person with respect to
leases constituting part of a sale and lease-back arrangement, (d) all
reimbursement obligations with respect to outstanding letters of credit, and (e)
all obligations of such Person under Interest Rate Hedge Agreements.
"Indebtedness for Money Borrowed" shall mean, with respect to any Person,
-------------------------------
money borrowed and Indebtedness represented by notes payable and drafts accepted
representing extensions of credit, all obligations evidenced by bonds,
debentures, notes or other similar instruments, all Indebtedness upon which
interest charges are customarily paid, and all Indebtedness issued or assumed as
full or partial payment for property or services, whether or not any such notes,
drafts, obligations or Indebtedness represent Indebtedness for money borrowed.
For purposes of this definition, interest which is accrued but not paid on the
original due date for such interest shall be deemed Indebtedness for Money
Borrowed. Where obligations are evidenced by bonds, debentures, notes or other
similar instruments whose face amount exceeds the amount received by such Person
with respect thereto, only the amount received plus debt discount amortized as
of the calculation date need be taken into account as Indebtedness for Money
Borrowed.
"Interest Expense" shall mean, for any period, the aggregate amount of all
----------------
interest paid or accrued, as well as fees payable to the Agents and the Banks
hereunder, in respect of Indebtedness for Money Borrowed and the portion of
payments under Capitalized Lease Obligations which constitutes imputed interest,
in each case, of the Borrower and its Subsidiaries on a consolidated basis
during such period as determined in accordance with GAAP.
"Interest Period" shall mean, (a) in connection with any Base Rate Advance,
---------------
the period beginning on the date of such Advance is made and ending on the last
day of the quarter (based upon quarters ending December 31, March 31, June 30,
and September 30) in which such Advance is made, provided, however, that if a
Base Rate Advance is made on the last day of any such quarter, it shall have an
Interest Period ending on, and its Payment Date shall be, the last day of the
following such quarter (based upon quarters ending December 31, March 31, June
30, and September 30); and (b) in connection with any Fixed Advance, the term of
such Advance selected by the Borrower or otherwise
-12-
<PAGE>
determined in accordance with this Agreement. Notwithstanding the foregoing,
however, (i) any applicable Interest Period which would otherwise end on a day
which is not a Business Day shall be extended to the next succeeding Business
Day unless, with respect to LIBOR Advances only, such Business Day falls in
another calendar month, in which case such Interest Period shall end on the next
preceding Business Day, (ii) any applicable Interest Period, with respect to
LIBOR Advances only, which begins on a day for which there is no numerically
corresponding day in the calendar month during which such Interest Period is to
end shall (subject to clause (i) above) end on the last day of such calendar
month, and (iii) no Interest Period shall extend beyond the Maturity Date or
such earlier date as would cause the Borrower to incur reimbursement obligations
under Section 2.10 hereof in light of the Borrower's scheduled repayment
obligations under Sections 2.5 and 2.7 hereof. Interest shall be due and
payable with respect to any Advance as provided in Section 2.3 hereof.
"Interest Rate Basis" shall mean the Base Rate Basis, the LIBOR Basis, or
-------------------
the CD Rate Basis, as appropriate.
"Interest Rate Hedge Agreement" shall mean the obligations of any Person
-----------------------------
pursuant to any arrangement with any other Person whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such other
Person calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall also include, without limitation, interest rate swaps,
caps, swaptions, captions, floors, collars and similar agreements.
"ISDA" shall mean the International Swap Dealers Association.
----
"Kelso" shall mean Kelso & Company, L.P., a Delaware limited partnership.
-----
"Leverage Ratio" shall mean the ratio of Total Debt as of a specified date
--------------
to Annualized Operating Cash Flow for the most recent fiscal quarter for which
financial statements are required to have been delivered pursuant to Section 6.1
hereof.
"LIBOR" shall mean, for any Interest Period, the average (rounded upward to
-----
the nearest one-sixteenth (1/16th) of one percent) of the interest rates per
annum at which deposits in United States dollars for such Interest Period are
offered to the Reference Banks, in the London interbank borrowing market at
approximately 11:00 a.m. (London time), two (2) Business Days
-13-
<PAGE>
before the first day of such Interest Period, in an amount approximately equal
to the principal amount of, and for a length of time approximately equal to the
Interest Period for, the LIBOR Advance sought by the Borrower.
"LIBOR Advance" shall mean an Advance which the Borrower requests to be
-------------
made as a LIBOR Advance or which is reborrowed as a LIBOR Advance, in accordance
with the provisions of Section 2.2 hereof, and which shall be in a principal
amount of at least $1,000,000 and in an integral multiple of $100,000.
"LIBOR Basis" shall mean a simple per annum interest rate equal to the sum
-----------
of (a) the quotient of (i) LIBOR divided by (ii) one minus the LIBOR Reserve
Percentage, stated as a decimal, plus (b) the Applicable Margin. The LIBOR
Basis shall apply to Interest Periods of one (1), two (2), three (3), six (6),
nine (9) and, subject to availability as determined by the Administrative Agent,
twelve (12) months and, once determined, shall remain unchanged during the
applicable Interest Period, except for changes to reflect adjustments in the
LIBOR Reserve Percentage and the Applicable Margin.
"LIBOR Reserve Percentage" shall mean the percentage which is in effect
------------------------
from time to time under Regulation D of the Board of Governors of the Federal
Reserve System, as such regulation may be amended from time to time, as the
maximum reserve requirement applicable with respect to Eurocurrency Liabilities
(as that term is defined in Regulation D), whether or not any Bank has any
Eurocurrency Liabilities subject to such reserve requirement at that time. The
LIBOR Basis for any LIBOR Advance shall be adjusted as of the effective date of
any change in the LIBOR Reserve Percentage.
"Licenses" shall mean any rights, whether based upon any agreement,
--------
statute, ordinance or otherwise, granted by any governmental authority to the
Borrower or any of its Subsidiaries to own and operate cable television systems,
described as of the Agreement Date on Schedule 1 attached hereto, and any other
----------
such rights subsequently obtained by the Borrower or any of its Subsidiaries,
together with any amendment, modification or replacement with respect thereto.
"Lien" shall mean, with respect to any property, any mortgage, lien,
----
pledge, assignment, charge, security interest, title retention agreement, levy,
execution, seizure, attachment, garnishment or other encumbrance of any kind in
respect of such property, whether or not choate, vested or perfected.
"Limited Partners" shall mean, collectively, CCT and CCELP.
----------------
-14-
<PAGE>
"Loan Documents" shall mean, without limitation, this Agreement, the Notes,
--------------
the Security Documents, the Subordination of Management and Financial Advisory
Fees Agreement, the Subordination Agreement, all Requests for Advances, all
Interest Rate Hedge Agreements between the Borrower, on the one hand, and the
Banks and the Agents, or any of them, on the other hand, and all other documents
and agreements executed and delivered in connection with the making of the
Loans.
"Loans" shall mean, collectively, the Term Loan and the Revolving Loans.
-----
"Majority Banks" shall mean, at any time, (a) if there are no Loans
--------------
outstanding, Banks the total of whose Commitment Ratios equals or exceeds sixty-
six and two-thirds percent (66-2/3%), or (b) if there are Loans outstanding,
Banks the total of whose Loans outstanding equals or exceeds sixty-six and two-
thirds percent (66-2/3%) of the total principal amount of the Loans outstanding
hereunder.
"Management Agreement" shall mean any management agreement between the
--------------------
Manager and the Borrower or any of its Subsidiaries, whereby the Manager agrees
to provide management services to the Borrower or any of its Subsidiaries
regarding the daily operation of the System, including programming, development
of advertising, marketing and sales programs, supervision of construction,
preparation of financial reports, budgets, forecasts and reports to governmental
and regulatory agencies, and liaison with federal, state and local governmental
officials.
"Manager" shall mean Charter Communications, Inc., a Delaware corporation,
-------
or any assignee, successor or transferee manager of the System agreed to in
writing by the Majority Banks.
"Managing Agents" shall mean, collectively, Toronto Dominion (Texas), Inc.,
---------------
Chemical Bank, CIBC Inc., Credit Lyonnais Cayman Island Branch and NationsBank,
N.A. (Carolinas); and "Managing Agent" shall mean any one of the foregoing
--------------
Managing Agents.
"Materially Adverse Effect" shall mean any materially adverse effect upon
-------------------------
the business, assets, liabilities, financial condition, results of operations or
business prospects of the Borrower and its Subsidiaries on a consolidated basis,
taken as a whole, or upon the ability of the Borrower and its Subsidiaries to
construct, operate and maintain the System, taken as a whole, or to ensure
performance under the Licenses (taken as a whole), this Agreement or any other
Loan Document by the Borrower and its Subsidiaries, resulting from any act,
omission, situation, status, event or undertaking, either singly or taken
together.
-15-
<PAGE>
"Maturity Date" shall mean December 31, 2003, or such earlier date as
-------------
payment of the Loans shall be due (whether by acceleration or otherwise).
"Mortgage" shall mean that certain Open-End Mortgage and Security Agreement
--------
of even date herewith given by the Borrower in favor of the Administrative
Agent, for itself and for the benefit of the Banks and the other Agents.
"Multiemployer Plan" shall have the meaning set forth in Section 4001(a)(3)
------------------
of ERISA.
"Necessary Authorizations" shall mean all material approvals and licenses
------------------------
from, and all material filings and registrations with, any governmental or other
regulatory authority, including, without limiting the foregoing, the Licenses
and all material approvals, licenses, filings and registrations under the
Federal Communications Act of 1934, necessary in order to enable the Borrower
and its Subsidiaries to acquire, construct, maintain and operate the System.
"Net Income" shall mean, as applied to any Person for any fiscal period,
----------
the aggregate amount of net income (or net loss) of such Person, after taxes,
for such period as determined in accordance with GAAP.
"Net Proceeds" shall mean, with respect to any sale, lease, transfer, or
------------
other disposition of the assets of the Borrower or any of its Subsidiaries
permitted hereunder, the gross cash sales price for the assets being sold,
leased, transferred or otherwise disposed of (including, without limitation, any
payments received for non-competition covenants), net of (a) amounts reserved,
if any, for Tax Distributions payable with respect to the sale after the
application of any available losses, credits, or other offsets, (b) reasonable
and customary transaction costs payable by the Borrower or any of its
Subsidiaries, (c) contingencies with respect to such sale, lease, transfer or
other disposition appropriately reserved for by the Borrower or any of its
Subsidiaries, and (d) until actually received by the Borrower or any of its
Subsidiaries, any portion of the sales price held in escrow or paid in
installments.
"Notes" shall mean, collectively, the Term Loan Notes and the Revolving
-----
Loan Notes.
"Obligations" shall mean (a) all payment and performance obligations of the
-----------
Borrower and its Subsidiaries to the Banks, and the Agents under this Agreement
and the other Loan Documents, as they may be amended from time to time, or as a
result of making the Loans, (b) all payment and performance obligations of
-16-
<PAGE>
all obligors (other than the Borrower and its Subsidiaries) to the Banks and the
Agents under the Loan Documents, as they may be amended from time to time, and
(c) the obligation to pay an amount equal to the amount of any and all damage
which the Banks and the Agents, or any of them, may suffer by reason of a breach
by the Borrower, any of its Subsidiaries, or any other obligor of any
obligation, covenant or undertaking with respect to this Agreement or any other
Loan Document.
"Operating Cash Flow" shall mean, for the Borrower and its Subsidiaries on
-------------------
a consolidated basis in respect of any quarterly or annual period, as
applicable, without duplication, the remainder of (a) the sum of Net Income,
plus, to the extent deducted in calculating Net Income, (i) Interest Expense,
(ii) depreciation, (iii) amortization, (iv) management fees and expenses paid in
cash to the Manager pursuant to the Management Agreement, (v) financial advisory
fees and expenses paid in cash to Kelso pursuant to the Financial Advisory
Agreement, (vi) income tax expense and (vii) other non-cash items, less (b)
extraordinary income, all as determined in accordance with GAAP. If the
Borrower or any of its Subsidiaries acquires (or disposes of) cable television
systems during a fiscal period, Operating Cash Flow for that period shall be
determined as if the systems so acquired (or disposed of) had been acquired (or
disposed of) on the first day of such fiscal period, and the operating results
of any acquired system for that portion of any fiscal period in which it was not
owned by the Borrower or any of its Subsidiaries shall be determined by
reference to financial information prepared by the prior owners thereof, subject
to such adjustments as the Managing Agents may reasonably require.
"Partners" shall mean, collectively, the General Partner and the Limited
--------
Partners, the only partners of the Borrower.
"Payment Date" shall mean the last day of any Interest Period.
------------
"Permitted Asset Swap" shall mean the exchange (whether effected pursuant
--------------------
to a sale of stock or assets or otherwise) by the Borrower and its Subsidiaries
of (a) that portion of the System located in the State of Connecticut in return
for (b) cable television assets located in, or in geographical areas contiguous
to, St. Louis, Missouri (other than those then owned by the Borrower or any of
its Subsidiaries) or all or any substantial part of the ownership interests of
any Person or Persons owning such St. Louis, Missouri cable television assets,
pursuant to terms which are reasonably satisfactory to the Managing Agents.
"Permitted Liens" shall mean, as applied to any Person:
---------------
-17-
<PAGE>
(a) any Lien in favor of the Administrative Agent or any Bank or
other Agent given to secure the Obligations;
(b) (i) Liens on real estate for real estate taxes not yet
delinquent and (ii) Liens for taxes, assessments, judgments, governmental
charges or levies or claims the non-payment of which is being diligently
contested in good faith by appropriate proceedings and for which adequate
reserves have been set aside on such Person's books, but only so long as no
foreclosure, distraint, sale or similar proceedings have been commenced with
respect thereto and remain unstayed for a period of thirty (30) days after their
commencement;
(c) Liens of carriers, warehousemen, mechanics, laborers and
materialmen incurred in the ordinary course of business for sums not yet due or
being diligently contested in good faith, if such reserve or appropriate
provision, if any, as shall be required by GAAP shall have been made therefor;
(d) Liens incurred in the ordinary course of business in connection
with worker's compensation and unemployment insurance;
(e) Restrictions on the transfer of assets imposed by any of the
Licenses as presently in effect or by the Federal Communications Act of 1934 and
any regulations thereunder;
(f) Liens created under Pole Agreements on cables and other property
affixed to transmission poles;
(g) Easements, rights-of-way, restrictions and other similar
encumbrances on the use of real property which do not materially interfere with
the ordinary conduct of the business of such person, or Liens incidental to the
conduct of the business of such Person or to the ownership of its properties
which were not incurred in connection with Indebtedness or other extensions of
credit and which do not in the aggregate materially detract from the value of
such properties or materially impair their use in the operation of the business
of such Person; and
(h) Liens securing Indebtedness permitted under Section 7.1(e) hereof
to the extent incurred in connection with the acquisition of any property or
assets by the Borrower or any of its Subsidiaries permitted hereunder, and Liens
securing Capitalized Lease Obligations permitted under Section 7.1(c) hereof;
provided, that
- --------
(1) such Lien shall attach only to the property or asset
acquired in such transaction and shall not extend
-19-
<PAGE>
to or cover any other assets or properties of the Borrower or any of its
Subsidiaries; and
(2) the Indebtedness secured or covered by such Lien shall not
exceed the cost of the asset or property acquired and shall not be renewed
or extended by the Borrower or any of its Subsidiaries.
"Person" shall mean an individual, corporation, partnership, limited
------
liability company, trust or unincorporated organization, or a government or any
agency or political subdivision thereof.
"Plan" shall mean an employee benefit plan within the meaning of Section
----
3(3) of ERISA maintained for employees of any Person or any affiliate of such
Person.
"Pole Agreements" shall mean the agreements between the Borrower or any of
---------------
its Subsidiaries and the parties referred to in Schedule 2 to this Agreement, as
----------
more particularly described therein, and any other agreement entered into by the
Borrower or any of its Subsidiaries permitting the Borrower or any of its
Subsidiaries to make use of the transmission poles or conduits of such parties
in distributing its cable television signals. Schedule 2 attached hereto sets
----------
forth a description of all Pole Agreements in effect on the Agreement Date as to
which payments scheduled to be made by the Borrower or any of its Subsidiaries
during the term of this Agreement exceed $50,000 in the aggregate.
"Prior Loan Agreement" shall have the meaning ascribed thereto in the
--------------------
recitals to this Agreement.
"Pro Forma Debt Service" shall mean, with respect to the Borrower and its
----------------------
Subsidiaries on a consolidated basis for the next succeeding four (4) calendar
quarters following the calculation date, the sum, without duplication, of (a)
cash Interest Expense for such period, (b) scheduled payments of principal
during such period in respect of the Loans required to be paid pursuant to
Sections 2.5(a) and 2.7(a) hereof or in respect of any other Indebtedness for
Money Borrowed and the principal component of payments for such period in
respect of Capitalized Lease Obligations, (c) management fees and expenses
anticipated to be paid in cash to the Manager during such period pursuant to the
Management Agreement, (d) financial advisory fees and expenses anticipated to be
paid in cash to Kelso during such period pursuant to the Financial Advisory
Agreement, and (e) fees payable during such period in respect of Indebtedness
for Money Borrowed. For purposes of calculating Pro Forma Debt Service
hereunder, when interest payments for the four-quarter period immediately
succeeding the calculation date are not fixed by way
-19-
<PAGE>
of Interest Rate Hedge Agreements, Fixed Rate Advances, or otherwise for the
entire period, interest shall be calculated on such Indebtedness for Money
Borrowed for periods for which interest payments are not so fixed at the LIBOR
Basis (based on the then current adjustment under Section 2.3(g) hereof) for a
LIBOR Advance having an Interest Period of three (3) months as determined on the
date of calculation; provided, however, that if such LIBOR Basis cannot be
-------- -------
determined in the reasonable opinion of the Administrative Agent, such interest
shall be calculated using the Base Rate Basis as then in effect.
"Purchase Agreement" shall mean that certain Stock Purchase Agreement dated
------------------
as of July 1, 1994, as amended, among HC Crown Corp., a Delaware corporation, CM
Acquisition Corp., a Delaware corporation, Marcus Cable Partners, L.P., a
Delaware limited partnership, Charter Communications, Inc., a Delaware
corporation, the General Partner, and Charter Communications II, L.P., a
Delaware limited partnership, together with every exhibit, appendix and schedule
thereto.
"Reference Banks" shall mean The Toronto-Dominion Bank, Credit Lyonnais
---------------
Cayman Island Branch, and Chemical Bank.
"Reportable Event" shall have the meaning set forth in Title IV of ERISA.
----------------
"Request for Advance" shall mean any certificate signed by an Authorized
-------------------
Signatory of the Borrower requesting an Advance hereunder, which certificate
shall be denominated a "Request for Advance," and shall be in substantially the
form of Exhibit D attached hereto. Each Request for Advance shall, among other
---------
things, (a) specify the date of the Advance, which shall be a Business Day, the
amount of the Advance, the type of Advance and, with respect to Fixed Rate
Advances, the Interest Period selected by the Borrower, (b) specify the
Commitment under which the Advance is to be made, (c) state that there shall not
exist, on the date of the requested Advance and after giving effect thereto, a
Default, and (d) specify the use of the proceeds of the Loans being requested.
"Restricted Payment" shall mean (a) any direct or indirect distribution,
------------------
dividend or other payment to any Person on account of any capital stock, general
or limited partnership interest, or other ownership interest (whether common or
preferred) in, or other equity securities of, the Borrower or any of its
Subsidiaries or in connection with any tax sharing agreement, including, without
limitation, Tax Distributions; and (b) any management, consulting, advisory,
search, acquisition or other similar fees or payments, or any interest thereon,
payable by the Borrower or any of its Subsidiaries to any Affiliate or to any
-20-
<PAGE>
other Person, including but not limited to payments to the Manager under the
Management Agreement and payments to Kelso under the Financial Advisory
Agreement.
"Restricted Purchase" shall mean any payment on account of the purchase,
-------------------
redemption or other acquisition or retirement of any capital stock, general or
limited partnership interest, or other ownership interest in, or other
securities of, the Borrower or any of its Subsidiaries.
"Revolving Loan Commitment" shall mean the several obligations of the Banks
-------------------------
issuing a Revolving Loan Commitment to advance the sum of up to $20,000,000 at
any one time outstanding, in accordance with their respective Commitment Ratios,
to the Borrower pursuant to the terms hereof, as such obligations may be reduced
from time to time pursuant to the terms hereof.
"Revolving Loan Notes" shall mean those certain amended and restated
--------------------
revolving promissory notes in the aggregate principal amount of $20,000,000, one
such note issued to each of the Banks having a Revolving Loan Commitment
hereunder by the Borrower, each one substantially in the form of Exhibit E
---------
attached hereto, and any extensions, renewals, amendments or substitutions to
any of the foregoing.
"Revolving Loans" shall mean, collectively, the amounts advanced by the
---------------
Banks issuing a Revolving Loan Commitment to the Borrower under the Revolving
Loan Commitment, not to exceed the amount of the Revolving Loan Commitment, and
evidenced by the Revolving Loan Notes.
"Security Agreement" shall mean that certain Security Agreement of even
------------------
date by and between the Borrower and the Administrative Agent, for itself and on
behalf of the Banks and the other Agents, in substantially the form of Exhibit F
---------
attached hereto.
"Security Documents" shall mean the Security Agreement, the Assignment of
------------------
Rights by General Partner, the Assignment of Rights by Limited Partner, the
Mortgage, any other agreement or instrument providing collateral for the
Obligations whether now or hereafter in existence, and any filings, instruments,
agreements, and documents related thereto or to this Agreement, and providing
collateral for the Obligations.
"Security Interest" shall mean all Liens in favor of the Administrative
-----------------
Agent for itself and on behalf of the Banks and the other Agents created under
this Agreement or any of the Security Documents to secure the Obligations.
-21-
<PAGE>
"Subordination Agreement" shall mean that certain Subordination Agreement
-----------------------
dated as of January 18, 1995, by and among the Agents, the Banks, Holdings and
HC Crown Corp., a Delaware corporation, in the form of Exhibit G attached
---------
hereto.
"Subordination of Management and Financial Advisory Fees Agreement" shall
-----------------------------------------------------------------
mean that certain Subordination of Management and Financial Advisory Fees
Agreement of even date herewith by and among the Manager, Kelso and the
Administrative Agent, for itself and on behalf of the Banks and the other
Agents, substantially in the form attached hereto as Exhibit H.
---------
"Subsidiary" shall mean, as applied to any Person, (a) any corporation of
----------
which fifty percent (50%) or more of the outstanding stock (other than
directors' qualifying shares) having ordinary voting power to elect a majority
of its board of directors, regardless of the existence at the time of a right of
the holders of any class or classes of securities of such corporation to
exercise such voting power by reason of the happening of any contingency, or any
partnership of which fifty percent (50%) or more of the outstanding partnership
interests, is at the time owned by such Person, or by one or more Subsidiaries
of such Person, or by such Person and one or more Subsidiaries of such Person,
and (b) any other entity which is controlled or susceptible to being controlled
by such Person, or by one or more Subsidiaries of such Person, or by such Person
and one or more Subsidiaries of such Person. Unless the context otherwise
requires, "Subsidiaries" as used herein shall mean the Subsidiaries of the
------------
Borrower. The Subsidiaries of the Borrower as of the Agreement Date are set
forth on Schedule 3 attached hereto.
----------
"System" shall mean, collectively, those certain cable systems and other
------
assets described as the "Missouri/Connecticut System" under the Purchase
Agreement, together with any other cable television systems acquired by the
General Partner or Cencom on or prior to the Agreement Date or hereafter
acquired by the Borrower or any of its Subsidiaries in accordance with the terms
and conditions of this Agreement.
"Tax Distributions" shall mean all amounts distributed in cash by the
-----------------
Borrower to the Partners to pay the Federal and state income tax liability of
the Partners (or their indirect or direct partners or shareholders who are
ultimately liable for such taxes) on the earnings of the Borrower and its
Subsidiaries, and any state franchise taxes with respect to the Borrower or any
of its Subsidiaries, after giving effect to all available losses, offsets,
credits, or other tax benefits; provided, however, the amount of such
-------- -------
distributions shall not exceed the actual aggregate tax liability (including
estimated taxes) of such
-22-
<PAGE>
Persons generated as a result of the Borrower's and its Subsidiaries' earnings
or the aggregate amount of such franchise taxes, as applicable, and shall be
distributed to the Partners no later than thirty (30) days after such taxes have
been paid by any such Persons.
"Taxes" shall have the meaning ascribed to such term in Section 2.9(b)
-----
hereof.
"Term Loan" shall mean, collectively, the amounts advanced by the Banks
---------
issuing a Term Loan Commitment to the General Partner on January 18, 1995 under
the Term Loan Commitment in an aggregate principal amount equal to the Term Loan
Commitment, which "Term Loan" is hereby assumed by the Borrower as of the
Agreement Date and which is evidenced by the Term Loan Notes.
"Term Loan Commitment" shall mean the several obligations of the Banks
--------------------
issuing a Term Loan Commitment to advance the sum of $280,000,000 to the General
Partner on January 18, 1995, in accordance with their respective Commitment
Ratios pursuant to the terms of the Prior Loan Agreement.
"Term Loan Notes" shall mean those certain amended and restated term
---------------
promissory notes in the aggregate principal amount of $280,000,000, one such
note issued to each of the Banks having a Term Loan Commitment by the Borrower,
each one substantially in the form of Exhibit I attached hereto, and any
---------
extensions, renewals, amendments or substitutions to any of the foregoing.
"Total Debt" shall mean, for the Borrower and its Subsidiaries on a
----------
consolidated basis as of any date, the sum of (a) Indebtedness for Money
Borrowed, plus (b) Capitalized Lease Obligations, plus (c) all reimbursement
obligations with respect to outstanding letters of credit, plus (d) all
obligations under Guaranties in respect of Indebtedness for Money Borrowed and
Capitalized Lease Obligations of any other Person.
"Upstream Dividends" shall have the meaning ascribed to such term in
------------------
Section 7.16 hereof.
Each definition of an agreement in this Article 1 shall include such
agreement as amended from time to time (with, to the extent required hereunder,
the prior written consent of the Banks or the Majority Banks, as provided in
Section 11.12 hereof).
-23-
<PAGE>
ARTICLE 2
Loans
-----
Section 2.1 The Loans.
---------
(a) Term Loans. The Banks who issued a Term Loan Commitment agreed
----------
to lend to the General Partner, on January 18, 1995, an amount not to exceed, in
the aggregate, the amount of the Term Loan Commitment. The Borrower hereby
assumes all of the "Obligations" of the General Partner which were previously
assumed by CCELP, as such term is defined under the Prior Loan Agreement,
including, without limitation, all obligations of the General Partner with
respect to "Advances" outstanding under the "Term Loan" (as such terms are
defined in the Prior Loan Agreement). For all purposes hereafter, all such
"Advances" under the "Term Loan" under the Prior Loan Agreement shall be deemed
to have been made to the Borrower as Advances of the Term Loan hereunder and
shall constitute a portion of the Obligations. Advances under the Term Loan
Commitment may be repaid and reborrowed as provided in Section 2.2(b), Section
2.2(c) and Section 2.2(d) hereof in order to effect changes in the Interest Rate
Bases applicable to the Advances thereunder, provided, however, that there shall
be no net increase in the aggregate principal amount outstanding under the Term
Loan Commitment.
(b) Revolving Loans. The Banks who have issued a Revolving Loan
---------------
Commitment agree, severally in accordance with their respective Commitment
Ratios relating to the Revolving Loan Commitment and not jointly, upon the terms
and subject to the conditions of this Agreement, to lend and relend to the
Borrower from time to time amounts which do not exceed in the aggregate at any
one time outstanding the amount of the Revolving Loan Commitment as in effect
from time to time. The Borrower hereby assumes all "Obligations" of the General
Partner which were previously assumed by CCELP in respect of "Advances"
outstanding under the "Revolving Loan Commitment" (as such terms are defined in
the Prior Loan Agreement). For all purposes hereafter, all such outstanding
"Advances" shall be deemed to have been made to the Borrower as Advances under
the Revolving Loan Commitment hereunder and shall constitute a portion of the
Obligations. Advances under the Revolving Loan Commitment may be repaid and
then reborrowed as provided in Section 2.2(b), Section 2.2(c) and Section
2.2(d).
-24-
<PAGE>
Section 2.2 Manner of Borrowing and Disbursement.
------------------------------------
(a) Choice of Interest Rate, Etc. Any Advance shall, at the option
----------------------------
of the Borrower as provided in Section 2.2 hereof, be made as a Base Rate
Advance, a LIBOR Advance or a CD Rate Advance; provided, however, that the
-------- -------
Borrower may not receive a Fixed Rate Advance after the occurrence and during
the continuance of a Default hereunder. Fixed Rate Advances shall in all cases
be subject to Section 2.3(f) and Article 10 hereof. Any notice given to the
Administrative Agent in connection with a requested Advance hereunder shall be
given to the Administrative Agent prior to 11:00 a.m. (Houston, Texas time) in
order for such Business Day to count toward the minimum number of Business Days
required.
(b) Base Rate Advances.
------------------
(i) Advances. The Borrower shall give the Administrative Agent
--------
in the case of Base Rate Advances at least one (1) Business Day's
irrevocable written notice in the form of a Request for Advance, or
telecopied notice followed immediately by an original Request for Advance;
provided, however, that the Borrower's failure to confirm any telecopied
-------- -------
notice with an original Request for Advance shall not invalidate any notice
so given.
(ii) Repayments and Reborrowings. Subject to the provisions of
---------------------------
Section 2.3(f) hereof, the Borrower may repay or prepay a Base Rate Advance
without regard to its Payment Date and (i) upon at least one (1) Business
Day's irrevocable prior written notice to the Administrative Agent,
reborrow all or a portion of the principal amount thereof as one or more
Base Rate Advances, (ii) upon at least three (3) Business Days' irrevocable
prior written notice to the Administrative Agent, reborrow all or a portion
of the principal thereof as one or more Fixed Rate Advances, or (iii) not
reborrow all or any portion of such Base Rate Advance. On the date
indicated by the Borrower, such Base Rate Advance shall be so repaid and,
as applicable, reborrowed.
(c) LIBOR Advances.
--------------
(i) Advances. Upon request, the Administrative Agent, whose
--------
determination shall be conclusive, shall determine the available LIBOR
Bases and shall notify the Borrower of such LIBOR Bases. The Borrower
shall give the Administrative Agent in the case of LIBOR Advances at least
three (3) Business Days' irrevocable written notice in the form of a
Request for Advance, or telecopied notice followed
-25-
<PAGE>
immediately by an original Request for Advance; provided, however, that the
-------- -------
Borrower's failure to confirm any telecopied notice with an original
Request for Advance shall not invalidate any notice so given. Upon receipt
of such notice from the Borrower, the Administrative Agent shall promptly
notify each Bank by telephone or telecopy of the contents thereof.
(ii) Repayments and Reborrowings. At least three (3) Business
---------------------------
Days prior to each Payment Date for a LIBOR Advance, the Borrower shall
give the Administrative Agent written notice specifying whether all or a
portion of any LIBOR Advance outstanding on the Payment Date (i) is to be
repaid and then reborrowed in whole or in part as a LIBOR Advance, (ii) is
to be repaid and then reborrowed in whole or in part as a CD Rate Advance,
(iii) is to be repaid and then reborrowed in whole or in part as one or
more Base Rate Advances, or (iv) is to be repaid and not reborrowed. Upon
such Payment Date such LIBOR Advance will, subject to the provisions
hereof, be so repaid and, as applicable, reborrowed.
(d) CD Rate Advances.
----------------
(i) Advances. Upon request, the Administrative Agent, whose
--------
determination shall be conclusive, shall determine the available CD Rate
Bases and shall notify the Borrower of such CD Rate Bases. The Borrower
shall give the Administrative Agent in the case of CD Rate Advances at
least three (3) Business Days' irrevocable written notice in the form of a
Request for Advance, or telecopied notice followed immediately by an
original Request for Advance; provided, however, that the Borrower's
-------- -------
failure to confirm any telecopied notice with an original Request for
Advance shall not invalidate any notice so given. Upon receipt of such
notice from the Borrower, the Administrative Agent shall promptly notify
each Bank by telephone or telecopy of the contents thereof.
(ii) Repayments and Reborrowings. At least three (3) Business
---------------------------
Days prior to each Payment Date for a CD Rate Advance, the Borrower shall
give the Administrative Agent written notice specifying whether all or a
portion of any CD Rate Advance outstanding on the Payment Date (i) is to be
repaid and then reborrowed in whole or in part as a CD Rate Advance, (ii)
is to be repaid and then reborrowed in whole or in part as a LIBOR Advance,
(iii) is to be repaid and then reborrowed in whole or in part as one or
more Base Rate Advances, or (iv) is to be repaid and not reborrowed. Upon
such Payment Date such CD Rate Advance will, subject to the
-26-
<PAGE>
provisions hereof, be so repaid and, as applicable, reborrowed.
(e) Notification of Banks. Upon receipt of a Request for Advance, or
---------------------
a notice from the Borrower with respect to any outstanding Advance prior to the
Payment Date for such Advance, the Administrative Agent shall notify each Bank
by telephone or telecopy of the contents thereof and the amount of such Bank's
portion of the Advance on the same day such Request for Advance or notice is
received by the Administrative Agent, provided that such Request for Advance or
notice is received by the Administrative Agent prior to 11:00 a.m. (Houston,
Texas time). Each Bank shall, not later than 12:00 noon (Houston, Texas time)
on the date specified in such notice, make available to the Administrative Agent
at the Administrative Agent's Office, or at such account as the Administrative
Agent shall designate, the amount of its portion of the Advance in immediately
available funds.
(f) Disbursement. Prior to 1:00 p.m. (Houston, Texas time) on the
------------
date of an Advance hereunder, the Administrative Agent shall, subject to the
satisfaction of the conditions set forth in Article 3, disburse the amounts made
available to the Administrative Agent by the Banks (or as otherwise provided
below) in like funds by (i) transferring the amounts so made available (or as
otherwise provided below) by wire transfer pursuant to the Borrower's
instructions, or (ii) in the absence of such instructions, crediting the amounts
so made available (or as otherwise provided below) to the account of the
Borrower maintained with the Administrative Agent. Unless the Administrative
Agent shall have received notice from a Bank prior to the date of any borrowing
that such Bank will not make available to the Administrative Agent such Bank's
ratable portion of such borrowing, the Administrative Agent may assume that such
Bank has made such portion available to the Administrative Agent on the date of
such borrowing and the Administrative Agent may, in its sole discretion and in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent such Bank shall not have so made
such ratable portion available to the Administrative Agent, such Bank agrees to
repay to the Administrative Agent forthwith on demand such corresponding amount
together with interest thereon, for each day from the date such amount is made
available to the Borrower until the date such amount is repaid to the
Administrative Agent, at the Federal Funds Rate for three (3) Business Days and
thereafter at the Base Rate. If such Bank shall repay to the Administrative
Agent such corresponding amount, such amount so repaid shall constitute such
Bank's Loan as part of such borrowing for purposes of this Agreement. If such
Bank does not repay such corresponding amount immediately
-27-
<PAGE>
upon the Administrative Agent's demand therefor, the Administrative Agent shall
notify the Borrower and the Borrower shall immediately pay such corresponding
amount to the Administrative Agent. The failure of any Bank to make the Loan to
be made by it as part of any borrowing shall not relieve any other Bank of its
obligation, if any, hereunder to make its Loan on the date of such borrowing,
but no Bank shall be responsible for any such failure of any other Bank. In the
event that, at any time when the Borrower is not in Default and the conditions
to borrowing set forth in Sections 3.1 and 3.2 hereof, as applicable, have been
satisfied, a Bank for any reason fails or refuses to fund its portion of an
Advance, then, until such time as such Bank has funded its portion of such
Advance (which late funding shall not absolve such Bank from any liability it
may have to the Borrower), or all other Banks have received payment in full from
the Borrower (whether by repayment or prepayment) or otherwise of the principal
and interest due in respect of such Advance, such non-funding Bank shall not
have the right (A) to vote regarding any issue on which voting is required or
advisable under this Agreement or any other Loan Document, and the amount of the
Loans of such Bank shall not be counted as outstanding for purposes of
determining "Majority Banks" hereunder, and (B) to receive payments of
principal, interest or fees from the Borrower, the Administrative Agent or the
other Banks in respect of its Loans.
Section 2.3 Interest.
--------
(a) On Base Rate Advances. Interest on each Base Rate Advance shall
---------------------
be computed on the basis of a year of 365/366 days for the actual number of days
elapsed and shall be payable at the Base Rate Basis for such Advance on the
applicable Payment Date. Interest on Base Rate Advances then outstanding shall
also be due and payable on the Maturity Date.
(b) On LIBOR Advances. Interest on each LIBOR Advance shall be
-----------------
computed on the basis of a 360-day year for the actual number of days elapsed
and shall be payable at the LIBOR Basis for such Advance in arrears on the
applicable Payment Date, and, in addition, if the Interest Period for a LIBOR
Advance exceeds three (3) months, interest on such LIBOR Advance shall also be
due and payable in arrears on each three-month anniversary of the date of such
LIBOR Advance during such Interest Period. Interest on LIBOR Advances then
outstanding shall also be due and payable on the Maturity Date.
(c) On CD Rate Advances. Interest on each CD Rate Advance shall be
-------------------
computed on the basis of a 360-day year for the actual number of days elapsed
and shall be payable at the CD Rate Basis for such Advance in arrears on the
applicable Payment Date,
-28-
<PAGE>
and, in addition, if the Interest Period for a CD Rate Advance exceeds ninety
(90) days, interest on such CD Rate Advance shall also be due and payable in
arrears on every ninetieth day anniversary of the date of such CD Rate Advance
during such Interest Period. Interest on CD Rate Advances then outstanding
shall also be due and payable on the Maturity Date.
(d) Interest if no Notice of Selection of Interest Rate Basis. If the
---------------------------------------------------------
Borrower fails to give the Administrative Agent timely notice of its selection
of a LIBOR Basis or a CD Rate Basis, or if for any reason a determination of a
LIBOR Basis or a CD Rate Basis for any Advance is not timely concluded and the
Administrative Agent has used reasonable efforts to make such determination, the
Base Rate Basis shall apply to such Advance.
(e) Interest Upon Default. Immediately upon the occurrence and during
---------------------
the continuance of an Event of Default, interest on the outstanding principal
balance of the Loans shall accrue at the Default Rate from the date of such
Event of Default. Such interest shall be payable on the earlier of demand or
the Maturity Date and shall accrue until the earlier of (i) waiver or cure (to
the satisfaction of the Majority Banks) of the applicable Event of Default, (ii)
agreement by the Majority Banks to rescind the charging of interest at the
Default Rate, or (iii) payment in full of the Obligations. The Banks shall not
be required to (1) accelerate the maturity of the Loans, (2) exercise any other
rights or remedies under the Loan Documents, or (3) give notice to the Borrower
of the decision to charge interest on the Loans at the Default Rate in
accordance herewith, prior to or in conjunction with the effective date of the
commencement of any accrual of interest at the Default Rate.
(f) Fixed Rate Contracts. At no time may the sum of the number of
--------------------
outstanding Fixed Rate Advances exceed eight (8).
(g) Applicable Margin. With respect to any Advance under the Term
-----------------
Loan Commitment or the Revolving Loan Commitment, the Applicable Margin shall be
as set forth in the table set forth below based upon the Leverage Ratio as of
the end of the most recently completed calendar quarter. Changes to the
Applicable Margin shall be effective as of the second (2nd) Business Day after
the day on which the financial statements are required to be delivered to the
Administrative Agent and the Banks pursuant to Section 6.1 hereof; provided,
--------
that, if such financial statements are not delivered to the Administrative Agent
- ----
and the Banks within five (5) days after the date specified in such Section, the
Leverage Ratio shall be deemed to be greater than 6.00:1, and the Applicable
Margin shall be deemed to be the highest Applicable Margin set forth in the
table set forth below, until the second (2nd) Business Day after the date on
which such
-29-
<PAGE>
financial statements are actually delivered to the Administrative Agent and the
Banks. Upon its receipt of such delinquent financial statements, the
Administrative Agent shall recalculate the Leverage Ratio and the Applicable
Margin by reference to such financial statements, and any change in the
Applicable Margin shall be effective as of the second (2nd) Business Day after
the Administrative Agent's receipt thereof.
<TABLE>
<CAPTION>
the the the
Applicable Applicable Applicable
Margin for Margin for Margin for
If the Base Rate LIBOR CD Rate
Leverage Advances Advances Advances
Ratio is: then shall be and shall be and shall be
-------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Greater than 6.00:1 1.375% 2.375% 2.500%
Greater than 5.50:1,
but less than or
equal to 6.00:1 1.125% 2.125% 2.250%
Greater than 5.00:1,
but less than or
equal to 5.50:1 0.875% 1.875% 2.000%
Greater than 4.50:1,
but less than or
equal to 5.00:1 0.625% 1.625% 1.750%
Greater than 4.00:1,
but less than or
equal to 4.50:1 0.375% 1.375% 1.500%
Less than or equal to
4.00:1 0% 1.125% 1.250%
</TABLE>
(h) Interest on Advances Outstanding under Prior Loan Agreement.
-----------------------------------------------------------
Interest on "Advances" outstanding under the Prior Loan Agreement shall be
payable to the Banks by the Borrower in accordance with the terms and conditions
of the Prior Loan Agreement.
Section 2.4 Commitment Fee. The Borrower agrees to pay to the Banks, in
--------------
accordance with their respective Commitment Ratios, a commitment fee on the
aggregate unborrowed balance of the Revolving Loan Commitment at a rate of
three-eighths of one percent (3/8%) per annum for each day from the Agreement
Date until the Maturity Date. Such commitment fee shall be computed on the
basis of a year of 365/366 days for the actual number of days elapsed, shall be
payable quarterly in arrears on each March 31, June 30, September 30 and
December 31, commencing on September 29, 1995 and on the Maturity Date, and
shall be fully earned when due and non-refundable when paid. The commitment fee
payable under the Prior Loan Agreement shall be paid to the Banks
-30-
<PAGE>
by the Borrower in accordance with the terms and conditions of the Prior Loan
Agreement.
Section 2.5 Revolving Loan Commitment Reductions.
------------------------------------
(a) Mandatory. Commencing March 31, 1997 and at the end of each
---------
calendar quarter thereafter, the Revolving Loan Commitment as in effect on March
30, 1997 shall be automatically reduced by the percentages set forth below:
Quarterly Percentage
Reduction of Revolving
Loan Commitment as in
Dates of Reduction Effect on March 30, 1997
------------------ ------------------------
March 31, 1997, June 30,
1997, September 30, 1997
and December 31, 1997 0.9500%
March 31, 1998, June 30,
1998, September 30, 1998
and December 31, 1998 1.8000%
March 31, 1999, June 30,
1999, September 30, 1999
and December 31, 1999 2.7750%
March 31, 2000, June 30,
2000, September 30, 2000
and December 31, 2000 3.5750%
March 31, 2001, June 30,
2001, September 30, 2001
and December 31, 2001 4.4750%
March 31, 2002, June 30,
2002, September 30, 2002
and December 31, 2002 5.5250%
March 31, 2003, June 30,
2003, September 30, 2003
and December 31, 2003 5.9000%
The Borrower shall make a repayment of the Revolving Loans
outstanding, together with accrued interest thereon, on or before the effective
date of each reduction in the Revolving Loan Commitment under this Section
2.5(a), such that the aggregate principal amount of the Revolving Loans
outstanding at no time exceeds the Revolving Loan Commitment as so reduced. In
-31-
<PAGE>
addition, any remaining unpaid principal and interest under the Revolving Loan
Commitment shall be due and payable in full on the Maturity Date.
(b) Optional. The Borrower may without penalty at any time terminate
--------
or permanently reduce the Revolving Loan Commitment by giving the Administrative
Agent and the Banks at least ten (10) Business Days' notice thereof; provided,
--------
however, that any reduction shall reduce the Revolving Loan Commitment in a
- -------
principal amount of at least $1,000,000 and an integral multiple of $1,000,000.
The Borrower shall make a repayment of the Loans outstanding under the Revolving
Loan Commitment plus accrued interest on such outstanding Revolving Loans,
together with any costs incurred on account of such repayment under Section
2.10, on or before the effective date of the reduction of the Revolving Loan
Commitment, such that the principal amount of the Revolving Loans outstanding
after such repayment does not exceed the Revolving Loan Commitment as so
reduced. The Borrower shall not have any right to rescind any termination or
reduction pursuant to this Section 2.5.
Section 2.6 Prepayment. The principal amount of any Base Rate Advance
----------
may be prepaid in full or in part at any time, without penalty and without
regard to the Payment Date for such Advance, upon three (3) Business Days' prior
written notice to the Administrative Agent of such prepayment. Fixed Rate
Advances may be prepaid prior to the applicable Payment Date, upon three (3)
Business Days' prior written notice to the Administrative Agent, provided that
-------- ----
the Borrower shall reimburse the Banks on the earlier of demand or the Maturity
Date, for any loss or out-of-pocket expense incurred by the Banks in connection
with such prepayment, as set forth in Section 2.10. Any notice of prepayment
shall be irrevocable and all amounts prepaid on the Loans pursuant to Sections
2.5(b) or 2.6 hereof shall be applied to principal, in inverse order of
maturity. Partial prepayments shall be in a principal amount of at least
$500,000 and integral multiples of $100,000. All prepayments shall be
accompanied by a payment of all accrued but unpaid interest on the principal
amounts so prepaid. Upon receipt of any notice of prepayment, the
Administrative Agent shall promptly notify each Bank of the contents thereof by
telephone or telecopy and of such Bank's portion of the prepayment.
Section 2.7 Repayment.
---------
(a) Scheduled Repayments. Commencing March 31, 1997, the principal
--------------------
balance of the Term Loan shall be amortized in consecutive quarterly
installments on March 31, June 30, September 30, and December 31 of each year
until paid in full, in such amounts as follows:
-32-
<PAGE>
Percent of Principal
Due on Last Day
Payment Dates of Each Quarter
------------- ---------------
March 31, 1997, June 30, 1997,
September 30, 1997 and
December 31, 1997 0.9500%
March 31, 1998, June 30, 1998,
September 30, 1998 and
December 31, 1998 1.8000%
March 31, 1999, June 30, 1999,
September 30, 1999 and
December 31, 1999 2.7750%
March 31, 2000, June 30, 2000,
September 30, 2000 and
December 31, 2000 3.5750%
March 31, 2001, June 30, 2001,
September 30, 2001 and
December 31, 2001 4.4750%
March 31, 2002, June 30, 2002,
September 30, 2002 and
December 31, 2002 5.5250%
March 31, 2003, June 30, 2003,
September 30, 2003 and
December 31, 2003 5.9000%
A final payment of all principal amounts and other Obligations then outstanding
shall be due and payable on the Maturity Date.
(b) Repayments Upon Sales of Assets and Asset Swaps. Except as
-----------------------------------------------
provided below with respect to Permitted Asset Swaps, in the event of any sale,
lease, transfer or other disposition of assets permitted hereunder, excluding
any such sale, lease, transfer or other disposition of assets by the Borrower or
any of its Subsidiaries in the ordinary course of business (collectively, "Asset
Sales"), to the extent that the Net Proceeds with respect thereto (when taken
together with the Net Proceeds of all other Asset Sales made subsequent to the
Agreement Date) are in excess of $5,000,000 in the aggregate for all Asset Sales
made during the period from the Agreement Date to the Maturity Date, the
Borrower shall, on the date of such sale, lease, transfer or other disposition,
make a repayment of the principal of the Term Loan then outstanding in an amount
equal to
-33-
<PAGE>
the Net Proceeds in excess of the first $5,000,000 of all such Asset Sales. Any
such Net Proceeds which constitute a portion of the sales price which was
previously held in escrow or paid in installments shall be paid to the extent
required by the terms hereof to the Banks as a repayment of principal at such
time as such Net Proceeds are received by the Borrower. In the event the
Borrower elects to enter into a Permitted Asset Swap, the Borrower shall, on the
date it sells, leases, transfers or otherwise disposes of all or substantially
all of its interests in the cable television system owned by the Borrower or any
of its Subsidiaries in the State of Connecticut, deposit in an escrow account
with the Administrative Agent an amount equal to the Net Proceeds of such sale,
lease, transfer or other disposition. The amount deposited in such escrow
account shall be held in such escrow account until the earlier to occur of the
consummation of the Permitted Asset Swap or the first anniversary of the sale,
lease, transfer or other disposition of such Connecticut assets or interests
relating thereto. Amounts held in such escrow account may be invested as
permitted under Section 7.6(i), (ii) and (iii) hereof, or as otherwise agreed to
by the Borrower and the Administrative Agent. Net Proceeds held in escrow by
the Administrative Agent may be used by the Borrower at any time prior to the
first anniversary of such sale, lease, transfer or other disposition of
Connecticut assets or interests to consummate a Permitted Asset Swap or to repay
the principal amount of the Term Loan. All Net Proceeds remaining in escrow
with the Administrative Agent pursuant to this Section 2.7(b) on such first
anniversary date shall be immediately applied to repay the principal amount of
the Term Loan. All amounts paid by the Borrower pursuant to this subsection
shall be applied to principal of the Term Loan pro rata over the scheduled
repayment schedule set forth in Section 2.7(a) above.
(c) Annual Excess Cash Flow Recapture. In addition to the foregoing,
---------------------------------
the Borrower agrees that on April 30, 1998 and on each April 30th thereafter
during the term of this Agreement, the Borrower shall make a repayment of the
principal of the Term Loan then outstanding in an amount equal to (i) seventy-
five percent (75%) of Annual Excess Cash Flow for the Borrower's preceding
fiscal year if the Leverage Ratio as of the end of such preceding fiscal year
(but before giving effect to such repayment) is greater than or equal to 5.5:1,
or (ii) fifty percent (50%) of Annual Excess Cash Flow for the Borrower's
preceding fiscal year if the Leverage Ratio at the time of such payment (but
before giving effect to such repayment) is less than 5.5:1, together, in any
case, with accrued interest on the portion of the Term Loan so repaid. All
amounts paid by the Borrower pursuant to this subsection in respect of the
principal of the Term Loan shall be applied to such principal in inverse order
of maturity.
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<PAGE>
(d) Reimbursement. In addition to any principal repayment required to
-------------
be made under Section 2.5 or Sections 2.7(a), (b) or (c) hereof, the Borrower
shall reimburse the Banks pursuant to Section 2.10 hereof for any loss or out-
of-pocket expense incurred by the Banks in connection with such repayment.
Section 2.8 Notes; Loan Accounts.
--------------------
(a) The Loans shall be repayable in accordance with the terms and
provisions set forth herein, and shall be evidenced by the Notes. One Term Loan
Note and one Revolving Loan Note shall be payable to the order of each Bank for
such Commitment, in accordance with the respective Commitment Ratio of such Bank
for the applicable Commitment. The Notes shall be issued by the Borrower to
each Bank and each Note shall be duly executed and delivered by the Authorized
Signatories.
(b) Each Bank may open and maintain on its books in the name of the
Borrower one or more loan accounts with respect to the Loans and interest
thereon. Each Bank which opens such loan accounts shall debit such loan
accounts for the principal amount of each Advance made by it and accrued
interest thereon, and shall credit such loan accounts for each payment on
account of principal of or interest on its Loans. The records of a Bank with
respect to the loan account maintained by it shall be prima facie evidence of
----- -----
the Loans and accrued interest thereon.
Section 2.9 Manner of Payment.
-----------------
(a) Each payment (including any prepayment) by the Borrower on account
of the principal of or interest on the Loans, commitment fees, and any other
amount owed to the Banks or the Agents under this Agreement or the other Loan
Documents shall be made not later than 1:00 p.m. (Houston, Texas time) on the
date specified for payment under this Agreement to the Administrative Agent at
the Administrative Agent's Office, for the account of the Banks and the Agents,
or any of them, as the case may be, in lawful money of the United States of
America in immediately available funds. If any payment is stated to be due
hereunder on the last day of any calendar or fiscal quarter and such day is not
a Business Day, the due date for such payment shall be, instead, the immediately
preceding Business Day in such quarter. Any payment received by the
Administrative Agent after 1:00 p.m. (Houston, Texas time) shall be deemed
received on the next Business Day. Receipt by the Administrative Agent of any
payment intended for any Bank or any Agent hereunder prior to 1:00 p.m.
(Houston, Texas time) on any Business Day shall be deemed to constitute receipt
by such Bank or such Agent (as appropriate) on such Business Day. In the case
of a payment for the account of a Bank or an Agent, the Administrative Agent
will promptly
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<PAGE>
thereafter distribute the amount so received in like funds to such Bank or such
Agent, as the case may be. If the Administrative Agent shall not have received
any payment from the Borrower as and when due, the Administrative Agent will
promptly notify the Banks accordingly.
(b) The Borrower agrees to pay principal, interest, fees and all other
amounts due hereunder or under the Notes or the other Loan Documents without
set-off or counterclaim or any deduction whatsoever, including withholding
taxes, excluding, (i) in the case of each Bank and each Agent, taxes measured by
its net income, and franchise taxes imposed on it by the jurisdiction under the
laws of which it is organized or any political subdivision thereof, (ii) in the
case of each Bank, taxes (including, but not limited to, the Branch Profits Tax
under Section 884 of the Code) measured by its net income, and franchise taxes
imposed on it, by the jurisdiction of such Bank's applicable lending office or
any political subdivision thereof and (iii) in the case of any Bank organized
under the laws of a jurisdiction outside the United States, United States
federal withholding tax payable with respect to payments by the Borrower which
would not have been imposed had such Bank, to the extent then required
thereunder, delivered to the Borrower and the Administrative Agent the forms
prescribed by Section 2.9(d) hereof (all such non-excluded taxes being
hereinafter referred to as "Taxes").
(c) Prior to the acceleration of the Loans under Section 8.2 hereof,
if some but less than all amounts due from the Borrower are received by the
Administrative Agent, the Administrative Agent shall distribute such amounts in
the following order of priority, all in accordance where applicable with the
respective Commitment Ratios of the Banks for the applicable Commitment: (i) to
the costs and expenses, if any, incurred by the Administrative Agent in the
collection of such amounts under this Agreement or any of the other Loan
Documents; (ii) to the payment of all fees then due and payable hereunder; (iii)
to the payment of interest then due and payable on the Loans; (iv) to the
payment of all other amounts not otherwise referred to in this Section 2.9(c)
then due and payable hereunder or under the Notes or the other Loan Documents;
and (v) to the payment of principal then due on the Term Loan and then due on
the Revolving Loans, which payments shall be applied against outstanding
Advances in the following order of priority: (A) Advances, the Interest Period
for which is expiring concurrently with such payment, (B) Base Rate Advances,
(C) CD Rate Advances, and (D) LIBOR Advances. Subsequent to any acceleration of
the Loans under Section 8.2 hereof, all amounts received from any source
whatsoever by the Administrative Agent or any of the Banks with respect to the
Borrower shall be paid to
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<PAGE>
and distributed by the Administrative Agent in the manner provided in Section
2.11(c) hereof.
(d) Prior to the date on which any Person becomes a Bank hereunder,
and from time to time thereafter if either required by law due to a change in
circumstances or reasonably requested by the Borrower or the Administrative
Agent (unless such Bank is unable to do so by reasons of change in law), each
Bank organized under the laws of a jurisdiction outside the United States shall
provide the Administrative Agent and the Borrower with an IRS Form 4224 or Form
1001 or other applicable form, certificate or document prescribed by the IRS
certifying as to such Bank's entitlement to full exemption from United States
withholding tax with respect to all payments to be made to such Bank hereunder
and under any Note. Unless the Borrower and the Administrative Agent have
received forms or other documents satisfactory to them indicating that payments
hereunder or under any Note are not subject to United States withholding tax (or
there is a change in law preventing delivery thereof), the Borrower or the
Administrative Agent shall, in the case of payments to or for any Bank organized
under the law of a jurisdiction outside the United States, (i) withhold taxes
from such payments at the applicable statutory rate, or at a rate reduced by an
applicable tax treaty (provided that the Borrower and the Administrative Agent
have received forms or other documents satisfactory to them indicating that such
reduced rate applies) and (ii) pay such Bank such payment net of any taxes
withheld. To the extent that the Borrower is obligated hereunder, the Borrower
shall provide evidence that such taxes of any nature whatsoever in respect of
this Agreement, any Loan or any Note shall have been paid to the appropriate
taxing authorities by delivery to the Bank on whose account such payment was
made of the official tax receipts or notarized copies of such receipts within
thirty (30) days after payment of such tax. If the Borrower fails to make any
such payment when due, the Borrower shall indemnify the Banks for any
incremental taxes, interest or penalties that may become payable by any Bank as
a result of any such failure.
Section 2.10 Reimbursement.
-------------
(a) Whenever any Bank shall sustain or incur any losses or out-of-
pocket expenses in connection with (i) failure by the Borrower to borrow any
Fixed Rate Advance after having given notice of its intention to borrow in
accordance with Section 2.2 hereof (whether by reason of the Borrower's election
not to proceed or the non-fulfillment of any of the conditions set forth in
Article 3 hereof), or (ii) prepayment or repayment of any Fixed Rate Advance in
whole or in part (including a prepayment pursuant to Sections 10.2 and 10.3(b)
hereof) prior to
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<PAGE>
its Payment Date, the Borrower agrees to pay to such Bank, upon the earlier of
such Bank's demand or the Maturity Date, an amount sufficient to compensate such
Bank for all such losses and out-of-pocket expenses. Such Bank's good faith
determination of the amount of such losses or out-of-pocket expenses, absent
manifest error, shall be binding and conclusive.
(b) Loss subject to reimbursement hereunder shall be any loss incurred
by any Bank in connection with the re-employment of funds prepaid, repaid, not
borrowed, or paid, as the case may be, and the amount of such loss shall be the
excess, if any, of (i) interest or other costs to such Bank of the deposit or
other sources of funding used to make any such Fixed Rate Advance for the
remainder of its Interest Period over (ii) the interest earned (or to be earned)
by such Bank upon the re-lending or other redeployment of the amount of such
Fixed Rate Advance for the remainder of its putative Interest Period.
Section 2.11 Pro Rata Treatment.
------------------
(a) Advances. Each Advance from the Banks under the Revolving Loan
--------
Commitment or the Term Loan Commitment shall be made pro rata on the basis of
the respective Commitment Ratios of the Banks applicable to the particular
Commitment.
(b) Payments Prior to Declaration of Event of Default. Prior to the
-------------------------------------------------
acceleration of the Loans under Section 8.2 hereof, each payment and prepayment
of the Loans, and, except as provided in Article 10 hereof, each payment of
interest on the Loans, shall be made to the Banks pro rata on the basis of their
respective unpaid principal amounts outstanding under the applicable Commitment
immediately prior to such payment or prepayment. If any Bank shall obtain any
payment (whether involuntary, through the exercise of any right of set-off, or
otherwise) on account of the Loans made by it in excess of its ratable share of
the Loans under its Commitment Ratio for the applicable Commitment, such Bank
shall forthwith purchase from the other Banks having Commitment Ratios with
respect to the applicable Commitment such participations in the Loans made by
them as shall be necessary to cause such purchasing Bank to share the excess
payment ratably with each of them; provided, however, that if all or any portion
-------- -------
of such excess payment is thereafter recovered from such purchasing Bank, such
purchase from each Bank shall be rescinded and such Bank shall repay to the
purchasing Bank the purchase price to the extent of such recovery. The Borrower
agrees that any Bank so purchasing a participation from another Bank pursuant to
this Section may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of set-off) with respect to such
participation as fully
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<PAGE>
as if such Bank were the direct creditor of the Borrower in the amount of such
participation.
(c) Payments Subsequent to Declaration of Event of Default.
------------------------------------------------------
Subsequent to the acceleration of the Loans under Section 8.2 hereof, payments
and prepayments made to the Administrative Agent, the other Agents or the Banks
or otherwise received by any of them (from realization on Collateral for the
Obligations or otherwise) shall be distributed as follows: first, to the
-----
Administrative Agent's reasonable costs and expenses, if any, incurred in
connection with the collection of such payment or prepayment, including, without
limitation, any reasonable costs incurred in connection with the sale or
disposition of any Collateral for the Obligations; second, to the payment of
------
fees then due and payable to the Banks and any costs and expenses, if any,
incurred by any of the Banks under Section 11.2(c) hereof, pro rata on the basis
of the amount of such Obligations; third, to any unpaid interest which may have
-----
accrued on the Obligations, pro rata on the basis of the amount of such
Obligations; fourth, to any unpaid principal of the Obligations, pro rata on the
------
basis of the amount of such Obligations; fifth, to damages incurred by the
-----
Administrative Agent or any Bank by reason of any breach hereof or of any other
Loan Document, pro rata on the basis of the amount of such Obligations; and
sixth, upon satisfaction in full of all Obligations, to the Borrower or as
- -----
otherwise required by law.
Section 2.12 Capital Adequacy. If any Bank shall determine that the
----------------
adoption, after the date hereof, of any Applicable Law regarding the capital
adequacy of banks or bank holding companies, or any change therein or in any
Applicable Law existing as of the date hereof, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by such Bank with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such
governmental authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on such Bank's capital as a consequence of
its commitment of its obligations to fund or maintain Advances hereunder to a
level below that which it could have achieved but for such adoption, change or
compliance (taking into consideration such Bank's policies with respect to
capital adequacy immediately before such adoption, change or compliance and
assuming that such Bank's capital was fully utilized prior to such adoption,
change or compliance) by an amount deemed by such Bank in good faith to be
material, then, upon the earlier of demand by such Bank or the Maturity Date,
the Borrower shall immediately pay to such Bank, such additional amounts as
shall be sufficient to compensate such Bank for such reduced return,
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<PAGE>
together with interest on such amount from the fourth (4th) day after the date
of demand or the Maturity Date, as applicable, until payment in full thereof at
the Default Rate. Any Bank claiming compensation under this Section 2.12 shall
notify the Borrower of any event occurring after the date of this Agreement
entitling such Bank to such compensation as promptly as practicable, but in any
event within forty-five (45) days, after such Bank obtains actual knowledge
thereof; provided that if such Bank fails to give such notice within forty-five
--------
(45) days after it obtains actual knowledge of such an event, such Bank shall,
with respect to such compensation in respect of any costs resulting from such
event, only be entitled to payment under the Section 2.12 for costs incurred
from and after the date forty-five (45) days prior to the date that such Bank
does give such notice. A certificate of such Bank setting forth the amount to
be paid to such Bank by the Borrower as a result of any event referred to in
this paragraph shall, absent manifest error, be conclusive, and, at the
Borrower's request, such Bank shall set forth the basis for such determination.
ARTICLE 3
Conditions Precedent
--------------------
Section 3.1 Conditions Precedent to Initial Advance and Closing. The
---------------------------------------------------
obligation of the Banks to undertake the Commitments, to permit the General
Partner's assignment to CCELP, with a subsequent assignment to the Borrower of,
and the Borrower's assumption of, the General Partner's "Obligations" under the
Prior Loan Agreement, and to make the initial Advances hereunder is subject to
the prior fulfillment of each of the following conditions:
(a) The Administrative Agent or the Banks, as appropriate, shall have
received each of the following, in form and substance satisfactory to the
Administrative Agent and the Banks:
(i) duly executed Notes;
(ii) duly executed Subordination of Management and Financial
Advisory Fees Agreement;
iii) duly executed Security Agreement, together with appropriate
UCC-1 financing statements;
(iv) duly executed Mortgage, together with appropriate title
insurance and related documentation;
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<PAGE>
(v) duly executed Assignment of Rights by General Partner,
together with appropriate UCC-1 financing statements;
(vi) duly executed Assignment of Rights by Limited Partner from
each of the Limited Partners, together with appropriate UCC-1 financing
statements;
(vii) opinions or comfort letters of general counsel, FCC
counsel and in-house counsel to the Borrower and its Subsidiaries,
addressed to the Banks and the Administrative Agent and satisfactory to the
Administrative Agent and its special counsel, dated the Agreement Date;
(viii) the loan certificate of the General Partner dated as of
the Agreement Date, in substantially the form attached hereto as Exhibit J,
---------
including a certificate of incumbency with respect to each Authorized
Signatory of the General Partner, together with appropriate attachments
which shall include, without limitation, the following items: (A) a copy
of the Certificate of Incorporation of the General Partner, certified to be
true, complete and correct by the Delaware Secretary of State, (B) a true,
complete and correct copy of the By-Laws of the General Partner, as in
effect on the date hereof, (C) a true, complete and correct copy of the
resolutions of the General Partner authorizing it to execute, deliver and
perform this Agreement and the other Loan Documents on behalf of the
Borrower, (D) certificates of good standing from appropriate jurisdictions
for the General Partner, (E) true, complete and correct copies of all
shareholders agreements or voting trust agreements among the shareholders
of the General Partner, (F) a true, complete and correct copy of the
Partnership Agreement of the Borrower as in effect on the Agreement Date,
and (G) certificates of good standing for the Borrower issued by the
Secretary of State or similar state official for each state in which the
Borrower is required to qualify to do business;
(ix) the loan certificate of the Limited Partners dated as of the
Agreement Date, in substantially the form attached hereto as Exhibit K,
---------
including a certificate of incumbency with respect to each authorized
signatory of the CCT, together with appropriate attachments which shall
include, without limitation, the following items: (A) a copy of the
Certificate of Incorporation of CCT, certified to be true, complete and
correct by the Delaware Secretary of State, (B) a true, complete and
correct copy of the By-Laws of CCT, as in effect on the date hereof, (C) a
true, complete and correct copy of the resolutions of CCT
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<PAGE>
authorizing it to execute, deliver and perform the Loan Documents to which
the Limited Partners are party, for itself and on behalf of CCELP, (D)
certificates of good standing from appropriate jurisdictions for the CCT,
(E) a true, complete and correct copy of the Partnership Agreement of CCELP
as in effect on the Agreement Date, and (F) certificates of good standing
for CCELP issued by the Secretary of State or similar state official for
each state in which the Borrower is required to qualify to do business;
(x) the loan certificate of the Manager dated as of the
Agreement Date, in substantially the form attached hereto as Exhibit L,
---------
including a certificate of incumbency with respect to each authorized
signatory of the Manager, together with appropriate attachments
which shall include, without limitation, the following items:
(A) a copy of the Certificate of Incorporation of the Manager,
certified to be true, complete and correct by the Delaware
Secretary of State, (B) a true, complete and correct copy of the
By-Laws of the Manager, as in effect on the date hereof, (C) a
true, complete and correct copy of the resolutions of the
Manager authorizing it to execute, deliver and perform the Loan
Documents to which it is party, and (D) certificates of good
standing from appropriate jurisdictions for the Manager;
(xi) true, complete and correct copies of the Management
Agreement and the Financial Advisory Agreement;
(xii) copies of all approvals or consents regarding the transfer
of all franchises and contracts to the Borrower;
(xiii) a duly executed Certificate of Financial Condition;
(xiv) copies of insurance binders or certificates covering the
assets of the Borrower and its Subsidiaries, and otherwise meeting the
requirements of Section 5.5 hereof;
(xv) copies of all documents related to the transfer of all
assets and liabilities of the General Partner and Cencom to CCELP and the
subsequent transfer of such assets and liabilities to the Borrower;
(xvi) a copy of the notice to HC Crown Corp., a Delaware
corporation, regarding the transactions contemplated hereby, together with
all related documentation, including, without limitation, copies of all
guaranties and other agreements provided or to be provided
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<PAGE>
to HC Crown Corp. in connection therewith and all correspondence relating
thereto;
(xvii) duly executed Request for Advance for any Advance of the
Loans on the Agreement Date;
(xviii) pro forma balance sheet with respect to the Borrower and
its Subsidiaries on a consolidated basis, after giving effect to the
transactions contemplated hereby, including, without limitation, the
assumption by the Borrower of all obligations of the General Partner under
the Prior Loan Agreement and the making of any new Advances hereunder on
the Agreement Date; and
(xix) all such other documents as the Administrative Agent or
any Bank may reasonably request, certified by an appropriate governmental
official or an Authorized Signatory if so reasonably requested.
(b) The Licenses shall be in form and substance satisfactory to the
Administrative Agent and the Banks, and the Administrative Agent and the Banks
shall have received evidence reasonably satisfactory to them that all Necessary
Authorizations, including all necessary consents to the closing of this
Agreement and the transactions contemplated hereby, from the grantors of the
Licenses have been obtained or made, are in full force and effect and are not
subject to any pending or threatened reversal or cancellation, and the
Administrative Agent and the Banks shall have received a certificate of an
Authorized Signatory so stating.
Section 3.2 Conditions Precedent to Each Advance. The obligation of the
------------------------------------
Banks to make each Advance, including the initial Advances under Section 3.1, is
subject to the fulfillment of each of the following conditions immediately prior
to or contemporaneously with such Advance:
(a) All of the representations and warranties of the Borrower under
this Agreement (including, without limitation, all representations and
warranties with respect to the Borrower's Subsidiaries), which, pursuant to
Section 4.2 hereof, are made at and as of the time of such Advance, shall be
true and correct at such time in all material respects, both before and after
giving effect to the making of the Advance and application of the proceeds of
the Advance;
(b) The incumbency of the Authorized Signatories shall be as stated in
the certificate of incumbency contained in the General Partner's loan
certificate delivered pursuant to Section 3.1(a) hereof or as subsequently
modified and reflected
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<PAGE>
in a certificate of incumbency delivered to the Administrative Agent and the
Banks;
(c) With respect to Advances which, if funded, would increase the
aggregate amount of Loans outstanding hereunder, the Administrative Agent and
the Banks shall have received a duly executed Request for Advance; and
(d) There shall not exist, on the date of the making of the Advance
and after giving effect thereto, a Default hereunder, and, with respect to
Advances which increase the outstanding principal amount of the Loans hereunder,
there shall not have occurred any event which could have or which has had a
Materially Adverse Effect.
ARTICLE 4
Representations and Warranties
------------------------------
Section 4.1 Representations and Warranties. The Borrower hereby agrees,
------------------------------
represents and warrants to the Agents and the Banks that:
(a) Organization; Ownership; Power; Qualification; Capitalization.
-------------------------------------------------------------
The Borrower is a limited partnership duly organized, validly existing and in
good standing under the laws of the State of Delaware. The Borrower has the
partnership power and authority to own its properties and to carry on its
business as now being and hereafter proposed to be conducted. Each Subsidiary
of the Borrower is a corporation or partnership duly organized, validly existing
and in good standing under the laws of the state of its incorporation or
formation and has the corporate or partnership power and authority to own its
properties and to carry on its business as now being and hereafter proposed to
be conducted. The Borrower and each of its Subsidiaries are duly qualified, in
good standing and authorized to do business in each jurisdiction in which the
character of their respective properties or the nature of their respective
businesses requires such qualification or authorization. The General Partner is
the sole general partner of the Borrower and the Limited Partners are the sole
limited partners of the Borrower.
(b) Authorization; Enforceability. The Borrower has the partnership
-----------------------------
power and has taken all necessary partnership action to authorize it to borrow
hereunder, to execute, deliver and perform this Agreement and each of the other
Loan Documents to which it is a party in accordance with their respective terms,
and to consummate the transactions contemplated hereby and
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<PAGE>
thereby. This Agreement has been duly executed and delivered by the Borrower
and is, and each of the other Loan Documents to which the Borrower is party is,
a legal, valid and binding obligation of the Borrower enforceable in accordance
with its terms, except as such enforceability may be limited by (a) bankruptcy,
insolvency, reorganization, moratorium or similar laws of general applicability
affecting the enforcement of creditors' rights and (b) the application of
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(c) Subsidiaries: Authorization; Enforceability. The Borrower's
--------------------------------------------
Subsidiaries and its direct and indirect ownership thereof are as set forth as
of the Agreement Date on Schedule 3 attached hereto, and to the extent such
----------
Subsidiaries are corporations, the Borrower has the unrestricted right to vote
the issued and outstanding shares of the Subsidiaries shown thereon; such shares
of such Subsidiaries have been duly authorized and issued and are fully paid and
nonassessable. Each Subsidiary of the Borrower has the corporate or partnership
power and has taken all necessary corporate or partnership action to authorize
it to execute, deliver and perform each of the Loan Documents to which it is a
party in accordance with their respective terms and to consummate the
transactions contemplated by this Agreement and by such Loan Documents. Each of
the Loan Documents to which any Subsidiary of the Borrower is party is a legal,
valid and binding obligation of such Subsidiary enforceable against such
Subsidiary in accordance with its terms, except as such enforceability may be
limited by (a) bankruptcy, insolvency, reorganization, moratorium or similar
laws of general applicability affecting the enforcement of creditors' rights,
and (b) the application of general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
(d) Compliance with Other Loan Documents and Contemplated
-----------------------------------------------------
Transactions. The execution, delivery and performance, in accordance with their
respective terms, by the Borrower of this Agreement, and by the Borrower and its
Subsidiaries of each of the other Loan Documents to which they are respectively
party, and the consummation of the transactions contemplated hereby and thereby,
do not and will not (i) require any consent or approval not already obtained,
(ii) violate any material Applicable Law respecting the Borrower or any
Subsidiary of the Borrower, (iii) conflict with, result in a breach of, or
constitute a default under the certificate or articles of incorporation, by-
laws, certificate of limited partnership or partnership agreements, as the case
may be, as amended, of the Borrower or of any Subsidiary of the Borrower, under
the Licenses, the Management Agreement or the Financial Advisory
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<PAGE>
Agreement, or, in any material respect, under any material indenture, agreement,
or other instrument to which the Borrower or any Subsidiary of the Borrower is a
party or by which any of them or any of their respective properties may be
bound, including, without limitation, the Pole Agreements, or (iv) result in or
require the creation or imposition of any Lien upon or with respect to any
property now owned or hereafter acquired by the Borrower or any Subsidiary of
the Borrower except Permitted Liens.
(e) Business. The Borrower and its Subsidiaries are engaged primarily
--------
in the business of acquiring, constructing, operating and maintaining the cable
television systems owned, leased or managed by them, respectively, and of
investing in other cable television systems and engaging in other activities
relating to the cable television industry.
(f) Licenses, etc. The Licenses have been duly authorized by the
--------------
grantors thereof and are in full force and effect. The Borrower and its
Subsidiaries are in compliance in all material respects with all of the
provisions thereof. The Borrower and its Subsidiaries have secured all
Necessary Authorizations and all such Necessary Authorizations are in full force
and effect. Neither any License nor any Necessary Authorization is the subject
of any pending or, to the best of the Borrower's knowledge, threatened attack or
revocation. Except as described on Schedule 4 attached hereto, and except for
----------
services operating on a national or regional basis and affecting the cable
television industry generally (for example, the DirecTV DBS service), there is
no Person currently overbuilding any territory within the System.
(g) Compliance with Law. The Borrower and its Subsidiaries are in
-------------------
compliance with all Applicable Laws, non-compliance with which could have a
Materially Adverse Effect.
(h) Title to Assets. Except as set forth on Schedule 5 attached
--------------- ----------
hereto, the Borrower has good, legal and marketable title to, or a valid
leasehold interest in, all of its assets. Each of the Borrower's Subsidiaries
has good, legal and marketable title to, or a valid leasehold interest in, all
of its assets. To the best of the Borrower's knowledge and as disclosed on the
lien searches described in Schedule 5 hereto, none of such properties or assets
----------
is subject to any Liens, except for Permitted Liens. To the best of the
Borrower's knowledge and as disclosed on the lien searches described in Schedule
--------
5 hereto, no financing statement under the Uniform Commercial Code as in effect
- -
in any jurisdiction and no other filing which names the Borrower or any of its
Subsidiaries as debtor or which covers or purports to cover any of the assets of
the Borrower or any of its
-46-
<PAGE>
Subsidiaries is on file in any state or other jurisdiction, and neither the
Borrower nor any of its Subsidiaries has signed any such financing statement or
filing or any security agreement authorizing any secured party thereunder to
file any such financing statement or filing. Neither the Borrower nor any of
its Subsidiaries owns any parcel of real estate with a fair market value in
excess of $750,000, except as set forth on Schedule 6 attached hereto.
----------
(i) Litigation. Except as described on Schedule 7 attached hereto,
---------- ----------
there is no action, suit, proceeding or investigation pending against, or, to
the best of the Borrower's knowledge, threatened against or in any other manner
relating adversely to, the Borrower or any of its Subsidiaries or any of their
respective properties, including, without limitation, the Licenses, in any court
or before any arbitrator of any kind or before or by any governmental body, and
no such action, suit, proceeding or investigation (i) calls into question the
validity of this Agreement or any other Loan Document, or (ii) could, if
determined adversely to the Borrower or any of its Subsidiaries, have a
Materially Adverse Effect.
(j) Taxes. All federal, state and other tax returns of the Borrower
-----
and each of its Subsidiaries required by law to be filed have been duly filed
and all federal, state and other taxes, including, without limitation,
withholding taxes, assessments and other governmental charges or levies required
to be paid by the Borrower or any of its Subsidiaries or imposed upon the
Borrower or any of its Subsidiaries or any of their respective properties,
income, profits or assets, which are due and payable, have been paid, except any
such (x) the payment of which the Borrower or any of its Subsidiaries is
diligently contesting in good faith by appropriate proceedings, (y) for which
adequate reserves have been provided on the books of the Borrower or the
Subsidiary of the Borrower involved, and (z) as to which no Lien other than a
Permitted Lien has attached and no foreclosure, distraint, sale or similar
proceedings have been commenced. The charges, accruals and reserves on the
books of the Borrower and each of its Subsidiaries in respect of taxes are, in
the judgment of the Borrower, adequate. All pro forma financial information
provided to the Agents and the Banks in connection with this Agreement has been
based upon reasonable assumptions and prepared in good faith.
(k) Financial Statements. The pro forma financial statements of the
--------------------
Borrower, with respect to the System, furnished to the Agents and the Banks by
the Borrower on or prior to the Agreement Date are, to the best of the
Borrower's knowledge, complete and correct in all material respects and present
fairly, in accordance with GAAP, the financial position of the Borrower
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<PAGE>
and its Subsidiaries on a consolidated basis, with respect to the System, on and
as at the date thereof, and the results of operations for the period then ended.
The pro forma financial statements of the General Partner, with respect to the
System, furnished to the Agents and the Banks by the General Partner on or prior
to the Agreement Date are, to the best of the Borrower's knowledge, complete and
correct in all material respects and present fairly, in accordance with GAAP,
the financial position of the General Partner and its Subsidiaries on a
consolidated basis, with respect to the System, on and as at the date thereof,
and the results of operations for the period then ended. When furnished to the
Administrative Agent and the Banks in accordance with Sections 6.1 and 6.2
hereof, all copies of the balance sheets and statements of income for the
Borrower and its Subsidiaries on a consolidated basis shall be complete and
correct in all material respects and shall present fairly, in accordance with
GAAP, the financial position of the Borrower and its Subsidiaries on a
consolidated basis on and as at the date thereof and the results of operations
for the periods then ended. Neither the Borrower nor any of its Subsidiaries
shall have material liabilities, contingent or otherwise, other than as
disclosed in the financial statements referred to in the preceding sentence for
the most recently ended fiscal year or quarter, as appropriate, and there shall
be no material unrealized losses of the Borrower or any of its Subsidiaries and
no material anticipated losses of the Borrower or any of its Subsidiaries other
than those which have been previously disclosed in writing to the Administrative
Agent and the Banks and identified to the Administrative Agent and the Banks as
such.
(l) ERISA. The Borrower and each Subsidiary of the Borrower and each
-----
of their respective Plans are in material compliance with ERISA and the Code
and neither the Borrower nor any of its Subsidiaries has incurred any
accumulated funding deficiency with respect to any such Plan within the meaning
of ERISA or the Code. The Borrower, each of its Subsidiaries and each other
Person which is affiliated with the Borrower within the meaning of Section 414
of the Code have materially complied with all requirements of ERISA Sections 601
through 608 and Code Section 4980B. Neither the Borrower nor any of its
Subsidiaries has made any promises of retirement or other benefits to employees,
except as set forth in any Plan. Neither the Borrower nor any of its
Subsidiaries has incurred any material liability to the Pension Benefit Guaranty
Corporation in connection with any such Plan. The assets of each such Plan
which is subject to Title IV of ERISA, if any, are sufficient to provide the
benefits under such Plan payment of which the Pension Benefit Guaranty
Corporation would guarantee if such Plan were terminated, and such assets are
also sufficient to provide all other "benefit liabilities" (as defined in ERISA
Section 4001(a)(1b)) due under
-48-
<PAGE>
the Plan upon termination. No Reportable Event has occurred and is continuing
with respect to any such Plan. No such Plan or trust created thereunder, or
party in interest (as defined in Section 3(14) of ERISA), or any fiduciary (as
defined in Section 3(21) of ERISA), has engaged in a "prohibited transaction"
(as such term is defined in Section 406 of ERISA or Section 4975 of the Code)
which would subject such Plan or any other Plan of the Borrower or any of its
Subsidiaries, any trust created thereunder, or any such party in interest or
fiduciary, or any party dealing with any such Plan or any such trust to the
penalty or tax on "prohibited transactions" imposed by Section 502 of ERISA or
Section 4975 of the Code. Neither the Borrower nor any of its Subsidiaries is a
participant in, and is not obligated to make any payment to, any Multiemployer
Plan.
(m) Compliance with Regulations G, T, U and X. Neither the Borrower
-----------------------------------------
nor any of its Subsidiaries is engaged principally in, or has as one of its
important activities, the business of extending credit for the purpose of
purchasing or carrying, and neither the Borrower nor any of its Subsidiaries
owns or presently intends to acquire, any "margin security" or "margin stock" as
defined in Regulations G, T, U, and X (12 C.F.R. Parts 221 and 224) of the Board
of Governors of the Federal Reserve System (herein called "margin stock"). None
of the proceeds of the Loans will be used, directly or indirectly, for the
purpose of purchasing or carrying any margin stock or for the purpose of
reducing or retiring any Indebtedness which was originally incurred to purchase
or carry margin stock or for any other purpose which might constitute this
transaction a "purpose credit" within the meaning of said Regulations G, T, U,
and X. Neither the Borrower, its Subsidiary, nor any bank acting on their
behalf has taken or will take any action which might cause this Agreement or the
Notes to violate Regulation G, T, U, or X or any other regulation of the Board
of Governors of the Federal Reserve System or to violate the applicable
provisions of the Securities Exchange Act of 1934, in each case as now in effect
or as the same may hereafter be in effect. If so requested by any Bank, the
Borrower and its Subsidiaries will furnish such Bank with (i) a statement or
statements in conformity with the requirements of Federal Reserve Forms G-3
and/or U-1 referred to in Regulations G and U of said Board of Governors and
(ii) other documents evidencing its compliance with the margin regulations,
including without limitation an opinion of counsel in form and substance
satisfactory to such Bank. Neither the making of the Loans nor the use of
proceeds thereof will violate, or be inconsistent with, the provisions of
Regulation G, T, U, or X of said Board of Governors.
(n) Investment Company Act. Neither the Borrower nor any of its
----------------------
Subsidiaries is required to register under the
-49-
<PAGE>
provisions of the Investment Company Act of 1940, as amended, and neither the
entering into or performance by the Borrower and its Subsidiaries of this
Agreement and the other Loan Documents nor the issuance of the Notes violates
any provision of such Act or requires any consent, approval or authorization of,
or registration with, the Securities and Exchange Commission or any other
governmental or public body or authority pursuant to any provisions of such Act.
(o) Government Regulation. Neither the Borrower nor any of its
---------------------
Subsidiaries is required to obtain any consent, approval, authorization, permit
or license which has not already been obtained from, or effect any filing or
registration which has not already been effected with, any federal, state or
local regulatory authority in connection with the execution and delivery of this
Agreement or any other Loan Document. Neither the Borrower nor any of its
Subsidiaries is required to obtain any consent, approval, authorization, permit
or license which has not already been obtained from, or effect any filing or
registration which has not already been effected with, any federal, state or
local regulatory authorization in connection with the performance, in accordance
with their respective terms, of this Agreement or any other Loan Document, or
the borrowing hereunder, other than the filing of Uniform Commercial Code
continuation statements, filings and consents relating to the renewal of
Licenses and ongoing filings and consents relating to the Commission.
(p) Absence of Default. The Borrower and its Subsidiaries are in
------------------
compliance in all material respects with all of the provisions of their
respective partnership agreements or certificates or articles of incorporation
and by-laws, as the case may be, and no event has occurred or failed to occur
(including without limitation any matter which could create an Event of Default
hereunder by cross-default) which has not been remedied or waived, the
occurrence or non-occurrence of which constitutes, or with the passage of time
or giving of notice or both would constitute, (i) an Event of Default or (ii) a
default by the Borrower or any of its Subsidiaries under any material indenture,
agreement or other instrument, including without limiting the foregoing the
Licenses, the Management Agreement, the Financial Advisory Agreement, and
material Pole Agreements, or any judgment, decree or order to which the Borrower
or any of its Subsidiaries is a party or by which the Borrower or any of its
Subsidiaries or any of their respective properties may be bound or affected.
(q) Accuracy and Completeness of Information. All information,
----------------------------------------
reports, prospectuses and other papers and data relating to the Borrower or any
of its Subsidiaries and furnished
-50-
<PAGE>
by or on behalf of the Borrower or any of its Subsidiaries to the Agents and the
Banks, or any of them, were, at the time furnished, complete and correct in all
material respects to the extent necessary to give the recipients true and
accurate knowledge of the subject matter thereof. Notwithstanding the
foregoing, with respect to projections of the future performance of the Borrower
and its Subsidiaries, such representations and warranties are made in good faith
and to the best of the Borrower's knowledge. No fact or situation is currently
known to the Borrower which has had or which could reasonably be foreseen to
have a Materially Adverse Effect.
(r) Agreements with Affiliates and Management Agreement. Except for
---------------------------------------------------
the Management Agreement, the Financial Advisory Agreement and as set forth on
Schedule 8 attached hereto, neither the Borrower nor any of its Subsidiaries has
- ----------
(i) any agreements or binding arrangements of any kind with any Affiliates or
(ii) any management or consulting agreements of any kind with any third party
(including Affiliates).
(s) Payment of Wages. The Borrower and each of its Subsidiaries are
----------------
in compliance with the Fair Labor Standards Act, as amended, and the Borrower
and each of its Subsidiaries have paid all minimum and overtime wages required
by law to be paid to their respective employees.
(t) Priority. The Security Interest is a valid and, upon the due
--------
filing of appropriate UCC-1 financing statements, perfected security interest in
the Collateral securing, in accordance with the terms of the Security Documents,
the Obligations, and the Security Interest is subject to no Liens that are prior
to, on a parity with or junior to the Security Interest other than Permitted
Liens, and the Security Documents are enforceable as security for the
Obligations in accordance with their terms with respect to the Collateral
against the Borrower and its Subsidiaries and all other third parties other than
holders of the Permitted Liens, except as such enforceability may be limited by
(a) bankruptcy, insolvency, reorganization, moratorium or similar laws of
general applicability affecting the enforcement of creditors' rights and (b) the
application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) (insofar as
any such law relates to the bankruptcy, insolvency or similar event of the
Borrower or any of its Subsidiaries, as the case may be, or any other Person
pledging Collateral to secure the Obligations).
(u) No Adverse Change. Since December 31, 1994, there has occurred no
-----------------
event which has had or which could have a Materially Adverse Effect.
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<PAGE>
(v) Environmental Laws. Except as consistent with applicable
------------------
Environmental Laws, no Hazardous Substances are present on or below the surface
of the real property or, to the Borrower's knowledge, leased premises which
could give rise to any event or condition which could have a Materially Adverse
Effect. None of the soil, ground water, or surface water of such real property,
or, to the best of the Borrower's knowledge, such leased premises, is
contaminated in any material respect by any Hazardous Substance which could have
a Materially Adverse Effect. To the best of the Borrower's knowledge, there are
no incinerators, septic tanks, or cesspools located on such real property or on
such leased premises; all sewage is discharged into a public sanitary sewer
system; and no Hazardous Substances are emitted, discharged or released in any
material respect from such real property or leased premises, directly or
indirectly, into the atmosphere or any body of water. To the best of the
Borrower's knowledge, neither the Borrower nor any of its Subsidiaries nor any
present or former owner or operator of such real property (including, without
limitation, the Borrower) or such leased premises, has been identified as a
potentially responsible party for cleanup liability with respect to the
emission, discharge, or release of any Hazardous Substance. As of the date
hereof, no permits, licenses, or other authorizations issued pursuant to the
Environmental Laws are required for Borrower's ownership of the Collateral,
present use or occupancy of the real property or leased premises included in the
Collateral, or the present operation of the Systems the absence of which would
have a Materially Adverse Effect.
Section 4.2 Survival of Representations and Warranties, etc. All
-----------------------------------------------
representations and warranties made under this Agreement shall be deemed to be
made, and shall be true and correct, at and as of the Agreement Date, and shall
be true and correct in all material respects on the date of each Advance, except
to the extent any such representation or warranty relates solely, by its terms,
to an earlier date or time period. All representations and warranties made
under this Agreement shall survive, and not be waived by, the execution hereof
by the Agents and the Banks, any investigation or inquiry by any of the Agents
and the Banks, or the making of any Advance.
ARTICLE 5
General Covenants
-----------------
So long as any of the Obligations is outstanding and unpaid or the Borrower
shall have the right to borrow hereunder (whether or not the conditions to
borrowing have been or can be
-52-
<PAGE>
fulfilled), and unless the Majority Banks shall otherwise consent in writing:
Section 5.1 Preservation of Existence and Similar Matters. The Borrower
---------------------------------------------
will, and will cause each of its Subsidiaries to:
(a) preserve and maintain its existence in the state of its formation,
its material rights, franchises, licenses and privileges, including, without
limiting the foregoing, the Licenses (to the extent required to prevent the
occurrence of a Default under Section 8.1(o) hereof), all material Pole
Agreements, and all other Necessary Authorizations, and
(b) qualify and remain qualified and authorized to do business in each
jurisdiction in which the character of its properties or the nature of its
businesses requires such qualification or authorization.
Section 5.2 Business; Compliance with Applicable Law. The Borrower
----------------------------------------
will, and will cause each of its Subsidiaries to, (a) engage solely in the
business of constructing, maintaining and operating the System and of investing
in other cable television systems and engaging in other activities relating to
the cable television industry, and (b) comply in all material respects with the
requirements of Applicable Law.
Section 5.3 Maintenance of Properties. The Borrower will, and will
-------------------------
cause each of its Subsidiaries to, maintain or cause to be maintained in the
ordinary course of business in good repair, working order and condition
(reasonable wear and tear excepted) all properties used in their respective
businesses (whether owned or held under lease), and from time to time make or
cause to be made all needed and appropriate repairs, renewals, replacements,
additions, betterments and improvements thereto. The Borrower will, and will
cause each of its Subsidiaries to, operate all property owned or leased by it
such that no material obligation, including a cleanup obligation, shall arise
under any Environmental Law and Regulation, which obligation would constitute a
Lien (other than a Permitted Lien) or charge (prior to that in favor of the
Administrative Agent under the Security Documents) on any property of the
Borrower or any of its Subsidiaries.
Section 5.4 Accounting Methods and Financial Records. The Borrower
----------------------------------------
will, and will cause each of its Subsidiaries on a consolidated basis with the
Borrower to, maintain a system of accounting established and administered in
accordance with GAAP, keep adequate records and books of account in which
complete entries will be made in accordance with such accounting
-53-
<PAGE>
principles consistently applied and reflecting all transactions required to be
reflected by such accounting principles, and keep accurate and complete records
of their respective properties and assets. The Borrower and its Subsidiaries
will maintain a fiscal year ending on December 31.
Section 5.5 Insurance. The Borrower will, and will cause each of its
---------
Subsidiaries to:
(a) Maintain insurance including, but not limited to, public liability
coverage insurance from responsible companies in such amounts and against such
risks to the Borrower and each of its Subsidiaries as shall be standard in the
cable television industry for cable television companies similar in size and
location to the Borrower and its Subsidiaries.
(b) Keep their respective assets insured by insurers on terms and in a
manner acceptable to the Majority Banks against loss or damage by fire, theft,
burglary, loss in transit, explosions and hazards insured against by extended
coverage, in amounts which are standard in the cable television industry for
cable television companies similar in size and location to the Borrower and its
Subsidiaries, all premiums thereon to be paid by the Borrower and its
Subsidiaries.
(c) Require that each insurance policy provide for at least thirty
(30) days' prior written notice to the Administrative Agent of any termination
of or proposed cancellation or nonrenewal of such policy, and that each
insurance policy insuring assets pledged to the Administrative Agent as
Collateral for the Obligations name the Administrative Agent as additional named
loss payee and additional insured to the extent of the Obligations secured by
such assets. All such amounts paid in respect of any such policy directly to
the Administrative Agent shall, provided no Default then exists, be applied to
the prepayment of the Obligations or the rebuilding or repairing of the portion
of the System giving rise to the payment of insurance benefits, as the Borrower
may elect; if a Default then exists, such amounts shall be applied by the
Administrative Agent, (i) prior to the acceleration of the Loans, as provided in
Section 2.9(c) hereof or, if the Majority Banks so elect, to the prepayment of
the Obligations or to the rebuilding or repairing of the portion of the System
giving rise to the payment of insurance benefits, and any balance thereof
remaining after payment in full of the Obligations shall be paid to the Borrower
or as otherwise required by law, and (ii) after the acceleration of the Loans,
as provided under Section 2.11(c) hereof.
Section 5.6 Payment of Taxes and Claims. The Borrower will, and will
---------------------------
cause each of its Subsidiaries to, pay and
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<PAGE>
discharge all taxes, including, without limitation, withholding taxes,
assessments and governmental charges or levies required to be paid by them or
imposed upon them or their income or profits or upon any properties belonging to
them prior to the date on which penalties attach thereto, and all lawful claims
for labor, materials and supplies which, if unpaid, might become a Lien or
charge upon any of their properties; except that no such tax, assessment,
charge, levy or claim need be paid which is being diligently contested in good
faith by appropriate proceedings and for which adequate reserves shall have been
set aside on the appropriate books, but only so long as such tax, assessment,
charge, levy or claim does not become a Lien or charge other than a Permitted
Lien and no foreclosure, distraint, sale or similar proceedings shall have been
commenced. The Borrower and each of its Subsidiaries shall timely file all
information returns required by federal, state or local tax authorities.
Section 5.7 Visits and Inspections. The Borrower will, and will cause
----------------------
each of its Subsidiaries to, permit representatives of the Administrative Agent
and the Banks upon two (2) days' prior notice, to (a) visit and inspect the
properties of the Borrower or any of its Subsidiaries at all reasonable times,
(b) inspect and make extracts from and copies of its books and records, and (c)
discuss with the principal officers of the Partners and the Manager, their
respective businesses, assets, liabilities, financial positions, results of
operations and business prospects.
Section 5.8 Payment of Indebtedness; Loans. Subject to any provisions
------------------------------
regarding subordination herein or in any other Loan Document, the Borrower will,
and will cause each of its Subsidiaries to, pay any and all of its Indebtedness
when and as it becomes due, other than amounts diligently disputed in good
faith.
Section 5.9 Use of Proceeds. The Borrower will use the aggregate
---------------
proceeds of the Loans (as set forth in the Requests for Advances issued from
time to time hereunder) to assume the liabilities of the General Partner under
the Prior Loan Agreement, which liabilities were previously assumed by CCELP, to
finance Capital Expenditures, for working capital and for other general
partnership needs as permitted under this Agreement.
Section 5.10 Management Services. The Borrower will obtain management
-------------------
services for the operation of the System from the Manager under the terms of the
Management Agreement.
Section 5.11 Indemnity. The Borrower, for itself and on behalf of each
---------
of its Subsidiaries, jointly and severally, will indemnify and hold harmless
each Bank, each Agent, and each of
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<PAGE>
their respective employees, representatives, officers and directors from and
against any and all claims, liabilities, losses, damages, actions, attorneys'
fees and demands by any party against the Banks and Agents, or any of them, (a)
resulting from any breach or alleged breach by the Borrower or any Subsidiary of
the Borrower of any representation or warranty made hereunder, or (b) arising
out of (i) the making or administration of the Loans, (ii) allegations of any
participation by the Banks and the Agents, or any of them, in the affairs of the
Borrower or any Subsidiary of the Borrower, or allegations that the Banks, and
the Agents, or any of them, has any joint liability with the Borrower or any
Subsidiary of the Borrower for any reason, or (iii) any claims against the Banks
and the Agents, or any of them, by any investor in or lender to the Borrower or
any Subsidiary of the Borrower, for any reason whatsoever; unless, in any case
referred to above, the Person seeking indemnification hereunder is determined to
have acted or failed to act with gross negligence or willful misconduct by a
non-appealable judicial order of a court of competent jurisdiction.
Section 5.12 Interest Rate Hedging. As of the Agreement Date, the
---------------------
Borrower shall have entered into (and shall at all times thereafter maintain)
one or more Interest Rate Hedge Agreements with respect to the Borrower's
interest obligations hereunder or under the Notes in an aggregate principal
amount of not less than fifty percent (50%) of the Obligations outstanding from
time to time. Such Interest Rate Hedge Agreements shall provide such interest
rate protection in conformity with the standards promulgated under the most
recent edition of ISDA's Code of Standard Wording, Assumptions and Provisions
for Swaps and for a weighted average period of not less than eighteen (18)
months from the date of such Interest Rate Hedge Agreement or, if earlier, until
the Maturity Date on terms reasonably acceptable to the Administrative Agent,
such terms to include consideration of the creditworthiness of the other party
to such Interest Rate Hedge Agreements. Any such Interest Rate Hedge Agreement
shall provide that the Borrower's obligations to pay interest in respect of the
notional amount thereunder shall not exceed, during the term of such Agreement,
two percent (2%) per annum in excess of the United States Treasury rate
currently in effect for an instrument of similar duration to the Interest Rate
Hedge Agreement in question, as such Treasury rate is in effect on the date of
such Agreement. All obligations of the Borrower to any of the Agents or the
Banks pursuant to any Interest Rate Hedge Agreement shall rank pari passu with
---- -----
the other Obligations.
Section 5.13 Covenants Regarding Formation of Subsidiaries. At the time
---------------------------------------------
of (i) any acquisition permitted hereunder, (ii) any Permitted Asset Swap
hereunder, (iii) the purchase by the Borrower or any of its Subsidiaries of all
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<PAGE>
minority (or remaining) interests in any Subsidiary of the Borrower, or (iv) the
formation of any new Subsidiary of the Borrower or any of its Subsidiaries which
is permitted under this Agreement, the Borrower will, and will cause its
Subsidiaries, as appropriate, to (a) provide to the Administrative Agent an
executed Subsidiary Security Agreement for such new Subsidiary, in substantially
the form attached to the Prior Loan Agreement as Exhibit J, together with
appropriate UCC-1 financing statements, as well as an executed Subsidiary
Guaranty for such new Subsidiary, in substantially the form attached to the
Prior Loan Agreement as Exhibit I, which shall constitute both Security
Documents and Loan Documents for purposes of this Agreement, as well as a loan
certificate for such new Subsidiary, in substantially the form attached to the
Prior Loan Agreement as Exhibit P, together with appropriate attachments; (b)
pledge to the Administrative Agent all of the stock or partnership interests (or
other instruments or securities evidencing ownership) of such Subsidiary or
Person which is acquired or formed, beneficially owned by the Borrower or any of
the Borrower's Subsidiaries, as the case may be, as additional Collateral for
the Obligations to be held by the Administrative Agent in accordance with the
terms of a pledge agreement in form and substance satisfactory to the Managing
Agents, and execute and deliver to the Administrative Agent all such
documentation for such pledge as, in the reasonable opinion of the Managing
Agents, is appropriate; and (c) with respect to any acquisition permitted
hereunder, any Permitted Asset Swap hereunder, or the formation of any new
Subsidiary which Subsidiary has assets or liabilities, or both, provide revised
financial projections for the remainder of the fiscal year and for each
subsequent year until the Maturity Date which reflect the effects of such
transaction, certified by the chief financial officer of the Borrower, together
with a statement by such Person that no Default exists or would be caused by
such acquisition or formation, and all other documentation, including one or
more opinions of counsel, reasonably satisfactory to the Managing Agents which
in their reasonable opinion is appropriate with respect to such transaction.
Any document, agreement or instrument executed or issued pursuant to this
Section 5.13 shall be a "Loan Document" for purposes of this Agreement.
Section 5.14 Payment of Wages. The Borrower and each of its Subsidiaries
----------------
shall at all times comply in all material respects with the requirements of the
Fair Labor Standards Act, as amended, including, without limitation, the
provisions of such Act relating to the payment of minimum and overtime wages as
the same may become due from time to time.
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<PAGE>
ARTICLE 6
Information Covenants
---------------------
So long as any of the Obligations is outstanding and unpaid or the Borrower
has a right to borrow hereunder (whether or not the conditions to borrowing have
been or can be fulfilled) and unless the Majority Banks shall otherwise consent
in writing, the Borrower will furnish or cause to be furnished to each Bank and
each Agent at their respective offices:
Section 6.1 Quarterly Financial Statements and Information. Within
----------------------------------------------
forty-five (45) days after the last day of each quarter in each fiscal year, the
balance sheet of the Borrower and its Subsidiaries on a consolidated basis as at
the end of such quarter and the related statement of income and statements of
cash flows of the Borrower and its Subsidiaries on a consolidated basis for such
quarter and for the elapsed portion of the year ended with the last day of such
quarter, which shall be certified by the chief financial officer of the
Borrower, to be, in his or her opinion, complete and correct in all material
respects and to present fairly, in accordance with GAAP, the financial position
of the Borrower and its Subsidiaries on a consolidated basis as at the end of
such period and the results of operations for such period, and for the elapsed
portion of the year ended with the last day of such period, subject only to
normal year-end adjustments. With respect to periods prior to the Agreement
Date, financial information of the General Partner and its Subsidiaries shall be
substituted for the financial information of the Borrower and its Subsidiaries
as if such financial information were that of the Borrower and its Subsidiaries.
Section 6.2 Annual Financial Statements and Information; Certificate of
-----------------------------------------------------------
No Default. Within one hundred twenty (120) days after the end of each fiscal
- ----------
year of the Borrower, (i) the audited consolidated balance sheet of the Borrower
and its Subsidiaries at the end of such fiscal year and the related statement of
income and retained earnings and related statement of cash flows of the Borrower
and its Subsidiaries for such fiscal year, which financial statements, shall set
forth in comparative form such figures as at the end of and for the previous
fiscal year, as applicable, and shall be accompanied by an opinion of
independent certified public accountants of recognized standing reasonably
satisfactory to the Majority Banks, together with a statement of such
accountants (A) to the effect that their audit examination has included a review
of Sections 7.7, 7.8, 7.9, 7.10 and 7.15 of the terms of this Agreement and the
Notes as they relate to accounting matters, (B) as to whether, in connection
with their audit examination,
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any Default has come to their attention and if such a Default has come to their
attention, specifying the nature and period of existence thereof, and (C) that
such accountants have authorized the Borrower to deliver such financial
statements and opinion thereon to the Agents and the Banks pursuant to this
Agreement; and (ii) the statement of income of the Borrower and its Subsidiaries
for each grouping of the System then utilized by the Borrower and its
Subsidiaries (it being understood that the Borrower's current groupings are (1)
Western Connecticut, (2) Northeast Connecticut, and (3) St. Louis, Missouri) as
at the end of each fiscal year of the Borrower and its Subsidiaries, which shall
be certified by the chief financial officer of the Borrower, to be, in his or
her opinion, complete and correct in all material respects and to present
fairly, in accordance with GAAP, the financial position of such grouping as at
the end of such period and the results of operations for such period. With
respect to periods prior to the Agreement Date, the financial information of the
General Partner and its Subsidiaries shall be substituted for the financial
information of the Borrower and its Subsidiaries as if such financial
information were that of the Borrower and its Subsidiaries.
Section 6.3 Monthly Operating Reports. To the extent that the Leverage
-------------------------
Ratio for the most recently reported fiscal quarter exceeded 5.5:1, within
forty-five (45) days from the last day of each month, a monthly operating report
of the Borrower and its Subsidiaries on a consolidated basis, in substantially
the form attached hereto as Exhibit M. With respect to periods prior to the
---------
Agreement Date, the financial information of the General Partner and its
Subsidiaries shall be substituted for the financial information of the Borrower
and its Subsidiaries as if such financial information were that of the Borrower
and its Subsidiaries.
Section 6.4 Performance Certificates. At the time the financial
------------------------
statements are furnished pursuant to Sections 6.1 and 6.2, a certificate of an
Authorized Officer in form and substance satisfactory to the Majority Banks:
(a) setting forth as at the end of such quarterly period or fiscal
year, as the case may be, the arithmetical calculations required to establish
(i) the Leverage Ratio, Fixed Charges and Pro Forma Debt Service and (ii)
whether or not the Borrower was in compliance with the requirements of Sections
7.7, 7.8, 7.9, 7.10, and 7.15 hereof; and
(b) stating that, to the best of his or her knowledge, no Default or
Event of Default has occurred as at the end of such quarterly period or year, as
the case may be, or, if a Default or an Event of Default has occurred,
disclosing each such Default or
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Event of Default and its nature, when it occurred, whether it is continuing and
the steps being taken by the Borrower with respect to such Default or Event of
Default.
With respect to periods prior to the Agreement Date, the financial information
of the General Partner and its Subsidiaries shall be substituted for the
financial information of the Borrower and its Subsidiaries as if such financial
information were that of the Borrower and its Subsidiaries.
Section 6.5 Copies of Other Reports.
-----------------------
(a) Promptly upon receipt thereof, copies of all reports, if any,
submitted to the Borrower in connection with an audit of the Borrower by the
Borrower's independent public accountants, including, without limitation, any
management report prepared in connection with the annual audit referred to in
Section 6.2.
(b) No later than January 31 of each year, a copy of the annual budget
for the Borrower and its Subsidiaries on a consolidated basis for such calendar
year, including the budget for Capital Expenditures.
(c) Promptly upon receipt thereof by an Authorized Officer, copies of
any material notice or report regarding any License from the grantor of such
License or regarding the System or any License from the Commission with respect
to (i) the suspension, revocation or modification of any License, (ii) a denial
of a request for a rate change, (iii) disciplinary proceedings involving the
Borrower or any of its Subsidiaries, (iv) notice of default or other non-
compliance by the Borrower or any of its Subsidiaries under any License, or (v)
any similar event or occurrence.
(d) Promptly upon receipt thereof by an Authorized Officer, copies of
any material correspondence from HC Crown Corp., a Delaware corporation, or any
of its Affiliates with respect to the Hallmark Subordinated Debt.
(e) From time to time and promptly upon each request, such data,
certificates, reports, statements, opinions of counsel, documents or further
information regarding the business, assets, liabilities, financial position,
projections, results of operations or business prospects of the Borrower or any
of its Subsidiaries, as the Administrative Agent or any Bank reasonably may
request.
(f) As soon as possible, and in any event within fifteen (15) days
after the Borrower knows that any of the events
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or conditions set forth below have occurred or exist, a statement signed by an
Authorized Officer setting forth details respecting such event or condition and
the action which the Borrower (or the applicable Subsidiary) proposes to take
with respect thereto (and a copy of any notices or other communications received
or given by the Borrower or the applicable Subsidiary, with respect thereto):
(i) any judgment, action, proceeding or investigation pending before
any court or governmental authority, bureau or agency, including, without
limitation, any environmental regulatory body, with respect to or
threatened against or affecting the Borrower or any of its Subsidiaries or
relating to the assets or liabilities of any of them (including, without
limitation, in respect of any "facility" owned, leased or operated by any
of them under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, or under any state, local or municipal
statute, ordinance or regulation in respect thereof, in connection with any
release of any toxic or hazardous waste or chemical substance, pollutant or
contaminant into the environment, or with the generation, storage or
disposal of any toxic or hazardous wastes or other chemical substances),
which could have a Materially Adverse Effect or materially impair the value
of the Collateral;
(ii) any liability or threatened liability of the Borrower or any of
its Subsidiaries (a) under any Applicable Law for any release of a
hazardous substance caused by the seeping, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
dumping or disposing of hazardous wastes or other chemical substances,
pollutants or contaminants into the environment, or (b) for the costs of
any cleanup or other remedial action including, without limitation, costs
arising out of security fencing, alternative water supplies, temporary
evacuation and housing and other emergency assistance undertaken by any
environmental regulatory body having jurisdiction over the Borrower or any
of its Subsidiaries to prevent or minimize any actual or threatened release
by the Borrower or any of its Subsidiaries, of any hazardous wastes or
other chemical substances, pollutants and contaminants into the environment
which would endanger the public health or the environment which could in
either case have a Materially Adverse Effect; and
(iii) any change or proposed change in any law, rule, regulation or
order (including without limitation, Environmental Laws) of any
governmental body or regulatory
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authority, other than proposed changes of general applicability, which
could have a Materially Adverse Effect.
Section 6.6 Notice of Litigation and Other Matters. Prompt notice of
--------------------------------------
the following events after an Authorized Officer has received notice or
otherwise become aware thereof:
(a) the commencement of all proceedings and investigations by or
before any governmental body and all actions and proceedings in any court or
before any arbitrator against or to the extent known to the Borrower or any of
its Subsidiaries in any other way relating materially adversely and directly to
the Borrower or any Subsidiary of the Borrower, CCELP, the General Partner or
the Manager, or any of their respective properties, assets or businesses or any
License;
(b) any material adverse change with respect to the business, assets,
liabilities, financial position, results of operations or business prospects of
the Borrower or any Subsidiary of the Borrower, the Manager, CCELP or the
General Partner, other than changes in the ordinary course of business which
have not had and are not likely to have a Materially Adverse Effect;
(c) any material amendment or change to any budget submitted under
Section 6.5(b) hereof for the operation of the System;
(d) any Default or the occurrence or non-occurrence of any event (i)
which constitutes, or which with the passage of time or giving of notice or both
would constitute a default by the Borrower or any Subsidiary of the Borrower,
CCELP or the General Partner under any material agreement other than this
Agreement to which the Borrower, or any Subsidiary of the Borrower, CCELP or the
General Partner is party or by which any of its respective properties may be
bound, or (ii) which could have a Materially Adverse Effect, giving in each case
the details thereof and specifying the action proposed to be taken with respect
thereto;
(e) the occurrence of any Reportable Event or a "prohibited
transaction" (as such term is defined in Section 406 of ERISA or Section 4975 of
the Code) with respect to any Plan of the Borrower or any Subsidiary of the
Borrower or the institution or threatened institution by the Pension Benefit
Guaranty Corporation of proceedings under ERISA to terminate or to partially
terminate any such Plan or the commencement or threatened commencement of any
litigation regarding any such Plan or naming it or the trustee of any such Plan
with respect to such Plan; and
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<PAGE>
(f) the occurrence of any event subsequent to the Agreement Date
which, if such event had occurred prior to the Agreement Date, would have
constituted an exception to the representation and warranty in Section 4.1(l) of
this Agreement.
ARTICLE 7
Negative Covenants
------------------
So long as any of the Obligations is outstanding and unpaid or the Borrower
has a right to borrow hereunder (whether or not the conditions to borrowing have
been or can be fulfilled) and unless the Majority Banks shall otherwise give
their prior consent in writing:
Section 7.1 Indebtedness of the Borrower. The Borrower shall not, and
----------------------------
shall not permit any of its Subsidiaries to, create, assume, incur or otherwise
become or remain obligated in respect of, or permit to be outstanding, any
Indebtedness except:
(a) Indebtedness arising under this Agreement, the Notes and the other
Loan Documents;
(b) Accounts payable, subscriber deposits, accrued expenses and
customer advance payments incurred in the ordinary course of business, which are
(1) current or (2) being contested in good faith by appropriate proceedings and
for which the Borrower or any of its Subsidiaries, as the case may be, has
established adequate reserves on its respective books;
(c) Capitalized Lease Obligations in an amount not in excess of
$3,000,000 in the aggregate;
(d) Accrued but unpaid management fees and financial advisory fees and
any interest thereon due pursuant to the Management Agreement and the Financial
Advisory Agreement, respectively, subject to the terms of the Subordination of
Management and Financial Advisory Fees Agreement;
(e) Any other Indebtedness (including, without limitation,
Indebtedness secured by Permitted Liens) in an aggregate outstanding principal
amount at any time not to exceed $5,000,000;
(f) Obligations under Interest Rate Hedge Agreements; and
(g) Indebtedness arising under payment and performance bonds and
letters of credit issued for the Borrower's account, or
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the account of a Subsidiary of the Borrower, in the ordinary course of the
Borrower's or such Subsidiary's business in favor of the grantors of the
Licenses and the Pole Agreements, in an aggregate amount not to exceed
$3,000,000.
Section 7.2 Limitation on Liens. The Borrower shall not, and shall not
-------------------
permit any of its Subsidiaries to, create, assume, incur or permit to exist or
to be created, assumed, incurred or permitted to exist, directly or indirectly,
any Lien on any of its properties or assets, whether now owned or hereafter
acquired, except for Permitted Liens, and the Borrower shall not, and shall not
permit any of its Subsidiaries to, undertake, covenant or agree with any third
party that it will not create, assume, incur or permit to exist or to be
created, assumed, incurred or permitted to exist any Lien on any of its assets
or properties (other than property subject to a Permitted Lien referred to in
clause (e) or (h) of the definition of Permitted Liens).
Section 7.3 Amendment and Waiver. The Borrower shall not, and shall not
--------------------
permit any of its Subsidiaries to, enter into any amendment of, or agree to or
accept or consent to any waiver of any of the provisions of (a) its certificate
or articles of incorporation, by-laws or partnership agreement, as the case may
be, (b) the Management Agreement which materially alters the duties and
obligations of the Manager thereunder, (c) the Financial Advisory Agreement
which materially alters the duties and obligations of Kelso thereunder, (d) any
Loan Document, or (e) any License (other than amendments and waivers in
connection with the renewal thereof). The foregoing notwithstanding, (A) any
such certificate or articles of incorporation, by-laws or partnership agreement
may be amended or modified without the prior written consent of any of the Banks
provided (i) no such amendment or modification adversely affects the rights of
the Agents or the Banks under the Loan Documents, and (ii) copies of all
documents evidencing or related to such amendment or modification are furnished
to the Agents and the Banks within five (5) days prior to its effective date,
and (B) any Licenses may be amended or modified without the prior written
consent of any of the Banks in connection with renewals thereof in any case, and
otherwise, provided such Licenses account for less than (i) five percent (5%) of
--------
the Basic Subscribers of the Borrower and its Subsidiaries in the aggregate
during any calendar year and (ii) twenty percent (20%) of the Basic Subscribers
of the Borrower and its Subsidiaries in the aggregate during the term of this
Agreement.
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<PAGE>
Section 7.4 Liquidation, Change in Ownership, Disposition or Acquisition
------------------------------------------------------------
of Assets.
- ---------
(a) The Borrower shall not, and shall not permit any of its
Subsidiaries to, at any time (i) liquidate, dissolve or terminate itself (or
suffer any liquidation, dissolution or termination) or otherwise wind up,
provided that the Borrower may dissolve such of its Subsidiaries as have no
assets and no liabilities, (ii) enter into any merger, other than, so long as no
Default then exists or would be caused thereby, a merger or consolidation among
the Borrower and one or more of its Subsidiaries, provided that the Borrower is
the surviving entity, or a merger or consolidation among two (2) or more
Subsidiaries of the Borrower, (iii) create any Subsidiary, unless no Default
then exists or would be caused by the creation of any such Subsidiary and unless
the Borrower first complies with the terms of Section 5.13 hereof, or (iv)
except pursuant to a Permitted Asset Swap, sell, lease, abandon, transfer or
otherwise dispose of any of its assets, property or business to the extent that
the fair market value of such assets exceeds $5,000,000 in the aggregate during
the term hereof (excluding such sales, leases, transfers or other dispositions
in the ordinary course of the Borrower's or any of its Subsidiaries' business).
All Net Proceeds received by the Borrower or any of its Subsidiaries from any
sale, lease, transfer or other disposition of assets permitted hereunder
(excluding such sales, leases, transfers or other dispositions in the ordinary
course of the Borrower's or any of its Subsidiaries' business) shall be used to
repay or prepay on the closing date of such sale an identical amount of the
outstanding principal amount of the Loans to the extent required under Section
2.7 hereof. In the event the Borrower or any of its Subsidiaries sells or
otherwise disposes of any assets in accordance with this Section, the Agents and
the Banks will, upon receipt of the Net Proceeds of such sale or other
disposition in repayment of the Loans to the extent required under Section 2.7
hereof, release their Liens on the assets so sold, leased, transferred or
otherwise disposed.
(b) The Borrower shall not, and shall not permit any of its
Subsidiaries to, at any time acquire any assets, property or business of any
other Person, or acquire stock, partnership or other ownership interests in any
other Person, other than (i) the acquisition of the assets of the General
Partner and Cencom from CCELP on the Agreement Date, (ii) in the ordinary course
of business of the Borrower or its Subsidiaries, (iii) as permitted by the
limitations on Capital Expenditures set forth in Section 7.15 hereof, (iv) so
long as no Default hereunder then exists or would be caused thereby,
acquisitions of cable television systems for a purchase price not to exceed
$5,000,000 in the aggregate in any fiscal year and $10,000,000 in the aggregate
during the term
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hereof, plus the aggregate amount of any Excess Cash Flow which, in accordance
with Section 7.7(c) hereof, would be permitted to be distributed to the Partners
and which are not so distributed, (v) pursuant to a Permitted Asset Swap, (vi)
as permitted pursuant to Section 7.7(c) hereof, (vii) to acquire assets with
insurance proceeds as permitted by Section 5.5(c) hereof, and (viii) with
respect to the transfer of assets between and among the Borrower or any of its
Subsidiaries, subject to the provisions of Section 5.13 hereof.
(c) So long as no Default then exists or would be caused thereby, the
Borrower or one or more of its Subsidiaries may enter into a Permitted Asset
Swap, so long as (i) not less than thirty (30) days prior to the execution of
contracts or agreements (other than substantially non-binding letters of intent)
relating to any such Permitted Asset Swap, the Borrower provides the Agents and
the Banks with written notice of its intent to enter into such a transaction,
together with copies of all material documents and any other information which
may be reasonably requested by the Administrative Agent or any Bank with respect
thereto, (ii) not less than ten (10) days prior to the execution of contracts or
agreements (other than substantially non-binding letters of intent) relating to
any such transaction, the Borrower provides the Agents and the Banks with a
certificate of its chief financial officer stating that no Default then exists
or would be caused by the consummation of the Permitted Asset Swap and setting
forth calculations specifically demonstrating the Borrower's pro forma
compliance with Sections 7.8, 7.9 and 7.10 hereof through the remaining term of
this Agreement, after giving effect to the consummation of such transaction, and
(iii) the Net Proceeds of any sale, lease, transfer or other disposition of any
assets constituting a part of such Permitted Asset Swap are delivered to the
Administrative Agent and distributed in the manner set forth in Section 2.7(b)
hereof.
Upon any acquisition by the Borrower and its Subsidiaries, the Borrower shall
immediately cause all assets and other properties, of whatever nature, to be
pledged to the Administrative Agent as Collateral for the Obligations pursuant
to Section 5.13 hereof to the extent that the existing Security Documents do not
already so provide.
Section 7.5 Limitation on Guaranties. The Borrower shall not, and shall
------------------------
not permit any of its Subsidiaries to, at any time Guaranty, assume, be
obligated with respect to, or permit to be outstanding any Guaranty of, any
obligation of any other Person other than (a) Guaranties by endorsement of
negotiable instruments for collection in the ordinary course of business, (b)
obligations under agreements of the Borrower or any of its
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Subsidiaries entered into in connection with the acquisition of services,
supplies and equipment in the ordinary course of business of the Borrower or any
of its Subsidiaries, and (c) Guaranties described in Section 7.1(g) hereof.
Section 7.6 Investments. The Borrower shall not, and shall not permit
-----------
any of its Subsidiaries to, make any loan or advance, or otherwise acquire for a
consideration evidences of Indebtedness, capital stock or other securities of or
equity interests in any Person, except that so long as no Event of Default then
exists or would be caused thereby, the Borrower or any of its Subsidiaries may
(i) purchase marketable, direct obligations of the United States of America
maturing within three hundred sixty-five (365) days of the date of purchase,
(ii) purchase commercial paper issued by corporations, each of which conducts a
substantial part of its business in the United States of America, maturing
within one hundred and eighty (180) days from the date of the original issue
thereof, and rated "P-1" or better by Moody's Investors Service, (iii) purchase
repurchase agreements and certificates of deposit maturing within three hundred
sixty-five (365) days of the date of purchase which are issued by any Bank or by
a United States national or state bank having capital, surplus and undivided
profits totaling more than $250 million and rated "A" or better by Moody's
Investors Service, (iv) make acquisitions as permitted pursuant to Section 7.4
hereof, (v) make loans and advances to officers and employees (other than
officers and employees, if any, who are shareholders of Kelso or the Manager),
in an aggregate outstanding amount not to exceed $750,000, in the ordinary
course of the Borrower's business, and (vi) make loans or advances to, and other
investments in, the Borrower or any wholly-owned Subsidiaries of the Borrower.
Section 7.7 Restricted Payments and Purchases. The Borrower shall not,
---------------------------------
and shall not permit any of its Subsidiaries to, directly or indirectly declare
or make any Restricted Payment or Restricted Purchase, except that Subsidiaries
of the Borrower may make Restricted Payments to the Borrower and to other
wholly-owned Subsidiaries of the Borrower, and except further that the Borrower
may:
(a) accrue management fees under the Management Agreement and accrue
financial advisory fees under the Financial Advisory Agreement, subject to the
provisions of the Subordination of Management and Financial Advisory Fees
Agreement and this Agreement;
(b) so long as no Default hereunder then exists or would be caused
thereby, during the period from January 18, 1995 through and including December
31, 1998, pay management fees and
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expenses and financial advisory fees and expenses in an aggregate amount for any
fiscal year not to exceed $3,650,000, except that with respect to the fiscal
year ending December 31, 1995, such amount shall not exceed the difference
between (i) $3,650,000 minus (ii) management fees and expenses and financial
-----
advisory fees and expenses paid by the General Partner for the period from and
after January 18, 1995 through and including the Agreement Date, as the same may
become due and payable under the Management Agreement and the Financial Advisory
Agreement, or, in the case of the General Partner, the predecessors to such
Agreements;
(c) subject to the provisions of Section 2.7(c) hereof, so long as no
Default hereunder then exists or would be caused thereby, and so long as the
Leverage Ratio is less than 5.5:1, on or after April 30, 1998 and on or after
each April 30th thereafter, use up to fifty percent (50%) of Annual Excess Cash
Flow for the most recently ended fiscal year of the Borrower to (i) make
distributions to the Partners, or (ii) make acquisitions otherwise permitted
under Section 7.4(b) hereof;
(d) not less than five (5) days prior to the making of any such
payment described in Section 7.7(b) or (c) above, the Borrower shall notify the
Agents and the Banks in writing of its intent to make such a payment (making
reference to this Section 7.7) and the proposed amount and nature of such
payment, and shall provide the Agents and the Banks with calculations
specifically demonstrating the Borrower's compliance with Sections 7.8, 7.9 and
7.10 hereof, both before and after giving effect to such payment;
(e) so long as no Default hereunder then exists or would be caused
thereby, make Tax Distributions to the Partners;
(f) so long as no Default hereunder then exists or would be caused
thereby, distribute to the General Partner the amount of any accounting fees and
any fees of other professionals with respect to the preparation of financial
statements and tax returns of the General Partner solely with respect to matters
involving the Borrower and its Subsidiaries and related matters arising in the
ordinary course of business of the General Partner with respect to the Borrower
and its Subsidiaries; and
(g) so long as no Default hereunder then exists or would be caused
thereby, pay fees of technical and other consultants in the ordinary course of
the Borrower's and its Subsidiaries' business, so long as such consultants are
not Affiliates.
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Section 7.8 Leverage Ratio. (a) As of the end of any calendar quarter,
--------------
and (b) at the time of any Advance which increases the outstanding principal
amount of the Loans (after giving effect to such Advance), the Borrower shall
not permit the Leverage Ratio for the calendar quarter end being tested in the
case of Section 7.8(a) above, or the most recent quarter end for which financial
statements are required to have been provided to the Agents and the Banks
pursuant to Section 6.1 hereof in the case of Section 7.8(b) above and after
giving effect to the Advance as of such date, to exceed the ratios set forth
below for calculation dates using financial statements for periods ending during
the periods shown below:
<TABLE>
<CAPTION>
Leverage
Period Ratio
------ -----
<S> <C>
From January 18, 1995
through December 31, 1995 6.50:1
From January 1, 1996
through June 30, 1996 6.25:1
From July 1, 1996
through December 31, 1996 6.00:1
From January 1, 1997
through June 30, 1997 5.75:1
From July 1, 1997
through December 31, 1997 5.50:1
From January 1, 1998
through December 31, 1998 5.00:1
From January 1, 1999
through December 31, 1999 4.50:1
From January 1, 2000
and thereafter 4.00:1
</TABLE>
Section 7.9 Annualized Operating Cash Flow to Fixed Charges Ratio. As
-----------------------------------------------------
of March 31, 1997 and as of the end of each calendar quarter thereafter, the
Borrower shall not permit the ratio of Annualized Operating Cash Flow for the
calendar quarter end being tested to Fixed Charges for the four (4) calendar
quarters immediately preceding the calculation date to be less than 1.0 to 1.0.
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Section 7.10 Annualized Operating Cash Flow to Pro Forma Debt Service.
--------------------------------------------------------
(a) As of the end of any calendar quarter, and (b) at the time of any Advance
which increases the outstanding principal amount of the Loans (after giving
effect to such Advance), the Borrower shall not permit the ratio of Annualized
Operating Cash Flow for the calendar quarter end being tested in the case of
Section 7.10(a) above, or the most recent quarter end for which financial
statements are required to be delivered to the Agents and the Banks pursuant to
Section 6.1 hereof in the case of Section 7.10(b) above, to Pro Forma Debt
Service for the immediately succeeding four (4) calendar quarters, to be less
than the ratio set forth below for calculation dates using financial statements
for quarters ending during the periods set forth below:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
From January 18, 1995
through December 31, 1997 1.20:1
From January 1, 1998
and thereafter 1.10:1
</TABLE>
Section 7.11 Affiliate Transactions. Except as specifically provided in
----------------------
Section 7.7 hereof and otherwise specifically provided herein, the Borrower
shall not, and shall not permit any of its Subsidiaries to, at any time engage
in any transaction with an Affiliate, nor make an assignment or other transfer
of any of its properties or assets to any Affiliate on terms less advantageous
to the Borrower or such Subsidiary than would be the case if such transactions
had been effected on an arm's length basis with a non-Affiliate. In addition,
the Borrower and any of its Subsidiaries shall receive the full benefit of any
discounts, rebates or special payment terms for pay television programming
available to the Manager which the Manager is permitted to pass through to the
Borrower or such Subsidiary, but which are not available to the Borrower or such
Subsidiary from a non-Affiliate.
Section 7.12 Real Estate. The Borrower shall not, and shall not permit
-----------
any of its Subsidiaries to, purchase or become obligated to purchase real estate
(other than easements, rights-of-way, restrictions and other similar
encumbrances on the use of real property), other than purchases, with a value of
less than $500,000 for any single purchase, and less than $1,000,000 in the
aggregate for all purchases after the Agreement Date.
Section 7.13 Limitation on Leases. The Borrower shall not make or be or
--------------------
become obligated to make, or permit any of its
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Subsidiaries to make or be or become obligated to make, any payment in respect
of any obligations as lessee under a lease, except for (x) payments under leases
to be used in connection with the operation of its business which, when
aggregated with all other payments under such leases by the Borrower and its
Subsidiaries would not exceed in the aggregate during any one fiscal year of the
Borrower, $1,500,000, and during the term of this Agreement, $10,000,000, and
(y) payments relating to Capitalized Lease Obligations permitted hereby.
Section 7.14 ERISA Liabilities. The Borrower shall not, and shall not
-----------------
permit any of its Subsidiaries to, allow any of their respective Plans to have
an accumulated funding deficiency as defined in Code Section 4971(c)(ii) and
measured at the end of any Plan year. The Borrower shall not, and shall not
permit any of its Subsidiaries to become a participant in any Multiemployer
Plan.
Section 7.15 Capital Expenditures. The Borrower shall not permit the
--------------------
aggregate amount of Capital Expenditures made by the Borrower and its
Subsidiaries (and, prior to the Agreement Date, by the General Partner and its
Subsidiaries), on a consolidated basis, in any period set forth below to exceed
as of the end of such period the sum of (a) the limit for such period, as set
forth below, plus (b) any unexpended portion of the Capital Expenditures limit
set forth below for the preceding period.
<TABLE>
<CAPTION>
Capital
Period Expenditures Limit
------ ------------------
<S> <C>
From January 18, 1995
through December 31, 1995 $ 23,500,000
From January 1, 1996
through December 31, 1996 $ 18,500,000
</TABLE>
There shall be no dollar limitation on Capital Expenditures after December 31,
1996.
Section 7.16 No Limitation on Upstream Dividends by Subsidiaries. The
---------------------------------------------------
Borrower shall not permit any of its Subsidiaries to enter into or agree, or
otherwise become subject, to any agreement, contract or other arrangement with
any Person pursuant to the terms of which (a) such Subsidiary is or would be
prohibited from declaring or paying any cash dividends or distributions on any
class of its stock or any partnership interests owned directly or indirectly by
the Borrower or from making any other distribution on account of any class of
any such
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stock or any such partnership interests (herein referred to as "Upstream
Dividends") or (b) the declaration or payment of Upstream Dividends by a
Subsidiary of the Borrower to the Borrower or to another Subsidiary of the
Borrower, on an annual or cumulative basis, is or would be otherwise limited or
restricted.
ARTICLE 8
Default
-------
Section 8.1 Events of Default. Each of the following shall constitute
-----------------
an Event of Default, whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
governmental or non-governmental body:
(a) Any representation or warranty made under this Agreement shall
prove incorrect or misleading in any material respect when made or deemed to be
made pursuant to Section 4.2 hereof;
(b) The Borrower shall default in the payment of (i) any interest
under the Notes, or any of them, or fees or other amounts payable hereunder or
under any other Loan Document (other than as provided in Section 8.1(b)(ii)
hereof), when due, which Default is not cured within three (3) days from the
date such payment shall become due, or (ii) any principal under the Notes, or
any of them, when due;
(c) The Borrower shall default (i) in the performance or observance of
any agreement or covenant contained in Article 7 hereof, (ii) in the performance
or observance of any negative covenant contained in any of the Loan Documents,
or (iii) in providing any financial statement or report under Article 6 hereof
which would permit the Agents and the Banks to determine whether the Borrower
was in Default under Article 7 hereof;
(d) The Borrower shall default in the performance or observance of any
other agreement or covenant contained in this Agreement not specifically
referred to elsewhere in this Section 8.1, and such default shall not be cured
to the Majority Banks' satisfaction within a period of thirty (30) days from the
date on which any Authorized Officer becomes aware of or receives notice of the
occurrence of such default;
(e) There shall occur any default in the performance or observance of
any agreement or covenant or material breach of
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any representation or warranty contained in any of the Loan Documents (other
than this Agreement or as otherwise provided in Section 8.1 of this Agreement),
which shall not be cured to the Majority Banks' satisfaction within a period of
thirty (30) days from the date on which any Authorized Officer becomes aware or
receives notice of the occurrence of such default;
(f) There shall be entered a decree or order for relief in respect of
the Manager, CCELP, the General Partner, the Borrower or any of the Borrower's
Subsidiaries under Title 11 of the United States Code, as now constituted or
hereafter amended, or any other applicable Federal or state bankruptcy law or
other similar law, or appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator or similar official of the Manager, CCELP, the General
Partner, the Borrower or any of the Borrower's Subsidiaries or of any
substantial part of its respective properties, or ordering the winding-up or
liquidation of the affairs of the Manager, CCELP, the General Partner, the
Borrower or any of the Borrower's Subsidiaries or an involuntary petition shall
be filed against the Manager, CCELP, the General Partner, the Borrower or any of
the Borrower's Subsidiaries, and (i) such petition shall not be diligently
contested, or (ii) any such petition shall continue undismissed for a period of
sixty (60) consecutive days;
(g) The Borrower, the Manager, CCELP, the General Partner, or any of
the Borrower's Subsidiaries shall file a petition, answer or consent seeking
relief under Title 11 of the United States Code, as now constituted or hereafter
amended, or any other applicable Federal or state bankruptcy law or other
similar law, or the Manager, CCELP, the General Partner, the Borrower or any of
the Borrower's Subsidiaries shall consent to the institution of proceedings
thereunder or to the filing of any such petition or to the appointment or taking
of possession of a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Manager, CCELP, the General
Partner, the Borrower or any of the Borrower's Subsidiaries or of any
substantial part of its respective properties, or the Manager, CCELP, the
General Partner, the Borrower or any of the Borrower's Subsidiaries shall fail
generally to pay its debts as they become due (other than to the extent required
with respect to the General Partner, under the Subordination Agreement and the
terms of the Hallmark Subordinated Debt), or the Manager, CCELP, the General
Partner, the Borrower or any of the Borrower's Subsidiaries shall take any
action in furtherance of any such action;
(h) A final judgment shall be entered by any court against the
Borrower or any of the Borrower's Subsidiaries for the payment of money which
exceeds any insurance coverage which
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is uncontested by the insurance carrier by $3,000,000 or more, or a warrant of
attachment or execution or similar process shall be issued or levied against
property of the Borrower or any of the Borrower's Subsidiaries which, together
with all other such property of the Borrower or any of the Borrower's
Subsidiaries subject to other such process, exceeds in value any insurance
coverage which is uncontested by the insurance carrier by $3,000,000 or more in
the aggregate, and if, within thirty (30) days after the entry, issue or levy
thereof, such judgment, warrant or process shall not have been paid or
discharged or stayed pending appeal, or if, after the expiration of any such
stay, such judgment, warrant or process shall not have been paid or discharged;
(i) There shall be at any time any "accumulated funding deficiency," as
defined in ERISA or in Section 412 of the Code, with respect to any Plan
maintained by the Borrower or any of its Subsidiaries, or to which the Borrower
or any of its Subsidiaries has any liabilities, or any trust created thereunder;
or a trustee shall be appointed by a United States District Court to administer
any such Plan; or the Pension Benefit Guaranty Corporation shall institute
proceedings to terminate any such Plan; or the Borrower or any of its
Subsidiaries shall incur any liability to the Pension Benefit Guaranty
Corporation in connection with the termination of any such Plan; or any Plan or
trust created under any Plan of the Borrower or any of its Subsidiaries shall
engage in a "prohibited transaction" (as such term is defined in Section 406 of
ERISA or Section 4975 of the Code) which would subject any such Plan, any trust
created thereunder, any trustee or administrator thereof, or any party dealing
with any such Plan or trust to the tax or penalty on "prohibited transactions"
imposed by Section 502 of ERISA or Section 4975 of the Code; or the Borrower or
any of its Subsidiaries shall enter into or become obligated to contribute to a
Multiemployer Plan;
(j) Any Materially Adverse Effect shall occur, or any event shall
occur which has a materially adverse effect upon the business, assets,
liabilities, financial condition, results of operations or business prospects of
CCELP or the General Partner;
(k) There shall occur any failure by the Borrower or any of the
Borrower's Subsidiaries to pay any Indebtedness when due (after any applicable
cure period) or there shall occur any default which entitles the holders to
accelerate the maturity thereof under, in either case, any agreement or
instrument evidencing Indebtedness of the Borrower or any of the Borrower's
Subsidiaries in an aggregate principal amount exceeding $3,000,000; or there
shall occur any material default under any
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Interest Rate Hedge Agreement having a notional principal amount of $3,000,000
or more;
(1) There shall occur any default which entitles the holders to
accelerate the maturity thereof under any agreement or instrument evidencing
Indebtedness for Money Borrowed of Holdings, CCELP or the General Partner, in an
aggregate principal amount exceeding $3,000,000;
(m) The Borrower shall at any time fail to obtain management services
pursuant to the Management Agreement, for itself and its Subsidiaries, from the
Manager or any permitted transferee, successor or assignee Manager agreed to in
writing by the Majority Banks for a period of thirty (30) consecutive days, or
there shall occur any event which could have a materially adverse effect upon
the ability of the Manager or any permitted transferee, successor or assignee
Manager agreed to in writing by the Majority Banks to fulfill its obligations
under the Management Agreement and the possibility that such event could have
such a materially adverse effect shall continue to exist on the thirty-first
(31st) day after the occurrence of such event;
(n) Any one or more of the following shall occur with respect to
Licenses which account for five percent (5%) or more of the Basic Subscribers:
(i) any License shall be revoked and such revocation shall not be waived
or stayed, or there shall occur a material default by the Borrower or any
of its Subsidiaries under any License which shall not have been waived
within thirty (30) days of the occurrence thereof, or any proceedings shall
in any way be brought to challenge (and shall continue uncontested for a
period of thirty (30) days) the validity or enforceability of any License,
or
(ii) a proceeding for the renewal of any License shall not be commenced
at least one year prior to its expiration, or
(iii) any License shall expire due to termination, nonrenewal or for any
other reason, which, together with any other such Licenses described in
this Section 8.1(n), account for five percent (5%) or more of the Basic
Subscribers;
(o) Any material provision of any Loan Document shall at any time and
for any reason be declared to be null and void, or a proceeding shall be
commenced by the Borrower or any of its Subsidiaries, or by any governmental
authority (other than the grantor of any License in a proceeding pertaining to
such
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<PAGE>
License) having jurisdiction over the Borrower or any of its Subsidiaries,
seeking to establish the invalidity or unenforceability thereof (exclusive of
questions of interpretation of any provision thereof), or the Borrower or any of
its Subsidiaries shall deny that it has any liability or obligation for the
payment of principal or interest purported to be created under any Loan
Document;
(p) Any Security Document shall for any reason (other than failure to
file UCC continuation statements), fail or cease (except by reason of lapse of
time) to create a valid and perfected and, except to the extent permitted by the
terms hereof or thereof, first priority lien on or security interest in any
material portion of the Collateral purported to be covered thereby;
(q) Kelso shall for any reason fail to own, directly or indirectly,
beneficially and of record, (i) prior to an initial public offering of its
capital stock by the General Partner, at least fifty-one percent (51%), and (ii)
after an initial public offering of its capital stock by the General Partner, at
least thirty-five percent (35%) of all economic ownership interests in, and
voting rights with respect to the capital stock of, the General Partner; or
Kelso shall for any reason fail to have the power to elect a majority of the
board of directors of the General Partner; or Kelso shall for any reason fail to
be the shareholder which owns, legally and beneficially, the largest percentage
of all classes of the issued and outstanding capital stock of the General
Partner;
(r) Kelso shall for any reason fail to own, directly or indirectly,
beneficially and of record, at least fifty-one percent (51%) of all economic
ownership interests in, and voting rights with respect to CCELP; or Kelso shall
for any reason fail to have, directly or indirectly, the largest share of voting
rights with respect to CCELP; or Kelso shall for any reason fail to be the
entity which owns, directly or indirectly, legally and beneficially, the largest
percentage of all partnership interests in CCELP;
(s) The General Partner shall cease to be the managing general
partner of the Borrower or the sole general partner of the Borrower; or CCELP
shall cease to own, directly or indirectly, beneficially and of record, at least
seventy-five percent (75%) of all economic ownership interests in, and voting
rights with respect to the Borrower;
(t) Unless the Majority Banks have otherwise agreed in writing:
(i) (1) each of Jerald L. Kent, Howard L. Wood and Barry L. Babcock (or any
substitute general partner which is not
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rejected by the Majority Banks, as provided below) shall cease for any reason to
be a general partner of Charter Communications Group, or (2) Charter
Communications Group shall for any reason fail to be controlled, directly or
indirectly, by at least one of such individuals, or (3) a majority of the voting
equity of and economic interests in Charter Communications Group shall for any
reason fail to be owned by at least one of such individuals; provided, however,
that if any of the events described in clause (1), (2) or (3) above occurs
solely as a result of the death, disability or legal incapacity of any such
individual (or any substitute general partner which is not rejected by the
Majority Banks, as provided below), such event shall not constitute an Event of
Default unless (w) thirty (30) days after the occurrence of such event, the
Borrower shall have failed to provide the Agents and the Banks with a written
proposal as to the identity of one or more willing substitute general partners
of Charter Communications Group, together with a list of the names of the
Charter Communications Group, or (x) the Majority Banks shall have rejected, in
writing, any such proposal given (within such thirty (30) day period) by the
Borrower or (y) any such substitute general partner shall fail to become a
general partner of Charter Communications Group within a reasonable time
thereafter or (z) the senior management proposed by the Borrower as set forth in
clause (w) above, or any combination thereof, shall for any reason fail to
engage in senior management of Charter Communications Group; or (ii) Charter
Communications Group shall for any reason fail to control Charter
Communications, Inc., a Delaware corporation, at any time it is the Manager,
directly or indirectly, or Charter Communications Group shall for any reason
fail to own a majority of the voting equity of Charter Communications, Inc., a
Delaware corporation, at any time it is the Manager; provided that for purposes
of this Section 8.1(t), "control" shall mean the possession of the power to
direct or cause the direction of management and policies of the Person in
question, whether through the ownership of voting securities, by contract or
otherwise;
(u) The Borrower shall fail to have provided to the Administrative
Agent and the Banks, by December 15, 1995: (i) evidence satisfactory to the
Administrative Agent that all necessary consents to the Commission to the
transfer to the borrower of all Commission Licenses held by the General Partner
and Cencom, or either of them, on or prior to the Agreement Date have been
received, together with an opinion of Commission counsel which is substantially
similar to the opinion of Commission counsel previously delivered in connection
with the Prior Loan Agreement; or (ii) evidence satisfactory to the
Administrative Agent that all necessary consents to the transfer or assignment
to the Borrower of all Pole Agreements set forth on
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Schedule 2 hereto and all "material" contracts and agreements (as such term is
- ----------
defined in the Security Agreement) held by the General Partner and Cencom, or
either of them, have been received; or (iii) evidence satisfactory to the
Administrative Agent that the Borrower has used its best efforts to obtain all
necessary consents to the collateral assignment of such contracts and agreements
to the Administrative Agent, for itself and on behalf of the Banks, in
accordance with the terms of the Security Agreement; or
(v) Any demand for payment shall be made under the Guaranty issued
by CCELP in favor of HC Crown Corp. in respect of the Hallmark Subordinated
Debt.
Section 8.2 Remedies. If an Event of Default shall have occurred and
--------
shall be continuing:
(a) With the exception of an Event of Default specified in Section
8.1(f) or (g), the Administrative Agent, at the direction of the Majority Banks,
shall (i) terminate the Commitments, and (ii) declare the principal of and
interest on the Loans and the Notes and all other amounts owed under this
Agreement, the Notes and the other Loan Documents to be forthwith due and
payable without presentment, demand, protest or notice of any kind, all of which
are hereby expressly waived, anything in this Agreement, the Notes, or the other
Loan Documents to the contrary notwithstanding.
(b) Upon the occurrence and continuance of an Event of Default
specified in Section 8.1(f) or Section 8.1(g), such principal, interest and
other amounts shall thereupon and concurrently therewith become due and payable
and the Commitments shall forthwith terminate, all without any action by any of
the Administrative Agent and the Banks or the Majority Banks or the holders of
the Notes and without presentment, demand, protest or other notice of any kind,
all of which are expressly waived, anything in this Agreement, the Notes or the
other Loan Documents to the contrary notwithstanding.
(c) The Administrative Agent, with the concurrence of the Majority
Banks, shall exercise all of the post-default rights granted to it and to them
under the Loan Documents or under Applicable Law.
(d) The Administrative Agent shall have the right (but not the
obligation) to operate the System in accordance with the terms of the Licenses
and subject to any limitations contained in the Security Documents and, within
guidelines established by the Majority Banks, to make any and all payments and
expenditures necessary or desirable in connection therewith, including,
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without limitation, payment of wages as required under the Fair Labor Standards
Act, as amended, and of any necessary withholding taxes to state or federal
authorities. In the event the Majority Banks fail to agree upon the guidelines
referred to in the preceding sentence within six (6) Business Days' after the
Administrative Agent has begun to operate the System, the Administrative Agent
may, after giving notice to the Banks of its intention to do so, make such
payments and expenditures as it deems reasonable and advisable in its sole
discretion to maintain the normal day-to-day operation of the System. Such
payments and expenditures in excess of receipts shall constitute Advances under
this Agreement, notwithstanding any limitation that might otherwise be imposed
on Advances by the amount of the Commitments. Advances made pursuant to this
Section 8.2(d) shall bear interest as provided in Section 2.3(e) and shall be
payable on the earlier of demand or the Maturity Date. The making of one or
more Advances under this Section 8.2(d) shall not create any obligation on the
part of the Banks to make any additional Advances hereunder. No exercise by the
Administrative Agent of the rights granted to it under this Section 8.2(d) shall
constitute a waiver of any other rights and remedies granted to the
Administrative Agent and the Banks, or any of them, under this Agreement or at
law. The Borrower hereby irrevocably appoints the Administrative Agent, the
true and lawful attorney of the Borrower, in its name and stead and on its
behalf, to execute, receipt for or otherwise act in connection with any and all
contracts, instruments or other documents in connection with the completion and
operation of the System in the exercise of the Administrative Agent's and the
Banks' rights under this Section 8.2(d).
(e) The rights and remedies of the Administrative Agent and the Banks
hereunder shall be cumulative, and not exclusive.
ARTICLE 9
The Agents
----------
Section 9.1 Appointment and Authorization. Each Bank hereby irrevocably
-----------------------------
appoints and authorizes, and hereby agrees that it will require any transferee
of any of its interest in its Loans and in its Note irrevocably to appoint and
authorize, the Administrative Agent and the Documentation Agents to take such
actions as its agents on its behalf and to exercise such powers hereunder as are
delegated by the terms hereof, together with such powers as are reasonably
incidental thereto. Neither the Administrative Agent nor the Documentation
Agents, nor any of their respective directors, officers, employees or agents
shall
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be liable for any action taken or omitted to be taken by it or them hereunder or
in connection herewith, except for its or their own gross negligence or willful
misconduct as determined by a final order of a court of competent jurisdiction.
Section 9.2 Interest Holders. The Agents may treat each Bank, or the
----------------
Person designated in the last notice filed with the Administrative Agent under
this Section, as the holder of all of the interests of such Bank in its Loans
and in its Note until written notice of transfer, signed by such Bank (or the
Person designated in the last notice filed with the Administrative Agent) and by
the Person designated in such written notice of transfer, in form and substance
satisfactory to the Administrative Agent, shall have been filed with the
Administrative Agent.
Section 9.3 Consultation with Counsel. The Agents may consult with such
-------------------------
legal counsel selected by them and shall not be liable for any action taken or
suffered by them in good faith.
Section 9.4 Documents. The Agents shall be under no duty to examine,
---------
inquire into, or pass upon the validity, effectiveness or genuineness of this
Agreement, any Note or any instrument, document or communication furnished
pursuant hereto or in connection herewith, and the Agents shall be entitled to
assume that they are valid, effective and genuine, have been signed or sent by
the proper parties and are what they purport to be.
Section 9.5 Agents and Affiliates. With respect to the Commitments and
---------------------
the Loans, the affiliates of the Agents which are Banks shall have the same
rights and powers hereunder as any other Bank, and the Agents and their
respective affiliates may accept deposits from, lend money to and generally
engage in any kind of business with the Borrower, any of its Subsidiaries, any
Affiliates of, or Persons doing business with, the Borrower, as if it were not
affiliated with the Agents and without any obligation to account therefor. The
Banks acknowledge that the Agents and their respective affiliates have other
lending and investment relationships with the Borrower, its Subsidiaries, and
its Affiliates and in the future may enter into additional such relationships.
Section 9.6 Responsibilities of the Agents. The duties and obligations
------------------------------
of the Agents under this Agreement are only those expressly set forth in this
Agreement. Each of the Agents shall be entitled to assume that no Default or
Event of Default has occurred and is continuing unless it has actual knowledge,
or has been notified by the Borrower, of such fact, or has been notified by a
Bank that such Bank considers that a Default or an Event of
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Default has occurred and is continuing, and such Bank shall specify in detail
the nature thereof in writing. None of the Agents shall be liable hereunder for
any action taken or omitted to be taken except for its own gross negligence or
willful misconduct as determined by a final order of a court of competent
jurisdiction. The Administrative Agent shall provide each Bank with copies of
such documents received from the Borrower as such Bank may reasonably request.
Section 9.7 Collateral. The Administrative Agent is hereby authorized
----------
to act on behalf of the Banks, in its own capacity and through other agents and
sub-agents appointed by it, under the Security Documents, provided that the
Administrative Agent shall not agree to the release of any Collateral, or any
property encumbered by any mortgage, pledge or security interest except in
compliance with Section 11.12 hereof.
Section 9.8 Action by the Administrative Agent and the Documentation
--------------------------------------------------------
Agents.
- ------
(a) The Administrative Agent and the Documentation Agents shall be
entitled to use their discretion with respect to exercising or refraining from
exercising any rights which may be vested in them by, and with respect to taking
or refraining from taking any action or actions which they may be able to take
under, or in respect of, this Agreement, unless the Administrative Agent or
either Documentation Agent shall have been instructed by the Majority Banks to
exercise or refrain from exercising such rights or to take or refrain from
taking such action; provided that the Administrative Agent shall not exercise
any rights under Section 8.2(a) or 8.2(c) of this Agreement without the request
of the Majority Banks. Each Administrative Agent and each Documentation Agent
shall not incur any liability under, or in respect of, this Agreement with
respect to anything which it may do or refrain from doing in the reasonable
exercise of its judgment or which may seem to it to be necessary or desirable in
the circumstances, except for its gross negligence or willful misconduct as
determined by a final order of a court of competent jurisdiction.
(b) Neither the Administrative Agent nor any Documentation Agent shall
be liable to the Banks or to any Bank in acting or refraining from acting under
this Agreement in accordance with the instructions of the Majority Banks, and
any action taken or failure to act pursuant to such instructions shall be
binding on all Banks.
Section 9.9 Notice of Default or Event of Default. In the event that
-------------------------------------
any of the Agents or any Bank shall acquire actual knowledge, or shall have been
notified, of any Default or Event
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of Default, such Agent or such Bank shall promptly notify the Banks and the
other Agents, and the Administrative Agent shall take such action and assert
such rights under this Agreement as the Majority Banks shall request in writing,
and the Administrative Agent shall not be subject to any liability by reason of
its action pursuant to any such request. If the Majority Banks shall fail to
request the Administrative Agent to take action or to assert rights under this
Agreement in respect of any Default or Event of Default within ten (10) days
after their receipt of the notice of any Default or Event of Default from the
Administrative Agent, or shall request inconsistent action with respect to such
Default or Event of Default, the Administrative Agent may, but shall not be
required to, take such action and assert such rights (other than rights under
Article 8 hereof) as it deems in its discretion to be advisable for the
protection of the Banks, except that, if the Majority Banks have instructed the
Administrative Agent not to take such action or assert such right, in no event
shall the Administrative Agent act contrary to such instructions.
Section 9.10 Responsibility Disclaimed. The Agents shall be under no
-------------------------
liability or responsibility whatsoever as Agents:
(a) To the Borrower or any other Person as a consequence of any
failure or delay in performance by or any breach by, any Bank of any of its or
their obligations under this Agreement;
(b) To any Bank, as a consequence of any failure or delay in
performance by, or any breach by, (i) the Borrower of any of its obligations
under this Agreement or the Notes or any other Loan Document, or (ii) any
Subsidiary of the Borrower or any other obligor under any other Loan Document;
or
(c) To any Bank, for any statements, representations or warranties in
this Agreement, or any other document contemplated by this Agreement, or any
information provided pursuant to this Agreement, any other Loan Document, or any
other document contemplated by this Agreement, or for the validity,
effectiveness, enforceability or sufficiency of this Agreement, the Notes, any
other Loan Document, or any other document contemplated by this Agreement.
Section 9.11 Indemnification. The Banks agree to indemnify the Agents
---------------
(to the extent not reimbursed by the Borrower) pro rata according to their
respective Commitment Ratios, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including fees and expenses of experts, agents, consultants and
counsel), or disbursements of any kind or nature
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whatsoever which may be imposed on, incurred by or asserted against the Agents
in any way relating to or arising out of this Agreement, any other Loan
Document, or any other document contemplated by this Agreement or any action
taken or omitted by such Agent under this Agreement, any other Loan Document, or
any other document contemplated by this Agreement, except that no Bank shall be
liable to any Agent for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses, or disbursements
resulting from the gross negligence or willful misconduct of such Agent as
determined by a final order of a court of competent jurisdiction.
Section 9.12 Credit Decision. Each Bank represents and warrants to each
---------------
other and to the Agents that:
(a) In making its decision to enter into this Agreement and to make
its Advances it has independently taken whatever steps it considers necessary to
evaluate the financial condition and affairs of the Borrower and the Borrower's
Subsidiaries and that it has made an independent credit judgment, and that it
has not relied upon information provided by any of the Agents; and
(b) So long as any portion of the Loans remains outstanding, it will
continue to make its own independent evaluation of the financial condition and
affairs of the Borrower and the Borrower's Subsidiaries.
Section 9.13 Successor Administrative Agent and Documentation Agents.
-------------------------------------------------------
The Administrative Agent and either of the Documentation Agents may resign at
any time by giving written notice thereof to the Banks and the Borrower, and may
be removed at any time for cause by the Majority Banks. Upon any such
resignation or removal, the Majority Banks shall have the right to appoint a
successor Administrative Agent or Documentation Agent. If no successor
Administrative Agent or Documentation Agent shall have been so appointed by the
Majority Banks and shall have accepted such appointment within ten (10) days
after the retiring Administrative Agent's or Documentation Agent's giving of
notice of resignation or the Majority Banks' removal of the retiring
Administrative Agent or Documentation Agent, then the retiring Administrative
Agent or Documentation Agent may, on behalf of the Banks, appoint a successor
Administrative Agent or Documentation Agent, as the case may be, which shall be
any Bank or a commercial bank organized under the laws of the United States of
America or any political subdivision thereof which has combined capital and
reserves in excess of $500,000,000. Such successor Administrative Agent or
Documentation Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges, duties and obligations of the retiring
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Administrative Agent or Documentation Agent, and the retiring Administrative
Agent or Documentation Agent shall be discharged from its duties and obligations
hereunder. After any retiring Administrative Agent's or Documentation Agent's
resignation or removal hereunder as Administrative Agent or Documentation Agent,
the provisions of this Article shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
Administrative Agent or Documentation Agent.
Section 9.14 Managing Agents. The Managing Agents shall have no duties
---------------
or obligations under this Agreement or the other Loan Documents in their
capacities as Managing Agents.
Section 9.15 Co-Agents. The Co-Agents shall have no duties or
---------
obligations under this Agreement or the other Loan Documents in their capacities
as Co-Agents.
ARTICLE 10
Change in Circumstances
Affecting Fixed Rate Advances
-----------------------------
Section 10.1 Fixed Rate Basis Determination Inadequate or Unfair. If
---------------------------------------------------
with respect to any proposed Fixed Rate Advance for any Interest Period, the
Administrative Agent determines that deposits in dollars (in the applicable
amount) are not being offered in the relevant market for such Interest Period,
or if the Majority Banks determine that the rate quoted by the Administrative
Agent does not reflect the Banks' actual cost of funding such Advance, the
applicable Banks shall forthwith give notice thereof to the Administrative
Agent, the Borrower and the other Banks, whereupon until the Administrative
Agent notifies the Borrower that the circumstances giving rise to such situation
no longer exist, the obligations of such Bank or all of the Banks, as
applicable, to make such type of Fixed Rate Advances shall be suspended.
Section 10.2 Illegality. If any applicable law, rule or regulation, or
----------
any change therein, or any interpretation or change in interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Bank with any request or directive (whether or not having the force of
law) of any such authority, central bank or comparable agency, shall make it
unlawful or impossible for any Bank to make, maintain or fund its Fixed Rate
Advances (whether LIBOR Advances, CD Rate Advances, or both), such Bank shall
notify the Administrative Agent, and the Administrative Agent
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shall forthwith give notice thereof to the Banks and the Borrower. Before
giving any notice to the Administrative Agent pursuant to this Section, such
Bank shall designate a different lending office if such designation will avoid
the need for giving such notice and will not, in the judgment of such Bank, be
otherwise disadvantageous to such Bank. Upon receipt of such notice,
notwithstanding anything contained in Article 2 hereof, the Borrower shall repay
in full the then outstanding principal amount of each affected Fixed Rate
Advance of such Bank so affected, together with accrued interest thereon, either
(a) on the last day of the then current Interest Period applicable to such
affected Fixed Rate Advances if such Bank may lawfully continue to maintain and
fund such Fixed Rate Advance to such day or (b) immediately if such Bank may not
lawfully continue to fund and maintain such affected Fixed Rate Advances to such
day. Concurrently with repaying each affected Fixed Rate Advance of such Bank
so affected, notwithstanding anything contained in Article 2 hereof, the
Borrower shall borrow a Base Rate Advance (or the other type of Fixed Rate
Advance, if available) from such Bank, and such Bank shall make such Advance in
an amount such that the outstanding principal amount of the Note held by such
Bank shall equal the outstanding principal amount of such Note immediately prior
to such repayment.
Section 10.3 Increased Costs.
---------------
(a) If any applicable law, rule or regulation adopted or promulgated
after the Agreement Date, or any change therein or in any law, rule or
regulation existing as of the Agreement Date, or any interpretation or change in
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof or compliance by any Bank with any request or directive (whether or not
having the force of law) of any such authority, central bank or comparable
agency:
(1) shall subject any Bank to any tax, duty or other charge with
respect to its obligation to make Fixed Rate Advances, or shall change the
basis of taxation of payments to any Bank of the principal of or interest
on its Fixed Rate Advances or in respect of any other amounts due under
this Agreement, in respect of its Fixed Rate Advances, or its obligation to
make Fixed Rate Advances (except for Taxes excluded under Section 2.9(b)
hereof); or
(2) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors of
the Federal Reserve System, but excluding any included in an applicable
LIBOR Reserve Percentage or Domestic Reserve Percentage), special deposit,
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capital adequacy, assessment or other requirement or condition against
assets of, deposits with or for the account of, or commitments or credit
extended by, any Bank or shall impose on any Bank or the London Interbank
Borrowing Market any other condition affecting its obligation to make such
Fixed Rate Advances or its Fixed Rate Advances;
and the result of any of the foregoing is to increase the cost to such Bank of
making or maintaining any such Fixed Rate Advances, or to reduce the amount of
any sum received or receivable by the Bank under this Agreement or under any of
its Notes with respect thereto, then, on the earlier of a date within fifteen
(15) days after demand by such Bank or the Maturity Date, the Borrower agrees to
pay to such Bank such additional amount or amounts as will compensate such Bank
for such increased costs. Each Bank will promptly notify the Borrower and the
Administrative Agent of any event of which its has knowledge, occurring after
the date hereof, which will entitle such Bank to compensation pursuant to this
Section 10.3 and will designate a different lending office if such designation
will avoid the need for, or reduce the amount of, such compensation and will
not, in the sole judgment of such Bank made in good faith, be otherwise
disadvantageous to such Bank.
(b) A certificate of any Bank claiming compensation under this Section
10.3 and setting forth the additional amount or amounts to be paid to it
hereunder and calculations therefor shall be presumptively correct in the
absence of manifest error. In determining such amount, such Bank may use any
reasonable averaging and attribution methods. If any Bank demands compensation
under this Section 10.3, the Borrower may at any time, upon at least five (5)
Business Days' prior notice to such Bank, prepay in full the then outstanding
affected Fixed Rate Advances of such Bank, together with accrued interest
thereon to the date of prepayment, along with any reimbursement required under
Section 2.10 hereof. Concurrently with prepaying such Fixed Rate Advances the
Borrower shall borrow a Base Rate Advance or a Fixed Rate Advance not so
affected, from such Bank, and such Bank shall make such Advance in an amount
such that the outstanding principal amount of the affected Note or Notes held by
such Bank shall equal the outstanding principal amount of such Note or Notes
immediately prior to such prepayment.
Section 10.4 Effects on Other Advances. If notice has been given
-------------------------
pursuant to Sections 10.1, 10.2 or 10.3 suspending the obligation of any Bank to
make any type of Fixed Rate Advance, or requiring Fixed Rate Advances of any
Bank to be repaid or prepaid, then, unless and until such Bank notifies the
Borrower that the circumstances giving rise to such repayment no longer
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apply, all Advances which would otherwise be made by such Bank as the type of
Fixed Rate Advances affected shall be made instead as Base Rate Advances, or, if
available, the other type of Fixed Rate Advance.
Section 10.5 Claims for Increased Costs and Taxes. In the event that any
------------------------------------
Bank shall decline to make any type of Fixed Rate Advances pursuant to Section
10.1 or 10.2 hereof or shall have notified the Borrower that it is entitled to
claim compensation pursuant to Section 2.12 or 10.3 hereof (each such Bank being
an "Affected Bank"), the Borrower may designate a replacement bank (a
"Replacement Bank") to assume the Commitments and the obligations of any such
Affected Bank hereunder, and to purchase the outstanding Note or Notes of such
Affected Bank and such Affected Bank's rights hereunder and with respect
thereto, without recourse upon, or warranty by, or expense to, such Affected
Bank, for a purchase price equal to the outstanding principal amount of the
Loans of such Affected Bank plus all interest accrued and unpaid thereon and all
other amounts owing to such Affected Bank hereunder, including without
limitation, any amount which would be payable to such Affected Bank pursuant to
Section 2.10, and upon such assumption and purchase by the Replacement Bank,
such Replacement Bank shall be deemed to be a "Bank" for purposes of this
Agreement and such Affected Bank shall cease to be a "Bank" for purposes of this
Agreement and shall no longer have any obligations or rights hereunder (other
than any obligations or rights which according to this Agreement shall survive
the termination of this Agreement).
ARTICLE 11
Miscellaneous
-------------
Section 11.1 Notices.
-------
(a) All notices and other communications under this Agreement shall be
in writing and shall be deemed to have been given three (3) days after deposit
in the mail, designated as certified mail, return receipt requested, post-
prepaid, or one (1) day after being entrusted to a reputable commercial
overnight delivery service, or when delivered to the telegraph office or sent
out by telex or telecopy addressed to the party to which such notice is directed
at its address determined as provided in this Section 11.1. All notices and
other communications under this Agreement shall be given to the parties hereto
at the following addresses:
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(i) If to the Borrower, to it at:
Charter Communications Entertainment I, L.P.
12444 Powerscourt Drive
Suite 400
St. Louis, Missouri 63131
Attn: Jeffrey Sanders
with a copy to:
Paul, Hastings, Janofsky & Walker
600 Peachtree Street, N.E.
Suite 2400
Atlanta, Georgia 30308
Attn: Kevin Conboy, Esq.
(ii) If to the Administrative Agent, to it at:
Toronto Dominion (Texas), Inc.
909 Fannin, Suite 1700
Houston, Texas 77010
Attn: Manager, Agency
with a copy to:
The Toronto-Dominion Bank
31 West 52nd Street
New York, New York 10019
Attn: Melissa Glass
and with a copy to:
Powell, Goldstein, Frazer & Murphy
Sixteenth Floor
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attn: Mary W. Bondurant, Esq.
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(iii) If to the Banks, to them at:
Toronto Dominion (Texas), Inc.
909 Fannin, Suite 1700
Houston, Texas 77010
Attn: Manager, Agency
with a copy to:
The Toronto-Dominion Bank
31 West 52nd Street
New York, New York 10019
Attn: Melissa Glass
Chemical Bank
270 Park Avenue
New York, New York 10017
Attn: Joseph Coneeny
CIBC Inc.
425 Lexington Avenue, 6th Floor
New York, New York 10017
Attn: Tefta Ghilaga
Credit Lyonnais Cayman Island Branch
1301 Avenue of the Americas
New York, New York 10019
Attn: Bruce Yeager
NationsBank, N.A. (Carolinas)
901 Main Street, 64th Floor
Dallas, Texas 75202
Attn: Hutch McClendon
Banque Paribas
2029 Century Park East, Suite 3900
Los Angeles, California 90067
Attn: Steve Healey
CoreStates Bank, N.A.
FC 1-8-10-73
1339 Chestnut Street
Philadelphia, Pennsylvania 19101
Attn: Anthony B. Parisi
The Long-Term Credit Bank of Japan, Ltd.
190 South Lasalle Street, Suite 800
Chicago, Illinois 60603
Attn: Ken Loveless
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Mercantile Bank of St. Louis
National Association
721 Locust Street
St. Louis, Missouri 63102
Attn: Eloise Engman
NatWest Bank N.A.
175 Water Street
New York, New York 10038
Attn: Michael Cerullo
Union Bank
445 South Figueroa Street
Los Angeles, California 90071
Attn: Kevin Sampson
Van Kampen Merritt Prime Rate Income Trust
c/o Van Kampen American Capital
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Attn: Jeffrey Maillet
First National Bank of Maryland
25 South Charles Street
Baltimore, Maryland 21201
Attn: John Bruch
Banque Francaise du Commerce Exterieur
645 Fifth Avenue
New York, New York 10022
Attn: Rick Kammler
Copies shall be provided to persons other than parties hereto only in the case
of notices under Article 8 hereof.
(b) Any party hereto may change the address to which notices shall be
directed under this Section 11.1 by giving ten (10) days' written notice of such
change to other parties.
Section 11.2 Expenses. The Borrower will promptly pay:
--------
(a) all reasonable out-of-pocket expenses of the Documentation Agents
and the Administrative Agent in connection with the preparation, negotiation,
execution and delivery of this Agreement and other Loan Documents, and the
transactions contemplated hereunder and thereunder and the making of the initial
Advance hereunder whether or not such Advance is made, including, but not
limited to, the reasonable fees and
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disbursements of Powell, Goldstein, Frazer & Murphy, special counsel for the
Administrative Agent;
(b) all reasonable out-of-pocket expenses of the Administrative Agent
in connection with the administration of the transactions contemplated in this
Agreement or the other Loan Documents (other than routine overhead expenses) and
the preparation, negotiation, execution and delivery of any waiver, amendment or
consent by the Banks relating to this Agreement or the other Loan Documents,
including, but not limited to, the reasonable fees and disbursements of any
experts, agents or consultants and of counsel for the Administrative Agent; and
(c) all reasonable out-of-pocket costs and expenses of the Agents and
the Banks in obtaining performance under this Agreement or the other Loan
Documents and in connection with any restructuring, refinancing or "work out" of
the transactions contemplated hereby and thereby, and all reasonable out-of-
pocket costs and expenses of collection if default is made in the payment of the
Notes, which in each case shall include reasonable fees and out-of-pocket
expenses of any experts, agents, consultants and counsel for the Administrative
Agent and reasonable fees and out-of-pocket expenses of counsel for the other
Banks, collectively (which counsel for the Banks shall be selected by the
Majority Banks).
Section 11.3 Waivers. The rights and remedies of the Agents and the
-------
Banks under this Agreement and the other Loan Documents shall be cumulative and
not exclusive of any rights or remedies which they would otherwise have. No
failure or delay by the Agents, the Majority Banks or the Banks, or any of them,
in exercising any right shall operate as a waiver of such right. The Agents and
the Banks expressly reserve the right to require strict compliance with the
terms of this Agreement in connection with any funding of a request for an
Advance. In the event the Banks decide to fund a request for an Advance at a
time when the Borrower is not in strict compliance with the terms of this
Agreement, such decision by the Banks shall not be deemed to constitute an
undertaking by the Banks to fund any further requests for Advances or preclude
the Banks from exercising any rights available to the Banks under the Loan
Documents or at law or equity. Any waiver or indulgence granted by the Banks or
by the Majority Banks shall not constitute a modification of this Agreement,
except to the extent expressly provided in such waiver or indulgence, or
constitute a course of dealing by the Banks at variance with the terms of the
Agreement such as to require further notice by the Banks of the Banks' intent to
require strict adherence to the terms of the Agreement in the future. Any such
actions shall not in any way affect the ability of the Agents and the Banks, in
their discretion, to exercise any rights
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available to them under this Agreement or under any other agreement, whether or
not the Agents and the Banks are party, relating to the Borrower.
Section 11.4 Set-Off. In addition to any rights now or hereafter granted
-------
under Applicable Law and not by way of limitation of any such rights, upon the
occurrence of an Event of Default and during the continuation thereof, the Banks
and any subsequent holder or holders of the Notes are hereby authorized by the
Borrower at any time or from time to time, without notice to the Borrower or to
any other Person, any such notice being hereby expressly waived, to set-off,
appropriate and apply any and all deposits (general or special, time or demand,
including, but not limited to, Indebtedness evidenced by certificates of
deposit, in each case whether matured or unmatured) and any other Indebtedness
at any time held or owing by the Banks or such holder to or for the credit or
the account of the Borrower, against and on account of the obligations and
liabilities of the Borrower, to the Banks or such holder under this Agreement,
the Notes and any other Loan Document, including, but not limited to, all claims
of any nature or description arising out of or connected with this Agreement,
the Notes or any other Loan Document, irrespective of whether (a) the Banks or
the holder of the Notes shall have made any demand hereunder or (b) the Banks
shall have declared the principal of and interest on the Loans and Notes and
other amounts due hereunder to be due and payable as permitted by Section 8.2
and although such obligations and liabilities, or any of them, shall be
contingent or unmatured. Any sums obtained by any Bank or by any subsequent
holder of the Notes shall be subject to the pro rata treatment provisions of
Section 2.11 hereof. Upon direction by the Administrative Agent with the
consent of the Majority Banks, each Bank holding deposits of the Borrower shall
exercise its set-off rights as so directed. The Administrative Agent will
notify the Borrower after the exercise of set-off rights under this Section.
Section 11.5 Assignment.
----------
(a) The Borrower may not assign or transfer any of its rights or
obligations hereunder, under the Notes or under any other Loan Document without
the prior written consent of each Bank.
(b) Each Bank may sell assignments of up to one hundred percent (100%)
of its interest hereunder to (A) one or more affiliates of such Bank or to any
other Bank, or (B) any Federal Reserve Bank as collateral security pursuant to
Regulation A of the Board of Governors of the Federal Reserve System and any
Operating Circular issued by such Federal Reserve
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Bank, so long as such assignment does not relieve such Bank from its obligations
hereunder.
(c) Each of the Banks may at any time enter into assignment agreements
(but not participations) with one or more other banks or other Persons pursuant
to which each Bank may assign its interest under this Agreement and the other
Loan Documents, including, its interest in any particular Advance or portion
thereof, provided, that (1) all assignments (other than assignments described in
--------
clause (b) hereof) shall be in minimum aggregate principal amounts of $7,500,000
with respect to both Commitments or either Commitment, as applicable (unless
after giving effect to all contemporaneous assignments to such Person, such
Person has a minimum aggregate commitment under the Commitments of $7,500,000),
(2) without the prior consent of the Borrower, no Bank may assign more than
forty-nine percent (49%) of its interest hereunder on the Agreement Date, unless
such Bank is selling one hundred percent (100%) of its interest, and (3) all
assignments (other than assignments described in clause (b) hereof) shall be
subject to the following additional terms and conditions:
(i) No assignment (except assignments permitted in Section
11.5(b) hereof) shall be sold without the prior consent of the
Administrative Agent and, prior to the occurrence and continuation of an
Event of Default, the consent of the Borrower, which consents shall not be
unreasonably withheld and, with respect to any assignment to any Person in
an aggregate principal amount of less than $10,000,000, the Borrower shall
have received not less than ten (10) Business Days' prior notice;
(ii) Any Person purchasing an assignment of the Loans from any
Bank shall be required to represent and warrant that its purchase shall not
constitute a "prohibited transaction" (as defined in Section 4.1(l)
hereof);
(iii) The Borrower, the Agents and the Banks agree that
assignments permitted hereunder may be made with all voting rights, and
shall be made pursuant to an Assignment and Assumption Agreement
substantially in the form of Exhibit N attached hereto. An administrative
---------
fee of $2,500 shall be payable to the Administrative Agent by the assigning
Bank at the time of any assignment hereunder other than with respect to an
assignment to an Affiliate of such Bank;
(iv) Each Bank agrees to provide the Administrative Agent and the
Borrower with prompt written
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notice of the making of any assignments of its interests hereunder;
(v) No assignment of any rights hereunder or under the Notes
shall be effected that would result in any interest requiring registration
under the Securities Act of 1933, as amended, or qualification under any
state securities law;
(vi) No such assignment may be made to any bank or other
financial institution (A) that does not have a minimum capital and surplus
of $500,000,000, (B) with respect to which a receiver or conservator
(including, without limitation, the Federal Deposit Insurance Corporation,
the Resolution Trust Company or the Office of Thrift Supervision) has been
appointed and (C) that is not "adequately capitalized" (as such term is
defined in Section 131(b)(1)(B) of the Federal Deposit Insurance
Corporation Improvement Act as in effect on the Agreement Date); and
(vii) If applicable, each Bank shall cause each of its assignees
to provide to the Administrative Agent on or prior to the effective date of
any assignment an appropriate Internal Revenue Service form as required by
Applicable Law supporting such Bank's position that no withholding by the
Borrower or the Administrative Agent for U.S. income tax payable by such
Bank in respect of amounts received by it hereunder is required. For
purposes of this Agreement, an appropriate Internal Revenue Service form
shall mean Form 1001 (Ownership Exemption or Reduced Rate Certificate of
the U.S. Department of Treasury), or Form 4224 (Exemption from Withholding
of Tax on Income Effectively Connected with the Conduct of a Trade or
Business in the United States), or any successor or related forms adopted
by the relevant U.S. taxing authorities.
(d) Nothing in this Agreement or the Notes, expressed or implied, is
intended to or shall confer on any Person other than the respective parties
hereto and thereto and their successors and assignees permitted hereunder and
thereunder any benefit or any legal or equitable right, remedy or other claim
under this Agreement or the Notes.
(e) The provisions of this Section 11.5 shall not apply to any
purchase of participations among the Banks pursuant to Section 2.11 hereof.
Section 11.6 Accounting Principles; Calculations. All references in this
-----------------------------------
Agreement to generally accepted accounting principles shall be to such
principles as in effect from time to
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time. All accounting terms used herein without definition shall be used as
defined under GAAP. All calculations required to be made hereunder with respect
to the Borrower and its Subsidiaries shall be made for the Borrower and its
Subsidiaries on a consolidated basis. All calculations for the Borrower and its
Subsidiaries relating to time periods prior to the Agreement Date shall be
deemed to include calculations for the General Partner and its Subsidiaries as
well as the Borrower and its Subsidiaries on a consolidated basis. All
calculations required to be made hereunder with respect to compliance by the
Borrower hereunder, including, without limitation, compliance under Sections
2.7(b), 7.3, 7.4(a), 7.4(b), 7.12, 7.13 and 7.15 hereof, shall be deemed to
include calculations for all activities engaged in, all transactions consummated
by and all events which occurred with respect to the General Partner and its
Subsidiaries for the period from and including January 18, 1995 through the
Agreement Date. For all purposes herein, the phrase "during the term of this
Agreement" or similar phrases used herein shall be deemed to refer to the period
from and including January 18, 1995 through the applicable calculation date.
Section 11.7 Counterparts. This Agreement may be executed in any number
------------
of counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same instrument.
Section 11.8 Governing Law. This Agreement and the other Loan Documents
-------------
shall be construed in accordance with and governed by the law of the State of
New York.
Section 11.9 Severability. Any provision of this Agreement which is
------------
prohibited or unenforceable shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof in that jurisdiction or affecting the validity or enforceability of such
provision in any other jurisdiction.
Section 11.10 Interest.
--------
(a) In no event shall the amount of interest due or payable hereunder
or under the Notes exceed the maximum rate of interest allowed by Applicable
Law, and in the event any such payment is inadvertently made by the Borrower or
inadvertently received by any Bank, then such excess sum shall be credited as a
payment of principal, unless the Borrower shall notify such Bank in writing that
it elects to have such excess sum returned forthwith. It is the express intent
hereof that the Borrower not pay and the Banks not receive, directly or
indirectly in any manner whatsoever, interest in excess of that which may
legally be paid by the Borrower under Applicable Law.
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(b) Notwithstanding the use by the Banks of the Base Rate, CD Rate,
LIBOR and the Federal Funds Rate as reference rates for the determination of
interest on the Loans, the Banks shall be under no obligation to obtain funds
from any particular source in order to charge interest to the Borrower at
interest rates tied to such reference rates.
Section 11.11 Headings. Headings used in this Agreement are for
--------
convenience only and shall not be used in connection with the interpretation of
any provision hereof.
Section 11.12 Amendment and Waiver. Neither this Agreement nor any term
--------------------
hereof may be amended orally, nor may any provision hereof be waived orally but
only by an instrument in writing signed by the Majority Banks and, in the case
of an amendment, by the Borrower, except that in the event of (a) any increase
in the amount of either Commitment, (b) reduction of any repayment of the Loans
provided in Section 2.5 or 2.7 hereof, (c) reduction of any required reduction
in the Revolving Loan Commitment provided in Section 2.5 hereof, (d) any
reduction of any principal, interest or fees due hereunder, (e) any postponement
of the timing of payments of principal, interest and fees due hereunder, (f) any
release (other than a release required under Section 7.4 hereof) or impairment
of the value of any Collateral for the Loans, (g) any waiver of any Default due
to the Borrower's failure to pay any sum due hereunder, (h) any amendments or
modifications to the Hallmark Subordinated Debt other than amendments or
modifications which are purely of an administrative nature or which (1) extend
the maturity of principal due thereunder, (2) decrease the rate of interest
payable by Holdings thereunder, (3) modify any reporting requirements or notice
provisions, (4) loosen any covenant of Holdings thereunder, or (5) forgive any
Indebtedness of Holdings arising thereunder, or (i) any amendment of this
Section 11.12 or of the definition of Majority Banks, any amendment or waiver
may be made only by an instrument in writing signed by each of the Banks and, in
the case of an amendment, also by the Borrower. In addition, no Bank's portion
of any Commitment hereunder may be increased without the written consent of such
Bank. Any amendment to any provision hereunder governing the rights,
obligations, or liabilities of any Agent in its capacity as such, may be made
only by an instrument in writing signed by such affected Person and by each of
the Banks. No term or provision of any Security Document may be amended or
waived orally, but only by an instrument in writing signed by the Administrative
Agent with the direction of the Majority Banks and, in the case of an amendment,
by such of the Borrower and its Subsidiaries as are party thereto; provided,
that the written consent of all of the Banks shall be required with respect to
any amendment to or waiver of the provisions of any Security Document which
would have the
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effect of (i) releasing any portion of the Collateral for the Loans, other than
in connection with any permitted asset sale (which shall require no further
approval by the Banks) or (ii) releasing any Guaranty of all or any portion of
the Obligations, except in connection with a merger, sale or other disposition
otherwise permitted hereunder (in either such case as described in clauses (i)
and (ii) of this sentence, such release shall require no further approval by the
Banks). The Agents and the Banks hereby instruct and authorize the
Administrative Agent to enter into the Security Documents (and all other Loan
Documents) referred to in Section 3.1 hereof as of the Agreement Date and any
other Security Documents required to be entered into by the Borrower or any of
its Subsidiaries hereunder after the Agreement Date.
Section 11.13 Entire Agreement. Except as otherwise expressly provided
----------------
herein, this Agreement and the other documents described or contemplated herein
embody the entire agreement and understanding among the parties hereto and
thereto and supersede all prior agreements and understandings relating to the
subject matter hereof and thereof.
Section 11.14 Other Relationships. No relationship created hereunder or
-------------------
under any other Loan Document shall in any way affect the ability of the Agents
and the Banks to enter into or maintain business relationships with the Borrower
or any of its Subsidiaries, the General Partner, either of the Limited Partners,
the Manager, or any of their Affiliates beyond the relationships specifically
contemplated by this Agreement and the other Loan Documents.
Section 11.15 Agreement to Transfer and Consent. By its execution of this
---------------------------------
Agreement, (a) the General Partner agrees (i) to transfer to CCELP on the
Agreement Date substantially all of the General Partner's assets (other than its
ownership of the stock of Cencom) and all of the its liabilities, including,
without limitation, the General Partner's liabilities under the Prior Loan
Agreement, and (ii) to transfer to CCT on the Agreement Date the portion of the
General Partner's assets not transferred to CCELP; (b) CCELP consents to the
transfer to CCELP on the Agreement Date of substantially all of the assets of
the General Partner and all of the assets of Cencom (other than the General
Partner's ownership of the stock of Cencom) and all of the liabilities of the
General Partner and Cencom, including, without limitation, the General Partner's
liabilities under the Prior Loan Agreement; (c) CCT consents to the transfer to
CCT on the Agreement Date of the portion of the assets of the General Partner
not transferred to CCELP; (d) CCELP agrees to transfer to the Borrower on the
Agreement Date all of the assets and liabilities of the General Partner and
Cencom which are
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transferred to CCELP by the General Partner and Cencom; and (e) CCT agrees to
transfer to the Borrower on the Agreement Date all of the assets of the General
Partner which are transferred to CCT by the General Partner. By their execution
of this Agreement, the parties signatory hereto consent to the transactions
contemplated hereby, including, without limitation, (i) the transfer to CCELP on
the Agreement Date of substantially all of the assets (other than the General
Partner's ownership of the stock of Cencom) and all of liabilities of the
General Partner, including, without limitation, the General Partner's
liabilities under the Prior Loan Agreement; (ii) the transfer to CCT on the
Agreement Date of the portion of the assets of the General Partner not
transferred to CCELP; (iii) the transfer by CCELP and CCT to the Borrower on the
Agreement Date of all assets and liabilities of the General Partner previously
transferred to CCELP and CCT, respectively; (iv) the transfer to CCELP on the
Agreement Date of all assets and liabilities of Cencom and the subsequent
transfer on the Agreement Date of such assets and liabilities to the Borrower;
and (v) effective upon completion of the transfer of all assets from the General
Partner and Cencom to CCELP and CCT, respectively, and the transfer of all
liabilities from the General Partner and Cencom to CCELP and the subsequent
transfer to the Borrower by CCELP and CCT, the agreement of the Borrower to
assume all of the Obligations (as defined in the Prior Loan Agreement) of the
General Partner and to be bound by all of the terms and conditions set forth in
the Prior Loan Agreement, as amended and restated hereby.
ARTICLE 12
Waiver of Jury Trial
--------------------
Section 12.1 Waiver of Jury Trial. THE BORROWER, EACH AGENT AND EACH
--------------------
BANK HEREBY AGREE TO WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY COURT AND IN ANY
ACTION OR PROCEEDING OF ANY TYPE IN WHICH THE BORROWER, ANY OF THE BORROWER'
SUBSIDIARIES, THE GENERAL PARTNER, EITHER OF THE LIMITED PARTNERS, THE MANAGER,
AND ANY OF THE AGENTS OR THE BANKS, OR ANY OF THEIR RESPECTIVE SUCCESSORS OR
ASSIGNS IS A PARTY, AS TO ALL MATTERS AND THINGS ARISING DIRECTLY OR INDIRECTLY
OUT OF THIS AGREEMENT, ANY OF THE NOTES OR THE OTHER LOAN DOCUMENTS AND THE
RELATIONS AMONG THE PARTIES LISTED IN THIS SECTION 12.1.
-98-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused it to be executed under seal by their duly authorized officers, all as of
the day and year first above written.
BORROWER: CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P., a
Delaware limited partnership
By: Its General Partner
CCA ACQUISITION CORP., a Delaware corporation
/s/ Jeffrey Sanders
By:______________________________________________
Its: Executive Vice President
ADMINISTRATIVE AGENT: TORONTO DOMINION (TEXAS), INC., as
Administrative Agent
/s/ Melissa B. Nigro
By:______________________________________________
Its: Vice President
DOCUMENTATION AGENTS: TORONTO DOMINION (TEXAS), INC., as a
Documentation Agent
/s/ Melissa B. Nigro
By:______________________________________________
Its: Vice President
CHEMICAL BANK, as a Documentation
Agent
/s/ Mary E. Cameron
By:______________________________________________
Its: Vice President
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
AMENDED AND RESTATED
LOAN AGREEMENT
SIGNATURE PAGE 1
<PAGE>
MANAGING AGENTS: TORONTO DOMINION (TEXAS), INC., as a
Managing Agent
/s/ Melissa B. Nigro
By:______________________________________________
Its: Vice President
CHEMICAL BANK, as a Managing Agent
/s/ Mary E. Cameron
By:______________________________________________
Its: Vice President
CIBC INC., as a Managing Agent
/s/ Matthew B. Jones
By:______________________________________________
Its: Vice President
CREDIT LYONNAIS CAYMAN ISLAND BRANCH,
as a Managing Agent
/s/ Bruce M. Yeager
By:______________________________________________
Its: Authorized Signatory
NATIONSBANK, N.A. (CAROLINAS), as a Managing Agent
/s/ Jennifer Zydney
By:______________________________________________
Its: Vice President
CO-AGENTS: BANQUE PARIBAS, as a Co-Agent
/s/ Stephen Healey
By:______________________________________________
Its: Vice President
/s/ John Cate
By:______________________________________________
Its: Vice President
UNION BANK, as a Co-Agent
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
AMENDED AND RESTATED
LOAN AGREEMENT
SIGNATURE PAGE 2
<PAGE>
/s/ Michael K. McShane
By:______________________________________________
Its: Vice President
BANKS: TORONTO DOMINION (TEXAS), INC., as a
Bank
/s/ Melissa B. Nigro
By:______________________________________________
Its: Vice President
CHEMICAL BANK, as a Bank
/s/ Mary E. Cameron
By:______________________________________________
Its: Vice President
CIBC INC., as a Bank
/s/ Matthew B. Jones
By:______________________________________________
Its: Vice President
CREDIT LYONNAIS CAYMAN ISLAND BRANCH,
as a Bank
/s/ Bruce M. Yeager
By:______________________________________________
Its: Authorized Signtory
NATIONSBANK, N.A. (CAROLINAS), as a Bank
/s/ Jennifer Zydney
By:______________________________________________
Its: Vice President
BANQUE PARIBAS, as a Bank
/s/ Stephen Healey
By:_____________________________________________
Its: Vice President
/s/ John Cate
By:______________________________________________
Its: Vice President
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
AMENDED AND RESTATED
LOAN AGREEMENT
SIGNATURE PAGE 3
<PAGE>
UNION BANK, as a Bank
/s/ Michael K. McShane
By:______________________________________________
Its: Vice President
CORESTATES BANK, N.A., as a Bank
/s/ Anthony B. Parisi
By:______________________________________________
Its: Assistant Vice President
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., as a Bank
/s/ Armund Schoen, Jr.
By:______________________________________________
Its: Vice President
MERCANTILE BANK OF ST. LOUIS
NATIONAL ASSOCIATION, as a Bank
/s/ Gregory D. Knudsen
By:______________________________________________
Its: Vice President
NATWEST BANK N.A., as a Bank
/s/ Michael Cerullo
By:______________________________________________
Its: Vice President
FIRST NATIONAL BANK OF MARYLAND, as a Bank
/s/ John L. Bruch
By:______________________________________________
Its: Vice President
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
AMENDED AND RESTATED
LOAN AGREEMENT
SIGNATURE PAGE 4
<PAGE>
VAN KAMPEN MERRITT PRIME RATE INCOME TRUST as a Bank
/s/ Kathleen A. Zarn
By:______________________________________________
Its: Vice President
BANQUE FRANCAISE DU COMMERCE EXTERIEUR, as a Bank
/s/ Frederick K. Kammler
By:______________________________________________
Its: Vice President
ACKNOWLEDGED AND, WITH RESPECT TO
SECTION 11.5 HEREOF, AGREED TO:
CCA ACQUISITION CORP., a Delaware corporation
/s/ Jeffrey Sanders
By:_________________________________________
Its: Executive Vice President
CHARTER COMMUNICATIONS ENTERTAINMENT, L.P.,
a Delaware limited partnership
By: Its General Partner
CCT HOLDINGS CORP., a Delaware corporation
/s/ Jeffrey Sanders
By:_____________________________________
Its: Executive Vice President
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
AMENDED AND RESTATED
LOAN AGREEMENT
SIGNATURE PAGE 5
<PAGE>
CCT HOLDINGS CORP., a Delaware corporation
/s/ Jeffrey Sanders
By:__________________________________________
Its: Executive Vice President
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
AMENDED AND RESTATED
LOAN AGREEMENT
SIGNATURE PAGE 6
<PAGE>
THIS PAGE MUST BE KEPT WITH THE DOCUMENT.
FIRST AMENDMENT TO LOAN AGREEMENT
04/25/97 1:23 PM
<PAGE>
Exhibit 10.2
FIRST AMENDMENT TO LOAN AGREEMENT
THIS FIRST AMENDMENT TO LOAN AGREEMENT (this "Amendment"), dated as of
the 31st day of October, 1995 (the "Amendment Date"), by and among CHARTER
COMMUNICATIONS ENTERTAINMENT I, L.P., a Delaware limited partnership (the
"Borrower"), TORONTO DOMINION (TEXAS), INC., CHEMICAL BANK, CIBC INC., CREDIT
LYONNAIS CAYMAN ISLAND BRANCH, NATIONSBANK, N.A. (CAROLINAS), BANQUE PARIBAS,
UNION BANK, CORESTATES BANK, N.A., THE LONG-TERM CREDIT BANK OF JAPAN, LTD.,
MERCANTILE BANK OF ST. LOUIS NATIONAL ASSOCIATION, NATWEST BANK N.A., FIRST
NATIONAL BANK OF MARYLAND, VAN KEMPEN MERRITT PRIME RATE INCOME TRUST and BANQUE
FRANCAISE DU COMMERCE EXTERIEUR (together with any financial institution which
subsequently becomes a `Bank' under the Loan Agreement, as such term is defined
therein, the "Banks"), TORONTO DOMINION (TEXAS), INC. and CHEMICAL BANK, as
Documentation Agents (in such capacity, the "Documentation Agents"), TORONTO
DOMINION (TEXAS), INC., CHEMICAL BANK, CIBC INC., CREDIT LYONNAIS CAYMAN ISLAND
BRANCH, and NATIONSBANK, N.A. (CAROLINAS), as Managing Agents (collectively in
such capacity, the "Managing Agents"), BANQUE PARIBAS and UNION BANK, as Co-
Agents (collectively in such capacity, the "Co-Agents") and TORONTO DOMINION
(TEXAS), INC., as Administrative Agent for the Documentation Agents, the
Managing Agents, the Co-Agents and the Banks (the "Administrative Agent," and
together with the Documentation Agents, the Managing Agents and the Co-Agents,
the "Agents"),
W I T N E S S E T H:
-------------------
WHEREAS, the Agents, the Borrower, and the Banks are parties to that
certain Amended and Restated Loan Agreement dated as of September 29, 1995, (as
amended, modified and supplemented from time to time, the "Loan Agreement"); and
WHEREAS, the Borrower has requested the Agents and the Banks to agree
to amend certain provisions of the Loan Agreement to provide for the creation of
a third credit facility to be provided thereunder which shall be in a principal
amount not to exceed $85,000,000 in the aggregate, the proceeds of which shall
be used by the Borrower to acquire certain cable properties from United Video
Cablevision, Inc. and Omega Communications, Inc.; and
WHEREAS, the Agents and the Banks are willing to consent to such
amendments and such other matters as set forth herein on the terms and
conditions contained herein in return, in part, for the payment of the Amendment
Fee (as defined herein);
NOW, THEREFORE, in consideration of the premises set forth above, the
covenants and agreements hereinafter set forth, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree that all capitalized terms used herein shall have the
<PAGE>
meanings ascribed thereto in the Loan Agreement, and further agree as follows:
1. Amendments to Article 1.
-----------------------
(a) Article 1 of the Loan Agreement, Definitions, is hereby amended by
-----------
deleting the existing definitions of "Base Rate Advance," "Commitment Ratios,"
----------------- -----------------
"Commitments," "Default Rate," "Loans," "Maturity Date" and "Notes" in their
- ------------ ------------ ----- ------------- -----
entireties and by substituting the following therefor:
"`Base Rate Advance' shall mean an Advance which the Borrower requests
------------------
to be made as a Base Rate Advance or is reborrowed as a Base Rate Advance
in accordance with the provisions of Section 2.2 hereof, and which shall be
in a principal amount of at least $1,000,000 and in an integral multiple of
$100,000, except for a Base Rate Advance which is in an amount equal to the
unused amount of the Commitment applicable thereto, which Advance may be in
such amount."
"`Commitment Ratios' shall mean the percentages in which the Banks are
-----------------
severally bound to make Advances to the Borrower under the respective
Commitments, as set forth below (together with dollar amounts) as of the
date of the First Amendment to this Agreement:
<TABLE>
<CAPTION>
Portion of
Portion of Revolving Portion of Term Loan Revolving Loan Fund Loan
Term Loan Loan Fund Loan Total Dollar Commitment Commitment Commitment
Banks Commitment Commitment Commitment Commitment Ratio Ratio Ratios
- ----------------- -------------- ------------- -------------- ------------ ------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Toronto $ 9,856,000.01 $ 703,999.99 $42,500,000.00 $ 53,060,000 3.520000001% 3.519999983% 50.000000000%
Dominion
(Texas), Inc.
Chemical Bank 13,189,333.33 2,370,666.67 $42,500,000.00 58,060,000 4.710476190% 11.853333333% 50.000000000%
CIBC Inc. 33,189,333.33 2,370,666.67 0.00 35,560,000 11.853333333% 11.853333333% 0.000000000%
Credit Lyonnais 33,189,333.33 2,370,666.67 0.00 35,560,000 11.853333333% 11.853333333% 0.000000000%
Cayman Island
Branch
NationsBank, 33,189,333.33 2,370,666.67 0.00 35,560,000 11.853333333% 11.853333333% 0.000000000%
N.A.
(Carolinas)
Banque Paribas 19,026,666.67 2,073,333.33 0.00 21,100,000 6.795238095% 10.366666667% 0.000000000%
Union Bank 29,026,666.67 2,073,333.33 0.00 31,100,000 10.366666667% 10.366666667% 0.000000000%
CoreStates 14,000,000.00 1,000,000.00 0.00 15,000,000 5.000000000% 5.000000000% 0.000000000%
Bank, N.A.
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
Portion of
Portion of Revolving Portion of Term Loan Revolving Loan Fund Loan
Term Loan Loan Fund Loan Total Dollar Commitment Commitment Commitment
Banks Commitment Commitment Commitment Commitment Ratio Ratio Ratios
- ----------------- -------------- ------------- -------------- ------------ ------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
The Long-Term 14,000,000.00 1,000,000.00 0.00 15,000,000 5.000000000% 5.000000000% 0.000000000%
Credit Bank of
Japan, Ltd.
Mercantile Bank 14,000,000.00 1,000,000.00 0.00 15,000,000 5.000000000% 5.000000000% 0.000000000%
of St. Louis
National
Association
NatWest Bank 14,000,000.00 1,000,000.00 0.00 15,000,000 5.000000000% 5.000000000% 0.000000000%
N.A.
First National 14,000,000.00 1,000,000.00 0.00 15,000,000 5.000000000% 5.000000000% 0.000000000%
Bank of
Maryland
Van Kampen 30,000,000.00 0.00 0.00 30,000,000 10.714285714% 0.000000000% 0.000000000%
Merritt Prime
Rate Income
Trust
Banque 9,333,333.33 666,666.67 0.00 10,000,000 3.333333332% 3.333333350% 0.000000000%
Francaise du
Commerce
Exterieur
===========================================================================================================
Total $ 280,000,000 $ 20,000,000 $85,000,000.00 $385,000,000 100% 100% 100%"
</TABLE>
"`Commitments' shall mean, collectively, the Term Loan Commitment, the
-----------
Revolving Loan Commitment and the Fund Loan Commitment."
"`Default Rate' shall mean a simple per annum interest rate equal to
------------
the sum of (a) the Base Rate Basis (calculated using the highest Applicable
Margin for Base Rate Advances under the applicable Commitment as set forth
in Section 2.3(g) hereof, without giving effect to the Leverage Ratio then
in effect) plus (b) two percent (2%)."
"`Loans' shall mean, collectively, the Term Loan, the Revolving Loans
-----
and the Fund Loans."
"`Maturity Date' shall mean December 31, 2003, or such earlier date as
-------------
payment of the Loans under the Revolving Loan Commitment or the Term Loan
Commitment shall be due (whether by acceleration or otherwise)."
"`Notes' shall mean, collectively, the Term Loan Notes, the Revolving
-----
Loan Notes and the Fund Loan Notes."
-3-
<PAGE>
THIS PAGE MUST BE KEPT WITH THE DOCUMENT.
FIRST AMENDMENT TO LOAN AGREEMENT
04/25/97 1:23 pm
<PAGE>
FIRST AMENDMENT TO LOAN AGREEMENT
THIS FIRST AMENDMENT TO LOAN AGREEMENT (this "Amendment"), dated as of
the 31st day of October, 1995 (the "Amendment Date"), by and among CHARTER
COMMUNICATIONS ENTERTAINMENT I, L.P., a Delaware limited partnership (the
"Borrower"), TORONTO DOMINION (TEXAS), INC., CHEMICAL BANK, CIBC INC., CREDIT
LYONNAIS CAYMAN ISLAND BRANCH, NATIONSBANK, N.A. (CAROLINAS), BANQUE PARIBAS,
UNION BANK, CORESTATES BANK, N.A., THE LONG-TERM CREDIT BANK OF JAPAN, LTD.,
MERCANTILE BANK OF ST. LOUIS NATIONAL ASSOCIATION, NATWEST BANK N.A., FIRST
NATIONAL BANK OF MARYLAND, VAN KEMPEN MERRITT PRIME RATE INCOME TRUST and BANQUE
FRANCAISE DU COMMERCE EXTERIEUR (together with any financial institution which
subsequently becomes a `Bank' under the Loan Agreement, as such term is defined
therein, the "Banks"), TORONTO DOMINION (TEXAS), INC. and CHEMICAL BANK, as
Documentation Agents (in such capacity, the "Documentation Agents"), TORONTO
DOMINION (TEXAS), INC., CHEMICAL BANK, CIBC INC., CREDIT LYONNAIS CAYMAN ISLAND
BRANCH, and NATIONSBANK, N.A. (CAROLINAS), as Managing Agents (collectively in
such capacity, the "Managing Agents"), BANQUE PARIBAS and UNION BANK, as Co-
Agents (collectively in such capacity, the "Co-Agents") and TORONTO DOMINION
(TEXAS), INC., as Administrative Agent for the Documentation Agents, the
Managing Agents, the Co-Agents and the Banks (the "Administrative Agent," and
together with the Documentation Agents, the Managing Agents and the Co-Agents,
the "Agents"),
W I T N E S S E T H:
-------------------
WHEREAS, the Agents, the Borrower, and the Banks are parties to that
certain Amended and Restated Loan Agreement dated as of September 29, 1995, (as
amended, modified and supplemented from time to time, the "Loan Agreement"); and
WHEREAS, the Borrower has requested the Agents and the Banks to agree
to amend certain provisions of the Loan Agreement to provide for the creation of
a third credit facility to be provided thereunder which shall be in a principal
amount not to exceed $85,000,000 in the aggregate, the proceeds of which shall
be used by the Borrower to acquire certain cable properties from United Video
Cablevision, Inc. and Omega Communications, Inc.; and
WHEREAS, the Agents and the Banks are willing to consent to such
amendments and such other matters as set forth herein on the terms and
conditions contained herein in return, in part, for the payment of the Amendment
Fee (as defined herein);
NOW, THEREFORE, in consideration of the premises set forth above, the
covenants and agreements hereinafter set forth, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree that all capitalized terms used herein shall have the
<PAGE>
meanings ascribed thereto in the Loan Agreement, and further agree as follows:
1. Amendments to Article 1.
-----------------------
(a) Article 1 of the Loan Agreement, Definitions, is hereby amended by
-----------
deleting the existing definitions of "Base Rate Advance," "Commitment Ratios,"
----------------- -----------------
"Commitments," "Default Rate," "Loans," "Maturity Date" and "Notes" in their
- ------------ ------------ ----- ------------- -----
entireties and by substituting the following therefor:
"`Base Rate Advance' shall mean an Advance which the Borrower requests
------------------
to be made as a Base Rate Advance or is reborrowed as a Base Rate Advance
in accordance with the provisions of Section 2.2 hereof, and which shall be
in a principal amount of at least $1,000,000 and in an integral multiple of
$100,000, except for a Base Rate Advance which is in an amount equal to the
unused amount of the Commitment applicable thereto, which Advance may be in
such amount."
"`Commitment Ratios' shall mean the percentages in which the Banks are
-----------------
severally bound to make Advances to the Borrower under the respective
Commitments, as set forth below (together with dollar amounts) as of the
date of the First Amendment to this Agreement:
<TABLE>
<CAPTION>
Portion of
Portion of Revolving Portion of Term Loan Revolving Loan Fund Loan
Term Loan Loan Fund Loan Total Dollar Commitment Commitment Commitment
Banks Commitment Commitment Commitment Commitment Ratio Ratio Ratios
- ----------------- -------------- ------------- -------------- ------------ ------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Toronto $ 9,856,000.01 $ 703,999.99 $42,500,000.00 $ 53,060,000 3.520000001% 3.519999983% 50.000000000%
Dominion
(Texas), Inc.
Chemical Bank 13,189,333.33 2,370,666.67 $42,500,000.00 58,060,000 4.710476190% 11.853333333% 50.000000000%
CIBC Inc. 33,189,333.33 2,370,666.67 0.00 35,560,000 11.853333333% 11.853333333% 0.000000000%
Credit Lyonnais 33,189,333.33 2,370,666.67 0.00 35,560,000 11.853333333% 11.853333333% 0.000000000%
Cayman Island
Branch
NationsBank, 33,189,333.33 2,370,666.67 0.00 35,560,000 11.853333333% 11.853333333% 0.000000000%
N.A.
(Carolinas)
Banque Paribas 19,026,666.67 2,073,333.33 0.00 21,100,000 6.795238095% 10.366666667% 0.000000000%
Union Bank 29,026,666.67 2,073,333.33 0.00 31,100,000 10.366666667% 10.366666667% 0.000000000%
CoreStates 14,000,000.00 1,000,000.00 0.00 15,000,000 5.000000000% 5.000000000% 0.000000000%
Bank, N.A.
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
Portion of
Portion of Revolving Portion of Term Loan Revolving Loan Fund Loan
Term Loan Loan Fund Loan Total Dollar Commitment Commitment Commitment
Banks Commitment Commitment Commitment Commitment Ratio Ratio Ratios
- ----------------- -------------- ------------- -------------- ------------ ------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
The Long-Term 14,000,000.00 1,000,000.00 0.00 15,000,000 5.000000000% 5.000000000% 0.000000000%
Credit Bank of
Japan, Ltd.
Mercantile Bank 14,000,000.00 1,000,000.00 0.00 15,000,000 5.000000000% 5.000000000% 0.000000000%
of St. Louis
National
Association
NatWest Bank 14,000,000.00 1,000,000.00 0.00 15,000,000 5.000000000% 5.000000000% 0.000000000%
N.A.
First National 14,000,000.00 1,000,000.00 0.00 15,000,000 5.000000000% 5.000000000% 0.000000000%
Bank of
Maryland
Van Kampen 30,000,000.00 0.00 0.00 30,000,000 10.714285714% 0.000000000% 0.000000000%
Merritt Prime
Rate Income
Trust
Banque 9,333,333.33 666,666.67 0.00 10,000,000 3.333333332% 3.333333350% 0.000000000%
Francaise du
Commerce
Exterieur
===========================================================================================================
Total $ 280,000,000 $ 20,000,000 $85,000,000.00 $385,000,000 100% 100% 100%"
</TABLE>
"`Commitments' shall mean, collectively, the Term Loan Commitment, the
-----------
Revolving Loan Commitment and the Fund Loan Commitment."
"`Default Rate' shall mean a simple per annum interest rate equal to
------------
the sum of (a) the Base Rate Basis (calculated using the highest Applicable
Margin for Base Rate Advances under the applicable Commitment as set forth
in Section 2.3(g) hereof, without giving effect to the Leverage Ratio then
in effect) plus (b) two percent (2%)."
"`Loans' shall mean, collectively, the Term Loan, the Revolving Loans
-----
and the Fund Loans."
"`Maturity Date' shall mean December 31, 2003, or such earlier date as
-------------
payment of the Loans under the Revolving Loan Commitment or the Term Loan
Commitment shall be due (whether by acceleration or otherwise)."
"`Notes' shall mean, collectively, the Term Loan Notes, the Revolving
-----
Loan Notes and the Fund Loan Notes."
-3-
<PAGE>
(b) Article 1 of the Loan Agreement, Definitions, is hereby further amended
-----------
by deleting clause (b)(vii) of the existing definition of "Annual Excess Cash
------------------
Flow" in its entirety and by substituting the following therefor:
- ----
"(vii) voluntary prepayments of the Term Loan or the Fund Loans under
Section 2.6 hereof;"
(c) Article 1 of the Loan Agreement, Definitions, is hereby further amended
-----------
by adding the following definitions in the appropriate alphabetical order:
"A `Change in Control' shall be deemed to have occurred if (a)(i)
-----------------
prior to any IPO, Kelso shall for any reason cease to be the beneficial
owner, directly or indirectly, of at least a majority of the voting rights
or other rights to participate in the Control of the Borrower, or (ii)
following any IPO, any Person or group (within the meaning of Rule 13d-5 of
the Securities and Exchange Commission as in effect on the date hereof)
other than Kelso and Persons Controlled by Kelso is or becomes the
beneficial owner, directly or indirectly, of more than 35% of the voting
rights or other rights to participate in the Control of the Borrower;
provided, however, that Kelso does not beneficially own, directly or
-------- -------
indirectly, in the aggregate a greater percentage of the voting rights or
other rights to participate in the Control of the Borrower than such other
Person and does not have the right or ability by voting power, contract or
otherwise to elect or designate for election a majority of the board of
directors or comparable body of the Borrower; or (b) following any IPO, any
Person or group other than Kelso and Persons Controlled by Kelso shall own,
directly or indirectly, more than 50% of the voting rights or other rights
to participate in the Control of the Borrower; or (c) following any IPO,
individuals who at the beginning of any period of two consecutive years
constituted the board of directors or other governing body of the Borrower
or any Person Controlling the Borrower (together with any new members of
such board of directors or other governing body appointed or nominated by
Kelso or a majority of the members then still in office who were either
members at the beginning of such period or who were previously so appointed
or nominated) shall cease for any reason to constitute a majority of such
board of directors or other governing body then in office; or (d) at any
time when the Manager shall manage the Borrower, (i) the Manager shall
cease beneficially to own, directly or indirectly, (A) prior to any IPO, at
least 10% of the equity interests in the Borrower, or (B) following any
IPO, at least 5% of such equity interests, or shall sell or otherwise
transfer for consideration to any other Person, directly or indirectly,
-4-
<PAGE>
any equity interest in the Borrower, or (ii) there shall occur a Charter
Communications Management Event."
"`Charter Communications Management Event' shall mean, unless the
---------------------------------------
Majority Banks shall have otherwise agreed in writing the happening of any
of the following events: (a)(i) Charter Communications Group shall for any
reason fail to be Controlled directly or indirectly by at least one of
Jerald L. Kent, Howard L. Wood and Barry L. Babcock or (ii) a majority of
the voting equity of and economic interests in Charter Communications Group
shall for any reason fail to be owned by at least one of such individuals
or (b) Charter Communications Group shall for any reason fail to Control
the Manager at any time it is the manager, directly or indirectly, of the
Borrower, or Charter Communications Group shall for any reason fail to own
a majority of the voting equity of the Manager at any time it is the
manager of the Borrower; provided that if any of the events described in
--------
clause (a)(i) or (a)(ii) above occurs solely as a result of the death of
any such individual, such event shall not constitute a Charter
Communications Management Event unless (x) 90 days after the occurrence of
such event (i) the Borrower shall have failed to provide the Administrative
Agent and the Banks with a written proposal as to the Control of Charter
Communications Group thereafter or (ii) the Majority Banks (or the
Administrative Agent on their behalf) shall not have consented (and consent
shall not be withheld unreasonably), in writing, to any such proposal given
by the Borrower in accordance with the preceding clause or (y) if such
written proposal is not rejected, such proposal shall not be implemented
within 180 days after such event."
"`Control' shall mean the possession, directly or indirectly, of the
-------
power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise, and "Controlling" and "Controlled" shall have meanings
----------- ----------
correlative thereto."
"`Final Maturity Date' shall mean December 31, 2004, or such earlier
-------------------
date as payment of the Fund Loans shall be due (whether by acceleration or
otherwise)."
"`Fund Loans' shall mean, collectively, the amounts advanced by the
----------
Banks issuing a Fund Loan Commitment to the Borrower under the Fund Loan
Commitment and which are evidenced by the Fund Loan Notes."
"`Fund Loan Commitment' shall mean the several obligations of the
--------------------
Banks issuing a Fund Loan Commitment to
-5-
<PAGE>
advance the sum of $85,000,000 to the Borrower in accordance with their
respective Commitment Ratios and the terms and conditions hereof."
"`Fund Loan Notes' shall mean those certain term promissory notes in
---------------
the aggregate principal amount of $85,000,000, one such note issued to each
of the Banks having a Fund Loan Commitment by the Borrower, each one
substantially in the form of Exhibit A to the First Amendment to this
---------
Agreement, and any extensions, renewals, amendments or substitutions to any
of the foregoing."
"`Fund Loans' shall mean, collectively, the amounts advanced by the
----------
Banks issuing a Fund Loan Commitment to the Borrower under the Fund Loan
Commitment and which are evidenced by the Fund Loan Notes."
"`IPO' shall mean a completed initial public offering and sale by any
---
Person directly or indirectly Controlling the Borrower of common stock or
partnership interests representing at least 10% of the equity of such
Person."
"`Omega Acquisition Agreement' shall mean that certain purchase and
---------------------------
sale agreement or similar agreement to be entered into by the Borrower and
Omega Communications, Inc. with respect to the acquisition by the Borrower
of certain cable television assets of Omega Communications, Inc., as such
agreement may be amended, modified or supplemented from time to time,
together with all exhibits, schedules and appendices thereto, all of which
shall be in form and substance satisfactory to the Administrative Agent."
"`Omega Acquisition Date' shall mean the date on which the Borrower
----------------------
acquires the Omega Assets pursuant to the Omega Acquisition Agreement."
"`Omega Assets' shall mean those cable television assets of Omega
------------
Communications, Inc. to be acquired by the Borrower pursuant to the Omega
Acquisition Agreement."
"`United Video Acquisition Agreement' shall mean that certain Asset
----------------------------------
Purchase and Sale Agreement between United Video Cablevision, Inc. and the
Borrower dated as of July 13, 1995, as amended, modified or supplemented
from time to time, together with all exhibits, schedules and appendices
thereto."
"`United Video Assets' shall mean those assets of United Video
-------------------
Cablevision, Inc. to be acquired by the Borrower pursuant to the United
Video Acquisition Agreement."
-6-
<PAGE>
2. Amendments to Article 2. Article 2 of the Loan Agreement, Loans, is
----------------------- -----
hereby amended as follows:
(a) Section 2.1 of the Loan Agreement, The Loans, is hereby amended by
---------
adding the following new subsection (c) thereto at the end of such Section:
"(c) Fund Loans. The Banks who have issued a Fund Loan Commitment
----------
agree, severally in accordance with their respective Commitment Ratios
relating to the Fund Loan Commitment, and not jointly, upon the terms and
subject to the conditions of this Agreement, to lend to the Borrower: (i)
an aggregate amount not to exceed $75,000,000 under the Fund Loan
Commitment on the date of the First Amendment to this Agreement; and (ii)
provided that, not less than fifteen (15) days prior to the Omega
Acquisition Date, the Borrower shall have provided the Administrative Agent
with copies of the Omega Acquisition Agreement and all other documents
related to the transfer of the Omega Assets to the Borrower, including,
without limitation, lien search results from appropriate jurisdictions with
respect to the Omega Assets, all of which shall be certified by an
Authorized Signatory to be true, complete and correct, and all of which
shall be in form and substance satisfactory to the Administrative Agent, an
aggregate amount not to exceed $10,000,000 under the Fund Loan Commitment
on the Omega Acquisition Date. Advances under the Fund Loan Commitment may
be repaid and reborrowed as provided in Section 2.2(b) and 2.2(c) hereof,
as applicable, in order to effect changes in the Interest Rate Bases
applicable to Advances thereunder, provided, however, that there shall be
-------- -------
no net increase in the aggregate principal amount outstanding under the
Fund Loan Commitment on any date other than the date of the First Amendment
to this Agreement or the Omega Acquisition Date."
(b) Section 2.3(a) of the Loan Agreement, Interest, On Base Rate Advances,
-------- ---------------------
is hereby amended by deleting the last sentence thereof in its entirety and by
substituting the following therefor:
"Interest on Base Rate Advances then outstanding shall also be due and
payable on the Maturity Date or the Final Maturity Date, as applicable to
the Commitment under which such Advance was made."
(c) Section 2.3(b) of the Loan Agreement, Interest, On LIBOR Advances, is
-------- -----------------
hereby amended by deleting the last sentence thereof in its entirety and by
substituting the following therefor:
-7-
<PAGE>
"Interest on LIBOR Advances then outstanding shall also be due and payable
on the Maturity Date or the Final Maturity Date, as applicable to the
Commitment under which such Advance was made."
(d) Section 2.3(c) of the Loan Agreement, Interest, On CD Rate Advances,
-------- -------------------
is hereby amended by deleting the last sentence thereof in its entirety and by
substituting the following therefor:
"Interest on CD Rate Advances then outstanding shall also be due and
payable on the Maturity Date or the Final Maturity Date, as applicable to
the Commitment under which such Advance was made."
(e) Section 2.3(e) of the Loan Agreement, Interest Upon Default, is hereby
---------------------
amended by adding the word "Final" immediately before the phrase "Maturity Date"
appearing in the second sentence thereof.
(f) Section 2.3(g) of the Loan Agreement, Applicable Margin, is hereby
-----------------
amended by designating the existing language in such Section as a paragraph (i),
entitled "For Revolving Loans and the Term Loan," and adding the following at
-------------------------------------
the end of such Section as a new paragraph (ii) thereof:
"(ii) For Fund Loans. With respect to any Base Rate Advance under the
--------------
Fund Loan Commitment, the Applicable Margin shall be one and three-quarters
percent (1-3/4%); with respect to any LIBOR Advance under the Fund Loan
Commitment, the Applicable Margin shall be two and three-quarters percent
(2-3/4%); and with respect to any CD Rate Advance under the Fund Loan
Commitment, the Applicable Margin shall be two and seven-eighths percent
(2-7/8%)."
(g) Section 2.4 of the Loan Agreement, Commitment Fee, is hereby amended by
--------------
deleting such Section in its entirety and by substituting the following
therefor:
"Section 2.4 Commitment Fee. The Borrower agrees to pay to the
--------------
Banks, in accordance with their respective Commitment Ratios for the
applicable Commitment, a commitment fee on the aggregate unborrowed balance
of the Revolving Loan Commitment and the Fund Loan Commitment at a rate of
three-eighths of one percent (3/8%) per annum for each day from the
Agreement Date until the Maturity Date or the Final Maturity Date, as
applicable to the respective Commitment. Such commitment fee shall be
computed on the basis of a year of 365/366 days for the actual number of
days elapsed, shall be payable quarterly in arrears on each March 31, June
30, September 30 and December 31, commencing
-8-
<PAGE>
on September 29, 1995 and on the Maturity Date or the Final Maturity Date,
as applicable, and shall be fully earned when due and non-refundable when
paid. The commitment fee payable under the Prior Loan Agreement shall be
paid to the Banks by the Borrower in accordance with the terms and
conditions of the Prior Loan Agreement."
(h) Section 2.6 of the Loan Agreement, Prepayment, is hereby amended by
----------
(i) adding the word "Final" immediately before the phrase "Maturity Date"
appearing in the second sentence thereof, and (ii) deleting the third sentence
thereof in its entirety and substituting the following therefor:
"Any notice of prepayment shall be irrevocable and all amounts prepaid on
the Loans shall be applied to principal outstanding, first, under the Term
Loan and the Fund Loans in inverse order of maturity and on a weighted pro
rata basis between the Term Loan and the Fund Loans, and then to the
Revolving Loans."
(i) Section 2.7(a) of the Loan Agreement, Scheduled Repayments, is hereby
--------------------
amended by (A) designating the existing language in such Section as a paragraph
(i), entitled "For the Term Loan," (B) deleting the last sentence of such new
-----------------
paragraph (i) in its entirety, and (C) adding the following at the end of such
Section as a new paragraph (ii) thereof:
"(ii) For the Fund Loans. Commencing March 31, 1998, the principal
------------------
balance of the Fund Loans shall be amortized in consecutive quarterly
installments on March 31, June 30, September 30 and December 31 of each
year until paid in full, in such amounts as follows:
<TABLE>
<CAPTION>
Percent of Principal
Due on Last Day
Payment Dates of Each Quarter
------------- ---------------
<S> <C>
March 31, 1998, June 30, 1998,
September 30, 1998 and
December 31, 1998 0.125%
March 31, 1999, June 30, 1999,
September 30, 1999 and
December 31, 1999 0.125%
March 31, 2000, June 30, 2000,
September 30, 2000 and
December 31, 2000 0.250%
</TABLE>
-9-
<PAGE>
<TABLE>
<S> <C>
March 31, 2001, June 30, 2001,
September 30, 2001 and
December 31, 2001 0.250%
March 31, 2002, June 30, 2002,
September 30, 2002 and
December 31, 2002 0.250%
March 31, 2003, June 30, 2003,
September 30, 2003 and
December 31, 2003 4.350%
March 31, 2004, June 30, 2004,
September 30, 2004 and
December 31, 2004 19.650%
</TABLE>
A final payment of all principal amounts and other Obligations then outstanding
shall be due and payable on the Final Maturity Date."
(j) Section 2.7(b) of the Loan Agreement, Repayments Upon Sales of Assets
-------------------------------
and Asset Swaps, is hereby amended by deleting the existing Section 2.7(b) in
- ---------------
its entirety and by substituting the following therefor:
"(b) Repayments Upon Sales of Assets and Asset Swaps. Except as
-----------------------------------------------
provided below with respect to Permitted Asset Swaps, in the event of any
sale, lease, transfer or other disposition of assets permitted hereunder,
excluding any such sale, lease, transfer or other disposition of assets by
the Borrower or any of its Subsidiaries in the ordinary course of business
(collectively, "Asset Sales"), to the extent that the Net Proceeds with
respect thereto (when taken together with the Net Proceeds of all other
Asset Sales made subsequent to the Agreement Date) are in excess of
$5,000,000 in the aggregate for all Asset Sales made during the period from
the Agreement Date to the Final Maturity Date, the Borrower shall, on the
date of such sale, lease, transfer or other disposition, make a repayment
of the principal of the Term Loan and the Fund Loans then outstanding (on a
weighted pro rata basis between such Loans) in an amount equal to the Net
Proceeds in excess of the first $5,000,000 of all such Asset Sales. Any
such Net Proceeds which constitute a portion of the sales price which was
previously held in escrow or paid in installments shall be paid to the
extent required by the terms hereof to the Banks as a repayment of
principal at such time as such Net Proceeds are received by the Borrower.
In the event the Borrower elects to enter into a Permitted Asset Swap, the
Borrower shall, on the date it sells, leases, transfers or otherwise
disposes of all or substantially all of its
-10-
<PAGE>
interests in the cable television system owned by the Borrower or any of
its Subsidiaries in the State of Connecticut, deposit in an escrow account
with the Administrative Agent an amount equal to the Net Proceeds of such
sale, lease, transfer or other disposition. The amount deposited in such
escrow account shall be held in such escrow account until the earlier to
occur of the consummation of the Permitted Asset Swap or the first
anniversary of the sale, lease, transfer or other disposition of such
Connecticut assets or interests relating thereto. Amounts held in such
escrow account may be invested as permitted under Section 7.6(i), (ii) and
(iii) hereof, or as otherwise agreed to by the Borrower and the
Administrative Agent. Net Proceeds held in escrow by the Administrative
Agent may be used by the Borrower at any time prior to the first
anniversary of such sale, lease, transfer or other disposition of
Connecticut assets or interests to consummate a Permitted Asset Swap or to
repay the principal amount of the Term Loan and the Fund Loans (on a
weighted pro rata basis between such Loans). All Net Proceeds remaining in
escrow with the Administrative Agent pursuant to this Section 2.7(b) on
such first anniversary date shall be immediately applied to repay the
principal amount of the Term Loan and the Fund Loans (on a weighted pro
rata basis between such Loans). All amounts paid by the Borrower pursuant
to this subsection shall be applied to principal of the Term Loan and the
Fund Loans, respectively, pro rata over the applicable repayment schedule
set forth in Section 2.7(a) above."
(k) Section 2.7(c) of the Loan Agreement, Annual Excess Cash Flow
-----------------------
Recapture, is hereby amended by deleting the existing Section 2.7(c) in its
- ---------
entirety and by substituting the following therefor:
"(c) Annual Excess Cash Flow Recapture. In addition to the foregoing,
---------------------------------
the Borrower agrees that on April 30, 1998 and on each April 30th
thereafter during the term of this Agreement, the Borrower shall make a
repayment of the principal of the Term Loan and the Fund Loans then
outstanding (on a weighted pro rata basis between such Loans) in an amount
equal to (i) seventy-five percent (75%) of Annual Excess Cash Flow for the
Borrower's preceding fiscal year if the Leverage Ratio as of the end of
such preceding fiscal year (but before giving effect to such repayment) is
greater than or equal to 5.5:1, or (ii) fifty percent (50%) of Annual
Excess Cash Flow for the Borrower's preceding fiscal year if the Leverage
Ratio at the time of such payment (but before giving effect to such
repayment) is less than 5.5:1, together, in any case, with accrued interest
on the portion of the Term Loan and the Fund Loans
-11-
<PAGE>
so repaid. All amounts paid by the Borrower pursuant to this subsection in
respect of the principal of the Term Loan and the Fund Loans shall be
applied to such principal in inverse order of maturity."
(l) Section 2.8 of the Loan Agreement, Notes; Loan Accounts, is hereby
--------------------
amended by deleting the second sentence of existing Section 2.8 in its entirety
and by substituting the following therefor:
"One Term Loan Note, one Revolving Loan Note and one Fund Loan Note shall
be payable to the order of each Bank for such Commitment, in accordance
with the respective Commitment Ratio of such Bank for the applicable
Commitment."
(m) Section 2.9 of the Loan Agreement, Manner of Payment, is hereby
-----------------
amended by deleting clause (v) of subsection (c) thereof in its entirety and
substituting the following therefor:
"(v) to the payment of principal then due on the Term Loan and the Fund
Loans (on a weighted pro rata basis between such Loans) and then due on the
Revolving Loans, which payments shall be applied against outstanding
Advances in the following order of priority: (A) Advances, the Interest
Period for which is expiring concurrently with such payment, (B) Base Rate
Advances, (C) CD Rate Advances, and (D) LIBOR Advances."
(n) Section 2.10 of the Loan Agreement, Reimbursement, is hereby amended
-------------
by adding the word "Final" immediately before the phrase "Maturity Date"
appearing in the first sentence of subsection (a) thereof.
(o) Section 2.11 of the Loan Agreement, Pro Rata Treatment, is hereby
------------------
amended by deleting subsection (a) thereof in its entirety and substituting the
following therefor:
"(a) Advances. Each Advance from the Banks under any Commitment
--------
shall be made pro rata on the basis of the respective Commitment Ratios of
the Banks applicable to the particular Commitment."
(p) Section 2.12 of the Loan Agreement, Capital Adequacy, is hereby
----------------
amended by adding the word "Final" immediately before the phrase "Maturity Date"
each time it appears therein.
3. Amendments to Article 5.
-----------------------
-12-
<PAGE>
(a) Section 5.9 of the Loan Agreement, Use of Proceeds, is hereby amended
---------------
by deleting existing Section 5.9 in its entirety and by substituting the
following therefor:
"Section 5.9 Use of Proceeds. The Borrower will use the aggregate
---------------
proceeds of the Term Loan and the Revolving Loans (as set forth in the
Requests for Advances issued from time to time hereunder) to assume the
liabilities of the General Partner under the Prior Loan Agreement, which
liabilities were previously assumed by CCELP, to finance Capital
Expenditures, for working capital and for other general partnership needs
as permitted under this Agreement. The Borrower will use proceeds of the
Fund Loans (a) in an aggregate amount not to exceed $75,000,000 to finance
the acquisition of the United Video Assets pursuant to the United Video
Acquisition Agreement and related transaction costs, and (b) in an
aggregate amount not to exceed $10,000,000 to finance the acquisition of
the Omega Assets pursuant to the Omega Acquisition Agreement and related
transaction costs."
(b) Section 5.12 of the Loan Agreement, Interest Rate Hedging, is hereby
---------------------
amended by inserting the word "Final" immediately before the phrase "Maturity
Date" appearing in the second sentence thereof.
(c) Section 5.13 of the Loan Agreement, Covenants Regarding Formation of
--------------------------------
Subsidiaries, is hereby amended by inserting the word "Final" immediately before
- ------------
the phrase "Maturity Date" appearing in clause (c) thereof.
4. Amendments to Article 7.
-----------------------
(a) Section 7.4 of the Loan Agreement, Liquidation, Change in Ownership,
---------------------------------
Disposition or Acquisition of Assets, is hereby amended by deleting the word
- ------------------------------------
"and" appearing immediately before existing subsection (b)(viii) and adding the
following at the end of existing subsection (b) thereof, before the period:
"and (ix) the United Video Acquisition and the Omega Acquisition, subject
to the terms and conditions of this Agreement."
(b) Section 7.7 of the Loan Agreement, Restricted Payments and Purchases,
---------------------------------
is hereby amended by deleting existing subsection (b) thereof in its entirety
and by substituting the following therefor:
"(b) so long as no Default hereunder then exists or would be caused
thereby, during the period from January 1, 1995 through and including
December 31, 1999, (i) pay
-13-
<PAGE>
management fees and financial advisory fees in an aggregate amount for any
fiscal year not to exceed $4,450,000, except that with respect to the
fiscal year ending December 31, 1995, such amount shall not exceed
$3,750,000, and (ii) reimburse Kelso for all reasonable out of pocket
expenses incurred by it in connection with its services under the Financial
Advisory Agreement, all as the same may become due and payable under the
Management Agreement and the Financial Advisory Agreement, or, in the case
of the General Partner, the predecessors to such Agreements;"
(c) Section 7.7 of the Loan Agreement, Restricted Payments and Purchases,
---------------------------------
is hereby further amended by (i) deleting the word "and" from the end of
subsection (f) thereof, (ii) deleting the period at the end of subsection (g)
thereof and inserting a semi-colon and the word "and" in lieu thereof, and (iii)
inserting the following new subsection (h) after existing subsection (g)
thereof:
"(h) (i) pay to Kelso or the Manager a search and acquisition fee (A)
in an aggregate amount not to exceed $1,900,000 on the date of the First
Amendment to this Agreement, and (B) in an aggregate amount not to exceed
$200,000 on the Omega Acquisition Date, and (ii) reimburse Kelso for all
reasonable out of pocket expenses incurred by Kelso in connection with its
providing search and acquisition services to the Borrower with respect to
the Borrower's acquisition of the United Video Assets and the Omega
Assets."
(d) Section 7.8 of the Loan Agreement, Leverage Ratio, is hereby amended
--------------
by deleting the existing table contained in existing Section 7.8 in its entirety
and by substituting the following therefor:
<TABLE>
<CAPTION>
Leverage
"Period Ratio
------ --------
<S> <C>
From January 18, 1995 6.50:1
through June 30, 1996
From July 1, 1996 6.25:1
through December 31, 1996
From January 1, 1997 6.00:1
through June 30, 1997
From July 1, 1997 5.50:1
through December 31, 1997
From January 1, 1998 5.00:1
through December 31, 1998
</TABLE>
-14-
<PAGE>
<TABLE>
<CAPTION>
Leverage
"Period Ratio
------ --------
<S> <C>
From January 1, 1999 4.50:1
through December 31, 1999
From January 1, 2000 and 4.00:1"
thereafter
</TABLE>
(e) Section 7.15 of the Loan Agreement, Capital Expenditures, is hereby
--------------------
amended by deleting the existing table contained in existing Section 7.15 in its
entirety and by substituting the following therefor:
<TABLE>
<CAPTION>
Capital
"Period Expenditures Limit
------ ------------------
<S> <C>
From January 18, 1995 $23,500,000
through December 31, 1995
From January 1, 1996 $25,500,000
through December 31, 1996
</TABLE>
5. Amendments to Article 8.
-----------------------
(a) Section 8.1 of the Loan Agreement, Events of Default, is hereby
-----------------
amended by deleting existing subsections 8.1(q), (r), (s) and (t) thereof in
their respective entireties and by substituting the following, in the
appropriate alphabetical order, therefor:
"(q) There shall have occurred a Change in Control;
(r) [INTENTIONALLY OMITTED];
(s) [INTENTIONALLY OMITTED];
(t) [INTENTIONALLY OMITTED];"
(b) Section 8.1 of the Loan Agreement, Events of Default, is hereby
-----------------
further amended by (i) deleting the period appearing at the end of existing
subsection (v) thereof and inserting a semi-colon and the word "or" in lieu
thereof, and (ii) adding the following as a new subsection (w) thereof:
"(w) CCELP shall incur, create, assume or permit to exist any
Indebtedness for Money Borrowed, Capitalized Lease Obligations or
obligations under Guaranties in respect of Indebtedness for Money Borrowed
in an aggregate amount in
-15-
<PAGE>
excess of $20,000,000, only $10,000,000 of which may be used for purposes
other than acquisitions."
(c) Section 8.2 of the Loan Agreement, Remedies, is hereby amended by
--------
inserting the word "Final" immediately before the phrase "Maturity Date"
appearing in the fourth sentence of subsection (d) thereof.
6. Amendment to Section 10.3. Section 10.3 of the Loan Agreement,
-------------------------
Increased Costs, is hereby amended by inserting the word "Final" immediately
- ---------------
before the phrase "Maturity Date" appearing in subsection (a) thereof.
7. Amendments to Article 11.
------------------------
(a) Section 11.5 of the Loan Agreement, Assignment, is hereby amended by
----------
deleting the introductory paragraph to existing subsection (c) thereof in its
entirety and by substituting the following therefor:
"(c) Each of the Banks may at any time enter into assignment
agreements (but not participations) with one or more other banks or other
Persons pursuant to which each Bank may assign its interests under this
Agreement and the other Loan Documents, including, without limitation, its
interest in any particular Advance or portion thereof, provided, that (1)
--------
all assignments (other than assignments described in clause (b) hereof and
assignments by Toronto Dominion (Texas), Inc. and Chemical Bank of their
respective interests under the Fund Loan Commitment and Advances
thereunder) shall be in minimum aggregate principal amounts of $7,500,000
with respect to each applicable Commitment (unless, after giving effect to
all contemporaneous assignments to the applicable assignee, such assignee
has a minimum aggregate commitment under the Commitments of $7,500,000),
(2) without the prior consent of the Borrower, no Bank (other than Toronto
Dominion (Texas), Inc. and Chemical Bank with respect to their respective
interests under the Fund Loan Commitment and Advances thereunder) may
assign more than forty-nine percent (49%) of its interests hereunder on the
Agreement Date, unless such Bank is selling one hundred percent (100%) of
its interests, and (3) all assignments (other than assignments described in
clause (b) hereof) shall be subject to the following additional terms and
conditions:"
(b) Section 11.12 of the Loan Agreement, Amendment and Waiver, is hereby
--------------------
amended by deleting subsection (a) thereof in its entirety and by substituting
the following therefor:
"(a) any increase in the amount of any Commitment,"
-16-
<PAGE>
8. Counterparts. This Amendment may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same instrument.
9. Governing Law. This Amendment shall be construed in accordance with
-------------
and governed by the laws of the State of New York.
10. Severability. Any provision of this Amendment which is prohibited or
------------
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof in that
jurisdiction or affecting the validity or enforceability of such provision in
any other jurisdiction.
11. No Other Amendment or Waiver. Except for the amendments set forth
----------------------------
above, the text of the Loan Agreement and all other Loan Documents shall remain
unchanged and in full force and effect. No waiver by the Administrative Agent,
the other Agents or the Banks under the Loan Agreement or any other Loan
Document is granted or intended except as expressly set forth herein, and the
Administrative Agent, the other Agents and the Banks expressly reserve the right
to require strict compliance in all other respects (whether or not in connection
with any Requests for Advance). Except as set forth herein, the amendments
agreed to herein shall not constitute a modification of the Loan Agreement or
any of the other Loan Documents, or a course of dealing with the Administrative
Agent, the other Agents and the Banks, or any of them, at variance with the Loan
Agreement or any of the other Loan Documents, such as to require further notice
by the Administrative Agent, the other Agents, the Banks, the Majority Banks, or
any of them, to require strict compliance with the terms of the Loan Agreement
and the other Loan Documents in the future.
12. Representations and Warranties. The Borrower hereby represents and
------------------------------
warrants in favor of the Agents and the Banks as follows:
(a) The Borrower has the partnership power and authority (i) to enter into
this Amendment and to consummate the acquisition of the United Video Assets as
contemplated hereby and (ii) to do all other acts and things as are required or
contemplated hereunder to be done, observed and performed by it;
(b) This Amendment has been duly authorized, validly executed and
delivered by one or more Authorized Signatories of the Borrower and constitutes
the legal, valid and binding obligation of the Borrower, enforceable against the
Borrower in accordance with its terms, subject, as to enforcement of
-17-
<PAGE>
remedies, to the following qualifications: (i) an order of specific performance
and an injunction are discretionary remedies and, in particular, may not be
available where damages are considered an adequate remedy at law, and (ii)
enforcement may be limited by bankruptcy, insolvency, liquidation,
reorganization, reconstruction and other similar laws affecting enforcement of
creditors' rights generally (insofar as any such law relates to the bankruptcy,
insolvency or similar event of the Borrower); and
(c) The execution and delivery of this Amendment, the performance by the
Borrower under the Loan Agreement and the other Loan Documents to which it is a
party, as amended hereby, and the consummation by the Borrower of the
acquisition of the United Video Assets as contemplated hereby do not and will
not require the consent or approval of any regulatory authority or governmental
authority or agency having jurisdiction over the Borrower which has not already
been obtained, nor is in contravention of or in conflict with the partnership
agreement or other similar agreement of the Borrower, or the provision of any
statute, judgment, order, indenture, instrument, agreement, or undertaking, to
which the Borrower is a party or by which any of its assets or properties are or
may become bound.
13. Conditions Precedent. The effectiveness of this Amendment is subject
--------------------
to the prior fulfillment of each of the following conditions:
(a) Toronto Dominion (Texas), Inc. and Chemical Bank shall each have
received a duly executed Fund Loan Note in substantially the form attached
hereto as Exhibit A, which promissory notes shall be deemed to be "Notes" under
---------
the Loan Agreement and the other Loan Documents for all purposes hereafter;
(b) The Administrative Agent or the Banks, as appropriate, shall have
received each of the following, in form and substance satisfactory to the
Administrative Agent and the Banks:
(i) A certificate, signed by an Authorized Signatory of the
Borrower, certifying on the date hereof that there exists no Default under
the Loan Agreement, after giving effect to this Amendment, and
demonstrating the Borrower's compliance with Sections 7.8, 7.9, 7.10 and
7.15 of the Loan Agreement, after giving effect to this Amendment and the
consummation of the Borrower's acquisition of the United Video Assets;
(ii) All documentation required under Section 5.13 of the Loan
Agreement with respect to the Borrower's acquisition of the United Video
Assets;
-18-
<PAGE>
(iii) Copies of the United Video Acquisition Agreement and all other
documents related to the transfer of the United Video Assets to the
Borrower, including, without limitation, lien search results from
appropriate jurisdictions with respect to the United Video Assets, all of
which shall be certified by an Authorized Signatory to be true, complete
and correct as of the date hereof, together with duly executed UCC-1
financing statements and other collateral documentation deemed reasonably
necessary by the Administrative Agent to reflect or perfect the Security
Interest of the Administrative Agent (for itself and on behalf of the
Banks) in such assets;
(iv) Opinions of general counsel and in-house counsel to the Borrower
and its Subsidiaries, addressed to the Banks and the Administrative Agent
and satisfactory to the Administrative Agent and its special counsel, dated
as of the date hereof;
(v) Reliance letters regarding a opinions of counsel to United Video
Cablevision, Inc., in form and substance satisfactory to the Administrative
Agent and its special counsel, dated as of the date hereof;
(vi) Evidence satisfactory to the Administrative Agent and its special
counsel that the Borrower has acquired the United Video Assets pursuant to
the United Video Acquisition Agreement;
(vii) Evidence satisfactory to the Agents and the Banks that CCELP has
invested not less than $22,000,000 in additional cash equity in the
Borrower;
(viii) Duly executed Certificate of Financial Condition dated as of the
date hereof;
(ix) Copies of all approvals or consents regarding the transfer to the
Borrower of all franchises and contracts constituting a part of the United
Video Assets;
(x) Pro forma balance sheet with respect to the Borrower, after
giving effect to the transactions contemplated hereby; and
(xi) All such other documents as the Administrative Agent or any Bank
may reasonably request, certified by an appropriate governmental official
or an Authorized Signatory if so reasonably requested.
(c) The Licenses constituting a part of the United Video Assets shall
be in form and substance satisfactory to the
-19-
<PAGE>
Administrative Agent, and the Administrative Agent shall have received evidence
reasonably satisfactory to it that all Necessary Authorizations, including all
necessary consents to the consummation of the Borrower's acquisition of the
United Video Assets and the other transactions contemplated hereby, from the
grantors of the Licenses have been obtained or made, are in full force and
effect and are not subject to any pending or threatened reversal or
cancellation, and the Administrative Agent and the Banks shall have received a
certificate of an Authorized Signatory so stating.
(d) The Administrative Agent for each of the Banks shall have received
from the Borrower for the account of the Banks an amendment fee (the "Amendment
Fee") by wire transfer of immediately available funds equal to the product of
(i) each Bank's pro rata portion of the Revolving Loan Commitment and the Term
Loan Commitment as of the effective date of this Amendment, multiplied by (ii)
0.125%, and all other fees payable to the Administrative Agent or any Bank in
connection herewith.
14. Effective Date. Upon satisfaction of the conditions precedent referred
--------------
to in Section 13 above, this Amendment shall be effective as of October 31,
1995.
15. Loan Documents. This document shall be deemed to be a Loan Document
--------------
for all purposes.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
-20-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment or
caused it to be executed under seal by their duly authorized officers, all as
of the day and year first above written.
BORROWER: CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P., a
Delaware limited partnership
By: Its General Partner
CCA ACQUISITION CORP., a Delaware corporation
By: /s/ Jeffrey Sanders
-------------------------------------------
Its: Executive Vice President
ADMINISTRATIVE AGENT: TORONTO DOMINION (TEXAS), INC., as
Administrative Agent
By: /s/ Martha L. Gariepy
-------------------------------------------
Its: Vice President
DOCUMENTATION AGENTS: TORONTO DOMINION (TEXAS), INC., as a
Documentation Agent
By: /s/ Martha L. Gariepy
-------------------------------------------
Its: Vice President
CHEMICAL BANK, as a Documentation Agent
By: /s/ Edward Devine
-------------------------------------------
Its: Managing Director
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
FIRST AMENDMENT TO LOAN AGREEMENT
SIGNATURE PAGE 1
<PAGE>
MANAGING AGENTS: TORONTO DOMINION (TEXAS), INC., as a
Managing Agent
By: /s/ Martha L. Gariepy
-------------------------------------------
Its: Vice President
CHEMICAL BANK, as a Managing Agent
By: /s/ Edward Devine
-------------------------------------------
Its: Managing Director
CIBC INC., as a Managing Agent
By: /s/ Deborah Strek
-------------------------------------------
Its: Vice President
CREDIT LYONNAIS CAYMAN ISLAND BRANCH,
as a Managing Agent
By: /s/ Bruce M. Yeager
-------------------------------------------
Its: Authorized Signatory
NATIONSBANK, N.A. (CAROLINAS), as a Managing Agent
By: /s/ W.H. McClendon
-------------------------------------------
Its: Senior Vice President
CO-AGENTS: BANQUE PARIBAS, as a Co-Agent
By: /s/ Stephen J. Healey
-------------------------------------------
Its: Vice President
By: /s/ John Cate
-------------------------------------------
Its: Group Vice President
UNION BANK, as a Co-Agent
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
FIRST AMENDMENT TO LOAN AGREEMENT
SIGNATURE PAGE 2
<PAGE>
By: /s/ Michael K. McShane
-------------------------------------------
Its: Vice President
BANKS: TORONTO DOMINION (TEXAS), INC., as a Bank
By: /s/ Martha L. Gariepy
-------------------------------------------
Its: Vice President
CHEMICAL BANK, as a Bank
By: /s/ Edward Devine
-------------------------------------------
Its: Managing Director
CIBC INC., as a Bank
By: /s/ Deborah Strek
-------------------------------------------
Its: Vice President
CREDIT LYONNAIS CAYMAN ISLAND BRANCH,
as a Bank
By: /s/ Bruce M. Yeager
-------------------------------------------
Its: Authorized Signatory
NATIONSBANK, N.A. (CAROLINAS), as a Bank
By: /s/ W.H. McClendon
-------------------------------------------
Its: Senior Vice President
BANQUE PARIBAS, as a Bank
By: /s/ Stephen J. Healey
-------------------------------------------
Its: Vice President
By: /s/ John Cate
-------------------------------------------
Its: Group Vice President
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
FIRST AMENDMENT TO LOAN AGREEMENT
SIGNATURE PAGE 3
<PAGE>
UNION BANK, as a Bank
By: /s/ Michael K. McShane
-----------------------------------------------
Its: Vice President
CORESTATES BANK, N.A., as a Bank
By: /s/ Anthony G. Parisi
-----------------------------------------------
Its: Assistant Vice President
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., as a Bank
By: /s/ Armund Schoen Jr.
-----------------------------------------------
Its: Vice President & Deputy General Manager
MERCANTILE BANK OF ST. LOUIS
NATIONAL ASSOCIATION, as a Bank
By: /s/ Gregory D. Knudsen
-----------------------------------------------
Its: Vice President
NATWEST BANK N.A., as a Bank
By: /s/ Michael Cerullo
-----------------------------------------------
Its: Vice President
FIRST NATIONAL BANK OF MARYLAND, as a Bank
By: /s/ Mark L. Cook
-----------------------------------------------
Its: Vice President
VAN KAMPEN MERRITT PRIME RATE INCOME TRUST
as a Bank
By: /s/ Jeffrey W. Maillet
-----------------------------------------------
Its: Senior Vice President--Portfolio Manager
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
FIRST AMENDMENT TO LOAN AGREEMENT
SIGNATURE PAGE 4
<PAGE>
BANQUE FRANCAISE DU COMMERCE EXTERIEUR, as a Bank
By: /s/ Frederick K. Kammler
-------------------------------------------
Its: Vice President
By: /s/ William C. Maier
-------------------------------------------
Its: Vice President--Group Manager
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
FIRST AMENDMENT TO LOAN AGREEMENT
SIGNATURE PAGE 5
<PAGE>
THIS PAGE MUST BE KEPT WITH THE DOCUMENT.
SECOND AMENDMENT TO LOAN AGREEMENT
04/25/97 12:13 pm
<PAGE>
Exhibit 10.3
SECOND AMENDMENT TO LOAN AGREEMENT
THIS SECOND AMENDMENT TO LOAN AGREEMENT (this "Amendment"), dated as
of the 16th day of January, 1996 (the "Amendment Date"), by and among
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P., a Delaware limited
partnership (the "Borrower"), TORONTO DOMINION (TEXAS), INC., CHEMICAL
BANK, CIBC INC., CREDIT LYONNAIS CAYMAN ISLAND BRANCH, NATIONSBANK, N.A.
(F/K/A NATIONSBANK, N.A. (CAROLINAS)), BANQUE PARIBAS, UNION BANK,
CORESTATES BANK, N.A., THE LONG-TERM CREDIT BANK OF JAPAN, LTD., MERCANTILE
BANK OF ST. LOUIS NATIONAL ASSOCIATION, NATWEST BANK N.A., FIRST NATIONAL
BANK OF MARYLAND, VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME TRUST
(F/K/A VAN KAMPEN MERRITT PRIME RATE INCOME TRUST), BANQUE FRANCAISE DU
COMMERCE EXTERIEUR, PRIME INCOME TRUST, SENIOR DEBT PORTFOLIO AND MERRILL
LYNCH SENIOR FLOATING RATE FUND, INC. (together with any financial
institution which subsequently becomes a `Bank' under the Loan Agreement,
as such term is defined therein, the "Banks"), TORONTO DOMINION (TEXAS),
INC. and CHEMICAL BANK, as Documentation Agents (in such capacity, the
"Documentation Agents"), TORONTO DOMINION (TEXAS), INC., CHEMICAL BANK,
CIBC INC., CREDIT LYONNAIS CAYMAN ISLAND BRANCH, and NATIONSBANK, N.A.
(F/K/A NATIONSBANK, N.A. (CAROLINAS)), as Managing Agents (collectively in
such capacity, the "Managing Agents"), BANQUE PARIBAS and UNION BANK, as
Co-Agents (collectively in such capacity, the "Co-Agents") and TORONTO
DOMINION (TEXAS), INC., as Administrative Agent for the Documentation
Agents, the Managing Agents, the Co-Agents and the Banks (the
"Administrative Agent," and together with the Documentation Agents, the
Managing Agents and the Co-Agents, the "Agents"),
W I T N E S S E T H:
-------------------
WHEREAS, the Agents, the Borrower, and certain of the Banks are
parties to that certain Amended and Restated Loan Agreement dated as of
September 29, 1995, as amended by that certain First Amendment to Loan
Agreement dated as of October 31, 1995 (as further amended, modified and
supplemented from time to time, the "Loan Agreement"); and
WHEREAS, Prime Income Trust, Senior Debt Portfolio and Merrill Lynch
Senior Floating Rate Fund, Inc. (collectively, the "New Banks") desire to
become "Banks" under the Loan Agreement by purchasing pro rata assignments
of portions of the Fund Loan Commitment and outstanding Fund Loans
currently held by Toronto Dominion (Texas), Inc. and Chemical Bank, as more
fully set forth in that certain Master Assignment and Assumption Agreement
of even date by and among each of the New Banks, Toronto Dominion (Texas),
Inc. and Chemical Bank with respect to the Loan Agreement; and
<PAGE>
WHEREAS, the parties to the Loan Agreement, including, without
limitation, the New Banks, desire to amend the Loan Agreement as more fully
set forth herein;
NOW, THEREFORE, in consideration of the premises set forth above, the
covenants and agreements hereinafter set forth, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree that all capitalized terms used
herein shall have the meanings ascribed thereto in the Loan Agreement, and
further agree as follows:
1. Amendments to Article 1.
-----------------------
(a) Article 1 of the Loan Agreement, Definitions, is hereby amended
-----------
by deleting the existing definitions of "Commitment Ratios," "Fund Loan
----------------- ---------
Notes," "Notes," "Revolving Loan Notes" and "Term Loan Notes" in their
----- ----- -------------------- ---------------
entireties and by substituting the following therefor:
"`Commitment Ratios' shall mean the percentages in which the
-----------------
Banks are severally bound to make Advances to the Borrower under the
respective Commitments, as set forth below (together with dollar
amounts) as of the date of the Second Amendment to this Agreement:
<TABLE>
<CAPTION>
Portion of
Portion of Revolving Portion of Term Loan Revolving Loan Fund Loan
Term Loan Loan Fund Loan Total Dollar Commitment Commitment Commitment
Banks Commitment Commitment Commitment Commitment Ratio Ratio Ratio
- ------------------- -------------- ------------- -------------- ------------ -------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Toronto $ 9,856,000.01 $ 703,999.99 $25,750,000.00 $ 36,310,000 3.520000001% 3.519999983% 30.294117647%
Dominion
(Texas), Inc.
Chemical Bank 13,189,333.33 2,370,666.67 $25,750,000.00 41,310,000 4.710476190% 11.853333333% 30.294117647%
CIBC Inc. 33,189,333.33 2,370,666.67 0.00 35,560,000 11.853333333% 11.853333333% 0.000000000%
Credit Lyonnais 33,189,333.33 2,370,666.67 0.00 35,560,000 11.853333333% 11.853333333% 0.000000000%
Cayman Island
Branch
NationsBank, 33,189,333.33 2,370,666.67 0.00 35,560,000 11.853333333% 11.853333333% 0.000000000%
N.A. (f/k/a
NationsBank,
N.A.
(Carolinas))
Banque Paribas 19,026,666.67 2,073,333.33 0.00 21,100,000 6.795238095% 10.366666667% 0.000000000%
Union Bank 29,026,666.67 2,073,333.33 0.00 31,100,000 10.366666667% 10.366666667% 0.000000000%
CoreStates 14,000,000.00 1,000,000.00 5,000,000.00 20,000,000 5.000000000% 5.000000000% 5.882352941%
Bank, N.A.
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
Portion of
Portion of Revolving Portion of Term Loan Revolving Loan Fund Loan
Term Loan Loan Fund Loan Total Dollar Commitment Commitment Commitment
Banks Commitment Commitment Commitment Commitment Ratio Ratio Ratio
- ------------------- -------------- ------------- -------------- ------------ -------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
The Long-Term 14,000,000.00 1,000,000.00 0.00 15,000,000 5.000000000% 5.000000000% 0.000000000%
Credit Bank of
Japan, Ltd.
Mercantile Bank 14,000,000.00 1,000,000.00 0.00 15,000,000 5.000000000% 5.000000000% 0.000000000%
of St. Louis
National
Association
NatWest Bank 14,000,000.00 1,000,000.00 0.00 15,000,000 5.000000000% 5.000000000% 0.000000000%
N.A.
First National 14,000,000.00 1,000,000.00 0.00 15,000,000 5.000000000% 5.000000000% 0.000000000%
Bank of
Maryland
Van Kampen 30,000,000.00 0.00 8,500,000.00 38,500,000 10.714285714% 0.000000000% 10.000000000%
American
Capital Prime
Rate Income
Trust (f/k/a Van
Kampen Merritt
Prime Rate
Income Trust)
Banque 9,333,333.33 666,666.67 0.00 10,000,000 3.333333332% 3.333333350% 0.000000000%
Francaise du
Commerce
Exterieur
Prime Income 0.00 0.00 10,000,000.00 10,000,000 0.000000000% 0.000000000% 11.764705882%
Trust
Merrill Lynch 0.00 0.00 5,000,000.00 5,000,000 0.000000000% 0.000000000% 5.882352941%
Senior Floating
Rate Fund, Inc.
Senior Debt 0.00 0.00 5,000,000.00 5,000,000 0.000000000% 0.000000000% 5.882352941%
Portfolio
Total $ 280,000,000 $ 20,000,000 $85,000,000.00 $385,000,000 100% 100% 100%"
</TABLE>
"`Fund Loan Notes' shall mean those certain term promissory notes
---------------
(including Registered Notes) in the aggregate principal amount of
$85,000,000, one such note issued to each of the Banks having a Fund Loan
Commitment by the Borrower, each one substantially in the form of Exhibit A
---------
to the Second Amendment to this Agreement, and any extensions, renewals,
amendments or substitutions to any of the foregoing."
-3-
<PAGE>
"'Revolving Loan Notes' shall mean those certain amended and restated
--------------------
revolving promissory notes (including Registered Notes) in the aggregate
principal amount of $20,000,000, one such note issued to each of the Banks
having a Revolving Loan Commitment hereunder by the Borrower, each one
substantially in the form of Exhibit E attached hereto, and any extensions,
---------
renewals, amendments or substitutions to any of the foregoing."
"'Term Loan Notes' shall mean those certain amended and restated term
---------------
promissory notes (including Registered Notes) in the aggregate principal
amount of $280,000,000, one such note issued to each of the Banks having a
Term Loan Commitment by the Borrower, each one substantially in the form of
Exhibit I attached hereto, and any extensions, renewals, amendments or
---------
substitutions to any of the foregoing."
(b) Article 1 of the Loan Agreement, Definitions, is hereby further
-----------
amended by adding the following definitions in the appropriate alphabetical
order:
"'Non-U.S. Bank' shall have the meaning ascribed to such term in
-------------
Section 2.8(a) hereof."
"'Register' shall have the meaning ascribed to such term in Section
--------
11.5(f) hereof."
"'Registered Noteholder' shall mean each Non-U.S.Bank that requests or
---------------------
holds a Registered Note pursuant to Section 2.8(a) hereof or registers its
Loans pursuant to Section 11.5(f) hereof."
"'Registered Notes' shall mean those certain Notes that have been
----------------
issued in registered form in accordance with Sections 2.8(a) and 11.5(f)
hereof and each of which bears the following legend: 'This is a Registered
Note, and this Registered Note and the Loans evidenced hereby may be
assigned or otherwise transferred in whole or in part only by registration
of such assignment or transfer on the Register and in compliance with all
other requirements provided for in the Loan Agreement.'"
"'U.S. Person' shall mean a citizen or resident of the United States
-----------
of America, a corporation, partnership or other entity created or organized
in or under any laws of the United States of America, or any estate or
trust that is subject to Federal income taxation regardless of the source
of its income."
-4-
<PAGE>
(2) Amendments to Article 2.
-----------------------
(a) Section 2.1 of the Loan Agreement, The Loans, is hereby amended by
---------
deleting existing subsection (c) thereto in its entirety and by substituting
the following in lieu thereof:
"(c) Fund Loans. The Banks who have issued a Fund Loan Commitment
----------
agree, severally in accordance with their respective Commitment Ratios
relating to the Fund Loan Commitment, and not jointly, upon the terms and
subject to the conditions of this Agreement, to lend to the Borrower: (i)
an aggregate amount not to exceed $75,000,000 under the Fund Loan
Commitment on the date of the First Amendment to this Agreement; and (ii)
provided that the Omega Acquisition Date occurs on or before March 31,
1996, and provided further that not less than fifteen (15) days prior to
the Omega Acquisition Date, the Borrower shall have provided the
Administrative Agent with copies of the Omega Acquisition Agreement and all
other documents related to the transfer of the Omega Assets to the
Borrower, including, without limitation, lien search results from
appropriate jurisdictions with respect to the Omega Assets, all of which
shall be certified by an Authorized Signatory to be true, complete and
correct, and all of which shall be in form and substance satisfactory to
the Administrative Agent, an aggregate amount not to exceed $10,000,000
under the Fund Loan Commitment on the Omega Acquisition Date. Advances
under the Fund Loan Commitment may be repaid and reborrowed as provided in
Section 2.2(b) and 2.2(c) hereof, as applicable, in order to effect changes
in the Interest Rate Bases applicable to Advances thereunder, provided,
--------
however, that there shall be no net increase in the aggregate principal
-------
amount outstanding under the Fund Loan Commitment on any date other than
the date of the First Amendment to this Agreement or the Omega Acquisition
Date. In any event, the Fund Loan Commitment shall terminate upon the
earlier to occur of the close of business on the Omega Acquisition Date or
March 31, 1996."
(b) Section 2.8 of the Loan Agreement, Notes; Loan Accounts, is hereby
--------------------
amended by adding the following at the end of existing Section 2.8(a):
"Any Bank (i) which is not a U.S. Person (a "Non-U.S. Bank") and (ii) which
-------------
could become completely exempt from withholding of United States Federal
income taxes in respect of payment of any obligations due to such Bank
hereunder relating to any of its Loans if such Loans were in registered
form for United States Federal income tax purposes may request the Borrower
(through the Administrative Agent), and the Borrower agrees thereupon, to
-5-
<PAGE>
register such Loans as provided in Section 11.5(f) hereof and to issue to
such Bank Notes evidencing such Loans as Registered Notes or to exchange
Notes evidencing such Loans for new Registered Notes, as applicable.
Registered Notes may not be exchanged for Notes that are not in registered
form."
(c) Section 2.9 of the Loan Agreement, Manner of Payment, is hereby
-----------------
amended by adding to Section 2.9(d) the phrase ", Form W-8" immediately after
the phrase "Form 4224" appearing in the first sentence thereof.
(d) Section 2.9 of the Loan Agreement, Manner of Payment, is hereby
-----------------
further amended by adding the following after the first sentence of existing
Section 2.9(d):
"Each Registered Noteholder (or, if such Registered Noteholder is not the
beneficial owner thereof, such beneficial owner) shall deliver to the
Borrower (with a copy to the Administrative Agent) prior to or at the time
it becomes a Registered Noteholder, the applicable form described in the
first sentence of this Section 2.9(d) (or such successor and related forms
as may from time to time be adopted by the relevant taxing authorities of
the United States of America), together with an annual certificate stating
that such Registered Noteholder or beneficial owner, as the case may be, is
not a "bank" within the meaning of Section 881(c)(3)(A) of the Code and is
not otherwise described in Section 881(c)(3) of the Code. Each Registered
Noteholder or beneficial owner, as the case may be, shall promptly notify
the Borrower (with a copy to the Administrative Agent) if at any time, such
Registered Noteholder or beneficial owner, as the case may be, determines
that it is no longer in a position to make the certification made in such
certificate to the Borrower (or any other form of certification adopted by
the relevant taxing authorities of the United States of America for such
purposes)."
3. Amendments to Article 11.
------------------------
(a) Section 11.1 of the Loan Agreement, Notices, is hereby amended by
-------
adding the following to Section 11.1(a)(iii) immediately before the last
sentence thereof:
"Prime Income Trust
c/o Dean Witter InterCapital, Inc.
Two World Trade Center
New York, New York 10048
Attn: Rafael Scolari
-6-
<PAGE>
Merrill Lynch Senior Floating Rate Fund, Inc.
c/o Merrill Lynch Asset Management
800 Scudders Mill Road
Plainsboro, New Jersey 08536
Attn: Anthony Clemente
Senior Debt Portfolio
c/o Eaton Vance
24 Federal Street
Boston, Massachusetts 02110
Attn: Jeffrey Garner"
(b) Section 11.5 of the Loan Agreement, Assignment, is hereby amended by
----------
deleting the introductory paragraph to existing subsection (c) thereof and
subparagraph (i) thereof in their respective entireties and by substituting the
following therefor:
"(c) Each of the Banks may at any time enter into assignment
agreements (but not participations) with one or more other banks or other
Persons pursuant to which each Bank may assign its interests under this
Agreement and the other Loan Documents, including, without limitation, its
interest in any particular Advance or portion thereof, provided, that (1)
--------
all assignments with respect to the Term Loan Commitment or Advances
thereunder (other than assignments described in clause (b) hereof) shall be
in minimum aggregate principal amounts of $10,000,000 (unless, after giving
effect to all contemporaneous assignments to the applicable assignee, such
assignee has a minimum commitment under the Term Loan Commitment of
$10,000,000), (2) all assignments with respect to the Revolving Loan
Commitment and Advances thereunder (other than assignments described in
clause (b) hereof) shall be in minimum aggregate principal amounts of
$10,000,000 (unless, after giving effect to all contemporaneous assignments
to the applicable assignee, such assignee has a minimum commitment
under the Revolving Loan Commitment of $10,000,000), (3) all assignments
with respect to the Fund Loan Commitment and Advances thereunder (other
than assignments described in clause (b) hereof and assignments by Toronto
Dominion (Texas), Inc. and Chemical Bank of their respective interests
under the Fund Loan Commitment and Advances thereunder) shall be in minimum
aggregate principal amounts of $5,000,000 (unless, after giving effect to
all contemporaneous assignments to the applicable assignee, such assignee
has a minimum commitment under the Fund Loan Commitment of $5,000,000), (4)
without the prior consent of the Borrower, no Bank (other than Toronto
Dominion (Texas), Inc. and Chemical Bank with respect to their respective
interests under the Fund Loan Commitment and Advances thereunder) may
assign more than forty-nine percent (49%) of
-7-
<PAGE>
its interests hereunder, unless such Bank is selling one hundred percent
(100%) of its interests hereunder, and (5) all assignments (other than
assignments described in clause (b) hereof) shall be subject to the
following additional terms and conditions:
"(i) No assignment (except assignments permitted in Section
11.5(b) hereof) shall be sold without the prior consent of the
Administrative Agent and, prior to the occurrence and continuation of an
Event of Default, the consent of the Borrower, which consents shall not be
unreasonably withheld;".
(c) Section 11.5 of the Loan Agreement, Assignment, is hereby further
----------
amended by adding the following as new subsections (f) and (g) thereof:
"(f) The Administrative Agent, acting, for this purpose only, as agent
of the Borrower shall maintain, at no extra charge to the Borrower, a
register (the "Register") at the address to which notices to the
--------
Administrative Agent are to be sent under Section 11.1 hereof) on which
Register the Administrative Agent shall enter the name, address and
taxpayer identification number (if provided) of the registered owner of the
Loans evidenced by a Registered Note or, upon the request of the registered
owner, for which a Registered Note has been requested. A Registered Note
and the Loans evidenced thereby may be assigned or otherwise transferred in
whole or in part only by registration of such assignment or transfer of
such Registered Note and the Loans evidenced thereby on the Register. Any
assignment or transfer of all or part of such Loans and the Registered Note
evidencing the same shall be registered on the Register only upon
compliance with the other provisions of this Section 11.5 and surrender for
registration of assignment or transfer of the Registered Note evidencing
such Loans, duly endorsed by (or accompanied by a written instrument of
assignment or transfer duly executed by) the Registered Noteholder thereof,
and thereupon one or more new Registered Notes in the same aggregate
principal amount shall be issued to the designated assignee(s) or
transferee(s) and, if less than the aggregate principal amount of such
Registered Notes is thereby transferred, the assignor or transferor. Prior
to the due presentment for registration of transfer of any Registered Note,
the Borrower and the Administrative Agent shall treat the Person in whose
name such Loans and the Registered Note evidencing the same is registered
as the owner thereof for the purpose of receiving all payments thereon and
for all other purposes, notwithstanding any notice to the contrary.
-8-
<PAGE>
"(g) The Register shall be available for inspection by the Borrower
and any Bank at any reasonable time during the Administrative Agent's
regular business hours upon reasonable prior notice."
4. Counterparts. This Amendment may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same instrument.
5. Governing Law. This Amendment shall be construed in accordance with
-------------
and governed by the laws of the State of New York.
6. Severability. Any provision of this Amendment which is prohibited or
------------
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof in that
jurisdiction or affecting the validity or enforceability of such provision in
any other jurisdiction.
7. No Other Amendment or Waiver. Except for the amendments set forth
----------------------------
above, the text of the Loan Agreement and all other Loan Documents shall remain
unchanged and in full force and effect. No waiver by the Administrative Agent,
the other Agents or the Banks under the Loan Agreement or any other Loan
Document is granted or intended except as expressly set forth herein, and the
Administrative Agent, the other Agents and the Banks expressly reserve the right
to require strict compliance in all other respects (whether or not in connection
with any Requests for Advance). Except as set forth herein, the amendments
agreed to herein shall not constitute a modification of the Loan Agreement or
any of the other Loan Documents, or a course of dealing with the Administrative
Agent, the other Agents and the Banks, or any of them, at variance with the Loan
Agreement or any of the other Loan Documents, such as to require further notice
by the Administrative Agent, the other Agents, the Banks, the Majority Banks, or
any of them, to require strict compliance with the terms of the Loan Agreement
and the other Loan Documents in the future.
8. Representations and Warranties. The Borrower hereby represents and
------------------------------
warrants in favor of the Agents and the Banks as follows:
(a) The Borrower has the partnership power and authority (i) to enter into
this Amendment and (ii) to do all other acts and things as are required or
contemplated hereunder to be done, observed and performed by it;
-9-
<PAGE>
(b) This Amendment has been duly authorized, validly executed and
delivered by one or more Authorized Signatories of the Borrower and constitutes
the legal, valid and binding obligation of the Borrower, enforceable against the
Borrower in accordance with its terms, subject, as to enforcement of remedies,
to the following qualifications: (i) an order of specific performance and an
injunction are discretionary remedies and, in particular, may not be available
where damages are considered an adequate remedy at law, and (ii) enforcement may
be limited by bankruptcy, insolvency, liquidation, reorganization,
reconstruction and other similar laws affecting enforcement of creditors' rights
generally (insofar as any such law relates to the bankruptcy, insolvency or
similar event of the Borrower); and
(c) The execution and delivery of this Amendment, the performance by the
Borrower under the Loan Agreement and the other Loan Documents to which it is a
party, as amended hereby, do not and will not require the consent or approval of
any regulatory authority or governmental authority or agency having jurisdiction
over the Borrower which has not already been obtained, nor is in contravention
of or in conflict with the partnership agreement or other similar agreement of
the Borrower, or the provision of any statute, judgment, order, indenture,
instrument, agreement, or undertaking, to which the Borrower is a party or by
which any of its assets or properties are or may become bound.
9. Conditions Precedent. The effectiveness of this Amendment is subject
--------------------
to the prior fulfillment of each of the following conditions:
(a) Toronto Dominion (Texas), Inc., Chemical Bank and the New Banks shall
each have received a duly executed Fund Loan Note in substantially the form
attached hereto as Exhibit A, which promissory notes shall be deemed to be
---------
"Notes" under the Loan Agreement and the other Loan Documents for all purposes
hereafter;
(b) The Administrative Agent or the Banks, as appropriate, shall have
received all such other documents as the Administrative Agent or any Bank may
reasonably request, certified by an appropriate governmental official or an
Authorized Signatory if so reasonably requested.
10. Effective Date. Upon satisfaction of the conditions precedent referred
--------------
to in Section 9 above, this Amendment shall be effective as of January 16, 1996.
11. Loan Documents. This document shall be deemed to be a Loan Document
--------------
for all purposes.
-10-
<PAGE>
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
-11-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment or
caused it to be executed under seal by their duly authorized officers, all as of
the day and year first above written.
BORROWER: CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.,
a Delaware limited partnership
By: Its General Partner
CCA ACQUISITION CORP., a Delaware corporation
By: /s/ Jeffrey Sanders
-------------------------------------------
Its: Executive Vice President
ADMINISTRATIVE AGENT: TORONTO DOMINION (TEXAS), INC., as
Administrative Agent
By: /s/ Melissa B. Nigro
-------------------------------------------
Its: Vice President
DOCUMENTATION AGENTS: TORONTO DOMINION (TEXAS), INC., as a
Documentation Agent
By: /s/ Melissa B. Nigro
-------------------------------------------
Its: Vice President
CHEMICAL BANK, as a Documentation
Agent
By: /s/ John C. Huber III
-------------------------------------------
Its: Managing Director
SECOND AMENDMENT TO LOAN AGREEMENT
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
Signature Page 1
<PAGE>
MANAGING AGENTS: TORONTO DOMINION (TEXAS), INC., as a
Managing Agent
/s/ Melissa B. Nigro
By: __________________________________________
Its: Vice President
CHEMICAL BANK, as a Managing Agent
/s/ John J. Huber III
By: __________________________________________
Its: Managing Director
CIBC INC., as a Managing Agent
/s/ Matthew B. Jones
By: __________________________________________
Its: Vice President
CREDIT LYONNAIS CAYMAN ISLAND BRANCH,
as a Managing Agent
/s/ James E. Morris
By: __________________________________________
Its: Vice President
NATIONSBANK, N.A. (f/k/a NationsBank,
N.A. (Carolinas)), as a Managing Agent
/s/ Jennifer Zydney
By: __________________________________________
Its: Vice President
CO-AGENTS: BANQUE PARIBAS, as a Co-Agent
/s/ John G. Acker
By: __________________________________________
Its: Vice President
/s/ Thomas Brandt
By: __________________________________________
Its: Vice President
SECOND AMENDMENT TO LOAN AGREEMENT
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
Signature Page 2
<PAGE>
UNION BANK, as a Co-Agent
/s/ Gabe Renga
By: __________________________________________
Its: Senior Vice President
BANKS: TORONTO DOMINION (TEXAS), INC., as a
Bank
/s/ Melissa B. Nigro
By: __________________________________________
Its: Vice President
CHEMICAL BANK, as a Bank
/s/ John J. Huber III
By: __________________________________________
Its: Managing Director
CIBC INC., as a Bank
/s/ Matthew B. Jones
By: __________________________________________
Its: Vice President
CREDIT LYONNAIS CAYMAN ISLAND BRANCH,
as a Bank
/s/ James E. Morris
By: __________________________________________
Its: Vice President
NATIONSBANK, N.A. (f/k/a NationsBank,
N.A. (Carolinas)), as a Bank
/s/ Jennifer Zydney
By: __________________________________________
Its: Vice President
BANQUE PARIBAS, as a Bank
/s/ John G. Acker
By: __________________________________________
Its: Vice President
/s/ Thomas Brandt
By: __________________________________________
Its: Vice President
SECOND AMENDMENT TO LOAN AGREEMENT
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
Signature Page 3
<PAGE>
UNION BANK, as a Bank
/s/ Gabe Renga
By: __________________________________________
Its: Senior Vice President
CORESTATES BANK, N.A., as a Bank
/s/ Anthony B. Parisi
By: __________________________________________
Its: Assistant Vice President
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., as a Bank
/s/ Armund Schoen, Jr
By: __________________________________________
Its: Vice President
MERCANTILE BANK OF ST. LOUIS
NATIONAL ASSOCIATION, as a Bank
/s/ Gregory D. Knudsen
By: __________________________________________
Its: Vice President
NATWEST BANK N.A., as a Bank
/s/ Adam Bester
By: __________________________________________
Its: Vice President
FIRST NATIONAL BANK OF MARYLAND, as a
Bank
/s/ Mark L. Cook
By: __________________________________________
Its: Vice President
SECOND AMENDMENT TO LOAN AGREEMENT
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
Signature Page 4
<PAGE>
VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME
TRUST (f/k/a Van Kampen Merritt Prime Rate
Income Trust), as a Bank
/s/ Jeffrey W. Maillet
By: __________________________________________
Its: Senior Vice President
BANQUE FRANCAISE DU COMMERCE EXTERIEUR,
as a Bank
/s/ Frederick K. Kammler
By: __________________________________________
Its: Vice President
/s/ William C. Maier
By: __________________________________________
Its: Vice President
PRIME INCOME TRUST, as a Bank
/s/ Rafael Scolari
By: __________________________________________
Its: Vice President - Portfolio Manager
SENIOR DEBT PORTFOLIO, as a Bank
By: Boston Management and Research, as
Investment Advisor
/s/ Barbara Campbell
By: __________________________________________
Its: Assistant Treasurer
MERRILL LYNCH SENIOR FLOATING RATE FUND,
INC., as a Bank
/s/ Anthony R. Clemente
By: __________________________________________
Its: Authorized Signatory
SECOND AMENDMENT TO LOAN AGREEMENT
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
Signature Page 5
<PAGE>
THIS PAGE MUST BE KEPT WITH THE DOCUMENT.
THIRD AMENDMENT TO LOAN AGREEMENT
04/25/97 12:24 pm
<PAGE>
Exhibit 10.4
THIRD AMENDMENT TO LOAN AGREEMENT
THIS THIRD AMENDMENT TO LOAN AGREEMENT (this "Amendment"), dated as of the
29th day of March, 1996 (the "Amendment Date"), by and among CHARTER
COMMUNICATIONS ENTERTAINMENT I, L.P., a Delaware limited partnership (the
"Borrower"), TORONTO DOMINION (TEXAS), INC., CHEMICAL BANK, CIBC INC., CREDIT
LYONNAIS CAYMAN ISLAND BRANCH, NATIONSBANK, N.A., BANQUE PARIBAS, UNION BANK,
CORESTATES BANK, N.A., THE LONG-TERM CREDIT BANK OF JAPAN, LTD., MERCANTILE BANK
OF ST. LOUIS NATIONAL ASSOCIATION, NATWEST BANK N.A., FIRST NATIONAL BANK OF
MARYLAND, VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME TRUST, BANQUE FRANCAISE
DU COMMERCE EXTERIEUR, PRIME INCOME TRUST, SENIOR DEBT PORTFOLIO, MERRILL LYNCH
SENIOR FLOATING RATE FUND, INC., AERIES FINANCE LTD. AND MERRILL LYNCH PRIME
RATE PORTFOLIO (together with any financial institution which subsequently
becomes a `Bank' under the Loan Agreement, as such term is defined therein, the
"Banks"), TORONTO DOMINION (TEXAS), INC. and CHEMICAL BANK, as Documentation
Agents (in such capacity, the "Documentation Agents"), TORONTO DOMINION (TEXAS),
INC., CHEMICAL BANK, CIBC INC., CREDIT LYONNAIS CAYMAN ISLAND BRANCH, and
NATIONSBANK, N.A., as Managing Agents (collectively in such capacity, the
"Managing Agents"), BANQUE PARIBAS and UNION BANK, as Co-Agents (collectively in
such capacity, the "Co-Agents") and TORONTO DOMINION (TEXAS), INC., as
Administrative Agent for the Documentation Agents, the Managing Agents, the Co-
Agents and the Banks (the "Administrative Agent," and together with the
Documentation Agents, the Managing Agents and the Co-Agents, the "Agents"),
W I T N E S S E T H:
-------------------
WHEREAS, the Agents, the Borrower, and the Banks are parties to that
certain Amended and Restated Loan Agreement dated as of September 29, 1995, as
amended by that certain First Amendment to Loan Agreement dated as of October
31, 1995, as amended by that certain Second Amendment to Loan Agreement dated as
of January 16, 1996 (as further amended, modified and supplemented from time to
time, the "Loan Agreement"); and
WHEREAS, the Borrower has requested that the Agents and the Banks agree to
amend certain provisions of the Loan Agreement to provide for an $80,000,000
increase of the Revolving Loan Commitment (as defined in the Loan Agreement) to
a principal amount not to exceed $100,000,000 in the aggregate, the proceeds of
which increase shall be used by the Borrower to acquire certain cable properties
from Cencom Cable Income Partners, L.P. and an office building from AEtna Life
Insurance Company; and
<PAGE>
WHEREAS, the Agents and the Banks are willing to consent to such amendments
and such other matters as set forth herein on the terms and conditions contained
herein in return, in part, for the payment of the Amendment Fee (as defined
herein);
NOW, THEREFORE, in consideration of the premises set forth above, the
covenants and agreements hereinafter set forth, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree that all capitalized terms used herein shall have the
meanings ascribed thereto in the Loan Agreement, and further agree as follows:
1. Amendments to Article 1.
-----------------------
(a) Article 1 of the Loan Agreement, Definitions, is hereby amended by
-----------
deleting the existing definitions of "Commitment Ratios," "Loan Documents,"
----------------- --------------
"Revolving Loan Commitment" and "Revolving Loan Notes" in their respective
- -------------------------- --------------------
entireties and by substituting the following therefor:
"`Commitment Ratios' shall mean the percentages in which the Banks are
-----------------
severally bound to make Advances to the Borrower under the respective
Commitments, as set forth below (together with dollar amounts) as of the
date of the Third Amendment to this Agreement:
<TABLE>
<CAPTION>
Portion of
Portion of Revolving Portion of Term Loan Revolving Fund Loan
Term Loan Loan Fund Loan Total Dollar Commitment Loan Commitment
Banks Commitment Commitment Commitment Commitment Ratio Commitment Ratio
- ----------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Toronto $ 9,856,000.01 $14,703,999.99 $18,250,000.00 $42,810,000.00 3.520000001% 14.703999999% 21.470588235%
Dominion
(Texas), Inc.
Chemical Bank 13,189,333.33 16,370,666.67 $18,250,000.00 47,810,000.00 4.710476190% 16.370666667% 21.470588235%
CIBC Inc. 33,189,333.33 16,370,666.67 0.00 49,560,000.00 11.853333333% 16.370666667% 0.000000000%
Credit 33,189,333.33 16,370,666.67 0.00 49,560,000.00 11.853333333% 16.370666667% 0.000000000%
Lyonnais
Cayman
Island Branch
NationsBank, N.A. 33,189,333.33 16,370,666.67 0.00 49,560,000.00 11.853333333% 16.370666667% 0.000000000%
Banque Paribas 19,026,666.67 2,073,333.33 0.00 21,100,000.00 6.795238095% 2.073333333% 0.000000000%
Union Bank 29,026,666.67 2,073,333.33 0.00 31,100,000.00 10.366666667% 2.073333333% 0.000000000%
CoreStates 14,000,000.00 11,000,000.00 5,000,000.00 30,000,000.00 5.000000000% 11.000000000% 5.882352941%
Bank, N.A.
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
Portion of
Portion of Revolving Portion of Term Loan Revolving Fund Loan
Term Loan Loan Fund Loan Total Dollar Commitment Loan Commitment
Banks Commitment Commitment Commitment Commitment Ratio Commitment Ratio
- ----------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
The Long- 14,000,000.00 1,000,000.00 0.00 15,000,000.00 5.000000000% 1.000000000% 0.000000000%
Term Credit
Bank of
Japan, Ltd.
Mercantile 14,000,000.00 1,000,000.00 0.00 15,000,000.00 5.000000000% 1.000000000% 0.000000000%
Bank of St.
Louis National
Association
NatWest Bank N.A. 14,000,000.00 1,000,000.00 0.00 15,000,000.00 5.000000000% 1.000000000% 0.000000000%
First National 14,000,000.00 1,000,000.00 0.00 15,000,000.00 5.000000000% 1.000000000% 0.000000000%
Bank of
Maryland
Van Kampen 30,000,000.00 0.00 8,500,000.00 38,500,000.00 10.714285714% 0.000000000% 10.000000000%
American
Capital Prime
Rate Income
Trust
Banque Francaise du 9,333,333.33 666,666.67 0.00 10,000,000.00 3.333333332% 0.666666667% 0.000000000%
Commerce
Exterieur
Prime Income Trust 0.00 0.00 10,000,000.00 10,000,000.00 0.000000000% 0.000000000% 11.764705882%
Merrill Lynch 0.00 0.00 5,000,000.00 5,000,000.00 0.000000000% 0.000000000% 5.882352941%
Senior
Floating Rate
Fund, Inc.
Senior Debt 0.00 0.00 5,000,000.00 5,000,000.00 0.000000000% 0.000000000% 5.882352941%
Portfolio
Aeries 0.00 0.00 10,000,000.00 10,000,000.00 0.000000000% 0.000000000% 11.764705882%
Finance Ltd.
Merrill Lynch 0.00 0.00 5,000,000.00 5,000,000.00 0.000000000% 0.000000000% 5.882352941%
Prime Rate
Portfolio
Total $280,000,000.00 $100,000,000.00 $85,000,000.00 $465,000,000.00 100% 100% 100%"
</TABLE>
"'Loan Documents' shall mean, without limitation, this Agreement, the
--------------
Notes, the Security Documents, the Subordination of Management and
Financial Advisory Fees Agreement, the Subordination Agreement, all
Requests for Advances, all Interest Rate Hedge Agreements and reimbursement
agreements with respect to letters of credit
-3-
<PAGE>
permitted under Sections 7.1(e) and (g) hereof, in each case, between the
Borrower, on the one hand, and the Banks and the Agents, or any of them, on
the other hand, and all other documents and agreements executed and
delivered in connection with the making of the Loans."
"'Revolving Loan Commitment' shall mean the several obligations of the
-------------------------
Banks issuing a Revolving Loan Commitment as indicated in the definition of
"Commitment Ratios" to advance the sum of up to $100,000,000 at any one
time outstanding, in accordance with their respective Revolving Loan
Commitment Ratios set forth in the definition of "Commitment Ratios," to
the Borrower pursuant to the terms hereof, as such obligations may be
reduced from time to time pursuant to the terms hereof."
"'Revolving Loan Notes' shall mean those certain amended and restated
--------------------
revolving promissory notes (including Registered Notes) in the aggregate
principal amount of $100,000,000, one such note issued to each of the Banks
having a Revolving Loan Commitment hereunder by the Borrower, each one
substantially in the form of Exhibit A to the Third Amendment to this
---------
Agreement, and any extensions, renewals, amendments or substitutions to any
of the foregoing."
(b) Article 1 of the Loan Agreement, Definitions, is hereby further
-----------
amended by adding the following definitions in the appropriate alphabetical
order:
"`CCIP Acquisition Agreement' shall mean that certain Asset Purchase
--------------------------
Agreement dated as of July 1, 1995 among Cencom Cable Income Partners,
L.P., the Borrower, Charter Communications Properties, Inc. and Charter
Communications Entertainment I, L.P. with respect to the acquisition by the
Borrower of certain cable television assets of Cencom Cable Income
Partners, L.P., as such agreement may be amended, modified or supplemented
from time to time, together with all exhibits, schedules and appendices
thereto, all of which shall be in form and substance satisfactory to the
Administrative Agent."
"`CCIP Assets' shall mean those cable television assets of Cencom
-----------
Cable Income Partners, L.P. to be acquired by the Borrower pursuant to the
CCIP Acquisition Agreement."
"`Office Building Acquisition Agreement' shall mean that certain
-------------------------------------
Purchase and Sale Agreement dated February 16, 1996 between AEtna Life
Insurance Company and Charter Communications, Inc., as assigned to the
Borrower by
-4-
<PAGE>
Assignment dated March 29, 1996, with respect to the acquisition by the
Borrower for a purchase price not to exceed $3,650,000 of a three building
office complex located in Town and Country, Missouri, as such agreement may
be amended, modified or supplemented from time to time, together with all
exhibits, schedules and appendices thereto, all of which shall be in form
and substance reasonably satisfactory to the Administrative Agent."
"`Office Building Acquisition Date' shall mean the date on which the
--------------------------------
Borrower acquires the Office Building Assets pursuant to the Office
Building Acquisition Agreement."
"`Office Building Assets' shall mean the three building office complex
----------------------
located in Town and Country, St. Louis County, Missouri to be acquired by
the Borrower pursuant to the Office Building Acquisition Agreement."
2. Amendments to Article 2.
-----------------------
(a) Section 2.5 of the Loan Agreement, Revolving Loan Commitment
-------------------------
Reductions, is hereby amended by deleting existing subsection (a) thereto in its
- ----------
entirety and by substituting the following therefor:
"(a) Mandatory. Commencing September 30, 1997 and at the end of each
---------
calendar quarter thereafter, the Revolving Loan Commitment as in effect on
September 29, 1997 shall be automatically reduced by the percentages set
forth below:
<TABLE>
Quarterly Percentage
Reduction of Revolving Loan
Commitment as in Effect
Dates of Reduction on September 29, 1997
------------------ ---------------------
<S> <C>
September 30, 1997
and December 31, 1997 1.0500%
March 31, 1998, June 30,
1998, September 30, 1998
and December 31, 1998 2.2500%
March 31, 1999, June 30,
1999, September 30, 1999
and December 31, 1999 3.3250%
March 31, 2000, June 30,
2000, September 30, 2000
and December 31, 2000 3.3250%
</TABLE>
-5-
<PAGE>
<TABLE>
Quarterly Percentage
Reduction of Revolving Loan
Commitment as in Effect
Dates of Reduction on September 29, 1997
------------------ ---------------------
<S> <C>
March 31, 2001, June 30,
2001, September 30, 2001
and December 31, 2001 4.4500%
March 31, 2002, June 30,
2002, September 30, 2002
and December 31, 2002 5.4500%
March 31, 2003, June 30,
2003, September 30, 2003
and December 31, 2003 5.6750%
</TABLE>
The Borrower shall make a repayment of the Revolving Loans
outstanding, together with accrued interest thereon, on or before the
effective date of each reduction in the Revolving Loan Commitment under
this Section 2.5(a), such that the aggregate principal amount of the
Revolving Loans outstanding at no time exceeds the Revolving Loan
Commitment as so reduced. In addition, any remaining unpaid principal and
interest under the Revolving Loan Commitment shall be due and payable in
full on the Maturity Date."
(b) Section 2.7 of the Loan Agreement, Scheduled Repayments, is hereby
--------------------
amended by deleting existing subsection (a)(i) thereto in its entirety and by
substituting the following therefor:
"(i) For the Term Loan. Commencing September 30, 1997, the principal
-----------------
balance of the Term Loan shall be amortized in consecutive quarterly
installments on September 30, December 31, March 31 and June 30 of each
year until paid in full, in such amounts as follows:
-6-
<PAGE>
<TABLE>
<CAPTION>
Percent of Principal
Due on Last Day
Payment Dates of Each Quarter
------------- ---------------
<S> <C>
September 30, 1997 and
December 31, 1997 1.0500%
March 31, 1998, June 30, 1998,
September 30, 1998 and
December 31, 1998 2.2500%
March 31, 1999, June 30, 1999,
September 30, 1999 and
December 31, 1999 3.3250%
March 31, 2000, June 30, 2000,
September 30, 2000 and
December 31, 2000 3.3250%
March 31, 2001, June 30, 2001,
September 30, 2001 and
December 31, 2001 4.4500%
March 31, 2002, June 30, 2002,
September 30, 2002 and
December 31, 2002 5.4500%
March 31, 2003, June 30, 2003,
September 30, 2003 and
December 31, 2003 5.6750%"
</TABLE>
(c) Section 2.7(b) of the Loan Agreement, Repayments Upon Sales of Assets
-------------------------------
and Asset Swaps, is hereby amended by deleting the existing Section 2.7(b) in
- ---------------
its entirety and by substituting the following therefor:
"(b) Repayments Upon Sales of Assets and Asset Swaps. Except as
-----------------------------------------------
provided below with respect to Permitted Asset Swaps, in the event of any
sale, lease, transfer or other disposition of assets permitted hereunder,
excluding any such sale, lease, transfer or other disposition of assets by
the Borrower or any of its Subsidiaries in the ordinary course of business
(collectively, "Asset Sales"), to the extent that the Net Proceeds with
respect thereto (when taken together with the Net Proceeds of all other
Asset Sales made subsequent to the Agreement Date) are in excess of
$7,500,000 in the aggregate for all Asset Sales made during the period from
the Agreement Date to the Final Maturity Date, the Borrower shall, on the
date of such sale, lease, transfer or other disposition, make a repayment
of
-7-
<PAGE>
the principal of the Term Loan and the Fund Loans then outstanding (on a
weighted pro rata basis between such Loans) in an amount equal to the Net
Proceeds in excess of the first $7,500,000 of all such Asset Sales. Any
such Net Proceeds which constitute a portion of the sales price which was
previously held in escrow or paid in installments shall be paid to the
extent required by the terms hereof to the Banks as a repayment of
principal at such time as such Net Proceeds are received by the Borrower.
In the event the Borrower elects to enter into a Permitted Asset Swap, the
Borrower shall, on the date it sells, leases, transfers or otherwise
disposes of all or substantially all of its interests in the cable
television system owned by the Borrower or any of its Subsidiaries in the
State of Connecticut, deposit in an escrow account with the Administrative
Agent an amount equal to the Net Proceeds of such sale, lease, transfer or
other disposition. The amount deposited in such escrow account shall be
held in such escrow account until the earlier to occur of the consummation
of the Permitted Asset Swap or the first anniversary of the sale, lease,
transfer or other disposition of such Connecticut assets or interests
relating thereto. Amounts held in such escrow account may be invested as
permitted under Section 7.6(i), (ii) and (iii) hereof, or as otherwise
agreed to by the Borrower and the Administrative Agent. Net Proceeds held
in escrow by the Administrative Agent may be used by the Borrower at any
time prior to the first anniversary of such sale, lease, transfer or other
disposition of Connecticut assets or interests to consummate a Permitted
Asset Swap or to repay the principal amount of the Term Loan and the Fund
Loans (on a weighted pro rata basis between such Loans). All Net Proceeds
remaining in escrow with the Administrative Agent pursuant to this Section
2.7(b) on such first anniversary date shall be immediately applied to repay
the principal amount of the Term Loan and the Fund Loans (on a weighted pro
rata basis between such Loans). All amounts paid by the Borrower pursuant
to this subsection shall be applied to principal of the Term Loan and the
Fund Loans, respectively, pro rata over the applicable repayment schedule
set forth in Section 2.7(a) above."
3. Amendments to Article 5.
-----------------------
(a) Section 5.9 of the Loan Agreement, Use of Proceeds, is hereby amended
---------------
by deleting existing Section 5.9 in its entirety and by substituting the
following therefor:
"Section 5.9 Use of Proceeds. On and after the effective date of the
---------------
Third Amendment to this Agreement, the
-8-
<PAGE>
Borrower will use the aggregate proceeds of the Revolving Loans (as
set forth in the Requests for Advances issued from time to time
hereunder) to finance Capital Expenditures; to finance the acquisition
of the CCIP Assets pursuant to the CCIP Acquisition Agreement and
related transaction costs; subject to compliance with Section 7.12
hereof, to finance the acquisition of the Office Building Assets
pursuant to the Office Building Acquisition Agreement and related
transaction costs; for working capital and for other general
partnership needs as permitted under this Agreement."
4. Amendments to Article 7.
-----------------------
(a) Section 7.1 of the Loan Agreement, Indebtedness of the Borrower,
----------------------------
is hereby amended by deleting existing subsections (c), (e) and (g) in their
respective entireties and by substituting the following therefor:
"(c) Capitalized Lease Obligations in an amount not in excess of
$4,500,000 in the aggregate;"
"(e) Any other Indebtedness (including, without limitation,
Indebtedness secured by Permitted Liens) in an aggregate outstanding
principal amount at any time not to exceed $7,500,000 of which not
more than $4,500,000 in an aggregate outstanding principal amount at
any time may be used for Indebtedness with respect to performance
bonds, letters of credit and similar instruments securing the
contractual obligations of the Borrower;"
"(g) Indebtedness arising under payment and performance bonds
and letters of credit issued for the Borrower's account, or the
account of a Subsidiary of the Borrower, in the ordinary course of the
Borrower's or such Subsidiary's business in favor of the grantors of
the Licenses and the Pole Agreements, in an aggregate amount not to
exceed $4,500,000."
(b) Section 7.4 of the Loan Agreement, Liquidation, Change in
----------------------
Ownership, Disposition or Acquisition of Assets, is hereby amended by deleting
- -----------------------------------------------
existing subsection (a)(iv) in its entirety and by substituting the following
therefor:
"(iv) except pursuant to a Permitted Asset Swap, sell, lease, abandon,
transfer or otherwise dispose of any of its assets, property or
business to the extent that the fair market value of such assets
exceeds $7,500,000 in the aggregate during the term hereof (excluding
such sales, leases, transfers or other dispositions in the ordinary
-9-
<PAGE>
course of the Borrower's or any of its Subsidiaries' business)."
(c) Section 7.4 of the Loan Agreement, Liquidation, Change in
----------------------
Ownership, Disposition or Acquisition of Assets, is hereby further amended by
- -----------------------------------------------
deleting existing subsections (b)(iv) and (ix) in their respective entireties
and by substituting the following therefor:
"(iv) so long as no Default hereunder then exists or would be caused
thereby, acquisitions of cable television systems for a purchase price
not to exceed $7,500,000 in the aggregate in any fiscal year and
$15,000,000 in the aggregate during the term hereof, plus the
aggregate amount of any Excess Cash Flow which, in accordance with
Section 7.7(c) hereof, would be permitted to be distributed to the
Partners and which are not so distributed,"
"(ix) the CCIP Acquisition and the Office Building Acquisition,
subject to the terms and conditions of this Agreement."
(d) Section 7.7 of the Loan Agreement, Restricted Payments and
-----------------------
Purchases, is hereby amended by deleting existing subsections (b), (c) and (h)
- ---------
thereof in their respective entireties and by substituting the following
therefor:
"(b) so long as no Default hereunder then exists or would be
caused thereby, during the period from January 1, 1995 through and
including December 31, 2000, (i) pay management fees and financial
advisory fees in an aggregate amount for any fiscal year not to exceed
$5,250,000, except that with respect to the fiscal year ending
December 31, 1995, such amount shall not exceed $3,750,000, and (ii)
reimburse Kelso for all reasonable out of pocket expenses incurred by
it in connection with its services under the Financial Advisory
Agreement, all as the same may become due and payable under the
Management Agreement and the Financial Advisory Agreement, or, in the
case of the General Partner, the predecessors to such Agreements;"
"(c) subject to the provisions of Section 2.7(c) hereof, so long
as no Default hereunder then exists or would be caused thereby, and so
long as the Leverage Ratio is less than 4.5:1, on or after April 30,
1999 and on or after each April 30th thereafter, use up to fifty
percent (50%) of Annual Excess Cash Flow for the most recently ended
fiscal year of the Borrower to (i) make distributions to the Partners,
or (ii) make acquisitions otherwise permitted under Section 7.4(b)
hereof;"
-10-
<PAGE>
"(h) (i) pay to Kelso and/or the Manager a search and acquisition
fee in an aggregate amount not to exceed $1,600,000 on the CCIP
Acquisition Date, and (ii) reimburse Kelso for all reasonable out of
pocket expenses incurred by Kelso in connection with its providing
search and acquisition services to the Borrower with respect to the
Borrower's acquisition of the United Video Assets and the Omega
Assets."
(e) Section 7.8 of the Loan Agreement, Leverage Ratio, is hereby
--------------
amended by deleting the existing table contained in existing Section 7.8 in its
entirety and by substituting the following therefor:
<TABLE>
Leverage
"Period Ratio
------ -----
<S> <C>
From January 18, 1995 6.50:1
through June 30, 1996
From July 1, 1996 6.25:1
through December 31, 1996
From January 1, 1997 6.00:1
through September 30, 1997
From October 1, 1997 through June 5.50:1
30, 1998
From July 1, 1998 5.00:1
through December 31, 1998
From January 1, 1999 4.50:1
through December 31, 1999
From January 1, 2000 and 4.00:1"
thereafter
</TABLE>
(f) Section 7.9 of the Loan Agreement, Annualized Operating Cash Flow
------------------------------
to Fixed Charges Ratio, is hereby amended by deleting the date "March 31, 1997"
- ----------------------
appearing in the first line thereof and replacing it with the date "September
30, 1997."
(g) Section 7.12 of the Loan Agreement, Real Estate, is hereby
-----------
amended by deleting existing Section 7.12 thereof in its entirety and by
substituting the following therefor:
"Section 7.12 Real Estate. The Borrower shall not, and shall
-----------
not permit any of its Subsidiaries to, purchase or become obligated to
purchase real estate (other than easements, rights-of-way, restrictions and
other similar encumbrances on the use of real property), other than
-11-
<PAGE>
purchases, with a value of less than $500,000 for any single purchase, and
less than $1,000,000 in the aggregate for all purchases after the Agreement
Date. Notwithstanding the foregoing, the Borrower may purchase the Office
Building Assets pursuant to the Office Building Acquisition Agreement
provided that (i) the Borrower grants a mortgage securing the Obligations
to the Administrative Agent and delivers to the Administrative Agent all
other documentation, including, without limitation, opinions of counsel,
policies of title insurance, and a Phase I environmental audit which in the
reasonable opinion of the Administrative Agent are appropriate with respect
to such grant, including any documentation requested by the Banks
(collectively, the "Mortgage Documents") and (ii) not less than five (5)
days prior to the Office Building Acquisition Date, the Borrower shall have
provided the Administrative Agent with copies of the Office Building
Acquisition Agreement, the Mortgage Documents and all other documents
related to the transfer of the Office Building Assets to the Borrower,
including, without limitation, lien search results from appropriate
jurisdictions with respect to the Office Building Assets, all of which
shall be certified by an Authorized Signatory to be true, complete and
correct, and all of which shall be in form and substance satisfactory to
the Administrative Agent."
(h) Section 7.13 of the Loan Agreement, Limitation on Leases, is hereby
--------------------
amended by deleting the existing subsection (x) in its entirety and by
substituting the following therefor:
"(x) payments under leases to be used in connection with the operation of
its business which, when aggregated with all other payments under such
leases by the Borrower and its Subsidiaries would not exceed in the
aggregate during any one fiscal year of the Borrower, $2,500,000, and
during the term of this Agreement, $15,000,000, and"
(i) Section 7.15 of the Loan Agreement, Capital Expenditures, is hereby
--------------------
amended by deleting the existing table and the last sentence contained in
existing Section 7.15 in its entirety and by substituting the following
therefor:
<TABLE>
Capital
"Period Expenditures Limit
------ ------------------
<S> <C>
From January 18, 1995 $23,500,000
through December 31, 1995
From January 1, 1996 $36,650,000
through December 31, 1996
</TABLE>
-12-
<PAGE>
Capital
"Period Expenditures Limit
------- ------------------
From January 1, 1997 $16,300,000
through June 30, 1997
There shall be no dollar limitation on Capital Expenditures after June 30, 1997.
Notwithstanding the foregoing, the Borrower may, during the 1996 calendar year,
expend an additional $3,650,000 for the purchase of the Office Building Assets
subject to compliance with Section 7.12 hereof."
(j) Section 8.1 of the Loan Agreement, Events of Default, is hereby
-----------------
amended by deleting the existing subsections (h), (k) and (l) in their
respective entireties and by substituting the following therefor:
"(h) A final judgment shall be entered by any court against the
Borrower or any of the Borrower's Subsidiaries for the payment of money
which exceeds any insurance coverage which is uncontested by the insurance
carrier by $4,500,000 or more, or a warrant of attachment or execution or
similar process shall be issued or levied against property of the Borrower
or any of the Borrower's Subsidiaries which, together with all other such
property of the Borrower or any of the Borrower's Subsidiaries subject to
other such process, exceeds in value any insurance coverage which is
uncontested by the insurance carrier by $4,500,000 or more in the
aggregate, and if, within thirty (30) days after the entry, issue or levy
thereof, such judgment, warrant or process shall not have been paid or
discharged or stayed pending appeal, or if, after the expiration of any
such stay, such judgment, warrant or process shall not have been paid or
discharged;"
"(k) There shall occur any failure by the Borrower or any of the
Borrower's Subsidiaries to pay any Indebtedness when due (after any
applicable cure period) or there shall occur any default which entitles the
holders to accelerate the maturity thereof under, in either case, any
agreement or instrument evidencing Indebtedness of the Borrower or any of
the Borrower's Subsidiaries in an aggregate principal amount exceeding
$4,500,000; or there shall occur any material default under any Interest
Rate Hedge Agreement having a notional principal amount of $4,500,000 or
more;"
"(l) There shall occur any default which entitles the holders to
accelerate the maturity thereof under any agreement or instrument
evidencing Indebtedness for Money
-13-
<PAGE>
Borrowed of Holdings, CCELP or the General Partner, in an aggregate
principal amount exceeding $4,500,000;"
5. Counterparts. This Amendment may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same instrument.
6. Governing Law. This Amendment shall be construed in accordance with
-------------
and governed by the laws of the State of New York.
7. Severability. Any provision of this Amendment which is prohibited or
------------
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof in that
jurisdiction or affecting the validity or enforceability of such provision in
any other jurisdiction.
8. No Other Amendment or Waiver. Except for the amendments set
----------------------------
forth above, the text of the Loan Agreement and all other Loan Documents shall
remain unchanged and in full force and effect. No waiver by the Administrative
Agent, the other Agents or the Banks under the Loan Agreement or any other Loan
Document is granted or intended except as expressly set forth herein, and the
Administrative Agent, the other Agents and the Banks expressly reserve the right
to require strict compliance in all other respects (whether or not in connection
with any Requests for Advance). Except as set forth herein, the amendments
agreed to herein shall not constitute a modification of the Loan Agreement or
any of the other Loan Documents, or a course of dealing with the Administrative
Agent, the other Agents and the Banks, or any of them, at variance with the Loan
Agreement or any of the other Loan Documents, such as to require further notice
by the Administrative Agent, the other Agents, the Banks, the Majority Banks, or
any of them, to require strict compliance with the terms of the Loan Agreement
and the other Loan Documents in the future.
9. Representations and Warranties. The Borrower hereby represents and
------------------------------
warrants in favor of the Agents and the Banks as follows:
(a) The Borrower has the partnership power and authority (i) to enter into
this Amendment and to consummate the acquisition of the CCIP Assets and the
Office Building Assets as contemplated hereby and (ii) to do all other acts and
things as are required or contemplated hereunder to be done, observed and
performed by it;
-14-
<PAGE>
(b) This Amendment has been duly authorized, validly executed and
delivered by one or more Authorized Signatories of the Borrower and constitutes
the legal, valid and binding obligation of the Borrower, enforceable against the
Borrower in accordance with its terms, subject, as to enforcement of remedies,
to the following qualifications: (i) an order of specific performance and an
injunction are discretionary remedies and, in particular, may not be available
where damages are considered an adequate remedy at law, and (ii) enforcement may
be limited by bankruptcy, insolvency, liquidation, reorganization,
reconstruction and other similar laws affecting enforcement of creditors' rights
generally (insofar as any such law relates to the bankruptcy, insolvency or
similar event of the Borrower); and
(c) The execution and delivery of this Amendment, the performance by the
Borrower under the Loan Agreement and the other Loan Documents to which it is a
party, as amended hereby, and the consummation by the Borrower of the
acquisition of the CCIP Assets and the Office Building Assets as contemplated
hereby do not and will not require the consent or approval of any regulatory
authority or governmental authority or agency having jurisdiction over the
Borrower which has not already been obtained, nor contravene or be in conflict
with the partnership agreement or other similar agreement of the Borrower, or
the provision of any statute, judgment, order, indenture, instrument, agreement,
or undertaking, to which the Borrower is a party or by which any of its assets
or properties are or may become bound.
10. Conditions Precedent. The effectiveness of this Amendment is subject
--------------------
to the prior fulfillment of each of the following conditions:
(a) Each of the Banks shall have received a duly executed Revolving Loan
Note in substantially the form attached hereto as Exhibit A, which promissory
---------
notes shall be deemed to be "Notes" under the Loan Agreement and the other Loan
Documents for all purposes hereafter;
(b) The Administrative Agent or the Banks, as appropriate, shall have
received each of the following, in form and substance satisfactory to the
Administrative Agent and the Banks:
(i) A certificate, signed by an Authorized Signatory of the Borrower,
certifying on the date hereof that there exists no Default under the Loan
Agreement, after giving effect to this Amendment, and demonstrating the
Borrower's compliance with Sections 7.8, 7.9, 7.10 and 7.15 of the Loan
Agreement, after giving effect to this Amendment and the consummation of
the Borrower's acquisition of the CCIP Assets and the Office Building
Assets;
-15-
<PAGE>
(ii) All documentation required under Section 5.13 of the Loan Agreement
with respect to the Borrower's acquisition of the CCIP Assets and the Office
Building Assets;
(iii) Copies of the CCIP Acquisition Agreement and the Office Building
Acquisition Agreement and all other documents related to the transfer of the
CCIP Assets and the Office Building Assets to the Borrower, including, without
limitation, lien search results from appropriate jurisdictions with respect to
the CCIP Assets and the Office Building Assets, all of which shall be certified
by an Authorized Signatory to be true, complete and correct as of the date
hereof, together with duly executed UCC-1 financing statements and other
collateral documentation deemed reasonably necessary by the Administrative Agent
to reflect or perfect the Security Interest of the Administrative Agent (for
itself and on behalf of the Banks) in such assets;
(iv) Opinions of general counsel and in-house counsel to the Borrower and
its Subsidiaries, addressed to the Banks and the Administrative Agent and
satisfactory to the Administrative Agent and its special counsel, dated as of
the date hereof;
(v) Opinions or comfort letters regarding the CCIP Assets and the Office
Building Assets and the CCIP Acquisition Agreement and the Office Building
Acquisition Agreement given by FCC counsel to the Borrower, addressed to the
Banks and the Administrative Agent and satisfactory to the Administrative Agent
and its special counsel, dated as of the date hereof;
(v) Reliance letters regarding opinions of counsel to Cencom Cable Income
Partners, L.P. and AEtna Life Insurance Company, in form and substance
satisfactory to the Administrative Agent and its special counsel, dated as of
the date hereof;
(vi) Evidence satisfactory to the Administrative Agent and its special
counsel that the Borrower has acquired the CCIP Assets pursuant to the CCIP
Acquisition Agreement and the Office Building Assets pursuant to the Office
Building Acquisition Agreement;
(viii) Duly executed Certificate of Financial Condition dated as of the date
hereof;
(ix) Copies of all approvals or consents regarding the transfer to the
Borrower of all franchises and contracts
-16-
<PAGE>
constituting a part of the CCIP Assets and the Office Building Assets;
(x) Pro forma balance sheet with respect to the Borrower, after
giving effect to the transactions contemplated hereby; and
(xi) All such other documents as the Administrative Agent or any Bank
may reasonably request, certified by an appropriate governmental official
or an Authorized Signatory if so reasonably requested.
(c) The Licenses constituting a part of the CCIP Assets and the
Office Building Assets shall be in form and substance satisfactory to the
Administrative Agent, and the Administrative Agent shall have received evidence
reasonably satisfactory to it that all Necessary Authorizations, including all
necessary consents to the consummation of the Borrower's acquisition of the CCIP
Assets and the Office Building Assets and the other transactions contemplated
hereby, from the grantors of the Licenses have been obtained or made, are in
full force and effect and are not subject to any pending or threatened reversal
or cancellation, and the Administrative Agent and the Banks shall have received
a certificate of an Authorized Signatory so stating.
(d) The Administrative Agent for each of the Banks shall have
received from the Borrower for the account of the Banks an amendment fee (the
"Amendment Fee") by wire transfer of immediately available funds equal to the
product of (i) each Bank's pro rata portion of the Revolving Loan Commitment,
the Term Loan Commitment and the Fund Loan Commitment as of the day immediately
prior to the effective date of this Amendment, multiplied by (ii) 0.10%, and all
other fees payable to the Administrative Agent or any Bank in connection
herewith.
11. Loan Documents. This document shall be deemed to be a Loan Document
--------------
for all purpose.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
-17-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment or
caused it to be executed under seal by their duly authorized officers, all as of
the day and year first above written.
BORROWER: CHARTER COMMUNICATIONS ENTERTAINMENT I,
L.P., a Delaware limited partnership
By: Its General Partner
CCA ACQUISITION CORP., a Delaware
corporation
/s/ Jeffrey Sanders
By: ___________________________________
Its: Executive Vice President
ADMINISTRATIVE AGENT: TORONTO DOMINION (TEXAS), INC., as
Administrative Agent
/s/ Melissa B. Nigro
By: ___________________________________
Its: Vice President
DOCUMENTATION AGENTS: TORONTO DOMINION (TEXAS), INC., as a
Documentation Agent
/s/ Melissa B. Nigro
By: ___________________________________
Its: Vice President
CHEMICAL BANK, as a Documentation
Agent
/s/ Ann B. Kern
By: ___________________________________
Its: Vice President
THIRD AMENDMENT TO LOAN AGREEMENT
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
Signature Page 1
<PAGE>
MANAGING AGENTS: TORONTO DOMINION (TEXAS), INC., as a
Managing Agent
/s/ Melissa B. Nigro
By: ___________________________________
Its: Vice President
CHEMICAL BANK, as a Managing Agent
/s/ Ann B. Kern
By: ___________________________________
Its: Vice President
CIBC INC., as a Managing Agent
/s/ Matthew B. Jones
By: ___________________________________
Its: Director
CREDIT LYONNAIS CAYMAN ISLAND BRANCH,
as a Managing Agent
/s/ Mark D. Thorsheim
By: ___________________________________
Its: Authorized Signatory
NATIONSBANK, N.A., as a Managing Agent
/s/ Jennifer Zydney
By: ___________________________________
Its: Vice President
CO-AGENTS: BANQUE PARIBAS, as a Co-Agent
/s/ Stephen J. Healey
By: ___________________________________
Its: Vice President
/s/ John Cate
By: ___________________________________
Its: Vice President
UNION BANK, as a Co-Agent
THIRD AMENDMENT TO LOAN AGREEMENT
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
Signature Page 2
22910426 .W51
<PAGE>
By: /s/ Michael K. McShane
-------------------------------------------
Its: Vice President
BANKS: TORONTO DOMINION (TEXAS), INC., as a
Banks
By: /s/ Melissa B. Nigro
-------------------------------------------
Its: Vice President
CHEMICAL BANK, as a Bank
By: /s/ Ann B. Kern
-------------------------------------------
Its: Vice President
CIBC INC., as a Bank
By: /s/ Matthew B. Jones
-------------------------------------------
Its: Director
CREDIT LYONNAIS CAYMAN ISLAND BRANCH,
as a Bank
By: /s/ Mark D. Thorsheim
-------------------------------------------
Its: Authorized Signatory
NATIONSBANK, N.A., as a Bank
By: /s/ Jennifer Zydney
-------------------------------------------
Its: Vice President
BANQUE PARIBAS, as a Bank
By: /s/ Stephen J. Healey
-------------------------------------------
Its: Vice President
By: /s/ John Cate
-------------------------------------------
Its: Group Vice President
THIRD AMENDMENT TO LOAN AGREEMENT
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
Signature Page 3
22910426 .W51
<PAGE>
UNION BANK, as a Bank
By: /s/ Michael K. McShane
-------------------------------------------
Its: Vice President
CORESTATES BANK, N.A., as a Bank
By: /s/ Anthony B. Parisi
-------------------------------------------
Its: Assistant Vice President
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., as a Bank
By: /s/ Armund Schoen Jr.
-------------------------------------------
Its: Vice President
MERCANTILE BANK OF ST. LOUIS
NATIONAL ASSOCIATION, as a Bank
By: /s/ Gregory D. Knudsen
-------------------------------------------
Its: Vice President
NATWEST BANK N.A., as a Bank
By: /s/ Adam Bester
-------------------------------------------
Its: Vice President
FIRST NATIONAL BANK OF MARYLAND, as a
Bank
By: /s/ Mark L. Cook
-------------------------------------------
Its: Senior Vice President
VAN KAMPEN AMERICAN CAPITAL PRIME RATE
INCOME TRUST, as a Bank
By: /s/ Jeffrey W. Maillet
-------------------------------------------
Its: Senior Vice President
THIRD AMENDMENT TO LOAN AGREEMENT
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
Signature Page 4
22910426. W51
<PAGE>
BANQUE FRANCAISE DU COMMERCE EXTERIEUR,
as a Bank
By: /s/ Timothy Daileader
-------------------------------------------
Its: Assistant Vice President
By: /s/ Frederick K. Kammler
-------------------------------------------
Its: Vice President
PRIME INCOME TRUST, as a Bank
By: /s/ Rafael Scolari
-------------------------------------------
Its: Vice President--Portfolio Manager
SENIOR DEBT PORTFOLIO, as a Bank
By: Boston Management and Research, as
Investment Advisor
By: /s/ Barbara Campbell
-------------------------------------------
Its: Assistant Treasurer
MERRILL LYNCH SENIOR FLOATING RATE FUND,
INC., as a Bank
By: /s/ Anthony R. Clemente
-------------------------------------------
Its: Authorized Signatory
AERIES FINANCE LTD., as Registered
Noteholder
By: /s/ Andrew Wignall
-------------------------------------------
Its: Director
MERRILL LYNCH PRIME RATE PORTFOLIO, as a
Bank
By: /s/ Anthony R. Clemente
-------------------------------------------
Its: Authorized Signatory
THIRD AMENDMENT TO LOAN AGREEMENT
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
Signature Page 5
22910426. W51
<PAGE>
THIS PAGE MUST BE KEPT WITH THE DOCUMENT
FOURTH AMENDMENT TO LOAN AGREEMENT
04/25/97 1:36 pm
<PAGE>
Exhibit 10.5
FOURTH AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
THIS FOURTH AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT (this
"Amendment"), dated as of the 24th day of May, 1996 (the "Amendment Date"), by
and among CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P., a Delaware limited
partnership (the "Borrower"), TORONTO DOMINION (TEXAS), INC., CHEMICAL BANK,
CIBC INC., CREDIT LYONNAIS CAYMAN ISLAND BRANCH, NATIONSBANK, N.A., BANQUE
PARIBAS, UNION BANK, CORESTATES BANK, N.A., THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., MERCANTILE BANK OF ST. LOUIS NATIONAL ASSOCIATION, FLEET BANK, N.A., F/K/A
NATWEST BANK N.A., FIRST NATIONAL BANK OF MARYLAND, VAN KAMPEN AMERICAN CAPITAL
PRIME RATE INCOME TRUST, BANQUE FRANCAISE DU COMMERCE EXTERIEUR, PRIME INCOME
TRUST, SENIOR DEBT PORTFOLIO, AERIES FINANCE LTD. AND ING CAPITAL ADVISORS
(together with any financial institution which subsequently becomes a `Bank'
under the Loan Agreement, as such term is defined therein, the "Banks"), TORONTO
DOMINION (TEXAS), INC. and CHEMICAL BANK, as documentation Agents (collectively,
in such capacity, the "Documentation Agents"), TORONTO DOMINION (TEXAS), INC.,
CHEMICAL BANK, CIBC INC., CREDIT LYONNAIS CAYMAN ISLAND BRANCH, and NATIONSBANK,
N.A., as managing agents (collectively, in such capacity, the "Managing
Agents"), BANQUE PARIBAS and UNION BANK, as co-agents (collectively, in such
capacity, the "Co-Agents"), and TORONTO DOMINION (TEXAS), INC., as
administrative agent for the Documentation Agents, the Managing Agents, the Co-
Agents and the Banks (the "Administrative Agent," and together with the
Documentation Agents, the Managing Agents and the Co-Agents, the "Agents"),
W I T N E S S E T H:
-------------------
WHEREAS, the Agents, the Borrower, and the Banks are parties to that
certain Amended and Restated Loan Agreement dated as of September 29, 1995, as
amended by that certain First Amendment to Loan Agreement dated as of October
31, 1995, as amended by that certain Second Amendment to Loan Agreement dated as
of January 16, 1996, and as amended by that certain Third Amendment to Loan
Agreement dated as of March 29, 1996 (as further amended, modified and
supplemented from time to time, the "Loan Agreement"); and
WHEREAS, the Borrower has requested that the Agents and the Banks agree to
amend certain provisions of the Loan Agreement to permit the formation of an
unrestricted subsidiary and its acquisition of an AM radio station from
Belleville Broadcasting Co. and Metro Broadcasting, Inc.; and
WHEREAS, the Agents and the Banks are willing to consent to such amendments
and such other matters as set forth herein on the terms and conditions contained
herein;
<PAGE>
NOW, THEREFORE, in consideration of the premises set forth above, the
covenants and agreements hereinafter set forth, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree that all capitalized terms used herein shall have the
meanings ascribed thereto in the Loan Agreement, and further agree as follows:
1. Amendments to Article 1.
-----------------------
(a) Article 1 of the Loan Agreement, Definitions, is hereby further
-----------
amended by adding the following sentence at the end of the existing definition
of "Subsidiary":
----------
"For all purposes under this Agreement (except as otherwise set forth
herein, with respect to the Borrower, "Subsidiary" or "Subsidiaries" shall
---------- ------------
not include the Unrestricted Subsidiary."
(b) Article 1 of the Loan Agreement, Definitions, is hereby further
-----------
amended by adding the following definitions in the appropriate alphabetical
order:
"'Unrestricted Subsidiary' shall mean Charter Communications Radio St.
-----------------------
Louis, LLC, a Delaware limited liability company. The financial condition
and operations of the Unrestricted Subsidiary shall not be consolidated
with those of the Borrower and its Subsidiaries for financial reporting and
financial covenant purposes herein."
"`WIBV Acquisition Agreement' shall mean that certain Asset Purchase
--------------------------
Agreement dated as of March 16, 1996 among Charter Communications Radio St.
Louis, LLC, Belleville Broadcasting Co. and Metro Broadcasting, Inc. with
respect to the acquisition by Charter Communications Radio St. Louis, LLC
of certain radio station assets of Belleville Broadcasting Co. and Metro
Broadcasting, Inc., as such agreement may be amended, modified or
supplemented from time to time, together with all exhibits, schedules and
appendices thereto, all of which shall be in form and substance
satisfactory to the Administrative Agent."
"`WIBV Assets' shall mean those radio station assets of Belleville
-----------
Broadcasting Co. and Metro Broadcasting, Inc. to be acquired by an
Unrestricted Subsidiary of the Borrower pursuant to the WIBV Acquisition
Agreement."
-2-
<PAGE>
2. Amendments to Article 4.
-----------------------
(a) Section 4.1(e) of the Loan Agreement, Business, is hereby amended by
--------
adding the following at the end of existing Section 4.1(e):
"The Unrestricted Subsidiary is engaged solely in the business of owning
and operating an AM radio station."
(b) Section 4.1(g) of the Loan Agreement, Compliance with Law, is hereby
-------------------
amended by deleting the phrase "The Borrower and its Subsidiaries" and replacing
it with the phrase "The Borrower, its Subsidiaries and the Unrestricted
Subsidiary".
(c) Section 4.1(i) of the Loan Agreement, Litigation, is hereby amended by
----------
adding the phrase "and the Unrestricted Subsidiary" immediately following the
word "Subsidiaries" in the fifth line thereof.
(d) Section 4.1(j) of the Loan Agreement, Taxes, is hereby amended by
-----
deleting existing Section 4.1(j) in its entirety and by substituting the
following therefor:
"(j) Taxes. All federal, state and other tax returns of the
-----
Borrower, each of its Subsidiaries and the Unrestricted Subsidiary required
by law to be filed have been duly filed and all federal, state and other
taxes, including, without limitation, withholding taxes, assessments and
other governmental charges or levies required to be paid by the Borrower or
any of its Subsidiaries or the Unrestricted Subsidiary or imposed upon the
Borrower or any of its Subsidiaries or the Unrestricted Subsidiary or any
of their respective properties, income, profits or assets, which are due
and payable, have been paid, except any such (x) the payment of which the
Borrower or any of its Subsidiaries or the Unrestricted Subsidiary is
diligently contesting in good faith by appropriate proceedings, (y) for
which adequate reserves have been provided on the books of the Borrower,
the Unrestricted Subsidiary or the Subsidiary of the Borrower involved, and
(z) as to which no Lien other than a Permitted Lien has attached and no
foreclosure, distraint, sale or similar proceedings have been commenced.
The charges, accruals and reserves on the books of the Borrower and each of
its Subsidiaries and the Unrestricted Subsidiary in respect of taxes are,
in the judgment of the Borrower, adequate. All pro forma financial
information provided to the Agents and the Banks in connection with this
Agreement has been based upon reasonable assumptions and prepared in good
faith."
-3-
<PAGE>
(e) Section 4.1(l) of the Loan Agreement, ERISA, is hereby amended by
-----
adding the following at the end of existing Section 4.1(l):
"For purposes of this Section 4.1(l), the term `Subsidiaries' shall include
the Unrestricted Subsidiary."
(f) Section 4.1(m) of the Loan Agreement, Compliance with Regulations G, T,
---------------------------------
U and X, is hereby amended by adding the following at the end of existing
- -------
Section 4.1(m):
"For purposes of this Section 4.1(m), the term `Subsidiaries' shall include
the Unrestricted Subsidiary."
(g) Section 4.1(q) of the Loan Agreement, Accuracy and Completeness of
----------------------------
Information, is hereby amended by (i) adding the phrase "or the Unrestricted
- -----------
Subsidiary" immediately following the word "Subsidiaries" in the third and
fourth lines thereof and (ii) adding the phrase "and the Unrestricted
Subsidiary" immediately following the word "Subsidiaries" in the tenth line
thereof.
3. Amendments to Article 5.
-----------------------
(a) Section 5.2 of the Loan Agreement, Business; Compliance with Law, is
-----------------------------
hereby amended by adding the following at the end of existing Section 5.2:
"The Borrower will cause the Unrestricted Subsidiary to (a) engage solely
in the business of owning and operating an AM radio station, and (b) comply
in all material respects with the requirements of all Applicable Law."
(b) Section 5.5 of the Loan Agreement, Insurance, is hereby amended by
---------
adding the phrase "and the Unrestricted Subsidiary" immediately following the
word "Subsidiaries" each time it appears therein.
(c) Section 5.6 of the Loan Agreement, Payment of Taxes and Claims, is
---------------------------
hereby amended by adding the phrase "and the Unrestricted Subsidiary"
immediately following the word "Subsidiaries" in the second and seventeenth
lines thereof.
(d) Section 5.11 of the Loan Agreement, Indemnity, is hereby amended by
---------
adding the phrase "or the Unrestricted Subsidiary" immediately following the
phrase "of the Borrower" in the thirteenth and fifteenth lines thereof.
-4-
<PAGE>
4. Amendments to Article 6.
-----------------------
(a) Section 6.5(e) of the Loan Agreement, Copies of Other Reports, is
-----------------------
hereby amended by adding the phrase "or the Unrestricted Subsidiary" immediately
following the word "Subsidiaries" in the sixth line thereof.
(b) Section 6.6(a) of the Loan Agreement, Notice of Litigation and Other
------------------------------
Matters, is hereby amended by (i) adding the phrase "or the Unrestricted
- -------
Subsidiary" immediately following the word "Subsidiaries" in the fourth line
thereof and (ii) deleting the phrase "or any Subsidiary of the Borrower" in the
sixth line and replacing it with "or its Subsidiaries or the Unrestricted
Subsidiary".
(c) Section 6.6(b) of the Loan Agreement, Notice of Litigation and Other
------------------------------
Matters, is hereby amended by deleting the phrase "or any Subsidiary of the
- -------
Borrower" beginning in the third line and replacing it with "or its Subsidiaries
or the Unrestricted Subsidiary".
5. Amendments to Article 7.
-----------------------
(a) Section 7.4 of the Loan Agreement, Liquidation, Change in Ownership,
---------------------------------
Disposition or Acquisition of Assets, is hereby amended by deleting subsection
- ------------------------------------
7.4(b)(iv) in its entirety and by substituting the following therefor:
"(iv) so long as no Default hereunder then exists or would be caused
thereby, loans, advances or investments permitted pursuant to Section
7.6(vii) hereof and acquisitions of cable television systems for a purchase
price not to exceed $7,500,000 in the aggregate in any fiscal year and
$15,000,000 in the aggregate during the term hereof, plus the aggregate
amount of any Excess Cash Flow which, in accordance with Section 7.7(c)
hereof, would be permitted to be distributed to the Partners and which are
not so distributed,"
(b) Section 7.6 of the Loan Agreement, Investments, is hereby amended by
-----------
(i) deleting the word "and" immediately before the "(vi)" in the twenty-fifth
line thereof and (ii) by adding the following at the end thereof immediately
before the period:
"and (vii) loans or advances to, and other investments in, the Unrestricted
Subsidiary, in an aggregate outstanding amount not to exceed $4,000,000
including, without limitation, the acquisition by the Unrestricted
Subsidiary of the WBIV Assets pursuant to the WBIV Acquisition Agreement."
-5-
<PAGE>
6. Counterparts. This Amendment may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same instrument.
7. Governing Law. This Amendment shall be construed in accordance with
-------------
and governed by the laws of the State of New York.
8. Severability. Any provision of this Amendment which is prohibited or
------------
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof in that
jurisdiction or affecting the validity or enforceability of such provision in
any other jurisdiction.
9. No Other Amendment or Waiver. Except for the amendments set forth
----------------------------
above, the text of the Loan Agreement and all other Loan Documents shall remain
unchanged and in full force and effect. No waiver by the Administrative Agent,
the other Agents or the Banks under the Loan Agreement or any other Loan
Document is granted or intended except as expressly set forth herein, and the
Administrative Agent, the other Agents and the Banks expressly reserve the right
to require strict compliance in all other respects (whether or not in connection
with any Requests for Advance). Except as set forth herein, the amendments
agreed to herein shall not constitute a modification of the Loan Agreement or
any of the other Loan Documents, or a course of dealing with the Administrative
Agent, the other Agents and the Banks, or any of them, at variance with the Loan
Agreement or any of the other Loan Documents, such as to require further notice
by the Administrative Agent, the other Agents, the Banks, the Majority Banks, or
any of them, to require strict compliance with the terms of the Loan Agreement
and the other Loan Documents in the future.
10. Representations and Warranties. The Borrower hereby represents and
------------------------------
warrants in favor of the Agents and the Banks as follows:
(a) The Borrower has the partnership power and authority (i) to enter into
this Amendment and (ii) to do all other acts and things as are required or
contemplated hereunder to be done, observed and performed by it;
(b) This Amendment has been duly authorized, validly executed and delivered
by one or more Authorized Signatories of the Borrower and constitutes the legal,
valid and binding obligation of the Borrower, enforceable against the Borrower
in accordance with its terms, subject, as to enforcement of remedies, to the
following qualifications: (i) an order of
-6-
<PAGE>
specific performance and an injunction are discretionary remedies and, in
particular, may not be available where damages are considered an adequate remedy
at law, and (ii) enforcement may be limited by bankruptcy, insolvency,
liquidation, reorganization, reconstruction and other similar laws affecting
enforcement of creditors' rights generally (insofar as any such law relates to
the bankruptcy, insolvency or similar event of the Borrower); and
(c) The execution and delivery of this Amendment, the performance by the
Borrower under the Loan Agreement and the other Loan Documents to which it is a
party, as amended hereby, do not and will not require the consent or approval
of any regulatory authority or governmental authority or agency having
jurisdiction over the Borrower which has not already been obtained, nor
contravene or be in conflict with the partnership agreement or other similar
agreement of the Borrower, or the provision of any statute, judgment, order,
indenture, instrument, agreement, or undertaking, to which the Borrower is a
party or by which any of its assets or properties are or may become bound.
11. Conditions Precedent. The effectiveness of this Amendment is subject
--------------------
to receipt by the Administrative Agent or the Banks, as appropriate, of each of
the following, in form and substance satisfactory to the Administrative Agent
and the Banks:
(a) A certificate, signed by an Authorized Signatory of the Borrower,
certifying on the date hereof that there exists no Default under the Loan
Agreement, after giving effect to this Amendment, and demonstrating the
Borrower's compliance with Sections 7.8, 7.9, 7.10 and 7.15 of the Loan
Agreement, after giving effect to this Amendment and the transactions
contemplated hereby; and
(b) All such other documents as the Administrative Agent or any Bank may
reasonably request, certified by an appropriate governmental official or an
Authorized Signatory if so reasonably requested.
12. Loan Documents. This document shall be deemed to be a Loan Document
--------------
for all purposes.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
-7-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment or caused
it to be executed under seal by their duly authorized officers, all as of the
day and year first above written.
BORROWER: CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P., a
Delaware limited partnership
By: Its General Partner
CCA ACQUISITION CORP., a Delaware corporation
By: /s/ Barry L. Babcock
-------------------------------------------
Its: Secretary
ADMINISTRATIVE AGENT: TORONTO DOMINION (TEXAS), INC., as
Administrative Agent
By: /s/ Diane Bailey
-------------------------------------------
Its: Vice President
DOCUMENTATION AGENTS: TORONTO DOMINION (TEXAS), INC., as a
Documentation Agent
By: /s/ Diane Bailey
-------------------------------------------
Its: Vice President
CHEMICAL BANK, as a Documentation
Agent
By: /s/ John Huber, III
-------------------------------------------
Its: Managing Director
FOURTH AMENDMENT TO LOAN AGREEMENT
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
Signature Page 1
<PAGE>
MANAGING AGENTS: TORONTO DOMINION (TEXAS), INC., as a
Managing Agent
By: /s/ Diane Bailey
-------------------------------------------
Its: Vice President
CHEMICAL BANK, as a Managing Agent
By: /s/ John J. Huber, III
-------------------------------------------
Its: Managing Director
CIBC INC., as a Managing Agent
By: /s/ Matthew B. Jones
-------------------------------------------
Its: Vice President
CREDIT LYONNAIS CAYMAN ISLAND BRANCH,
as a Managing Agent
By: /s/ Mark Thorsheim
---------------------------------------------
Its: Authorized Signatory
NATIONSBANK, N.A., as a Managing Agent
By: /s/ Jennifer Zydney
--------------------------------------------
Its: Vice President
CO-AGENTS: BANQUE PARIBAS, as a Co-Agent
By: /s/ Thomas Brandt
----------------------------------------------
Its: Vice President
By: /s/ John J. Acker
----------------------------------------------
Its: Vice President
UNION BANK, as a Co-Agent
FOURTH AMENDMENT TO LOAN AGREEMENT
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
Signature Page 2
<PAGE>
/s/ Michael K. McShane
By:______________________________________________
Its: Vice President
BANKS: TORONTO DOMINION (TEXAS), INC., as a
Bank
/s/ Diane Bailey
By:______________________________________________
Its: Vice President
CHEMICAL BANK, as a Bank
/s/ John J. Huber, III
By:______________________________________________
Its: Managing Director
CIBC INC., as a Bank
/s/ Matthew B. Jones
By:______________________________________________
Its: Vice President
CREDIT LYONNAIS CAYMAN ISLAND BRANCH,
as a Bank
/s/ Mark Thorsheim
By:______________________________________________
Its: Authorized Signatory
NATIONSBANK, N.A., as a Bank
/s/ Jennifer Zydney
By:______________________________________________
Its: Vice President
BANQUE PARIBAS, as a Bank
/s/ Thomas Brandt
By:______________________________________________
Its: Vice President
/s/ John J. Acker
By:______________________________________________
Its: Vice President
FOURTH AMENDMENT TO LOAN AGREEMENT
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
Signature Page 3
<PAGE>
UNION BANK, as a Bank
/s/ Matthew K. McShane
By:______________________________________________
Its: Vice President
CORESTATES BANK, N.A., as a Bank
Anthony B. Parisi
By:______________________________________________
Its: Vice President
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., as a Bank
/s/ Armund Schoen, Jr.
By:______________________________________________
Its: Vice President and Deputy General Manager
MERCANTILE BANK OF ST. LOUIS
NATIONAL ASSOCIATION, as a Bank
/s/ Gregory D. Knudsen
By:______________________________________________
Its: Vice President
FLEET BANK, N.A., f/k/a NatWest Bank N.A., as a Bank
/a/ Adam Bester
By:______________________________________________
Its: Vice President
FIRST NATIONAL BANK OF MARYLAND, as a Bank
/s/ Mark D. Jones
By:______________________________________________
Its: Senior Vice President
VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME TRUST, as
a Bank
/s/ Jeffrey Maillet
By:______________________________________________
Its: Senior Vice President
FOURTH AMENDMENT TO LOAN AGREEMENT
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
Signature Page 4
<PAGE>
BANQUE FRANCAISE DU COMMERCE EXTERIEUR, as a Bank
/s/ Brian J. Cumberland
By:______________________________________________
Its: Assistant Treasurer
/s/ Frederick K. Kammler
By:______________________________________________
Its: Vice President
PRIME INCOME TRUST, as a Bank
/s/ Rafael Scolari
By:______________________________________________
Its: Vice President - Portfolio Manager
SENIOR DEBT PORTFOLIO, as a Bank
By: Boston Management and Research, as Investment
Advisor
[blank]
By:______________________________________________
Its: [blank]
AERIES FINANCE LTD., as a Registered Noteholder
/s/ Ian D. Moore
By:______________________________________________
Its: Director
FOURTH AMENDMENT TO LOAN AGREEMENT
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
Signature Page 5
<PAGE>
ING CAPITAL ADVISORS, as a Bank
/s/ Kathleen A. Lenarcic
By:______________________________________________
Its: Vice President
FOURTH AMENDMENT TO LOAN AGREEMENT
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
Signature Page 6
<PAGE>
THIS PAGE MUST BE KEPT WITH THE DOCUMENT.
FIFTH AMENDMENT TO LOAN AGREEMENT
04/25/97 12:50 pm
<PAGE>
Exhibit 10.6
FIFTH AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
THIS FIFTH AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT (this
"Amendment"), dated as of the 29th day of November, 1996, by and among CHARTER
COMMUNICATIONS ENTERTAINMENT I, L.P., a Delaware limited partnership (the
"Borrower"), TORONTO DOMINION (TEXAS), INC., THE CHASE MANHATTAN BANK (FORMERLY,
CHEMICAL BANK), CIBC INC., CREDIT LYONNAIS CAYMAN ISLAND BRANCH, NATIONSBANK,
N.A., BANQUE PARIBAS, UNION BANK OF CALIFORNIA, N.A. (FORMERLY, UNION BANK),
CORESTATES BANK, N.A., THE LONG-TERM CREDIT BANK OF JAPAN, LTD., MERCANTILE BANK
OF ST. LOUIS NATIONAL ASSOCIATION, FLEET BANK, N.A., FIRST NATIONAL BANK OF
MARYLAND, VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME TRUST, BANQUE FRANCAISE
DU COMMERCE EXTERIEUR, PRIME INCOME TRUST, SENIOR DEBT PORTFOLIO, AERIES FINANCE
LTD., ING CAPITAL ADVISORS, INC., ABN AMRO BANK N.V., SOCIETE GENERALE, THE
FIRST NATIONAL BANK OF BOSTON, CAPTIVA FINANCE LTD., BANQUE NATIONALE DE PARIS,
THE SUMITOMO BANK, LIMITED, CHICAGO BRANCH AND CHASE SECURITIES INC. (together
with any financial institution which subsequently becomes a `Bank' under the
Loan Agreement, as such term is defined therein, the "Banks"), TORONTO DOMINION
(TEXAS), INC. and THE CHASE MANHATTAN BANK (FORMERLY, CHEMICAL BANK), as
documentation agents (collectively, in such capacity, the "Documentation
Agents"), TORONTO DOMINION (TEXAS), INC., THE CHASE MANHATTAN BANK (FORMERLY,
CHEMICAL BANK), CIBC INC., CREDIT LYONNAIS CAYMAN ISLAND BRANCH, and
NATIONSBANK, N.A., as managing agents (collectively, in such capacity, the
"Managing Agents"), BANQUE PARIBAS, UNION BANK OF CALIFORNIA, N.A. (FORMERLY,
UNION BANK), ABN AMRO BANK N.V., SOCIETE GENERALE, FLEET BANK, N.A., CORESTATES
BANK, N.A. AND THE FIRST NATIONAL BANK OF BOSTON, as co-agents (collectively, in
such capacity, the "Co-Agents"), and TORONTO DOMINION (TEXAS), INC., as
administrative agent for the Documentation Agents, the Managing Agents, the Co-
Agents and the Banks (the "Administrative Agent," and together with the
Documentation Agents, the Managing Agents and the Co-Agents, the "Agents"),
W I T N E S S E T H:
-------------------
WHEREAS, the Agents, the Borrower, and the Banks are parties to that
certain Amended and Restated Loan Agreement dated as of September 29, 1995, as
amended by that certain First Amendment to Loan Agreement dated as of October
31, 1995, that certain Second Amendment to Loan Agreement dated as of January
16, 1996, that certain Third Amendment to Loan Agreement dated as of March 29,
1996 and that certain Fourth Amendment to Loan Agreement dated as of May 24,
1996 (as further amended, modified and supplemented from time to time, the "Loan
Agreement"); and
<PAGE>
WHEREAS, the Borrower has requested that the Agents and the Banks agree to
amend certain provisions of the Loan Agreement to permit the Borrower to acquire
cable television systems located in Jefferson County, Missouri from Masada Cable
Partners, L.P. and to finance additional capital expenditures, acquisitions,
working capital, fees and other general corporate needs; and
WHEREAS, the Agents and the Banks are willing to consent to such amendments
and such other matters as set forth herein on the terms and conditions contained
herein;
NOW, THEREFORE, in consideration of the premises set forth above, the
covenants and agreements hereinafter set forth, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree that all capitalized terms used herein shall have the
meanings ascribed thereto in the Loan Agreement, and further agree as follows:
1. Amendments to Article 1.
-----------------------
(a) Article 1 of the Loan Agreement, Definitions, is hereby amended by
-----------
deleting the existing definitions of "Commitment Ratios," "Maturity Date,"
----------------- -------------
"Revolving Loan Commitment" and "Revolving Loan Notes" in their entireties and
------------------------- --------------------
by substituting the following therefor:
"`Commitment Ratios' shall mean the percentages in which the Banks are
-----------------
severally bound to make Advances to the Borrower under the respective
Commitments, as set forth below (together with dollar amounts) as of the
date of the Fifth Amendment to this Agreement:
<TABLE>
<CAPTION>
Portion of
Portion of Revolving Portion of Term Loan Revolving Loan Fund Loan
Term Loan Loan Fund Loan Total Dollar Commitment Commitment Commitment
Banks Commitment Commitment Commitment Commitment Ratio Ratio Ratio
- ----------------- --------------- --------------- --------------- --------------- ------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Toronto $ 6,211,985.62 $ 10,118,014.38 $18,250,000.00 $ 34,580,000.00 2.218566293% 7.227153129% 21.470588235%
Dominion
(Texas), Inc.
The Chase 5,820,912.28 13,009,087.72 5,750,000.00 24,580,000.00 2.078897243% 9.292205514% 6.764705882%
Manhattan
Bank
(formerly,
Chemical
Bank)
CIBC Inc. 17,202,370.00 17,377,630.00 0.00 34,580,000.00 6.143703571% 12.412592857% 0.000000000%
Credit 17,202,370.00 17,377,630.00 0.00 34,580,000.00 6.143703571% 12.412592857% 0.000000000%
Lyonnais
Cayman
Island Branch
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
Portion of
Portion of Revolving Portion of Term Loan Revolving Loan Fund Loan
Term Loan Loan Fund Loan Total Dollar Commitment Commitment Commitment
Banks Commitment Commitment Commitment Commitment Ratio Ratio Ratio
- ----------------- --------------- --------------- --------------- --------------- ------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
NationsBank, 17,202,370.00 17,377,630.00 0.00 34,580,000.00 6.143703571% 12.412592857% 0.000000000%
N.A.
Banque 19,026,666.67 2,073,333.33 0.00 21,100,000.00 6.795238096% 1.480952379% 0.000000000%
Paribas
Union Bank of 23,000,000.00 2,000,000.00 0.00 25,000,000.00 8.214285714% 1.428571429% 0.000000000%
California,
N.A.
(formerly,
Union Bank)
CoreStates 14,000,000.00 11,000,000.00 5,000,000.00 30,000,000.00 5.000000000% 7.857142857% 5.882352941%
Bank, N.A.
The Long- 14,000,000.00 6,000,000.00 0.00 20,000,000.00 5.000000000% 4.285714286% 0.000000000%
Term Credit
Bank of
Japan, Ltd.
Mercantile 9,000,000.00 1,000,000.00 0.00 10,000,000.00 3.214285714% 0.714285714% 0.000000000%
Bank of St.
Louis National
Association
Fleet Bank, 14,000,000.00 11,000,000.00 0.00 25,000,000.00 5.000000000% 7.857142857% 0.000000000%
N.A.
First National 14,000,000.00 1,000,000.00 0.00 15,000,000.00 5.000000000% 0.714285714% 0.000000000%
Bank of
Maryland
Van Kampen 30,000,000.00 0.00 8,500,000.00 38,500,000.00 10.714285714% 0.000000000% 10.000000000%
American
Capital Prime
Rate Income
Trust
Banque 9,333,333.33 5,666,666.67 0.00 15,000,000.00 3.333333332% 4.047619050% 0.000000000%
Francaise du
Commerce
Exterieur
Prime Income 0.00 0.00 10,000,000.00 10,000,000.00 0.000000000% 0.000000000% 11.764705882%
Trust
Senior Debt 0.00 0.00 5,000,000.00 5,000,000.00 0.000000000% 0.000000000% 5.882352941%
Portfolio
Aeries 0.00 0.00 5,000,000.00 5,000,000.00 0.000000000% 0.000000000% 5.882352941%
Finance Ltd.
ING Capital 0.00 0.00 12,500,000.00 12,500,000.00 0.000000000% 0.000000000% 14.705882353%
Advisors
ABN AMRO 18,421,050.00 6,578,950.00 0.00 25,000,000.00 6.578946429% 4.699250000% 0.000000000%
Bank N.V.
</TABLE>
-3-
<PAGE>
<TABLE>
<CAPTION>
Portion of
Portion of Revolving Portion of Term Loan Revolving Loan Fund Loan
Term Loan Loan Fund Loan Total Dollar Commitment Commitment Commitment
Banks Commitment Commitment Commitment Commitment Ratio Ratio Ratio
- ----------------- --------------- --------------- --------------- --------------- ------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Societe 18,421,050.00 6,578,950.00 0.00 25,000,000.00 6.578946429% 4.699250000% 0.000000000%
Generale
The First 18,421,050.00 6,578,950.00 0.00 25,000,000.00 6.578946429% 4.699250000% 0.000000000%
National Bank
of Boston
Banque 7,368,421.05 2,631,578.95 0.00 10,000,000.00 2.631578946% 1.879699250% 0.000000000%
Nationale de
Paris
The Sumitomo 7,368,421.05 2,631,578.95 0.00 10,000,000.00 2.631578946% 1.879699250% 0.000000000%
Bank,
Limited,
Chicago
Branch
Captiva 0.00 0.00 5,000,000.00 5,000,000.00 0.000000000% 0.000000000% 5.882352941%
Finance Ltd.
Chase 0.00 0.00 10,000,000.00 10,000,000.00 0.000000000% 0.000000000% 11.764705882%
Securities,
Inc.
Total $280,000,000.00 $140,000,000.00 $85,000,000.00 $505,000,000.00 100.00% 100.00% 100.00%
</TABLE>
"'Maturity Date' shall mean June 30, 2004 or such earlier date as
-------------
payment of the Loans under the Revolving Loan Commitment or the Term Loan
Commitment shall be due (whether by acceleration or otherwise)."
"'Revolving Loan Commitment' shall mean the several obligations of the
-------------------------
Banks issuing a Revolving Loan Commitment as indicated in the definition of
"Commitment Ratios" to advance the sum of up to $140,000,000 at any one
time outstanding, in accordance with their respective Revolving Loan
Commitment Ratios set forth in the definition of "Commitment Ratios," to
the Borrower pursuant to the terms hereof, as such obligations may be
reduced from time to time pursuant to the terms hereof."
"'Revolving Loan Notes' shall mean those certain second amended and
--------------------
restated revolving promissory notes (including Registered Notes) in the
aggregate principal amount of $140,000,000, one such note issued to each of
the Banks having a Revolving Loan Commitment hereunder by the Borrower,
each one substantially in the form of Exhibit A to the Fifth Amendment to
---------
this Agreement, and any extensions, renewals, amendments or substitutions
to any of the foregoing."
-4-
<PAGE>
(b) Article 1 of the Loan Agreement, Definitions, is hereby further
amended by adding the following definitions in the appropriate alphabetical
order:
"'Masada' shall mean Masada Cable Partners, L.P., a Delaware limited
------
partnership."
"'Masada Acquisition Agreement' shall mean that certain CATV Asset
----------------------------
Purchase Agreement dated as of May 28, 1996 among Masada Cable Partners,
L.P. and CM Acquisition Corp. as assigned pursuant to that certain Amended
and Restated Assignment of Purchase Rights dated as of November 1, 1996
among CM Acquisition Corp and the Borrower, Charter Communications
Properties, Inc. and Charter Communications, L.P., as such agreement may be
amended, modified or supplemented from time to time, together with all
exhibits, schedules and appendices thereto, all of which shall be in form
and substance satisfactory to the Administrative Agent."
"'Masada Acquisition Date' shall mean the date on which the Borrower
-----------------------
acquires the Masada Assets pursuant to the Masada Acquisition Agreement."
"'Masada Assets' shall mean those cable television assets of Masada
-------------
located in Franklin County, Jefferson County and St. Francois County,
Missouri to be acquired by the Borrower pursuant to the Masada Acquisition
Agreement."
2. Amendments to Article 2.
-----------------------
(a) Section 2.5 of the Loan Agreement, Revolving Loan Commitment
-------------------------
Reductions, is hereby amended by deleting the existing subsection (a) in its
- ----------
entirety and by substituting the following in lieu thereof:
"(a) Mandatory. Commencing September 30, 1997 and at the end of
---------
each calendar quarter thereafter, the Revolving Loan Commitment as in
effect on September 29, 1997 shall be automatically reduced by the
percentages set forth below:
<TABLE>
<CAPTION>
Quarterly Percentage
Reduction of Revolving Loan
Commitment as in Effect
Dates of Reduction on September 29, 1997
------------------ ---------------------
<S> <C>
September 30, 1997
and December 31, 1997 1.0500%
</TABLE>
-5-
<PAGE>
<TABLE>
<CAPTION>
Quarterly Percentage
Reduction of Revolving Loan
Commitment as in Effect
Dates of Reduction on September 29, 1997
------------------ ---------------------
<S> <C>
March 31, 1998, June 30,
1998, September 30, 1998
and December 31, 1998 2.2500%
March 31, 1999, June 30,
1999, September 30, 1999
and December 31, 1999 3.0000%
March 31, 2000, June 30,
2000, September 30, 2000
and December 31, 2000 3.0625%
March 31, 2001, June 30,
2001, September 30, 2001
and December 31, 2001 4.1250%
March 31, 2002, June 30,
2002, September 30, 2002
and December 31, 2002 5.0625%
March 31, 2003, June 30,
2003, September 30, 2003
and December 31, 2003 5.3125%
March 31, 2004
and June 30, 2004 3.3250%
</TABLE>
The Borrower shall make a repayment of the Revolving Loans outstanding,
together with accrued interest thereon, on or before the effective date of
each reduction in the Revolving Loan Commitment under this Section 2.5(a),
such that the aggregate principal amount of the Revolving Loans outstanding
at no time exceeds the Revolving Loan Commitment as so reduced. In
addition, any remaining unpaid principal and interest under the Revolving
Loan Commitment shall be due and payable in full on the Maturity Date."
(b) Section 2.7 of the Loan Agreement, Repayments, is hereby amended
----------
by deleting the existing subsection (a)(i) thereto in its entirety and by
substituting the following in lieu thereof:
"(i) For the Term Loan. Commencing September 30, 1997, the
-----------------
principal balance of the Term Loan shall be amortized in consecutive
quarterly installments on September
-6-
<PAGE>
30, December 31, March 31 and June 30 of each year until paid in full, in
such amounts as follows:
<TABLE>
<CAPTION>
Percent of Principal
Due on Last Day
Payment Dates of Each Quarter
------------- ---------------
<S> <C>
September 30, 1997
and December 31, 1997 1.0500%
March 31, 1998, June 30,
1998, September 30, 1998
and December 31, 1998 2.2500%
March 31, 1999, June 30,
1999, September 30, 1999
and December 31, 1999 3.0000%
March 31, 2000, June 30,
2000, September 30, 2000
and December 31, 2000 3.0625%
March 31, 2001, June 30,
2001, September 30, 2001
and December 31, 2001 4.1250%
March 31, 2002, June 30,
2002, September 30, 2002
and December 31, 2002 5.0625%
March 31, 2003, June 30,
2003, September 30, 2003
and December 31, 2003 5.3125%
March 31, 2004
and June 30, 2004 3.3250%"
</TABLE>
(c) Section 2.7 of the Loan Agreement, Repayment, is hereby further
---------
amended by deleting the existing subsection 2.7(b) thereto in its entirety and
by substituting the following in lieu thereof:
"(b) Repayments Upon Sales of Assets and Asset Swaps. Except as
-----------------------------------------------
provided below with respect to Permitted Asset Swaps, in the event of any
sale, lease, transfer or other disposition of assets permitted hereunder,
excluding any such sale, lease, transfer or other disposition of assets by
the Borrower or any of its Subsidiaries in the ordinary course of business
(collectively, "Asset Sales"), to the extent that the Net Proceeds with
respect thereto (when
-7-
<PAGE>
taken together with the Net Proceeds of all other Asset Sales made
subsequent to the Agreement Date) are in excess of $7,500,000 in the
aggregate for all Asset Sales made during the period from the Agreement
Date to the Final Maturity Date, the Borrower shall, on the date of such
sale, lease, transfer or other disposition, make a repayment of the
principal of the Term Loan and the Fund Loans then outstanding, and the
Revolving Loan Commitment shall be permanently and automatically reduced,
such that the outstanding principal amount of the Term Loan, the
outstanding principal amount of the Fund Loans and the amount of the
Revolving Loan Commitment are reduced, on a weighted pro rata basis among
the outstanding principal amount of the Term Loan and the Fund Loans and
the amount of the Revolving Loan Commitment, in an aggregate amount equal
to the Net Proceeds in excess of the first $7,500,000 of all such Asset
Sales. Any such Net Proceeds which constitute a portion of the sales price
which was previously held in escrow or paid in installments shall be paid
to the Banks as a repayment of principal, and the Revolving Loan Commitment
shall be permanently and automatically reduced, all to the extent required
by the terms hereof, at such time as such Net Proceeds are received by the
Borrower. In the event the Borrower elects to enter into a Permitted Asset
Swap, the Borrower shall, on the date it sells, leases, transfers or
otherwise disposes of all or substantially all of its interests in the
cable television system owned by the Borrower or any of its Subsidiaries in
the State of Connecticut, deposit in an escrow account with the
Administrative Agent an amount equal to the Net Proceeds of such sale,
lease, transfer or other disposition. The amount deposited in such escrow
account shall be held in such escrow account until the earlier to occur of
the consummation of the Permitted Asset Swap or the first anniversary of
the sale, lease, transfer or other disposition of such Connecticut assets
or interests relating thereto. Amounts held in such escrow account may be
invested as permitted under Section 7.6(i), (ii) and (iii) hereof, or as
otherwise agreed to by the Borrower and the Administrative Agent. Net
Proceeds held in escrow by the Administrative Agent may be used by the
Borrower at any time prior to the first anniversary of such sale, lease,
transfer or other disposition of Connecticut assets or interests to
consummate a Permitted Asset Swap or the Borrower may direct the
Administrative Agent to repay the principal amount of the Term Loan and the
Fund Loans and to permanently and automatically reduce the Revolving Loan
Commitment (on a weighted pro rata basis among the outstanding principal
amount of the Term Loan and the Fund Loans and the amount of the Revolving
Loan Commitment) in a like amount. On such first anniversary date, the
outstanding principal amount of
-8-
<PAGE>
the Term Loan and the Fund Loans shall be automatically repaid and the
amount of the Revolving Loan Commitment shall be permanently and
automatically reduced (on a weighted pro rata basis among the outstanding
principal amount of the Term Loan and the Fund Loans and the amount of the
Revolving Loan Commitment) in an aggregate amount equal to the amount of
all Net Proceeds then remaining in escrow with the Administrative Agent
pursuant to this Section 2.7(b). All amounts paid pursuant to this
subsection shall be applied to principal of the Term Loan and the Fund
Loans, respectively, pro rata over the applicable repayment schedule set
forth in Section 2.7(a) above."
(d) Section 2.7 of the Loan Agreement, Repayment, is hereby further
---------
amended by deleting the date "April 30, 1998" appearing in the first sentence of
subsection (c), "Annual Excess Cash Flow Recapture," and substituting the date
---------------------------------
"April 30, 1999" in lieu thereof.
3. Amendments to Article 5.
-----------------------
(a) Section 5.9 of the Loan Agreement, Use of Proceeds, is hereby
---------------
amended by deleting the existing Section 5.9 in its entirety and by substituting
the following in lieu thereof:
"Section 5.9 Use of Proceeds. On and after the effective date
---------------
of the Fifth Amendment to this Agreement, the Borrower will use the
aggregate proceeds of the Revolving Loans (as set forth in the Requests for
Advances issued from time to time hereunder) to finance Capital
Expenditures, to finance the acquisition of the Masada Assets pursuant to
the Masada Acquisition Agreement and related transaction costs, for working
capital and for other partnership needs as permitted under this Agreement."
(b) Section 5.12 of the Loan Agreement, Interest Rate Hedging, is
---------------------
hereby amended by adding the following proviso at the end of the first sentence
of such Section immediately before the period:
"; provided, however, that, prior to February 27, 1997, no Default shall be
deemed to have arisen under this Section solely as a result of the
Borrower's failure to comply with the foregoing requirement with respect to
Advances made under the Revolving Loan Commitment which cause the aggregate
principal amount of Advances outstanding thereunder to exceed
$100,000,000."
-9-
<PAGE>
4. Amendments to Article 7.
-----------------------
(a) Section 7.7 of the Loan Agreement, Restricted Payments and
-----------------------
Purchases, is hereby amended by deleting the existing subsection (b) thereof in
- ---------
its entirety and by substituting the following in lieu thereof:
"(b) so long as no Default hereunder then exists or would be
caused thereby, during the period from January 1, 1995 through and
including December 31, 2000, (i) pay management fees and financial advisory
fees in an aggregate amount for any fiscal year not to exceed $5,450,000,
provided, that, in the event the Leverage Ratio for each of the two (2)
most recently completed fiscal quarters for which financial statements of
the Borrower are required to have been provided to the Banks pursuant to
Section 6.1 hereof is less than 5.50 to 1.0, the Borrower may pay
management fees and financial advisory fees for the fiscal year during
which the second such fiscal quarter falls up to the greater of $5,450,000
or an aggregate amount not to exceed three percent (3%) of gross revenues
of the Borrower and its Restricted Subsidiaries on a consolidated basis for
such year, as determined in accordance with GAAP, and (ii) reimburse Kelso
for all reasonable out of pocket expenses incurred by it in connection with
its services under the Financial Advisory Agreement, all as the same may
become due and payable under the Management Agreement and the Financial
Advisory Agreement, or, in the case of the General Partner, the
predecessors to such Agreements;"
(b) Section 7.7 of the Loan Agreement, Restricted Payments and
-----------------------
Purchases, is hereby further amended by deleting the period at the end of
- ---------
existing subsection (h) thereof and substituting a semi-colon therefor, and
adding the following as a new subsection (i) thereof:
"(i) so long as no Default hereunder then exists or would be
caused thereby, pay Kelso and/or the Manager a search and acquisition fee
in an aggregate amount not to exceed $480,000 on the Masada Acquisition
Date."
(c) Section 7.8 of the Loan Agreement, Leverage Ratio, is hereby
--------------
amended by deleting the existing Section in its entirety and by substituting the
following in lieu thereof:
"Section 7.8 Leverage Ratio. (a) As of the end of any calendar
--------------
quarter, and (b) at the time of any Advance which increases the outstanding
principal amount of the Loans (after giving effect to such Advance), the
Borrower shall not permit the Leverage Ratio for the calendar quarter end
being tested in the case of Section 7.8(a) above, or the
-10-
<PAGE>
most recent quarter end for which financial statements are required to have
been provided to the Agents and the Banks pursuant to Section 6.1 hereof in
the case of Section 7.8(b) above and after giving effect to the Advance as
of such date, to exceed the ratios set forth below for calculation dates
using financial statements for periods ending during the periods shown
below:
<TABLE>
<CAPTION>
Leverage
Period Ratio
------ -----
<S> <C>
January 18, 1995 6.50:1
through March 31, 1997
From April 1, 1997 6.25:1
through September 30, 1997
From October 1, 1997 6.00:1
through March 31, 1998
From April 1, 1998 5.50:1
through December 31, 1998
From January 1, 1999 5.00:1
through June 30, 1999
From July 1, 1999 4.50:1
through December 31, 1999
From January 1, 2000 and 4.00:1"
thereafter
</TABLE>
(d) Section 7.9 of the Loan Agreement, Annualized Operating Cash Flow
------------------------------
to Fixed Charges, is hereby amended by deleting the existing Section in its
- ----------------
entirety and by substituting the following in lieu thereof:
"Section 7.9 Annualized Operating Cash Flow to Fixed Charges Ratio.
-----------------------------------------------------
As of September 30, 1998 and as of the end of each calendar quarter
thereafter, the Borrower shall not permit the ratio of Annualized Operating
Cash Flow for the calendar quarter end being tested to Fixed Charges for
the four (4) calendar quarters immediately preceding the calculation date
to be less than 1.0 to 1.0."
(e) Section 7.15 of the Loan Agreement, Capital Expenditures, is
--------------------
hereby amended by deleting the existing Section in its entirety and by
substituting the following in lieu thereof:
Section 7.15 Capital Expenditures. The Borrower shall not permit the
--------------------
aggregate amount of Capital Expenditures made by the Borrower and its
Subsidiaries (and,
-11-
<PAGE>
prior to the Agreement Date, by the General Partner and its Subsidiaries),
on a consolidated basis, in any period set forth below to exceed as of the
end of such period the sum of (a) the limit for such period, as set forth
below, plus (b) any unexpended portion of the Capital Expenditures limit
set forth below for the preceding period.
<TABLE>
<CAPTION>
Capital
Period Expenditures Limit
------ ------------------
<S> <C>
From January 18, 1995 $23,500,000
through December 31, 1995
From January 1, 1996 $40,300,000
through December 31, 1996
From January 1, 1997 $42,500,000
through December 31, 1997
From January 1, 1998 $18,500,000
through September 30, 1998
</TABLE>
There shall be no dollar limitation on Capital Expenditures after September
30, 1998."
5. Amendment to Article 8.
----------------------
(a) Section 8.1 of the Loan Agreement, Events of Default, is hereby
-----------------
amended by adding the following at the end of existing subsection (w) thereof
immediately before the period:
", other than that certain Guaranty dated as of September 29, 1995 issued
by CCELP for the benefit of H C Crown Corp., as the same may be amended,
restated or otherwise modified from time to time with the prior written consent
of the Majority Banks."
6. Counterparts. This Amendment may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same instrument.
7. Governing Law. This Amendment shall be construed in accordance with
-------------
and governed by the laws of the State of New York.
8. Severability. Any provision of this Amendment which is prohibited or
------------
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof in that
jurisdiction or affecting the validity or enforceability of such provision in
any other jurisdiction.
-12-
<PAGE>
9. No Other Amendment or Waiver. Except for the amendments set forth
----------------------------
above, the text of the Loan Agreement and all other Loan Documents shall remain
unchanged and in full force and effect. No waiver by the Administrative Agent,
the other Agents or the Banks under the Loan Agreement or any other Loan
Document is granted or intended except as expressly set forth herein, and the
Administrative Agent, the other Agents and the Banks expressly reserve the right
to require strict compliance in all other respects (whether or not in connection
with any Requests for Advance). Except as set forth herein, the amendments
agreed to herein shall not constitute a modification of the Loan Agreement or
any of the other Loan Documents, or a course of dealing with the Administrative
Agent, the other Agents and the Banks, or any of them, at variance with the Loan
Agreement or any of the other Loan Documents, such as to require further notice
by the Administrative Agent, the other Agents, the Banks, the Majority Banks, or
any of them, to require strict compliance with the terms of the Loan Agreement
and the other Loan Documents in the future.
10. Representations and Warranties. The Borrower hereby represents and
------------------------------
warrants in favor of the Agents and the Banks as follows:
(a) The Borrower has the partnership power and authority (i) to enter
into this Amendment and (ii) to do all other acts and things as are required or
contemplated hereunder to be done, observed and performed by it;
(b) This Amendment has been duly authorized, validly executed and
delivered by one or more Authorized Signatories of the Borrower and constitutes
the legal, valid and binding obligation of the Borrower, enforceable against the
Borrower in accordance with its terms, subject, as to enforcement of remedies,
to the following qualifications: (i) an order of specific performance and an
injunction are discretionary remedies and, in particular, may not be available
where damages are considered an adequate remedy at law, and (ii) enforcement may
be limited by bankruptcy, insolvency, liquidation, reorganization,
reconstruction and other similar laws affecting enforcement of creditors' rights
generally (insofar as any such law relates to the bankruptcy, insolvency or
similar event of the Borrower); and
(c) The execution and delivery of this Amendment, the performance by
the Borrower under the Loan Agreement and the other Loan Documents to which it
is a party, as amended hereby, and the consummation of the transactions
contemplated hereby do not and will not require the consent or approval of any
regulatory authority or governmental authority or agency having jurisdiction
over the Borrower which has not already been obtained, nor contravene or be in
conflict with the partnership
-13-
<PAGE>
agreement or other similar agreement of the Borrower, or the provision of any
statute, judgment, order, indenture, instrument, agreement, or undertaking, to
which the Borrower is a party or by which any of its assets or properties are or
may become bound.
11. Conditions Precedent. The effectiveness of this Amendment is subject
--------------------
to receipt by the Administrative Agent or the Banks, as appropriate, of each of
the following, in form and substance satisfactory to the Administrative Agent
and the Banks:
(a) Each of the Banks having a portion of the Revolving Loan
Commitment shall have received a duly executed Revolving Loan Note in
substantially the form attached hereto as Exhibit A, which promissory notes
---------
shall be deemed to be "Notes" under the Loan Agreement and the other Loan
Documents for all purposes hereafter;
(b) The Administrative Agent or the Banks, as appropriate, shall have
received each of the following, in form and substance satisfactory to the
Administrative Agent and the Banks:
(i) A certificate, signed by an Authorized Signatory of the
Borrower, certifying on the date hereof that there exists no Default under the
Loan Agreement, after giving effect to this Amendment and to the consummation of
the Borrower's acquisition of the Masada Assets, and demonstrating the
Borrower's compliance with Sections 7.8, 7.9, 7.10 and 7.15 of the Loan
Agreement, after giving effect to this Amendment and the consummation of the
Borrower's acquisition of the Masada Assets;
(ii) All documentation required under Section 5.13 of the Loan
Agreement with respect to the Borrower's acquisition of the Masada Assets;
(iii) Copies of the Masada Acquisition Agreement and all other
documents related to the transfer of the Masada Assets to the Borrower,
including, without limitation, lien search results from appropriate
jurisdictions with respect to the Masada Assets, all of which shall be certified
by an Authorized Signatory to be true, complete and correct as of the date
hereof, together with duly executed UCC-1 financing statements and other
collateral documentation deemed reasonably necessary by the Administrative Agent
to reflect or perfect the Security Interest of the Administrative Agent (for
itself and on behalf of the Banks) in such assets;
(iv) Opinions of general counsel, local counsel and in-house
counsel to the Borrower and its Subsidiaries, addressed to the Banks and the
Administrative Agent and
-14-
<PAGE>
satisfactory to the Administrative Agent and its special counsel, dated as of
the date hereof;
(v) Opinions or comfort letters regarding the Masada Assets and
the Masada Acquisition Agreement given by FCC counsel to the Borrower, addressed
to the Banks and the Administrative Agent and satisfactory to the Administrative
Agent and its special counsel, dated as of the date hereof;
(v) Reliance letters regarding opinions of counsel to Masada, in
form and substance satisfactory to the Administrative Agent and its special
counsel, dated as of the date hereof;
(vi) Evidence satisfactory to the Administrative Agent and its
special counsel that the Borrower has acquired the Masada Assets pursuant to the
Masada Acquisition Agreement;
(viii) Duly executed Certificate of Financial Condition dated as of
the date hereof;
(ix) Copies of all approvals or consents regarding the transfer
to the Borrower of all franchises and contracts constituting a part of the
Masada Assets;
(x) Pro forma balance sheet with respect to the Borrower, after
giving effect to the transactions contemplated hereby; and
(xi) All such other documents as the Administrative Agent or any
Bank may reasonably request, certified by an appropriate governmental official
or an Authorized Signatory if so reasonably requested;
(c) The Licenses constituting a part of the Masada Assets shall be in
form and substance satisfactory to the Administrative Agent, and the
Administrative Agent shall have received evidence reasonably satisfactory to it
that all Necessary Authorizations, including all necessary consents to the
consummation of the Borrower's acquisition of the Masada Assets and the other
transactions contemplated hereby, from the grantors of the Licenses have been
obtained or made, are in full force and effect and are not subject to any
pending or threatened reversal or cancellation, and the Administrative Agent and
the Banks shall have received a certificate of an Authorized Signatory so
stating;
(d) The Administrative Agent for each of the Banks shall have
received from the Borrower for the account of the Banks an amendment fee (the
"Amendment Fee") by wire transfer of immediately available funds equal to the
product of (i) each
-15-
<PAGE>
Bank's pro rata portion of the Revolving Loan Commitment, the Term Loan
Commitment and the Fund Loan Commitment as of the day immediately prior to the
effective date of this Amendment, multiplied by (ii) 0.125%, and all other fees
payable to the Administrative Agent or any Bank in connection herewith; and
(e) All such other documents as the Administrative Agent or any Bank
may reasonably request, certified by an appropriate governmental official or an
Authorized Signatory if so reasonably requested.
12. Loan Documents. This document shall be deemed to be a Loan Document
--------------
for all purposes.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
-16-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment or
caused it to be executed under seal by their duly authorized officers, all as of
the day and year first above written.
BORROWER: CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P., a
Delaware limited partnership
By: Its General Partner
CCA ACQUISITION CORP., a Delaware corporation
/s/ Jerald L. Kent
By: ________________________________________________
Its: President
ADMINISTRATIVE AGENT: TORONTO DOMINION (TEXAS), INC., as Administrative Agent
/s/ Diane Bailey
By: ________________________________________________
Its: Vice President
DOCUMENTATION AGENTS: TORONTO DOMINION (TEXAS), INC., as a Documentation
Agent
/s/ Diane Bailey
By: ________________________________________________
Its: Vice President
THE CHASE MANHATTAN BANK (formerly, Chemical Bank), as
a Documentation
Agent
/s/ John J. Huber, III
By: ________________________________________________
Its: Managing Director
MANAGING AGENTS: TORONTO DOMINION (TEXAS), INC., as a
Managing Agent
/s/ Diane Bailey
By: ________________________________________________
Its: Vice President
FIFTH AMENDMENT TO LOAN AGREEMENT
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
Signature Page 1
<PAGE>
MANAGING AGENTS: THE CHASE MANHATTAN BANK (formerly,
(continued) Chemical Bank), as a Managing Agent
/s/ John J. Huber, III
By: ________________________________________________
Its: Managing Director
CIBC INC., as a Managing Agent
/s/ Matthew B. Jones
By: ________________________________________________
Its: Vice President
CREDIT LYONNAIS CAYMAN ISLAND BRANCH,
as a Managing Agent
/s/ Mark D. Thorsheim
By: ________________________________________________
Its: Authorized Signatory
NATIONSBANK, N.A., as a Managing Agent
/s/ Jennifer Zydney
By: ________________________________________________
Its: Vice President
CO-AGENTS: BANQUE PARIBAS, as a Co-Agent
/s/ Bryan G. Petermann
By: ________________________________________________
Its: Vice President
/s/ John G. Acker
By: ________________________________________________
Its: Group Vice President
UNION BANK OF CALIFORNIA, N.A. (formerly, Union Bank),
as a Co-Agent
/s/ B. Adam Trout
By: ________________________________________________
Its: Assistant Vice President
FIFTH AMENDMENT TO LOAN AGREEMENT
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
Signature Page 2
<PAGE>
CO-AGENTS CORESTATES BANK, N.A., as a Co-Agent
(continued)
/s/ Anthony B. Parisi
By: ________________________________________________
Its: Vice President
FLEET BANK, N.A., as a Co-Agent
/s/ M.A. Cerullo
By: ________________________________________________
Its: Vice President
ABN AMRO BANK N.V., as a Co-Agent
/s/ James J. Johnson
By: ________________________________________________
Its: Vice President
/s/ Mary L. Honda
By: ________________________________________________
Its: Vice President
SOCIETE GENERALE, as a Co-Agent
/s/ John Sadik-Khan
By: ________________________________________________
Its: Vice President
THE FIRST NATIONAL BANK OF BOSTON, as a Co-Agent
/s/ Cindy C. Chen
By: ________________________________________________
Its: Director
BANKS: TORONTO DOMINION (TEXAS), INC., as a
Bank
/s/ Diane Bailey
By: ________________________________________________
Its: Vice President
FIFTH AMENDMENT TO LOAN AGREEMENT
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
Signature Page 2B
<PAGE>
BANKS THE CHASE MANHATTAN BANK (formerly,
(continued) Chemical Bank), as a Bank
/s/ John J. Huber, III
By: ________________________________________________
Its: Managing Director
CIBC INC., as a Bank
/s/ Matthew B. Jones
By: ________________________________________________
Its: Vice President
CREDIT LYONNAIS CAYMAN ISLAND BRANCH, as a Bank
/s/ Mark D. Thorsheim
By: ________________________________________________
Its: Authorized Signatory
NATIONSBANK, N.A., as a Bank
/s/ Jennifer Zydney
By: ________________________________________________
Its: Vice President
BANQUE PARIBAS, as a Bank
/s/ Bryan G. Petermann
By: ________________________________________________
Its: Vice President
/s/ John G. Acker
By: ________________________________________________
Its: Group Vice President
UNION BANK OF CALIFORNIA, N.A. (formerly Union Bank),
as a Bank
/s/ B. Adam Trout
By: ________________________________________________
Its: Assistant Vice President
BANKS CORESTATES BANK, N.A., as a Bank
FIFTH AMENDMENT TO LOAN AGREEMENT
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
Signature Page 3B
<PAGE>
(continued)
/s/ Anthony B. Parisi
By: ________________________________________________
Its: Vice President
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., as a Bank
/s/ Armund Schoen, Jr.
By: ________________________________________________
Its: Vice President
MERCANTILE BANK OF ST. LOUIS NATIONAL ASSOCIATION, as a
Bank
/s/ Gregory D. Knudsen
By: ________________________________________________
Its: Vice President
FLEET BANK, N.A., as a Bank
/s/ M.A. Cerullo
By: ________________________________________________
Its: Vice President
FIRST NATIONAL BANK OF MARYLAND, as a Bank
/s/ Mark L. Cook
By: ________________________________________________
Its: Senior Vice President
VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME TRUST, as
a Bank
/s/ Brian W. Good
By: ________________________________________________
Its: Vice President
FIFTH AMENDMENT TO LOAN AGREEMENT
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
Signature Page 4B
<PAGE>
BANKS BANQUE FRANCAISE DU COMMERCE
(continued) EXTERIEUR, as a Bank
/s/ Brian J. Cumberland
By: ________________________________________________
Its: Assistant Treasurer
/s/ Frederick K. Kammler
By: ________________________________________________
Its: Vice President
PRIME INCOME TRUST, as a Bank
/s/ Rafael Scolari
By: ________________________________________________
Its: Authorized Signatory
SENIOR DEBT PORTFOLIO, as a Bank
By: Boston Management and Research, as Investment
Advisor
/s/ Scott Page
By: ________________________________________________
Its: Vice President and Portfolio Manager
AERIES FINANCE LTD., as a Registered Noteholder
/s/ Andrew Wignall
By: ________________________________________________
Its: Director
ING CAPITAL ADVISORS, INC., as agent for Bank
syndication account
/s/ Kathleen A. Lenarcic
By: ________________________________________________
Its: Vice President & Portfolio Manager
FIFTH AMENDMENT TO LOAN AGREEMENT
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
Signature Page 5B
<PAGE>
BANKS ABN AMRO BANK N.V., as a Bank
(continued)
/s/ James J. Johnson
By: ________________________________________________
Its: Vice President
/s/ Mary L. Honda
By: ________________________________________________
Its: Vice President
SOCIETE GENERALE, as a Bank
/s/ John Sadik-Khan
By: ________________________________________________
Its: Vice President
THE FIRST NATIONAL BANK OF BOSTON, as a Bank
/s/ Cindy C. Chen
By: ________________________________________________
Its: Director
BANQUE NATIONALE DE PARIS, as a Bank
/s/ Mark Whitson
By: ________________________________________________
Its: Vice President
/s/ Pamela Lucash
By: ________________________________________________
Its: Assistant Treasurer
FIFTH AMENDMENT TO LOAN AGREEMENT
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
Signature Page 6B
<PAGE>
BANKS THE SUMITOMO BANK, LIMITED, CHICAGO
(continued) BRANCH, as a Bank
/s/ Hiroyuki Iwami
By: ________________________________________________
Its: Joint General Manager
CAPTIVA FINANCE LTD., as a Registered Noteholder
/s/ Darrin Riley
By: ________________________________________________
Its: Director
CHASE SECURITIES INC., as agent for The Chase Manhattan
Bank, as a Bank
/s/ Matthew B. Leahey
By: ________________________________________________
Its: Vice President
FIFTH AMENDMENT TO LOAN AGREEMENT
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
Signature Page 7B
<PAGE>
THIS PAGE MUST BE KEPT WITH THE DOCUMENT.
SIXTH AMENDMENT TO LOAN AGREEMENT
04/25/97 12:35 pm
<PAGE>
Exhibit 10.7
SIXTH AMENDMENT TO LOAN AGREEMENT
THIS SIXTH AMENDMENT TO LOAN AGREEMENT (this "Amendment"), dated as of the
7th day of February, 1997 (the "Amendment Date"), by and among CHARTER
COMMUNICATIONS ENTERTAINMENT I, L.P., a Delaware limited partnership (the
"Borrower"), TORONTO DOMINION (TEXAS), INC., THE CHASE MANHATTAN BANK (FORMERLY,
CHEMICAL BANK), CIBC INC., CREDIT LYONNAIS CAYMAN ISLAND BRANCH, NATIONSBANK,
N.A., BANQUE PARIBAS, UNION BANK OF CALIFORNIA, N.A. (FORMERLY, UNION BANK),
CORESTATES BANK, N.A., THE LONG-TERM CREDIT BANK OF JAPAN, LTD., MERCANTILE BANK
OF ST. LOUIS NATIONAL ASSOCIATION, FLEET BANK, N.A., FIRST NATIONAL BANK OF
MARYLAND, VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME TRUST, BANQUE FRANCAISE
DU COMMERCE EXTERIEUR, PRIME INCOME TRUST, SENIOR DEBT PORTFOLIO, AERIES FINANCE
LTD., ING CAPITAL ADVISORS, INC., ABN AMRO BANK N.V., SOCIETE GENERALE, THE
FIRST NATIONAL BANK OF BOSTON, CAPTIVA FINANCE LTD., BANQUE NATIONALE DE PARIS,
THE SUMITOMO BANK, LIMITED, CHICAGO BRANCH, CHASE SECURITIES INC. AND THE ING
CAPITAL SENIOR SECURED HIGH INCOME FUND, L.P. (together with any financial
institution which subsequently becomes a `Bank' under the Loan Agreement, as
such term is defined therein, the "Banks"), TORONTO DOMINION (TEXAS), INC. and
THE CHASE MANHATTAN BANK (FORMERLY, CHEMICAL BANK), as Documentation Agents (in
such capacity, the "Documentation Agents"), TORONTO DOMINION (TEXAS), INC., THE
CHASE MANHATTAN BANK (FORMERLY, CHEMICAL BANK), CIBC INC., CREDIT LYONNAIS
CAYMAN ISLAND BRANCH, and NATIONSBANK, N.A., as Managing Agents (collectively in
such capacity, the "Managing Agents"), BANQUE PARIBAS, UNION BANK OF CALIFORNIA,
N.A. (FORMERLY, UNION BANK), ABN AMRO BANK N.V., SOCIETE GENERALE, FLEET BANK,
N.A., CORESTATES BANK, N.A. AND THE FIRST NATIONAL BANK OF BOSTON, as Co-Agents
(collectively in such capacity, the "Co-Agents") and TORONTO DOMINION (TEXAS),
INC., as Administrative Agent for the Documentation Agents, the Managing Agents,
the Co-Agents and the Banks (the "Administrative Agent," and together with the
Documentation Agents, the Managing Agents and the Co-Agents, the "Agents"),
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Agents, the Borrower, and the Banks are parties to that
certain Amended and Restated Loan Agreement dated as of September 29, 1995, as
amended by that certain First Amendment to Loan Agreement dated as of October
31, 1995, that certain Second Amendment to Loan Agreement dated as of January
16, 1996, that certain Third Amendment to Loan Agreement dated as of March 29,
1996, that certain Fourth Amendment to Loan Agreement dated as of May 24, 1996
and that certain Fifth Amendment to Loan Agreement dated as of November 29, 1996
(as further amended, modified and supplemented from time to time, the "Loan
Agreement"); and
<PAGE>
WHEREAS, the Borrower has requested that the Agents and the Banks agree to
amend certain provisions of the Loan Agreement to provide for an increase in the
amount of Indebtedness with respect to performance bonds, letters of credit and
similar instruments permitted under the Loan Agreement and to waive any Default
which may currently exist as a result of the incurrence of such types of
Indebtedness prior to the date of this Amendment; and
WHEREAS, the Borrower has requested that the Agents and the Banks agree to
certain amendments to the documentation relating to the Hallmark Subordinated
Debt; and
WHEREAS, the Agents and the Banks are willing to consent to such amendments
and such other matters as set forth herein on the terms and conditions contained
herein;
NOW, THEREFORE, in consideration of the premises set forth above, the
covenants and agreements hereinafter set forth, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree that all capitalized terms used herein shall have the
meanings ascribed thereto in the Loan Agreement, and further agree as follows:
1. Amendment to Article 7. Section 7.1 of the Loan Agreement,
----------------------
Indebtedness of the Borrower, is hereby amended by deleting existing subsections
- ----------------------------
(e) and (g) in their respective entireties and by substituting the following
therefor:
"(e) Any other Indebtedness (including, without limitation,
Indebtedness secured by Permitted Liens) in an aggregate outstanding
principal amount at any time not to exceed $7,500,000 of which not more
than $6,000,000 in an aggregate outstanding principal amount at any time
may be used for Indebtedness with respect to performance bonds, letters of
credit and similar instruments securing the contractual obligations of the
Borrower;"
"(g) Indebtedness arising under payment and performance bonds and
letters of credit issued for the Borrower's account, or the account of a
Subsidiary of the Borrower, in the ordinary course of the Borrower's or
such Subsidiary's business in favor of the grantors of the Licenses and the
Pole Agreements, in an aggregate amount not to exceed $6,000,000."
-2-
<PAGE>
2. Consents.
--------
(a) Pursuant to Section 7(a)(iii) of the Subordination Agreement and
Section 8.1(w) of the Loan Agreement, the Agents and the Banks hereby consent to
the amendment and restatement of that certain Senior Subordinated Loan Agreement
dated as January 18, 1995 and that certain Guaranty by CCELP dated September 30,
1995 as set forth in the Amended and Restated Senior Subordinated Loan Agreement
dated as of November 15, 1996 attached hereto as Exhibit A (the "Amended
---------
Agreement") and the Amended and Restated Guaranty of CCELP dated as of November
15, 1996 attached hereto as Exhibit B (the "Amended Guaranty"), respectively.
---------
The Agents and the Banks hereby further agree that the Subordination Agreement
shall be amended and restated by that certain Amended and Restated Subordination
Agreement dated as of November 15, 1996 (the "Amended Subordination Agreement")
to be executed by the Agents and the Banks in the form attached hereto as
Exhibit C as of the effective date of this Amendment. The Agents and the Banks
- ---------
hereby further consent to the amendment and restatement of that certain Senior
Subordinated Note dated January 18, 1995 (the "Original Subordinated Note") as
set forth in an Amended and Restated Subordinated Note (the "Amended
Subordinated Note") which shall be on substantially the same terms as the
Original Subordinated Note and which shall be in form and substance satisfactory
to the Administrative Agent. The Agents and the Banks hereby authorize the
Administrative Agent to enter into or obtain from the Borrower and its
Subsidiaries such conforming modifications to the Loan Documents as the
Administrative Agent may deem necessary or appropriate to reflect the Amended
Agreement, the Amended Subordinated Note, the Amended Guaranty and the Amended
Subordination Agreement.
(b) In the event the Amended Subordinated Note is required to be
registered in accordance with the Amended Agreement, the Agents and the Banks
hereby authorize the Administrative Agent to approve and execute an indenture
and related documents (the "Indenture Documents") to replace the Amended
Agreement, Amended Guaranty, Amended Subordination Agreement and related
agreements; provided, however, that (i) the Indenture Documents shall be in form
-------- -------
and substance the same terms as the Amended Agreement, the Amended Guaranty and
the Amended Subordinated Note with such changes as are necessary to reflect that
the Amended Subordinated Note will be issued in one or more notes under an
indenture rather than a loan agreement and such other changes required to comply
with Applicable Law, all of which changes and modifications shall be in form and
substance satisfactory to the Administrative Agent; (ii) a replacement
subordination agreement in form and substance of the Amended Subordination
Agreement shall be executed by the trustee under the Indenture Documents on
behalf of the holders of the replacement subordinated notes in favor of the
Agents and the
-3-
<PAGE>
Banks, which agreement shall be in form and substance satisfactory to the
Administrative Agent; (iii) the Borrower shall provide to the Administrative
Agent a certificate, signed by an Authorized Signatory of the Borrower,
certifying that there exists no Default under the Loan Agreement, both before
and after giving effect to the Indenture Documents, and demonstrating the
Borrower's compliance with Sections 7.8, 7.9, 7.10 and 7.15 of the Loan
Agreement, after giving effect to the Indenture Documents; and (iv) the Borrower
shall provide to the Administrative Agent opinions of general counsel and in-
house counsel to the Borrower and its Subsidiaries, addressed to the Banks and
the Administrative Agent and satisfactory to the Administrative Agent and its
special counsel, dated as of the effective date of the Indenture Documents.
3. Waiver. The Agents and the Banks hereby waive, effective through the
------
date hereof, any Default or Event of Default which may have arisen under
Sections 7.1(e) or 7.1(g) of the Loan Agreement resulting from the incurrence by
the Borrower and its Subsidiaries of Indebtedness with respect to performance
bonds, letters of credit and similar instruments in an aggregate outstanding
principal amount in excess of $9,000,000.
4. Counterparts. This Amendment may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same instrument.
5. Governing Law. This Amendment shall be construed in accordance with
-------------
and governed by the laws of the State of New York.
6. Severability. Any provision of this Amendment which is prohibited or
------------
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof in that
jurisdiction or affecting the validity or enforceability of such provision in
any other jurisdiction.
7. No Other Amendment, Consent or Waiver. Except for the amendments,
-------------------------------------
consents and waiver set forth above, the text of the Loan Agreement and all
other Loan Documents shall remain unchanged and in full force and effect. No
waiver by the Administrative Agent, the other Agents or the Banks under the Loan
Agreement or any other Loan Document is granted or intended except as expressly
set forth herein, and the Administrative Agent, the other Agents and the Banks
expressly reserve the right to require strict compliance in all other respects
(whether or not in connection with any Requests for Advance). Except as set
forth herein, the amendments, consents and waiver agreed to herein shall not
constitute a modification of the Loan Agreement
-4-
<PAGE>
or any of the other Loan Documents, or a course of dealing with the
Administrative Agent, the other Agents and the Banks, or any of them, at
variance with the Loan Agreement or any of the other Loan Documents, such as to
require further notice by the Administrative Agent, the other Agents, the Banks,
the Majority Banks, or any of them, to require strict compliance with the terms
of the Loan Agreement and the other Loan Documents in the future.
8. Representations and Warranties. The Borrower hereby represents and
------------------------------
warrants in favor of the Agents and the Banks as follows:
(a) The Borrower has the partnership power and authority (i) to enter
into this Amendment and (ii) to do all other acts and things as are required or
contemplated hereunder to be done, observed and performed by it;
(b) This Amendment has been duly authorized, validly executed and
delivered by one or more Authorized Signatories of the Borrower and constitutes
the legal, valid and binding obligation of the Borrower, enforceable against the
Borrower in accordance with its terms, subject, as to enforcement of remedies,
to the following qualifications: (i) an order of specific performance and an
injunction are discretionary remedies and, in particular, may not be available
where damages are considered an adequate remedy at law, and (ii) enforcement may
be limited by bankruptcy, insolvency, liquidation, reorganization,
reconstruction and other similar laws affecting enforcement of creditors' rights
generally (insofar as any such law relates to the bankruptcy, insolvency or
similar event of the Borrower); and
(c) The execution and delivery of this Amendment, the performance by
the Borrower under the Loan Agreement and the other Loan Documents to which it
is a party, as amended hereby, and the consummation of the transactions
contemplated hereby do not and will not require the consent or approval of any
regulatory authority or governmental authority or agency having jurisdiction
over the Borrower which has not already been obtained, nor contravene or be in
conflict with the partnership agreement or other similar agreement of the
Borrower, or the provision of any statute, judgment, order, indenture,
instrument, agreement, or undertaking, to which the Borrower is a party or by
which any of its assets or properties are or may become bound.
9. Conditions Precedent. The effectiveness of this Amendment is subject
--------------------
to receipt by the Administrative Agent or the Banks, as appropriate, of each of
the following, in form and substance satisfactory to the Administrative Agent
and the Banks:
-5-
<PAGE>
(a) The Administrative Agent or the Banks, as appropriate, shall have
received each of the following, in form and substance satisfactory to the
Administrative Agent and the Banks:
(i) A certificate, signed by an Authorized Signatory of the
Borrower, certifying on the date hereof that, except with respect to the
requirements of Subsections 7.1(e) and (g) of the Loan Agreement waived
hereby, there exists no Default under the Loan Agreement, both before and
after giving effect to this Amendment, and demonstrating the Borrower's
compliance with Sections 7.8, 7.9, 7.10 and 7.15 of the Loan Agreement,
after giving effect to this Amendment; and
(ii) Opinions of general counsel and in-house counsel to the
Borrower and its Subsidiaries, addressed to the Banks and the
Administrative Agent and satisfactory to the Administrative Agent and its
special counsel, dated as of the date hereof.
(b) All such other documents as the Administrative Agent or any Bank
may reasonably request, certified by an appropriate governmental official or an
Authorized Signatory if so reasonably requested.
10. Loan Documents. This document shall be deemed to be a Loan Document
--------------
for all purposes.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment, or
caused it to be executed under seal by their duly authorized officers, all as of
the day and year first above written.
BORROWER: CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P., a Delaware
limited partnership
By: Its General Partner
CCA ACQUISITION CORP., a Delaware corporation
/s/ Kent D. Kalkwarf
By: _________________________________________________
Its: Senior Vice President
ADMINISTRATIVE AGENT: TORONTO DOMINION (TEXAS), INC., as Administrative Agent
/s/ Diane Bailey
By: ___________________________________________________
Its: Vice President
DOCUMENTATION AGENTS: TORONTO DOMINION (TEXAS), INC., as a Documentation
Agent
/s/ Diane Bailey
By: ___________________________________________________
Its: Vice President
THE CHASE MANHATTAN BANK (formerly, Chemical Bank), as
a Documentation Agent
/s/ Mitchell J. Gervis
By: ___________________________________________________
Its: Vice President
MANAGING AGENTS: TORONTO DOMINION (TEXAS), INC., as a
Managing Agent
/s/ Diane Bailey
By: ___________________________________________________
Its: Vice President
SIXTH AMENDMENT TO LOAN AGREEMENT
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
Signature Page 1
<PAGE>
MANAGING AGENTS: THE CHASE MANHATTAN BANK (formerly,
(continued) Chemical Bank), as a Managing Agent
/s/ Mitchell J. Gervis
By:__________________________________________
Its: Vice President
CIBC INC., as a Managing Agent
/s/ Matthew B. Jones
By:__________________________________________
Its: Authorized Signatory
CREDIT LYONNAIS CAYMAN ISLAND BRANCH,
as a Managing Agent
/s/ Mark D. Thorsheim
By:__________________________________________
Its: Vice President
NATIONSBANK, N.A., as a Managing Agent
/s/ Jennifer Zydney
By:__________________________________________
Its: Vice President
CO-AGENTS: BANQUE PARIBAS, as a Co-Agent
/s/ Bryan Petermann
By:__________________________________________
Its: Vice President
/s/ John G. Acker
By:__________________________________________
Its: Vice President
UNION BANK OF CALIFORNIA, N.A. (formerly, Union Bank),
as a Co-Agent
/s/ B. Adam Trout
By:__________________________________________
Its: Assistant Vice President
SIXTH AMENDMENT TO LOAN AGREEMENT
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
Signature Page 2
<PAGE>
CO-AGENTS: CORESTATES BANK, N.A., as a Co-Agent
(continued)
/s/ Anthony B. Parisi
By:__________________________________________
Its: Vice President
FLEET BANK, N.A., as a Co-Agent
/s/ Adam Bester
By:__________________________________________
Its: Senior Vice President
ABN AMRO BANK N.V., as a Co-Agent
/s/ James J. Johnston
By:__________________________________________
Its: Vice President
/s/ Mary L. Honda
By:__________________________________________
Its: Vice President
SOCIETE GENERALE, as a Co-Agent
/s/ William A. Sinsigalli
By:__________________________________________
Its: First Vice President & Group Manager
THE FIRST NATIONAL BANK OF BOSTON, as a Co-Agent
/s/ Cindy Chen
By:__________________________________________
Its: Director
BANKS: TORONTO DOMINION (TEXAS), INC., as a
Bank
/s/ Diane Bailey
By:__________________________________________
Its: Vice President
SIXTH AMENDMENT TO LOAN AGREEMENT
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
Signature Page 3
<PAGE>
BANKS: THE CHASE MANHATTAN BANK (formerly,
(continued) Chemical Bank), as a Bank
/s/ Mitchell J. Gervis
By:__________________________________________
Its: Vice President
CIBC INC., as a Bank
/s/ Matthew B. Jones
By:__________________________________________
Its: Authorized Signatory
CREDIT LYONNAIS CAYMAN ISLAND BRANCH, as a Bank
/s/ Mark D. Thorsheim
By:__________________________________________
Its: Vice President
NATIONSBANK, N.A., as a Bank
/s/ Jennifer Zydney
By:__________________________________________
Its: Vice President
BANQUE PARIBAS, as a Bank
/s/ Bryan Petermann
By:__________________________________________
Its: Vice President
/s/ John G. Acker
By:__________________________________________
Its: Vice President
UNION BANK OF CALIFORNIA, N.A. (formerly Union Bank),
as a Bank
/s/ Adam Trout
By:__________________________________________
Its: Assistant Vice President
SIXTH AMENDMENT TO LOAN AGREEMENT
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
Signature Page 4
<PAGE>
BANKS: CORESTATES BANK, N.A., as a Bank
(continued)
/s/ Anthony B. Parisi
By:__________________________________________
Its: Vice President
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., as a Bank
/s/ Armund Schoen, Jr.
By:__________________________________________
Its: Vice President & Deputy General Manager
MERCANTILE BANK OF ST. LOUIS NATIONAL ASSOCIATION, as a
Bank
/s/ Gregory D. Knudsen
By:__________________________________________
Its: Vice President
FLEET BANK, N.A., as a Bank
/s/ Adam Bester
By:__________________________________________
Its: Senior Vice President
FIRST NATIONAL BANK OF MARYLAND, as a Bank
/s/ William Blake Hampson
By:__________________________________________
Its: Vice President
VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME TRUST, as
a Bank
/s/ Jeffrey W. Maillet
By:__________________________________________
Its: Senior Vice President
SIXTH AMENDMENT TO LOAN AGREEMENT
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
Signature Page 5
<PAGE>
BANKS: BANQUE FRANCAISE DU COMMERCE
(continued) EXTERIEUR, as a Bank
/s/ Evan Kraus
By:__________________________________________
Its: Assistant Treasurer
/s/ Frederick K. Kammler
By:__________________________________________
Its: Vice President
PRIME INCOME TRUST, as a Bank
/s/ Rafael Scolari
By:__________________________________________
Its: Vice President & Portfolio Manager
SENIOR DEBT PORTFOLIO, as a Bank
By: Boston Management and Research, as Investment
Advisor
/s/ Scott H. Page
By:__________________________________________
Its: Vice President
AERIES FINANCE LTD., as a Registered Noteholder
/s/ Andrew Wignall
By:__________________________________________
Its: Director
ING CAPITAL ADVISORS, INC., as agent for Bank
syndication account
/s/ Kahleen A. Lenarcic
By:__________________________________________
Its: Vice President & Portfolio Manager
SIXTH AMENDMENT TO LOAN AGREEMENT
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
Signature Page 6
<PAGE>
BANKS: ABN AMRO BANK N.V., as a Bank
(continued)
/s/ James J. Johnston
By:__________________________________________
Its: Vice President
/s/ Mary I. Honda
By:__________________________________________
Its: Vice President
SOCIETE GENERALE, as a Bank
/s/ William A. Sinsigalli
By:__________________________________________
Its: First Vice President & Group Manager
THE FIRST NATIONAL BANK OF BOSTON, as a Bank
/s/ Cindy Chen
By:__________________________________________
Its: Director
BANQUE NATIONALE DE PARIS, as a Bank
/s/ Mark Whitson
By:__________________________________________
Its: Vice President
/s/ Pamela Lucash
By:__________________________________________
Its: Assistant Treasurer
SIXTH AMENDMENT TO LOAN AGREEMENT
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
Signature Page 7
<PAGE>
BANKS: THE SUMITOMO BANK, LIMITED, CHICAGO
(continued) BRANCH, as a Bank
/s/ Hiroyuki Iwami
By:__________________________________________
Its: Joint General Manager
CAPTIVA FINANCE LTD., as a Registered Noteholder
/s/ Derrie Boggess
By:__________________________________________
Its: Director
CHASE SECURITIES INC., as agent for The Chase Manhattan
Bank, as a Bank
/s/ Matthew B. Leahey
By:__________________________________________
Its: Vice President
THE ING CAPITAL SENIOR SECURED HIGH INCOME FUND, L.P.,
as agent for Bank syndication account
/s/ Kathleen A. Lenarcic
By:__________________________________________
Its: Vice President & Portfolio Manager
SIXTH AMENDMENT TO LOAN AGREEMENT
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
Signature Page 8
<PAGE>
EXHIBIT 10.8
AMENDED AND RESTATED SHAREHOLDERS' AGREEMENT
This Amended and Restated Agreement is made as of this 15th day of
November, 1996 by and among Kelso & Company, L.P. ("Kelso"), Charter
Communications, Inc. ("Charter") and HC Crown Corp. ("Seller").
WHEREAS, Charter and Crown are parties to a certain Stock Purchase
Agreement dated July 1, 1994 as amended November 18, 1994 (the "Agreement");
WHEREAS, in order to secure financing for the transac tion described in the
Agreement, Seller entered into the Subordination Agreement dated January 18,
1995 (the "Origi nal Subordination Agreement") among Seller, CCA Holdings Corp.
("Holdings") and the other parties set forth therein;
WHEREAS, the Original Subordination Agreement is being amended and restated
as of the date hereof (as so amended and restated, and as the same may be
amended, extended, renewed, restated, supplemented or otherwise modified from
time to time, the "Amended and Restated Subordination Agree ment");
WHEREAS, Charter and certain designees and affiliates of Kelso are the sole
stockholders of Holdings; and
NOW, THEREFORE, the parties hereto agree as follows:
1. Kelso and Charter represent that Charter and certain designees and
affiliates of Kelso are the owners of all of the outstanding shares of stock of
Holdings, and that Charter is the manager of the cable systems owned and to be
acquired by Holdings and its subsidiaries.
2. In consideration of the execution by Seller of the Amended and
Restated Subordination Agreement, Kelso and Charter severally agree as follows:
A. They will cause Holdings to comply with the re quirements of Section
4.01(a) of the Amended and Restated
<PAGE>
Loan Agreement dated as of the date hereof (the "Loan Agree ment") by and
between Seller and Holdings;
B. They will give Seller at least 10 business days' prior written notice
of any proposed transfer or disposition by Holdings or its subsidiaries of more
than 10% of Charter Communications Entertainment I, L.P.'s assets in any trans
action or series of transactions.
C. They will take no action inconsistent with the following provisions of
the Loan Agreement: Section 4.01(b)(i), (iii), (iv), (v), (xii), (xiv) and
(xvi).
D. The following legend has been or will be placed on all stock
certificates of Holdings owned by them:
"These shares are subject to an Amended and Re stated Shareholders'
Agreement dated as of November 15, 1996 on file in the office of the
company."
Any new shares of Holdings issued to transferees of such designees or affiliates
of Kelso or Charter shall include the same legend. Such legends may be removed
and will not be required at such time as the Notes (as defined in the Loan
Agreement) have been paid in full or otherwise cancel led or discharged.
3. Seller shall enter into the Amended and Restated Subordination
Agreement.
4. Notices to Seller and Charter pursuant hereto shall be given in
accordance with the Agreement. Notices to Kelso shall be sent to:
320 Park Avenue
New York, NY 10022
Attn: James J. Connors, II, Esq.
5. This agreement shall be binding upon the assigns, transferees and
successors of the parties hereto.
6. Capitalized terms used herein without definition shall have the
meanings ascribed to such terms in the Agree ment.
-2-
<PAGE>
7. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICT OF LAWS.
-3-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this agreement as of
the day and year first written above.
Kelso & Company, L.P.
By /s/ James J. Connors II
______________________________________
Title Vice President and General Counsel
___________________________________
Charter Communications, Inc.
By______________________________________
Title___________________________________
HC Crown Corp.
By_______________________________________
Title____________________________________
-4-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this agreement as of
the day and year first written above.
Kelso & Company, L.P.
By__________________________
Title_______________________
Charter Communications, Inc.
By /s/ Kent Kalkwarf
__________________________
Title Vice President
_______________________
HC Crown Corp.
By__________________________
Title_______________________
-5-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this agreement as of
the day and year first written above.
Kelso & Company, L.P.
By__________________________
Title_______________________
Charter Communications, Inc.
By__________________________
Title_______________________
HC Crown Corp.
/s/ Dwight Arn
By__________________________
Vice President
Title_______________________
-6-
<PAGE>
EXHIBIT 10.9
================================================================================
AMENDED AND RESTATED
MANAGEMENT AGREEMENT
between
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
and
CHARTER COMMUNICATIONS, INC.
Dated as of September 29, 1995
================================================================================
<PAGE>
TABLE OF CONTENTS
- -----------------
Page
----
RECITALS............................................................. 1
ARTICLE I Definitions............................................... 2
1.1 Defined Terms.............................................. 2
ARTICLE II Retention of the Manager................................. 4
2.1 Agreement to Manage........................................ 4
2.2 Standards of Performance................................... 5
2.3 Availability of Discounts, etc............................. 5
2.4 Conflicts of Interest...................................... 6
2.5 Annual Business Plan....................................... 6
2.6 Tax Returns, Financial Statements, Books, etc.............. 6
(a) Tax Returns........................................... 6
(b) Financial Statements.................................. 7
(c) Preparation of Documents under Financing Arrangements. 7
(d) Books and Records..................................... 7
(e) Appraisal............................................. 7
ARTICLE III Restricted Activities of the Manager.................... 8
3.1 Restricted Activities of the Manager....................... 8
4.1 Base Management Fee........................................ 10
(a) General............................................... 10
(b) Expenses.............................................. 10
(c) Employees............................................. 10
4.2 Cash Bonus............................................ 11
(a) Determination of Cash Bonus........................... 11
(b) Procedures for Payment of Cash Bonus.................. 11
4.3 Payment of Fee and Cash Bonus.............................. 11
4.4 Pro Rated Fee and Cash Bonus............................... 11
ARTICLE V Representations and Warranties............................ 12
5.1 Representations and Warranties of the Company.............. 12
(a) Due Organization; Power and Authority, etc............ 12
(b) Authorization; Enforceability......................... 12
(c) Executing Parties..................................... 12
5.2 Representations and Warranties of the Manager.............. 12
(a) Due Organization; Power and
<PAGE>
Page
----
Authority, etc..................................... 12
(b) Authorization; Enforceability...................... 13
(c) Executing Parties.................................. 13
(d) Authorizations..................................... 13
5.3 Survival of Representations and Warranties......... 13
ARTICLE VI Insurance and Indemnity............................... 13
6.1 Insurance............................................... 13
6.2 Indemnification of the Manager.......................... 13
6.3 Indemnification by the Manager.......................... 14
6.4 Persons Indemnified..................................... 14
ARTICLE VII Termination.......................................... 15
7.1 Default by the Manager.................................. 15
7.2 Effect of Termination................................... 15
ARTICLE VIII Miscellaneous....................................... 15
8.1 Prohibited Transfers and Assignments.................... 15
8.2 Waiver.................................................. 16
8.3 Amendment and Modification.............................. 16
8.4 Governing Law........................................... 16
8.5 Invalidity of Provision................................. 16
8.6 Notices................................................. 17
8.7 Headings; Execution in Counterparts..................... 18
8.8 Successors.............................................. 18
8.9 Entire Agreement........................................ 18
SCHEDULES
Schedule 1 List of Cable Systems
Schedule 2 Projected OCF
<PAGE>
AMENDED AND RESTATED MANAGEMENT AGREEMENT
AMENDED AND RESTATED MANAGEMENT AGREEMENT (the "Agreement"), dated as of
September 29, 1995, between Charter Communications, Inc., a Delaware corporation
(the "Manager"), and Charter Communications Entertainment I, L.P., a Delaware
limited partnership (the "Company").
RECITALS
--------
WHEREAS, the Manager and CCA Acquisition Corp., a Delaware corporation
("CCA Acquisition"), are party to a Management Agreement, dated as of January
18, 1995 (the "Original Management Agreement");
WHEREAS, CCA Acquisition is transferring all of its assets and liabilities
to the Company;
WHEREAS, the parties hereto desire to amend and restate the Original
Management Agreement, to provide, among other things, for the replacement of CCA
Acquisition by the Company as a party to this Agreement;
WHEREAS, upon the completion of such transfer, the Company and its
subsidiaries will own and operate the cable television systems listed on
Schedule 1;
WHEREAS, the Company desires to retain the Manager to manage and operate
the Cable Systems (as defined below) on its behalf, and the Manager has agreed
to manage and operate the Cable Systems, all upon the terms and subject to the
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
<PAGE>
ARTICLE I
Definitions
-----------
1.1 Defined Terms. When used in this Agreement, the following terms
-------------
shall have the meanings ascribed to them in this Section 1.1:
"Affiliate" shall mean a Person that directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common control
with, the Person specified.
"Cable Systems" shall mean the cable television systems listed on Schedule
1 and any cable television systems subsequently acquired by the Company or any
of its subsidiaries during the Term.
"Cash Bonus" shall mean the annual cash bonus payable to the Manager with
respect to a given Fiscal Year, which shall equal 30% of the excess, if any, of
OCF for such Fiscal Year over Projected OCF for such Fiscal Year.
"CCA Holdings" shall mean CCA Holdings Corp., a Delaware corporation.
"Closing Date" shall mean the date of the closing under the Asset Purchase
Agreement, dated as of March 30, 1995, as the same shall be amended from time to
time, among Cencom Cable Television, Inc., Lenoir T.V. Cable, Inc., CCT Holdings
Corp. and CCA Holdings.
"Equity Agreements" shall mean the Stockholders' Agreement, the
Registration Rights Agreement and the Subscription Agreements.
"Financial Advisory Agreement" shall mean the Amended and Restated
Financial Advisory Agreement, dated as of the Closing Date, between Kelso &
Company, L.P. and the Company.
"Fiscal Year" shall mean a year beginning on January 1 of one calendar
year and ending on December 31 of the same calendar year, or such other fiscal
year as the Company and the Manager may hereafter agree, provided, however, that
-------- -------
the term "Fiscal Year" shall mean with respect to the Company's first period of
operations the period commencing on the Closing Date and ending on December 31
of the same calendar year.
<PAGE>
"General Partner" shall mean CCA Acquisition, together with any other
entities which, in accordance with the terms of the Partnership Agreement, may
be admitted after the date hereof as a general partner of the Company.
"H C Crown" shall mean H C Crown Corp., a Delaware corporation.
"Kelso" shall mean Kelso Investment Associates V, L.P., a Delaware limited
partnership.
"Loan Agreement" shall mean the Amended and Restated Loan Agreement, dated
as of September 29, 1995, among the Company, Toronto Dominion (Texas), Inc., as
Documentation Agent and Managing Agent, and the other banks signatory thereto,
including any amendment, renewal, extension, substitution, refinancing,
replacement or other modification thereof.
"Partnership Agreement" shall mean the Agreement of Limited Partnership of
the Company, dated as of September 29, 1995, as the same shall be amended from
time to time, among the General Partner and the limited partners party thereto.
"OCF" for any period means the sum of (a) consolidated net income before
nonrecurring gains or losses for such period and (b) all amounts deducted in the
determination of such consolidated net income in respect of (i) depreciation
-
and amortization, (ii) interest charges, (iii) federal, state and local income
-- ---
taxes, (iv) franchise and similar taxes and fees and (v) fees paid to Kelso &
-- -
Company, L.P. pursuant to the Financial Advisory Agreement. OCF shall be
derived from the audited consolidated financial statements of the Company and
its subsidiaries delivered to the Company by the Manager pursuant to Section
2.6.
"Person" shall mean an individual, corporation, partnership, association,
trust or other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"Principals" shall mean Howard L. Wood, Barry L. Babcock and Jerald L. Kent
or appropriate replacements, reasonably satisfactory to and approved by Kelso.
"Projected OCF" shall mean the projected OCF for a given Fiscal Year for
the Company and its subsidiaries set forth on Schedule 2. Schedule 2 shall be
amended by the
<PAGE>
Company, with the consent of Kelso and the Manager, each acting
reasonably and in good faith, prior to any acquisition or disposition of
assets outside the ordinary course of business to reflect such acquisition or
disposition.
"Registration Rights Agreement" shall mean the Registration Rights
Agreement, dated as of January 18, 1995, as the same shall be amended from time
to time, among CCA Holdings, Kelso, Kelso Equity Partners V, L.P. and the
Manager.
"Stock Purchase Agreement" shall mean the Stock Purchase Agreement, dated
July 1, 1994, as amended, among H C Crown, CM Acquisition Corp., Marcus Cable
Partners, L.P., the Manager, the Company and Charter Communications II, L.P.
"Stockholders' Agreement" shall mean the Amended and Restated Stockholders'
Agreement, dated as of the date hereof, as the same shall be amended from time
to time, among CCA Holdings, Kelso, Kelso Equity Partners V, L.P. and the
Manager.
"Subscription Agreements" shall mean the Subscription Agreements, each
dated as of January 18, 1995, between CCA Holdings and each of the Manager,
Kelso and Kelso Equity Partners V, L.P.
"Subordinated Loan Agreement" shall mean the Senior Subordinated Loan
Agreement, dated as of January 18, 1995, as the same shall be amended from time
to time, between H C Crown and CCA Holdings.
"Term" shall mean the term of this Agreement which shall commence on the
Closing Date and end upon the tenth anniversary thereof, unless sooner
terminated pursuant to the terms hereof.
ARTICLE II
Retention of the Manager
------------------------
2.1 Agreement to Manage. (a) Subject to the terms and conditions
-------------------
hereinafter set forth, the Company hereby retains the Manager, and the Manager
hereby accepts such retention, as the manager of the Cable Systems, with full
power and authority during the Term to carry out all responsibilities of the
Manager under this Agreement.
<PAGE>
(b) The Manager shall, subject to Section 3.1 and in accordance with all
applicable laws, administrative enactments and franchise agreements and
licenses, be responsible for the management and operation of the Cable Systems,
including, but not limited to, (i) determination of policy, (ii) preparation and
- --
filing of all materials with appropriate federal, state and local regulatory
agencies or departments (including but not limited to the Federal Communications
Commission, Equal Employment Opportunity Commission and state agencies having
similar jurisdiction), (iii) hiring, supervision and dismissal of all
---
personnel, (iv) day-to-day system operations and (v) payment of all financial
-- -
obligations and operating expenses relating to the Cable Systems. All such
responsibilities shall be undertaken under the Company's continuing oversight,
review, supervision and control. Notwithstanding the foregoing, the Company
shall retain unfettered use of all facilities and equipment of the Cable Systems
and all cash or other assets received by the Manager in connection with the
management and operation of the Cable Systems shall be the property of the
Company, other than the Manager's compensation pursuant to Section 4.
2.2 Standards of Performance. The Manager covenants with the Company to
------------------------
manage and operate the Cable Systems in substantially the same manner as cable
television systems managed or owned by the Manager are managed and operated, and
to perform its duties and obligations under this Agreement in accordance with
all applicable laws, the terms and conditions of all applicable franchise
agreements and licenses and standard industry practices with respect to the
management of similar cable television systems. The Company acknowledges that
the Manager manages and owns other cable television systems. Nevertheless, the
Manager agrees that at any given time at least two of the Principals will be
devoting a substantial amount of their respective time to the management and
operation of the Cable Systems.
2.3 Availability of Discounts, etc. To the extent that the Manager is
-------------------------------
able to negotiate discounts or other favorable terms with suppliers of
programming and other goods and services with respect to cable systems owned or
managed by it, which discounts or other favorable terms are based on the buying
power of the Manager or otherwise, the Manager shall use its commercially
reasonable efforts to make the benefit of such discounts or other favorable
terms available to the Cable Systems on the same terms. In no event shall the
Cable Systems receive goods and services
<PAGE>
from the Manager on terms less favorable than what the Cable Systems would
receive from an unaffiliated third party.
2.4 Conflicts of Interest. The Manager shall not cause the Company, any
---------------------
of its subsidiaries or any Cable System to engage in any transaction or enter
into any agreement with the Manager or any Affiliate or employee thereof unless
(a) such transaction or agreement is in the ordinary course of business and upon
-
terms and conditions substantially similar to those granted to or imposed by the
Manager on all other cable television systems owned or managed by the Manager or
(b) the General Partner shall have consented thereto (which consent may be
-
granted or withheld in the sole discretion of the General Partner).
2.5 Annual Business Plan. On or before the Closing Date (but, in any
--------------------
event, not later than the date upon which the Company is required to deliver the
following budgets to the lenders under the Loan Agreement or to H C Crown under
the Subordinated Loan Agreement), the Manager shall prepare and submit to the
General Partner for its approval proposed capital and operating budgets for the
Company and its subsidiaries for the remaining portion of the 1995 Fiscal Year.
Commencing with the budget for the 1996 Fiscal Year, the Manager shall prepare
and submit to the General Partner for its approval at least 30 days prior to the
first day of each Fiscal Year (and, in any event, at least 30 days prior to any
required delivery of such budgets to the lenders under the Loan Agreement or to
H C Crown under the Subordinated Loan Agreement) proposed capital and operating
budgets for the Company and its subsidiaries for the forthcoming Fiscal Year.
As revised and approved by the General Partner, such proposed capital and
operating budgets shall become the "Annual Business Plan" for the Company and
its subsidiaries.
2.6 Tax Returns, Financial Statements, Books, etc. Without limiting the
----------------------------------------------
generality of the Manager's responsibilities set forth in Section 2.1(b), the
Manager shall:
(a) Tax Returns. Prepare or cause to be prepared and file all tax
-----------
returns and statements, if any, that must be filed on behalf of the Company or
any of its subsidiaries with any taxing authority. The Manager will provide
copies of any such filings to Kelso or any of its Affiliates or any of their
respective representatives upon request.
<PAGE>
(b) Financial Statements. Render to the Company (i) within 120 days
-------------------- -
following the end of each Fiscal Year, audited financial statements for each
prior Fiscal Year, (ii) within 45 days following the end of each fiscal quarter,
--
unaudited financial statements for each prior fiscal quarter, (iii) within 45
days following the end of each month, monthly financial statements and (iv)
--
such other information or reports as the General Partner may reasonably request.
All financial statements shall be for the Company and its subsidiaries on a
consolidated basis and shall be prepared in accordance with generally accepted
accounting principles, consistently applied. The Manager will provide copies of
any such financial statements, information or reports to Kelso or any of its
Affiliates or any of their respective representatives upon the reasonable
request of such parties.
(c) Preparation of Documents under Financing Arrangements. Prepare or
-----------------------------------------------------
cause to be prepared all documents, certificates, reports and other information
required to be delivered to the lenders under the Loan Agreement or H C Crown
under the Subordinated Loan Agreement and otherwise cause the Company and its
subsidiaries to comply with the terms thereof. The Manager will provide copies
of any such documents, certificates, reports and other information to Kelso or
any of its Affiliates or any of their respective representatives upon request.
(d) Books and Records. Maintain complete and accurate records and
-----------------
accounts pertaining to the business of the Company and its subsidiaries in
accordance with generally accepted accounting principles. Kelso, its Affiliates
and their respective representatives shall be entitled to inspect and audit the
books, records and accounts of the Company and its subsidiaries.
(e) Appraisal. Engage, from time to time, but not less often than once
---------
with respect to every Fiscal Year, commencing with the Fiscal Year ending on
Decem ber 31, 1995, and not later than 90 days after the end of each Fiscal
Year, an independent valuation consultant or appraiser of recognized national
standing reasonably satisfactory to Kelso to appraise the fair market value of
the Company and its subsidiaries on a consolidated basis as of the last day of
the Fiscal Year then most recently ended or, at the request of the
<PAGE>
Company or Kelso, as of any more recent date and to prepare and deliver a
report to the Company and Kelso describing the results of such appraisal.
ARTICLE III
Restricted Activities of the Manager
------------------------------------
3.1 Restricted Activities of the Manager. Without the prior written
------------------------------------
consent of the General Partner, which consent may be granted or withheld in its
sole discretion, the Manager shall not do, or cause or permit to be done, the
following for or on behalf of the Company or any of its subsidiaries:
(a) Modify, amend or waive any material right under any agreement
between the Company or any of its subsidiaries, on the one hand, and the Manager
or any Affiliate or employee thereof, on the other hand, including, without
limitation, this Agreement and the Equity Agreements.
(b) Approve any additional payment by the Company or any of its
subsidiaries to the Manager or any Affiliate or employee thereof other than as
provided in subsection (k)(ii) below.
(c) Commence or settle any suit, action or other legal or administrative
proceeding, except for any suit, action or other proceeding brought or defended
in the ordinary course of business where the Manager has no reasonable
expectation that potential damages will exceed $1,000,000.
(d) Select or replace the Company's independent public accountants.
(e) Materially change the accounting practices of the Company or any of
its subsidiaries .
(f) Materially change any of the tax reporting positions or elections of
the Company or any of its subsidiaries.
(g) Assert any of the Company's rights under the Stock Purchase
Agreement, provided, however, that the failure of the Company to timely assert
-------- -------
such rights in
<PAGE>
accordance therewith shall not constitute a breach by the Manager hereunder.
(h) Operate any business or enter into any agreement not related to the
Cable Systems.
(i) Approve the Annual Business Plan, including the annual capital and
operating expense budget, or change any such approved budgets by more than 10%
in the aggregate.
(j) Incur or guarantee any indebtedness, except (i) indebtedness for
-
borrowed money not in excess of $1,000,000, (ii) indebtedness pursuant to the
--
Loan Agreement, (iii) indebtedness in connection with a programming contract
---
or a cable television basic service supply contract entered into in the
ordinary course of business which requires aggregate payments of less than
$3,000,000 over the value assigned to such contract in the Company's most recent
operating expense budget, (iv) guarantees of any obligations under franchise
--
agreements of any of the Company's subsidiaries and (v) indebtedness in
-
connection with those cable television programming services commonly known in
the cable television industry as "Pay-TV" or "premium services" entered into in
the ordinary course of business.
(k) Make any loans or advances to or investments in any Person other
than a subsidiary of the Company, except (i) extensions of trade credit in the
-
ordinary course of business and (ii) loans and advances to employees of the
--
Company or any of its subsidiaries for reasonable travel, relocation and related
expenses in the ordinary course of business not to exceed $1 million in the
aggregate outstanding at any one time.
(l) Sell, pledge, encumber, donate, abandon, transfer or otherwise
dispose of any portion of the Company's or any of its subsidiaries' assets
having a fair market value in excess of $3,000,000.
(m) Unless included in the capital budget approved under subsection (i)
above, purchase, lease or acquire on behalf of the Company or any of its
subsidiaries any interest in any real property or other assets having a fair
market value in excess of $3,000,000.
(n) Unless included in the capital or operating budgets approved under
subsection (i) above or permit-
<PAGE>
ted under subsection (j) above, enter into, or materially modify or waive any of
the Company's or any of its subsidiaries' material rights under, any agreement
or related set of agreements involving aggregate payments to or by the Company
or any of its subsidiaries in excess of $1,000,000 during the term of such
agreement or agreements.
ARTICLE IV
Compensation
------------
4.1 Base Management Fee. (a) General. As compensation to the Manager for the
------------------- -------
management and operation of the Cable Systems, the Company shall pay to the
Manager an aggregate fee (the "Base Management Fee") equal to $3,250,000 per
Fiscal Year, payable quarterly in arrears. In the event the Company acquires
Cable Systems after the Closing Date, the Company and the Manager shall
negotiate in good faith to effect a mutually acceptable increase to the Base
Management Fee to reflect such acquisitions.
(b) Expenses. The Base Management Fee shall cover all expenses related to the
--------
management and operation of the Cable Systems, provided, however, the Base
-------- -------
Management Fee will not cover, and the Company or its subsidiaries will pay or
reimburse the Manager for, (i) in any given year, the kinds and amount of
-
operating and capital expenses of the Cable Systems set forth in the Annual
Business Plan for such year and (ii) the reasonable out-of-pocket travel
--
expenses (and lodging and entertainment expenses incurred by the Manager in
connection therewith) incurred by the Manager in connection with the performance
of its duties hereunder. Notwithstanding the provisions of clause (i) above, in
the event that the amount of any actual operating and capital expense of the
Cable Systems in any given year exceeds the amount of such expense set forth in
the Annual Business Plan for such year, then the Company or its subsidiaries
shall pay or reimburse the Manager for such excess up to an amount equal to 10%
of such operating and capital expense set forth in the Annual Business Plan for
such year.
(c) Employees. It is understood by the parties that the Company and its
---------
subsidiaries shall have the benefit of the headquarters, facilities, officers
and employees of the Manager. The Manager shall be responsible for providing
all benefits to such employees and shall indemnify the
<PAGE>
Company and its subsidiaries for any claim in connection therewith.
4.2 Cash Bonus. (a) Determination of Cash Bonus. Following the end of each
---------- ---------------------------
Fiscal Year (beginning with the 1995 Fiscal Year) during the Term of this
Agreement, if OCF for such Fiscal Year exceeds Projected OCF for such Fiscal
Year, the Company shall pay to the Manager the Cash Bonus for such Fiscal Year.
(b) Procedures for Payment of Cash Bonus. Together with delivery of the
------------------------------------
Company's audited financial statements for each Fiscal Year, the Manager shall
cause the Company's auditors to deliver a schedule that sets forth, for such
Fiscal Year: (i) OCF, including the calculations made to determine OCF, (ii)
- --
Projected OCF and (iii) calculations showing the amount, if any, of the Cash
---
Bonus, as determined in accordance with this Section 4.2 and the definition of
Cash Bonus. Such schedule will be presented to the General Partner for its
approval (which approval shall not be unreasonably withheld or delayed). If a
Cash Bonus is payable for any Fiscal Year, it will become due and payable to the
Manager within five days after delivery of such schedule to the General Partner
for its approval described in the preceding sentence.
4.3 Payment of Fee and Cash Bonus. Notwithstanding anything to the contrary
-----------------------------
herein, the Company shall not be permitted or obligated to pay the Base
Management Fee or any Cash Bonus to the extent the Company is restricted from
paying such Base Management Fee or Cash Bonus by any of the Loan Agreement or
the Subordinated Loan Agreement. In the event the Company is unable to pay the
full amount of any Base Management Fee or Cash Bonus due to any such
restriction, the Company shall pay such deferred amounts together with 8%
annual interest thereon, as soon as such payment is permissible under the Loan
Agreement, if ever, and the Subordinated Loan Agreement.
4.4 Pro Rated Fee and Cash Bonus. If this Agreement is terminated at any
----------------------------
time during the Term other than the end of a Fiscal Year, the Base Management
Fee and any Cash Bonus to which the Manager might be entitled pursuant to
Section 4.2 shall be determined on a pro rata basis for the Fiscal Year during
which the termination occurs.
<PAGE>
ARTICLE V
Representations and Warranties
------------------------------
5.1 Representations and Warranties of the Company. As a material inducement
---------------------------------------------
to the Manager to enter into this Agreement, the Company represents and warrants
that:
(a) Due Organization; Power and Authority, etc. It is a limited partnership
-------------------------------------------
duly organized, validly existing and in good standing under the laws of the
State of Delaware, with all necessary partnership power and authority to enter
into this Agreement and to carry out the transactions contemplated herein. The
execution and delivery hereof and the performance by the Company of its
obligations hereunder will not violate or constitute a default under the terms
and provisions of its certificate of limited partnership or agreement of limited
partnership or of any agreement, law or court order to which the Company is a
party or by which the Company is bound.
(b) Authorization; Enforceability. All actions required to be taken by or on
-----------------------------
behalf of the Company to authorize it to execute, deliver and perform its
obligations under this Agreement have been taken, and this Agreement is a valid
and binding obligation of the Company, enforceable in accordance with its terms,
except as the same may be affected by bankruptcy, insolvency, moratorium or
similar laws, or by legal or equitable principles relating to or limiting the
rights of contracting parties generally.
(c) Executing Parties. The Person executing this Agreement on behalf of the
-----------------
Company has full power and authority to bind the Company to the terms hereof.
5.2 Representations and Warranties of the Manager. As a material inducement
---------------------------------------------
to the Company to enter into this Agreement, the Manager represents and warrants
that:
(a) Due Organization; Power and Authority, etc. It is a corporation duly
-------------------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware, with all necessary corporate power and authority to enter into this
Agreement and to carry out the transactions contemplated herein. The execution
and delivery hereof and the performance by the Manager of its obligations
hereunder will not violate or consti-
<PAGE>
tute a default under the terms and provisions of its certificate of
incorporation or by-laws or of any agreement, law or court order to which the
Manager is a party or by which the Manager is bound.
(b) Authorization; Enforceability. All actions required to be taken by or on
-----------------------------
behalf of the Manager to authorize it to execute, deliver and perform its
obligations under this Agreement have been taken, and this Agreement is a valid
and binding obligation of the Manager, enforceable in accordance with its terms,
except as the same may be affected by bankruptcy, insolvency, moratorium or
similar laws, or by legal or equitable principles relating to or limiting the
rights of contracting parties generally.
(c) Executing Parties. The Person executing this Agreement on behalf of the
-----------------
Manager has full power and authority to bind the Manager to the terms hereof.
(d) Authorizations. The Manager has all necessary permits, licenses,
--------------
franchises, authorizations and entitlements necessary to perform its obligations
under this Agreement.
5.3 Survival of Representations and Warranties. All representations,
------------------------------------------
warranties and indemnities of the Company and the Manager in this Agreement
shall survive the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby.
ARTICLE VI
Insurance and Indemnity
-----------------------
6.1 Insurance. The Manager shall take out, or cause to be taken out, in each
---------
case at the expense of the Company, and maintain in force, such insurance
policies, bonds, or other sureties as are required by federal, state or local
law or by requirements of any franchise agreement or as are customary in the
normal course of business in the cable television industry.
6.2 Indemnification of the Manager. The Company hereby agrees to defend
------------------------------
(with counsel approved by the Manager, which approval shall not be
unreasonably withheld), indemnify and hold the Manager harmless from and against
and reimburse the Manager for any loss, liability, claim, liti-
<PAGE>
gation, damage, penalty, action, demand and expense arising out of, connected
with or incidental to: (a) the performance by the Manager of its duties under
-
this Agreement or any matter arising out of the relationship created hereby,
except to the extent that the Manager shall have acted with gross negligence,
dishonesty, willful malfeasance or gross misconduct or (b) any breach of any
-
representation by the Company in this Agreement. This obligation to indemnify
shall include reasonable attorneys' fees and investigation costs and all other
reasonable costs, expenses and liabilities incurred by the Manager or its
counsel in connection with any such claim. Such fees, costs and expenses shall
be paid by the Company in advance of the final disposition of such claim upon
receipt of an undertaking by or on behalf of the Manager to repay such amount if
it shall ultimately be determined that the Manager is not entitled to be
indemnified by the Company.
6.3 Indemnification by the Manager. The Manager hereby agrees to defend
------------------------------
(with counsel approved by the Company, which approval shall not be
unreasonably withheld), indemnify and hold the Company and its subsidiaries
harmless from and against and reimburse the Company and its subsidi aries for
any loss, liability, claim, litigation, damage, penalty, action, demand and
expense arising out of, connected with or incidental to: (a) any gross
-
negligence, dishonesty, willful malfeasance or gross misconduct by the Manager
in connection with the performance by the Manager of its obligations contained
in this Agreement or (b) any breach of any representation made by the Manager in
-
this Agreement. This obligation to indemnify shall include reasonable
attorneys' fees and investigation costs and all other reasonable costs, expenses
and liabilities incurred by the Company, its subsidiaries or its counsel in
connection with any such claim.
6.4 Persons Indemnified. The foregoing agreements by the Manager or the
-------------------
Company to indemnify and hold the other harmless shall inure to the benefit not
only of the respective indemnitee but also to that of its respective Affiliates,
and the directors, officers, employees, partners, agents and control persons
(as such term is defined in the Securities Act of 1933, as amended, and the
rules and regulations thereunder) of such indemnitee and its Affiliates. For
purposes of this Section 6.4, neither the Manager nor any of its officers,
directors, employees or stockholders shall be deemed to be an Affiliate of the
Company.
<PAGE>
ARTICLE VII
Termination
-----------
7.1 Default by the Manager. (a) If the Manager materially breaches this
---------------------- -
Agreement or the Stockholders' Agreement and the Manager fails to cure such
breach within 10 days after receipt of written notice from the Company advising
the Manager of the action allegedly resulting in such breach (or, if such breach
is not susceptible of cure within such period, fails to cure such breach as
promptly as possible, but in any event, within 90 days after receipt of written
notice from the Company), provided that the foregoing 90 day cure period will
--------
not apply to any willful breach of either such agreement by the Manager or (b)
-
if the Manager, or any employee or consultant thereof, engages in any act of
gross negligence, dishonesty, willful malfeasance or gross misconduct that is
materially injurious to the Company and its subsidiaries taken as a whole,
then the Company may elect, by written notice to the Manager, to terminate this
Agreement or (c) if the Manager defaults under any material agreement to which
-
it is a party and the Company reasonably believes that the Manager will be
unable to pay its debts as such debts become due (whether upon maturity,
acceleration or otherwise). Any such termination shall be effective as of the
date specified in the notice of termination. Without limiting the generality
of subsection (a) above, any breach of Section 8.1 hereof shall be deemed to be
a material breach of this Agreement entitling the Company to terminate this
Agreement. Kelso shall be entitled to exercise all of the Company's rights
under this Section 7.1.
Effect of Termination. If this Agreement is terminated pursuant to Section
---------------------
7.1, such termination will be without liability of any party and such party's
Affiliates to any other party and such other party's Affiliates, except for
liabilities resulting from any breach or default occurring prior to such
termination. The provisions of Article VI shall survive any termination of this
Agreement.
ARTICLE VIII
Miscellaneous
-------------
8.1 Prohibited Transfers and Assignments. The Manager shall not sell, convey,
------------------------------------
assign, transfer, hypothecate, pledge, or otherwise dispose of all or any part
of its interests in or obligations under this Agreement or agree to
<PAGE>
do any of the foregoing, except that (i) with the prior written consent of
-
Kelso, the Manager may assign its rights and obligations hereunder to an
Affiliate of the Manager and (ii) with prior notice to the Company, the Manager
--
may assign to any commercial bank (a "Charter Lender") any of its rights
hereunder, including its rights to receive compensation hereunder, as collateral
for any loan made by such Charter Lender to the Manager. So long as this
Agreement shall remain in full force and effect, the Principals shall own, in
the aggregate, directly or indirectly, at least 51% of the voting interests and
35% of the economic interests of the Manager on a fully diluted basis, taking
into account agreements or understandings (other than a pledge agreement entered
into in accordance with the terms of the Stockholders' Agreement) in effect
entitling any other Person (other than a Charter Lender) to the economic benefit
of such securities, provided, however, that the Principals shall be permitted to
-------- -------
transfer their shares of common stock of the Manager to their respective spouses
or children, or to trusts established for the benefit of such spouses or
children. Notwithstanding the foregoing provisions of this Section 8.1, the
Manager shall not take any action and shall not permit any Principal to take any
action, that would cause a breach of the Loan Agreement or the Subordinated Loan
Agreement.
8.2 Waiver. The waiver by the Company or the Manager of any breach of any
------
term, covenant or condition contained in this Agreement shall not be deemed to
be a waiver of any subsequent breach of the same or any other term, covenant or
condition contained herein. No covenant, term or condition of this Agreement
shall be deemed to have been waived by the Company or the Manager, unless such
waiver is in writing and is signed by the party against whom such waiver is
asserted.
8.3 Amendment and Modification. This Agreement may be amended, modified or
--------------------------
supplemented only by written agreement of the Company and the Manager.
8.4 Governing Law. This Agreement and the rights and obligations of the
-------------
parties hereunder and the persons subject hereto shall be governed by, and
construed and interpreted in accordance with, the law of the State of New
York, without giving effect to the choice of law principles thereof.
8.5 Invalidity of Provision. The invalidity or unenforceability of any
-----------------------
provision of this Agreement in any
<PAGE>
jurisdiction shall not affect the validity or enforceability of the remainder of
this Agreement in that jurisdiction or the validity or enforceability of this
Agreement, including that provision, in any other jurisdiction.
8.6 Notices. All notices, requests, demands, letters, waivers and other
-------
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if (a) delivered
-
personally, (b) mailed, certified or registered mail with postage prepaid, (c)
- -
sent by next-day or overnight mail or delivery or (d) sent by fax, as follows:
-
(i) If to the Company, to it at:
Charter Communications Entertainment I, L.P.
12444 Powerscourt Drive
400
St. Louis, Missouri 63131
Attention: Jerald L. Kent
(ii) If to the Manager, to it at:
Charter Communications, Inc.
12444 Powerscourt Drive
Suite 400
St. Louis, Missouri 63131
Attention: Jerald L. Kent
With a copy of any such notice to the Company or the Manager also being
sent to:
Kelso Investment Associates V, L.P.
c/o Kelso & Company
350 Park Avenue, 21st Floor
New York, New York 10022
Attention: James J. Connors, II, Esq.
or to such other person or address as any party shall specify by notice in
writing to the Company. All such notices, requests, demands, letters, waivers
and other communications shall be deemed to have been received (w) if by
-
personal delivery on the day after such delivery, (x) if by certified or
-
registered mail, on the fifth business day after the mailing thereof, (y) if by
-
next-day or overnight mail or delivery, on the day delivered or (z) if by fax,
-
on the next day following the day on which such fax was sent, provided that a
copy is also sent by certified or registered mail.
<PAGE>
8.7 Headings; Execution in Counterparts. The headings and captions contained
-----------------------------------
herein are for convenience and shall not control or affect the meaning or
construction of any provision hereof. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and
which together shall constitute one and the same instrument.
8.8 Successors. Except as herein otherwise provided, the terms hereof
----------
shall be binding upon and shall inure to the benefit of the successors and
assigns, respectively, of the Company and the Manager.
8.9 Entire Agreement. This Agreement embodies the entire agreement and
----------------
understanding of the parties hereto in respect of the subject matter contained
herein. There are no restrictions, promises, representations, warranties,
covenants or undertakings relating to the subject matter contained herein, other
than those expressly set forth or referred to herein. This Agreement supersedes
all prior
<PAGE>
agreements and understandings among the parties with respect to such subject
matter.
IN WITNESS WHEREOF, the Company and the Manager have executed this
Agreement as of the date first above written.
CHARTER COMMUNICATIONS
ENTERTAINMENT I, L.P.
By: CCA Acquisition Corp.,
as general partner
By:/s/ Theodore W. Browne, II
----------------------------
Theodore W. Browne
Executive Vice President
CHARTER COMMUNICATIONS, INC.
By:/s/ Theodore W. Browne, II
----------------------------
Theodore W. Browne
Executive Vice President
<PAGE>
Schedule 1
----------
List of Cable Systems
---------------------
Connecticut Systems
-------------------
1. Department of Public Utility Control (Northeast Connecticut) of the State of
Connecticut for Ashford, Brooklyn-Danielson, Canterbury, Chaplin, Columbia,
Coventry and Eastford (New London, Tolland and Windham Counties) [Willimantic
System].
2. Department of Public Utility Control (West Connecticut) of the State of
Connecticut for Bethlehem, Bridgewater, Brookfield, Kent, Monroe, New
Fairfield, New Milford, Newtown, Roxbury, Sherman, Southbury, Trumbult,
Washington and Woodbury (Fairfield, Litchfield and New Haven Counties)
[Housatonic, Mid-Connecticut, New Milford and Newtown Systems].
Missouri Systems
----------------
<TABLE>
<CAPTION>
<C> <S> <C> <C>
1. Ballwin 30. Oakland
2. Bella Villa 31. Olivette
3. Black Jack 32. Pike County
4. Bowling Green 33. Richmond Heights
5. Bridgeton 34. Rock Hill
6. Charlack 35. Shrewsbury
7. Country Life Acres 36. St. George
8. Crestwood 37. St. John
9. Creve Coeur 38. St. Louis County Area A
10. Crystal Lake Park 39. St. Louis County Area D/E
11. Des Peres 40. Sunset Hills
12. Ellisville 41. Sycamore Hills
13. Eureka 42. Town & Country
14. Fenton 43. Troy
15. Florissant 44. Truesdale
16. Frontenac 45. Twin Oaks
17. Glendale 46. Unknown Area
18. Grantwood Village 47. Valley Park
19. Hanley Hills 48. Vinita Park
20. Huntleigh 49. Warren County
21. Kirkwood 50. Warrenton
22. Ladue 51. Warson Woods
23. Lakeshire 52. Webster Groves
24. Lakeview Estates 53. Westwood
25. Lincoln County 54. Wilbur Park
26. Mackenzie 55. Winchester
27. Manchester 56. Woodson Terrace
28. Marlborough 57. Wright City
29. Moscow Mills
</TABLE>
<PAGE>
Schedule 2
----------
Projected OCF
-------------
<TABLE>
<CAPTION>
Final year Projected
Ended December 31 OCF
- --------------------------- -----------
<S> <C>
1995 $43,111,178
1996 $47,531,358
1997 $52,566,181
1998 $58,243,378
1999 $64,198,510
2000 $70,572,412
2001 $77,352,348
2002 $84,651,332
2003 $92,483,668
</TABLE>
<PAGE>
EXHIBIT 10.10
AMENDMENT NUMBER ONE TO
AMENDED AND RESTATED MANAGEMENT AGREEMENT
AMENDMENT NUMBER ONE, dated as of October 31, 1995, to the Amended and
Restated Management Agreement, dated as of September 29, 1995 (the "Management
Agreement"), between Charter Communications Entertainment I, L.P., a Delaware
limited partnership, and Charter Communications, Inc., a Delaware corporation.
NOW, THEREFORE, for good and valuable considera tion, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Section 4.1(a) of the Management Agreement is hereby replaced in its
entirety with the following:
"(a) General. As compensation to the Manager for the management and
-------
operation of the Cable Systems, the Company shall pay to the Manager an
aggregate fee (the "Base Management Fee") equal to $3,925,000 per Fiscal
Year, payable quarterly in arrears. In the event the Company acquires
Cable Systems after the Closing Date, the Company and the Manager shall
negotiate in good faith to effect a mutually acceptable increase to the
Base Management Fee to reflect such acquisitions."
2. Schedule 1 to the Management Agreement is hereby replaced in its
entirety with Schedule 1 attached hereto.
3. Schedule 2 to the Management Agreement is hereby replaced in its
entirety with Schedule 2 attached hereto.
4. Except as specifically amended hereby, the Management Agreement
remains in full force and effect.
5. This Amendment Number One may be executed in any number of
counterparts, each of which shall be deemed to be an original and which together
shall constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Amendment
Number One as of the date first above written.
CHARTER COMMUNICATIONS
ENTERTAINMENT I, L.P.
By: CCA Acquisition Corp.,
as general partner
By:/s/ Jeffrey C. Sanders
-------------------------------
Jeffrey C. Sanders
Executive Vice President
CHARTER COMMUNICATIONS, INC.
By:/s/ Jeffrey C. Sanders
-------------------------------
Jeffrey C. Sanders
Executive Vice President
2
<PAGE>
Schedule 1
----------
List of Cable Systems
---------------------
Connecticut Systems
-------------------
1. Department of Public Utility Control (Northeast Connecticut) of the State
of Connecticut for Ashford, Brooklyn-Danielson, Canterbury, Chaplin,
Columbia, Coventry and Eastford (New London, Tolland and Windham Counties)
[Willimantic System].
2. Department of Public Utility Control (West Connecticut) of the State of
Connecticut for Bethlehem, Bridgewater, Brookfield, Kent, Monroe, New
Fairfield, New Milford, Newtown, Roxbury, Sherman, Southbury, Trumbull,
Washington and Woodbury (Fairfield, Litchfield and New Haven Counties)
[Housatonic, Mid-Connecticut, New Milford and Newtown Systems].
Massachusetts Systems
---------------------
1. Pepperell
2. Rutland
3. Uxbridge
4. Wales
5. Westport
Missouri Systems
----------------
1. Ballwin 31. Oakland
2. Bela Villa 32. Olivette
3. Black Jack 33. Pike County
4. Bowling Green 34. Richmond Heights
5. Bridgeton 35. Rock Hill
6. Charlack 36. Shrewsbury
7. Chesterfield 37. St. George
8. Country Life Acres 38. St. John
9. Crestwood 39. St. Louis County Area A
10. Creve Coeur 40. St. Louis County Area D/E
11. Crystal Lake Park 41. Sunset Hills
12. Des Peres 42. Sycamore Hills
13. Ellisville 43. Town & Country
14. Eureka 44. Troy
15. Fenton 45. Truesdale
16. Florissant 46. Twin Oaks
<PAGE>
17. Frontenac 47. Unknown Area
18. Glendale 48. Valley Park
19. Grantwood Village 49. Vinita Park
20. Hanley Hills 50. Warren County
21. Huntleigh 51. Warrenton
22. Kirkwood 52. Warson Woods
23. Ladue 53. Webster Groves
24. Lakeshire 54. Westwood
25. Lakeview Estates 55. Wilbur Park
26. Lincoln County 56. Winchester
27. Mackenzie 57. Woodson Terrace
28. Manchester 58. Wright City
29. Marlborough
30. Moscow Mills
2
<PAGE>
EXHIBIT 10.11
AMENDMENT NUMBER TWO TO
AMENDED AND RESTATED MANAGEMENT AGREEMENT
AMENDMENT NUMBER TWO, dated as of March 29, 1996, to the Amended and
Restated Management Agreement, dated as of September 29, 1995 and as amended as
of October 31, 1995 (the "Management Agreement"), between Charter Communications
Entertainment I, L.P., a Delaware limited partnership, and Charter
Communications, Inc., a Delaware corporation.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Section 4.1(a) of the Management Agreement is hereby replaced in
its entirety with the following:
"(a) General. As compensation to the Manager for the management and
-------
operation of the Cable Systems, the Company shall pay to the Manager an
aggregate fee (the "Base Management Fee") equal to $4,665,000 per Fiscal Year,
payable quarterly in arrears. In the event the Company acquires Cable Systems
after the Closing Date, the Company and the Manager shall negotiate in good
faith to effect a mutually acceptable increase to the Base Management Fee to
reflect such acquisitions."
2. Schedule 1 to the Management Agreement is hereby replaced in its
entirety with Schedule 1 attached hereto.
3. Schedule 2 to the Management Agreement is hereby replaced in its
entirety with Schedule 2 attached hereto.
4. Except as specifically amended hereby, the Management Agreement
remains in full force and effect.
5. This Amendment Number Two may be executed in two counterparts,
both of which shall be deemed to be an original and which together shall
constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed
this Amendment Number Two as of the date first above written.
CHARTER COMMUNICATIONS
ENTERTAINMENT I, L.P.
By: CCA Acquisition Corp.,
its general partner
By: /s/ Jerald L. Kent
______________________________________________
Name:
Title:
CHARTER COMMUNICATIONS, INC.
By: /s/ Jerald L. Kent
______________________________________________
Name:
Title:
<PAGE>
Schedule 2
----------
Projected OCF
-------------
Final year Projected
Ended December 31 OCF
--------------------------- ------------
1996 $ 65,111,589
1997 $ 74,620,519
1998 $ 82,842,070
1999 $ 91,523,401
2000 $100,506,900
2001 $109,937,267
2002 $120,092,309
2003 $131,000,409
<PAGE>
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
City/County Legal Entity
CONNECTICUT (2)
Northeast Connecticut CCE I
Western Connecticut CCE I
ILLINOIS (25)
Alhambra CCE I
Caseyville CCE I
Collinsville CCE I
Columbia CCE I
Dupo CCE I
Edwardsville CCE I
Glen Carbon CCE I
Granite City CCE I
Hamel CCE I
Highland CCE I
Madison CCE I
Madison County CCE I
Marine CCE I
Maryville CCE I
Millstadt CCE I
Monroe County CCE I
New Douglas CCE I
Pontoon Beach CCE I
Sorento CCE I
St. Clair County CCE I
St. Jacob CCE I
Troy CCE I
Venice CCE I
Waterloo CCE I
Worden CCE I
MASSACHUSETTS (16)
Barre CCE I
Berlin CCE I
Brimfield CCE I
Douglas CCE I
Dunstable CCE I
Groton CCE I
Harvard CCE I
Hubbardston CCE I
Millville CCE I
Oakham CCE I
Page 1
<PAGE>
Pepperell CCE I
Rutland CCE I
Sutton CCE I
Uxbridge CCE I
Wales CCE I
Westport CCE I
NEW HAMPSHIRE (2)
Brookline CCE I
Hollis CCE I
MISSOURI (73)
Ballwin CCE I
Ballwin (UVC) CCE I
Bella Villa CCE I
Black Jack CCE I
Bonne Terre CCE I
Bowling Green CCE I
Bridgeton CCE I
Charlack CCE I
Chesterfield CCE I
Clarkson Valley CCE I
Country Life Acres CCE I
Crestwood CCE I
Creve Coeur I CCE I
Creve Coeur II CCE I
Crystal Lake Park CCE I
Des Peres CCE I
Desloge CCE I
Ellisville CCE I
Eureka CCE I
Fenton CCE I
Florissant CCE I
Frontenac CCE I
Glendale CCE I
Grantwood Village CCE I
Green Park CCE I
Hanley Hills CCE I
Hazelwood CCE I
Huntleigh CCE I
Kirkwood CCE I
Ladue CCE I
Lakeshire CCE I
Leadington CCE I
Leadwood CCE I
Lincoln County CCE I
Mackenzie CCE I
Page 2
<PAGE>
Manchester I CCE I
Manchester II CCE I
Marlborough CCE I
Moscow Mills CCE I
Oakland CCE I
Olivette CCE I
Park Hills CCE I
Peerless Park CCE I
Pike County CCE I
Richmond Heights CCE I
Rock Hill CCE I
Shrewsbury CCE I
St. George CCE I
St. John CCE I
St. Louis County-Area A CCE I
St. Louis County-Area D CCE I
St. Louis County-Area E CCE I
St. Louis County (UVC) CCE I
Sunset Hills CCE I
Sycamore Hills CCE I
Town & Country CCE I
Town & Country (UVC) CCE I
Troy CCE I
Truesdale CCE I
Twin Oaks CCE I
Valley Park CCE I
Vinita Park CCE I
Warren County CCE I
Warrenton CCE I
Warson Woods CCE I
Webster Groves CCE I
Westwood CCE I
Wilbur Park CCE I
Wildwood CCE I
Wildwood (UVC) CCE I
Winchester CCE I
Woodson Terrace CCE I
Wright City CCE I
Page 3
<PAGE>
EXHIBIT 10.12
AMENDMENT NUMBER THREE TO
AMENDED AND RESTATED MANAGEMENT AGREEMENT
AMENDMENT NUMBER THREE, dated as of November 29, 1996, to the Amended and
Restated Management Agreement, dated as of September 29, 1995, as amended as of
October 31, 1995 and as further amended as of March 29, 1996 (the "Management
Agreement"), between Charter Communications Entertainment I, L.P., a Delaware
limited partnership, and Charter Communications, Inc., a Delaware corporation.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Section 4.1(a) of the Management Agreement is hereby replaced in its
entirety with the following:
"(a) General. As compensation to the Manager for the management and
-------
operation of the Cable Systems, the Company shall pay to the Manager an
aggregate fee (the "Base Management Fee") equal to $4,845,000 per Fiscal Year,
payable quarterly in arrears. In the event the Company acquires Cable Systems
after the Closing Date, the Company and the Manager shall negotiate in good
faith to effect a mutually acceptable increase to the Base Management Fee to
reflect such acquisitions."
2. Schedule 1 to the Management Agreement is hereby replaced in its
entirety with Schedule 1 attached hereto.
3. Schedule 2 to the Management Agreement is hereby replaced in its
entirety with Schedule 2 attached hereto.
4. Except as specifically amended hereby, the Management Agreement remains
in full force and effect.
5. This Amendment Number Three may be executed in two counterparts, both
of which shall be deemed to be an original and which together shall constitute
one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Amendment Number
Three as of the date first above written.
CHARTER COMMUNICATIONS
ENTERTAINMENT I, L.P.
By: CCA Acquisition Corp.,
its general partner
By: /s/ Jerald L. Kent
__________________________
Name:
Title:
CHARTER COMMUNICATIONS, INC.
By: /s/ Jerald L. Kent
__________________________
Name:
Title:
2
<PAGE>
Schedule 2
----------
Projected OCF
-------------
<TABLE>
<CAPTION>
Final year Projected
Ended December 31 OCF
- --------------------------- ------------
<S> <C>
1996 $ 65,288,897
1997 $ 77,242,502
1998 $ 85,920,610
1999 $ 95,090,670
2000 $104,513,390
2001 $114,444,874
2002 $124,987,559
2003 $136,312,259
</TABLE>
3
<PAGE>
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
City/County Legal Entity
CONNECTICUT (2)
Northeast Connecticut CCE I
Western Connecticut CCE I
ILLINOIS (25)
Millstadt CCE I
St. Clair County CCE I
Glen Carbon CCE I
Edwardsville CCE I
Dupo CCE I
Troy CCE I
Madison County CCE I
Waterloo CCE I
Highland CCE I
Granite City CCE I
Pontoon Beach CCE I
Maryville CCE I
Caseyville CCE I
Collinsville CCE I
Sorento CCE I
Alhambra CCE I
New Douglas CCE I
Worden CCE I
St. Jacob CCE I
Hamel CCE I
Monroe County CCE I
Marine CCE I
Venice CCE I
Madison CCE I
Columbia CCE I
MASSACHUSETTS (16)
Pepperell CCE I
Uxbridge CCE I
Westport CCE I
Millville CCE I
Sutton CCE I
Groton CCE I
Douglas CCE I
Rutland CCE I
Barre CCE I
Berlin CCE I
Page 1
<PAGE>
Hubbardston CCE I
Harvard CCE I
Brimfield CCE I
Wales CCE I
Dunstable CCE I
Oakham CCE I
NEW HAMPSHIRE (2)
Brookline CCE I
Hollis CCE I
MISSOURI (78)
Green Park CCE I
Huntleigh CCE I
Hazelwood CCE I
St. Louis County--Area A CCE I
St. Louis County--Area D CCE I
St. Louis County--Area E CCE I
St. Louis County (UVC) CCE I
Warrenton CCE I
Bella Villa CCE I
Lincoln County CCE I
Clarkson Valley CCE I
Troy CCE I
Wildwood CCE I
Town & Country (UVC) CCE I
Webster Groves CCE I
Ballwin (UVC) CCE I
Sycamore Hills CCE I
Manchester I CCE I
Fenton CCE I
Des Peres CCE I
Ellisville CCE I
Crystal Lake Park CCE I
Creve Coeur I CCE I
Sunset Hills CCE I
Olivette CCE I
Eureka CCE I
Frontenac CCE I
Kirkwood CCE I
Warson Woods CCE I
Richmond Heights CCE I
Rock Hill CCE I
Crestwood CCE I
Town & Country CCE I
Ballwin CCE I
Ladue CCE I
Page 2
<PAGE>
Twin Oaks CCE I
Oakland CCE I
Creve Coeur II CCE I
Manchester II CCE I
Westwood CCE I
Country Life Acres CCE I
Vinita Park CCE I
Charlack CCE I
Bonne Terre CCE I
St. George CCE I
St. John CCE I
Wilbur Park CCE I
Moscow Mills CCE I
Desloge CCE I
Leadington CCE I
Bowling Green CCE I
Florissant CCE I
Bridgeton CCE I
Pike County CCE I
Wright City CCE I
Truesdale CCE I
Franklin County CCE I
Park Hills CCE I
Chesterfield CCE I
Winchester CCE I
Valley Park CCE I
Leadwood CCE I
Mackenzie CCE I
Jefferson County CCE I
Byrnes Mill CCE I
Olympian Village CCE I
Woodson Terrace CCE I
Shrewsbury CCE I
Glendale CCE I
Marlborough CCE I
Cedar Hill Lakes CCE I
Lakeshire CCE I
Warren County CCE I
Kimmswick CCE I
Grantwood Village CCE I
Peerless Park CCE I
Hanley Hills CCE I
Black Jack CCE I
Page 3
<PAGE>
EXHIBIT 10.13
PAGE 1
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
________________________________
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF LIMITED
PARTNERSHIP OF "CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.", FILED IN THIS
OFFICE ON THE TWENTIETH DAY OF APRIL, A.D. 1995, AT 1:30 O'CLOCK P.M.
/s/ Edward J. Freel
(SEAL) ----------------------------------
Edward J. Freel Secretary of State
2500922 8100 AUTHENTICATION: 7481708
950087614 DATE: 04-24-95
<PAGE>
CERTIFICATE OF LIMITED PARTNERSHIP
OF
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
This Certificate of Limited Partnership of Charter Communications
Entertainment I, L.P. (the "Partnership"), dated as of April 19, 1995, is being
duly executed and filed by CCA Holdings Corp., a Delaware corporation, as
general partner, to form a limited partnership pursuant to the Delaware Revised
Uniform Limited Partnership Act, Title 6 Delaware Code, Chapter 17.
1. The name of the limited partnership is Charter Communications
Entertainment I, L.P.
2. The address of the Partnership's registered office in the State
of Delaware is the Corporation Trust Center, 1209 Orange Street, Wilmington, New
Castle County, Delaware 19801. The name of the Partnership's registered agent
for service of process at such address is The Corporation Trust Company.
3. The name and business address of the sole general partner of the
Partnership is:
CCA Holdings Corp.
c/o Charter Communications, Inc.
12444 Powerscourt Drive
St. Louis, Missouri 63131
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Limited Partnership of Charter Communications Entertainment I, L.P. as of the
date first above written.
CHARTER COMMUNICATIONS
ENTERTAINMENT I, L.P.
By: CCA Holdings Corp.,
general partner
By: /s/ Neil A. Torpey
-----------------------------
Name: Neil A. Torpey
Title: Assistant Secretary
<PAGE>
EXHIBIT 10.14
AMENDMENT
TO THE
CERTIFICATE OF LIMITED PARTNERSHIP
OF
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
The undersigned, desiring to amend the Certificate of Limited
Partnership of Charter Communications Entertainment I, L.P. pursuant to the
provisions of Section 17-202 of the Revised Uniform Limited Partnership Act of
the State of Delaware, does hereby certify as follows:
FIRST: The name of the Limited Partnership is Charter Communications
Entertainment I, L.P.
SECOND: Article 3 of the Certificate of Limited Partnership shall be
amended to read in its entirety as follows:
"3. The name and business address of the sole general partner of the
Partnership is:
CCA Acquisition Corp.
c/o Charter Communications, Inc.
12444 Powerscourt Drive
St. Louis, Missouri 63131"
IN WITNESS WHEREOF, the undersigned executed this Amendment to the
Certificate of Limited Partnership of this 29th day of September, 1995.
CHARTER COMMUNICATIONS
ENTERTAINMENT I. L.P.
By: CCA Acquisition Corp.,
general partner
By:/s/ Jeffrey Sanders
_______________________
Name: Jeffrey Sanders
Title: Executive Vice President,
CFO and Treasurer
<PAGE>
EXHIBIT 10.15
================================================================================
AGREEMENT
OF LIMITED PARTNERSHIP
OF
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
Dated as of September 29, 1995
<PAGE>
================================================================================
2
<PAGE>
Initial
Preferred
Capital
Account
- -------
Table of Contents
-----------------
<TABLE>
<CAPTION>
Page
<S> <C>
Article I
Formation of the Partnership................................... 1
1.1. Formation................................................ 1
1.2. Partnership Name......................................... 1
1.3. Purpose.................................................. 1
1.4. Place of Business........................................ 1
1.5. Registered Office and Registered Agent................... 2
1.6. Term..................................................... 2
1.7. Partnership Powers....................................... 2
Article II
Capital........................................................ 3
2.1. Capital Contributions.................................... 3
2.2. Additional Capital....................................... 3
2.3. Liability, etc........................................... 4
2.4. Withdrawal of Capital.................................... 4
2.5. Priority................................................. 4
2.6. Capital Accounts......................................... 4
2.7. Adjustments.............................................. 4
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Article III
Accounting, Distributions and Taxes............................ 5
3.1. Allocations of Net Profits and Net Losses................ 5
3.2. Qualified Income Offsets, Restorative
Allocations.............................................. 5
3.3. Partnership Minimum Gain................................. 6
3.4. Minimum Gain Attributable to Partner
Nonrecourse Debt......................................... 6
3.5. Nonrecourse Deductions................................... 7
3.6. Partner Nonrecourse Deductions........................... 7
3.7. Section 754 Adjustments.................................. 7
3.8. Tax Allocations; Section 704(c).......................... 7
3.9. Distributions............................................ 8
3.10. Accounting Method........................................ 8
3.11. Certain Federal Income Tax Matters....................... 8
3.12. Election under Section 754............................... 9
3.13. Tax Withholdings......................................... 9
Article IV
General Partner................................................ 9
4.1. Management............................................... 9
4.2. Reliance on Authority of General Partner................. 10
4.3. Interested Party Contracts............................... 10
4.4. Expenditures By General Partner.......................... 10
4.5. Other Relationships...................................... 10
4.6. Proscriptions............................................ 10
4.7. Bank Accounts............................................ 11
Article V
Restrictions Regarding Transfer, Substitution, etc............. 11
5.1. Transfer of Interests by General Partner................. 11
5.2. Additional General Partner............................... 11
5.3. Transfer of Interests by Limited Partners................ 11
5.4. Additional Limited Partners.............................. 11
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
Article VI
Indemnification................................................ 12
6.1. Exculpatory Provisions................................... 12
6.2. Indemnification of General Partner....................... 12
6.3. Advance of Expenses...................................... 13
6.4. Non-Exclusivity.......................................... 13
6.5. Satisfaction from Partnership Assets..................... 13
6.6. Notices of Claims, etc................................... 13
6.7. Exculpation and Indemnification of Manager............... 13
Article VII
Dissolution and Liquidation.................................... 14
7.1. Events of Dissolution; Accounting........................ 14
7.2. Liquidating Trustee...................................... 14
7.3. Distribution in Liquidation.............................. 14
Article VIII
Power of Attorney.............................................. 15
Article IX
Construction................................................... 16
9.1. Headings................................................. 16
9.2. Notices.................................................. 16
9.3. Governing Law............................................ 17
9.4. Entire Understanding and Amendment....................... 17
9.5. Miscellaneous............................................ 18
Article X
Definitions.................................................... 18
</TABLE>
SCHEDULE A -- Partners, Capital Contributions and Capital Accounts
iii
<PAGE>
AGREEMENT OF LIMITED PARTNERSHIP
OF
CHARTER COMMUNICATIONS ENTERTAINMENT I, L.P.
AGREEMENT OF LIMITED PARTNERSHIP, dated as of September 29, 1995,
among CCA Acquisition, a Delaware corporation, as general partner (the "General
Partner"), and the entities identified as limited partners in Schedule A hereto,
as limited partners (which entities, together with any other entities who, in
accordance with the terms hereof, may be admitted hereafter as limited partners,
are herein collectively referred to as the "Limited Partners").
Capitalized terms used herein without definition are defined in
Article X.
Article I
----------
Formation of the Partnership
----------------------------
1.1 Formation. The parties to this Agreement hereby form a limited
---------
partnership (the "Partnership") pursuant to and in accordance with the
provisions of the Delaware Revised Uniform Limited Partnership Act (as amended
from time to time, the "Act"). The Certificate of Limited Partnership of the
Partnership was filed with the Secretary of State of the State of Delaware on
April 20, 1995.
1.2 Partnership Name. The name of the Partnership shall be Charter
----------------
Communications Entertainment I, L.P.
1.3 Purpose. The purpose of the Partnership is, directly or
-------
indirectly, to acquire, finance, franchise, construct, develop, own, alter,
repair, maintain, promote, program, operate, manage, lease, sell, exchange or
otherwise
<PAGE>
dispose of cable television systems and to engage in such activities as the
General Partner, subject to the terms set forth herein, deems necessary,
advisable or incidental to the foregoing.
1.4 Place of Business. The principal place of business of the
-----------------
Partnership shall be c/o Charter Communications, Inc., 12444 Powerscourt Drive,
Suite 400, St. Louis, Missouri 63131, or such other place or places as may be
designated at any time and from time to time by the General Partner. The General
Partner will inform the Limited Partners of any change in the principal office
of the Partnership.
1.5 Registered Office and Registered Agent. The registered office of
--------------------------------------
the Partnership in the State of Delaware shall be c/o The Corporation Trust
Company, Corporation Trust Company Center, 1209 Orange Street, Wilmington, New
Castle County, Delaware 19801, and the registered agent for service of process
on the Partnership in the State of Delaware at such address is The Corporation
Trust Company.
1.6 Term. Unless sooner terminated by the General Partner, the
----
Partnership shall continue until the earliest to occur of:
(a) The assignment for the benefit of creditors by the General
Partner, appointment of a receiver for or adjudication of bankruptcy of the
General Partner which appointment or order remains unstayed for more than
90 days, or seizure by a judgment creditor of the General Partner's
interest in the Partnership;
(b) The sale, exchange or involuntary conversion of all, or
substantially all, of the assets of the Partnership;
2
<PAGE>
(c) The resignation or withdrawal of any Partner or the assignment or
transfer by any Partner of any of such Partner's interest in the
Partnership; or
(d) December 31, 2055.
1.7 Partnership Powers. In furtherance of the Partnership's purpose
------------------
specified in Section 1.3, the Partnership shall have all of the powers available
to it as a limited partnership under the laws of the State of Delaware,
including, without limitation, the power to engage in all activities and
transactions necessary or advisable to carry out the Partnership's purpose. The
General Partner is authorized to exercise all such powers in the name and on
behalf of the Partnership, including, without limitation, the authority:
(a) to invest in any other entity and to sell, transfer, assign,
convey, exchange or otherwise dispose of any or all of the properties or
assets of the Partnership or its Subsidiaries for cash, stock, securities
or any combination thereof on such terms and conditions as may, at any time
and from time to time, be determined by the General Partner;
(b) (i) to enter into any instruments or agreements constituting
-
Indebtedness; (ii) to apply the proceeds of any borrowings under any
--
instruments or agreements evidencing or creating any Indebtedness in such
manner and for such purposes as the General Partner shall determine; (iii)
---
to grant security interests in assets of the Partnership or its
Subsidiaries to secure the obligations of the Partnership or its
Subsidiaries or any of their respective affiliates with respect to any
Indebtedness; and (iv) to guarantee the obligations of the Partnership or
--
its Subsidiaries or any of their respective affiliates with respect to any
Indebtedness;
3
<PAGE>
(c) to enter into, deliver, perform and carry out contracts and
agreements of every kind necessary or incidental to the Partnership's
purpose;
(d) to open, maintain, and close bank accounts and draw checks or
other orders for the payment of money; and
(e) to take or perform such acts and to execute such agreements,
certificates, documents and instruments necessary or advisable to carry out
the Partnership's purpose.
Article II
----------
Capital
-------
2.1 Capital Contributions. As of the date of this Agreement, each
---------------------
Partner shall have contributed or caused to be contributed to the capital of the
Partnership property having an agreed upon value equal to the amount set forth
opposite such Partner's name on Schedule A hereto.
2.2 Additional Capital. No additional capital contributions or
------------------
assessments therefor beyond the amounts provided for in Section 2.1 shall be
required from any Partner. No additional capital contribution will be accepted
from any person (including the Partners) except for capital contributions
approved by the General Partner. Upon the making of any additional capital
contribution by any Partner, the General Partner shall amend Schedule A to
reflect the capital contribution of such Partner.
2.3 Liability, etc. The Limited Partners shall not have any personal
--------------
liability with respect to the liabilities or the obligations of the Partnership.
The Partners shall not be required to lend funds to the Partnership for any
purpose. The Limited Partners, in their capacity as such, shall not (a) take
-
part in the management of the
4
<PAGE>
business of the Partnership, except to the extent provided herein and as
permitted under the Act, (b) transact any business for the Partnership or (c)
- -
have the power to sign for or to bind the Partnership.
2.4 Withdrawal of Capital. No Partner shall be entitled to the
---------------------
return of such Partner's capital contribution except by reason of the
distribution to such Partner of cash or other property pursuant to Section 3.9
or 7.3 or upon the consent of the General Partner. No Partner shall have the
right to receive a distribution of property other than cash from the
Partnership.
2.5 Priority. Except as expressly otherwise provided herein, there
--------
shall be no priority of one or more of the Partners over the other Partners as
to return of contributions, withdrawals or distributions of cash or other
property.
2.6 Capital Accounts. There shall be established and maintained for
----------------
each Partner on the books of the Partnership a capital account (each, a "Capital
Account"), which shall be comprised of two subaccounts, an Ordinary Capital
Account and a Preferred Capital Account. The opening balance in each Partner's
Capital Account shall be as shown in Schedule A hereto. Whenever this Agreement
refers to the balance in a Partner's Capital Account, such reference shall mean
the sum of the balances of such Partner's Ordinary Capital Account and Preferred
Capital Account.
2.7 Adjustments. (a) As of each Adjustment Date, the balance of
-----------
each Ordinary Capital Account shall be adjusted by (i) increasing such balance
- ----------
by such Partner's (x) allocable share of Net Profits (allocated in accordance
-
with Section 3.1) and (y) the amount of money or the fair market value of any
-
property contributed to the Partnership by such Partner (net of any liabilities
secured by such contributed property that the Partnership is considered to
assume or take subject to under Section 752 of the Code) and
<PAGE>
(ii) decreasing such balance by (x) the amount of cash or the fair market value
-- ---------- -
of property distributed or deemed distributed to such Partner pursuant to
Sections 3.9(a), 3.9(b)(ii) and 7.3 (net of any liabilities secured by such
distributed property that the distributee Partner is considered to assume or
take subject to under Section 752 of the Code) and (y) such Partner's allocable
-
share of Net Losses (allocated in accordance with Section 3.1). Each Partner's
Ordinary Capital Account shall be further adjusted with respect to any special
allocations pursuant to Sections 3.2 through 3.7.
(b) As of each Adjustment Date, the balance of each Preferred Capital
Account shall be adjusted by (i) increasing such balance by any Preferred Return
- ----------
during the relevant Fiscal Period and (ii) decreasing such balance by any
-- ----------
payments made pursuant to Section 3.9(b)(i) during the relevant Fiscal Period.
Such increase and any related payment pursuant to Section 3.9(b)(i) shall be
treated for all purposes of this Agreement as a payment described in Section
707(c) of the Code.
(c) Any question with respect to a Partner's Capital Account shall be
resolved by the General Partner in good faith and in its reasonably exercised
discretion, applying principles consistent with this Agreement. The provisions
of this Agreement relating to the maintenance of Capital Accounts are intended
to comply with Treasury Regulations Section 1.704-1(b) and shall be interpreted
and applied in a manner consistent with such Treasury Regulations.
Article III
-----------
Accounting, Distributions and Taxes
-----------------------------------
3.1 Allocations of Net Profits and Net Losses. Except as provided in
-----------------------------------------
Sections 3.2 through 3.8, the Net Profits or Net Losses of the Partnership for
any Fiscal
6
<PAGE>
Period shall be allocated among the Partners in accordance with their Percentage
Interests.
3.2 Qualified Income Offsets, Restorative Allocations. (a) If (i)
-------------------------------------------------- -
any Partner unexpectedly receives any adjustment, allocation or distribution
described in Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6)
and (ii) such adjustment, allocation or distribution causes or increases a
--
deficit in such Partner's Adjusted Capital Account as of the end of the Fiscal
Period to which such adjustment, allocation or distribution relates (a
"Deficit"), then items of gross income for such Fiscal Period and each
subsequent Fiscal Period shall be specifically allocated to each such Partner
pro rata in proportion to its Deficits in an amount and manner sufficient to
- --- ----
eliminate, to the extent required by the Treasury Regulations, such Deficit as
quickly as possible, provided that an allocation pursuant to this Section 3.2
--------
shall be made only if and to the extent that such Partner would have a Deficit
after all other allocations provided for in this Article III have been
tentatively made as if this Section 3.2 were not in this Agreement.
(b) Any special allocations of items of income or gain pursuant to
this Section 3.2 shall be taken into account in computing subsequent allocations
pursuant to this Agreement, so that the net amount for any item so allocated and
all other items allocated to each Partner pursuant to this Agreement shall be
equal, to the extent possible, to the net amount that would have been allocated
to each Partner pursuant to the provisions of this Agreement if such special
allocations had not occurred.
3.3 Partnership Minimum Gain. Except as otherwise provided in
------------------------
Treasury Regulations Section 1.704-2(f), if there is a net decrease in
Partnership Minimum Gain during any Partnership Fiscal Year, each Partner shall
be specially allocated items of Partnership income and gain for such period
(and, if necessary, subsequent periods) in proportion to, and to the extent of,
an amount equal to the
7
<PAGE>
portion of such Partner's share of the net decrease in Partnership Minimum Gain,
determined in accordance with Treasury Regulations Section 1.704-2(g). This
Section 3.3 is intended to comply with the chargeback of items of income and
gain requirement in Treasury Regulations Section 1.704-2(f) and shall be
interpreted consistently therewith.
3.4 Minimum Gain Attributable to Partner Nonrecourse Debt. Except as
-----------------------------------------------------
otherwise provided in Treasury Regulations Section 1.704-2(i), if there is a net
decrease in Minimum Gain Attributable to Partner Nonrecourse Debt during any
Partnership Fiscal Year, each Partner with a share of Minimum Gain Attributable
to Partner Nonrecourse Debt shall be specially allocated items of Partnership
income and gain for such period (and, if necessary, subsequent periods) in
proportion to, and to the extent of, an amount equal to the portion of such
Partner's share of the net decrease in the Minimum Gain Attributable to Partner
Nonrecourse Debt, determined in accordance with Treasury Regulations Section
1.704-2(i)(4). This Section 3.4 is intended to comply with the chargeback of
items of income and gain requirement in Treasury Regulations Section 1.704-
2(i)(4) and shall be interpreted consistently therewith.
3.5 Nonrecourse Deductions. Nonrecourse Deductions for any Fiscal
----------------------
Year shall be allocated to the Partners in the same ratios that Net Profits are
allocated for the Fiscal Year in accordance with Treasury Regulations Section
1.704-2(b)(1).
3.6 Partner Nonrecourse Deductions. Partner Nonrecourse Deductions
------------------------------
for any Fiscal Year shall be allocated 100% to the Partner that bears the
economic risk of loss (as defined in Treasury Regulations Section 1.704-2(b))
with respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse
Deductions are attributable in accordance with Treasury Regulations Section
1.704-2(i). If more than one Partner bears the economic risk of loss with
respect to a Partner Nonrecourse Debt, such Partner Nonrecourse Deductions
attributable thereto shall be
8
<PAGE>
allocated between or among such Partners in accordance with the ratios in which
they share such economic risk of loss.
3.7 Section 754 Adjustments. To the extent an adjustment to the
-----------------------
adjusted basis of any Partnership asset pursuant to Section 734(b) of the Code
or Section 743(c) of the Code is required, pursuant to Treasury Regulations
Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital
Accounts, the amount of such adjustment to Capital Accounts shall be treated as
an item of gain (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases such basis) and such gain or loss shall be specially
allocated to the Partners in a manner consistent with the manner in which their
Adjusted Capital Accounts are required to be adjusted pursuant to Treasury
Regulations Section 1.704-1(b)(2)(iv)(m).
3.8 Tax Allocations; Section 704(c). (a) Except as provided in
-------------------------------
subsection (b) below, the income, gains, losses, credits and deductions
recognized by the Partnership shall be allocated among the Partners, for U.S.
federal, state and local income tax purposes, to the extent permitted under the
Code and the Treasury Regulations, in the same manner that each such item
affects the balances in the Partners' Capital Accounts.
(b) In accordance with Section 704(c) of the Code and the Treasury
Regulations thereunder, income, gain, loss and deduction with respect to any
property contributed to the capital of the Partnership shall, solely for tax
purposes, be allocated among the Partners so as to take account of any variation
between the adjusted basis of such property to the Partnership for federal
income tax purposes and its fair market value as determined by the General
Partner.
3.9 Distributions. The General Partner may from time to time declare
-------------
distributions of cash or other Partnership property. Such distributions shall
be made or applied as follows:
9
<PAGE>
(a) First, all distributions received for Permitted Expenses shall be
distributed in a manner designed to permit payment of such expenses.
(b) Following the Partnership's distribution of amounts pursuant to
Section 3.9(a) above, the Partnership shall make all other distributions to the
Partners in accordance with the following order of priority:
(i) first, to each Partner whose Preferred Capital Account
balance shall be greater than zero to the extent of such positive
balance in the ratio that its respective Preferred Capital Account
balance bears to all such positive Preferred Capital Account balances;
and
(ii) thereafter, to the Partners in accordance with their
Percentage Interests.
3.10 Accounting Method. The books of account of the Partnership shall
-----------------
be kept pursuant to the accrual method of accounting. Except to the extent
required by law, the Partnership shall not change its accounting principles in a
manner adverse to any Partner without the consent of such Partner.
3.11 Certain Federal Income Tax Matters. The Partners understand and
----------------------------------
intend that under the Code the Partnership constitutes a "limited partnership."
The General Partner shall be the "tax matters partner" of the Partnership
pursuant to Section 6231(a)(7) of the Code. Each Partner hereby consents to such
designation and agrees that upon the request of the General Partner it will
execute, certify, acknowledge, deliver, swear to, file and record at the
appropriate public offices such documents as may be necessary or appropriate to
evidence such consent.
3.12 Election under Section 754. The General Partner, on behalf of
--------------------------
the Partnership, may in its sole
10
<PAGE>
discretion file an election under Section 754 of the Code in accordance with the
procedures set forth in the applicable Treasury Regulations.
3.13 Tax Withholdings. The Partnership shall at all times be entitled
----------------
to make payments with respect to any Partner in amounts required to discharge
any legal obligation of the Partnership pursuant to any provision of the Code or
any other tax provision or any provision enacted in the future imposing a
similar obligation on the Partnership to withhold or make payments to any
governmental authority with respect to any U.S. federal, state and local tax
liability of such Partner arising as a result of such Partner's interest in the
Partnership. Each such payment shall be deemed to be a loan by the Partnership
to such Partner and shall not be deemed to be a distribution. The amount of such
payments made with respect to any Partner, plus interest at an annual rate equal
to the interest rate publicly announced by The Toronto-Dominion Bank, New York
Branch from time to time as its base rate on each such amount from the date of
each such payment until such amount is repaid to the Partnership, shall be
repaid to the Partnership by (i) deduction from the current or next succeeding
-
distribution or distributions otherwise payable to such Partner pursuant to this
Agreement or (ii) earlier payment of such amounts and interest by the Partner to
--
the Partnership.
Article IV
----------
General Partner
---------------
4.1 Management. The management and control of and the determination
----------
of policy with respect to the Partnership and its affairs shall be vested
exclusively in the General Partner and in connection therewith the General
Partner may exercise all of the powers and authority set forth in Section 1.7.
Notwithstanding the foregoing, the General Partner may retain the Manager to
manage the
11
<PAGE>
Partnership and its Subsidiaries and may delegate such powers and authority to
the Manager and assign such duties to the Manager as the General Partner in its
reasonable discretion deems necessary or advisable, such powers, authority and
duties to be set forth, and limited in the manner set forth, in the Management
Agreement.
4.2 Reliance on Authority of General Partner. Nothing herein
----------------------------------------
contained shall impose any obligation on any person or firm doing business with
the Partnership to inquire as to whether or not the General Partner has exceeded
its authority in executing or causing to be executed any contract, lease, deed
or other instrument on behalf of the Partnership, and any such third person
shall be fully protected in relying upon such authority.
4.3 Interested Party Contracts. The General Partner may cause the
--------------------------
Partnership to enter into contracts and transactions with the General Partner or
any of its affiliates, provided that the terms of any such contract or
--------
transaction are entered into in good faith, and are fair and reasonable to the
Partnership.
4.4 Expenditures By General Partner. The General Partner shall be
-------------------------------
entitled to reimbursement by the Partnership for any reasonable expenditures
incurred by the General Partner on behalf of the Partnership which are paid by
or on behalf of the General Partner other than out of the funds of the
Partnership. The General Partner shall not be compensated for its services as a
General Partner of the Partnership.
4.5 Other Relationships. The General Partner shall devote so much of
-------------------
its time to the business of the Partnership as in the judgment of the General
Partner the conduct of the Partnership's business shall reasonably require. The
General Partner may engage in other business ventures of any nature and
description independently or with others, and neither the Partnership nor any of
the other Partners shall have any rights in and to such independent
12
<PAGE>
ventures or the income or profits derived therefrom. Except as otherwise
specifically provided herein, nothing contained in this Agreement shall, or
shall be deemed to, prohibit, restrict or limit in any manner any business or
investment activities of the General Partner or any of its affiliates,
including, without limitation, rendering any business, management or consulting
advice to the Partnership or its Subsidiaries.
4.6 Proscriptions. Without the written consent of or ratification by
-------------
90% or more of the Percentage Interests of the Limited Partners, the General
Partner shall have no authority to do any act in contravention of this Agreement
or of the Act.
4.7 Bank Accounts. All funds of the Partnership shall be deposited
-------------
in the Partnership name in such bank account or accounts and in such bank or
banks as shall be designated from time to time by the General Partner. All
withdrawals therefrom shall be made upon the signature of the General Partner or
of such other person or persons as the General Partner may from time to time
designate. The Partnership's funds shall not be commingled with funds not
belonging to the Partnership and shall be used only for the affairs or business
of the Partnership as herein provided.
Article V
---------
Restrictions Regarding Transfer, Substitution, etc.
---------------------------------------------------
5.1 Transfer of Interests by General Partner. The General Partner may
----------------------------------------
not (a) sell, transfer, assign, convey, or otherwise dispose of, all or a
-
portion of its general partner interest in the Partnership or (b) resign or
-
withdraw from the Partnership.
5.2 Additional General Partner. Without the prior written consent of
--------------------------
a Majority in Interest, no party shall become an additional General Partner
hereof unless and
13
<PAGE>
until it has executed such certificates and other documents and performed such
acts as may be necessary to constitute such party as a general partner, and to
preserve the status of the Partnership as a limited partnership.
5.3 Transfer of Interests by Limited Partners. No Limited Partner may
-----------------------------------------
sell, transfer, assign, convey, or otherwise dispose of, all or a portion of its
limited partner interest in the Partnership.
5.4 Additional Limited Partners. No party shall become an additional
---------------------------
Limited Partner hereof without the consent of the General Partner and unless and
until it has executed such certificates and other documents and performed such
acts as may be necessary to constitute such party as a limited partner, and to
preserve the status of the Partnership as a limited partnership.
Article VI
----------
Indemnification
---------------
6.1 Exculpatory Provisions. None of the General Partner or any of
----------------------
its affiliates, or the partners, officers, directors, employees or control
persons (as such term is defined in the Securities Act of 1933, as amended, and
the rules and regulations thereunder) of the General Partner or affiliate
(collectively, the "Indemnified Persons") shall be liable, directly or
indirectly, to the Partnership or any Partner for any act or omission (in
relation to the Partnership or this Agreement) taken or omitted by such
Indemnified Person in good faith, provided that such act or omission did not
--------
constitute gross negligence, fraud, willful violation of the law, willful
violation of this Agreement or reckless disregard of the duties of such
Indemnified Person.
6.2 Indemnification of General Partner. The Partnership shall, to
----------------------------------
the fullest extent permitted by applicable law, indemnify and hold harmless each
Indemnified
14
<PAGE>
Person against all claims, liabilities and expenses of whatever nature
("Claims") relating to activities undertaken in connection with the Partnership,
including but not limited to amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, and counsel, accountants' and experts' and
other fees, costs and expenses reasonably incurred in connection with the
investigation, defense or disposition (including by settlement) of any action,
suit or other proceeding, whether civil or criminal, before any court or
administrative body in which such Indemnified Person may be or may have been
involved, as a party or otherwise, or with which such Indemnified Person may be
or may have been threatened, while acting as such Indemnified Person, provided
--------
that no indemnity shall be payable hereunder against any liability incurred by
such Indemnified Person by reason of gross negligence, fraud, willful violation
of the law, willful violation of this Agreement, reckless disregard of the
duties of such Indemnified Person or with respect to any matter as to which such
Indemnified Person shall have been adjudicated not to have acted in good faith,
and provided further that as to any action, suit or other proceeding disposed of
--------
by settlement or a compromise payment, pursuant to a consent decree or
otherwise, no indemnification (whether for such payment or for any other Claim)
shall be provided unless there has been a determination that such compromise is
in or not opposed to the best interests of the Partnership and that such
Indemnified Person has acted in good faith and did not involve gross negligence,
fraud, willful violation of the law, willful violation of this Agreement or
reckless disregard of the duties of such Indemnified Person.
6.3 Advance of Expenses. Expenses incurred by an Indemnified Person
-------------------
in defense or settlement of any Claim that may be subject to a right of
indemnification hereunder may be advanced by the Partnership prior to the final
disposition thereof upon receipt of an undertaking by or on behalf of the
Indemnified Person to repay such amount if it shall ultimately be determined
that the Indemnified Person is not entitled to be indemnified by the
Partnership.
15
<PAGE>
6.4 Non-Exclusivity. The right of any Indemnified Person to the
---------------
indemnification provided herein shall be cumulative of, and in addition to, any
and all rights to which such Indemnified Person may otherwise be entitled by
contract or as a matter of law or equity and shall extend to such Indemnified
Person's successors, assigns and legal representatives.
6.5 Satisfaction from Partnership Assets. All judgments against the
------------------------------------
Partnership or an Indemnified Person, in respect of which such Indemnified
Person is entitled to indemnification, shall first be satisfied from Partnership
assets before the Indemnified Person is responsible therefor.
6.6 Notices of Claims, etc. Promptly after receipt by an Indemnified
-----------------------
Person of notice of the commencement of any action or proceeding or threatened
action or proceeding involving a Claim referred to in this Article VI, such
Indemnified Person will, if a claim for indemnification in respect thereof is to
be made against the Partnership, give written notice to the Partnership of the
commencement of such action, provided that the failure of any Indemnified Person
--------
to give notice as provided herein shall not relieve the Partnership of its
obligations under this Article VI, except to the extent that the Partnership is
actually prejudiced by such failure to give notice. Each such Indemnified
Person shall keep the General Partner apprised of the progress of any such
proceeding.
6.7 Exculpation and Indemnification of Manager. Notwithstanding the
------------------------------------------
foregoing provisions of this Article VI, the liability of the Manager to the
Partnership and the Partnership's obligation to indemnify the Manager acting
solely in its capacity as Manager with respect to any action or inaction in
connection with the performance of the services and duties contemplated by the
Management Agreement shall be governed by the provisions of the Management
Agreement. For purposes of this Section 6.7, the Manager
16
<PAGE>
shall include its officers, directors, employees and affiliates.
Article VII
------------
Dissolution and Liquidation
---------------------------
7.1 Events of Dissolution; Accounting. (a) The Partnership shall
---------------------------------
dissolve upon the earliest to occur of the events described in Section 1.6.
(b) In the event of the dissolution and liquidation of the
Partnership, a proper accounting shall be made of the Capital Account of each
Partner and of the Net Profits or Net Losses of the Partnership from the date of
the last previous accounting to the date of dissolution. Financial statements
presenting such accounting shall be audited and shall include a report of a
nationally recognized accounting firm.
7.2 Liquidating Trustee. Upon the dissolution and liquidation of the
-------------------
Partnership's business for any reason, the General Partner shall act as
liquidating trustees, or, if there shall then be no General Partner, the Limited
Partners may elect a liquidating trustee. The liquidating trustee(s) shall have
full power to sell, assign and encumber Partnership assets.
7.3 Distribution in Liquidation. In the event of the termination of
---------------------------
the Partnership pursuant to this Article VII or for any other reason, the
Partnership assets shall be liquidated. The proceeds of such liquidation shall
be distributed as follows:
(a) first, to the payment of the expenses of the liquidation;
(b) second, to the (i) payment of creditors of the Partnership and
-
(ii) establishment of reserves to
--
17
<PAGE>
provide for contingent liabilities, if any, in the order of priority as
provided by law;
(c) third, to each Partner whose Preferred Capital Account balance
shall be greater than zero (determined after all adjustments for the Fiscal
Period in which such dissolution occurs) to the extent of such positive
balance in the ratio that its respective Preferred Capital Account balance
bears to all such positive Preferred Capital Account balances;
(d) fourth, to each Partner whose Ordinary Capital Account balance
shall be greater than zero (determined after all adjustments for the Fiscal
Period in which such dissolution occurs) to the extent of such positive
balance in the ratio which its respective Ordinary Capital Account balance
bears to all such positive Ordinary Capital Account balances; and
(e) thereafter, to the Partners in accordance with their Percentage
Interests at the time of liquidation.
Payments to Partners described in subsections (a) through (e) above
may be made in cash or in kind if so determined by the General Partner or a
liquidating trustee appointed pursuant to Section 7.2. Any distributions to
Partners upon liquidation shall be made by the end of the taxable year in which
the liquidation of the Partnership occurs (or, if later, within 90 days after
the date of such liquidation).
Article VII
-----------
Power of Attorney
-----------------
Concurrently with the execution of this Agreement, each Limited
Partner hereby appoints the General Partner as its true and lawful attorneys
coupled with an interest, in
18
<PAGE>
its name, place and stead to sign, execute, acknowledge, swear to and file any
and all documents which in the reasonable discretion of such attorney are
required to be signed, executed, acknowledged, sworn to or filed by each Limited
Partner to discharge the purposes of the Partnership as hereinabove stated.
Without limitation, among the documents which the General Partner may execute on
behalf of each Limited Partner shall be a Certificate of Limited Partnership and
all amendments thereto required by applicable law or by the provisions of this
Agreement.
Article IX
----------
Construction
------------
9.1 Headings. The headings, titles and subtitles herein are
--------
inserted for convenience of reference only and shall not control or affect the
meaning or construction of any of the provisions hereof.
9.2 Notices. All notices, requests, demands, letters, waivers and
-------
other communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if (a) delivered
-
personally, (b) mailed, by certified or registered mail with postage prepaid,
-
(c) sent by next-day or overnight mail or delivery or (d) transmitted by
- -
telecopy or telegram, as follows:
(i) If to the General Partner:
c/o Charter Communications, Inc.
12444 Powerscourt Drive
Suite 400
St. Louis, Missouri 63131
Attention: Jerald L. Kent
with a copy to:
19
<PAGE>
Kelso & Company
350 Park Avenue, 21st Floor
New York, New York 10022
Attention: James J. Connors, II, Esq.
Paul, Hastings, Janofsky & Walker
399 Park Avenue
New York, New York 10022
Attention: Neil A. Torpey, Esq.
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Richard D. Bohm, Esq.
(ii) If to the Limited Partners, to each of them:
c/o Charter Communications, Inc.
12444 Powerscourt Drive
Suite 400
St. Louis, Missouri 63131
Attention: Jerald L. Kent
with a copy to:
Kelso & Company
350 Park Avenue, 21st Floor
New York, New York 10022
Attention: James J. Connors, II, Esq.
Paul, Hastings, Janofsky & Walker
399 Park Avenue
New York, New York 10022
Attention: Neil A. Torpey, Esq.
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Richard D. Bohm, Esq.
20
<PAGE>
or to such other person or address as any party shall specify by notice in
writing to the other Partners. All such notices, requests, demands, letters,
waivers and other communications shall be deemed to have been received (w) if by
-
personal delivery on the day after such delivery, (x) if by certified or
-
registered mail, on the fifth business day after the mailing thereof, (y) if by
-
next-day or overnight mail or delivery, on the day delivered or (z) if by
-
telecopy or telegram, on the next day following the day on which such telecopy
or telegram was sent, provided that a copy is also sent by certified or
registered mail.
9.3 Governing Law. This Agreement, and its validity, construction
-------------
and performance, shall be governed by the laws of the State of Delaware, without
regard to the conflict of laws rules thereof.
9.4 Entire Understanding and Amendment. This Agreement embodies the
----------------------------------
entire agreement and understanding of the parties hereto in respect of the
subject matter contained herein. There are no restrictions, promises,
representations, warranties, covenants or undertakings among the parties hereto
relating to the subject matter contained herein, other than those expressly set
forth or referred to herein. This Agreement supersedes all prior agreements and
understandings among the parties with respect to such subject matter. This
Agreement may be amended or modified with the written consent of the General
Partner. Notwithstanding the foregoing, this Agreement may not be amended or
modified without the prior written consent of the General Partner and, if in the
judgment of the General Partner such amendment or modification would materially
and adversely affect the rights of a Limited Partner, a Majority in Interest.
9.5 Miscellaneous. Except as provided in Article V, this Agreement
-------------
may not be assigned or transferred by operation of law or otherwise. This
Agreement is not intended to confer upon any other person except the parties
hereto any rights or remedies hereunder. If any provision
21
<PAGE>
of this Agreement or the application thereof to any person or circumstance shall
be prohibited by or invalid under applicable law, the remainder of this
Agreement or the application of such provision to other persons or circumstances
shall not be affected thereby. This Agreement may be executed in one or more
counterparts, all of which shall constitute one and the same instrument. Each
counterpart may consist of a number of copies each signed by less than all, but
together signed by all, the parties hereto.
Article X
---------
Definitions
-----------
As used in this Agreement and the Schedules hereto, the following
terms shall have the following meanings:
Act: as defined in Section 1.1 of this Agreement.
---
Adjusted Capital Account: means, with respect to any Partner, as of
------------------------
the end of any Fiscal Year, such Partner's Capital Account balance (whether
positive or negative) as of the end of such Fiscal Year, (i) increased by the
- ---------
sum of (A) such Partner's share of Partnership Minimum Gain and (B) any amount
- -
for which such Partner is personally liable with respect to liabilities of the
Partnership as of the end of such Fiscal Year (except to the extent that such
amount would duplicate the amount of any increase under clause (A) above) and
(ii) decreased by such Partner's share of the reasonably expected net
- --- ---------
allocations and distributions described in Treasury Regulations Sections 1.704-
1(b)(2)(ii)(d)(4), (5) and (6).
Adjustment Date: means (a) the close of business on the last day of
--------------- -
each Fiscal Year of the Partnership, (b) the day before the effective date of
-
the admission of any additional Partner to the Partnership, (c) the day be-
-
22
<PAGE>
fore any distribution is made by the Partnership or (d) any other date selected
-
by the General Partner, in its reasonable discretion, for an interim closing of
the Partnership books. For purposes of this definition, the day before the date
of this Agreement shall be considered an Adjustment Date.
Capital Account: as defined in Section 2.6 of this Agreement.
---------------
Claims: as defined in Section 6.2 of this Agreement.
------
Code: means the Internal Revenue Code of 1986, as amended.
----
Deficit: as defined in Section 3.2 of this Agreement.
-------
Fiscal Period: means a period beginning on the day following any
-------------
Adjustment Date and ending on the next succeeding Adjustment Date.
Fiscal Year: means a year beginning on January 1 of one calendar year
-----------
and ending on December 31 of the same calendar year, provided, however, that the
-------- -------
term "Fiscal Year" shall mean with respect to the Partnership's first period of
operations the period commencing on the date hereof and ending on December 31 of
the same calendar year.
General Partner: as defined in the first paragraph of this Agreement.
---------------
Hallmark Loan Agreement: means the Senior Subordinated Loan
-----------------------
Agreement, dated as of January 18, 1995, between the General Partner and HC
Crown Corp., including any amendment, renewal, extension, substitution,
refinancing, replacement or other modification thereof.
23
<PAGE>
Indebtedness: means any indebtedness, whether or not for money
------------
borrowed, including any amendment, renewal, extension, substitution,
refinancing, replacement or other modification thereof, directly or indirectly
created, incurred or assumed by any entity, including, without limitation,
indebtedness arising under or pursuant to the TD Loan Agreement and the Hallmark
Loan Agreement.
Indemnified Party: as defined in Section 6.1 of this Agreement.
-----------------
Limited Partners: as defined in the first paragraph of this
----------------
Agreement.
Majority in Interest: means a majority in interest of the Limited
--------------------
Partners, based on their Percentage Interests.
Management Agreement: means the Amended and Restated Management
--------------------
Agreement, dated as of September 29, 1995, as the same shall be amended from
time to time, between the Partnership and the Manager.
Manager: means Charter Communications, Inc., a Delaware corporation,
-------
or any successor manager approved by the General Partner.
Minimum Gain Attributable to Partner Nonrecourse Debt: means that
-----------------------------------------------------
amount determined in accordance with the principles of Treasury Regulations
Section 1.704-2(i)(3), (4) and (5).
Net Profits and Losses: means, for any Fiscal Period, (a) the
---------------------- -
Partnership's share of the net income and net loss for such Fiscal Period of
each Subsidiary that is a partnership for federal income tax purposes, as
determined in accordance with the operating agreement for such Subsidiary, and
(b) in the case of any other item, the net income or net loss of the Partnership
- --
for such Fiscal Period, including any items that are separately stated for
24
<PAGE>
purposes of Section 702(a) of the Code, as determined in accordance with federal
income tax accounting principles with the following adjustments:
(i) any income of the Partnership that is exempt from federal income
tax shall be included as income;
(ii) any expenditures of the Partnership described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures
pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(1) shall be
treated as current expenses;
(iii) no effect shall be given to any adjustments made pursuant to
Section 734 or Section 743 of the Code;
(iv) the basis of property contributed to the Partnership shall
initially be treated as equal to the agreed upon valuation of such property
as reflected on Schedule A hereto and all gain, loss, depreciation and
amortization on such property shall be determined based on such agreed upon
value in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)(g);
(v) if the Partnership distributes any property in kind, the
Partnership shall be deemed to have sold such property for its fair market
value immediately before such distribution and the proceeds of such deemed
sale shall be deemed to have been distributed to the Partners for all
purposes of this Agreement; and
(vi) notwithstanding any other provisions of this definition, any
items which are specially allocated pursuant to Sections 3.2 through 3.8
shall not be taken into account.
Nonrecourse Deductions: has the meaning set forth in Treasury
----------------------
Regulations Section 1.704-2(b)(1).
25
<PAGE>
Nonrecourse Liability: has the meaning set forth in Treasury
---------------------
Regulations Section 1.704-2(b)(3).
Ordinary Capital Account: as described in Section 2.6 of this
------------------------
Agreement.
Partner Nonrecourse Debt: means debt of the Partnership within the
------------------------
meaning of Treasury Regulations Section 1.704-2(b)(4).
Partner Nonrecourse Deductions: has the meaning set forth in Treasury
------------------------------
Regulations Sections 1.704-2(i)(1) and 1.704-2(i)(2).
Partners: means the General Partner and the Limited Partners.
--------
Partnership: as defined in Section 1.1 of this Agreement.
-----------
Partnership Minimum Gain: has the meaning set forth in Sections
------------------------
1.704-2(b)(2) and 1.704-2(d) of the Treasury Regulations.
Percentage Interest: means each Partner's proportionate share of the
-------------------
Net Profits or Net Losses of the Partnership, as set forth in Schedule A hereto.
Permitted Expenses: means, to the extent permitted pursuant to any
------------------
instrument or agreement constituting Indebtedness, general and administrative
expenses, all U.S. federal and state income taxes, state franchise taxes,
accounting fees, fees and expenses of technical and other consultants, and fees
and expenses of other professionals of the Partnership or its affiliates or any
direct or indirect partner in the Partnership.
Preferred Capital Account: as defined in Section 2.6 of this
-------------------------
Agreement.
26
<PAGE>
Preferred Return: means, for any Fiscal Period, in the case of
----------------
Charter Communications Entertainment, L.P., the aggregate of the "Preferred
Returns" accruing in respect of the "Preferred Capital Accounts" of the General
Partner and Cencom Cable Entertainment, Inc., a Delaware corporation, as such
terms are defined in, and pursuant to, the Agreement of Limited Partnership of
Charter Communications Entertainment, L.P., as amended from time to time.
Subsidiaries: means any corporation, partnership, limited liability
------------
company or other entity of which the Partnership owns, directly or indirectly,
more than 50% of the equity.
TD Loan Agreement: means the Amended and Restated Loan Agreement,
-----------------
dated as of September 29, 1995, among the Partnership, Toronto Dominion (Texas),
Inc. as documentation agent and managing agent and the other banks signatory
thereto, including any amendment, renewal, extension, substitution, refinancing,
replacement or other modification thereof.
Treasury Regulations: means the Regulations of the Treasury
--------------------
Department of the United States issued pursuant to the Code.
27
<PAGE>
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as
of the day and year first above written.
GENERAL PARTNER: LIMITED PARTNERS:
CCA ACQUISITION CORP. CCT HOLDINGS CORP.
By /s Theodore W. Browne, II By /s/ Theodore W. Browne, II
------------------------- --------------------------
Executive Vice President Executive Vice President
CHARTER COMMUNICATIONS
ENTERTAINMENT, L.P.
By /s/ Theodore W. Browne, II
--------------------------
Executive Vice President
28
<PAGE>
SCHEDULE A
General Partner:
---------------
Initial Initial
Ordinary Preferred
Percentage Initial Capital Capital Capital
Partner Interest Contribution Account Account
- ------- -------- ------------ ------- -------
CCA 1.22%
Acquisition
Corp.
Limited Partners:
----------------
Initial
Ordinary
Percentage Initial Capital Capital
Partner Interest Contribution Account
- ------- -------- ------------ -------
CCT Holdings Corp. 1.00%
Corp.
Charter
Communications 97.78%
Entertainment,
L.P.
<PAGE>
EXHIBIT 10.16
PAGE 1
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
_____________________________
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF LIMITED
PARTNERSHIP OF "CHARTER COMMUNICATIONS ENTERTAINMENT II, L.P.", FILED IN THIS
OFFICE ON THE TWENTIETH DAY OF APRIL, A.D. 1995, AT 1:30 O'CLOCK P.M.
(SEAL) /s/ Edward J. Freel
-----------------------------------
Edward J. Freel, Secretary of State
2500493 8100 AUTHENTICATION: 7656303
950221976 DATE: 09-27-95
<PAGE>
CERTIFICATE OF LIMITED PARTNERSHIP
OF
CHARTER COMMUNICATIONS ENTERTAINMENT II, L.P.
This Certificate of Limited Partnership of Charter Communications
Entertainment II, L.P. (the "Partnership"), dated as of April 19, 1995, is being
duly executed and filed by CCT Holdings Corp., a Delaware corporation, as
general partner, to form a limited partnership pursuant to the Delaware Revised
Uniform Limited Partnership Act, Title 6 Delaware Code, Chapter 17.
1. The name of the limited partnership is Charter Communications
Entertainment II, L.P.
2. The address of the Partnership's registered office in the State
of Delaware is the Corporation Trust Center, 1209 Orange Street, Wilmington, New
Castle County, Delaware 19801. The name of the Partnership's registered agent
for service of process at such address is The Corporation Trust Company.
3. The name and business address of the sole general partner of the
Partnership is:
CCT Holdings Corp.
c/o Charter Communications, Inc.
12444 Powerscourt Drive
St. Louis, Missouri 63131
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Limited Partnership of Charter Communications Entertainment II, L.P. as of the
date first above written.
CHARTER COMMUNICATIONS
ENTERTAINMENT II, L.P.
By: CCT Holdings Corp.,
general partner
By: /s/ Neil A. Torpey
---------------------------------
Name: Neil A. Torpey
Title: Assistant Secretary
<PAGE>
EXHIBIT 10.17
================================================================================
AGREEMENT
OF LIMITED PARTNERSHIP
OF
CHARTER COMMUNICATIONS ENTERTAINMENT II, L.P.
Dated as of September 29, 1995
================================================================================
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
<S> <C>
Article I
Formation of the Partnership.................................... 1
1.1 Formation.................................................. 1
1.2 Partnership Name........................................... 1
1.3 Purpose.................................................... 1
1.4 Place of Business.......................................... 1
1.5 Registered Office and Registered Agent..................... 2
1.6 Term....................................................... 2
1.7 Partnership Powers......................................... 2
Article II
Capital......................................................... 3
2.1 Capital Contributions...................................... 3
2.2 Additional Capital......................................... 3
2.3 Liability, etc............................................. 4
2.4 Withdrawal of Capital...................................... 4
2.5 Priority................................................... 4
2.6 Capital Accounts........................................... 4
2.7 Adjustments................................................ 4
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Article III
Accounting, Distributions and Taxes................................... 5
3.1 Allocations of Net Profits and Net Losses........................ 5
3.2 Qualified Income Offsets, Restorative
Allocations...................................................... 5
3.3 Partnership Minimum Gain......................................... 6
3.4 Minimum Gain Attributable to Partner
Nonrecourse Debt................................................. 6
3.5 Nonrecourse Deductions........................................... 7
3.6 Partner Nonrecourse Deductions................................... 7
3.7 Section 754 Adjustments.......................................... 7
3.8 Tax Allocations; Section 704(c).................................. 7
3.9 Distributions.................................................... 8
3.10 Accounting Method............................................... 8
3.11 Certain Federal Income Tax Matters.............................. 8
3.12 Election under Section 754...................................... 9
3.13 Tax Withholdings................................................ 9
Article IV
General Partner....................................................... 9
4.1 Management....................................................... 9
4.2 Reliance on Authority of General Partner......................... 10
4.3 Interested Party Contracts....................................... 10
4.4 Expenditures By General Partner.................................. 10
4.5 Other Relationships.............................................. 10
4.6 Proscriptions.................................................... 11
4.7 Bank Accounts.................................................... 11
Article V
Restrictions Regarding Transfer, Substitution, etc.................... 11
5.1 Transfer of Interests by General Partner......................... 11
5.2 Additional General Partner....................................... 11
5.3 Transfer of Interests by Limited Partners........................ 12
5.4 Additional Limited Partners...................................... 12
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
Article VI
Indemnification........................................................ 12
6.1 Exculpatory Provisions............................................ 12
6.2 Indemnification of General Partner................................ 12
6.3 Advance of Expenses............................................... 13
6.4 Non-Exclusivity................................................... 13
6.5 Satisfaction from Partnership Assets.............................. 13
6.6 Notices of Claims, etc............................................ 13
6.7 Exculpation and Indemnification of Manager........................ 14
Article VII
Dissolution and Liquidation............................................ 14
7.1 Events of Dissolution; Accounting................................. 14
7.2 Liquidating Trustee............................................... 14
7.3 Distribution in Liquidation....................................... 15
Article VIII
Power of Attorney...................................................... 16
Article IX
Construction........................................................... 16
9.1 Headings.......................................................... 16
9.2 Notices........................................................... 16
9.3 Governing Law..................................................... 18
9.4 Entire Understanding and Amendment................................ 18
9.5 Miscellaneous..................................................... 18
Article X
Definitions............................................................ 19
</TABLE>
SCHEDULE A -- Partners, Capital Contributions and Capital Accounts
iii
<PAGE>
AGREEMENT OF LIMITED PARTNERSHIP
OF
CHARTER COMMUNICATIONS ENTERTAINMENT II, L.P.
AGREEMENT OF LIMITED PARTNERSHIP, dated as of September 29, 1995,
among CCT Holdings Corp., a Delaware corporation, as general partner (the
"General Partner"), and the entities identified as limited partners in Schedule
A hereto, as limited partners (which entities, together with any other entities
who, in accordance with the terms hereof, may be admitted hereafter as limited
partners, are herein collectively referred to as the "Limited Partners").
Capitalized terms used herein without definition are defined in
Article X.
Article I
----------
Formation of the Partnership
----------------------------
1.1 Formation. The parties to this Agreement hereby form a limited
---------
partnership (the "Partnership") pursuant to and in accordance with the
provisions of the Delaware Revised Uniform Limited Partnership Act (as amended
from time to time, the "Act"). The Certificate of Limited Partnership of the
Partnership was filed with the Secretary of State of the State of Delaware on
April 20, 1995.
1.2 Partnership Name. The name of the Partner ship shall be Charter
----------------
Communications Entertainment II, L.P.
1.3 Purpose. The purpose of the Partnership is, directly or
-------
indirectly, to acquire, finance, franchise, construct, develop, own, alter,
repair, maintain, promote, program, operate, manage, lease, sell, exchange or
otherwise dispose of cable television systems and to engage in such
<PAGE>
activities as the General Partner, subject to the terms set forth herein, deems
necessary, advisable or incidental to the foregoing.
1.4 Place of Business. The principal place of business of the
-----------------
Partnership shall be c/o Charter Communications, Inc., 12444 Powerscourt
Drive, Suite 400, St. Louis, Missouri 63131, or such other place or places as
may be designated at any time and from time to time by the General Partner. The
General Partner will inform the Limited Partners of any change in the principal
office of the Partnership.
1.5 Registered Office and Registered Agent. The registered office of
--------------------------------------
the Partnership in the State of Delaware shall be c/o The Corporation Trust
Company, Corporation Trust Company Center, 1209 Orange Street, Wilmington, New
Castle County, Delaware 19801, and the registered agent for service of process
on the Partnership in the State of Delaware at such address is The Corporation
Trust Company.
1.6 Term. Unless sooner terminated by the General Partner, the
----
Partnership shall continue until the earliest to occur of:
(a) The assignment for the benefit of creditors by the General
Partner, appointment of a receiver for or adjudication of bankruptcy of the
General Partner which appointment or order remains unstayed for more than
90 days, or seizure by a judgment creditor of the General Partner's
interest in the Partnership;
(b) The sale, exchange or involuntary conversion of all, or
substantially all, of the assets of the Partnership;
(c) The resignation or withdrawal of any Partner or the assignment or
transfer by any Partner of any of such Partner's interest in the
Partnership; or
2
<PAGE>
(d) December 31, 2055.
1.7 Partnership Powers. In furtherance of the Partnership's purpose
------------------
specified in Section 1.3, the Partnership shall have all of the powers available
to it as a limited partnership under the laws of the State of Delaware,
including, without limitation, the power to engage in all activities and
transactions necessary or advisable to carry out the Partnership's purpose. The
General Partner is authorized to exercise all such powers in the name and on
behalf of the Partnership, including, without limitation, the authority:
(a) to invest in any other entity and to sell, transfer, assign,
convey, exchange or otherwise dispose of any or all of the properties or
assets of the Partnership or its Subsidiaries for cash, stock, securities
or any combination thereof on such terms and conditions as may, at any time
and from time to time, be determined by the General Partner;
(b) (i) to enter into any instruments or agreements constituting
-
Indebtedness; (ii) to apply the proceeds of any borrowings under any
--
instruments or agreements evidencing or creating any Indebtedness in such
manner and for such purposes as the General Partner shall determine; (iii)
---
to grant security interests in assets of the Partnership or its
Subsidiaries to secure the obligations of the Partnership or its
Subsidiaries or any of their respective affiliates with respect to any
Indebtedness; and (iv) to guarantee the obligations of the Partnership or
--
its Subsidiaries or any of their respective affiliates with respect to any
Indebtedness;
(c) to enter into, deliver, perform and carry out contracts and
agreements of every kind necessary or incidental to the Partnership's
purpose;
3
<PAGE>
(d) to open, maintain, and close bank accounts and draw checks or
other orders for the payment of money; and
(e) to take or perform such acts and to execute such agreements,
certificates, documents and instruments necessary or advisable to carry out
the Partnership's purpose.
Article II
----------
Capital
-------
2.1 Capital Contributions. As of the date of this Agreement, each
---------------------
Partner shall have contributed or caused to be contributed to the capital of the
Partnership property having an agreed upon value equal to the amount set forth
opposite such Partner's name on Schedule A hereto.
2.2 Additional Capital. No additional capital contributions or
------------------
assessments therefor beyond the amounts provided for in Section 2.1 shall be
required from any Partner. No additional capital contribution will be accepted
from any person (including the Partners) except for capital contributions
approved by the General Partner. Upon the making of any additional capital
contribution by any Partner, the General Partner shall amend Schedule A to
reflect the capital contribution of such Partner.
2.3 Liability, etc. The Limited Partners shall not have any personal
--------------
liability with respect to the liabilities or the obligations of the
Partnership. The Partners shall not be required to lend funds to the
Partnership for any purpose. The Limited Partners, in their capacity as such,
shall not (a) take part in the management of the business of the Partnership,
-
except to the extent provided herein and as permitted under the Act, (b)
-
transact any business for the Partnership or (c) have the power to sign for or
-
to bind the Partnership.
4
<PAGE>
2.4 Withdrawal of Capital. No Partner shall be entitled to the
---------------------
return of such Partner's capital contribution except by reason of the
distribution to such Partner of cash or other property pursuant to Section 3.9
or 7.3 or upon the consent of the General Partner. No Partner shall have the
right to receive a distribution of property other than cash from the
Partnership.
2.5 Priority. Except as expressly otherwise provided herein, there
--------
shall be no priority of one or more of the Partners over the other Partners as
to return of contributions, withdrawals or distributions of cash or other
property.
2.6 Capital Accounts. There shall be established and maintained for
----------------
each Partner on the books of the Partnership a capital account (each, a "Capital
Account"), which shall be comprised of two subaccounts, an Ordinary Capital
Account and a Preferred Capital Account. The opening balance in each Partner's
Capital Account shall be as shown in Schedule A hereto. Whenever this Agreement
refers to the balance in a Partner's Capital Account, such reference shall mean
the sum of the balances of such Partner's Ordinary Capital Account and Preferred
Capital Account.
2.7 Adjustments. (a) As of each Adjustment Date, the balance of
-----------
each Ordinary Capital Account shall be adjusted by (i) increasing such balance
- ----------
by such Partner's (x) allocable share of Net Profits (allocated in accordance
-
with Section 3.1) and (y) the amount of money or the fair market value of any
-
property contributed to the Partnership by such Partner (net of any liabilities
secured by such contributed property that the Partnership is considered to
assume or take subject to under Section 752 of the Code) and (ii) decreasing
-- ----------
such balance by (x) the amount of cash or the fair market value of property
-
distributed or deemed distributed to such Partner pursuant to Sections 3.9(a),
3.9(b)(ii) and 7.3 (net of any liabilities secured by such distributed property
that the distributee Partner is
5
<PAGE>
considered to assume or take subject to under Section 752 of the Code) and (y)
-
such Partner's allocable share of Net Losses (allocated in accordance with
Section 3.1). Each Partner's Ordinary Capital Account shall be further adjusted
with respect to any special allocations pursuant to Sections 3.2 through 3.7.
(b) As of each Adjustment Date, the balance of each Preferred Capital
Account shall be adjusted by (i) increasing such balance by any Preferred Return
- ----------
during the relevant Fiscal Period and (ii) decreasing such balance by any
-- ----------
payments made pursuant to Section 3.9(b)(i) during the relevant Fiscal Period.
Such increase and any related payment pursuant to Section 3.9(b)(i) shall be
treated for all purposes of this Agreement as a payment described in Section
707(c) of the Code.
(c) Any question with respect to a Partner's Capital Account shall be
resolved by the General Partner in good faith and in its reasonably exercised
discretion, applying principles consistent with this Agreement. The provisions
of this Agreement relating to the maintenance of Capital Accounts are intended
to comply with Treasury Regulations Section 1.704-1(b) and shall be
interpreted and applied in a manner consistent with such Treasury Regulations.
Article III
-----------
Accounting, Distributions and Taxes
-----------------------------------
3.1 Allocations of Net Profits and Net Losses. Except as provided in
-----------------------------------------
Sections 3.2 through 3.8, the Net Profits or Net Losses of the Partnership for
any Fiscal Period shall be allocated among the Partners in accordance with their
Percentage Interests.
3.2 Qualified Income Offsets, Restorative Allocations. (a) If (i)
------------------------------------------------- -
any Partner unexpectedly receives any
6
<PAGE>
adjustment, allocation or distribution described in Treasury Regulations Section
1.704-1(b)(2)(ii)(d)(4), (5) or (6) and (ii) such adjustment, allocation or
--
distribution causes or increases a deficit in such Partner's Adjusted Capital
Account as of the end of the Fiscal Period to which such adjustment, allocation
or distribution relates (a "Deficit"), then items of gross income for such
Fiscal Period and each subsequent Fiscal Period shall be specifically allocated
to each such Partner pro rata in proportion to its Deficits in an amount and
--- ----
manner sufficient to eliminate, to the extent required by the Treasury
Regulations, such Deficit as quickly as possible, provided that an allocation
--------
pursuant to this Section 3.2 shall be made only if and to the extent that such
Partner would have a Deficit after all other allocations provided for in this
Article III have been tentatively made as if this Section 3.2 were not in this
Agreement.
(b) Any special allocations of items of income or gain pursuant to
this Section 3.2 shall be taken into account in computing subsequent
allocations pursuant to this Agreement, so that the net amount for any item so
allocated and all other items allocated to each Partner pursuant to this
Agreement shall be equal, to the extent possible, to the net amount that would
have been allocated to each Partner pursuant to the provisions of this
Agreement if such special allocations had not occurred.
3.3 Partnership Minimum Gain. Except as otherwise provided in
------------------------
Treasury Regulations Section 1.704-2(f), if there is a net decrease in
Partnership Minimum Gain during any Partnership Fiscal Year, each Partner shall
be specially allocated items of Partnership income and gain for such period
(and, if necessary, subsequent periods) in proportion to, and to the extent of,
an amount equal to the portion of such Partner's share of the net decrease in
Partnership Minimum Gain, determined in accordance with Treasury Regulations
Section 1.704-2(g). This Section 3.3 is intended to comply with the chargeback
of items of income
7
<PAGE>
and gain requirement in Treasury Regulations Section 1.704-2(f) and shall be
interpreted consistently therewith.
3.4 Minimum Gain Attributable to Partner Nonrecourse Debt. Except as
-----------------------------------------------------
otherwise provided in Treasury Regulations Section 1.704-2(i), if there is a net
decrease in Minimum Gain Attributable to Partner Nonrecourse Debt during any
Partnership Fiscal Year, each Partner with a share of Minimum Gain Attributable
to Partner Nonrecourse Debt shall be specially allocated items of Partnership
income and gain for such period (and, if necessary, subsequent periods) in
proportion to, and to the extent of, an amount equal to the portion of such
Partner's share of the net decrease in the Minimum Gain Attributable to Partner
Nonrecourse Debt, determined in accordance with Treasury Regulations Section
1.704-2(i)(4). This Section 3.4 is intended to comply with the chargeback of
items of income and gain requirement in Treasury Regulations Section 1.704-
2(i)(4) and shall be interpreted consistently therewith.
3.5 Nonrecourse Deductions. Nonrecourse Deductions for any Fiscal
----------------------
Year shall be allocated to the Partners in the same ratios that Net Profits are
allocated for the Fiscal Year in accordance with Treasury Regulations Section
1.704-2(b)(1).
3.6 Partner Nonrecourse Deductions. Partner Nonrecourse Deductions
------------------------------
for any Fiscal Year shall be allocated 100% to the Partner that bears the
economic risk of loss (as defined in Treasury Regulations Section 1.704-2(b))
with respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse
Deductions are attributable in accordance with Treasury Regulations Section
1.704-2(i). If more than one Partner bears the economic risk of loss with
respect to a Partner Nonrecourse Debt, such Partner Nonrecourse Deductions
attributable thereto shall be allocated between or among such Partners in
accordance with the ratios in which they share such economic risk of loss.
8
<PAGE>
3.7 Section 754 Adjustments. To the extent an adjustment to the
-----------------------
adjusted basis of any Partnership asset pursuant to Section 734(b) of the Code
or Section 743(c) of the Code is required, pursuant to Treasury Regulations
Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital
Accounts, the amount of such adjustment to Capital Accounts shall be treated as
an item of gain (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases such basis) and such gain or loss shall be specially
allocated to the Partners in a manner consistent with the manner in which their
Adjusted Capital Accounts are required to be adjusted pursuant to Treasury
Regulations Section 1.704-1(b)(2)(iv)(m).
3.8 Tax Allocations; Section 704(c). (a) Except as provided in
-------------------------------
subsection (b) below, the income, gains, losses, credits and deductions
recognized by the Partnership shall be allocated among the Partners, for U.S.
federal, state and local income tax purposes, to the extent permitted under the
Code and the Treasury Regulations, in the same manner that each such item
affects the balances in the Partners' Capital Accounts.
(b) In accordance with Section 704(c) of the Code and the Treasury
Regulations thereunder, income, gain, loss and deduction with respect to any
property contributed to the capital of the Partnership shall, solely for tax
purposes, be allocated among the Partners so as to take account of any variation
between the adjusted basis of such property to the Partnership for federal
income tax purposes and its fair market value as determined by the General
Partner.
3.9 Distributions. The General Partner may from time to time declare
-------------
distributions of cash or other Partnership property. Such distributions shall
be made or applied as follows:
9
<PAGE>
(a) First, all distributions for Permitted Expenses shall be
distributed in a manner designed to permit payment of such expenses.
(b) Following the Partnership's distribution of amounts pursuant to
Section 3.9(a) above, the Partnership shall make all other distributions to the
Partners in accordance with the following order of priority:
(i) first, to each Partner whose Preferred Capital Account
balance shall be greater than zero to the extent of such positive
balance in the ratio that its respective Preferred Capital Account
balance bears to all such positive Preferred Capital Account balances;
and
(ii) thereafter, to the Partners in accordance with their
Percentage Interests.
3.10 Accounting Method. The books of account of the Partnership shall
-----------------
be kept pursuant to the accrual method of accounting. Except to the extent
required by law, the Partnership shall not change its accounting principles in a
manner adverse to any Partner without the consent of such Partner.
3.11 Certain Federal Income Tax Matters. The Partners understand and
----------------------------------
intend that under the Code the Partnership constitutes a "limited partnership."
The General Partner shall be the "tax matters partner" of the Partnership
pursuant to Section 6231(a)(7) of the Code. Each Partner hereby consents to such
designation and agrees that upon the request of the General Partner it will
execute, certify, acknowledge, deliver, swear to, file and record at the
appropriate public offices such documents as may be necessary or appropriate to
evidence such consent.
3.12 Election under Section 754. The General Partner, on behalf of
--------------------------
the Partnership, may in its sole
10
<PAGE>
discretion file an election under Section 754 of the Code in accordance with the
procedures set forth in the applicable Treasury Regulations.
3.13 Tax Withholdings. The Partnership shall at all times be entitled
----------------
to make payments with respect to any Partner in amounts required to discharge
any legal obliga tion of the Partnership pursuant to any provision of the Code
or any other tax provision or any provision enacted in the future imposing a
similar obligation on the Partnership to withhold or make payments to any
governmental authority with respect to any U.S. federal, state and local tax
liability of such Partner arising as a result of such Partner's interest in the
Partnership. Each such payment shall be deemed to be a loan by the Partnership
to such Partner and shall not be deemed to be a distribution. The amount of
such payments made with respect to any Partner, plus interest at an annual rate
equal to the interest rate publicly announced by Chemical Bank from time to time
as its base rate on each such amount from the date of each such payment until
such amount is repaid to the Partnership, shall be repaid to the Partnership by
(i) deduction from the current or next succeeding distribution or distributions
-
otherwise payable to such Partner pursuant to this Agreement or (ii) earlier
--
payment of such amounts and interest by the Partner to the Partnership.
Article IV
-----------
General Partner
---------------
4.1 Management. The management and control of and the determination
----------
of policy with respect to the Partnership and its affairs shall be vested
exclusively in the General Partner and in connection therewith the General
Partner may exercise all of the powers and authority set forth in Section 1.7.
Notwithstanding the foregoing, the General Partner may retain the Manager to
manage the Partnership and its Subsidiaries and may delegate such
11
<PAGE>
powers and authority to the Manager and assign such duties to the Manager as the
General Partner in its reasonable discretion deems necessary or advisable, such
powers, authority and duties to be set forth, and limited in the manner set
forth, in the Management Agreement. The Management Agreement may not be amended
or modified without the prior written consent of the General Partner, which
consent may be granted or withheld in its sole discretion.
4.2 Reliance on Authority of General Partner. Nothing herein
----------------------------------------
contained shall impose any obligation on any person or firm doing business with
the Partnership to inquire as to whether or not the General Partner has
exceeded its authority in executing or causing to be executed any contract,
lease, deed or other instrument on behalf of the Partnership, and any such third
person shall be fully protected in relying upon such authority.
4.3 Interested Party Contracts. The General Partner may cause the
--------------------------
Partnership to enter into contracts and transactions with the General Partner or
any of its affiliates, provided that the terms of any such contract or
--------
transaction are entered into in good faith, and are fair and reasonable to the
Partnership.
4.4 Expenditures By General Partner. The General Partner shall be
-------------------------------
entitled to reimbursement by the Partnership for any reasonable expenditures
incurred by the General Partner on behalf of the Partnership which are paid by
or on behalf of the General Partner other than out of the funds of the
Partnership. The General Partner shall not be compensated for its services as a
General Partner of the Partnership.
4.5 Other Relationships. The General Partner shall devote so much of
-------------------
its time to the business of the Partnership as in the judgment of the General
Partner the conduct of the Partnership's business shall reasonably require. The
General Partner may engage in other business ventures of any nature and
description independently or with
12
<PAGE>
others, and neither the Partnership nor any of the other Partners shall have any
rights in and to such independent ventures or the income or profits derived
therefrom. Except as otherwise specifically provided herein, nothing contained
in this Agreement shall, or shall be deemed to, prohibit, restrict or limit in
any manner any business or investment activities of the General Partner or any
of its affiliates, including, without limitation, rendering any business,
management or consulting advice to the Partnership or its Subsidiaries.
4.6 Proscriptions. Without the written consent of or ratification by
-------------
90% or more of the Percentage Interests of the Limited Partners, the General
Partner shall have no authority to do any act in contravention of this Agreement
or of the Act.
4.7 Bank Accounts. All funds of the Partnership shall be deposited
-------------
in the Partnership name in such bank account or accounts and in such bank or
banks as shall be designated from time to time by the General Partner. All
withdrawals therefrom shall be made upon the signature of the General Partner or
of such other person or persons as the General Partner may from time to time
designate. The Partnership's funds shall not be commingled with funds not
belonging to the Partnership and shall be used only for the affairs or business
of the Partnership as herein provided.
Article V
----------
Restrictions Regarding Transfer, Substitution, etc.
---------------------------------------------------
5.1 Transfer of Interests by General Partner. The General Partner may
----------------------------------------
not (a) sell, transfer, assign, convey, or otherwise dispose of, all or a
-
portion of its general partner interest in the Partnership or (b) resign or
-
withdraw from the Partnership, provided, however, that nothing herein shall
-------- -------
prohibit any General Partner from assigning its rights to receive cash
distributions pursuant
13
<PAGE>
to Section 3.9 or 7.3 in connection with the pledge of any partnership interest
to any creditor of the Partnership.
5.2 Additional General Partner. Without the prior written consent of
--------------------------
the General Partner and a Majority in Interest, no party shall become an
additional General Partner hereof unless and until it has executed such
certificates and other documents and performed such acts as may be necessary to
constitute such party as a general partner, and to preserve the status of the
Partnership as a limited partnership. In the event that any additional General
Partner(s) shall be admitted to the Partnership in accordance with this Section
5.2, any provision of this Agreement pursuant to which the consent of the
General Partner is required shall be deemed also to require the consent of any
such additional General Partner(s).
5.3 Transfer of Interests by Limited Partners. No Limited Partner may
-----------------------------------------
sell, transfer, assign, convey, or otherwise dispose of, partner interest in the
Partnership, provided, however, that nothing herein shall prohibit any Limited
-------- -------
Partner from assigning its rights to receive cash distributions pursuant to
Section 3.9 or 7.3 in connection with the pledge of any partnership interest to
any creditor of the Partnership.
5.4 Additional Limited Partners. No party shall become an additional
---------------------------
Limited Partner hereof without the consent of the General Partner and unless and
until it has executed such certificates and other documents and performed such
acts as may be necessary to constitute such party as a limited partner, and to
preserve the status of the Partnership as a limited partnership.
14
<PAGE>
Article VI
-----------
Indemnification
---------------
6.1 Exculpatory Provisions. None of the General Partner or any of
----------------------
its affiliates, or the partners, officers, directors, employees or control
persons (as such term is defined in the Securities Act of 1933, as amended, and
the rules and regulations thereunder) of the General Partner or affiliate
(collectively, the "Indemnified Persons") shall be liable, directly or
indirectly, to the Partnership or any Partner for any act or omission (in
relation to the Partnership or this Agreement) taken or omitted by such
Indemnified Person in good faith, provided that such act or omission did not
--------
constitute gross negligence, fraud, willful violation of the law, willful
violation of this Agreement or reckless disregard of the duties of such
Indemnified Person.
6.2 Indemnification of General Partner. The Partnership shall, to
----------------------------------
the fullest extent permitted by applicable law, indemnify and hold harmless each
Indemnified Person against all claims, liabilities and expenses of whatever
nature ("Claims") relating to activities undertaken in connection with the
Partnership, including but not limited to amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and counsel, accountants'
and experts' and other fees, costs and expenses reasonably incurred in
connection with the investigation, defense or disposition (including by
settlement) of any action, suit or other proceeding, whether civil or criminal,
before any court or administrative body in which such Indemnified Person may be
or may have been involved, as a party or otherwise, or with which such
Indemnified Person may be or may have been threatened, while acting as such
Indemnified Person, provided that no indemnity shall be payable hereunder
--------
against any liability incurred by such Indemnified Person by reason of gross
negligence, fraud, willful violation of the law, willful violation of this
Agreement, reckless disregard of the duties of such Indemnified Person or with
respect to any matter as to which such
15
<PAGE>
Indemnified Person shall have been adjudicated not to have acted in good faith,
and provided further that as to any action, suit or other proceeding disposed of
--------
by settlement or a compromise payment, pursuant to a consent decree or
otherwise, no indemnification (whether for such payment or for any other Claim)
shall be provided unless there has been a determination that such compromise is
in or not opposed to the best interests of the Partnership and that such
Indemnified Person has acted in good faith and did not involve gross negligence,
fraud, willful violation of the law, willful violation of this Agreement or
reckless disregard of the duties of such Indemnified Person.
6.3 Advance of Expenses. Expenses incurred by an Indemnified Person
-------------------
in defense or settlement of any Claim that may be subject to a right of
indemnification hereunder may be advanced by the Partnership prior to the final
disposition thereof upon receipt of an undertaking by or on behalf of the
Indemnified Person to repay such amount if it shall ultimately be determined
that the Indemnified Person is not entitled to be indemnified by the
Partnership.
6.4 Non-Exclusivity. The right of any Indemnified Person to the
---------------
indemnification provided herein shall be cumulative of, and in addition to, any
and all rights to which such Indemnified Person may otherwise be entitled by
contract or as a matter of law or equity and shall extend to such Indemnified
Person's successors, assigns and legal representatives.
6.5 Satisfaction from Partnership Assets. All judgments against the
------------------------------------
Partnership or an Indemnified Person, in respect of which such Indemnified
Person is entitled to indemnification, shall first be satisfied from Partnership
assets before the Indemnified Person is responsible therefor.
6.6 Notices of Claims, etc. Promptly after receipt by an Indemnified
-----------------------
Person of notice of the
16
<PAGE>
commencement of any action or proceeding or threatened action or proceeding
involving a Claim referred to in this Article VI, such Indemnified Person will,
if a claim for indemnification in respect thereof is to be made against the
Partnership, give written notice to the Partnership of the commencement of such
action, provided that the failure of any Indemnified Person to give notice as
--------
provided herein shall not relieve the Partnership of its obligations under this
Article VI, except to the extent that the Partnership is actually prejudiced by
such failure to give notice. Each such Indemnified Person shall keep the General
Partner apprised of the progress of any such proceeding.
6.7 Exculpation and Indemnification of Manager. Notwithstanding the
------------------------------------------
foregoing provisions of this Article VI, the liability of the Manager to the
Partnership and the Partnership's obligation to indemnify the Manager acting
solely in its capacity as Manager with respect to any action or inaction in
connection with the performance of the services and duties contemplated by the
Management Agreement shall be governed by the provisions of the Management
Agreement. For purposes of this Section 6.7, the Manager shall include its
officers, directors, employees and affiliates.
Article VII
------------
Dissolution and Liquidation
---------------------------
7.1 Events of Dissolution; Accounting. (a) The Partnership shall
---------------------------------
dissolve upon the earliest to occur of the events described in Section 1.6.
(b) In the event of the dissolution and liquidation of the
Partnership, a proper accounting shall be made of the Capital Account of each
Partner and of the Net Profits or Net Losses of the Partnership from the date
of the last previous accounting to the date of dissolution. Financial statements
presenting such accounting shall be audited
17
<PAGE>
and shall include a report of a nationally recognized ac counting firm.
7.2 Liquidating Trustee. Upon the dissolution and liquidation of the
-------------------
Partnership's business for any reason, the General Partner shall act as
liquidating trustees, or, if there shall then be no General Partner, the Limited
Partners may elect a liquidating trustee. The liquidating trustee(s) shall have
full power to sell, assign and encumber Partnership assets.
7.3 Distribution in Liquidation. In the event of the termination of
---------------------------
the Partnership pursuant to this Article VII or for any other reason, the
Partnership assets shall be liquidated. The proceeds of such liquidation shall
be distributed as follows:
(a) first, to the payment of the expenses of the liquidation;
(b) second, to the (i) payment of creditors of the Partnership and
-
(ii) establishment of reserves to provide for contingent liabilities, if
---
any, in the order of priority as provided by law;
(c) third, to each Partner whose Preferred Capital Account balance
shall be greater than zero (determined after all adjustments for the Fiscal
Period in which such dissolution occurs) to the extent of such positive
balance in the ratio that its respective Preferred Capital Account balance
bears to all such positive Preferred Capital Account balances;
(d) fourth, to each Partner whose Ordinary Capital Account balance
shall be greater than zero (determined after all adjustments for the Fiscal
Period in which such dissolution occurs) to the extent of such positive
balance in the ratio which its respective Ordinary Capital Account balance
bears to all such positive Ordinary Capital Account balances; and
18
<PAGE>
(e) thereafter, to the Partners in accordance with their Percentage
Interests at the time of liquidation.
Payments to Partners described in subsections (a) through (e) above
may be made in cash or in kind if so determined by the General Partner or a
liquidating trustee appointed pursuant to Section 7.2. Any distributions to
Partners upon liquidation shall be made by the end of the taxable year in which
the liquidation of the Partnership occurs (or, if later, within 90 days after
the date of such liquidation).
Article VII
------------
Power of Attorney
-----------------
Concurrently with the execution of this Agreement, each Limited
Partner hereby appoints the General Partner as its true and lawful attorneys
coupled with an interest, in its name, place and stead to sign, execute,
acknowledge, swear to and file any and all documents which in the reasonable
discretion of such attorney are required to be signed, executed, acknowledged,
sworn to or filed by each Limited Partner to discharge the purposes of the
Partnership as hereinabove stated. Without limitation, among the documents
which the General Partner may execute on behalf of each Limited Partner shall be
a Certificate of Limited Partnership and all amendments thereto required by
applicable law or by the provisions of this Agreement.
Article IX
----------
Construction
------------
9.1 Headings. The headings, titles and subtitles herein are inserted
--------
for convenience of reference only and
19
<PAGE>
shall not control or affect the meaning or construction of any of the provisions
hereof.
9.2 Notices. All notices, requests, demands, letters, waivers and
-------
other communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if (a) delivered
-
personally, (b) mailed, by certified or registered mail with postage prepaid,
-
(c) sent by next-day or overnight mail or delivery or (d) transmitted by
- -
telecopy or telegram, as follows:
(i) If to the General Partner:
c/o Charter Communications, Inc.
12444 Powerscourt Drive
Suite 400
St. Louis, Missouri 63131
Attention: Jerald L. Kent
with a copy to:
Kelso & Company
350 Park Avenue, 21st Floor
New York, New York 10022
Attention: James J. Connors, II, Esq.
Paul, Hastings, Janofsky & Walker
399 Park Avenue
New York, New York 10022
Attention: Neil A. Torpey, Esq.
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Richard D. Bohm, Esq.
(ii) If to the Limited Partners, to each of them:
20
<PAGE>
c/o Charter Communications, Inc.
12444 Powerscourt Drive
Suite 400
St. Louis, Missouri 63131
Attention: Jerald L. Kent
with a copy to:
Kelso & Company
350 Park Avenue, 21st Floor
New York, New York 10022
Attention: James J. Connors, II, Esq.
Paul, Hastings, Janofsky & Walker
399 Park Avenue
New York, New York 10022
Attention: Neil A. Torpey, Esq.
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Richard D. Bohm, Esq.
or to such other person or address as any party shall specify by notice in
writing to the other Partners. All such notices, requests, demands, letters,
waivers and other communications shall be deemed to have been received (w) if by
-
personal delivery on the day after such delivery, (x) if by certified or
-
registered mail, on the fifth business day after the mailing thereof, (y) if by
-
next-day or overnight mail or delivery, on the day delivered or (z) if by
-
telecopy or telegram, on the next day following the day on which such telecopy
or telegram was sent, provided that a copy is also sent by certified or
registered mail.
9.3 Governing Law. This Agreement, and its validity, construction
-------------
and performance, shall be governed by the laws of the State of Delaware, without
regard to the conflict of laws rules thereof.
21
<PAGE>
9.4 Entire Understanding and Amendment. This Agreement embodies the
----------------------------------
entire agreement and understanding of the parties hereto in respect of the
subject matter contained herein. There are no restrictions, promises,
representations, warranties, covenants or undertakings among the parties hereto
relating to the subject matter contained herein, other than those expressly set
forth or referred to herein. This Agreement supersedes all prior agreements and
understandings among the parties with respect to such subject matter. This
Agreement may be amended or modified with the written consent of the General
Partner. Notwithstanding the foregoing, this Agreement may not be amended or
modified without the prior written consent of the General Partner and, if in the
judgment of the General Partner such amendment or modification would materially
and adversely affect the rights of a Limited Partner, a Majority in Interest.
9.5 Miscellaneous. Except as provided in Article V, this Agreement
-------------
may not be assigned or transferred by operation of law or otherwise. This
Agreement is not intended to confer upon any other person except the parties
hereto any rights or remedies hereunder. If any provision of this Agreement or
the application thereof to any person or circumstance shall be prohibited by or
invalid under applicable law, the remainder of this Agreement or the application
of such provision to other persons or circumstances shall not be affected
thereby. This Agreement may be executed in one or more counterparts, all of
which shall constitute one and the same instrument. Each counterpart may
consist of a number of copies each signed by less than all, but together signed
by all, the parties hereto. Notwithstanding anything to the contrary in this
Agreement, nothing in this Agreement shall be interpreted to prohibit, or to
cause a dissolution on account of, the pledge of any partnership interest to any
creditor of the Partnership.
22
<PAGE>
Article X
---------
Definitions
-----------
As used in this Agreement and the Schedules hereto, the following
terms shall have the following meanings:
Act: as defined in Section 1.1 of this Agreement.
---
Adjusted Capital Account: means, with respect to any Partner, as of
------------------------
the end of any Fiscal Year, such Partner's Capital Account balance (whether
positive or negative) as of the end of such Fiscal Year, (i) increased by the
- ---------
sum of (A) such Partner's share of Partnership Minimum Gain and (B) any amount
- -
for which such Partner is personally liable with respect to liabilities of the
Partnership as of the end of such Fiscal Year (except to the extent that such
amount would duplicate the amount of any increase under clause (A) above) and
(ii) decreased by such Partner's share of the reasonably expected net
- --- ---------
allocations and distributions described in Treasury Regulations Sections 1.704-
1(b)(2)(ii)(d)(4), (5) and (6).
Adjustment Date: means (a) the close of business on the last day of
--------------- -
each Fiscal Year of the Partnership, (b) the day before the effective date of
-
the admission of any additional Partner to the Partnership, (c) the day before
-
any distribution is made by the Partnership or (d) any other date selected by
-
the General Partner, in its reasonable discretion, for an interim closing of
the Partner ship books. For purposes of this definition, the day before the
date of this Agreement shall be considered an Adjustment Date.
Capital Account: as defined in Section 2.6 of this Agreement.
---------------
Cencom Loan Agreement: means the Senior Subordinated Loan Agreement,
---------------------
dated as of September 29, 1995,
23
<PAGE>
between the General Partner and Cencom Cable Television, Inc., including any
amendment, renewal, extension, substitution, refinancing, replacement or other
modification thereof.
Claims: as defined in Section 6.2 of this Agreement.
------
Code: means the Internal Revenue Code of 1986, as amended.
----
Deficit: as defined in Section 3.2 of this Agreement.
-------
Fiscal Period: means a period beginning on the day following any
-------------
Adjustment Date and ending on the next succeeding Adjustment Date.
Fiscal Year: means a year beginning on January 1 of one calendar year
-----------
and ending on December 31 of the same calendar year, provided, however, that the
-------- -------
term "Fiscal Year" shall mean with respect to the Partnership's first period of
operations the period commencing on the date hereof and ending on December 31
of the same calendar year.
General Partner: as defined in the first paragraph of this Agreement.
---------------
Indebtedness: means any indebtedness, whether or not for money
------------
borrowed, including any amendment, renewal, extension, substitution,
refinancing, replacement or other modification thereof, directly or indirectly
created, incurred or assumed by any entity, including, without limitation,
indebtedness arising under or pursuant to the Loan Agreement and the Cencom Loan
Agreement.
Indemnified Party: as defined in Section 6.1 of this Agreement.
-----------------
24
<PAGE>
Limited Partners: as defined in the first paragraph of this
----------------
Agreement.
Loan Agreement: means the Loan Agreement, dated as of September 29,
--------------
1995, among the Partnership, Chemical Bank as Documentation Agent, Nationsbank
of Texas, N.A. as Administrative Agent, and the lenders named therein, including
any amendment, renewal, extension, substitution, refinancing, replacement or
other modification thereof.
Majority in Interest: means a majority in interest of the Limited
--------------------
Partners, based on their Percentage Interests.
Management Agreement: means the Management Agreement, dated as of
--------------------
September 29, 1995, as the same shall be amended from time to time in accordance
with the terms hereof, between the Partnership and the Manager.
Manager: means Charter Communications, Inc., a Delaware corporation,
-------
or any successor manager approved by the General Partner.
Minimum Gain Attributable to Partner Nonrecourse Debt: means that
-----------------------------------------------------
amount determined in accordance with the principles of Treasury Regulations
Section 1.704-2(i)(3), (4) and (5).
Net Profits and Losses: means, for any Fiscal Period, the net income
----------------------
or net loss of the Partnership for such Fiscal Period, including any items that
are separately stated for purposes of Section 702(a) of the Code, as determined
in accordance with federal income tax accounting principles with the following
adjustments:
(i) any income of the Partnership that is exempt from federal income
tax shall be included as income;
(ii) any expenditures of the Partnership described in Code Section
705(a)(2)(B) or treated as Code Sec-
25
<PAGE>
tion 705(a)(2)(B) expenditures pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(1) shall be treated as current expenses;
(iii) no effect shall be given to any adjustments made pursuant to
Section 734 or Section 743 of the Code;
(iv) the basis of property contributed to the Partnership shall
initially be treated as equal to the agreed upon valuation of such property
as reflected on Schedule A hereto and all gain, loss, depreciation and
amortization on such property shall be determined based on such agreed upon
value in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)(g);
(v) if the Partnership distributes any property in kind, the
Partnership shall be deemed to have sold such property for its fair market
value immediately before such distribution and the proceeds of such deemed
sale shall be deemed to have been distributed to the Partners for all
purposes of this Agreement; and
(vi) notwithstanding any other provisions of this definition, any
items that are specially allocated pursuant to Sections 3.2 through 3.8
shall not be taken into account.
Nonrecourse Deductions: has the meaning set forth in Treasury
----------------------
Regulations Section 1.704-2(b)(1).
Nonrecourse Liability: has the meaning set forth in Treasury
---------------------
Regulations Section 1.704-2(b)(3).
Ordinary Capital Account: as described in Section 2.6 of this
------------------------
Agreement.
Partner Nonrecourse Debt: means debt of the Partnership within the
------------------------
meaning of Treasury Regulations Section 1.704-2(b)(4).
26
<PAGE>
Partner Nonrecourse Deductions: has the meaning set forth in Treasury
------------------------------
Regulations Sections 1.704-2(i)(1) and 1.704-2(i)(2).
Partners: means the General Partner and the Limited Partners.
--------
Partnership: as defined in Section 1.1 of this Agreement.
-----------
Partnership Minimum Gain: has the meaning set forth in Sections
------------------------
1.704-2(b)(2) and 1.704-2(d) of the Treasury Regulations.
Percentage Interest: means each Partner's proportionate share of the
-------------------
Net Profits or Net Losses of the Partnership, as set forth in Schedule A
hereto.
Permitted Expenses: means, to the extent permitted pursuant to any
------------------
instrument or agreement constituting Indebtedness, general and administrative
expenses, all U.S. federal and state income taxes, state franchise taxes,
accounting fees, fees and expenses of technical and other consultants, and fees
and expenses of other professionals of the Partnership or its affiliates or any
direct or indirect partner in the Partnership.
Preferred Capital Account: as defined in Section 2.6 of this
-------------------------
Agreement.
Preferred Return: means, for any Fiscal Period, in the case of
----------------
Charter Communications Entertainment, L.P., the sum of (a) the "Preferred
-
Return" accruing in respect of the "Preferred Capital Account" of CCT Holdings
Corp., a Delaware corporation, as such terms are defined in, and pursuant to,
the Agreement of Limited Partnership of Charter Communications Entertainment,
L.P., as amended from time to time and (b) the Ratable Portion of the Excess
-
Amount. For purposes of this definition, (i) the "Excess Amount" shall equal
-
the excess of (w) the initial Preferred Capital
-
27
<PAGE>
Account balance of CCT Holdings Corp. in respect of its partnership interest in
Charter Communications Entertainment, L.P. over (x) the initial Preferred
-
Capital Account balance of Charter Communications Entertainment, L.P. in the
Partnership and (ii) the "Ratable Portion" shall mean the ratable portion for
--
such Fiscal Period of the Excess Amount amortized (on a straight-line basis)
over the term of the "Cencom Loan Agreement" (as defined in the Agreement of
Limited Partnership of Charter Communications Entertainment, L.P.).
Subsidiaries: means any corporation, partnership, limited liability
------------
company or other entity of which the Partnership owns, directly or indirectly,
more than 50% of the equity.
Treasury Regulations: means the Regulations of the Treasury
--------------------
Department of the United States issued pursuant to the Code.
28
<PAGE>
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as
of the day and year first above written.
GENERAL PARTNER: LIMITED PARTNERS:
CCT HOLDINGS CORP. CCA HOLDINGS CORP.
By /s/ Theodore W. Browne, II By /s/ Theodore W. Browne, II
-------------------------- --------------------------
Executive Vice President Executive Vice President
CHARTER COMMUNICATIONS
ENTERTAINMENT, L.P.
By /s/Theodore W. Browne, II
-------------------------
Executive Vice President
29
<PAGE>
SCHEDULE A
General Partner:
---------------
<TABLE>
<CAPTION>
Initial Initial
Ordinary Preferred
Percentage Initial Capital Capital Capital
Partner Interset Contribution Account Account
- ------- -------- ------------ ------- -------
<S> <C> <C> <C> <C>
CCT Holdings 1%
Corp.
</TABLE>
Limited Partners:
----------------
<TABLE>
<CAPTION>
Initial Initial
Ordinary Preferred
Percentage Initial Capital Capital Capital
Partner Interset Contribution Account Account
- ------- -------- ------------ ------- -------
<S> <C> <C> <C> <C>
CCA Holdings 1.22%
Corp.
Charter 97.78%
Communications
Entertainment,
L.P.
</TABLE>
<PAGE>
EXHIBIT 10.18
CONTINGENT PAYMENT AGREEMENT
----------------------------
CONTINGENT PAYMENT AGREEMENT, dated as of September 29, 1995, among
Charter Communications Entertainment, L.P., a Delaware limited partnership
("CCE"), CCT Holdings Corp., a Delaware corporation ("CCT"), and Cencom Cable
Television, Inc., a Delaware corporation ("Cencom").
WHEREAS, Kelso Investment Associates V, L.P., a Delaware limited
partnership, Kelso Equity Partners V, L.P., a Delaware limited partnership, and
certain individual investors (collectively, "Kelso") and Charter Communications,
Inc., a Delaware corporation ("Charter"), own all of the outstanding shares of
capital stock of CCT and CCA Holdings Corp., a Delaware corporation ("CCA");
WHEREAS, Cencom and Lenoir T.V. Cable, Inc., a North Carolina
corporation (together, the "Sellers"), CCT and CCA have entered into a Asset
Purchase Agreement (the "Asset Purchase Agreement"), dated as of March 30, 1995,
providing for the sale of certain assets (the "Assets") by the Sellers to CCT on
the date hereof;
WHEREAS, immediately after the closing under the Asset Purchase
Agreement CCT will contribute a majority of the Assets to CCE in exchange for
general and limited partnership interests in CCE and CCA will cause a majority
of the assets of its direct and indirect subsidiaries to be contributed to CCE
in exchange for general and limited partnership interests in CCE;
WHEREAS, in connection with the foregoing arrangements CCE has agreed
that Cencom will be entitled to receive payments from CCE if certain conditions
are met;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Distributions to CCT by the Partnerships.
----------------------------------------
(a) Basic Formula. If, at any time after the date hereof, CCT
--------------
receives a distribution from CCE, Charter Communications
1
<PAGE>
Entertainment II, L.P. ("CCE II'") or Charter Communications Entertainment I,
L.P. ("CCE I") (collectively, the "Partnerships") that is not used entirely to
pay either outstanding principal of or accrued interest on the Senior
Subordinated Note, in the principal amount of $165,687,890, issued to Cencom by
CCT on the date hereof, as such note may be amended from time to time (the
"Cencom Note"), or Permitted Expenses (as defined in the Limited Partnership
Agreement of CCE, dated as of the date hereof, attached as Exhibit A hereto, as
the same shall be amended from time to time in accordance with Section 5 hereof
(the "Partnership Agreement")) (the gross amount of such distribution, a
"Partnership Distribution"), then CCE will pay to Cencom an amount equal to the
product of 15% and the amount, if any, of (i) the aggregate amount of cash (or
-
the cash equivalent value of other property) distributed to CCT and CCA in
connection with such Partnership Distribution over (ii) the sum of (A) Equity
-- -
Value (as defined below) immediately prior to such Partnership Distribution; (B)
-
the amount of such Partnership Distribution applied to the payment of
outstanding principal of and accrued interest on the Cencom Note; and (C) the
-
amount of such Partnership Distribution applied to the payment of accrued but
unpaid Permitted Expenses of CCT. "Equity Value" shall initially mean $450
million and shall be subject to adjustment as provided in Sections 1(c), 2(c)
and 3(b) below. Prior to making any Partnership Distribution, CCE and CCT shall
calculate the amount, if any, to be paid to Cencom pursuant to this Section 1(a)
and CCE shall withhold such amount from the amounts to be distributed to CCT.
(b) Adjustments to Basic Formula Upon Contributions of Additional
-------------------------------------------------------------
Capital. If, at any time after the date hereof, any additional capital is
- -------
contributed to CCE by either CCT or CCA, then the 15% factor in the formula set
forth in Sections 1(a) above and 3(a) below will be reduced by multiplying it by
a fraction, the numerator of which will be $450 million and the denominator of
which will be $450 million plus the aggregate amount of capital contributed to
CCE by CCT and CCA after the date hereof. In no event shall any adjustment under
this Section 1(b) affect any calculations hereunder other than those made under
Section 1(a) above or Section 3(a) below.
(c) Adjustments to Equity Value Upon Partial Distributions. The
------------------------------------------------------
amount, if any, of the aggregate amount of cash (or the cash equivalent value of
other property)
2
<PAGE>
distributed to CCT and CCA in connection with any Partnership Distribution over
the sum of (i) the amount of such Partnership Distribution applied to the
-
payment of the outstanding principal and accrued interest on the Cencom Note
and (ii) the amount of such Partnership Distribution applied to the payment of
--
accrued but unpaid Permitted Expenses of CCT, will reduce Equity Value for
purposes of any subsequent calculations of Equity Value hereunder, provided that
--------
in no event will Equity Value be reduced below zero.
2. Sale of Equity Securities of CCT or CCA. (a) Basic Formula. if at
--------------------------------------- -------------
any time after the date of this Agreement, either Kelso or Charter sells any
equity securities of CCT or CCA (an "Equity Sale''), then CCE will be required
to make a payment to Cencom equal to the product of 15% and the amount, if any,
of (i) the sum of (x) the aggregate amount of cash (or the cash equivalent value
- -
of other property) received by the stockholders of CCT and CCA in connection
with such Equity Sale, after payment of such stockholders' expenses relating to
such Equity Sale, and (y) if equity securities of CCA were sold by Kelso or
-
Charter in connection with such Equity Sale, a pro rata amount (based on the
percentage of the outstanding equity securities of CCA sold in connection with
such Equity Sale) of the outstanding amount of principal of and accrued interest
on the Senior Subordinated Note issued to HC Crown Corp. by CCA on January 18,
1995 immediately prior to such Equity Sale over (ii) Equity Value immediately
--
prior to such Equity Sale.
(b) Adjustments to Basic Formula Upon the Issuance of Additional
------------------------------------------------------------
Equity. If at any time after the date of this Agreement, any additional equity
- ------
is contributed to or issued by either CCT or CCA, the proceeds of which are
contributed to CCE, then the 15% factor in the formula set forth in Section 2(a)
above will be reduced by multiplying it by a fraction, the numerator of which
will be $450 million and the denominator of which will be $450 million plus the
aggregate amount of equity contributed to or equity proceeds received by CCT and
CCA and contributed to CCE after the date hereof. In no event shall any
adjustment under this Section 2(b) affect any calculations hereunder other than
those made under Section 2(a) above.
(c) Adjustments to Equity Value Upon Partial Sales. The aggregate
----------------------------------------------
amount of cash (or the cash equivalent
3
<PAGE>
value of other property) received by the stockholders of CCT and CCA in
connection with any Equity Sale, after payment of such stockholders' expenses
relating to such Equity Sale, will reduce Equity Value for purposes of any
subsequent calculations of Equity Value hereunder, provided that in no event
--------
will Equity Value be reduced below zero. In addition, following any Equity Sale
of less than 100% of Kelso's and Charter's equity interests in CCT and CCA, any
subsequent calculations under Sections 1, 2 and 3 shall be adjusted as
necessary to reflect the reduction in Kelso's and Charter's indirect equity
interests in the Partnerships as a result of such Equity Sale.
3. Sale of Assets by CCT or CCA. (a) Basic Formula. If at any time
---------------------------- -------------
after the date of this Agreement, either CCT or CCA sells any assets, including
without limitation, their respective partnership interests in the Partnerships
(an "Assets Sale"), then CCE will be required to make a payment to Cencom equal
to the product of 15% and the amount, if any, of (i) the aggregate amount of
-
cash (or cash equivalent value of other property) received by CCT and CCA in
connection with such Asset Sale, after paying CCT's and CCA's expenses in
connection with such Asset Sale, over (ii) the sum of (A) Equity Value
-- -
immediately prior to such Asset Sale; (B) the amount from such Asset Sale
-
applied to the payment of outstanding principal of and accrued interest on the
Cencom Note and (C) the amount from such Asset Sale applied to the payment of
-
accrued but unpaid Permitted Expenses of CCT.
(b) Adjustments to Equity Value Upon Partial Asset Sales. The amount,
----------------------------------------------------
if any, of the aggregate amount of cash (or cash equivalent value of other
property) received by CCT and CCA in connection with any Asset Sale, after
paying CCT's and CCA's expenses in connection with such Asset Sale, over the sum
of (i) the amount from such Asset Sale applied to the payment of outstanding
-
principal of and accrued interest on the Cencom Note and (ii) the amount from
--
such Asset Sale applied to the payment of accrued but unpaid Permitted Expenses
of CCT, will reduce Equity Value for purposes of any subsequent calculations of
Equity Value hereunder, provided, that in no event will Equity Value be reduced
--------
below zero.
4. Initial Public Offering. (a) Upon an initial public offering of
-----------------------
CCT, CCA, CCE or any successor in interest to CCT, CCA, or CCE, CCE's
obligations to Cencom set
4
<PAGE>
forth in Sections 1-3 will terminate and CCT and CCE will be obligated to cause
to be issued to Cencom equity securities of the entity which is making such
initial public offering of the same type which are being offered to the public
and having an aggregate fair market value equal to the amount which would be
payable to Cencom pursuant to Section 1 if as of the date of such initial public
offering the Partnerships sold 100% of their assets for fair market value for
cash and distributed the net proceeds to their partners. For purposes of this
Section 4, "fair market value" will be determined with reference to the initial
public offering price of the equity securities being offered to the public by
such entity making an initial public offering.
(b) Notwithstanding the provisions of Section 4(a), in the event that an
issuance of equity securities to Cencom pursuant to Section 4(a) would cause
Cencom or any of its affiliates to have an attributable interest in a cable
operator for purposes of 47 C.F.R. (section section)76.1000 - 76.1003 and as a
result any of Gaylord's Entertainment Company's cable networks would be
prohibited from offering programming on an exclusive basis to cable delivery
systems, then, at Cencom's option, CCT and CCE will cause such number of equity
securities to be issued to Cencom as, in the opinion of Cencom's counsel, will
not result in Cencom or its affiliates having such an attributable interest and
CCT and CCE will have the option either (i) to pay or to cause to be paid to
-
Cencom in cash the fair market value of the balance of such equity securities
otherwise issuable pursuant to Section 4(a) up to the amount of the net proceeds
from the initial public offering received by the entity making such initial
public offering, with the balance, if any, payable in a subordinated note of
such entity, convertible into equity securities with appropriate registration
rights, or (ii) to cause the balance of such equity securities otherwise
--
issuable pursuant to Section 4(a) to be sold on behalf of Cencom in such initial
public offering. In any event, Cencom will be entitled to have such number of
its securities registered and sold in such initial public offering in the same
proportion as the number of securities owned by Kelso and Charter bears to the
number of securities to be registered and sold by Kelso and Charter in such
initial public offering.
5. Amendments to Partnership Agreements. CCE and CCT will not permit any
------------------------------------
amendment to the Partnership Agreement or the CCE II or CCE I Agreements of
Limited
5
<PAGE>
Partnership, dated as of the date hereof, attached hereto as Exhibit B and C,
respectively, that would adversely affect the rights of CCT to receive
allocations and distributions thereunder; provided, that such partnership
--------
agreements may be amended at any time to reflect normal dilution to CCT as a
result of the admission of new partners into any of the Partnerships.
6. Affiliate Transactions. CCE will not enter, and will not permit or
----------------------
cause any of its subsidiaries to enter, into any transaction with any of their
respective affiliates on terms less favorable than those that would be obtained
in an arm's-length transaction with an unaffiliated third party; provided, that
--------
(1) CCE II and its respective subsidiaries may enter into arrangements with
-
Charter or any replacement manager upon the terms of the Management Agreement,
dated as of the date hereof, between CCE II and Charter; (2) CCE I and its
-
respective subsidiaries may enter into arrangements with Charter or any
replacement manager upon the terms of the Amended and Restated Management
Agreement, dated as of the date hereof, between CCE I and Charter; (3) CCE II
-
may enter into financial advisory arrangements with Kelso & Company, L.P.
("Kelso & Co.") upon the terms of the Financial Advisory Agreement, dated as of
the date hereof, between Kelso & Co. and CCE II; (4) CCE I may enter into
-
financial advisory arrangements with Kelso & Co. upon the terms of the Amended
and Restricted Financial Advisory Agreement, dated as of the date hereof,
between Kelso & Co. and CCE I and (5) the foregoing arrangements may be amended
-
to reflect subsequent acquisitions by CCE, CCE II, CCE I and their respective
subsidiaries and Kelso & Co. may enter into financial advisory arrangements with
future subsidiaries of CCE, CCE II and CCE I, provided that any such amendments
--------
or any such new arrangements provide for management or financial advisory fees,
as the case may be, which are consistent with current arrangements taking into
account the value of the assets, number of subscribers and equity value of the
entities acquired.
7. Miscellaneous
-------------
(a) Amendments, etc. The terms of this Agreement may be waived,
---------------
amended or supplemented only with the written consent of all the parties hereto.
(b) Assignment. This Agreement may not be assigned by any party
----------
without the prior written consent of the
6
<PAGE>
other parties hereto; provided that Cencom may assign its rights hereunder to
any of its affiliates without the prior consent of CCE and CCT.
(c) Headings. The headings in this Agreement are solely for convenience
--------
of reference and shall not affect its interpretation.
(d) Counterparts. This Agreement may be executed in more than one
------------
counterpart which, taken together, shall constitute one agreement.
(e) Completeness. This Agreement, together with the Limited Partnership
------------
Agreement of CCE, sets forth the entire understanding of the parties hereto with
respect to the subject matter hereof.
(f) Termination. This Agreement shall terminate upon the earlier of
-----------
(a) the issuance of shares to Cencom pursuant to Section 4; (b) Kelso and
- -
Charter ceasing to own any shares of capital stock of either CCT or CCA; (c) CCE
-
selling, transferring or otherwise disposing of all of substantially all of its
assets; and (d) CCT and CCA selling, transferring or otherwise disposing of all
-
or substantially all of their assets provided that all amounts due to Cencom
--------
hereunder have been fully paid.
(g) Disclaimer of Relationship. This Agreement is not intended to
--------------------------
create a partnership or joint venture relationship among the parties hereto.
(h) Governing Law. This Agreement shall be construed in accordance with
-------------
and governed by the laws of the State of New York.
(i) Attorneys' Fees and Expenses of Enforcement. CCE agrees to pay up to
-------------------------------------------
$100,000 of costs and expenses (including reasonable attorneys' fees) incurred
by Cencom in any action or proceeding to enforce its rights hereunder that
results in a payment to Cencom hereunder.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Contingent
Payment Agreement to be executed as of the day and year first above written.
CHARTER COMMUNICATIONS
ENTERTAINMENT, L.P.
By: CCT HOLDINGS CORP., a
general partner
By: /s/ Theodore W. Browne, II
-------------------------------
Title: Executive Vice President
CCT HOLDINGS CORP.
By: /s/ Theodore W. Browne, II
-------------------------------
Title: Executive Vice President
CENCOM CABLE TELEVISION, INC.
By: /s/ Jerry E. Finder
-------------------------------
Title: Chief Financial Officer
8
<PAGE>
EXHIBIT 10.19
================================================================================
AMENDED AND RESTATED
STOCKHOLDERS' AGREEMENT
among
CCA HOLDINGS CORP.
and
KELSO INVESTMENT ASSOCIATES V, L.P.
and
KELSO EQUITY PARTNERS V, L.P.
and
CHARTER COMMUNICATIONS, INC.
Dated as of September 29, 1995
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C>
1. Restrictions on Transfer of Common Stock.......................... 1
1.1. Restrictions on Transfers by Charter.................... 1
1.2. Restrictions on Transfers by Kelso...................... 2
2. Sales by Charter to Third Parties................................. 2
2.1. General................................................. 2
2.2. Right of First Refusal.................................. 3
3. Sales by Kelso to Third Parties................................... 4
3.1. General................................................. 4
3.2. Right of First Negotiation.............................. 4
3.3. Tag-Along Rights........................................ 6
3.4. Drag-Along Rights....................................... 6
4. Pledges by Charter and Involuntary Transfers...................... 6
4.1. Pledges by Charter...................................... 6
4.2. Involuntary Transfers................................... 7
5. Right of Charter to Sell to the Company Shares of
Common Stock ("Put Rights")
5.1 Common Stock ("Put Rights")............................. 7
5.1. Right to Sell........................................... 7
5.2. Notice.................................................. 7
5.3. Payment................................................. 8
6. Right of the Company to Purchase from Charter
Shares of Common Stock ("Call Rights")
6.1. Right to Purchase....................................... 8
6.2. Notice.................................................. 8
6.3. Payment................................................. 8
7. Prohibited Purchases.............................................. 9
8. Exit Payments..................................................... 9
9. Election of Directors............................................. 11
9.1. Board Make-up........................................... 11
9.2. Irrevocable Proxy....................................... 21
10. Stock Certificate Legends......................................... 21
11. Absence of Other Arrangements..................................... 31
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
12. Parties............................................................ 13
12.1. Assignment by the Company................................ 13
12.2. Assignment Generally..................................... 14
12.3. Termination.............................................. 14
12.4. Agreements to Be Bound................................... 14
13. Defined Terms...................................................... 15
14. Miscellaneous...................................................... 17
14.1. Sales Incentive Fee......................................
14.2. Recapitalizations, Exchanges, etc........................ 17
Affecting the Common Stock............................... 17
14.3. Actions Requiring Approval of
Stockholders............................................. 17
14.4. No Third Party Beneficiaries............................. 17
14.5. Mechanics of Payment..................................... 17
14.6. Further Assurances....................................... 18
14.7. Amendment and Modification............................... 18
14.8. Governing Law............................................ 18
14.9. Invalidity of Provision.................................. 18
14.10. Notices.................................................. 18
14.11. Headings; Execution in Counterparts...................... 20
14.12. Injunctive Relief........................................ 20
14.13. Entire Agreement......................................... 20
</TABLE>
-ii-
<PAGE>
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT, dated as of September
29, 1995, among CCA Holdings Corp., a Delaware corporation (the "Company"),
Kelso Investment Associates V, L.P., a Delaware limited partnership ("KIA V"),
Kelso Equity Partners V, L.P., a Delaware limited partnership ("KEP V", together
with KIA V, "Kelso"), and Charter Communications, Inc., a Delaware corporation
("Charter"). Kelso and Charter are hereinafter referred to collectively as the
"Stockholders".
Capitalized terms used herein without definition are defined in
Section 13.
WHEREAS, the Company and the Stockholders are party to a Stockholders'
Agreement, dated as of January 18, 1995 (the "Original Agreement");
WHEREAS, pursuant to the Original Agreement, the Company has sold
65,100 shares of Class A Common Stock to KIA V, 2,715 shares of Class A Common
Stock to KEP V, 7,700 shares of Class A Common Stock to Charter and 4,300 shares
of Class B Common Stock to Charter; and
WHEREAS, the parties hereto desire to amend and restate the Original
Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
obligations set forth in this Agreement, the parties hereto agree as follows:
1. Restrictions on Transfer of Common Stock. 1.1. Restrictions on
---------------------------------------- ---------------
Transfers by Charter. Prior to the earlier of (a) the closing of a public
- -------------------- -
offering pursuant to an effective registration statement (a "Registration")
under the Securities Act of 1933, as amended, and the rules and regulations
thereunder (the "Act"), that covers (together with any prior effective
Registrations) (i) 50% or more of the aggregate number of shares of Common Stock
-
then outstanding or (ii) shares of Common Stock that, after the closing of such
--
public offering, will be traded on the New York Stock Exchange, the American
Stock Exchange or the National Association of Securities Dealers Automated
Quotation System (any such Registration, an "IPO") and (b) the tenth anniversary
-
of the Closing, no shares of Common Stock or any interest therein now or
hereafter owned by Charter may be Transferred, except for any (1) sale to a
-
third party or the Company after the fifth anniversary of the Closing in
compliance with Section 2.2 ("Right of First Refusal"),
<PAGE>
(2) sale to a third party pursuant to Section 3.3 ("Tag-Along Rights") or
-
Section 3.4 ("Drag-Along Rights"), (3) involuntary Transfer to a third party
-
permitted under Section 4.2, (4) sale to the Company pursuant to Section 5 ("Put
-
Rights") or Section 6 ("Call Rights"), (5) Transfer, authorized by the prior
-
written approval (not to be un reasonably withheld) of the disinterested members
of the Board of Directors of the Company (the "Board"), to an Affiliate of
Charter that agrees to be bound by the terms of this Agreement pursuant to
Section 12.4 or Transfer to any entity of which Charter owns a majority of the
voting and economic rights that agrees to be bound by the terms of this
Agreement pursuant to Section 12.4, (6) sale pursuant to a Registration in
-
accordance with the Registration Rights Agreement or (7) pledges of shares of
-
Common Stock in accordance with Section 4.1. Notwithstanding the foregoing or
any other provision of this Agreement, Charter may not Transfer (a) more than
-
50% of the shares of Common Stock held by it on the Closing as long as the
Management Agreement is in full force and effect; (b) any shares of Common Stock
-
if such Transfer would breach or cause a default under any provision of the
Financing Documents (as defined in Section 7) and (c) any shares of Class B
-
Common Stock unless such transferee is also the permitted assignee of all of
Charter's rights and obligations under Section 14.1 hereof.
1.2. Restrictions on Transfers by Kelso. Prior to the earlier of (a)
---------------------------------- -
an IPO and (b) the tenth anniversary of the Closing, no shares of Common Stock
-
or any interest therein now or hereafter owned by Kelso may be Transferred,
except for any (i) Transfer to a third party or to Charter after the third
-
anniversary of the Closing in compliance with Section 3.2 ("Right of First
Negotiation") and Section 3.3 ("Tag-Along Rights"), (ii) involuntary Transfer
--
to a third party permitted under Section 4.2, (iii) Transfer to a Permitted
---
Assignee that agrees to be bound by the terms of this Agreement pursuant to
Section 12.4 or (iv) sale pursuant to a Registration in accordance with the
--
Registration Rights Agreement. Notwithstanding the foregoing or any other
provision of this Agreement, Kelso may not Transfer any shares of Common Stock
if such Transfer would breach or cause a default under any provision of the
Financing Documents.
2. Sales by Charter to Third Parties. 2.1. General. At any time
--------------------------------- -------
after the fifth anniversary of the Closing, Charter may sell any of the shares
of Common Stock held by it to a third party or parties, provided that such sale
--------
-2-
<PAGE>
is made in compliance with the provisions of Section 2.2 ("Right of First
Refusal"). For purposes of this Section 2, a sale to a third party shall not
include a sale by Charter pursuant to a Registration in accordance with the
Registration Rights Agreement, or pursuant to Section 3.3 ("Tag-Along Rights"),
Section 3.4 ("Drag-Along Rights"), Section 4.2 ("Involuntary Transfers"),
Section 5 ("Put Rights") or Section 6 ("Call Rights").
2.2. Right of First Refusal. (a) Procedure. If at any time after
---------------------- ---------
the fifth anniversary of the Closing, Charter shall have received a bona fide
---- ----
offer or offers from a third party or parties to purchase any shares of Common
Stock, then prior to selling such shares of Common Stock to such third party or
parties Charter shall deliver to the Company and KIA V a letter signed by it
setting forth:
(i) the name(s) of such third party or parties;
(ii) the purchase price per share of Common Stock offered by such third
party or parties;
(iii) all material terms and conditions contained in the offer of the
third party or parties;
(iv) Charter's offer (irrevocable by its terms for 30 days following
receipt) to sell to the Company all (but not less than all) of the shares
of Common Stock covered by the offer of the third party or parties, for a
purchase price per share and on other terms and conditions not less
favorable to the Company than those contained in the offer of the third
party or parties (the "Offer"); and
(v) closing arrangements and a closing date not less than 60 nor more
than 90 days following the delivery of such letter (or such later date as
is necessary to obtain all requisite governmental and regulatory approvals
and consents, provided Charter covenants to use commercially reasonable
--------
efforts to obtain such approvals and consents) for any purchase and sale
that may be effected by the Company.
(b) Effecting Sales. If, upon the expiration of 30 days following
---------------
receipt by the Company of the letter described in Section 2.2(a), the Company
shall not have accepted the Offer, Charter shall have the right, to sell to such
third party or parties all (but not less than all) of the shares of Common Stock
covered by the Offer, for a
-3-
<PAGE>
purchase price and on other terms and conditions no less favorable to Charter
than those contained in the Offer. If Charter has not signed a binding purchase
agreement (subject to customary closing conditions) with such third party or
parties within 45 days of the expiration of such 30 day period or if such sale
has not been completed within 180 days from the expiration of such 30 day
period, the shares of Common Stock covered by such Offer may not thereafter be
sold by Charter unless the procedures set forth in this Section 2.2 shall have
again been complied with. If the Company shall have accepted the Offer, the
closing of the purchase and sale pursuant to such acceptance shall take place as
set forth in Charter's letter to the Company.
3. Sales by Kelso to Third Parties. 3.1. General. At any time
------------------------------- -------
after the third anniversary of the Closing, Kelso may sell any of the shares of
Common Stock held by it to a third party or parties, provided that such sale is
--------
made in compliance with the provisions of Sections 3.2 and 3.3. For purposes of
this Section 3, a sale to a third party shall not include a sale by Kelso to any
Permitted Assignee or a sale pursuant to a Registration in accordance with the
Registration Rights Agreement.
3.2. Right of First Negotiation. (a) Procedure. If at any time
-------------------------- ---------
after the third anniversary of the Closing, Kelso desires to sell any of the
shares of Common Stock held by it, then prior to selling such shares of Common
Stock to any third party or parties, Kelso shall deliver to Charter a letter
signed by it setting forth the number of shares of Common Stock Kelso desires to
sell (the "Sale Notice"). Within 60 days of receipt of the Sale Notice, Charter
may make an offer to purchase such shares of Common Stock offered by Kelso by
delivering written notice to Kelso setting forth:
(i) the prospective purchase price per share of Common Stock;
(ii) any other material terms and conditions to such purchase;
(iii) evidence of binding commitments reasonably satisfactory to Kelso
for the financing of such purchase; and
(iv) closing arrangements and a closing date not less than 60 nor more
than 90 days following the delivery of such notice (or such later date as
is
-4-
<PAGE>
necessary to obtain all requisite governmental and regulatory approvals and
consents, provided Charter covenants to use commercially reasonable efforts
to obtain such approvals and consents).
(b) Effecting Sales. If, upon the expiration of 60 days following
---------------
receipt by Charter of the Sale Notice, Charter shall not have made an offer to
purchase the shares of Common Stock covered by the Sale Notice, Kelso may sell
to a third party or parties any of the shares of Common Stock covered by the
Sale Notice for whatever price and upon whatever other terms and conditions
Kelso may agree to, provided that Kelso and the third party execute a binding
--------
purchase agreement (subject to customary closing conditions) within 45 days of
any written offer and in any event within 180 days after the expiration of such
60 day period and consummate the closing thereunder within 30 days after the
receipt of all requisite governmental and regulatory approvals and consents.
Kelso will provide a copy of any such written offer to Charter promptly upon
receipt thereof. If Charter shall have made an offer to purchase the shares of
Common Stock covered by the Sale Notice, then Kelso may either (1) accept
-
Charter's offer and the sale of such shares of Common Stock shall be consummated
as soon as practicable after the delivery of a notice of acceptance by Kelso,
but in any event within 90 days of the delivery of the Sale Notice (or such
later date as is necessary to obtain all requisite governmental and regulatory
approvals and consents), or (2) reject Charter's offer, by written notice
-
delivered to Charter within 20 days of the delivery to Kelso of such offer, in
which case Kelso shall have the right to sell to a third party or parties all
(but not less than all) of the shares of Common Stock covered by the Sale
Notice, for a purchase price and on other terms and conditions no less favorable
to Kelso than those contained in Charter's offer, provided that Kelso and the
--------
third party purchaser execute a binding purchase agreement (subject to customary
closing conditions) within 45 days of any written offer and in any event within
180 days of Charter's offer and consummate the closing thereunder within 30 days
of receipt of all requisite governmental and regulatory approvals and consents.
If Kelso and a third party purchaser do not execute such a purchase agreement or
close such transaction within the time periods set forth in the proviso of the
preceding sentence, then the shares of Common Stock covered by such Sale Notice
may not thereafter be sold by Kelso unless the procedures set forth in this
Section 3.2 shall have again been complied with. Any offer by Charter pursuant
to this Section 3.2(b) shall not preclude Charter
-5-
<PAGE>
from making additional offers for such shares or participating in any auction
relating to the sale of any such shares.
3.3. Tag-Along Rights. If at any time after the third anniversary of
----------------
the Closing Kelso desires to sell any shares of Common Stock to one or more
third parties and such shares, together with all shares of Common Stock
previously sold by Kelso, would represent more than 10% of the aggregate number
of shares of Common Stock held by Kelso immediately after the Closing, Kelso
must offer Charter a pro rata right to participate in such sale with respect to
--- ----
Charter's shares of Class A Common Stock, for a purchase price per share of
Class A Common Stock equal to the purchase price per share of Class A Common
Stock being paid for Kelso's shares and on other terms and conditions not less
favorable to Charter than those applicable to Kelso.
3.4. Drag-Along Rights. If at any time after the third anniversary
-----------------
of the Closing and subject to the termination or waiver by Charter of its rights
under Section 3.2, Kelso proposes to sell to one or more third parties all of
the shares of Common Stock then owned by it, then, if requested by Kelso,
Charter shall be required to join Kelso in such sale on a pro rata basis for a
--- ----
purchase price per share of Common Stock and on other terms and conditions not
less favorable to Charter than those applicable to Kelso, provided, that any
shares of Class B Common Stock subject to such sale will be sold for a price of
$1,000 per share.
4. Pledges by Charter and Involuntary Transfers. 4.1. Pledges by
-------------------------------------------- ----------
Charter. Charter may pledge its shares of Common Stock to a commercial bank
- -------
(the "Charter Lender") pursuant to the terms of a pledge agreement, in form and
substance reasonably satisfactory to Kelso. Upon any foreclosure, the Charter
Lender will be required (a) to offer and sell the shares of Common Stock so
-
foreclosed upon to the Company as provided in Section 4.2 and (b) to agree to
-
become a party hereunder, subject to all the rights and obligations of Charter,
except as provided below. During the 60 day period referred to in Section 4.2,
the Charter Lender shall not have any rights hereunder. If, after the
expiration of the 60 day period referred to in Section 4.2, the Company has not
purchased such shares, then the Charter Lender shall be deemed to be Charter for
all purposes hereunder, except that Section 3.2 and Section 14.3 and Charter's
rights under Section 9.1 hereof will be of no further force and effect.
-6-
<PAGE>
4.2. Involuntary Transfers. Any transfer of title or beneficial
---------------------
ownership of shares of Common Stock upon default, foreclosure, forfeit, court
order, or otherwise than by a voluntary decision on the part of a Stockholder,
including, without limitation, pursuant to Section 4.1, (an "Involuntary
Transfer") shall be void unless such Stockholder complies with this Section 4.2
and enables the Company to exercise in full its rights hereunder. Upon any
Involuntary Transfer, the Company shall have the right to purchase such shares
of Common Stock pursuant to this Section 4.2 and the Person to whom such shares
have been transferred (the "Involuntary Transferee") shall have the obligation
to sell such shares in accordance with this Section 4.2. Upon the Involuntary
Transfer of any shares of Common Stock, such Stockholder shall promptly (but in
no event later than three business days after such Involuntary Transfer) furnish
written notice to the Company and the other Stockholders indicating that the
Involuntary Transfer has occurred, specifying the name of the Involuntary
Transferee, giving a detailed description of the circumstances giving rise to,
and stating the legal basis for, the Involuntary Transfer. Upon the receipt of
such notice, and for 60 days thereafter, the Company shall have the right to
purchase, and the Involuntary Transferee shall have the obligation to sell, all
(but not less than all) of the shares of Common Stock acquired by the
Involuntary Transferee for a purchase price equal to the Carrying Value of such
shares of Common Stock.
5. Right of Charter to Sell to the Company Shares of Common Stock
--------------------------------------------------------------
("Put Rights"). 5.1. Right to Sell. Subject to all subsections of this
-------------
Section 5 and Section 7, Charter shall have the right to sell to the Company,
and the Company shall have the obligation to purchase from Charter, all, but not
less than all, of Charter's shares of Common Stock at their Carrying Value if
the Management Agreement is terminated pursuant to Article VII thereof or at the
end of the term of the Management Agreement unless such agreement shall have
been renewed or replaced by mutual agreement of the parties thereto.
5.2. Notice. If Charter desires to sell shares of Common Stock
------
pursuant to Section 5.1, Charter shall notify the Company and KIA V not more
than 30 days after the occurrence of the event giving rise to Charter's right to
sell its shares of Common Stock and shall specify the number of shares of Common
Stock Charter owns.
-7-
<PAGE>
5.3. Payment. Subject to Section 7, payment for shares of Common
-------
Stock sold by Charter pursuant to Section 5.1 shall be made on the date that is
60 days (or the first business day thereafter if the 60th day is not a business
day, or such later date as is necessary to obtain all requisite governmental and
regulatory approvals and consents) following the date of the receipt by the
Company of such notice.
Any payments required to be made by the Company under this Section 5.3
shall accrue simple interest at a rate per annum of 8% from the date of
termination of the Management Agreement to the date the Company has paid in full
for all of the shares of Common Stock. All payments of interest accrued
hereunder shall be paid only at the date of payment by the Company for the
shares of Common Stock being purchased.
6. Right of the Company to Purchase from Charter Shares of Common
--------------------------------------------------------------
Stock ("Call Rights"). 6.1. Right to Purchase. Subject to all subsections of
- ----- -----------------
this Section 6 and Section 7, the Company shall have the right to purchase from
Charter, and Charter shall have the obligation to sell to the Company, all, but
not less than all, of Charter's shares of Common Stock at the Carrying Value of
the shares of Common Stock to be purchased if the Management Agreement is
terminated pursuant to Article VII thereof or at the end of the term of the
Management Agreement unless such agreement shall have been renewed or replaced
by mutual agreement of the parties thereto.
6.2. Notice. If the Company desires to purchase shares of Common
------
Stock from Charter pursuant to Section 6.1, it shall notify Charter not more
than 30 days after the occurrence of the event giving rise to the Company's
right to acquire Charter's shares of Common Stock.
6.3. Payment. Subject to Section 7, payment for shares of Common
-------
Stock purchased by the Company pursuant to Section 6.1 shall be made on the date
60 days (or the first business day thereafter if the 60th day is not a business
day, or such later date as is necessary to obtain all requisite governmental and
regulatory approvals and consents) following the date of the receipt by Charter
of the Company's notice pursuant to Section 6.2.
Any payments required to be made by the Company under this Section 6.3
shall accrue simple interest at a rate per annum of 8% on the amounts not paid
from the date
-8-
<PAGE>
of termination of the Management Agreement to the date the Company makes such
payments. All payments of interest accrued hereunder shall be paid only at the
date or dates of payment by the Company for the shares of Common Stock being
purchased.
7. Prohibited Purchases. Notwithstanding anything to the contrary
--------------------
herein, the Company shall not be permitted or obligated to purchase any shares
of Common Stock hereunder to the extent (a) the Company is prohibited from
-
purchasing such shares by applicable law or by any debt instruments or
agreements, including any amendment, renewal, extension, substitution,
refinancing, replacement or other modification thereof (the "Financing
Documents") entered into by the Company, CCE, CCE I or Cencom Cable
Entertainment, Inc., a wholly-owned subsidiary of the Company, (b) a default has
-
occurred under any Financing Document and is continuing or (c) the purchase of
-
such shares of Common Stock would, or in the reasonable opinion of the Board
might, result in the occurrence of an event of default under any Financing
Document or create a condition which would or might, with notice or lapse of
time or both, result in such an event of default. If shares of Common Stock that
the Company has the right or obligation to purchase on any date exceed the total
amount permitted to be purchased on such date pursuant to the preceding sentence
(the "Maximum Amount"), the Company shall purchase on such date only that number
of shares of Common Stock up to the Maximum Amount (and shall not be required to
purchase more than the Maximum Amount). Notwithstanding anything to the contrary
contained in this Agreement, if the Company is unable to make any payment when
due under this Agreement by reason of this Section 7, the Company shall make
such payment at the earliest practicable date permitted under this Section 7 and
any such payment shall accrue simple interest (or if such payment is accruing
interest at such time, shall continue to accrue interest) at a rate per annum of
8% from the date such payment is due and owing to the date such payment is made.
All payments of interest accrued hereunder shall be paid only at the date of
payment by the Company for the shares of Common Stock being purchased.
8. Exit Payments. (a) General Allocation. Except as otherwise
------------- ------------------
provided in Sections 8(b) and (e) below, in the event Kelso and Charter become
entitled to cash payments in respect of any shares of Class A Common Stock,
whether in connection with a sale of such shares, a distribution by the Company
or otherwise (any such payment being referred to herein as an "Exit Payment"),
the Exit
-9-
<PAGE>
Payment will be allocated between Kelso and Charter as follows:
(i) Kelso and Charter will receive 85% and 15%, respectively, of the
Exit Payment until Kelso and Charter shall each have received from the
aggregate amount of Exit Payments allocated to them, an amount equal to
their respective capital investments in the Company.
(ii) After the allocation pursuant to Section 8(a)(i), the remainder,
if any, of the Exit Payment shall be allocated 85% and 15%, respectively,
to Kelso and Charter until each of Kelso and Charter has received from the
aggregate amount of Exit Payments allocated to it an internal rate of
return equal to 15% per annum, compounded annually, on the aggregate amount
of capital invested in the Company by it.
(iii) After the allocations pursuant to Sections 8(a)(i) and 8(a)(ii),
the remainder, if any, of the Exit Payment shall be allocated 75% and 25%,
respectively, to Kelso and Charter until each of Kelso and Charter has
received from the aggregate amount of Exit Payments allocated to it an
internal rate of return equal to 32% per annum, compounded annually, on the
aggregate amount of capital invested in the Company by it.
(iv) After the allocations pursuant to Sections 8(a)(i), 8(a)(ii) and
8(a)(iii), the remainder, if any, of the Exit Payment shall be allocated
50% to Kelso and 50% to Charter.
For purposes of this Section 8(a), internal rates of return shall be calculated
by taking into account the date or dates of the investments of capital by each
of Kelso and Charter in the Company, the date or dates of any Exit Payments and
the amounts of such investments and Exit Payments.
(b) Limitation. The provisions set forth in Section 8(a) above shall
----------
apply only to a sale by Kelso and Charter of all of the shares of Class A Common
Stock owned by both Kelso and Charter to a third party or parties or a sale of
all or substantially all of the Company's and its subsidiaries' assets (either
of such transactions, a "Sale of 100% of the Company"). In the event either
Kelso or Charter become entitled to a cash payment in respect of any shares of
Class A Common Stock, but in connection with a
-10-
<PAGE>
transaction constituting less than a Sale of 100% of the Company, then Kelso and
Charter shall negotiate in good faith an equitable allocation of such cash
payments which reflects the economic objectives set forth in Section 8(a).
(c) Procedures for Payment. Kelso and Charter shall use reasonable
----------------------
efforts to arrange for any amounts allocated to Kelso and Charter pursuant to
Section 8(a) or the last sentence of Section 8(b) to be paid directly to Kelso
and Charter by the relevant third party purchaser(s) or the Company, as the case
may be. In the event that Kelso or Charter is unable to make such arrangements
(including, without limitation, because of any restrictions contained in the
Company's Amended and Restated Certificate of Incorporation), Kelso or Charter,
as the case may be, shall pay any amounts allocated to such party pursuant to
Section 8(a) or the last sentence of Section 8(b) promptly following such
party's receipt of such amounts.
(d) Permitted Assignees. All references to Kelso in this Section 8
-------------------
shall include any Permitted Assignees of Kelso.
(e) Cencom Contingent Payment Agreement. Notwithstanding the
-----------------------------------
foregoing, the Cencom Contingent Payment Agreement provides for payments to
Cencom under certain circumstances which may also involve the payment to Kelso
and Charter of Exit Payments hereunder. Accordingly, Kelso and Charter each
acknowledge that any Exit Payment will be calculated assuming such payment to
Cencom has been made and in the event either Kelso or Charter receives any Exit
Payment that includes any amount due to Cencom under the Cencom Contingent
Payment Agreement, then upon the request of the Company, such party shall
promptly remit such amount to Cencom.
9. Election of Directors. 9.1. Board Make-up. Until the earlier of
--------------------- -------------
(a) the tenth anniversary of the Closing, (b) the closing of an IPO or (c) the
- - -
termination of the Management Agreement, each Stockholder agrees that it will
nominate and elect and will vote all of the shares of Common Stock owned or held
of record by it to elect and, thereafter, for such period, to continue in office
a Board consisting of five members, three of whom will be designated for
nomination and election by KIA V, and two of whom will be designated for
nomination and election by Charter. The individuals designated for nomination
and election by KIA V or Charter, as the case may be, pursuant to this Section 9
-11-
<PAGE>
may be changed from time to time by KIA V or Charter, as the case may be. Prior
to or at the first meeting of the Board after the date of this Agreement,
Charter shall propose to the Board for its approval one or more officers of the
Company who will have the authority to execute and deliver such documents,
instruments and agreements on behalf of the Company as is necessary for Charter
to fulfill its obligations under the Management Agreement. Charter shall have
the right at any time to propose to the Board for its approval additional or
different officers to have such authority. The By-laws of the Company shall
provide that the Board may, by resolution, authorize one or more such officers
to take such actions on behalf of the Company.
9.2. Irrevocable Proxy. In order to effectuate Section 9.1 and, in
-----------------
addition to and not in lieu of Section 9.1, each Stockholder hereby grants to
the Secretary of the Company an irrevocable proxy solely for the purpose of
voting all of the shares of Common Stock of the Company owned by the grantor of
the proxy for the election of directors nominated in accordance with Section
9.1.
10. Stock Certificate Legends. A copy of this Agreement shall be
-------------------------
filed with the Secretary of the Company and kept with the records of the
Company. Each certificate representing shares of Common Stock issued after the
date hereof shall bear upon its face the following legends, as appropriate:
(a) "THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED, SOLD,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS
AND UNTIL REGISTERED UNDER THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR UNLESS, IN THE OPINION OF COUNSEL TO THE
STOCKHOLDER, WHICH COUNSEL MUST BE, AND THE FORM AND SUBSTANCE OF
WHICH OPINION ARE, SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION, TRANSFER OR OTHER DISPOSITION
IS EXEMPT FROM REGISTRATION OR IS OTHERWISE IN COMPLIANCE WITH
THE ACT, SUCH LAWS AND THE AMENDED AND RESTATED STOCKHOLDERS'
AGREEMENT OF THE ISSUER, DATED AS OF SEPTEMBER 29, 1995 (THE
"STOCKHOLDERS' AGREEMENT")."
-12-
<PAGE>
(b) "THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO RESTRICTIONS ON TRANSFER AND OTHER CONDITIONS, AS SPECIFIED IN
THE STOCKHOLDERS' AGREEMENT, COPIES OF WHICH ARE ON FILE AT THE
OFFICE OF THE ISSUER AND WILL BE FURNISHED WITHOUT CHARGE TO THE
HOLDER OF SUCH SHARES UPON WRITTEN REQUEST."
In addition, certificates representing shares of Common Stock owned by any
permitted transferees who are residents of certain states shall bear any legends
required by the laws of such states.
Each Stockholder shall be bound by the requirements of such legends.
Upon a Registration of any shares of Common Stock, the certificate representing
the registered shares shall be replaced, at the expense of the Company, with
certificates not bearing the legends required by Sections 10(a) and 10(b).
11. Absence of Other Arrangements. Each Stockholder hereby
-----------------------------
represents and warrants to each other Stockholder that it has not entered into
or agreed to be bound by any other arrangements or agreements of any kind with
any other party with respect to the shares of Common Stock, including, but not
limited to, arrangements or agreements with respect to the acquisition,
disposition or voting of shares of Common Stock or any interest therein (whether
or not such arrangements or agreements are with the Company, Kelso, Charter or
holders of Common Stock that are not parties to this Agreement), except for the
letter agreements, dated as of the date of the Closing, between Kelso and
certain of the KIA V Designees, a copy of which is attached hereto as Exhibit A,
the Subscription Agreements, the Registration Rights Agreement, the Management
Agreement and any pledge agreements between Charter and the Charter Lenders
entered into in compliance with Section 4.1.
12. Parties. 12.1. Assignment by the Company. The Company shall
------- -------------------------
have the right to assign to one or more Permitted Assignees, and/or the right to
cause one or more Permitted Assignees to assume, all or any portion of its
rights and obligations under Section 2.2 ("Right of First Refusal"), Section 4.2
("Involuntary Transfers"), Section 5 ("Put Rights") and Section 6 ("Call
Rights"), provided that any such assignment or assumption is accepted by the
--------
proposed assignee or assignees. If the Company has not exercised its right to
purchase shares of Common Stock pursuant to any such Section within 20 days of
receipt by the Company
-13-
<PAGE>
of the letter or notice giving rise to such right (or, in the case of Section 6,
the giving of notice by the Company), then Kelso shall have the right to require
the Company to assign such right to one or more Permitted Assignees. If such
right to purchase is assigned to a Permitted Assignee or Permitted Assignees
pursuant to this Section 12.1, such Permitted Assignee or Permitted Assignees
shall be deemed to be the Company for purposes of any such purchases and the
seller shall be obligated to sell to such Permitted Assignee or Permitted
Assignees.
12.2. Assignment Generally. The provisions of this Agreement shall
--------------------
be binding upon and inure to the benefit of the parties hereto and their
respective heirs, legal representatives, successors and assigns, provided that
--------
Charter shall not be permitted to assign any of its rights or cause a third
party to assume any of its obligations under this Agreement, unless such
assignment or assumption is in connection with a Transfer explicitly permitted
by this Agreement and, prior to such assignment or assumption, such assignee
complies with the requirements of Section 12.4.
12.3. Termination. Any party to, or person who is subject to, this
-----------
Agreement which ceases to own any shares of Common Stock or any interest therein
shall cease to be a party to, or person who is subject to, this Agreement and
thereafter shall have no rights or obligations hereunder; provided, however,
-------- -------
that a Transfer of shares of Common Stock not explicitly permitted under this
Agreement shall not relieve any Stockholder of any of its obligations hereunder.
Notwithstanding the foregoing, in connection with a Transfer to an Affiliate
explicitly permitted by this Agreement, including, without limitation, pursuant
to subsection 5 of Section 1.1, prior to any such Person ceasing to be an
Affiliate of the Stockholder from whom such Person acquired its shares of Common
Stock, such Person shall be obligated to transfer such shares of Common Stock
back to such original Stockholder and such original Stockholder shall thereupon
be subject to this Agreement again.
12.4. Agreements to Be Bound. Notwithstanding anything to the
----------------------
contrary contained in this Agreement, any Transfer of shares by Kelso to a
Permitted Assignee or by Charter (other than pursuant to a Registration) shall
be permitted under the terms of this Agreement only if the transferee of such
shares of Common Stock shall agree in writing to be bound by the terms and
conditions of this Agreement pursuant to an instrument of assignment and
assumption reasonably satisfactory in substance and form, in
-14-
<PAGE>
the case of a Transfer by Kelso, to Charter and, in the case of a Transfer by
Charter, to KIA V. Upon the execution of the instrument of assignment and
assumption by such transferee, such transferee shall be deemed to be Kelso or
Charter, as the case may be, for all purposes of this Agreement, provided,
--------
however, that Section 3.3 ("Tag-Along Rights"), Section 5 ("Put Rights"),
- -------
Section 8 ("Exit Payments") and Section 14.2 ("Sales Incentive Fee") shall not
apply to any transferee of Charter (other than a transferee permitted under
subsection 5 of Section 1.1 (an "Affiliate Transferee"), or a third party
transferee which has acquired Charter's shares of Common Stock in accordance
with Section 2.2 and which Kelso has approved, such approval not to be
unreasonably withheld). Notwithstanding anything herein to the contrary,
Charter shall exercise all rights hereunder on behalf of any such Affiliate
Transferee and the Company and Kelso shall be entitled to deal exclusively with
Charter and rely on the consent, waiver or any other action by Charter as the
consent, waiver or other action, as the case may be, of any such Affiliate
Transferee.
13. Defined Terms. As used in this Agreement, the following terms
-------------
shall have the meanings ascribed to them below:
"Affiliate": A Person that directly, or indirectly through one or
---------
more intermediaries, controls, or is controlled by, or is under common control
with, the Person specified.
"Carrying Value": The price paid by a Stockholder for any share of
--------------
Common Stock together with simple interest at a rate of 6% per annum from the
date of the purchase of such share by such Stockholder through the date of the
purchase by the Company less any distributions made to such Stockholder in
respect of any such share.
"CCE": Charter Communications Entertainment, L.P., a Delaware limited
---
partnership.
"CCE I": Charter Communications Entertainment I, L.P., a Delaware
-----
limited partnership.
"Cencom": Cencom Cable Television, Inc., a Delaware corporation.
------
"Cencom Contingent Payment Agreement": The Contingent Payment
-----------------------------------
Agreement, dated as of September 29,
-15-
<PAGE>
1995, as the same shall be amended from time to time, among CCE, CCT Holdings
Corp. and Cencom.
"Class A Common Stock": the Company's Class A common stock, par value
--------------------
$.01 per share.
"Class B Common Stock": the Company's Class B common stock, par value
--------------------
$.01 per share.
"Closing": January 18, 1995.
-------
"Common Stock": The Company's Class A Common Stock and Class B Common
------------
Stock.
"KIA V Designee": Any of the following individuals or entities:
--------------
Richard Cyert, Steven P. Dolberg, Louis and Patricia Kelso Trust, William A.
Marquard, John F. McGillicuddy, Frank T. Nickell IRA, David M. Roderick, John
Rutledge, George L. Shinn and Dieter Spethmann.
"Management Agreement": The Amended and Restated Management
--------------------
Agreement, dated as of the date hereof, as the same shall be amended from time
to time between CCE I and Charter.
"Permitted Assignee": Kelso, any Affiliate of Kelso, any KIA V
------------------
Designee and any Affiliate of a KIA V Designee.
"Person": An individual, corporation, partnership, association,
------
trust or other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"Registration Rights Agreement": The Registration Rights Agreement,
-----------------------------
dated as of the Closing, as the same shall be amended from time to time, among
the Company, KIA V, KEP V and Charter.
"Subscription Agreements": The Subscription Agreements, each dated as
-----------------------
of the Closing, between the Company and each of Charter, KIA V and KEP V.
"Transfer (or any variation thereof used herein)": Any direct or
-----------------------------------------------
indirect sale, assignment, mortgage, transfer, pledge, hypothecation or other
disposal or any arrangement or agreement with respect to any of the foregoing.
-16-
<PAGE>
14. Miscellaneous. 14.1. Sales Incentive Fee. In consideration of
------------- -------------------
Charter's marketing and sales efforts in selling the Company, the Company agrees
that after the distribution provided in Section 8(a)(i), if required, it will
redeem all of Charter's shares of Class B Common Stock for $1,000 per share.
Such redemption shall occur upon the earliest of (i) the disposition by Kelso,
-
together with any Permitted Assignees, of all or substantially all of their
shares of Common Stock, (ii) a Sale of 100% of the Company and (iii) the closing
-- ---
of an IPO.
14.2. Recapitalizations, Exchanges, etc. Affecting the Common Stock.
-------------------------------------------------------------
Except as otherwise provided herein, the provisions of this Agreement shall
apply to the full extent set forth herein with respect to (a) the shares of
-
Common Stock and (b) any and all shares of capital stock of the Company or any
-
successor or assign of the Company (whether by merger, consolidation, sale of
assets or otherwise) which may be issued in respect of, in exchange for, or in
substitution for the shares of Common Stock, by reason of any stock dividend,
split, reverse split, combination, recapitalization, reclassification, merger,
consolidation or otherwise.
14.3. Actions Requiring Approval of Stockholders. Without the prior
------------------------------------------
written approval of each of the Stockholders, the Company shall not (a) incur,
-
guarantee or assume any indebtedness for borrowed money or (b) reserve for
-
issuance, authorize the issuance of, agree to issue or issue (i) any additional
-
shares of capital stock (presently or hereafter authorized and whether
authorized and unissued shares or treasury shares), (ii) any security (debt or
--
equity) convertible into or exchangeable for shares of capital stock of the
Company or (iii) any options, warrants or rights to acquire shares of capital
---
stock of the Company.
14.4. No Third Party Beneficiaries. Except as otherwise provided
----------------------------
herein, this Agreement is not intended to confer upon any person, except for the
parties hereto, any rights or remedies hereunder.
14.5. Mechanics of Payment. If at any time the Company purchases any
--------------------
shares of Common Stock pursuant to this Agreement, the Company may pay the
purchase price determined under this Agreement for the shares of Common Stock
it purchases by wire transfer of funds or company check in the amount of the
purchase price, and upon receipt of payment of such purchase price or, pursuant
to Section 7, any portion thereof, the seller shall deliver the certificates
-17-
<PAGE>
representing the number of shares of Common Stock being purchased in a form
suitable for transfer, duly endorsed in blank, and free and clear of any lien,
claim or encumbrance. Notwithstanding anything in this Agreement to the
contrary, the Company shall not be required to make any payment for shares of
Common Stock purchased hereunder until delivery to it of the certificates
representing such shares or evidence or an affidavit, in either case in form and
substance reasonably satisfactory to the Company of loss, theft or destruction
of such certificates. If the Company is purchasing less than all the shares of
Common Stock represented by a single certificate, the Company shall deliver to
the seller a certificate for any unpurchased shares of Common Stock.
14.6. Further Assurances. Each party hereto or person subject hereto
------------------
shall do and perform or cause to be done and performed all such further acts and
things and shall execute and deliver all such other agreements, certificates,
instruments and documents as any other party hereto or person subject hereto may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.
14.7. Amendment and Modification. This Agreement may be amended,
--------------------------
modified or supplemented only by the written agreement of all the parties
hereto.
14.8. Governing Law. This Agreement and the rights and obligations
-------------
of the parties hereunder and the persons subject hereto shall be governed by,
and construed and interpreted in accordance with, the law of the State of
Delaware, without giving effect to the choice of law principles thereof.
14.9. Invalidity of Provision. The invalidity or unenforceability of
-----------------------
any provision of this Agreement in any jurisdiction shall not affect the
validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of this Agreement, including that
provision, in any other jurisdiction.
14.10. Notices. All notices, requests, demands, letters, waivers and
-------
other communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if (a) delivered
-
personally, (b) mailed, certified or registered mail with
-
-18-
<PAGE>
postage prepaid, (c) sent by next-day or overnight mail or delivery or (d) sent
- -
by fax, as follows:
(i) If to the Company, to it at:
CCA Holdings Corp.
12444 Powerscourt Drive
Suite 400
St. Louis, Missouri 63131
Attention: Jerald L. Kent
with a copy to:
Kelso & Company
350 Park Avenue, 21st Floor
New York, New York 10022
Attention: James J. Connors, II, Esq.
(ii) If to Charter, to it at:
Charter Communications, Inc.
12444 Powerscourt Drive
Suite 400
St. Louis, Missouri 63131
Attention: Jerald L. Kent
with a copy to:
Paul, Hastings, Janofsky & Walker
399 Park Avenue
New York, New York 10022
Attention: Daniel G. Bergstein, Esq.
(iii) If to KIA V, to it at:
Kelso Investment Associates V, L.P.
c/o Kelso & Company
350 Park Avenue, 21st Floor
New York, New York 10022
Attention: James J. Connors, II, Esq.
(iv) If to KEP V, to it at:
Kelso Equity Partners V, L.P.
c/o Kelso & Company
350 Park Avenue, 21st Floor
New York, New York 10022
Attention: James J. Connors, II, Esq.
-19-
<PAGE>
or to such other person or address as any party shall specify by notice in
writing to the Company and the other Stockholder(s). All such notices, requests,
demands, letters, waivers and other communications shall be deemed to have been
received (w) if by personal delivery on the day after such delivery, (x) if by
- -
certified or registered mail, on the fifth business day after the mailing
thereof, (y) if by next-day or overnight mail or delivery, on the day delivered
-
or (z) if by fax, on the next day following the day on which such fax was sent,
-
provided that a copy is also sent by certified or registered mail.
14.11. Headings; Execution in Counterparts. The headings and
-----------------------------------
captions contained herein are for convenience and shall not control or affect
the meaning or construction of any provision hereof. This Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original and which together shall constitute one and the same instrument.
14.12. Injunctive Relief. The shares of Common Stock cannot readily
-----------------
be purchased or sold in the open market, and for that reason, among others, the
parties hereto would be irreparably damaged in the event this Agreement is not
specifically enforced. Each of the parties therefore agrees that in the event
of a breach of any provision of this Agreement, the aggrieved party may elect
to institute and prosecute proceedings in any court of competent jurisdiction
to enforce specific performance or to enjoin the continuing breach of this
Agreement. Such reme dies shall, however, be cumulative and not exclusive, and
shall be in addition to any other remedy which any such party may have.
14.13. Entire Agreement. This Agreement, together with the
----------------
Subscription Agreements and the Registration Rights Agreement, embodies the
entire agreement and understanding of the parties hereto in respect of the
subject matter contained herein. There are no restrictions, promises,
representations, warranties, covenants or under takings relating to the shares
of Common Stock, other than those expressly set forth or referred to herein or
as set forth in the Subscription Agreements and the Registration Rights
Agreement. This Agreement supersedes all prior agreements and understandings
among the parties with respect to such subject matter.
-20-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been signed by each of the
parties hereto, effective as of the date first above written.
CCA HOLDINGS CORP.
By: /s/ Theodore W. Browne, II
_______________________________
Name: Theodore W. Browne, II
Title: Executive Vice President
KELSO INVESTMENT ASSOCIATES V, L.P.
By: Kelso Partners V, L.P.
as General Partner
By: /s/ George E. Matelich
_______________________________
as General Partner
KELSO EQUITY PARTNERS V, L.P.
By: /s/ George E. Matelich
_______________________________
as General Partner
CHARTER COMMUNICATIONS, INC.
By: /s/ Theodore W. Browne, II
_______________________________
Name: Theodore W. Browne, II
Title: Executive Vice President
-21-
<PAGE>
EXHIBIT 10.20
================================================================================
REGISTRATION RIGHTS AGREEMENT
among
CCA HOLDINGS CORP.
and
KELSO INVESTMENT ASSOCIATES V, L.P.
and
KELSO EQUITY PARTNERS V, L.P.
and
CHARTER COMMUNICATIONS, INC.
Dated as of January 18, 1995
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
1. Registrations Upon Request.................. 1
1.1. Requests.............................. 1
1.2. Registration Statement Form........... 3
1.3. Expenses.............................. 3
1.4. Priority in Demand Registrations...... 3
1.5. No Company Initiated Registration..... 3
2. Incidental Registrations.................... 4
3. Registration Procedures..................... 5
4. Underwritten Offerings...................... 10
4.1. Underwriting Agreement................ 10
4.2. Selection of Underwriters............. 11
5. Holdback Agreements......................... 11
6. Preparation; Reasonable Investigation....... 12
7. No Grant of Future Registration Rights...... 12
8. Kelso Designees and Permitted Transferees... 12
9. Indemnification............................. 13
9.1. Indemnification by the Company........ 13
9.2. Indemnification by the Sellers........ 13
9.3. Notices of Claims, etc................ 14
9.4. Other Indemnification................. 15
9.5. Indemnification Payments.............. 15
9.6. Other Remedies........................ 15
10. Definitions................................. 16
11. Miscellaneous............................... 18
11.1. Rule 144 etc......................... 18
11.2. Successors, Assigns and Transferees.. 19
11.3. Stock Splits, etc.................... 19
11.4. Amendment and Modification........... 19
11.5. Governing Law........................ 19
11.6. Invalidity of Provision.............. 20
11.7. Notices.............................. 20
11.8. Headings; Execution in Counterparts.. 21
11.9. Injunctive Relief.................... 21
11.10 Entire Agreement..................... 21
11.11. Term................................. 22
<PAGE>
REGISTRATION RIGHTS AGREEMENT
-----------------------------
REGISTRATION RIGHTS AGREEMENT, dated as of January 18, 1995, among CCA
Holdings Corp., a Delaware corporation (the "Company"), Kelso Investment
Associates V, L.P., a Delaware limited partnership ("KIA V"), Kelso Equity
Partners V, L.P., a Delaware limited partnership ("KEP V", together with KIA V,
"Kelso"), and Charter Communications, Inc., a Delaware corporation ("Charter").
Capitalized terms used herein without definition are defined in Section 10.
1. Registrations Upon Request.
--------------------------
1.1. Requests. At any time after the first anniversary hereof, the
--------
Majority Stockholder shall have the right to make up to four requests and at any
time after an IPO, Charter shall have the right to make up to two requests that
the Company effect the registration under the Securities Act of any of the
Registrable Securities of the Majority Stockholder or Charter, as the case may
be, each such request to specify the intended method or methods of disposition
thereof, provided, that the Company shall not be required to effect a
--------
registration pursuant to this Section 1.1 upon the request of any Requesting
Stockholder until a period of 180 days shall have elapsed from the effective
date of the most recent registration previously effected pursuant to this
Section 1.1 upon the request of such Requesting Stockholder and, provided,
--------
further, that (a) if the Requesting Stockholder determines in its good faith
- ------- -
judgment to withdraw the proposed registration of any Registrable Securities
requested to be registered pursuant to this Section 1.1 due to marketing or
regulatory reasons or (b) the registration statement relating to any such
-
request is not declared effective within 90 days of the date such registration
statement is first filed with the Commission or (c) if, within 180 days after
-
the registration relating to any such request has become effective, such
registration is interfered with by any stop order, injunction or other order or
requirement of the Commission or other governmental agency or court for any
reason and the Company fails to have such stop order, injunction or other order
or requirement removed, withdrawn or resolved to such Requesting Stockholder's
reasonable satisfaction within 30 days or (d) the conditions to closing
-
specified in the purchase agreement or indemnity agreement entered into in
connection with the registration relating to any such request are not satisfied
(other than conditions to be satisfied by such Requesting Stockholder), then
such request, shall not
<PAGE>
be counted for purposes of such Requesting Shareholder's request limitations set
forth above. Upon any request by a Requesting Stockholder pursuant to this
Section 1.1, the Company will promptly, but in any event within 15 days, give
written notice of such request to the other Requesting Stockholder and thereupon
the Company will use its best efforts to effect the registration under the
Securities Act of:
(i) the Registrable Securities which the Company has been so
requested to register by the Requesting Stockholder, and
(ii) all other Registrable Securities which the Company has been
requested to register by the other Requesting Stockholder by written
request given to the Company within 20 days after the giving of such
written notice by the Company,
all to the extent required to permit the disposition (in accordance with the
Requesting Stockholder's intended method or methods of disposition) of the
Registrable Securities so to be registered. Notwithstanding the foregoing, but
subject to the rights of holders of Registrable Securities under Section 2, (a)
-
if the Board determines in its good faith judgment, after consultation with a
firm of nationally recognized underwriters, that there will be an adverse effect
on a then contemplated initial public offering of the Company's equity
securities, the Company may defer the filing (but not the preparation) of the
registration statement which is required to effect any registration pursuant to
this Section 1.1, during the period starting with the thirtieth day immediately
preceding the date of anticipated filing by the Company of, and ending on a date
60 days following the effective date of, the registration statement relating to
such initial public offering, provided that at all times the Company is in good
--------
faith using all reasonable efforts to cause such registration statement to
become effective and provided, further, that such period shall end on such
-------- -------
earlier date as may be permitted by the underwriters of such underwritten public
offering and (b) if the Company shall at any time furnish to the Requesting
-
Stockholder a certificate signed by the President of the Company stating that
the Company has pending or in process a material transaction, the disclosure of
which would, in the good faith judgment of the Board, materially and adversely
affect the Company, the Company may defer the filing (but not the preparation)
of a registration statement for up to 60 days (but the Company shall use its
best efforts to
-2-
<PAGE>
resolve the transaction and file the registration statement as soon as
possible).
1.2. Registration Statement Form. Each registration requested
---------------------------
pursuant to Section 1.1 shall be effected by the filing of a registration
statement on a form agreed to by the Requesting Stockholder.
1.3. Expenses. The Company will pay all Registration Expenses in
--------
connection with any registrations requested under Section 1.1; provided that any
--------
seller thereunder shall pay all Registration Expenses to the extent required to
be paid by such seller under applicable law.
1.4. Priority in Demand Registrations. If a registration pursuant to
--------------------------------
this Section 1 involves an underwritten offering, and the managing underwriter
(or, in the case of an offering which is not underwritten, an investment banker)
shall advise the Company in writing (with a copy to each Person requesting
registration of Registrable Securities) that, in its opinion, the number of
securities requested and otherwise proposed to be included in such registration
exceeds the number which can be sold in such offering, the Company will include
in such registration to the extent of the number which the Company is so advised
can be sold in such offering, first, the Registrable Securities of the
-----
Requesting Stockholder requested to be included in such registration and the
Registrable Securities of the other Requesting Stockholder requested to be
included in such registration, pro rata, among such holders, on the basis of the
--- ----
number of Registrable Securities requested to be included by such holders, and
second, the securities, if any, being sold by the Company. Notwithstanding the
- ------
foregoing, Charter (or any successor manager of the Company and its
subsidiaries) will not be entitled to participate in any such registration
requested by the Majority Stockholder if the managing underwriter (or, in the
case of an offering that is not underwritten, an investment banker) shall
determine in good faith that the participation of management would adversely
affect the marketability of the securities being sold by the Majority
Stockholder in such registration.
1.5. No Company Initiated Registration. After receipt of notice of a
---------------------------------
requested registration pursuant to Section 1.1, the Company shall not initiate a
registration of any of its securities for its own account until 90 days after
such registration has been effected or such registration has been terminated.
-3-
<PAGE>
2. Incidental Registrations. If the Company at any time proposes to
------------------------
register any of its equity securities under the Securities Act (other than
pursuant to Section 1 or a registration on Form S-4 or S-8 or any successor
form), and the registration form to be used may be used for the registration of
Registrable Securities, it will give prompt written notice to all holders of
Registrable Securities of its intention to do so. Upon the written request of
any such holder made within 30 days after the receipt of any such notice (which
request shall specify the number of Registrable Securities intended to be
disposed of by such holder and the intended method or methods of disposition
thereof), the Company will use its best efforts to effect the registration under
the Securities Act of all such Registrable Securities in accordance with such
intended method or methods of disposition, provided that:
--------
(a) if such registration shall be in connection with an initial
public offering by the Company, the Company shall not include any
Registrable Securities in such proposed registration if the Board shall
have determined, after consultation with the managing underwriter for such
offering, that it is not in the best interests of the Company to include
any Registrable Securities in such registration;
(b) if, at any time after giving written notice of its intention to
register any equity securities and prior to the effective date of the
registration statement filed in connection with such registration, the
Company shall determine for any reason not to register such equity
securities, the Company may, at its election, give written notice of such
determination to each holder of Registrable Securities and, thereupon,
shall not be obligated to register any Registrable Securities in connection
with such registration (but shall nevertheless pay the Registration
Expenses in connection therewith), without prejudice, however, to the
rights of the Majority Stockholder to request that a registration be
effected under Section 1; and
(c) if a registration pursuant to this Section 2 involves an
underwritten offering, and the managing underwriter (or, in the case of an
offering that is not underwritten, an investment banker) shall advise the
Company in writing (with a copy to each holder of Registrable Securities
requesting registration thereof) that, in its opinion, the number of
securities requested and otherwise proposed to be included in such
-4-
<PAGE>
registration exceeds the number which can be sold in such offering, the
Company will include in such registration to the extent of the number
which the Company is so advised can be sold in such offering, first, the
-----
securities if any, being sold by the Company, and second, the Registrable
------
Securities of each holder requesting registration thereof, pro rata, among
--- ----
such holders, on the basis of the number of Registrable Securities
requested to be included by such holders. Notwithstanding the foregoing,
Charter will not be entitled to participate in any such registration if the
managing underwriter (or, in the case of an offering that is not
underwritten, an investment banker) shall determine in good faith that the
participation of management would adversely affect the marketability of the
securities being sold by the Company in such registration.
The Company will pay all Registration Expenses in connection with each
registration of Registrable Securities requested pursuant to this Section 2,
provided that each seller of Registrable Securities shall pay all Registration
- --------
Expenses to the extent required to be paid by such seller under applicable law.
No registration effected under this Section 2 shall relieve the Company from its
obligation to effect registrations under Section 1.
3. Registration Procedures. If and whenever the Company is required
-----------------------
to use its best efforts to effect the registration of any Registrable Securities
under the Securities Act as provided in Sections 1 and 2, the Company will
promptly:
(a) prepare, and within 60 days thereafter file with the Commission,
a registration statement with respect to such Registrable Securities, make
all required filings with the NASD and use best efforts to cause such
registration statement to become effective;
(b) prepare and promptly file with the Commission such amendments and
post-effective amendments and supplements to such registration statement
and the prospectus used in connection therewith as may be necessary to keep
such registration statement effective for so long as is required to comply
with the provisions of the Securities Act and to complete the disposition
of all securities covered by such registration statement in accordance with
the intended method or methods of disposition thereof, but in no
-5-
<PAGE>
event for a period of more than six months after such registration
statement becomes effective;
(c) furnish to counsel selected by the Majority Stockholder and each
seller of Registrable Securities copies of all documents proposed to be
filed with the Commission in connection with such registration, which
documents will be subject to the review of such counsel and each seller and
the Company shall not file any amendment and post-effective amendments or
supplement to such registration statement or the prospectus used in
connection therewith which any such seller shall have reasonably objected
in writing on the grounds that such amendment or supplement does not comply
(explaining why) in all material respects with the requirements of the
Securities Act or of the rules or regulations thereunder;
(d) furnish to each seller of Registrable Securities, without
charge, such number of conformed copies of such registration statement and
of each such amendment and supplement thereto (in each case including all
exhibits and documents filed therewith) and such number of copies of the
prospectus included in such registration statement (including each
preliminary prospectus and any summary prospectus) and any other prospectus
filed under Rule 424 under the Securities Act, in conformity with the
requirements of the Securities Act, and such other documents, as such
seller may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such seller in accordance with the
intended method or methods of disposition thereof;
(e) use its best efforts to register or qualify such Registrable
Securities covered by such registration statement under the securities or
blue sky laws of such jurisdictions as each seller shall reasonably
request, and do any and all other acts and things which may be necessary or
advisable to enable such seller to consummate the disposition of such
Registrable Securities in such jurisdictions in accordance with the
intended method or methods of disposition thereof, provided that the
--------
Company shall not for any such purpose be required to qualify generally to
do business as a foreign corporation in any jurisdiction wherein it is not
so qualified, subject itself to taxation in any jurisdiction wherein it is
not so subject, or take any action which would subject it to general
service of
-6-
<PAGE>
process in any jurisdiction wherein it is not so subject;
(f) use its best efforts to cause all Registrable Securities covered
by such registration statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary by virtue of
the business and operations of the Company to enable the seller or sellers
thereof to consummate the disposition of such Registrable Securities in
accordance with the intended method or methods of disposition thereof;
(g) furnish to each seller of Registrable Securities a signed
counterpart, addressed to the sellers, of
(i) an opinion of counsel for the Company experienced in
securities law matters, dated the effective date of the registration
statement (and, if such registration includes an underwritten public
offering, the date of the closing under the underwriting agreement),
and
(ii) a "comfort" letter (unless the registration is pursuant to
Section 2 and such a letter is not otherwise being furnished to the
Company), dated the effective date of such registration statement (and
if such registration includes an underwritten public offering, dated
the date of the closing under the underwriting agreement), signed by
the independent public accountants who have issued an audit report on
the Company's financial statements included in the registration
statement,
covering such matters as are customarily covered in opinions of issuer's
counsel and in accountants' letters delivered to the underwriters in
underwritten public offerings of securities and such other matters as the
Majority Stockholder may reasonably request;
(h) notify each seller of any Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any
event or existence of any fact as a result of which the prospectus included
in such registration statement, as then in effect, includes an untrue
statement of a
-7-
<PAGE>
material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in light
of the circumstances then existing, and, as promptly as is practicable,
prepare and furnish to such seller a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such securities, such
prospectus shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances
then existing;
(i) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its security
holders, as soon as reasonably practicable, an earnings statement of the
Company (in form complying with the provisions of Rule 158 under the
Securities Act) covering the period of at least 12 months, but not more
than 18 months, beginning with the first month after the effective date of
the registration statement;
(j) notify each seller of any Registrable Securities covered by such
registration statement (i) when the prospectus or any prospectus
-
supplement or post-effective amendment has been filed, and, with respect to
such registration statement or any post-effective amendment, when the same
has become effective, (ii) of any request by the Commission for amendments
--
or supplements to such registration statement or to amend or to supplement
such prospectus or for additional information, (iii) of the issuance by the
---
Commission of any stop order suspending the effectiveness of such
registration statement or the initiation of any proceedings for that
purpose and (iv) of the suspension of the qualification of such securities
--
for offering or sale in any jurisdiction, or of the institution of any
proceedings for any of such purposes;
(k) use every reasonable effort to obtain the lifting of any stop
order that might be issued suspending the effectiveness of such
registration statement at the earliest possible moment;
(l) use its best efforts (i) (A) to list such Registrable Securities
- -
on any securities exchange on
-8-
<PAGE>
which the equity securities of the Company are then listed or, if no such
equity securities are then listed, on an exchange selected by the Company,
if such listing is then permitted under the rules of such exchange, or (B)
-
if such listing is not practicable, to secure designation of such
securities as a NASDAQ "national market system security" within the
meaning of Rule 11Aa2-1 under the Exchange Act or, failing that, to secure
NASDAQ authorization for such Registrable Securities, and, without limiting
the foregoing, to arrange for at least two market makers to register as
such with respect to such Registrable Securities with the NASD, and (ii) to
--
provide a transfer agent and registrar for such Registrable Securities not
later than the effective date of such registration statement;
(m) enter into such agreements and take such other actions as the
sellers of Registrable Securities or the underwriters reasonably request in
order to expedite or facilitate the disposition of such Registrable
Securities, including, without limitation, preparing for, and
participating in, such number of "road shows" and all such other customary
selling efforts as the underwriters reasonably request in order to
expedite or facilitate such disposition; and
(n) use its reasonable best efforts to take all other steps necessary
to effect the registration of such Registrable Securities contemplated
hereby.
The Company may require each seller of any Registrable Securities as
to which any registration is being effected to furnish to the Company such
information regarding such seller, its ownership of Registrable Securities and
the disposition of such Registrable Securities as the Company may from time to
time reasonably request in writing and as shall be required by law in connection
therewith. Each such holder agrees to furnish promptly to the Company all
information required to be disclosed in order to make the information previously
furnished to the Company by such holder not materially misleading.
The Company agrees not to file or make any amendment to any
registration statement with respect to any Registrable Securities, or any
amendment of or supplement to the prospectus used in connection therewith, which
refers to any seller of any Registrable Securities covered thereby by name, or
otherwise identifies such seller as the holder of any Registrable Securities,
without the consent of such
-9-
<PAGE>
seller, such consent not to be unreasonably withheld, unless such disclosure is
required by law.
By acquisition of Registrable Securities, each holder of such
Registrable Securities shall be deemed to have agreed that upon receipt of any
notice from the Company of the happening of any event of the kind described in
Section 3(h), such holder will promptly discontinue such holder's disposition
of Registrable Securities pursuant to the registration statement covering such
Registrable Securities until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(h). If so directed
by the Company, each holder of Registrable Securities will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies,
in such holder's possession of the prospectus covering such Registrable
Securities at the time of receipt of such notice. In the event that the Company
shall give any such notice, the period mentioned in Section 3(b) shall be
extended by the number of days during the period from and including the date of
the giving of such notice to and including the date when each seller of any
Registrable Securities covered by such registration statement shall have
received the copies of the supplemented or amended prospectus contemplated by
Section 3(h).
4. Underwritten Offerings.
----------------------
4.1. Underwriting Agreement. If requested by the underwriters for
----------------------
any underwritten offering by holders of Registrable Securities pursuant to a
registration requested under Section 1 or Section 2, the Company shall enter
into an underwriting agreement with the underwriters for such offering, such
agreement to be reasonably satisfactory in substance and form to the Majority
Stockholder and to the underwriters and to contain such representations and
warranties by the Company and such other terms and provisions as are
customarily contained in agreements of this type, including, without
limitation, indemnities to the effect and to the extent provided in Section 9.
The holders of Registrable Securities to be distributed by such underwriters
shall be parties to such underwriting agreement and may, at their option,
require that any or all of the representations and warranties by, and the
agreements on the part of, the Company to and for the benefit of such
underwriters be made to and for the benefit of such holders of Registrable
Securities and that any or all of the conditions precedent to the obligations of
such underwriters under such underwriting agreement shall also be conditions
precedent to
-10-
<PAGE>
the obligations of such holders of Registrable Securities. No underwriting
agreement (or other agreement in connection with such offering) shall require
any holder of Registrable Securities to make any representations or warranties
to or agreements with the Company or the underwriters other than
representations, warranties or agreements regarding such holder, the ownership
of such holder's Registrable Securities and such holder's intended method or
methods of disposition and any other representation required by law or to
furnish any indemnity to any Person which is broader than the indemnity
furnished by such holder in Section 9.2.
4.2. Selection of Underwriters. If the Company at any time proposes
-------------------------
to register any of its securities under the Securities Act for sale for its own
account pursuant to an underwritten offering, the Company will have the right to
select the managing underwriter (which shall be of nationally recognized
standing) to administer the offering, but only with the approval of the Majority
Stockholder, such approval not to be unreasonably withheld, provided that
--------
whenever a registration requested pursuant to Section 1 is for an underwritten
offering, the Majority Stockholder will have the right to select the managing
underwriter (which shall be of nationally recognized standing) to administer the
offering, but only with the approval of the Company, such approval not to be
unreasonably withheld.
5. Holdback Agreements. (a) If and whenever the Company proposes to
-------------------
register any of its equity securities under the Securities Act for its own
account (other than on Form S-4 or S-8 or any successor form) or is required to
use its best efforts to effect the registration of any Registrable Securities
under the Securities Act pursuant to Section 1 or 2, each holder of Registrable
Securities agrees by acquisition of such Registrable Securities not to effect
any public sale or distribution, including any sale pursuant to Rule 144 under
the Securities Act, of any Registrable Securities within seven days prior to and
90 days (unless advised in writing by the managing underwriter that a longer
period, not to exceed 180 days, is required) after the effective date of the
registration statement relating to such registration, except as part of such
registration.
(b) The Company agrees not to effect any public sale or distribution
of its equity securities or securities convertible into or exchangeable or
exercisable for any of such securities within seven days prior to and 90 days
(unless advised in writing by the managing underwriter that a longer period, not
to exceed 180 days, is required) after
-11-
<PAGE>
the effective date of such registration statement (except as part of such
registration or pursuant to a registration on Form S-4 or S-8 or any successor
form). In addition, the Company shall cause each holder of its equity
securities or any securities convertible into or exchangeable or exercisable for
any of such securities, whether outstanding on the date of this Agreement or
issued at any time after the date of this Agreement (other than any such
securities acquired in a public offering), to agree not to effect any such
public sale or distribution of such securities during such period, except as
part of any such registration if permitted, and to cause each such holder to
enter into a similar agreement to such effect with the Company.
6. Preparation; Reasonable Investigation. In connection with the
-------------------------------------
preparation and filing of each regis tration statement registering Registrable
Securities under the Securities Act, the Company will give the holders of such
Registrable Securities so to be registered and their underwriters, if any, and
their respective counsel and accountants the opportunity to participate in the
preparation of such registration statement, each prospectus included therein or
filed with the Commission, and each amendment thereof or supplement thereto, and
will give each of them such access to the financial and other records, pertinent
corporate documents and properties of the Company and its subsidiaries and such
opportunities to discuss the business of the Company with its officers and the
independent public accountants who have issued audit reports on its financial
statements as shall be reasonably requested by such holders in connection with
such registration statement.
7. No Grant of Future Registration Rights. The Company shall not
--------------------------------------
grant any other demand or incidental registration rights to any other Person
without the prior written consent of the Majority Stockholder.
8. Kelso Designees and Permitted Transferees. The Majority
-----------------------------------------
Stockholder shall have the right to have included in any registration pursuant
to Section 1 or Section 2 any shares of Common Stock owned by any of the Kelso
Designees as though such shares were Registrable Securities owned by the
Majority Stockholder. Charter shall have the right to have included in any
registration pursuant to Section 1 or Section 2 any shares of Common Stock owned
by any permitted transferees of Charter under the Stockholders' Agreement as
those such shares were Registrable Securities owned by Charter.
-12-
<PAGE>
9. Indemnification.
---------------
9.1. Indemnification by the Company. In the event of any
------------------------------
registration of any Registrable Securities pursuant to this Agreement, the
Company will indemnify and hold harmless (a) the seller of such Registrable
-
Securities, (b) the directors, officers, partners, employees, agents and
-
Affiliates of such seller, (c) each Person who participates as an underwriter in
-
the offering or sale of such securities and (d) each person, if any, who
-
controls (with the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act) any such seller, partner or underwriter against any and all
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof), joint or several, directly or indirectly based upon or arising out of
(i) any untrue statement or alleged untrue statement of a fact contained in any
-
registration statement under which such Registrable Securities were registered
under the Securities Act, any preliminary prospectus, final prospectus or
summary prospectus contained therein or used in connection with the offering of
securities covered thereby, or any amendment or supplement thereto, or (ii) any
--
omission or alleged omission to state a fact required to be stated therein or
necessary to make the statements therein not misleading; and the Company will
reimburse each such indemnified party for any legal or any other expenses
reasonably incurred by them in connection with investigating, preparing,
pursuing or defending any such loss, claim, damage, liability, action or
proceeding, except insofar as any such loss, claim, damage, liability, action,
proceeding or expense arises out of or is based upon an untrue statement or
omission made in such registration statement, any such preliminary prospectus,
final prospectus, summary prospectus, amendment or supplement in reliance upon
and in conformity with written information furnished to the Company by such
seller expressly for use in the preparation thereof. Such indemnity shall
remain in full force and effect, regardless of any investigation made by such
indemnified party and shall survive the transfer of such Registrable Securities
by such seller. The indemnity agreement contained in this Section 9.1 shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability, action or proceeding if such settlement is effected without the
consent of the Company (which consent shall not be unreasonably withheld).
9.2. Indemnification by the Sellers. The Company may require, as a
------------------------------
condition to including any Registrable Securities in any registration statement
filed pursuant to
-13-
<PAGE>
Section 1 or 2 that the Company shall have received an undertaking satisfactory
to it from each of the prospective sellers of such Registrable Securities to
indemnify and hold harmless, severally, not jointly, in the same manner and to
the same extent as set forth in Section 9.1, the Company, its directors and
officers and each person, if any, who controls (within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act) the Company with
respect to any statement or alleged statement in or omission or alleged omission
from such registration statement, any preliminary prospectus, final prospectus
or summary prospectus contained therein, or any amendment or supplement
thereto, if such statement or alleged statement or omission or alleged omission
was made in reliance upon and in conformity with written information furnished
to the Company by such seller expressly for use in the preparation of such
registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement. Such indemnity shall remain in full force
and effect, regardless of any investigation made by or on behalf of the Company
or any such director, officer or controlling Person and shall survive the
transfer of such Registrable Securities by such seller. The indemnity agreement
contained in this Section 9.2 shall not apply to amounts paid in settlement of
any such loss, claim, damage, liability, action or proceeding if such settlement
is effected without the consent of such seller (which consent shall not be
unreasonably withheld). The indemnity provided by each seller of Registrable
Securities under this Section 9.2 shall be limited in amount to the net amount
of proceeds actually received by such seller from the sale of Registrable
Securities pursuant to such registration statement.
9.3. Notices of Claims, etc. Promptly after receipt by an
----------------------
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding paragraphs of this Section 9,
such indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the commencement of
such action or proceeding, provided that the failure of any indemnified party to
--------
give notice as provided herein shall not relieve the indemnifying party of its
obligations under the preceding paragraphs of this Section 9, except to the
extent that the indemnifying party is materially prejudiced by such failure to
give notice. In case any such action is brought against an indemnified party,
the indemnifying party will be entitled to participate therein and to assume the
defense thereof,
-14-
<PAGE>
jointly with any other indemnifying party similarly notified, to the extent that
it may wish, with counsel reasonably satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof except for the
reasonable fees and expenses of any counsel retained by such indemnified party
to monitor such action or proceeding. Notwithstanding the foregoing, if such
indemnified party and the indemnifying party reasonably determine, based upon
advice of their respective independent counsel, that a conflict of interest may
exist between the indemnified party and the indemnifying party with respect to
such action and that it is advisable for such indemnified party to be
represented by separate counsel, such indemnified party may retain other
counsel, reasonably satisfactory to the indemnifying party, to represent such
indemnified party, and the indemnifying party shall pay all reasonable fees and
expenses of such counsel. No indemnifying party, in the defense of any such
claim or litigation, shall, except with the consent of such indemnified party,
which consent shall not be unreasonably withheld, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect of such claim or litigation.
9.4. Other Indemnification. Indemnification similar to that
---------------------
specified in the preceding paragraphs of this Section 9 (with appropriate
modifications) shall be given by the Company and each seller of Registrable
Securities with respect to any required registration (other than under the
Securities Act) or other qualification of such Registrable Securities under any
federal or state law or regulation of any governmental authority.
9.5. Indemnification Payments. Any indemnification required to be
------------------------
made by an indemnifying party pursuant to this Section 9 shall be made by
periodic payments to the indemnified party during the course of the action or
proceeding, as and when bills are received by such indemnifying party with
respect to an indemnifiable loss, claim, damage, liability or expense incurred
by such indemnified party.
9.6. Other Remedies. If for any reason the foregoing indemnity is
--------------
unavailable, or is insufficient to hold
-15-
<PAGE>
harmless an indemnified party, other than by reason of the exceptions provided
therein, then the indemnifying party shall contribute to the amount paid or
payable by the indemnified party as a result of such losses, claims, damages,
liabilities, actions, proceedings or expenses in such proportion as is
appropriate to reflect the relative benefits to and faults of the indemnifying
party on the one hand and the indemnified party on the other in connection with
the offering of Registrable Securities (taking into account the portion of the
proceeds of the offering realized by each such party) and the statements or
omissions or alleged statements or omissions which resulted in such loss, claim,
damage, liability, action, proceeding or expense, as well as any other relevant
equitable considerations. The relative fault of the indemnifying party and of
the indemnified party shall be determined by reference to, among other things,
whether the untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the indemnifying party or by
the indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statements or omissions.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. No party shall be
liable for contribution under this Section 9.6 except to the extent and under
such circumstances as such party would have been liable to indemnify under this
Section 9 if such indemnification were enforceable under applicable law.
10. Definitions. For purposes of this Agreement, the following terms
-----------
shall have the following respective meanings:
"Affiliate": A Person that directly, or indirectly through one or
---------
more intermediaries, controls, or is controlled by, or is under common control
with, the Person specified.
"Board": The Board of Directors of the Company.
-----
"Commission": The Securities and Exchange Commission.
----------
"Common Stock": The Company's Class A Common Stock, par value $.01
------------
per share.
-16-
<PAGE>
"Exchange Act": The Securities Exchange Act of 1934, as amended, or
------------
any successor federal statute, and the rules and regulations thereunder which
shall be in effect at the time.
"IPO": as defined in the Stockholders' Agreement.
---
"Kelso Designees": Any of the following individuals or entities:
---------------
Richard Cyert, Steven P. Dolberg, Louis and Patricia Kelso Trust, William A.
Marquard, John F. McGillicuddy, Frank T. Nickell IRA, David M. Roderick, John
Rutledge, George L. Shinn and Dieter Spethmann and any of their permitted
assigns under the Stockholders' Agreement.
"Majority Stockholder": Any holder or holders of at least 50% of the
--------------------
Registrable Securities then outstanding.
"NASD": National Association of Securities Dealers, Inc.
----
"NASDAQ": The Nasdaq National Market.
------
"Person": An individual, corporation, partnership, joint venture,
------
association, trust or other entity or organization, including a government or
political subdivision or an agency or instrumentality thereof.
"Registrable Securities": The shares of Common Stock beneficially
----------------------
owned (within the meaning of Section 13d-3 of the Exchange Act) by Kelso,
Charter or any other Person made a party hereto pursuant to Section 11.2. As to
any particular Registrable Securities, such securities shall cease to be
Registrable Securities when (i) a registration statement with respect to the
-
sale of such securities shall have become effective under the Securities Act and
such securities shall have been disposed of in accordance with such registration
statement, (ii) they shall have been sold to the public pursuant to Rule 144
--
under the Securities Act, (iii) they shall have been otherwise transferred and
---
subsequent disposition of them shall not require registration or qualification
of them under the Securities Act of or any similar state law then in force or
(iv) they shall have ceased to be outstanding.
- ---
"Registration Expenses": All expenses incident to the Company's
---------------------
performance of or compliance with Section 1 and Section 2, including, without
limitation, (i) registration, filing and NASD fees, (ii) fees and expenses of
- --
complying with securities or blue sky laws, (iii) fees and
---
-17-
<PAGE>
expenses associated with listing securities on an exchange or NASDAQ, (iv) word
--
processing, duplicating and printing expenses, (v) messenger and delivery
-
expenses, (vi) fees and disbursements of counsel for the Company and of its
--
independent public accountants, including the expenses of any special audits or
"cold comfort" letters, (vii) reasonable fees and disbursements of any one
---
counsel retained by the sellers of Registrable Securities, which counsel shall
be designated by the Majority Stockholder, and (viii) any fees and disbursements
----
of underwriters customarily paid by issuers or sellers of securities, but
excluding underwriting discounts and commissions and transfer taxes, if any.
"Requesting Stockholder": shall mean any stockholder which is
----------------------
exercising its rights to request that the Company effect a registration pursuant
to Section 1.1.
"Securities Act": The Securities Act of 1933, as amended, or any
--------------
successor federal statute, and the rules and regulations thereunder which shall
be in effect at the time.
"Stockholders' Agreement": The Stockholders' Agreement, dated as of
-----------------------
the date hereof, as the same shall be amended from time to time, among the
Company, KIA V, KEP V and Charter.
11. Miscellaneous.
-------------
11.1. Rule 144 etc. If the Company shall have filed a registration
------------
statement pursuant to the requirements of Section 12 of the Exchange Act or a
registration statement pursuant to the requirements of the Securities Act
relating to any class of equity securities, the Company will file the reports
required to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations adopted by the Commission thereunder, and will take such
further action as any holder of Registrable Securities may reasonably request,
all to the extent required from time to time to enable such holder to sell
Registrable Securities without registration under the Securities Act within the
limitation of the exemptions provided by (a) Rule 144 under the Securities Act,
-
as such rule may be amended from time to time, or (b) any successor rule or
-
regulation hereafter the commission. Upon the request of any holder of
Registrable Securities, the Company will deliver to such holder a written
statement as to whether it has complied with such requirements.
-18-
<PAGE>
11.2. Successors, Assigns and Transferees. This Agreement shall be
-----------------------------------
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns. In addition, and provided that an
express assignment shall have been made, and a copy of which shall have been
delivered to the Company, the provisions of this Agreement which are for the
benefit of a holder of Registrable Securities shall be for the benefit of and
enforceable by any subsequent holder of any Registrable Securities, provided
--------
that Charter may only assign its rights hereunder to one or more of its
Affiliates which have acquired Registrable Securities in accordance with the
terms of the Stockholders' Agreement or any third party transferee which has
acquired Charter's Registrable Securities in accordance with Section 2.2 of the
Stockholders' Agreement and which the Majority Stockholder has approved, such
approval not to be unreasonably withheld. Notwithstanding anything herein to
the contrary, Charter shall exercise all rights hereunder on behalf of any such
Affiliates and the Company and Kelso shall be entitled to deal exclusively with
Charter and rely on the consent, waiver or any other action by Charter as the
consent, waiver or other action, as the case may be, of any such Affiliates.
11.3. Stock Splits, etc. Each holder of Registrable Securities
-----------------
agrees that it will vote to effect a stock split or combination with respect to
any Registrable Securities in connection with any registration of such
Registrable Securities hereunder, or otherwise, if the managing underwriter
shall advise the Company in writing (or, in connection with an offering that is
not underwritten, if an investment banker shall advise the Company in writing)
that in its opinion such a stock split or combination would facilitate or
increase the likelihood of success of the offering.
11.4. Amendment and Modification. This Agreement may be amended,
--------------------------
modified or supplemented by the Company with the written consent of the Majority
Stockholder and a majority (by number of shares) of any other holder of
Registrable Securities whose interests would be adversely affected by such
amendment.
11.5. Governing Law. This Agreement and the rights and obligations
-------------
of the parties hereunder and the persons subject hereto shall be governed by,
and construed and interpreted in accordance with, the law of the State of
Delaware, without giving effect to the choice of law princples thereof.
-19-
<PAGE>
11.6. Invalidity of Provision. The invalidity or unenforceability of
-----------------------
any provision of this Agreement in any jurisdiction shall not affect the
validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of this Agreement, including that
provision, in any other jurisdiction.
11.7. Notices. All notices, requests, demands, letters, waivers and
-------
other communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if (a) delivered
-
personally, (b) mailed, certified or registered mail with postage prepaid, (c)
- -
sent by next-day or overnight mail or delivery or (d) sent by telecopy or
-
telegram, as follows:
(i) If to the Company, to it at:
CCA Holdings Corp.
12444 Powerscourt Drive
Suite 550
St. Louis, Missouri 63131
Attention: Jerald L. Kent
with a copy to:
Kelso & Company
350 Park Avenue, 21st Floor
New York, New York 10022
Attention: James J. Connors, II, Esq.
(ii) If to Charter, to it at:
Charter Communications, Inc.
12444 Powerscourt Drive
Suite 550
St. Louis, Missouri 63131
Attention: Jerald L. Kent
with a copy to:
Paul, Hastings, Janofsky & Walker
399 Park Avenue
New York, NY 10022
Attention: Daniel G. Bergstein, Esq.
-20-
<PAGE>
(iii) If to Kelso, to it at:
KIA Investment Associates V, L.P.
Kelso Equity Partners V, L.P.
c/o Kelso & Company
350 Park Avenue, 21st Floor
New York, New York 10022
Attention: James J. Connors, II, Esq.
(iv) If to any other holder of Registrable Securities, to the address of
such holder as set forth in the books and records of the Company
or to such other person or address as any party shall specify by notice in
writing to the Company. All such notices, requests, demands, letters, waivers
and other communications shall be deemed to have been received (w) if by
-
personal delivery on the day after such delivery, (x) if by certified or
-
registered mail, on the fifth business day after the mailing thereof, (y) if by
-
next-day or overnight mail or delivery, on the day delivered or (z) if by
-
telecopy or telegram, on the next day following the day on which such telecopy
or telegram was sent, provided that a copy is also sent by certified or
registered mail.
11.8. Headings; Execution in Counterparts. The headings and captions
-----------------------------------
contained herein are for convenience and shall not control or affect the meaning
or construction of any provision hereof. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and
which together shall constitute one and the same instrument.
11.9. Injunctive Relief. Each of the parties recognizes and agrees
-----------------
that money damages may be insufficient and, therefore, in the event of a breach
of any provision of this Agreement the aggrieved party may elect to institute
and prosecute proceedings in any court of competent jurisdiction to enforce
specific performance or to enjoin the continuing breach of this Agreement. Such
remedies shall, however, be cumulative and not exclusive, and shall be in
addition to any other remedy which such party may have.
11.10. Entire Agreement. This Agreement, together with the
----------------
Stockholders' Agreement, is intended by the parties hereto as a final expression
of their agreement and intended to be a complete and exclusive statement of
their agreement and understanding in respect of the subject
-21-
<PAGE>
matter contained herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
11.11. Term. This Agreement shall be effective as of the date hereof
----
and shall continue in effect thereafter until the earlier of (a) its
-
termination by the consent of the parties hereto or their respective successors
in interest and (b) the date on which no Registrable Securities remain
-
outstanding.
IN WITNESS WHEREOF, this Agreement has been signed by each of the
parties hereto, effective as of the date first written above.
CCA HOLDINGS CORP.
By: /s/ Jerald L. Kent
-----------------------------------
Name: Jerald L. Kent
Title: Executive Vice President
KELSO INVESTMENT ASSOCIATES V, L.P.
By: Kelso Partners V, L.P.
General Partner
By: /s/ George E. Matelich
----------------------------------
General Partner
KELSO EQUITY PARTNERS V, L.P.
By: /s/ George E. Matelich
----------------------------------
General Partner
CHARTER COMMUNICATIONS, INC.
By: /s/ Jerald L. Kent
-----------------------------------
Name: Jerald L. Kent
Title: Executive Vice President
-22-
<PAGE>
EXHIBIT 10.21
AMENDMENT NUMBER ONE
TO REGISTRATION RIGHTS AGREEMENT
AMENDMENT NUMBER ONE, dated as of September 29, 1995, to the
Registration Rights Agreement, dated as of January 18, 1995 (the "Registration
Rights Agreement"), among CCA Holdings Corp., a Delaware corporation, Kelso
Investment Associates V, L.P., a Delaware limited partnership, Kelso Equity
Partners V, L.P., a Delaware limited partnership, and Charter Communications,
Inc., a Delaware corporation.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. The definition of "Requesting Stockholder" is hereby replaced in its
entirety with the following:
" 'Requesting Stockholder': shall mean any stockholder which may
----------------------
exercise its rights to request that the Company effect a registration pursuant
to Section 1.1."
2. Except as specifically amended hereby, the Registration Rights
Agreement remains in full force and effect.
3. This Amendment Number One may be executed in any number of
counterparts, each of which shall be deemed to be an original and which together
shall constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Amendment Number
One as of the date first above written.
CCA HOLDINGS CORP.
/s/ Theodore W. Browne, II
By: _________________________________
Name: Theodore W. Browne, II
Title: Executive Vice President
KELSO INVESTMENT ASSOCIATES V, L.P.
By: Kelso Partners V, L.P.
General Partner
/s/ George E. Matelich
By: ________________________________
General Partner
KELSO EQUITY PARTNERS V, L.P.
/s/ George E. Matelich
By: ________________________________
General Partner
CHARTER COMMUNICATIONS, INC.
/s/ Theodore W. Browne, II
By: _________________________________
Name: Theodore W. Browne, II
Title: Executive Vice President
2
<PAGE>
EXHIBIT 12.1
CROWN SYSTEMS
RATIO OF EARNINGS TO FIXED CHARGES CALCULATION
(IN THOUSANDS, EXCEPT RATIO AMOUNTS)
<TABLE>
<CAPTION>
1992 1993 1994
---- ---- ----
<S> <C> <C> <C>
Earnings
- --------
Loss before income taxes $(29,539) $(27,213) $(28,183)
Fixed charges 19,547 12,051 15,053
---------- ---------- ----------
Earnings $(9,992) $(15,162) $(13,130)
========== ========== ==========
Fixed charges
- -------------
Interest expense 19,547 12,051 15,053
----------- ---------- ----------
Total fixed charges $ 19,547 $12,051 $15,053
=========== ========== ==========
Ratio of earnings to fixed charges(1) - - -
</TABLE>
(1) Earnings for the years ended December 31, 1992, 1993 and 1994 were
insufficient to cover the fixed charges by $29,539, $27,213 and $28,183,
respectively. As a result of such deficiencies, the ratios are not
presented above.
<PAGE>
EXHIBIT 12.2
CCA HOLDINGS CORP. AND SUBSIDIARIES
RATIO OF EARNINGS TO FIXED CHARGES CALCULATION
(IN THOUSANDS, EXCEPT RATIO AMOUNTS)
<TABLE>
<CAPTION>
1995 1996
---- ----
<S> <C> <C>
Earnings
- --------
Loss before income taxes $(41,761) $(38,634)
Fixed charges 36,274 47,854
-------- --------
Earnings $ (5,487) $ 9,220
======== ========
Fixed charges
- -------------
Interest expense 35,461 46,654
Interest element of rentals 165 192
Amortization of debt costs 648 1,008
-------- --------
Total fixed charges $36,274 $ 47,854
======== ========
Ratio of earnings to
fixed charges(1) -- --
</TABLE>
(1) Earnings for the years ended December 31, 1995 and 1996 were insufficient
to cover the fixed charges by $41,761 and $38,634, respectively. As a
result of such deficiencies, the ratios are not presented above.
<PAGE>
Exhibit 21.1
List of Subsidiaries of the Registrants
CCA Holdings Corp.:
- -----------------
CCA Acquisition Corp. (Delaware)
Cencom Cable Entertainment, Inc. (Delaware)
Charter Communications Entertainment, L.P. (Delaware)
Charter Communications Entertainment I, L.P. (Delaware)
Charter Communications Entertainment II, L.P. (Delaware)
Charter Communications Radio St. Louis, LLC (Delaware)
Cable Advertising of St. Louis, L.P. ("CASTL") (Missouri)
CCA Acquisition Corp.:
- ---------------------
Cencom Cable Entertainment, Inc. (Delaware)
Charter Communications Entertainment, L.P. (Delaware)
Charter Communications Entertainment I, L.P. (Delaware)
Charter Communications Entertainment II, L.P. (Delaware)
Charter Communications Radio St. Louis, LLC (Delaware)
Cable Advertising of St. Louis, L.P. ("CASTL") (Missouri)
Cencom Cable Entertainment, Inc.:
- --------------------------------
Charter Communications Entertainment, L.P. (Delaware)
Charter Communications Entertainment I, L.P. (Delaware)
Charter Communications Entertainment II, L.P. (Delaware)
Charter Communications Radio St. Louis, LLC (Delaware)
Cable Advertising of St. Louis, L.P. ("CASTL") (Missouri)
Charter Communications Entertainment, L.P.:
- ------------------------------------------
Charter Communications Entertainment I, L.P. (Delaware)
Charter Communications Entertainment II, L.P. (Delaware)
Charter Communications Radio St. Louis, LLC (Delaware)
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated February 21, 1997, relating to the consolidated financial statements of
CCA Holdings Corp. and subsidiaries as of and for the years ended December 31,
1996 and 1995, (and to all references to our Firm) included in or made a part of
this Registration Statement for the $82,000,000 Series B Senior Subordinated
Notes due 1999 of CCA Holdings Corp.
ARTHUR ANDERSEN LLP
St. Louis, Missouri,
April 30, 1997
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated February 21, 1997, relating to the consolidated financial statements of
CCA Acquisition Corp. and subsidiaries as of and for the years ended December
31, 1996 and 1995, (and to all references to our Firm) included in or made a
part of this Registration Statement for the $82,000,000 Series B Senior
Subordinated Notes due 1999 of CCA Holdings Corp.
ARTHUR ANDERSEN LLP
St. Louis, Missouri,
April 30, 1997
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated February 21, 1997, relating to the financial statements of Cencom Cable
Entertainment, Inc. as of and for the years ended December 31, 1996 and 1995,
(and to all references to our Firm) included in or made a part of this
Registration Statement for the $82,000,000 Series B Senior Subordinated Notes
due 1999 of CCA Holdings Corp.
ARTHUR ANDERSEN LLP
St. Louis, Missouri,
April 30, 1997
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated February 21, 1997, relating to the financial statements of Charter
Communications Entertainment, L.P. as of and for the years ended December 31,
1996 and 1995, (and to all references to our Firm) included in or made a part of
this Registration Statement for the $82,000,000 Series B Senior Subordinated
Notes due 1999 of CCA Holdings Corp.
ARTHUR ANDERSEN LLP
St. Louis, Missouri,
April 30, 1997
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated February 21, 1997, relating to the financial statements of Charter
Communications Entertainment I, L.P. as of and for the years ended December
31, 1996 and 1995, (and to all references to our Firm) included in or made a
part of this Registration Statement for the $82,000,000 Series B Senior
Subordinated Notes due 1999 of CCA Holdings Corp.
ARTHUR ANDERSEN LLP
St. Louis, Missouri,
April 30, 1997
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated February 21, 1997, relating to the financial statements of Charter
Communications Entertainment II, L.P. as of December 31, 1996 and 1995 and for
the year ended December 31, 1996 and for the period from inception (April 20,
1995) to December 31, 1995, (and to all references to our Firm) included in or
made a part of this Registration Statement for the $82,000,000 Series B Senior
Subordinated Notes due 1999 of CCA Holdings Corp.
ARTHUR ANDERSEN LLP
St. Louis, Missouri,
April 30, 1997
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated July 31, 1996, relating to the financial statements of Cencom Cable
Entertainment, Inc.--Missouri System as of and for the year ended December 31,
1994, (and to all references to our Firm) included in or made a part of this
Registration Statement for the $82,000,000 Series B Senior Subordinated Notes
due 1999 of CCA Holdings Corp.
ARTHUR ANDERSEN LLP
St. Louis, Missouri,
April 30, 1997
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated July 31, 1996, relating to the financial statements of Cencom Cable Income
Partners, L.P.--Illinois System as of and for the years ended December 31, 1995
and 1994, (and to all references to our Firm) included in or made a part of this
Registration Statement for the $82,000,000 Series B Senior Subordinated Notes
due 1999 of CCA Holdings Corp.
ARTHUR ANDERSEN LLP
St. Louis, Missouri,
April 30, 1997
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated November 22, 1995, relating to the financial statements of Cencom Cable
Television, Inc.--Los Angeles and Riverside Systems as of September 29, 1995 and
December 31, 1994, and for the nine months ended September 29, 1995 and the
years ended December 31, 1994 and 1993, (and to all references to our Firm)
included in or made a part of this Registration Statement for the $82,000,000
Series B Senior Subordinated Notes due 1999 of CCA Holdings Corp.
ARTHUR ANDERSEN LLP
Dallas, Texas,
April 30, 1997
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Independent Certified
Public Accountants" and to the use of our report dated February 17, 1997, with
respect to the Missouri Cable Television System to be sold by Masada Cable
Partners, L.P. to Charter Communications Entertainment I, L.P., in this
Registration Statement for the $82,000,000 Series B Senior Subordinated Notes
due 1999 of CCA Holdings Corp.
ERNST & YOUNG LLP
Birmingham, Alabama
May 1, 1997
<PAGE>
Exhibit 23.3
INDEPENDENT AUDITORS' CONSENT
We consent to the use of our reports included herein and to the reference to our
firm under the headings "Independent Certified Public Accountants" and
"Unaudited Selected Historical and Unaudited Pro Forma Financial Data" in the
registration statement.
KPMG Peat Marwick LLP
Dallas, Texas
April 30, 1997
<PAGE>
EXHIBIT 23.4
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated July 25, 1996, on the financial statements of United Video Cablevision,
Inc. Massachusetts and Missouri Divisions included in or made part of CCA
Holdings Corp.'s Form S-4 registration statement.
Piaker & Lyons, P.C.
Vestal, New York
April 30, 1997
<PAGE>
EXHIBIT 25.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
Statement of Eligibility
Under the Trust Indenture Act of 1939
of a Corporation Designated to Act as
Trustee
Check if an Application to Determine
Eligibility of a Trustee Pursuant to Section
305(b)(2) _______________
HARRIS TRUST AND SAVINGS BANK
(Name of Trustee)
Illinois 36-1194448
(I.R.S. Employer
(State of Incorporation) Identification No.)
111 West Monroe Street, Chicago, Illinois 60603
(Address of principal executive offices)
Daniel G. Donovan, Harris Trust and Savings Bank,
111 West Monroe Street, Chicago, Illinois, 60603
312-461-2908
(Name, address and telephone number for agent for service)
CCA HOLDINGS CORP.
(Name of Obligor)
Delaware 43-1720013
(I.R.S. Employer
(State of Incorporation) Identification No.)
12444 Powerscourt Drive
Suite 400
St. Louis, Missouri 63131
(Address of principal executive offices)
Senior Subordinated Notes
(Title of indenture securities)
<PAGE>
1. GENERAL INFORMATION. Furnish the following information as to the
Trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Commissioner of Banks and Trust Companies, State of Illinois,
Springfield, Illinois; Chicago Clearing House Association, 164 West
Jackson Boulevard, Chicago, Illinois; Federal Deposit Insurance
Corporation, Washington, D.C.; The Board of Governors of the Federal
Reserve System,Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Harris Trust and Savings Bank is authorized to exercise corporate
trust powers.
2. AFFILIATIONS WITH OBLIGOR. If the Obligor is an affiliate of the Trustee,
describe each such affiliation.
The Obligor is not an affiliate of the Trustee.
3. thru 15.
NO RESPONSE NECESSARY
16. LIST OF EXHIBITS.
1. A copy of the articles of association of the Trustee as now in effect
which includes the authority of the trustee to commence business and to
exercise corporate trust powers.
A copy of the Certificate of Merger dated April 1, 1972 between Harris
Trust and Savings Bank, HTS Bank and Harris Bankcorp, Inc. which
constitutes the articles of association of the Trustee as now in effect
and includes the authority of the Trustee to commence business and to
exercise corporate trust powers was filed in connection with the
Registration Statement of Louisville Gas and Electric Company, File No.
2-44295, and is incorporated herein by reference.
2. A copy of the existing by-laws of the Trustee.
A copy of the existing by-laws of the Trustee was filed in connection
with the Registration Statement of
Commercial Federal Corporation, File No. 333-20711, and is incorporated
herein by reference.
3. The consents of the Trustee required by Section 321(b) of the Act.
(included as Exhibit A on page 2 of this statement)
4. A copy of the latest report of condition of the Trustee published
pursuant to law or the requirements of its supervising or examining
authority.
(included as Exhibit B on page 3 of this statement)
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee,
HARRIS TRUST AND SAVINGS BANK, a corporation organized and existing under the
laws of the State of Illinois, has duly caused this statement of eligibility to
be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of Chicago, and State of Illinois, on the 6th day of May, 1997.
Harris Trust and Savings Bank
By: /s/ DGDonovan
-------------
D. G. Donovan
Assistant Vice President
EXHIBIT A
The consents of the Trustee required by Section 321(b) of the Act.
Harris Trust and Savings Bank, as the Trustee herein named, hereby consents that
reports of examinations of said trustee by Federal and State authorities may be
furnished by such authorities to the Securities and Exchange Commission upon
request therefor.
Harris Trust and Savings Bank
By: /s/ DGDonovan
--------------
D.G. Donovan
Assistant Vice President
2
<PAGE>
EXHIBIT B
Attached is a true and correct copy of the statement of condition of Harris
Trust and Savings Bank as of December 31, 1996, as published in accordance with
a call made by the State Banking Authority and by the Federal Reserve Bank of
the Seventh Reserve District.
[LOGO OF
HARRIS BANK]
HARRIS BANK
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, Illinois 60603
of Chicago, Illinois, And Foreign and Domestic Subsidiaries, at the close of
business on December 31, 1996, a state banking institution organized and
operating under the banking laws of this State and a member of the Federal
Reserve System. Published in accordance with a call made by the Commissioner of
Banks and Trust Companies of the State of Illinois and by the Federal Reserve
Bank of this District.
Bank's Transit Number 71000288
THOUSANDS
ASSETS OF DOLLARS
Cash and balances due from depository
institutions:
Non-interest bearing balances $ 1,157,832
and currency and coin...........
Interest bearing balances........ $ 658,287
Securities:.............................
a. Held-to-maturity securities $ 0
b. Available-for-sale securities $ 2,759,331
Federal funds sold and securities
purchased under agreements to resell in
domestic offices of the bank and
of its Edge and Agreement subsidiaries,
and in IBF's:
Federal funds sold............... $ 316,275
Securities purchased under
agreements to resell............ $ 0
Loans and lease financing receivables:
Loans and leases, net of
unearned income................. $ 8,199,096
LESS: Allowance for loan and
lease losses.................... $ 108,408
-------------
Loans and leases, net of
unearned income, allowance, and
reserve
(item 4.a minus 4.b)............. $ 8,090,688
Assets held in trading accounts......... $ 185,153
Premises and fixed assets (including
capitalized leases).................... $ 180,043
Other real estate owned................. $ 582
Investments in unconsolidated
subsidiaries and associated companies.. $ 82
Customer's liability to this bank on
acceptances outstanding................ $ 78,983
Intangible assets....................... $ 294,420
Other assets............................ $ 542,257
-----------
TOTAL ASSETS $14,263,933
===========
3
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES
Deposits:
<S> <C> <C>
In domestic offices................... $ 7,898,588
Non-interest bearing............. $ 3,135,907
Interest bearing................. $ 4,762,681
In foreign offices, Edge and
Agreement subsidiaries, and IBF's.... $ 1,839,922
Non-interest bearing............. $ 35,116
Interest bearing................. $ 1,804,806
Federal funds purchased and securities
sold under agreements to repurchase in
domestic offices of the bank and of
its Edge and Agreement subsidiaries,
and in IBF's:
Federal funds purchased............... $ 1,615,797
Securities sold under agreements to
repurchase........................... $ 376,270
Trading Liabilities
Other borrowed money:................... $ 74,165
a. With remaining maturity of one year
or less $ 697,591
b. With remaining maturity of more
than one year $ 9,265
Bank's liability on acceptances
executed and outstanding............... $ 78,983
Subordinated notes and debentures....... $ 310,000
Other liabilities....................... $ 170,785
------------------------------
TOTAL LIABILITIES $13,071,366
==============================
EQUITY CAPITAL
Common stock............................ $ 100,000
Surplus................................. $ 600,377
a. Undivided profits and capital
reserves............................... $ 506,301
b. Net unrealized holding gains
(losses) on available-for-sale
securities ($14,111)
------------------------------
TOTAL EQUITY CAPITAL $ 1,192,567
==============================
Total liabilities, limited-life
preferred stock, and equity capital.... $14,263,933
==============================
</TABLE>
I, Steve Neudecker, Vice President of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the Board of Governors of the Federal Reserve System and
is true to the best of my knowledge and belief.
STEVE NEUDECKER
1/29/97
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and, to the best of our
knowledge and belief, has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and the
Commissioner of Banks and Trust Companies of the State of Illinois and is true
and correct.
EDWARD W. LYMAN,
ALAN G. McNALLY,
MARIBETH S. RAHE
Directors.
4
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0001038334
<NAME> CCA HOLDINGS CORP.
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 2,934,939
<SECURITIES> 0
<RECEIVABLES> 5,836,916
<ALLOWANCES> (371,166)
<INVENTORY> 0
<CURRENT-ASSETS> 8,999,959
<PP&E> 249,145,896
<DEPRECIATION> (42,794,517)
<TOTAL-ASSETS> 744,080,870
<CURRENT-LIABILITIES> 29,276,003
<BONDS> 566,963,402
0
0
<COMMON> 800
<OTHER-SE> (396,025)
<TOTAL-LIABILITY-AND-EQUITY> 744,080,870
<SALES> 143,023,261
<TOTAL-REVENUES> 143,023,261
<CGS> 0
<TOTAL-COSTS> 142,289,623
<OTHER-EXPENSES> 893,795
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 46,654,019
<INCOME-PRETAX> (53,117,116)
<INCOME-TAX> (53,117,116)
<INCOME-CONTINUING> (53,117,116)
<DISCONTINUED> (1,515,558)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (38,634,050)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0001038332
<NAME> CCA ACQUISITION CORP.
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 2,934,939
<SECURITIES> 0
<RECEIVABLES> 5,836,916
<ALLOWANCES> (371,166)
<INVENTORY> 0
<CURRENT-ASSETS> 8,999,959
<PP&E> 249,145,896
<DEPRECIATION> (42,794,517)
<TOTAL-ASSETS> 744,080,870
<CURRENT-LIABILITIES> 28,903,475
<BONDS> 566,963,402
0
0
<COMMON> 1
<OTHER-SE> (22,698)
<TOTAL-LIABILITY-AND-EQUITY> 744,080,870
<SALES> 143,023,261
<TOTAL-REVENUES> 143,023,261
<CGS> 0
<TOTAL-COSTS> 141,917,095
<OTHER-EXPENSES> 893,795
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 46,654,019
<INCOME-PRETAX> (52,744,638)
<INCOME-TAX> (52,744,638)
<INCOME-CONTINUING> (52,744,638)
<DISCONTINUED> (1,515,558)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (38,261,522)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0001038336
<NAME> CENCOM CABLE ENTERTAINMENT, INC.
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 122,582,298
<CURRENT-LIABILITIES> 0
<BONDS> 104,843,403
0
0
<COMMON> 245,973
<OTHER-SE> (38,007,078)
<TOTAL-LIABILITY-AND-EQUITY> 122,582,298
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,404,598
<INCOME-PRETAX> (26,941,399)
<INCOME-TAX> (26,941,399)
<INCOME-CONTINUING> (26,941,399)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (26,941,399)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0001038335
<NAME> CHARTER COMMUNICATIONS ENTERTAINMENT, L.P.
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 27,418,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 307,272,790
<CURRENT-LIABILITIES> 0
<BONDS> 104,843,403
0
0
<COMMON> 0
<OTHER-SE> 202,429,387
<TOTAL-LIABILITY-AND-EQUITY> 307,272,790
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,404,598
<INCOME-PRETAX> (76,947,787)
<INCOME-TAX> (76,947,787)
<INCOME-CONTINUING> (76,947,787)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (76,947,787)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
TO TENDER
SERIES A SENIOR SUBORDINATED NOTES
DUE 1999
OF CCA HOLDINGS CORP.
PURSUANT TO THE PROSPECTUS
DATED , 1997
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1997 UNLESS EXTENDED (AS SO EXTENDED, THE "EXPIRATION DATE").
EXCEPT AS PROVIDED UNDER APPLICABLE SECURITIES LAWS, TENDERS OF OLD NOTES
(AS DEFINED HEREIN) MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M., NEW
YORK CITY TIME, ON THE EXPIRATION DATE UNLESS SUCH OLD NOTES HAVE BEEN
ACCEPTED FOR EXCHANGE BY CCA HOLDINGS CORP. PRIOR THERETO.
To: HARRIS TRUST AND SAVINGS BANK, EXCHANGE AGENT
BY MAIL, BY HAND OR OVERNIGHT BY FACSIMILE:
DELIVERY:
Harris Trust and Savings Bank (212) 701-7636
c/o Harris Trust Company of New York
77 Water Street, 4th Floor
New York, NY 10005 CONFIRMATION AND INFORMATION:
Attn: Reorganization Department
(212) 701-7649
Delivery of this Letter of Transmittal to an address other than as set forth
above or transmission of instructions via a facsimile number other than the
one listed above will not constitute valid delivery.
The undersigned acknowledges receipt and review of the prospectus dated May
, 1997 (the "Prospectus") of CCA Holdings Corp., a Delaware corporation
("Issuer") and this Letter of Transmittal relating to the Issuer's Series A
Senior Subordinated Notes due 1999 ("Old Notes"), which constitutes the
Issuer's offer ("Exchange Offer") to exchange Old Notes for Series B
Subordinated Notes due 1999 ("New Notes") in accordance with the terms and
conditions described in the Prospectus. Capitalized terms used but not defined
herein shall have the meanings given to them in the Prospectus.
This Letter of Transmittal must be used if (i) Old Notes are to be
physically delivered herewith, (ii) delivery of Old Notes is to be made by
book-entry transfer to the Exchange Agent's account at The Depository Trust
Company ("Book-Entry Transfer Facility") pursuant to the procedures set forth
in "The Exchange Offer--Procedures for Tendering" in the Prospectus, or (iii)
the guaranteed delivery procedures described in the Prospectus under "The
Exchange Offer--Guaranteed Delivery Procedures" are to be utilized. Delivery
of documents to a Book-Entry Transfer Facility does not constitute delivery to
the Exchange Agent.
A holder who wishes to tender Old Notes must, at a minimum, complete columns
(1) and (3) in the box below, captioned "Description of Old Notes," and sign
in the box below captioned "Sign Here." If only columns (1) and (3) are
completed, the holder will be deemed to have tendered all Old Notes listed in
column (3) of the box captioned "Description of Old Notes." If a holder wishes
to tender less than all of such Old Notes, column (4) must be completed in
full, and such holder should refer to Instruction 4 of the instructions hereto
("Instructions") regarding completion of this Letter of Transmittal.
Holders who desire to tender their Old Notes and (i) whose Old Notes are not
immediately available, (ii) who cannot deliver their Old Notes, this Letter of
Transmittal and all other documents required hereby to the Exchange Agent
prior to the Expiration Date, or (iii) who cannot complete the procedure for
book-entry transfer on a timely
<PAGE>
basis, must tender their Old Notes pursuant to the guaranteed delivery
procedure set forth in the Prospectus under the caption "The Exchange Offer--
Guaranteed Delivery Procedures." See Instruction 2.
If the undersigned is not the person in whose name the Old Notes tendered
are registered on the books of the Issuer, a properly completed bond power
must be obtained from the registered holder of such Old Notes and submitted
with this Letter of Transmittal in order to tender them pursuant to this
Letter of Transmittal. See Instructions 1 and 5.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL CAREFULLY BEFORE COMPLETING
ANY INFORMATION BELOW.
Ladies and Gentlemen:
Pursuant to the offer by the Issuer to exchange up to $82,000,000 principal
amount of Old Notes for up to $82,000,000 principal amount of New Notes, upon
the terms and subject to the conditions set forth in the Prospectus and this
Letter of Transmittal, the undersigned hereby tenders to the Issuer the Old
Notes indicated below. Accrued interest on Old Notes accepted for exchange
will not be paid, but will instead continue to accrue.
Subject to and effective upon acceptance for exchange of the Old Notes
tendered herewith, the undersigned hereby exchanges, assigns and transfers to
or upon the order of the Issuer all right, title and interest in and to all
the Old Notes that are being tendered hereby, and irrevocably constitutes and
appoints the Exchange Agent the true and lawful agent and attorney-in-fact of
the undersigned (with full knowledge that the Exchange Agent also acts as the
agent of the Issuer) with respect to such Old Notes, with full power of
substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest) to (a) present such Old Notes and all evidences of
transfer and authenticity to, or upon the order of, the Issuer for
registration in the name of the undersigned on the books of the Issuer if the
undersigned is not currently the registered holder thereof, (b) deliver
certificates for such Old Notes, or transfer ownership of such Old Notes on
the account books maintained by the Book-Entry Transfer Facility, together, in
any such case, with all accompanying evidences of transfer and authenticity,
to or upon the order of the Issuer upon receipt by the Exchange Agent as the
undersigned's agent, of the New Notes to be issued in exchange therefor, (c)
present such Old Notes for cancellation and transfer on the books of the
Issuer and (d) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Old Notes, all in accordance with the terms of
the Exchange Offer.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, exchange, assign and transfer the Old Notes
tendered hereby, and that when the same are accepted for exchange and
exchanged by the Issuer, the Issuer will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances
and not subject to any adverse claims. The undersigned will, upon request,
execute and deliver any additional documents deemed by the Exchange Agent or
the Issuer to be necessary or desirable to complete the exchange, assignment
and transfer of the Old Notes tendered hereby.
The undersigned further represents and warrants that (i) this Exchange Offer
is being made in reliance on an interpretation by the staff of the Securities
and Exchange Commission that the New Notes may be offered for resale, resold
and otherwise transferred by the holders thereof without compliance with the
registration and prospectus delivery provisions of the Securities Act of 1933,
as amended (the "Securities Act"), (ii) the New Notes are being obtained in
the ordinary course of business of the person receiving such New Notes,
whether or not such person is the holder of the Old Notes, (iii) no such
person has any arrangement with any person to participate in the distribution
of such New Notes and (iv) no such person is an "affiliate" of the Issuer or
any of the Guarantors within the meaning of Rule 405 under the Securities Act.
If the undersigned is not a broker-dealer, the undersigned represents that it
is not engaged in, and does not intend to engage in, a distribution of the New
Notes. If the undersigned is a broker-dealer that will receive New Notes for
its own account in exchange for Old Notes that were acquired as a result of
market-making activities or other trading activities, it agrees that it will
deliver a prospectus in connection with any resale of such New Notes; however,
by so agreeing and by delivering a prospectus, the undersigned will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act.
Listed below are the Old Notes tendered by the undersigned upon the terms
and conditions set forth in the Prospectus and this Letter of Transmittal. The
undersigned understands that the minimum permitted tender is $1 million
principal amount of Old Notes and that all other tenders must be in integral
multiples of $1 million.
<PAGE>
DESCRIPTION OF OLD NOTES
- -------------------------------------------------------------------------------
NAME(S) AND
ADDRESS(ES)
OF
REGISTERED PRINCIPAL AMOUNT
HOLDER(S) CERTIFICATE AGGREGATE TENDERED (MUST BE
(PLEASE NUMBER(S)* PRINCIPAL AN
FILL IN, IF (ATTACH SEPARATE AMOUNT OF INTEGRAL MULTIPLE
BLANK) LIST IF NECESSARY) OLD NOTES OF $1 MILLION)**
- -----------------------------------------------------------
------------------
------------------
------------------
------------------
------------------
- -----------------------------------------------------------
*Need not be completed by holders tendering by book-entry transfer.
** Need not be completed by holders who wish to tender all Old Notes
listed. Unless otherwise indicated in column (4), the holder(s) will be
deemed to have tendered the entire aggregate principal amount
represented by the Old Notes listed in column (3).
NOTE: SIGNATURES MUST BE PROVIDED IN THE BOX BELOW CAPTIONED "SIGN HERE."
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
[_]CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
TO THE EXCHANGE AGENT'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER
FACILITIES AND COMPLETE THE FOLLOWING:
Name of Tendering Institution: _____________________________________________
Account Number: ____________________________________________________________
at The Depository Trust Company.
Transaction Code Number: ___________________________________________________
[_]CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE
THE FOLLOWING:
Name(s) of Registered Holder(s): ___________________________________________
Date of Execution of Notice of Guaranteed Delivery: ________________________
Name of Eligible Institution that Guaranteed Delivery: _____________________
If Delivery is by Book-Entry Transfer, provide Account Number: _____________
at The Depository Trust Company.
[_]CHECK HERE IF OLD NOTES ARE BEING DELIVERED HEREWITH
<PAGE>
TO BE COMPLETED BY ALL TENDERING HOLDERS OF OLD NOTES
PAYER'S NAME: HARRIS TRUST AND SAVINGS BANK
- -------------------------------------------------------------------------------
PART I--PLEASE PROVIDE
SUBSTITUTE YOUR TIN IN THE BOX AT TIN: _____________________
FORM W-9 RIGHT AND CERTIFY BY Social Security Number or
SIGNING AND DATING BELOW. Emplyer Identification
Number
DEPARTMENT OF THE
TREASURY INTERNAL
REVENUE SERVICE ----------------------------------------------------------
PART II--For Payees Exempt From Backup Withholding
PAYER'S REQUEST FOR TAXPAYER IDENTIFICATION NUMBER (TIN) AND CERTIFICATION
(See Instructions)
1. The number shown on this form is my correct Tax-
payer Identification Number (or I am waiting for
a number to be issued to me), and
----------------------------------------------------------
CERTIFICATION--UNDER PENALTIES OF PERJURY, I CERTIFY
THAT:
2. I am not subject to backup withholding because:
(a) I am exempt from backup withholding, or (b) I
have not been notified by the Internal Revenue
Service ("IRS") that I am subject to backup with-
holding as a result of a failure to report all
interest or dividends, or (c) the IRS has noti-
fied me that I am no longer subject to backup
withholding.
Signature: __________________________ Dated: ________
Instructions for Parts 1 and 2. Individuals (including sole proprietors) are
not exempt from backup withholding. Corporations are exempt from backup
withholding for certain payments, such as interest and dividends. For a
complete list of exempt payees, please consult your tax advisor. If you are
exempt from backup withholding, you should still complete this form to avoid
possible erroneous backup withholding. Enter your correct Taxpayer
Identification Number ("TIN") in Part 1, write "Exempt" in Part 2, and sign
and date the form. If you are a nonresident alien or a foreign entity not
subject to backup withholding, you must provide to the Issuer a completed Form
W-8, Certificate of Foreign Status.
INSTRUCTIONS FOR CERTIFICATION. YOU MUST CROSS OUT ITEM (2) IN THE BOX
MARKED "CERTIFICATION" IN THE SUBSTITUTE FORM W-9 ABOVE IF YOU HAVE BEEN
NOTIFIED BY THE IRS THAT YOU ARE CURRENTLY SUBJECT TO BACKUP WITHHOLDING
BECAUSE OF UNDERREPORTING INTEREST OR DIVIDENDS ON YOUR TAX RETURN. NOTE:
FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF
31% OF ANY PAYMENTS MADE TO YOU AS A RESULT OF THE EXCHANGE OFFER OR ON
ACCOUNT OF THE NEW NOTES.
* * *
Upon satisfaction or waiver of the conditions to the Exchange Offer, the
Issuer will accept promptly after the Expiration Date all properly tendered
Old Notes and will deliver the New Notes in exchange therefor promptly after
acceptance of such Old Notes. Interest on Old Notes accepted for exchange in
the Exchange Offer will accrue to the Expiration Date, will be added to the
New Notes as if accrued on the New Notes, and will continue to accrue without
interruption on the Expiration Date.
For purposes of the Exchange Offer, the Issuer will be deemed to have
accepted for exchange tendered Old Notes if, as and when the Issuer gives oral
or written notice to the Exchange Agent of their acceptance for exchange of
the tenders of such Old Notes. New Notes will be delivered by deposit of the
same with the Exchange Agent, which will act as agent for tendering holders
for the purpose of receiving New Notes from the Issuer and transmitting the
same to such holders.
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall survive the death or incapacity of the undersigned, and any
obligation of the undersigned hereunder shall be binding upon the heirs,
executors, administrators, trustees in bankruptcy, legal representatives,
successors and assigns of the undersigned.
<PAGE>
EXCEPT AS PROVIDED UNDER APPLICABLE SECURITIES LAWS, TENDERS OF OLD NOTES
MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE
EXPIRATION DATE UNLESS SUCH OLD NOTES HAVE BEEN ACCEPTED FOR EXCHANGE BY THE
ISSUER PRIOR THERETO.
The Issuer may, in its sole discretion, extend the period of time for which
the Exchange Offer is open, in which event the term "Expiration Date" shall
mean the latest time and date to which the Exchange Offer has been extended.
The Issuer shall make a public announcement of any such extension of the
Exchange Offer no later than 9:00 a.m. New York City time, on the next
business day after the previously scheduled Expiration Date.
In the event the Issuer should modify the consideration offered for Old
Notes in the Exchange Offer, such modified consideration would be paid to all
holders of Old Notes accepted in the Exchange Offer, including those holders
who tendered before the announcement of such modification. If the
consideration is modified, the Exchange Offer will remain open at least ten
business days from the date the Issuer gives notice, by public announcement or
otherwise, of such modification, as required by applicable law.
The undersigned understands that tenders of Old Notes pursuant to any one of
the procedures described in the Prospectus under the caption "The Exchange
Offer--Procedures for Tendering" and in the Instructions hereto will
constitute a binding agreement between the undersigned and the Issuer upon the
terms and subject to the conditions of the Exchange Offer.
Unless otherwise indicated under "Special Issuance Instructions" below,
please (i) issue the New Notes and (ii) return any Old Notes not tendered or
not exchanged, in the Name(s) of the undersigned (and, in the case of Old
Notes tendered by book-entry transfer, by credit to the account at the Book-
Entry Transfer Facility designated above). Similarly, unless otherwise
indicated under "Special Delivery Instructions" below, please mail (i) the New
Notes and (ii) any certificates for Old Notes not tendered or not exchanged
(and accompanying documents, as appropriate), to the undersigned at the
address shown in the box captioned "Description of Old Notes" above. In the
event that both "Special Issuance Instructions" and "Special Delivery
Instructions" are completed, please issue the New Notes, return any Old Notes
not tendered or not exchanged and mail any check and any certificates to the
person(s) and address(es) so indicated. The undersigned recognizes that the
Issuer has no obligation pursuant to the "Special Issuance Instructions" and
"Special Delivery Instructions" to transfer any Old Notes from the name(s) of
the registered holder(s) thereof if the Issuer does not accept for exchange
any of the Old Notes so tendered.
The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with
respect to the Exchange Offer. By completing the box entitled "Description of
Old Notes" and signing this Letter of Transmittal, the undersigned will be
deemed to have tendered the Old Notes indicated in such box, and will receive
New Notes in exchange for such Old Notes.
<PAGE>
SPECIAL ISSUANCE INSTRUCTIONS(SEE SPECIAL DELIVERY INSTRUCTIONS(SEE
INSTRUCTION 7) INSTRUCTION 7)
To be completed ONLY if (i) the To be completed ONLY if (i) the
New Notes and/or (ii) the Old New Notes and/or (ii) the Old
Notes (if any) not tendered or Notes (if any) not tendered or
not exchanged are to be issued in not exchanged are to be mailed to
the name of someone other than someone other than the under-
the undersigned, or if Old Notes signed or to the undersigned at
delivered by book-entry transfer an address other than that shown
that are not tendered or not ex- in the box captioned "Description
changed are to be returned by of Old Notes" above.
credit to an account maintained
at a Book-Entry Transfer Facility
other than as designated above.
(Check appropriate boxes)
[_] New Notes [_] Old Notes
__________________________________
(Check appropriate boxes) NAME (PLEASE PRINT)
[_] New Notes [_] Old Notes __________________________________
(ADDRESS)
__________________________________ __________________________________
NAME (PLEASE PRINT) (INCLUDE ZIP CODE)
__________________________________
(ADDRESS)
__________________________________
(INCLUDE ZIP CODE)
__________________________________
(TAXPAYER ID OR SOCIAL SECURITY
NUMBER)
<PAGE>
SIGN HERE TO BE COMPLETED BY ALL TENDERING HOLDERS (INCLUDING THOSE COMPLETING
THE NOTICE OF GUARANTEED DELIVERY)
X __________________________________________________________________________
(SIGNATURE OF OWNER)
X __________________________________________________________________________
SIGNATURE OF OWNER (IF MORE THAN ONE)
Dated: , 1997 Area Code and Telephone Number:
(Must be signed by registered holder(s) exactly as name(s) appear(s) on Old
Notes or on a security position listing or by person(s) authorized to
become registered holder(s) by Old Notes and documents transmitted
herewith. If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation, agent or other person acting in
a fiduciary or representative capacity, please provide the following
information and see Instruction 5.)
____________________________________________________________________________
NAME(S) (PLEASE PRINT)
____________________________________________________________________________
____________________________________________________________________________
CAPACITY (FULL TITLE)
____________________________________________________________________________
(ADDRESS)
____________________________________________________________________________
(INCLUDE ZIP CODE)
__________________________________ __________________________________
(AREA CODE AND TELEPHONE NUMBER) (TAXPAYER ID OR SOCIAL SECURITY
NUMBER(S))
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED--SEE INSTRUCTIONS 1 AND 5)
X __________________________________________________________________________
(AUTHORIZED SIGNATURE)
____________________________________________________________________________
(PRINT NAME)
__________________________________ __________________________________
(TITLE) (NAME OF FIRM)
____________________________________________________________________________
(ADDRESS AND TELEPHONE NUMBER OF FIRM)
Dated: _____________________, 1997
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all signatures
on this Letter of Transmittal must be guaranteed by a firm which is a member
of a registered national securities exchange or of the National Association of
Securities Dealers, Inc., or by a commercial bank or trust company having an
office or correspondent in the United States (an "Eligible Institution").
Signatures on this Letter of Transmittal need not be guaranteed if (a) this
Letter of Transmittal is signed by the registered holder(s) of the Old Notes
tendered herewith (which term, for purposes of this Letter of Transmittal,
shall include any participant in one of the Book-Entry Transfer Facilities
whose name appears on a security position listing as the owner of the Old
Notes tendered herewith) and such holder(s) have not completed either the box
captioned "Special Issuance Instructions" or the box captioned "Special
Delivery Instructions" on this Letter of Transmittal or (b) such Old Notes are
tendered for the account of an Eligible Institution. See Instruction 5.
2. DELIVERY OF THIS LETTER OF TRANSMITTAL AND OLD NOTES. This Letter of
Transmittal is to be used if (i) Old Notes are to be forwarded to the Exchange
Agent herewith, (ii) delivery of Old Notes is to be made by book-entry
transfer to the Exchange Agent's account at one of the Book-Entry Transfer
Facilities pursuant to the procedures set forth in the Prospectus under the
caption "The Exchange Offer--Procedures for Tendering" or (iii) the guaranteed
delivery procedures described under the same caption and under "--Guaranteed
Delivery Procedures" in the Prospectus are to be utilized.
All physically delivered Old Notes, or a confirmation of a book-entry
transfer into the Exchange Agent's account at one of the Book-Entry Transfer
Facilities of all Old Notes tendered herewith, as well as a properly completed
and duly executed Letter of Transmittal (or facsimile thereof) and all other
documents required by this Letter of Transmittal, must be received by the
Exchange Agent at its address set forth on the front page of this Letter of
Transmittal prior to the Expiration Date.
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available, (ii) who cannot deliver their Old Notes, this Letter of
Transmittal and all other documents required hereby to the Exchange Agent
prior to the Expiration Date, or (iii) who cannot complete the procedure for
book-entry transfer on a timely basis, must tender their Old Notes pursuant to
the guaranteed delivery procedures set forth in the Prospectus. Pursuant to
such procedures: (a) such tender must be made by or through an Eligible
Institution, (b) a properly completed and duly executed Notice of Guaranteed
Delivery setting forth the name and address of the holder of Old Notes, the
certificate number(s) of such Old Notes and the principal amount of Old Notes
to be delivered, stating that tender is being made thereby and guaranteeing
that the certificate(s) representing the Old Notes, the Letter of Transmittal
and all other documents required thereby will be deposited by the Eligible
Institution with the Exchange Agent within three business days after the
Expiration Date and (c) all physically delivered Old Notes in proper form for
transfer (or a confirmation of a book-entry transfer into the Exchange Agent's
account at one of the Book-Entry Transfer Facilities of all Old Notes so
delivered), together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) and all other documents required by this
Letter of Transmittal, must be received by the Exchange Agent within three
business days after the Expiration Date, all as provided in the Prospectus
under the caption "The Exchange Offer--Guaranteed Delivery Procedures".
THE METHOD OF DELIVERY OF OLD NOTES AND ALL OTHER REQUIRED DOCUMENTS IS AT
THE OPTION AND RISK OF THE TENDERING HOLDER. IF OLD NOTES ARE SENT BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED, AND ENOUGH TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted. By
executing this Letter of Transmittal (or a facsimile hereof), the tendering
holder waives any right to receive any notice of the acceptance for exchange
of the Old Notes.
3. INADEQUATE SPACE. If the space provided is inadequate, the aggregate
principal amount of the Old Notes being tendered and the certificate numbers
(if available) must be listed on a separate schedule signed by the tendering
holder and attached hereto.
4. PARTIAL TENDERS. Tenders of the Old Notes will be accepted only in integral
multiples of $1 million. If tenders are to be made with respect to less than
the entire principal amount of any Old Notes, the holder must fill in the
principal amount of Old Notes which are tendered in column (4) of the box
captioned "Description of Old Notes." The entire principal amount of Old Notes
delivered to the Exchange Agent will be deemed to have been tendered unless
otherwise indicated in Column (4). In the case of partial tenders, Old Notes
in fully registered form for the principal amount of Old Notes not tendered
will be sent to the person(s) signing this Letter of Transmittal, unless
otherwise indicated in the appropriate box on this Letter of Transmittal,
promptly after the Expiration Date.
<PAGE>
5. SIGNATURES ON LETTER OF TRANSMITTAL; BOND POWERS AND ENDORSEMENTS. The
signature(s) of the registered holder(s) on this Letter of Transmittal must
correspond with the name(s) as written on the face of the Old Notes, without
alteration, enlargement or any change whatsoever.
If any of the Old Notes are held of record by two or more joint owners, all
such owners must sign this Letter of Transmittal. If any of the Old Notes are
registered in different names, it will be necessary to complete, sign and
submit as many separate copies of this Letter of Transmittal as there are
names in which Old Notes are held.
If this Letter of Transmittal is signed by the registered holder(s) of the
Old Notes, no endorsements of Old Notes or separate bond powers are required.
If, however, the Interest Payments are to be made, the New Notes are to be
issued, or Old Notes not tendered or not exchanged are to be issued or
returned in the name(s) of any person(s) or address(es) other than those of
the registered holder(s), then endorsements of certificates transmitted hereby
and separate bond powers are required, and signatures on any such Old Notes or
bond powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Old Notes, such Old Notes must be endorsed or
accompanied by appropriate bond powers, in either case signed exactly as the
name(s) of the registered holder(s) on such Old Notes. Signature(s) on any
such Old Notes or bond powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal or any Old Notes or bond powers are signed by
a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation, agent or other person acting in a fiduciary or representative
capacity, such person must so indicate when signing and proper evidence,
satisfactory to the Issuer, of the authority of such person to so act must be
submitted with this Letter of Transmittal (unless waived by the Issuer).
6. TRANSFER TAXES. The Issuer will pay or cause to be paid security transfer
taxes, if any, with respect to the exchange and transfer of Old Notes pursuant
to the Exchange Offer. If, however, New Notes are to be issued to, or Old
Notes not tendered or not exchanged are to be delivered to or are to be issued
or registered in the name of, any person other than the registered holder(s),
or if tendered Old Notes are to be registered in the name of any person other
than the transferor of Old Notes to the Issuer or its order pursuant to the
Exchange Offer, then the amount of any such security transfer taxes (whether
imposed on the registered holder(s), such other person or otherwise) will be
payable by the tendering holder. If satisfactory evidence of the payment of
such tax, or exemption therefrom, is not submitted with this Letter of
Transmittal, the amount of such transfer taxes will be billed directly to such
tendering holder.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Old Notes listed in this Letter of
Transmittal.
7. SPECIAL ISSUANCE AND DELIVERY INSTRUCTION. If any of (i) the New Notes or
(ii) any Old Notes not tendered or not exchanged are to be issued or returned
to or in the name of a person other than the person(s) signing this Letter of
Transmittal, or if any of (i) the New Notes or (ii) any Old Notes not tendered
or not exchanged, are to be mailed to a person other than the person(s)
signing this Letter of Transmittal at an address other than that shown above,
the applicable box(es) on this Letter of Transmittal should be completed.
Holders tendering Old Notes by book-entry transfer may request that the Old
Notes not tendered or not exchanged be credited to an account maintained at
one of the Book-Entry Transfer Facilities. If no instructions are given, such
Old Notes not tendered will be returned to the name and address of the person
signing this Letter of Transmittal, or, at the Issuer's option, by crediting
the account of the Book-Entry Transfer Facility so designated.
8. SUBSTITUTE FORM W-9. Federal income tax law generally requires that a
tendering holder whose Old Notes are accepted for payment provide the Exchange
Agent (as payor) with his correct TIN, which, in the case of a holder who is
an individual, is his social security number. If the Exchange Agent is not
provided with the correct TIN or an adequate basis for an exemption, such
holder may be subject to a penalty imposed by the Internal Revenue Service. In
addition, backup withholding at the rate of 31% may be imposed upon any
payments resulting from the Exchange Offer or made on account of the New
Notes. If withholding results in an overpayment of taxes, a holder may be
eligible for a refund. In order to avoid such backup withholding, each
tendering holder must provide the Exchange Agent with such holder's correct
TIN by completing the Substitute Form W-9 (the "Form") set forth in this
Letter of Transmittal. Certain holders (including, among others, all
corporations and certain foreign individuals) are not subject to these backup
withholding and reporting requirements. To prevent possible erroneous backup
withholding, an exempt holder must enter its correct TIN in Part 1 of the
Form, write "Exempt" in Part 2 of such Form, and sign and date the Form. In
order for a nonresident alien or foreign entity to qualify as exempt, such
person must submit a completed Form W-8, entitled "Certificate of Foreign
Status." Such Forms W-8 may be obtained from the Exchange Agent. If a holder
does not have a TIN, such holder should write "Applied For" in the space for
the TIN; if notice of the TIN assigned to such holder is not received by the
Exchange Agent within 60 days, backup withholding will begin and continue
until the Exchange Agent is in receipt of notice of such TIN. Note: Writing
"Applied For" on the Form means that a holder has already applied for a TIN or
that a holder intends to apply for a TIN.
<PAGE>
Failure to complete the Substitute Form W-9 will not, by itself, cause Old
Notes to be deemed invalidly tendered, but may require withholding at the rate
of 31% to be imposed on the amount of any payments made to the tendering
holder as a result of the Exchange Offer or on account of the New Notes.
Backup withholding is not an additional federal income tax. Rather, the
federal income tax liability of a person subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an
overpayment of taxes, a refund may be obtained.
9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for
assistance or additional copies of the Prospectus and this Letter of
Transmittal may be directed to the Exchange Agent at the address or telephone
number set forth in this Letter of Transmittal.
10. SATISFACTION AND WAIVER OF CONDITIONS. All questions as to the validity,
form, eligibility (including time of receipt), acceptance for exchange or
withdrawal of any tender of Old Notes pursuant to any of the procedures
described herein or in the Prospectus will be determined by the Issuer in its
sole discretion, which determination shall be final and binding on all
parties. The Issuer reserves the absolute right to reject any and all Old
Notes not properly tendered or any Old Notes the Issuer's acceptance for
exchange of which may, in the opinion of the Issuer or its counsel, be
unlawful. The Issuer also reserves the absolute right to amend, waive or
modify any of the conditions of the Exchange Offer as set forth in the
Prospectus under the caption "The Exchange Offer--Conditions," or to waive any
defect or irregularity in any tender with respect to any particular Old Notes
or any particular holder. The interpretation of the terms and conditions of
the Exchange Offer (including this Letter of Transmittal and the Instructions
hereto) by the Issuer shall be final and binding on all parties. Unless waived
by the Issuer, any defects or irregularities in connection with the tender of
Old Notes must be cured within such time as the Issuer shall determine.
Neither the Issuer, the Exchange Agent nor any other person will be under any
duty to give notification of any defects or irregularities with respect to
tenders of Old Notes, nor shall any of them incur any liability for failure to
give any such modification.
11. MUTILATED, LOST, STOLEN OR DESTROYED OLD NOTES. Any tendering holder whose
Old Notes have been mutilated, lost, stolen or destroyed should contact the
Exchange Agent at its address set forth on the front page of this Letter of
Transmittal for further instructions.
12. WITHDRAWAL. Except as otherwise provided below, tenders of Old Notes
pursuant to the Exchange Offer are irrevocable and no withdrawal rights are
being afforded to holders of Old Notes. EXCEPT AS PROVIDED UNDER APPLICABLE
SECURITIES LAWS, TENDERS OF OLD NOTES MAY BE WITHDRAWN AT ANY TIME PRIOR TO
5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE UNLESS SUCH OLD NOTES
HAVE BEEN ACCEPTED FOR EXCHANGE PRIOR THERETO. To be effective with respect to
the tender of Old Notes, a notice of withdrawal must (i) be given in writing
or by facsimile transmission and be timely received by the Exchange Agent at
its address set forth on the front page of this Letter of Transmittal before
acceptance by the of the Old Notes relating to such withdrawal, (ii) specify
the name(s) of the person(s) who tendered the Old Notes and the principal
amount of Old Notes to be withdrawn, (iii) where Old Notes have been delivered
or otherwise identified to the Exchange Agent, specify the name(s) in which
such Old Notes are registered (if different from the person(s) tendering the
Old Notes) and the certificate numbers of the particular Old Notes to be
withdrawn, (iv) if Old Notes have been tendered pursuant to the procedure for
book-entry transfer, specify the name, account number and Book-Entry Transfer
Facility to be credited with the withdrawn Old Notes, and (v) be signed by the
holder of Old Notes in the same manner as the original signature on this
Letter of Transmittal (including any required signature guarantees) or be
accompanied by evidence satisfactory to the Exchange Agent that the person
withdrawing the tender has succeeded to beneficial ownership of the Old Notes
prior to the physical release of Old Notes to be withdrawn.
Withdrawals of tenders of Old Notes may not be rescinded, and any Old Notes
withdrawn will thereafter be deemed not validly tendered for purposes of the
Exchange Offer; provided, however, that withdrawn Old Notes may be tendered by
following one of the procedures described in the Prospectus under the caption
"The Exchange Offer-- Procedures for Tendering" at any time prior to the
Expiration Date.
The Exchange Agent for the Exchange Offer is:
HARRIS TRUST AND SAVINGS BANK
By Mail, By Hand or Overnight By Facsimile:
Delivery:
(212) 701-7636
Harris Trust and Savings Bank
c/o Harris Trust Company of New Confirmation and Information:
York
77 Water Street, 4th Floor (212) 701-7649
New York, NY 10005
Attention: Reorganization
Department
