SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended May 31, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-9676
CENTURY COMMUNICATIONS CORP.
(Exact name of registrant as specified in its charter)
New Jersey 06-1158179
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
50 Locust Avenue
New Canaan, Connecticut 06840
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 972-2000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Class A Common
Stock, par value $.01 per share
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes x No.
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-
K or any amendment to this Form 10-K. x
As of August 21, 1995, there were 28,217,276 shares of Class
A Common Stock outstanding and 45,406,115 shares of Class B Common Stock
outstanding. The aggregate market value of the Class A Common Stock held by
non-affiliates of the Company, based upon the last reported sale price of the
Class A Common Stock on The Nasdaq Stock Market on August 21, 1995 of $10.00
per share, was $263,948,900.
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the Company's Proxy Statement to be filed with the
Commission pursuant to Rule 14a-6 under the Securities Exchange Act of 1934
in connection with the Company's 1995 Annual Meeting of Shareholders are
incorporated by reference in Part III, Items 10-13 of this Annual Report on
Form 10-K.
PART 1
ITEM 1. BUSINESS.
GENERAL
The Company was incorporated in New Jersey on December 5, 1985 as the
holding company for a corporation of the same name incorporated in Texas on
June 12, 1973 ("Century-Texas"). As used in this Annual Report on Form 10-K,
the term "Company" includes Century Communications Corp., a New Jersey
corporation, and its subsidiaries. The Company is engaged in the ownership
and operation of cable television systems, wireless telephone systems and
radio stations.
The Company owns and operates 65 cable television systems in 25 states
and Puerto Rico. At May 31, 1995, the Company's cable systems passed
approximately 1,790,000 homes and served a total of approximately 1,100,000
primary basic subscribers.
The Company is engaged in the wireless telephone business through its
subsidiary, Centennial Cellular Corp. ("Centennial Cellular"), in which the
Company has a 32.7% common equity interest (29.4% on a diluted basis).
Centennial Cellular acquires, operates and invests in cellular telephone
systems throughout the United States and was recently the successful bidder
for, and has acquired, one of two Metropolitan Trading Area ("MTA") licenses
to provide broadband personal communications services ("PCS") in the
Commonwealth of Puerto Rico and the U.S. Virgin Islands. See "Business -
Wireless Communications - Personal Communications Services; Alternative
Access." Centennial Cellular also owns and operates paging systems and
two-way mobile radio systems in two markets in which it also owns and
operates the non-wireline cellular telephone system and in which the Company
owns and operates a cable television system. As of August 21, 1995,
Centennial Cellular's current wireless telephone interests represent
approximately 9.98 million Net Pops (as defined below). Approximately 6.38
million of these Net Pops are represented by Centennial Cellular's current
cellular telephone interests. The balance of approximately 3.6 million Net
Pops represents Centennial Cellular's interest in the PCS license in the
Commonwealth of Puerto Rico and the U.S. Virgin Islands described above.
The Company has acquired interests in complementary businesses in the
developing pay television industry in Australia. The interests include
investments in entities which have the following: (i) ownership of one of
two satellite subscription broadcast licenses granted by the government of
Australia; (ii) ownership of programming arrangements and distribution
licenses for the retail distribution, primarily through multichannel
multipoint distribution systems (MMDS), of pay television services in areas
covering approximately 717,000 households on the east coast of Australia and
in Tasmania; (iii) a long-term infrastructure agreement through which the
Company will distribute its pay television services as well as participate in
the retail distribution of such services to subscribers in the six largest
capital cities of Australia covering more than 4 million households; and (iv)
ownership of a 25% interest in a joint venture to develop and own programming
which will be distributed through a variety of technologies, including owned
and third party distribution facilities, especially through a cable system
which is being developed. See "Business - Cable Television - Australian
Investment".
For certain industry segment information regarding the Company's cable
television and cellular telephone businesses, see Note 17 of Notes to
Consolidated Financial Statements.
CABLE TELEVISION
Cable television is a service that delivers a variety of channels of
television programming, primarily video entertainment and news, as well as
information, original programming and FM radio signals, to subscribers who
pay a monthly fee for the service.
The primary level of cable television service is commonly referred to as
"basic service" and must be taken by all subscribers. The content of basic
service varies widely from franchise to franchise but, pursuant to the Cable
Television Consumer Protection and Competition Act of 1992 (the "1992 Cable
Act"), now must include local television signals and public, governmental and
educational access channels, and may also include certain satellite delivered
cable programming channels. One or more expanded tiers of service may also
be offered to subscribers. These expanded tiers of service usually include
additional satellite delivered cable programming channels and are available
for additional monthly fees. Basic service and expanded cable programming
tiers are subject to the rate regulation provisions of the 1992 Cable Act.
However, cable programming tiers consisting of channels new to a system are
not rate regulated. See "Business-Regulation and Legislation-Cable
Television - Rate Regulation."
Most cable television systems also offer premium services, such as Home
Box Office, Showtime, The Movie Channel, Cinemax and The Disney Channel, on a
per channel basis for an extra monthly fee and may also offer sporting
events, concerts and other entertainment programming as a premium service on
a per program basis. Satellite delivered cable programming channels may also
be offered as a premium service on a per channel basis or as part of a
package of premium services. Per channel and per program service are not
subject to the rate regulation provisions of the 1992 Cable Act. See
"Business-Regulation and Legislation-Cable Television-Rate Regulation."
Development of Cable Television Systems
The following table indicates the growth of the Company's cable
television systems since May 31, 1991:
May 31,
1995 1994 1993 1992 1991
Homes passed by cable 1,790,000 1,675,000 1,650,900 1,650,000 1,600,000
Primary basic subscribers 1,100,000 945,000 934,000 907,000 884,000
Primary basic subscribers
as a percentage of homes
passed 61.4% 56.4% 56.6% 55.0% 55.3%
The growth in the number of subscribers that the Company experienced
during the fiscal year ended May 31, 1995 is attributable to the acquisition
of cable television systems, the expansion of existing cable television
systems and increased marketing efforts by the Company.
Management's estimate of homes passed in franchise areas is based on
local sources believed to be reliable, such as city directories, chambers of
commerce, public utilities, estimates of public officials and, where
available, actual house counts.
The Cable Television Systems
At May 31, 1995, all of the Company's cable television systems were
wholly-owned by the Company except for the systems serving Colorado Springs,
Colorado, Glendora, California and greater San Juan, Puerto Rico, which were
owned 50% by the Company and which, at May 31, 1995, served a total of
approximately 241,000 primary basic subscribers. On July 31, 1995, the
Company exchanged 50% of its interest in the cable television systems serving
Brunswick, Georgia, Owensboro, Kentucky and Wauwatosa, Wisconsin, which serve
an aggregate of approximately 100,000 primary basic subscribers, for a 50%
interest in the Colorado Springs, Colorado cable television system, which
also serves approximately 100,000 primary basic subscribers. As a result of
this transaction, the Company now owns 100% of the Colorado Springs cable
television system and a 50% interest in the cable television systems serving
Brunswick, Georgia, Owensboro, Kentucky and Wauwatosa, Wisconsin.
On February 26, 1993, the Company and Citizens Utilities (as hereinafter
defined) entered into an agreement to acquire the cable television systems
serving the cities of Chino and Chino Hills, California and certain
unincorporated areas of Orange, Riverside and San Bernardino Counties in
California for approximately $40,500,000, subject to adjustment. At June 30,
1994, such cable systems passed approximately 36,600 homes and served
approximately 19,200 primary basic subscribers. The obligation of the
Company and Citizens Utilities to consummate this transaction is subject to
certain closing conditions, including the approval of the relevant franchise
authorities and other regulatory approvals. The Company anticipates
completing this acquisition in the second quarter of fiscal 1996.
On September 30, 1994, the Company and Citizens Utilities acquired the
cable television systems serving the cities of Glendora, Monrovia, La Verne,
San Dimas and Bradbury, California and certain unincorporated areas of Los
Angeles County, California for approximately $51,700,000. At May 31, 1995,
such cable television systems served an aggregate of approximately 28,000
primary basic subscribers. In connection with the Chino and Glendora
acquisitions, the Company and Citizens Utilities have formed a joint venture
that will own and operate the Chino and Glendora systems.
On November 28, 1994, the Company entered into an agreement to acquire
the cable television systems serving Anaheim, Hermosa Beach/Manhattan Beach,
Fairfield and Rohnert Park/Yountville, California, for an aggregate purchase
price of $286,000,000, subject to adjustment, payable in cash. At September
30, 1994, such cable television systems served an aggregate of approximately
135,000 primary basic subscribers. The obligation of the Company to
consummate this transaction is subject to certain closing conditions,
including the approval by the relevant franchise authorities of both the
transfer and extension of the relevant franchises and other regulatory
approvals. The Company anticipates completing this acquisition by December
31, 1995.
On March 1, 1995, the Company acquired cable television systems located
in California, Colorado, Idaho, Montana and Washington for an aggregate
purchase price of $99,805,000, subject to adjustment, payable by $55,930,000
in cash and the balance in approximately 3,581,632 registered shares of Class
A Common Stock of the Company (valued at $12.25 per share, subject to post-
closing adjustment based on the price performance of the Class A Common
Stock). At May 31, 1995, such cable television systems served an aggregate of
approximately 52,000 primary basic subscribers.
Subscriber Services and Rates
Like other cable television operators, the Company offers to its
subscribers multiple channels of television programming, primarily video
entertainment and news, as well as information, Company-produced programming
and FM radio programming. Services vary from system to system because of
differences in channel capacity and viewer interests.
The Company's cable television revenues are derived principally from
monthly subscription fees for cable television service. Rates to subscribers
vary from market to market and in accordance with the type of service
selected. Effective September 1, 1993, the Company revised its rate
structure and the packaging of programming services it offers to subscribers.
In virtually all of the Company's cable television systems, basic service was
expanded to include many satellite delivered cable programming channels
previously offered on expanded tiers of service, while certain selected
satellite delivered cable programming channels are offered as a premium
service on a per channel basis and as part of a package of premium services.
Further adjustments to the Company's rates were made pursuant to the FCC's
November 10, 1994 revision to its rate formula. A number of franchising
authorities have become certified to regulate the basic service rates charged
by Company systems. Some of these franchising authorities have issued
decisions ordering the Company to reduce its rates and to refund past
overcharges to subscribers. The Company has appealed several of these
decisions to the Federal Communications Commission (the "FCC"). Most of
these appeals remain pending.
As noted above, on September 1, 1993, the Company, as part of its rate
adjustments, implemented a plan whereby subscribers are given the choice of
buying certain satellite delivered programming services individually on a per
channel basis or as part of a package of premium services at a discounted
price. The FCC, in its reconsideration of the original rate regulations,
stated that it was going to review the validity of such a la carte service
offerings, and it empowered franchising authorities to do the same. A la
carte packages which are determined to be evasions of rate regulation rather
than true enhancements of subscriber choice will be treated as regulated
tiers, and cable operators engaging in such practices may be subject to
further rate adjustments and refund orders. As part of the November 10, 1994
revisions to its rate regulations, the FCC decided that discounted packages
of non-premium a la carte services will be subject to rate regulation in the
future. However, in applying this new policy to a la carte packages such as
those already offered by the Company and numerous other cable operators, the
FCC decided that where only a few services were moved from regulated tiers to
the a la carte package, the package will be treated as if it were a tier of
new program services and thus not subject to rate regulation. Approximately
84% of the Company's primary basic subscribers have a la carte offerings
which conform to this structure, and thus are not subject to rate regulation.
Approximately 16% of the Company's primary basic subscribers have expanded a
la carte service offerings, which offerings as such have not been approved by
the FCC, and are subject to appeal.
In addition to monthly subscription fees, other potential sources of
revenue for cable operators are the sale of advertising time on locally
originated and satellite delivered programming and revenues from services
which offer merchandise for sale to subscribers. Such services compensate
cable television systems based upon a percentage of their sales revenue.
None of such potential sources of revenue is subject to rate regulation under
the 1992 Cable Act.
Most of the Company's systems have a capacity of at least 35 channels
and all are fully built, except for upgrading, rebuilding and extension of
certain systems and continuing construction of cable plant in certain systems
to accommodate growth within the Company's franchise areas. As of May 31,
1995, all or certain portions of 33 of the Company's systems, serving an
aggregate of approximately 807,700 primary basic subscribers, were equipped
with addressable decoding converters, which permit the Company to adjust
service received by a subscriber without making a service call and serve as a
computerized method of controlling the signals decoded and received by
subscribers. Such converters also enable the Company to sell optional
pay-per-view programming.
Franchises
The Company's cable television systems operate pursuant to non-exclusive
franchises issued by governmental authorities. In many cases, a system
passes homes in more than one governmental subdivision and, occasionally,
more than one state. Under the terms of most of the Company's franchises, a
franchise fee (ranging up to 5% of revenues of the cable system) is payable
to the governmental authority. See "Business-Regulation and Legislation-Cable
Television-Federal Legislation and FCC Regulation." As of May 31, 1995, the
Company held 343 franchises with unexpired terms ranging from under one year
to over fifteen years. These franchises typically contain many conditions,
such as standards of service, including number of channels and provision of
free service to schools and certain other public institutions, time
requirements on commencement and completion of construction, and the
maintenance of insurance and indemnity bonds. State and local franchises are
in certain respects subject to the requirements of federal regulation under
the Cable Communications Policy Act of 1984 (the "1984 Cable Act") and the
1992 Cable Act. See "Business-Regulation and Legislation-Cable Television-
Federal Legislation and FCC Regulation."
Most of the Company's franchises can be terminated prior to their stated
expiration by the franchising authority, after due process, for breach of
material provisions of the franchise. All franchises are subject to renewal.
To date, the Company's franchises have generally been renewed or extended at
or effective upon their stated expirations, generally on modified but not
unduly burdensome terms, although as a condition to the renewal of a
franchise, some franchising authorities have required improved facilities,
increased channel capacity or enhanced services.
The franchise for the City of Santa Monica, California, serving
approximately 22,000 primary basic subscribers as of May 31, 1995, was
terminated by the City of Santa Monica effective December 13, 1987, due to
alleged violations of the local ordinance with respect to the transfer of the
franchise to the Company prior to approval from the local authority. The
relevant local authority has not yet enforced this termination and the
Company continues to operate this system. The Company and the relevant local
authority have agreed that neither party has waived its legal rights as a
result of the local authority's failure to enforce the termination of the
franchise. The parties are currently negotiating the terms of a new
franchise agreement and the Company anticipates concluding an acceptable
franchise agreement with the local authority. If, however, such an agreement
is not concluded and the local authority seeks to enforce the termination,
the Company intends to vigorously oppose such action and termination in an
appropriate forum based upon its rights under applicable law.
Programming Suppliers
The Company provides cable network programming to its subscribers
pursuant to contracts with program suppliers. The Company generally pays
program suppliers a monthly fee per subscriber. The costs to the Company to
provide cable programming have increased in recent years and are expected to
continue to increase as a result of additional programming being provided to
subscribers, increased consumer identification with certain program suppliers
permitting such suppliers to charge increased fees, inflationary increases
and other factors. Pursuant to certain provisions of the 1992 Cable Act,
commencing in October 1993, the Company can be required to pay fees or other
consideration to broadcast stations for permission to retransmit over the air
broadcast signals for which the Company had previously not been charged a
fee. See "Business-Regulation and Legislation- Cable Television-
Retransmission Consent and Must Carry Requirements."
Competition
Cable television systems generally compete for viewer attention with the
direct reception of broadcast television signals by the viewer's own antenna.
The extent of such competition is dependent upon the number and quality of
signals available and the alternative services offered by the cable system.
A cable system also competes to varying degrees with other communications and
entertainment media, including movies, theater and VCRs, and other leisure
time activities.
Other technologies supply services that compete with certain services
provided by cable television. These technologies include direct broadcast
satellite to home transmission (DBS) (whereby signals are transmitted by
satellite to receiving facilities located on the premises of subscribers);
"wireless cable" including multichannel multipoint distribution systems
(MMDS) and similar technologies (which use low-power microwave frequencies to
transmit programming over the air to subscribers); satellite master antenna
systems (SMATV) (which use a satellite earth station to receive signals and
then transmit such signals by cable to residences within a given building or
complex); television translator stations (which rebroadcast television
broadcast signals at different frequencies at lower power to improve
reception); and "low-power" television stations (LPTV), which have begun
operations in certain communities, and may increase the number of free and
subscription broadcast television signals in many areas.
Homeowners and apartment building owners also have the option to
purchase earth stations, which allow the direct reception of satellite pay
television and some expanded basic signals without interconnecting with a
cable system.
All of the foregoing services and technologies have the capacity to
deliver multiple channels of video programming and other information to
subscribing homes and thus to compete directly with the cable services
provided by the Company. The 1992 Cable Act and FCC regulations prohibit
cable operators from owning and operating certain competing technologies,
such as SMATV and MMDS, within their franchise service areas. As these
technologies and services continue to develop, and because of recent measures
by the federal government encouraging such development, as well as the 1992
Cable Act, there is expected to be increased competition adversely affecting
the business of the Company. See "Business-Regulation and Legislation-Cable
Television-Federal Legislation and FCC Regulation."
Because the Company's systems are operated under non-exclusive
franchises, other applicants may obtain franchises in areas where the Company
currently has franchises. Franchising authorities may be more likely to
grant a second franchise for an area if they anticipate that increased
competition will have the effect of reducing rates charged or moderating
increases in rates and improving services offered by the franchise holders.
In addition, franchising authorities themselves may seek to operate cable
systems in competition with private cable operators.
Applications for competing franchises may be made at any time. It is
possible that well-financed businesses, including businesses from outside the
cable industry (such as the public utilities which own the facilities to
which the cable is attached), may become competitors for franchises or
providers of competing services. The FCC has substantially relaxed its
prohibition against the national television networks owning cable systems and
telephone companies may extend their entrance into the cable industry as
present governmental restrictions on their participation are lifted, as more
fully discussed below.
The 1984 Cable Act and FCC rules prohibit telephone companies from
providing video programming directly to subscribers in their telephone
service areas. This restriction has been held to be unconstitutional by a
number of Federal District Courts and Courts of Appeals, and the issue is now
before the U.S. Supreme Court.
Furthermore, in July 1992, the FCC modified its rules to enable local
telephone companies to provide common carrier "video dialtone" service within
their telephone service areas. This video dialtone service would permit
telephone companies to provide transmission of video programming for others
in conjunction with additional non-programming services to be provided by the
telephone company. Such service by the telephone company, which is being
actively encouraged by the FCC, would potentially provide access for
consumers to a wide variety of services, including video programming,
videotext, videophone and other advanced telecommunications services in
competition with cable television. The U.S. Court of Appeals affirmed the
FCC's earlier conclusion that no local franchise is required by either the
telephone company in providing video dialtone service or by video programmers
using this proposed service, but the FCC's current policy would be to require
telephone companies to obtain a local franchise if the telephone company
wishes to provide video programming directly to subscribers, rather than
using the video dialtone approach. In July 1995, the FCC issued an initial
authorization to Pacific Bell to provide video dialtone service in certain
parts of the State of California, including parts of California where certain
of the Company's cable television systems are located.
Telecommunications legislation has passed in the U.S. House of
Representatives and the Senate and could be enacted into law this year. This
legislation would repeal the statutory restriction on telephone company/cable
television cross-ownership to permit telephone companies to provide video
programming directly to subscribers in their telephone service areas, subject
to certain regulatory provisions. In view of the various legislative,
judicial and regulatory actions directed toward permitting telephone company
entry into cable television, the Company anticipates that it will face
increased competition from telephone companies which generally have
significantly greater financial resources than the Company.
Australian Investment
During fiscal 1994 and 1995, the Company has invested through a wholly-
owned subsidiary approximately $92 million in East Coast Pay Television Pty.
Limited, an Australian company ("ECT"), which is pursuing opportunities to
own, operate and invest in pay television services in Australia (which is an
emerging pay television market). Such investment was effected through the
acquisition by the Company of convertible debentures and ordinary shares of
ECT representing a 76.2% economic interest in ECT. In conjunction with such
interest, the Company has the right to designate five of the seven directors
of ECT and to approve certain corporate transactions. The Company has also
entered into management agreements with ECT and has agreed to fund up to an
aggregate of $20 million for certain costs and working capital requirements.
ECT, through a wholly-owned subsidiary, owns Satellite Subscription
Broadcast License A ("Satellite License A"), one of only three licenses which
may be granted by Australian authorities prior to July 1997 for direct-to-
home ("DTH") satellite television broadcasting and which allows ECT to offer
four channels of programming via DTH satellite. Australis Media Limited
("Australis"), another pay television company in Australia, owns Satellite
Subscription Broadcast License B, the second of the three licenses currently
available in Australia for DTH satellite television broadcasting, which
allows it to offer four channels of programming via DTH satellite. ECT and
Australis have entered into agreements pursuant to which ECT will offer its
four channels of programming (the "License A Package") for distribution
individually as a single four channel package or as part of Australis' multi-
channel basic programming package known as the GALAXY Package. The
programming is distributed via DTH satellite, microwave multi-point
distribution system ("MDS") and other transmission technologies. The GALAXY
Package will be distributed by Australis through its distribution facilities
in the six largest capital cities in Australia and in regional Western
Australia and by its three franchisees, including ECT (the "Franchisees"), to
substantially all of the remaining population of Australia. ECT receives a
per subscriber fee from Australis for the License A Package.
The distribution arrangements are subject to an agreement with
Australis, which is subject to regulatory review and approval, pursuant to
which ECT has the right to receive 25% of Australis' adjusted net cash flow
from broadcasting services and operations. The 25% interest was calculated
by taking into account the relationship between the aggregate capital
originally invested or committed by each of Australis and ECT to their own
pay television businesses in Australia. Such percentage may be adjusted
downward depending upon whether ECT elects to fund a specified portion of any
funds expended by Australis to establish transmission, subscriber management,
customer service and certain other facilities as provided for in the
agreement. Notification has been received from one of the regulatory
authorities that certain aspects of this agreement raise concerns.
Discussions regarding such concerns are continuing and no assurance can be
given as to the ultimate outcome.
ECT, Australis and its other two Franchisees have acquired control of
substantially all of the currently issued licenses which can be used for
transmission of pay television programming via MDS in Australia. ECT owns or
controls all of the currently issued licenses which entitle it to transmit
pay television programming via MDS in most of Coastal New South Wales and all
of Tasmania (including Wollongong, Hobart and Newcastle, Australia and
surrounding areas) (the "ECT Franchise Areas") and has entered into a
franchise agreement with Australis pursuant to which it has the exclusive
right (and is obligated) for at least a ten year period (with an option to
renew for an additional ten years) to deliver in each of the ECT Franchise
Areas any subscription broadcast service supplied by Australis, including the
GALAXY Package. As of December 1994, the ECT Franchise Areas contained
approximately 717,000 households or approximately 13% of all Australian
households.
Programming for the License A Package is provided by XYZ Entertainment
Pty. Limited ("XYZ"), a joint venture in which the Company holds a 25%
interest. The Company's 25% interest in XYZ is derived through the Company's
joint venture with United International Holdings, Inc., ("UIH"), a leading
international provider of pay television services which holds interests in
the other two Franchisees of Australis. The above noted struc ture is
purusant to a series of agreements entered into by the Company, UIH and
FOXTEL. Closing of the agreements is subject to certain conditions. There
is no assurance that such conditions will be met. Failing such closing, the
Company will retain a 50% interest in XYZ, with UIH remaining as the other
50% holder. Programming provided by XYZ includes Discovery Australia, a
documentary, adventure, history, and lifestyle channel; Red, a music video
channel; Max/Classic Max, a children's and family channel; and Arena, a
general entertainment channel.
ECT has entered into a long-term agreement with FOXTEL pursuant to which
FOXTEL has agreed to distribute the License A Package as well as two
additional channels throughout Australia over FOXTEL's proposed cable
television network. ECT receives a per subscriber fee from FOXTEL for the
License A Package. FOXTEL, a joint venture between Telstra Corporation
Limited, the government-owned Australian national telecommunications carrier,
and The News Corporation Limited, a major international media and
entertainment company, owns the remaining 50% of XYZ.
The Company has also acquired an approximate 2% economic interest in
Australis for approximately $10 million.
The Australian operations described above are expected to be capital
intensive requiring funds for the buildout of the franchise infrastructure,
maintenance of its satellite distribution business, and the development of
its programming. In order to meet such requirements ECT is currently
evaluating bank borrowings, debt or equity issuances in the public and
private markets and other financing resources, including funding from the
Company. There is no assurance ECT will be successful in obtaining such
funding on favorable terms.
WIRELESS COMMUNICATIONS
The Company is engaged in the wireless telephone business through
Centennial Cellular. Centennial Cellular acquires, operates and invests in
cellular telephone systems throughout the United States and was recently the
winning bidder for one of two MTA licenses to provide broadband PCS services
in the Commonwealth of Puerto Rico and the U.S. Virgin Islands. See
"Business - Wireless Communications - Personal Communications Services;
Alternative Access."
Centennial Cellular was organized in 1988 as a wholly-owned subsidiary
of the Company. On August 30, 1991, Citizens Cellular Company, a Delaware
corporation ("Citizens Cellular"), was merged with and into Centennial
Cellular in exchange for common and preferred stock of Centennial Cellular
(the "Merger"). Citizens Cellular was a wholly-owned subsidiary of Citizens
Utilities Company, a Delaware corporation ("Citizens Utilities"). Citizens
Utilities is a diversified utility company providing telephone, electric,
gas, water and waste water services, in which the Company owns 4,306,738
shares of Series A Common Stock, representing 2% of the issued and
outstanding Common Stock (both Series A and Series B) of Citizens Utilities
as of August 21, 1995. Leonard Tow is Chairman of the Board, Chief
Executive Officer and Chief Financial Officer of both Citizens Utilities and
the Company. Two other directors of the Company, Robert D. Siff and Claire
L. Tow, are also directors of Citizens Utilities. Citizens Cellular's assets
consisted of the Investment Interests (as defined below), which had been
acquired by Citizens Cellular as a result of agreements among various
companies providing local exchange telephone service in markets in which
Citizens Utilities also provides service. See "Business-Wireless
Communications-The Cellular Systems." As a result of its ownership of
securities of Centennial Cellular and in accordance with an agreement with
Citizens Utilities, the Company has the ability to nominate at least a
majority and elect all of the directors of Centennial Cellular; the Company
has agreed to vote for one director to be nominated by Citizens Utilities.
Cellular mobile telephone service offers high quality, high capacity
communications to and from vehicle-mounted and hand-held radio telephones
("cellular telephones") which provide substantially the same types and levels
of service as traditional landline systems. The cellular system operator has
a traffic interchange agreement with, and pays a fee to, the local landline
telephone company so calls may be placed from a mobile unit to a conventional
telephone. The amounts paid under these agreements are subject to
negotiation and vary from system to system. The rates, terms and conditions
of these agreements may be subject to state and FCC regulation. See
"Business-Regulation and Legislation-Cellular Telephone-Regulation-Federal
Regulation." PCS includes a family of digital, wireless mobile or portable
and ancillary fixed radio communications services for individuals and
business that can be integrated with a variety of competing networks. PCS is
not a specific technology, but a variety of potential technologies.
Equipment proposed for broadband PCS includes small lightweight and wireless
telephone handsets; computers that can communicate over the airwaves wherever
they are located; and portable facsimile machines, and other graphic devices.
The Cellular Systems
Centennial Cellular's current cellular telephone interests represent
approximately 6.38 million Net Pops (as defined below). Approximately 5.30
million of these Net Pops are represented by interests in cellular telephone
systems Centennial Cellular owns and operates, which systems serve three
geographic areas (the "Controlled Cellular Systems"). The balance of
approximately 1.08 million Net Pops represents minority interests in limited
partnerships, controlled by other parties, that own cellular telephone
systems which primarily serve the Sacramento Valley and the San Francisco Bay
area in California (the "Investment Interests"). "Pops", as used in this
Annual Report on Form 10-K, means the population of a market based upon the
final 1990 Census Report of the Bureau of the Census, United States
Department of Commerce, and "Net Pops" means a market's Pops multiplied by
the percentage interest that Centennial Cellular owns in an entity licensed
by the FCC to construct or operate a cellular telephone system (or to provide
personal communications services) in that market. Centennial Cellular also
owns and operates paging systems and two-way mobile radio systems in two
markets in which it also owns and operates the non-wireline cellular
telephone system and in which the Company owns and operates a cable
television system.
The charts below set forth certain information about the Controlled
Cellular Systems and the Investment Interests as of August 21, 1995.
Markets Ownership Pops Net Pops
Controlled Cellular Systems
MICHIANA CLUSTER(1)
Battle Creek, MI 100.00% 186,000 186,000
Jackson, MI(2) 92.00% 149,800 137,800
Kalamazoo, MI 100.00% 293,500 293,500
Cass, MI(3) 85.74% 288,000 246,900
Roscommon, MI 100.00% 130,400 130,400
Newaygo, MI 100.00% 222,200 220,200
System Subtotal 1,269,900 1,214,800
Elkhart-Goshen, IN 77.24% 156,200 120,700
Richmond, IN 100.00% 217,900 217,900
South Bend, IN 100.00% 289,200 289,200
Newton, IN 100.00% 204,200 204,200
Williams, OH 100.00% 125,900 125,900
System Subtotal 993,400 957,900
Fort Wayne, IN 100.00% 420,900 420,900
Huntington, IN. 100.00% 145,200 145,200
Kosciusko, IN 100.00% 160,000 160,000
Miami, IN 100.00% 179,000 179,000
System Subtotal 905,100 905,100
Cluster Subtotal 3,168,400 3,077,800
EAST TEXAS/LOUISIANA/MISSISSIPPI CLUSTER
Beaumont - Port Arthur, TX 100.00% 361,200 361,200
Alexandria, LA 92.79% 149,000 138,300
Beauregard, LA 100.00% 372,500 372,500
Iberville, LA 100.00% 131,000 131,000
Bastrop, LA 100.00% 116,300 116,300
DeSoto, LA 100.00% 156,000 156,000
Caldwell, LA 100.00% 71,600 71,600
West Feliciana, LA 100.00% 170,900 170,900
Claiborne, MS 100.00% 153,900 153,900
Copiah, MS 100.00% 118,000 118,000
Jonesboro, AK 100.00% 201,000 201,000
Cluster Subtotal 2,001,400 1,990,700
SOUTHWESTERN CLUSTER
El Centro, CA 100.00% 109,300 109,300
Yuma, AZ 100.00% 120,700 120,700
Cluster Subtotal 230,000 230,000
Total Controlled
Cellular Systems 5,399,800 5,298,500
Investment Interests
SACRAMENTO VALLEY CLUSTER 23.47%
Sacramento, CA 1,355,100 318,100
Stockton, CA 480,600 112,800
Modesto, CA 370,600 87,000
Reno, NV 254,700 59,800
Chico, CA 182,100 42,800
Redding, CA 147,000 34,500
Yuba City, CA 122,600 28,800
Tehama, CA 90,700 21,300
Storey, NV 90,600 21,300
Sierra, CA 81,800 19,200
Cluster Subtotal 3,175,800 745,600
SAN FRANCISCO BAY AREA CLUSTER 2.87%
San Francisco, CA 3,686,600 105,800
San Jose, CA 1,497,600 43,000
Vallejo, CA 451,200 13,000
Santa Rosa-Petaluma, CA 388,200 11,100
Salinas, CA 355,700 10,200
Santa Cruz, CA 299,700 6,600
Cluster Subtotal 6,609,000 189,700
Lawrence, PA 14.29% 363,400 51,900
Coconino, AZ 21.30% 204,300 43,500
Del Norte, CA 6.88% 199,200 13,700
Modoc, CA 25.00% 57,000 14,200
Lake Charles, LA 12.37% 168,100 20,800
Total Investment Interests 10,776,800 1,079,400
Total Controlled Cellular Systems and
Investment Interests 6,377,900
(1) Centennial Cellular classifies certain of its markets in the Michiana
cluster as single systems for operational and managerial purposes.
(2) In connection with Centennial Cellular's acquisition of its interest in
the Jackson, Michigan system, Century Federal, Inc., an affiliate of the
Company ("Century Federal"), acquired the remaining 8% ownership interest for
$1.0 million. Centennial Cellular has the right, but not the obligation, to
acquire such 8% interest from Century Federal for $1.0 million, which it
plans to do.
(3) In connection with Centennial Cellular's acquisition of its interest in
the Cass, Michigan system, Century Federal acquired the remaining 14.26%
ownership interest for $2.0 million. Centennial Cellular has the right, but
not the obligation, to acquire such 14.26% interest from Century Federal for
$2.0 million, which it plans to do.
A system is deemed operational when it has met the FCC's requirements
for an operating license and has received an FCC license to commence
operations. All of the cellular telephone systems operated by the
partnerships in which Centennial Cellular owns the Investment Interests were
operational when they were acquired in the Merger on August 30, 1991, with
the exception of the Lawrence, PA system which became operational in August
1992. All of the Controlled Cellular Systems are currently operational.
The chart below sets forth the subscribers of the Controlled Cellular Systems
as of the dates indicated.
May 31,
1995 1994 1993 1992 1991
Michiana cluster 55,960 35,170 25,530 19,850 14,050
*Central Virginia/North
Carolina cluster 20,870 15,540 9,080 5,680 3,400
Southwestern cluster 5,970 4,520 3,180 2,090 840
East Texas/Louisiana/
Mississippi cluster and
other Controlled Systems 29,730 9,350 7,690 4,740 2,370
Total 112,530 64,580 45,480 32,360 20,660
*On June 30, 1995, Centennial Cellular transferred to a third party all of
the Controlled Cellular Systems constituting its Central Virginia/North
Carolina Cluster. See "Business - Wireless Communications - Recent Cellular
Acquisitions".
At May 31, 1995, Centennial Cellular's pro rata share of subscribers
relating to the Investment Interests was approximately 57,900.
Centennial Cellular owns and operates paging and SMR and conventional
mobile telephone businesses in Yuma, Arizona and El Centro, California. As
of May 31, 1995, the paging system served approximately 2,830 subscribers and
the SMR business served approximately 2,530 subscribers.
The Company also has the right to receive an amount equal to five
percent of an incremental value over a base value (a "carried interest")
received by Centennial Cellular in the event Centennial Cellular sells or
otherwise disposes of any of the cellular telephone systems in Elkhart, Fort
Wayne and South Bend, Indiana, and Battle Creek and Kalamazoo, Michigan. At
any time following December 31, 1996, the Company has the right to force
Centennial Cellular to purchase its carried interest in any of such cellular
telephone systems using an appraisal procedure to determine the price, if
necessary. The Company also has a carried interest in the cellular telephone
system of Centennial Cellular in Roanoke, Virginia. Concurrently with the
transaction between Centennial Cellular and United States Cellular
Corporation consummated on June 30, 1995, pursuant to which the Roanoke
system was transferred by Centennial Cellular, Centennial Cellular assumed
the obligation to compensate the Company for its carried interest in the
Roanoke system. See "Business-Wireless Communications-Recent Cellular
Acquisitions".
Fiscal 1995 Cellular Acquisitions
On June 29, 1994, Centennial Cellular acquired the non-wireline cellular
telephone system serving Jonesboro, Arkansas, representing approximately
201,000 Net Pops. The purchase price for this acquisition was $18,500,000,
subject to adjustment, consisting of approximately $4,500,000 in cash and
700,670 registered shares of Class A Common Stock of Centennial Cellular
valued at approximately $14,000,000.
On June 30, 1994, Centennial Cellular acquired the non-wireline cellular
telephone system serving Iberville, Louisiana, representing approximately
131,000 Net Pops. The purchase price for this acquisition was $12,100,000,
consisting of approximately $750,000 in cash and 639,055 registered shares of
Class A Common Stock of Centennial Cellular valued at approximately
$11,350,000.
On August 23, 1994, Centennial Cellular acquired the cellular telephone
systems serving DeSoto and Caldwell, Louisiana and Claiborne, Mississippi,
representing an aggregate of approximately 381,500 Net Pops. The purchase
price for the acquisition was $45,500,000, subject to adjustment, consisting
of approximately $8,000,000 in cash and 2,345,953 registered shares of Class
A Common Stock of Centennial Cellular valued at approximately $37,500,000.
On September 21, 1994, Centennial Cellular acquired the non-wireline
cellular telephone system serving Clinton, Iowa, representing approximately
107,800 Net Pops. The purchase price for this acquisition was $15,500,000,
subject to adjustment, consisting of approximately $5,000,000 in cash and
611,354 registered shares of Class A Common Stock of Centennial Cellular
valued at approximately $10,500,000.
On September 30, 1994, Centennial Cellular acquired the non-wireline
cellular telephone system serving Huntington, Indiana, representing
approximately 145,200 Net Pops. The purchase price for this acquisition was
$18,400,000, subject to adjustment, consisting of approximately $4,500,000 in
cash and 844,863 registered shares of Class A Common Stock of Centennial
Cellular valued at approximately $13,900,000.
On October 24, 1994, Centennial Cellular acquired the non-wireline
cellular telephone system serving West Feliciana, Louisiana, representing
approximately 170,900 Net Pops. The purchase price for this acquisition was
$17,000,000, consisting of 998,167 registered shares of Class A Common Stock
of Centennial Cellular valued at approximately $17,000,000.
On April 18, 1995, Centennial Cellular acquired the non-wireline
cellular telephone systems serving Roscommon, Michigan and Newaygo, Michigan,
representing an aggregate of approximately 352,600 Net Pops. The purchase
price for the acquisition was $42,960,000, subject to adjustment, consisting
of approximately $25,000,000 in cash and the balance in 898,000 registered
shares of Class A Common Stock of Centennial Cellular valued at approximately
$17,960,000 (subject to post-closing adjustment based on the price
performance of the Class A Common Stock).
During Centennial Cellular's fiscal year ended May 31, 1995, Centennial
Cellular completed ten cellular market acquitisions for a total purchase
price of $173,860,000, consisting of approximately $51,761,000 in cash and
7,023,383 registered shares of Class A Common Stock of Centennial Cellular
valued at approximately $122,099,000.
Recent Cellular Acquisitions
On June 30, 1995, Centennial Cellular acquired the non-wireline cellular
telephone systems serving (a) Newton, Indiana, (b) Kosciusko, Indiana, (c)
Williams, Ohio and (d) Copiah, Mississippi, representing an aggregate of
approximately 644,000 Net Pops. The above-described systems were acquired by
Centennial Cellular in exchange for Centennial Cellular's non-wireline
cellular telephone systems serving the Roanoke, Virginia MSA, the Lynchburg,
Virginia MSA, Ashe, North Carolina and Clinton, Iowa, representing an
aggregate of approximately 627,000 Net Pops. Simultaneously with the
consummation of the transaction described above, Centennial Cellular sold its
72.2% interest in the non-wireline cellular telephone system serving the
Charlottesville, Virginia MSA, representing an aggregate of approximately
94,700 Net Pops, for a cash purchase price of approximately $9,452,000,
subject to adjustment.
Pending Cellular Acquisitions
Centennial Cellular is negotiating definitive purchase and sale
agreements, based upon a letter of intent which was executed on May 30, 1995,
to (i) obtain a controlling interest in the non-wireline cellular telephone
system serving the Lafayette, Louisiana MSA in exchange for Centennial
Cellular's non-wireline cellular telephone system serving the Jonesboro,
Arkansas RSA and a cash payment by Centennial Cellular of approximately
$5,200,000, subject to adjustment, and (ii) obtain minority interests in the
Elkhart, Indiana and Lake Charles, Louisiana MSAs, for a cash payment of
approximately $2,950,000. Centennial Cellular's obligation to consummate
these transactions is subject to the execution of definitive purchase and
sale agreements which will contain various closing conditions, including FCC
and other regulatory approvals. There can be no assurance that the
definitive purchase agreements will be executed or, if executed, that the
closing conditions set forth therein will be satisfied.
Centennial Cellular plans to exercise its right to acquire the minority
interests held by Century Federal in the Cass and Jackson, Michigan systems
from Century Federal for the prices paid by Century Federal for such minority
interests in the acquisitions of such systems ($2,000,000 and $1,000,000,
respectively). See Notes (2) and (3) to the chart on page 12. Upon
completion of these transactions, Centennial Cellular will own 100% of these
systems.
Concurrently with the transaction between Centennial Cellular and United
States Cellular Corporation consummated on June 30, 1995, pursuant to which
Centennial Cellular's Roanoke, Virginia cellular system was transferred by
Centennial Cellular, Centennial Cellular assumed the obligation to compensate
the Company for its carried interest in the Roanoke system. See "Business--
Wireless Communications--Recent Cellular Acquisitions."
Personal Communications Services; Alternative Access
Centennial Cellular was the successful bidder for one of two MTA
licenses to provide broadband PCS services in the Commonwealth of Puerto Rico
and the U.S. Virgin Islands. The licensed area represents approximately
3,623,000 Net Pops. The amount of the final bid submitted by Centennial
Cellular was $54,672,000, which has been paid in full. The FCC granted the
30 MHz Block B broadband PCS license for the Puerto Rico-Virgin Islands MTA
to Centennial Cellular on June 23, 1995. The grant of all Block A and B
licenses, including Centennial Cellular's license, is being challenged at the
FCC on the grounds (a) that various bidders, not including the Company,
engaged in anticompetitive conduct in the Block A and B auction; and (b) that
if the FCC licenses the Block A and B spectrum before it is ready to license
Block C spectrum, such C-block licensees will be at a substantial competitive
disadvantage in violation of the FCC's statutory mandate to promote minority
ownership. Centennial Cellular believes that the challenges are meritless
and will not be successful although there can be no assurance that they will
be denied.
PCS includes a family of digital, wireless mobile or portable and
ancillary fixed radio communications services for individuals and business
that can be integrated with a variety of competing networks. PCS is not a
specific technology, but a variety of potential technologies. Equipment
proposed for broadband PCS include small lightweight and wireless telephone
handsets; computers that can communicate over the airwaves wherever they are
located; and portable facsimile machines, and other graphic devices.
Centennial Cellular has commenced the design and construction of its
broadband PCS system. Centennial Cellular has executed an agreement with
AT&T World Services, Inc., pursuant to which Centennial Cellular has agreed,
subject to certain conditions, to purchase equipment and installation
services necessary for its initial PCS system. Centennial Cellular currently
estimates that the cost to build out the infrastructure of the PCS system
will be approximately $75,000,000 in the aggregate over the next three years.
Centennial Cellular expects to incur costs of approximately $55,000,000
related to such equipment and installation in fiscal year 1996, and
anticipates installation of the initial system by the end of fiscal year
1996. Centennial Cellular is exploring various sources of external financing
including but not limited to bank financing, joint ventures, partnerships and
placements of debt and equity securities of Centennial Cellular. There can
be no assurance that such financing will be available to Centennial Cellular
from any of such sources.
Centennial Cellular also plans to participate in the alternative access
business in Puerto Rico pursuant to FCC requirements for interstate service
and pursuant to an authorization issued to Centennial Cellular in December,
1994 by the Public Service Commission of the Commonwealth of Puerto Rico for
intrastate service. The issuance of the authorization was challenged by the
local telephone service provider based on a claim to a statutory monopoly in
the provision of intrastate telecommunications services. Centennial Cellular
is actively defending the authorization against the challenge. There is no
assurance that the matter will be decided in Centennial Cellular's favor.
Competition
Operating Competition. The FCC grants licenses to operate cellular
telephone systems in defined market areas. The FCC presently authorizes two
licensees to operate cellular service in each market. One of the two
licenses in each market was initially awarded to a company or group that was
affiliated with one or more local landline telephone carriers in the market
(the "Wireline" license) and the other license in each market was initially
awarded to a company, individual or group not affiliated with any landline
telephone carrier (the "Non-Wireline" license). The Controlled Cellular
Systems are all Non-Wireline systems. The Investment Interests are all in
Wireline systems. It is possible that the FCC may in the future assign
additional frequencies to cellular telephone service to provide for more than
two cellular telephone systems per market. See "Business-Regulation and
Legislation-Cellular Telephone-Regulation-Pending Legislation; FCC and State
Proceedings."
The Controlled Cellular Systems and the systems in which Centennial
Cellular has the Investment Interests compete directly with the other
cellular licensee in each market in attracting and retaining cellular
telephone customers and dealers, principally on the basis of quality, price,
services offered and responsiveness of customer service. The Controlled
Systems and the systems in which Centennial Cellular has the Investment
Interests also compete with the other licensee in each market on the basis of
coverage area. To the extent that the Controlled Systems or the systems in
which Centennial Cellular has the Investment Interests do not provide
cellular telephone service to an area within or adjacent to their markets,
Centennial Cellular may be placed at a competitive disadvantage with the
other licensee in such market, particularly if the other licensee provides
cellular telephone service to any such areas.
The competitors of the Controlled Cellular Systems and certain of the
systems in which Centennial Cellular has an Investment Interest are larger
and may have access to more substantial financial resources than Centennial
Cellular. Theses competitors include Regional Bell Operating Companies,
large independent telephone companies and AT&T (McCaw), among others.
Other Competition. The FCC is now licensing commercial broadband PCS
providers. Among other possible uses, broadband PCS will be capable of
providing a two-way mobile voice and data telephone service that is similar
to cellular service. Broadband PCS will be a digital, wireless
communications system that will utilize technology that could allow it to
compete effectively with cellular systems, particularly in densely populated
areas. Licenses will be awarded by competitive bidding. Auctions for the
first two spectrum blocks (Blocks A and B) have been completed and licenses
have been issued to the winners. Absent delays caused by any judicial
proceedings, some broadband PCS systems can be expected to commence operation
as early as the end of calendar year 1995.
The FCC grants up to six licenses to operate broadband PCS systems in
defined market areas as follows: (i) two channel blocks (Blocks A and B) have
been allocated 30 MHz of spectrum each, and have been licensed on the basis
of 51 MTAs, (ii) one channel block (Block C) has been allocated 30 MHz of
spectrum and will be licensed on the basis of 493 Basic Trading Areas
("BTAs"), and (iii) three channel blocks (Blocks D, E and F) have been
allocated 10 MHz of spectrum each and will be licensed on the basis of BTAs.
The FCC has limited the eligibility for the Block C and F spectrum
allocations to entities meeting the FCC's definition of "entrepreneur". The
FCC originally granted licensing preferences on the Block C and F spectrum
allocations for small businesses, rural telephone companies and
minority/woman-owned businesses. The gender and minority based preferences
were later withdrawn by the FCC after a rulemaking proceeding conducted in
light of a recent decision by the U.S. Supreme Court relating to minority set-
asides. The FCC's decision to withdraw such preferences has been appealed.
In addition, a challenge to the FCC's decision to allow all applicants for
the Block C spectrum to use a certain structural option previously reserved
for minority/women-owned businesses has resulted in that decision being
stayed by a federal court of appeals. In response to the stay, the FCC has
postponed indefinitely the procedural dates for the Block C auction. The FCC
has not yet scheduled any further broadband PCS auctions.
It is uncertain what will be the effect on Centennial Cellular of these
new personal communications services. The FCC revised its cellular rules to
explicitly state that cellular licensees may provide any PCS-type services
(including wireless PBX, data transmission and telepoint services) on their
800 MHz band cellular channels without prior notification to the FCC.
Management of Centennial Cellular believes that technological advances in
present cellular telephone technology in conjunction with buildout of the
present cellular systems throughout the nation with cell splitting and
microcell technology would provide essentially the same services as the
services that PCS providers are expected to provide, but there is no
assurance that this will happen.
Centennial Cellular expects that its 30 MHz Block B broadband PCS
operation in the Puerto Rico-Virgin Islands MTA will face primary competition
from the entrenched cellular telephone licensees which include the Puerto
Rico Telephone Company, an entity owned by the Commonwealth of Puerto Rico,
and Cellular Communications, Inc., a publicly held company. In addition, the
FCC has issued the 30 MHz Block A broadband PCS license for the Puerto Rico-
Virgin Islands MTA to AT&T. Centennial Cellular anticipates that the FCC
will license additional broadband PCS providers in Puerto Rico and the Virgin
Islands in the future. This could result in one or more additional
competitors in Centennial Cellular's markets.
Competing Technologies. In addition to competition from the other
cellular licensee in each market, there is also competition from other
current technologies. Such technologies include conventional landline
telephone service, and mobile telephone and SMR systems, both of which are
more limited than cellular but which provide a two-way voice service and are
able to connect with the landline telephone network. In addition, one-way
paging service may be a competitive alternative adequate for those who do not
need a two-way service or may be a service that reduces cellular telephone
usage among subscribers to both cellular and paging services.
The FCC has given permission to SMR operators in several major
metropolitan areas, via waivers of its rules, to operate an enhanced type of
SMR system ("ESMR"). ESMR systems typically have a large number of channels
which can be configured into a cellular-type system, thereby potentially
eliminating much of the current technological distinction between SMR and
cellular. A few such systems are now operational on the West Coast. The FCC
has a rule making proceeding outstanding in which they propose to establish
ESMR as a regular service.
The FCC has also allocated spectrum for narrowband PCS in the 900 MHz
band. The possible new services using this 900 MHz band spectrum include
advanced voice paging, two-way acknowledgment paging, data messaging,
electronic mail and facsimile transmissions. These services most likely will
be provided using a variety of devices, such as laptop and palmtop computers
and computerized "personal organizers" that allow receipt of office messages,
calendar planning, and document editing from remote locations in some
circumstances. Auctions for nationwide narrowband PCS spectrum have been
completed and licenses have been issued to the winners. Narrowband PCS is
expected to present limited competition for both cellular telephone systems
and broadband PCS systems.
The FCC has allocated radio channels for a mobile satellite system in
which transmissions from mobile units to satellites would augment or replace
transmissions to cell sites, and a consortium to provide such a service has
been formed. Such a system is designed primarily to service the
communications needs of remote locations and a mobile satellite system could
provide viable competition for land-based cellular systems in such areas.
Other satellite-based mobile radio systems have also been proposed and are
under consideration at the FCC. The FCC has also authorized Basic Exchange
Telecommunications Radio Service to make basic telephone service more
accessible to rural households and businesses.
Technological advances in the communications field continue to occur
which makes it difficult to predict the extent of additional future
competition for cellular systems.
Potential Conflicts of Interest and Competition. Substantially all of
the Company's and all of Citizens' current cellular operations and
investments are conducted or held by Centennial Cellular. See "Business -
Wireless Communications--The Cellular Systems". Although exceptions are
permitted by the Conflicts/Non-Compete Agreement described below (the
"Conflicts/Non-Compete Agreement"), the Company has indicated to Centennial
Cellular that it intends to conduct all of its wireless telephone operations
through Centennial Cellular, subject to FCC restrictions. Citizens has
agreed with the Company and Centennial Cellular that Citizens will conduct
all of its wireless telephone operations through Centennial Cellular, except
in areas where Citizens operates or acquires landline telephone systems and
areas contiguous thereto. There can be no assurance that Centennial Cellular
will not lose any material expansion opportunities as a result of such
exception or any conflicts that may exist between the interests of Citizens
and Centennial Cellular.
Centennial Cellular, the Company and Citizens have entered into a
Conflicts/Non-Compete Agreement. Pursuant to such agreement, except as
described below, neither the Company nor Citizens may compete with Centennial
Cellular in the acquisition of cellular telephone businesses or ownership
interests therein, and Centennial Cellular will have the first opportunity to
purchase any cellular telephone business or ownership interests therein that
may be presented to Citizens or the Company. Citizens has no obligation to
present any such business opportunity to Centennial Cellular if the business
under consideration is located in or is contiguous to an area in which
Citizens (or a subsidiary or affiliate at least 50%-owned by Citizens) owns
or operates, a landline telephone operation. Citizens is the managing
general partner of a partnership which is the holder of the wireline cellular
telephone license for the Mohave, Arizona market, a market in which Citizens
also owns and operates a landline telephone operation.
Because the rules of the FCC prohibit the direct or indirect alienation
of any interests in pending applications for cellular telephone systems and
due to the concern that, under FCC rules, Centennial Cellular might not meet
the eligibility requirements as either a wireline or non-wireline applicant
for a grant of an initial authorization, applications of the Company for
cellular telephone licenses pending as of the effective date of the Merger
were retained by the Company. As of August 1, 1995, the Company had
applications pending before the FCC to be designated the non-wireline
cellular telephone permittee or licensee for several separate markets. Since
the Company could not be obligated to transfer to Centennial Cellular the
interests described without adversely affecting the validity of such pending
applications, it has agreed with Centennial Cellular that if any of its
pending applications results in it owning an interest in a permit or in an
entity which owns such a permit, it will explore fully the possibility of
transferring such interests to Centennial Cellular, unless the market covered
by such permit is located in or is contiguous to an area in which the Company
or any entity in which the Company has a direct or indirect 50% or greater
interest, owns, operates or manages, or is then negotiating to acquire, a
cable television system (which is the case in one of such markets, which
Centennial Cellular does not believe represents the loss of a material
expansion opportunity).
REGULATION AND LEGISLATION
Cable Television
The cable television industry is extensively regulated by the federal
government through a combination of federal legislation and FCC regulations,
by some state government and by most local government franchising
authorities. The regulation of cable systems at the federal, state and local
levels is subject to the political process and has been in constant flux over
the past decade. This process continues in the context of legislative
proposals for new laws and the adoption or repeal of administrative
regulations and policies. As further material changes in the law and
regulatory requirements occur, there can be no assurance that the Company's
systems will not be adversely affected.
Federal Legislation and FCC Regulation. In 1984, Congress enacted the
1984 Cable Act which created an extensive regulatory framework for cable
television systems. On October 5, 1992, Congress enacted the 1992 Cable Act
which expands the scope of cable industry regulation substantially beyond
that imposed by the 1984 Cable Act. Violation by a cable operator of the
provisions of these federal laws can subject the operator to substantial
monetary penalties and other sanctions. A number of the significant areas of
regulation, as well as the status of significant new Federal legislation, are
discussed below.
Rate Regulation. Virtually all of the Company's cable systems are
subject to rate regulation under the 1992 Cable Act and FCC regulations
adopted thereunder. Only rates for programming offered on a per-channel or
per-program basis and non-video services, such as FM radio and data
transmission, are excluded entirely from rate regulation. The 1992 Cable Act
requires each cable operator to provide a separately available basic service
tier to all of the subscribers to a cable system. This tier of service must,
at a minimum, consist of all television broadcast signals which the system is
required to carry and any public, educational and governmental access
channels which the system is required to provide under its local franchise
agreement. The basic service must also include any other television
broadcast signals which the cable operator chooses to carry except for those
television broadcast signals received via satellite carrier, which need not
be placed on the basic tier. Basic service rates may be regulated by local
franchising authorities which must follow regulatory standards and procedures
established by the FCC.
Rates for cable programming service tiers are regulated by the FCC
pursuant to the 1992 Cable Act. The FCC, upon receipt of a complaint from a
subscriber, franchising authority or other relevant state or local
governmental entity, will review the rates for cable programming service
tiers to determine compliance with the applicable rate regulations of the
FCC.
On April 1, 1993 the FCC announced the adoption of rate regulations
which became effective September 1, 1993. Under those regulations rates must
be evaluated initially against "competitive benchmarks" and are generally
subject to refunds and rollbacks if they exceed the benchmark levels. On
February 22, 1994 the FCC adopted further rate reductions effective May 15,
1994 based on complex formulas and revised benchmarks. FCC rules provide
that future rate increases will be subject to price caps, with rate increases
limited to the general rate of inflation and certain increases in system
costs. Notwithstanding the foregoing, the cable operator is afforded the
opportunity to defend rates in excess of these benchmarks based on utility-
type cost-of-service rate regulation. Utilization of this remedy by the
cable operator assumes the risk of an adjudication of rates below "the
benchmarks", particularly because of uncertainty regarding various aspects of
the cost-of-service standards to be applied. Cable systems are also required
to unbundle all equipment charges and base those charges on "actual costs"
plus permitted mark-up.
In complying with the benchmark regulatory scheme (without considering
the effect of any cost-of-service showing) for the period September 1, 1993
to May 15, 1994, the Company, on a franchise by franchise basis, was required
to reduce regulated service rates such that the "average monthly subscriber
bill" for all cable service subject to rate regulation (including, but not
limited to basic service, cable programming service not offered on a per-
channel basis, secondary outlets, converters and remote control units,
installation and service charges) is reduced by an amount of up to 10% of
such charges as of September 1992. Under the new FCC benchmarks, additional
reductions were required after May 15, 1994. These new FCC benchmarks are
intended generally to reduce rates to a level 17% below September, 1992
rates, subject to various adjustments. Where rates are found to exceed the
permitted levels, the Company is subject to refunds and other penalties.
Although some refunds have been ordered, the extent of the anticipated
decline in revenues and any potential refunds or penalties cannot be
determined at this time, but could have a negative impact on the Company.
The November 24, 1994, amendments to the rate regulations adopted an
alternative method for adjusting the rates charged for certain regulated
service tiers when new programming services are added. Under this method
cable operators can increase rates by as much as $1.50 through December 31,
1996 to reflect the addition of up to six new channels of service on certain
regulated service tiers. In addition, new product tiers consisting of
services new to the cable system can be created free of rate regulation as
long as certain conditions are met such as not moving services from existing
tiers to the new tier.
The 1992 Cable Act includes a "buy-through prohibition" which prohibits
cable systems which have addressable technology and addressable converters in
place from requiring cable subscribers to purchase service tiers above basic
as a condition to purchasing premium movie channels. Cable systems which are
not addressable are allowed a 10-year phase-in period to comply.
Retransmission Consent and Must Carry Requirements. FCC regulations
adopted in April 1993 pursuant to the 1992 Cable Act established a choice for
local broadcasters between "must carry" rights (as described below) and
"retransmission consent" rights. Effective October 6, 1993, cable operators
were required to secure permission from broadcasters that selected
retransmission consent before transmitting such broadcasters' signals. The
Company has been able to secure such permission for the stations currently
carried on its cable systems through agreements involving various forms of
consideration. However, there can be no assurance that it will obtain all
necessary retransmission consents in the future and it is anticipated that
the cost of carriage of broadcast signals on the Company's cable systems
could increase significantly in the future.
The FCC regulations also provide an option for "local" broadcast
stations to choose "must carry" rights which, while not requiring the cable
operator to obtain the broadcaster's consent to transmit its signal, does
require the cable operator to carry any such broadcast channel electing "must
carry". Generally, a cable operator must dedicate up to approximately
one-third of its channel capacity for carriage of commercial television
stations and additional channels for non-commercial television stations.
The Supreme Court has remanded the constitutional challenge to the must
carry rules to the District Court for further proceedings. In the meantime,
the rules continue in force.
Cable Programming Agreements. The 1992 Cable Act and FCC regulations
adopted in April 1993 require cable programmers to make their programming
services available to competing video technologies such as MMDS, SMATV and
DBS on terms and conditions that do not discriminate against such competing
technologies. The 1992 Cable Act and FCC regulations preclude most exclusive
programming contracts and limit to some degree the "volume discounts"
currently available to larger cable operators such as the Company. The 1992
Cable Act also regulates certain aspects of program carriage agreements
between cable operators and cable programming networks. Cable operators are
prohibited from requiring a financial interest in a program service as a
condition to carriage of such service, coercing exclusive rights in a
programming service, or favoring affiliated programmers so as to unreasonably
restrain the ability of unaffiliated programmers to compete. The Company
believes that this regulation of the distribution of cable programming will
encourage increased competition to the cable industry because of its impact
on the availability of cable programming to competing technologies. See
"Business-Cable Television-Competition".
Ownership Restrictions. The 1984 Cable Act and the FCC's rules prohibit
the common ownership, operation, control or interest in a cable system and a
local television broadcast station. Common ownership or control has
historically also been prohibited by the FCC (but not by the 1984 Cable Act)
between a cable system and a national television network, although the FCC
has substantially relaxed the network/cable cross-ownership prohibitions
subject to certain national and local ownership limits. Finally, in order to
encourage competition in the provision of video programming, the FCC has a
rule prohibiting the common ownership, affiliation, control or interest in
cable television systems and MDS facilities having overlapping service areas,
except in very limited circumstances. The 1992 Cable Act codified this
restriction and extended it to co-located SMATV systems. Co-located SMATV
systems can be purchased and integrated into the cable system, however.
Permitted arrangements in effect as of October 5, 1992 are grandfathered.
The 1992 Cable Act permits states or local franchising authorities to adopt
certain additional restrictions on the ownership of cable television systems.
Pursuant to the 1992 Cable Act, the FCC has imposed limits on the number
of cable subscribers a person is authorized to reach through cable systems
owned by such person, or in which such person has an attributable interest.
In general, no cable operator can have an attributable interest in cable
systems which pass more than 30% of all homes nationwide. The FCC has stayed
the effectiveness of these rules pending the outcome of the appeal from the
U.S. District Court decision holding the multiple ownership limit provision
of the 1992 Cable Act unconstitutional.
The FCC has also adopted rules which limit the number of channels on a
cable system which can be occupied by programming in which the entity which
owns the cable system has an attributable interest. The limit is 40% of all
activated channels. Additionally, cable operators are prohibited from
selling a cable system within three years of acquisition or construction of
such cable system. The Company believes that these ownership regulations and
limitations as adopted by the FCC will not have a material impact on the
Company.
Customer Service/Technical Standards. Pursuant to the 1992 Cable Act,
the FCC has adopted regulations establishing strict standards for customer
service and technical system performance. These standards are expected to
result in higher operating costs for some of the Company's systems. In
addition, the adoption of the FCC standards does not preclude the
establishment or enforcement by franchising authorities of customer service
requirements which are more stringent than the FCC standards.
The 1984 Cable Act. The majority of the 1984 Cable Act remains in
place. The 1984 Cable Act sets uniform national guidelines for the
regulation of the cable television industry by franchising authorities.
Among other things, the 1984 Cable Act affirms the right of a franchising
authority to award one or more franchises within its jurisdiction and
prohibits cable television systems from commencing operations without a
franchise in that jurisdiction. State or local laws that are inconsistent
with the 1984 Cable Act are preempted. The 1984 Cable Act prohibits
franchising authorities from imposing franchise fees on cable television
system operators in excess of 5% of their gross system revenues annually
during the term of the franchise.
The 1984 Cable Act establishes complex franchise renewal procedures
that, while providing cable systems with certain due process protections,
could result in considerable expense upon renewal. Moreover, such procedural
protections do not in any way assure franchise renewal. The 1984 Cable Act
permits local franchising authorities to require public, governmental and
educational access channels. Franchise operators also must assure service to
low-income areas in a community. Such provisions could increase the costs to
cable television operators, including the Company. See "Business-Cable
Television-Franchises".
The 1984 Cable Act prohibits employment discrimination on the basis of
race, color, religion, national origin, sex or age, and requires cable
systems annually to file statistical reports documenting compliance with
these prohibitions. Non-complying cable systems may be subject to
substantial penalties and suspension of microwave licenses, which could be
materially detrimental to the continued operation of a cable system. In
addition, other serious consequences, including possible loss of existing
franchises and loss of new franchising opportunities, might result from
non-compliance. The Company has not been subject to any such substantial
penalties, suspensions or other consequences.
The 1984 Cable Act requires cable systems with 36 or more channels to
designate a portion of their channels for commercial leased access by third
parties. Cable systems are not prohibited by the 1984 Cable Act from
providing two-way voice and data services, but provision of such services may
be subject to state public utility commission jurisdiction similar to that
exercised over telephone companies, which could inhibit or preclude the
development of such voice and data services by cable systems.
The 1984 Cable Act codifies existing FCC cross-ownership rules that
prohibit telephone companies from owning cable systems within their telephone
service area, except in areas defined as "rural" by the FCC or by specific
waiver of FCC rules. Similarly, television broadcast stations are prohibited
from owning cable systems within the station's local service area as defined
by FCC standards. The FCC, however, has published certain proposals that
involve the elimination and/or relaxation of the current bar on ownership of
and affiliation with cable systems by local telephone companies. This
restriction has been held to be unconstitutional by a number of Federal
District Courts and Courts of Appeal, and the issue is now before the U.S.
Supreme Court. In addition, both houses of Congress have passed bills which,
if enacted into law, would eliminate the telephone/cable cross ownership
restrictions. See "Business-Cable Television-Competition" and "Business-
Regulation and Legislation-Cable Television-FCC, Federal Legislation and
Regulation".
Other FCC Regulations and Policies. Various other regulations
applicable to cable television systems have been promulgated by the FCC.
These include detailed provisions covering non-duplication of network
programming, sports program blackouts, syndicated program exclusivity,
origination of programming (including "equal time" and "sponsorship
identification" provisions similar to those rules applicable to broadcast
stations), ownership of cable systems, equal employment opportunities,
comprehensive reporting requirements and various technical conditions and
standards. The FCC is authorized to impose fines upon cable system operators
for violations of FCC rules and may suspend licenses and authorizations and
issue cease and desist orders. Under certain conditions, the FCC must
consent prior to a change in ownership of a cable system.
In recent years, the FCC has adopted policies providing for
authorization of new technologies and a more favorable operating environment
for certain existing technologies which provide, or have the potential to
provide, substantial additional competition for cable systems. These include
direct satellite-to-home broadcasting service ("DBS") which use high-powered
space satellites to transmit programming directly to home rooftop antennas;
telephone company video dialtone systems which would utilize telephone
facilities to deliver video programming; MDS and MMDS, which are used to
transmit pay-television and other programming to hotels, apartment house
complexes and individual residences; and low power television stations
("LPTV"). Thus, it is possible that the subscribers to the Company's systems
may be reached by DBS, MMDS and other services providing multiple channels of
programming services. Furthermore, FCC decisions to deregulate the
construction and operation of receive-only earth stations have accelerated
the development of home earth stations and of satellite master antenna
television systems which provide cable services to apartment complexes,
hotels and other multi-unit dwellings within a cable system's franchise area.
All of these new services and technologies, which have been encouraged by
recent decisions and policies, can be expected to provide significant,
growing competition for cable systems. See "Business-Cable Television-
Competition".
Pending Telecommunications Legislation. Both the U.S. Senate and House
of Representatives have recently passed telecommunications bills and such
legislation is likely to be enacted into law this year. Although the final
form of this legislation has not yet been determined, it would, if adopted as
anticipated, result in very significant changes in laws and regulations
applicable to cable television companies, telephone companies and many other
providers of communications services. Generally the legislation would
eliminate the cross-ownership restrictions between telephone companies and
cable operators, subject to certain conditions. This would permit telephone
companies to provide cable television services to subscribers within their
telephone service area over telephone or other facilities, and cable
operators would be permitted to provide telephone services under certain
circumstances. In addition, the legislation would provide some deregulation
of cable television, but would also impose some additional obligations and
expense on cable operators, including higher pole attachment fees. While the
full impact of this legislation cannot be predicted at this time, the Company
anticipates that it will face increased competition from telephone companies
which generally have significantly greater financial resources than the
Company.
State and Local Regulation. Cable television systems generally are
operated pursuant to non-exclusive franchises, or permits or licenses granted
by a municipality or other local government entity. Franchises generally are
granted for fixed terms and require the franchise operator to comply with
various provisions, including provisions requiring the operator to comply
with national, state and local safety and electrical codes, with specified
schedules of construction, with limitations on installation and monthly
service charges and with required conditions of service. Although the 1984
Cable Act provides for certain procedural protections, there can be no
assurance that renewals will be granted or that renewals will be made on
similar terms and conditions. Franchises usually call for the payment of
fees, often based on percentages (up to 5%) of the system's gross revenues,
to the granting authority. The terms and conditions of franchises vary
materially from jurisdiction to jurisdiction, and even from city to city
within the same state, historically ranging from reasonable to highly
restrictive or burdensome provisions. "Reasonable" franchise provisions
encompass those requirements typically and normally imposed by local
governments on cable systems similarly situated in the context of geographic
location, system size and population. The terms "highly restrictive" and
"burdensome" reflect the fact that some franchise authorities impose
conditions which materially exceed those conditions normally imposed on
similarly situated systems.
The franchises for the Company's systems are non-exclusive. Each
franchise generally contains some provisions governing fees to be paid to the
franchising authority, length of the franchise term, renewal and sale or
transfer of the franchise, territory of the franchise, design and technical
performance of the system, use and occupancy of public streets and number and
types of cable services provided. See "Business-Cable Television-
Franchises". The specific terms and conditions of a franchise and the laws
and regulations under which it was granted directly affect the profitability
of the cable television system.
Various proposals have been introduced at the state and local levels
with regard to the regulation of cable television systems, and a number of
states have adopted legislation subjecting 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. To date, none of the states in which the Company
operates except Connecticut, New York, Massachusetts, West Virginia and the
Commonwealth of Puerto Rico has enacted such legislation with respect to the
regulation of cable television systems.
In City of Los Angeles v. Preferred Communications, Inc., the U.S.
Supreme Court affirmed a decision that had allowed a challenge to the
constitutionality of the cable television franchising process and which
suggested that, where feasible, franchising authorities must grant access to
others seeking to provide competitive cable television service in a
community. The Supreme Court left open material questions affecting the
rights of cities or other franchising authorities to regulate the entry and
operation of cable television systems consistent with the provisions of the
First Amendment to the Constitution. The Court remanded the case to the
trial court for the purpose of establishing a record. The trial court struck
down certain aspects of the franchising process and upheld others. The trial
court's decision was appealed to the U.S. Court of Appeals for the Ninth
Circuit which held that the City could not, consistent with the First
Amendment, grant an exclusive franchise when public utility poles and
facilities and other public property could physically accommodate more than
one distribution system. In June, 1994 the U.S. Supreme Court rejected
without comment the City's appeal of the Ninth Circuit's decision. It is
possible that this case and other similar cases will result in increased
competition to franchised cable operations from other new systems operating
within the same territory.
Copyright. Cable television systems are subject to the Copyright Act,
which provides a compulsory license for carriage of certain television
broadcast signals authorized under FCC regulations, subject to compliance
with prescribed copyright and FCC regulations. Cable systems are required to
make semi-annual payments of royalty fees to a Federal copyright royalty pool
generally calculated as a percentage of each system's gross revenues derived
from providing basic subscriber services. The Copyright Act contains
specific formulas for calculating the amount of the copyright fee. In
general, under these formulas, the larger the system and the greater the
number of distant signals carried, the greater will be the copyright fee
liability. The Copyright Act also established a Copyright Royalty Tribunal
(the "CRT") empowered to review and adjust copyright royalty rates. The CRT
did, in fact, make several adjustments in the copyright royalty rates. This
tribunal was abolished by Congress in 1993. Any future adjustment to the
copyright royalty rates will be done through an arbitration process to be
supervised by the U.S. Copyright Office.
Carriage of any television broadcast station by a cable television
system in a manner inconsistent with applicable FCC regulations, the
Copyright Act or copyright regulations may subject the system operator to
full copyright liability, including a potential copyright infringement action
for material damages and suspension of the compulsory license. Cable systems
do not receive a compulsory license with respect to transmission of
non-broadcast programming and are fully subject to the general copyright
laws.
Various legislative proposals have been introduced and considered from
time to time in Congress that, if adopted, would materially revise the
Copyright Act. The proposals include, among other things, a significant
increase in the rate structure for royalty fees, imposition of restrictions
on carriage of television broadcast programming and elimination of the
compulsory license for cable system carriage of television broadcast signals.
It can be expected that similar bills will be proposed in the future.
Cellular Telephone
Regulation
Federal Regulation. The construction, operation and sale of controlling
interest in cellular telephone systems in the United States is regulated by
the FCC pursuant to the Communications Act of 1934, as amended (the
"Communications Act"). The FCC has promulgated regulations for the
construction and operation of cellular systems, the licensing and
administrative appeals processes and the technical standards for the
provision of cellular telephone service.
Under FCC regulations, two cellular authorizations initially are
available for any given area within each of the 734 FCC-designated markets in
the United States. Apart from the different frequency blocks, there is no
technical difference between Wireline and Non-Wireline systems, and the
operational requirements imposed on Wireline and Non-Wireline licensees are
the same. The regulatory distinction between Wireline and Non-Wireline
frequency blocks affects an applicant's eligibility to apply for an initial
authorization and disappears after initial licensing. After initial
authorization, a Non-Wireline company may purchase interests in a Wireline
system, subject to restrictions on common ownership of Wireline and
Non-Wireline systems in the same market and to any necessary prior approval
of the FCC. Likewise, a company affiliated with a landline telephone service
provider may purchase an interest in a Non-Wireline license subject to the
same restrictions on common ownership and prior FCC approval where necessary.
Prior to the time a cellular system is placed in operation, FCC approval of a
sale is subject to a showing that the seller is not trafficking in cellular
telephone licenses. Once a system has been constructed and placed in
operation, FCC approval for such sales may be obtained without such a
showing. Non-controlling interests in a licensee or construction permit
holder generally may be sold without prior FCC approval. Whenever FCC
approval is required, any interested party may file a petition to dismiss or
deny the application for approval of the proposed transfer.
Under FCC rules, the authorized service area for a cellular licensee in
a market is referred to as the cellular geographic service area ("CGSA").
The CGSA may be coincident with or smaller than the related FCC-designated
market. In all FCC-designated markets not yet operational, at least one cell
must be placed into commercial service within eighteen months after the award
of the construction permit. The official CGSA boundaries are the areas
actually served by the cellular licensees (as computed by a mathematical
formula based on the height and power of the various cells). Cellular
licensees need not obtain FCC authority prior to increasing the CGSA within
the five-year period after the construction permit is initially granted for
the market. However, FCC notification may still be required under certain
circumstances. After the five-year build-out period has expired, any entity
may apply to serve the unserved areas of the FCC-designated market which are
outside of the licensee's CGSA (an "unserved area application"). FCC rules
require that any unserved area application filed by an entity other than a
licensed cellular carrier operating a system adjacent to the unserved area
must propose a single contiguous service area of no less than 50 square
miles.
Changes in a licensee's construction plans that are considered to be
major by the FCC must be approved in advance by the FCC. Changes not
considered to be major, such as changes in cell site locations that do not
result in any enlargement of the service area, may be undertaken without
notification to the FCC. When a cellular system has been constructed and is
ready to be placed in operation, the licensee is required to notify the FCC
that construction has been completed in accordance with the authorization it
received. Immediately upon this notification, the FCC rules authorize the
licensee to offer commercial service to the public. The licensee is then
said to have operating authority.
Cellular licenses are granted for a term of up to ten years, after which
they must be renewed. Licenses may be revoked and license renewal
applications denied for cause. It is possible that there may be competition
for a license upon the expiration of its initial license term. While there
can be no assurance that any license will be renewed, the FCC recently
adopted rules providing for a significant renewal preference to a licensee
that has used its spectrum for its intended purpose, complied with Commission
regulations and the federal communications statutes. If a licensee is
awarded a renewal expectancy, its renewal will be granted without further
consideration of any competing applications.
The FCC's rules also prohibit cellular telephone licensees from imposing
restrictions on the resale of cellular service by third parties who purchase
blocks of mobile telephone numbers from an operational system and then resell
them to the public.
The FCC requires landline telephone companies in each market to offer
reasonable terms and facilities for the interconnection to both cellular
telephone systems in that market to the landline telephone company's network.
Wireline licensees are required to disclose how their systems will
interconnect with the landline network. The Non-Wireline cellular licensee
has the right to interconnect with the landline network in a manner no less
favorable than that of the Wireline licensee, and it may, in its discretion,
request reasonable interconnection arrangements that are different than those
provided to the Wireline licensee in that market. The landline telephone
company must negotiate such requests in good faith and within a reasonable
time.
The FCC also regulates other aspects of the operation and ownership of
cellular telephone systems including restrictions on the level of foreign
ownership of cellular licenses and the bundling of cellular equipment and
services.
In addition to regulation by the FCC, cellular telephone systems are
subject to certain Federal Aviation Administration tower height regulations
respecting the siting, construction, marking and lighting of cellular
transmitter towers and antennas.
The cellular, PCS, paging and conventional mobile telephone systems
operated by Centennial Cellular are licensed by the FCC in the Commercial
Mobile Radio Service ("CMRS"). There can be no assurance that any FCC
requirements currently applicable to Centennial Cellular's CMRS systems will
not be changed in the future.
State and Local Regulation. Following the grant of an FCC
construction permit to an applicant, and prior to the commencement of
commercial service (and prior to construction in certain states), the holder
of the permit may have to obtain certain approvals from the appropriate
regulatory bodies in the states in which it will offer cellular service. In
1981 the FCC preempted the states from exercising jurisdiction in the areas
of licensing, technical standards and market structure. Under recent federal
legislation and implementing FCC regulations, states which regulate rates
were required to petition the FCC by August 1994 if they wish to continue to
so regulate. Of the states in which Centennial Cellular's cellular
operations are located, only Arizona, California, and Louisiana filed
petitions. Those petitions were denied by the FCC although such denials
remain subject to appeal. At present, none of the states in which Centennial
Cellular's cellular operations are located may regulate the entry of cellular
service providers or the rates charged for cellular service. However, they
could regulate other terms and conditions of service.
The siting and construction of the cellular facilities, including
transmitter towers, antennas and equipment shelters may be subject to state
or local zoning, land use and other local regulations. Before a system can
be put into commercial operation, the holder of a construction permit must
obtain all necessary zoning and building permit approvals ("zoning
approvals") for the cell sites and MTSO locations. The time needed to obtain
zoning approvals and the requisite state permits varies from market to market
and state to state.
Recent Legislation; FCC and State Proceedings. On August 10, 1993,
President Clinton signed into law the Omnibus Budget Reconciliation Act of
1993, Title VI, which addressed certain regulatory issues affecting the
mobile radio telecommunications industry. Specifically the legislation (1)
provides for the reallocation of up to 200 MHz of radio spectrum from
government to non-government use, (2) authorizes the FCC to use competitive
bidding to resolve mutually exclusive applications for subscription-based
radio telecommunications licenses, (3) provides for spectrum use fees to be
imposed on radio licensees, and (4) preempts state and local authorities from
regulating entry and rates of commercial mobile radio service providers,
except when the FCC finds, pursuant to a state's specific request, that new
or continued regulation of rates (but not of entry) is required by market
conditions. A number of rulemakings have been instituted by the FCC to
implement the legislation.
Pending Legislation; FCC and State Proceedings. Congress is currently
considering comprehensive legislation designed to bring additional
competition and reduced regulation to various telecommunications markets.
Among numerous proposals, Congress is considering preempting state and local
authority with respect to antenna site approval. While such a provision
would reduce Centennial Cellular's regulatory burdens in certain locations,
there is no guarantee that this proposal will ultimately be included in
legislation, or that such legislation will be enacted.
The FCC currently has a rulemaking pending in which it is considering
adopting a requirement that CMRS operators provide subscribers the same
access as wireline callers to 911 emergency services. The imposition of such
a requirement, if adopted, may result in significant costs to Centennial
Cellular.
In addition, the FCC has a rulemaking pending concerning interconnection
and resale obligations of CMRS providers. The FCC has tentatively concluded
that (1) it would be premature to propose or adopt rules of general
applicability requiring direct interconnection between CMRS providers; and
(2) imposing a resale obligation on most CMRS providers would be in the
public interest. Such rules are not expected to have any material effect on
Centennial Cellular.
In 1994, the FCC issued a notice proposing to extend "equal access"
obligations to all providers of cellular telephone service. Such a proposal
would require cellular operators to provide customers with the capability of
directly accessing the long-distance provider of their choice. To date, the
FCC has rendered no final decision on the proposal. Centennial Cellular does
not expect that an order to extend "equal access" would have a material
effect on its business, but there can be no assurance that this will be the
case.
Radiofrequency Emission Concerns
Media reports have suggested that certain radiofrequency ("RF")
emissions from portable cellular telephones might be linked to cancer.
Centennial Cellular is not aware of any credible evidence linking the usage
of portable cellular telephones with cancer. The FCC currently has a
rulemaking proceeding pending to update the guidelines and methods it uses
for evaluating RF emissions in radio equipment, including cellular
telephones. While the proposal would impose more restrictive standards on RF
emissions from low power devices such as portable cellular telephones, it is
anticipated that all cellular telephones currently marketed and in use will
comply with those standards.
RADIO STATIONS
The Company owns and operates three radio stations serving the Owensboro
and Shepherdsville, Kentucky areas and the Evansville, Indiana area. The
three radio stations share facilities and certain management personnel with
the Company's cable system at that location. Century-ML (as defined
below)owns two radio stations located in and serving areas of Puerto Rico.
These radio stations share facilities and certain management personnel with
Century-ML.
EMPLOYEES
At May 31, 1995, the Company had approximately 2,300 employees. Certain
of the employees of 16 of its cable systems, including three of its largest
systems, are represented by unions. The Company considers its relations with
its employees to be good.
ITEM 2. PROPERTIES.
The principal physical assets associated with the Company's cable
television systems consist of operating plant and equipment, including signal
receiving apparatus, headends and distribution systems and subscriber house
drop equipment. The signal receiving apparatus typically includes a tower,
antennas, ancillary electronic equipment and earth stations for reception of
satellite signals. Headends, consisting of associated electronic equipment
necessary for the reception, amplification and modulation of signals, are
located near the receiving devices. The Company's distribution system
consists principally of fiber and coaxial cables and related electronic
equipment. Subscriber devices consist principally of decoding converters.
The physical components of cable television systems may require maintenance
and periodic upgrading and rebuilding to keep pace with technological
advances. The Company owns or leases property for receiving sites (antenna
towers and headends), microwave facilities and business offices and owns most
of its service vehicles.
With respect to Centennial Cellular's cellular systems, Centennial
Cellular owns or leases sales or administrative offices and sites for the
MTSO's and cell sites. Centennial Cellular also leases office space at 1305
Campus Parkway, Neptune, New Jersey where it has its principal operations
office. Cell sites typically include a tower and transmitting, receiving and
signalling equipment and is connected by landline, microwave or other means
to the cellular systems' computers in the MTSO.
As of May 31, 1995, the Company leases approximately 25,000 square feet
of office space at 50 Locust Avenue, New Canaan, Connecticut, where it has
its corporate headquarters, pursuant to a lease which expires in 1997 and
provides for monthly rental payments of approximately $48,600 through August
31, 1995 and $52,600 from September 1, 1995 to August 31, 1997.
Centennial Cellular leases certain space for equipment in Puerto Rico
from Century-ML Cable Corp. ("Century-ML"), which is 50% owned by the Company
and 50% by an unaffiliated entity. The current annual rent is approximately
$2,400. Further, Centennial Cellular leases certain office space in Puerto
Rico to Century-ML for a current annual rent of $68,850. Further, Centennial
Cellular is engaged in negotiation with Century-ML regarding the lease or use
by Centennial Cellular of fibre plant and facilities of Century-ML for the
alternative access business of Centennial Cellular. The Company believes
that the above transactions and contemplated transactions between it and
Centennial Cellular and/or Century-ML are or will be, as the case may be, on
terms no less favorable to the Company or Century-ML than would be obtainable
at that time in comparable transactions with unaffiliated parties.
The Company considers the properties owned and leased by it to be
suitable and adequate for its business operations.
ITEM 3. LEGAL PROCEEDINGS.
On January 13, 1988, five residents of Colorado Springs, Colorado
brought a class action lawsuit against Colorado Springs Cablevision, Inc.
("CSCI"), an indirect 50% subsidiary of the Company, and other parties in the
Colorado District Court of El Paso County, Colorado. The complaint alleged
that the defendants violated provisions of the Colorado Springs Municipal
Code prohibiting service discrimination and unreasonable rate differences,
and of the Colorado Unfair Practices Act prohibiting predatory pricing and
the imposition of different rates for the purpose of destroying competition,
by charging lower rates for its services in one portion of Colorado Springs
than it charges in the remainder of the City. The named plaintiffs requested
certification to represent a class of CSCI subscribers charged the higher
rates and sought recovery of three times the difference between those rates
and the lower rates charged other subscribers with interest and costs from
approximately April 1, 1986 to the date of judgment. On August 12, 1988, the
District Court for El Paso County, Colorado granted CSCI's motion and
dismissed the plaintiffs' complaint in its entirety with prejudice. The
Court held that there is no private right of action under the Colorado
Springs Municipal Code and that the plaintiffs lacked standing to pursue
their claims under the Colorado Unfair Practices Act. On May 3, 1990, the
Colorado Court of Appeals affirmed the lower court's ruling dismissing the
complaint in its entirety. The Colorado Supreme Court agreed to review the
decision of the Court of Appeals and subsequently on April 13, 1992 reversed
the dismissal of the complaint and remanded the case back to the Court of
Appeals for further proceedings to determine whether the complaint is subject
to dismissal on other grounds.
On November 5, 1992, the Court of Appeals issued a decision denying
dismissal of the complaint and denied rehearing on January 7, 1993. CSCI
sought review of this and related issues in the Colorado Supreme Court by
petition for writ of certiorari, which was denied by order dated July 12,
1993. The Court of Appeals entered its Amended Mandate on July 16, 1993, by
which this case has now been returned to the El Paso County District Court
for further proceedings. Plaintiffs filed an Amended Complaint seeking to
alter their theories of recovery in certain respects and CSCI has responded
to that complaint. In March 1994, plaintiffs filed an amended motion for
class certification. In June 1994, venue of the case was transferred from
the El Paso County District Court to the District Court for the City and
County of Denver.
By Order dated December 2, 1994, the District Court denied plaintiffs'
motion for class certification in its entirety. This ruling had the effect
of limiting the case to the claims of the four remaining individual
plaintiffs. The parties notified the court on April 19, 1995 that they were
engaged in serious settlement negotiations.
On August 25, 1995, the parties filed a joint stipulation for dismissal
of this case with prejudice and informed the court that they had entered into
a settlement agreement resolving all claims in this litigation. The parties'
motion is pending before the court. The terms of the settlement would not
have a material effect on the consolidated financial statements of the
Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no matters submitted to a vote of the Company's shareholders
during the fiscal quarter ended May 31, 1995.
EXECUTIVE OFFICERS OF THE COMPANY.
The names, ages and positions of all of the executive officers of the
Company as of August 21, 1995 are listed below along with their business
experience during the past five years. Officers serve at the discretion of
the Board of Directors. Except as otherwise indicated below, the Company's
officers were elected to their respective positions on December 5, 1985
following the incorporation of the Company as a holding company for
Century-Texas, and have held such positions at all times since December 5,
1985. There are no arrangements or understandings between any officer and
any other person pursuant to which the officer was selected, and except as
otherwise indicated below, there are no family relationships between any
executive officers or any directors of the Company.
Leonard Tow, 67, has been Chairman of the Board of the Company since
October 1989. He has also been a director and the Chief Executive Officer
and Chief Financial Officer of the Company since its incorporation in
December 1985, and of Century-Texas from the date of its organization in 1973
through December 1985. He also served as President and Chief Operating
Officer of the Company from December 1985 to October 1989, and as President
of Century-Texas from 1973 through December 1985. Mr. Tow has been active in
the cable television industry for approximately 28 years. He has also served
as Chairman of the Board of Citizens Utilities since June 1990, as Chief
Executive Officer of Citizens Utilities since July 1, 1990, and as a director
of Citizens Utilities since April 1989. Mr. Tow holds a Ph.D. from Columbia
University and is the husband of Claire L. Tow and the father of Andrew Tow.
Bernard P. Gallagher, 48, has been a director of the Company since
October 1990 and has been President and Chief Operating Officer of the
Company since October 1989. Mr. Gallagher has also been Chairman of the
Board and Chief Executive Officer of Centennial Cellular since August 1991
and has been a director of Centennial Cellular since March 1991. From
February 1990 to August 1991, Mr. Gallagher was President and Chief Operating
Officer of Centennial Cellular. From 1979 to October 1989, Mr. Gallagher
served in various financial and executive capacities at Comcast Corporation,
a cable and cellular company, and its subsidiaries, including Vice President
and Treasurer from November 1984 to October 1989.
Andrew Tow, 36, has been a director of the Company since October 1992.
Since February 1995, Mr. Tow has been Executive Vice President of the Company
and Chairman of the Century Cable Television Division of the Company.
During the current fiscal year, Mr. Tow has been living and working in
Australia overseeing the Company's investment in the pay television business
in that country. From 1991 to 1995, Mr. Tow was Senior Vice President of the
Company and President of the Century Cable Television Division of the
Company. He was a Vice President of the Company from August 1989 to June 25,
1991. He has been involved in the operations of the Company since its
incorporation in December 1985 and with Century-Texas since October 1984.
Andrew Tow is the son of Leonard and Claire Tow.
Michael G. Harris, 49, has been Senior Vice President- Engineering of
the Company since June 26, 1991, and was Vice President, Engineering of the
Company since its incorporation in December 1985. He was Director of
Engineering of Century-Texas from 1973 to 1982 and Vice President,
Engineering of Century-Texas from 1982 to December 1985. Mr. Harris has also
been Senior Vice President, Engineering of Centennial Cellular since August
1991, and was Vice President, Engineering of Centennial Cellular from the
date of its incorporation in 1988 to August 1991.
Scott N. Schneider, 37, has been a director of the Company since October
1994 and Senior Vice President and Treasurer of the Company since June 26,
1991, and has been an Assistant Secretary of the Company since October 1986.
He was a Vice President of the Company from October 1986 to June 25, 1991 and
was Controller of the Company from December 1985 to June 25, 1991. He was
Controller of Century-Texas from December 1982 to December 1985. Mr.
Schneider has also been Senior Vice President, Chief Financial Officer and
Treasurer of Centennial Cellular since August 1991. He was a Vice President
and Controller of Centennial Cellular from the date of incorporation in 1988
to August 1991.
Daniel E. Gold, 59, has been a Senior Vice President of the Company and
President of the Century Cable Television Division of the Company since
February 1995. From July 1994 to January 1995 he was Chief Executive Officer
of the American Society of Composers, Authors and Publishers. Mr. Gold was
Senior Vice President, Operations, of the Century Cable Television Division
of the Company from 1991 to June 1994. Mr. Gold was President and Chief
Executive Officer of the eight television station group of Knight Ridder
Broadcasting Company from 1985 to 1990, and was President and Chief Operating
Officer of Comcast Corporation from 1980 to 1985. Between 1960 and 1980 Mr.
Gold held a variety of positions in the areas of government, law and
broadcasting.
Claire L. Tow, 64, has been Senior Vice President and a director of the
Company since February 1988. She has been involved in the operations of the
Company since its incorporation and with Century-Texas since its
incorporation. Mrs. Tow is the wife of Leonard Tow and the mother of Andrew
Tow.
David Z. Rosensweig, 69, has been a director and the Secretary of the
Company since its incorporation in December 1985 and of Century-Texas from
1982 to December 1985. Mr. Rosensweig has also been a director and Secretary
of Centennial Cellular since its incorporation in 1988. He is a member of
the New York law firm of Leavy Rosensweig & Hyman.
Douglas W. Paul, 41, has been a Vice President of the Company since June
1988. He has also been Vice President, Legal of Centennial Cellular since
August 1991 and was a Vice President of Centennial Cellular from the date of
its incorporation in 1988 to August 1991. From February 1987 to April 1988
he was General Counsel and Secretary of Essex Communications Corp., a cable
company.
Robert J. Larson, 36, has been Vice President - Controller of the
Company since October 1994, was Controller of the Company from June 26, 1991
to 1994 and was Assistant Controller from 1989 to June 25, 1991. Mr. Larson
has been Vice President - Accounting and Administration of Centennial
Cellular since March 1995 and was Vice President - Controller of Centennial
Cellular from October 1994 to March 1995, Controller of Centennial Cellular
from 1990 to October 1994, and was Assistant Controller of Centennial
Cellular from 1989 to 1990. Prior to joining the Company and Centennial
Cellular, Mr. Larson was a manager with Deloitte & Touche.
William J. Rosendahl, 50, has been a Vice President of the Company since
October 1987 and was Director of Corporate Affairs from January 1987 to
October 1987. Prior to that time, he was Director of Corporate Affairs of
Group W Cable, Inc., a cable company.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
Market Information
The Class A Common Stock commenced trading on The Nasdaq Stock Market
("Nasdaq") under the symbol CTYA on January 5, 1995. Prior to such date, the
Class A Common Stock was traded on the American Stock Exchange ("AMEX").
There is no established public market for the Class B Common Stock. The
table set forth below lists the high and low sale prices for the Class A
Common Stock reported on the AMEX for the period from July 1, 1993 through
January 4, 1995, and on Nasdaq for the period from January 5, 1995 through
June 30, 1995. The prices set forth below have not been adjusted to give
effect to the 5% stock distribution paid to holders of record on July 15,
1993 and the 3% stock distribution paid to holders of record on November 10,
1993. The following table sets forth, for the indicated calendar quarters,
the closing price range of the Class A Common Stock as furnished by AMEX
and/or Nasdaq.
1993 High Low
Third Quarter $ 9.75 $7.13
Fourth Quarter 14.25 9.00
1994
First Quarter 12.00 8.75
Second Quarter 8.88 7.13
Third Quarter 9.75 7.00
Fourth Quarter 9.25 6.25
1995
First Quarter 10.13 7.25
Second Quarter 10.13 7.63
On August 21, 1995, the last sale price of the Class A Common Stock, as
reported on Nasdaq, was $10.00 per share. At August 21, 1995, there were
approximately 948 holders of record of shares of Class A Common Stock and
four holders of record of shares of Class B Common Stock.
Stock Distributions and Dividend Policy
In recent years, in recognition of improvements in earnings before
depreciation, amortization, interest and taxes ("operating cash flow"), the
Company has from time to time made pro rata distributions of common stock to
its stockholders. The effect of such distributions is to increase the number
of shares outstanding and reduce the proportionate investment in the Company
represented by each share. For accounting purposes, since the Company
continues to report net losses and has an accumulated deficit, an amount
equal to the aggregate par value ($.01 per share) of the shares distributed
is transferred from additional paid in capital to the common stock account.
If the Company had retained earnings, the accounting treatment would be to
transfer an amount equal to the market value of the shares issued from
retained earnings to additional paid-in capital. Since the Company has
neither retained earnings nor current earnings, the stock distributions
represent a reallocation of the shareholder's investment over an increased
number of shares and do not represent distributions of corporate earnings and
profits.
The Company has never paid a cash dividend on its common stock. The
Company is currently restricted from paying cash dividends by certain of its
debt instruments. Its ability to do so is further limited by provisions of
credit agreements entered into by certain of its subsidiaries that limit the
amount of cash that may be upstreamed to the Company.
ITEM 6. SELECTED FINANCIAL DATA.
The selected consolidated financial data set forth below for the five
years ended May 31, 1995 have been derived from the Company's audited
consolidated financial statements. This data should be read in conjunction
with Management's Discussion and Analysis of Financial Condition and Results
of Operations and the consolidated financial statements and notes thereto
included elsewhere in this Annual Report on Form 10-K.
Year ended May 31,
1995 1994 1993 1992 1991
(Dollars in thousands except per share amounts)
Statement of Operations
Data
Revenues $ 416,687 $ 374,599 $ 345,131 $312,317 $277,049
Cost of services 103,673 83,132 80,715 77,375 68,623
Selling, general and
administrative 110,381 82,368 71,027 67,448 59,559
Regulatory restructuring
charge 4,000 -- -- -- --
Depreciation and
amortization 171,931 151,296 138,547 129,810 116,364
389,985 316,796 290,289 274,633 244,546
Operating income 26,702 57,803 54,842 37,684 32,503
Interest expense 139,001 121,698 112,294 116,516 132,498
Other expense 2,400 -- 7,144 -- 21,702
Loss before income tax
benefit,minority
interest and
extraordinary item (114,699) (63,895) (64,596) (78,832) (121,697)
Income tax benefit (8,061) (5,633) (12,401) (8,291) (33,331)
Loss before minority
interest and
extraordinary item (106,638) (58,262) (52,195) (70,541) (88,366)
Minority interest in
loss of subsidiaries 24,013 16,335 14,404 14,395 8,071
Loss before
extraordinary item (82,625) (41,927) (37,791) (56,146) (80,295)
Extraordinary item-loss
on early retirement
of debt -- -- -- 9,888 --
Net loss $(82,625) $(41,927) $(37,791) $(66,034) $(80,295)
Dividend requirements
on subsidiary
convertible redeemable
preferred stock $ 4,419 $ 5,838 $ 5,883 $ 4,809 $ --
Loss applicable to common
shares $ (87,044) $(47,765) $ (43,674) $(70,843) $ (80,295)
Loss per common share:
Loss before extra-
ordinary item $ (1.01) $ (0.53) $ (0.49) $ (0.69) $ (0.92)
Extraordinary item - - - (0.11) -
Loss $ (1.01) $ (0.53) $ (0.49) $ (0.80) $ (0.92)
Weighted average
number of common
shares outstanding
during the period 86,277,000 89,381,000 88,652,000 88,032,000 87,718,000
Year ended May 31,
1995 1994 1993 1992 1991
(Dollars in thousands)
Balance
Sheet Data
Total assets $2,004,417 $1,350,426 $1,303,484 $1,357,975 $1,192,328
Long-term
debt 1,741,143 1,270,989 1,167,423 1,174,871 1,220,674
Common
stockholders'
deficiency (351,645) (243,628) (215,238) (178,342) (171,349)
See Note 3 of the consolidated financial statements regarding recent
acquisitions and the effect of
such acquisitions on the comparability of the historical financial statements
of the Company.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations (Dollar Amounts in Thousands except subscriber and
share data)
Historically, the Company has earned its revenues primarily from subscriber
fees for services provided by its cable television systems and from the
operations of four radio stations. In addition, the Company's 32.7% owned
subsidiary, Centennial Cellular Corp. ("Centennial"), provides cellular
telephone service to subscribers of twenty-eight cellular telephone systems
in three geographic areas. Centennial also has minority investments in six
cellular telephone systems accounted for by Centennial under the equity
method of accounting. In accordance with Financial Accounting Standards
Board Statement No. 94, the accounts of Centennial are consolidated with
those of the Company for financial reporting purposes for all periods
presented. See Notes 1 and 17 to the consolidated financial statements.
Due to actions by the Federal Communications Commission (the "FCC"), relating
to the reinstitution of rate regulation, as hereinafter described, the rate
structure of the cable television industry, including the Company's business,
has been negatively affected. In view of the continuing changes and recently
published revisions to the FCC rate regulations, the Company is currently
unable to assess the full impact of the 1992 Cable Act upon its future
financial results. The Company implemented new rate and service offerings
whereby subscribers are given the choice of buying certain programming
services individually on a per channel basis or as part of a package of
premium services at a discounted price ("A La Carte Service Offerings").
Several of the Company's systems, along with numerous other cable operators,
received specific inquiries from the FCC regarding their implementation of
this method of offering cable services. In its decisions on the inquiry
letters, the FCC admitted that previous guidelines which cable operators,
including the Company, relied upon may have been confusing. During December
1994, the FCC responded to certain of the letters of inquiry related to A La
Carte Service Offerings. The FCC has, through such responses, effectively
determined that A La Carte Service Offerings limited to six channels or less
will be considered New Product Tiers under the FCC rules (see Regulation). A
La Carte Service Offerings in systems serving approximately 84% of the
Company's subscribers qualify as New Product Tiers. A La Carte Service
Offerings in excess of six channels have not been given New Product Tier
status and it is the intent of the FCC to treat such offerings as regulated
tiers of cable programming service, retroactively to the date of initial
regulation. Such treatment, affecting approximately 16% of the Company's
primary basic subscribers, would result in further reductions in the
Company's rates for such services as well as refunds for previously provided
services. The Company has appealed this determination to the FCC. The
outcome of such appeal cannot be determined at this time.
During July and August 1994, further adjustments to the Company's rates were
made in certain of the Company's cable television systems pursuant to the
FCC's second revision to its rate formula. As a result, the Company
experienced a further decrease in the regulated portion of its services for
the fiscal year ended May 31, 1995. Under the regulatory price cap mechanism
established by the FCC, a portion of the decline was offset in part, by
allowable rate increases during fiscal 1995. Such increases relate to
adjustments for the annual change in the Gross National Producers Price Index
as well as certain increases in programming fees, the addition of new channel
service and so called "external costs" as delineated in the rules. The
Company anticipates that the bulk of such price adjustments will become
effective during the first fiscal quarter of the year ending May 31, 1996.
Fiscal Years Ended May 31, 1995 and May 31, 1994
Revenue for the year ended May 31, 1995 increased by $42,088, or 11.2%, over
the year ended May 31, 1994. Revenue from cable television operations
increased by $13,042, or 4.1%, over the year ended May 31 1994 as a result of
increases in the number of cable television subscriptions. Acquisitions of
cable television systems accounted for 60.2% of the increase, or $7,846. The
increase was partially offset by a decline in revenues related to the
implementation of rate regulations established by the FCC pursuant to the
1992 Cable Act. Average primary basic cable television subscribers ("Basic
Subscribers") for the year ended May 31, 1995 were approximately 995,000 as
compared to approximately 941,200 during the year ended May 31, 1994, an
increase of 5.7%. Average monthly revenue per Basic Subscriber, including
programmer's share of such revenue, was approximately $33.11 during the year
ended May 31, 1995, as compared to approximately $33.49 during the prior
year, a decrease of 1.1%.
Revenue from cellular telephone operations for the year ended May 31, 1995
increased by $29,046 or 51.5%, over the year ended May 31, 1994, primarily as
a result of growth in subscriptions to cellular telephone service. In
addition, acquisitions of twelve cellular telephone markets accounted for
approximately $13,617 or 46.9% of the increase in cellular telephone revenue.
Costs and expenses excluding depreciation and amortization for the year ended
May 31, 1995 increased by $52,554 or 31.8% over the year ended May 31, 1994.
Cost of services for the year ended May 31, 1995 increased by $20,541 or
24.7% over the corresponding period in the prior year, while selling, general
and administrative expenses increased by $28,013 or 34.0%. Cost of services
of the Company's cable television operations increased by $11,813 an increase
of 16.9%, while selling, general and administrative expenses of the Company's
cable television operations for the year ended May 31, 1995 increased to
$84,326, an increase of $19,745 or 30.6% over the $64,581 in the year ended
May 31, 1994. The principal reason for these increases was expenditures
associated with the implementation of the 1992 Cable Act. In addition, the
Company expanded its managerial, customer service and marketing efforts to
accommodate the increased customer service and technical standards imposed by
the 1992 Cable Act. The Company expects that during fiscal 1996 it will
continue to incur incremental costs associated with implementation of, and
compliance with, the 1992 Cable Act.
Cost of services related to the cellular telephone operations during the year
ended May 31, 1995 was $22,152, an increase of $8,728 or 65.0% as compared to
the year ended May 31, 1994. The reason for the increase was the larger
number of retail sales of telephones and the variable costs associated with a
larger revenue and subscription base as well as increased cellular coverage
areas resulting from the continued expansion of Centennial's network and
acquisitions completed during the fiscal year ended May 31, 1994 and 1995.
Selling, general and administrative expenses related to the cellular
telephone operations rose to $26,055, an increase of $8,268 or 46.5% above
the $17,787 recorded during the year ended May 31, 1994. Primarily, the
variable costs associated with a larger revenue base and acquisitions made
during fiscal 1994 and the year ended May 31, 1995 contributed to the
increase. Secondarily, the increase was the result of Centennial increasing
its managerial, customer service and sales staff to accomodate the current
and anticipated growth of its wireless telephone business.
The Company anticipates continued increases in the cost of services and
selling, general and administrative expenses as the growth of its cellular
telephone business continues. In addition, the Company expects that the
start-up and development of its recently acquired wireless telephone markets
will contribute to an increase in these costs and expenses.
The Company recorded a one time charge of $4,000 in the fourth quarter of
1995 in accordance with a plan adopted to restructure the Company's cable
television operations in response to recent FCC mandated rules. The charge
includes related employee severance costs, coincident with the restructuring.
The restructuring charge was substantially cash in nature and did not result
in the writeoff of the Company's assets.
Depreciation and amortization for the year ended May 31, 1995 increased by
$20,635 or 13.6% over the year ended May 31, 1994. The cellular telephone
operations and acquisitions accounted for $17,990 of this increase; the cable
television operations accounted for $2,645.
Operating income for the year ended May 31, 1995 decreased by $31,101 or
53.8% below the year ended May 31, 1994. The cellular operating loss for the
year ended May 31, 1995 of $28,430 increased by $5,940 or 26.4% over the year
ended May 31, 1994.
Interest expense for the year ended May 31, 1995 increased by $17,303 or
14.2% as compared with the year ended May 31, 1994 reflecting higher average
debt levels offset to some extent by lower interest rates in effect during
the year ended May 31, 1995. For the year ended May 31, 1995, the average
debt outstanding was approximately $1,444,000 or $220,000 above the average
outstanding debt balance of $1,224,000 during the year ended May 31, 1994.
The cellular operations accounted for $34,947 or 15.9% of the increase. The
Company's weighted average interest rate excluding borrowings of Centennial
and the Company's 50% owned joint ventures was approximately 9.8% in the year
ended May 31, 1995 as compared to approximately 10.5% in the year ended May
31, 1994. The decrease in such rates is the result of a higher proportion of
the Company's debt associated with bank credit agreements. Interest on bank
financings are based upon short-term floating rates which during the period
were below those of the Company's fixed rate financings. At May 31, 1995,
the Company's effective weighted average variable interest rate on its bank
credit agreements was approximately 6.8%. Additionally, as described below
interest expense related to the Company's interest rate hedge agreements
declined during the year ended May 31, 1995. During the year ended May 31,
1995, the Company incurred interest expense of $2,794 in respect of the
interest rate hedge transactions compared to interest expense of $6,009 in
respect of the interest rate hedge transactions in the year ended May 31,
1994. See "Liquidity and Capital Resources". Centennial's weighted average
interest rate declined to 9.2% for the year ended May 31, 1995 from 9.5% for
the year ended May 31, 1994.
After losses attributable to minority interests in subsidiaries for the year
ended May 31, 1995, a pretax loss of $90,686 was incurred, as compared to a
pretax loss of $47,560 for the year ended May 31, 1994 The income tax
benefit of $8,061 for the year ended May 31, 1995 represents an adjustment
to the deferred tax liability of the Company offset by current state and
local taxes for the period. These tax benefits are non-cash in nature and
are attributable to the Company's acquisitions and results of operations,
calculated in accordance with the Financial Accounting Standards Board
Statement No. 109 for the year ended May 31, 1995 and 1994.
The net loss for the year ended May 31, 1995 of $82,625 represents an
increase of $40,698 or 97.1% over the loss for the year ended May 31, 1994.
The Company expects net losses to continue until such time as the operations
of the cellular telephone systems, cable television systems and investments
in plant associated with rebuilds and extensions of its cable television
systems and expansion of the cellular telephone system infrastructure
generate sufficient earnings to offset the associated costs of acquisitions
and operations described above.
Fiscal Years Ended May 31, 1994 and May 31, 1993
Revenue for the fiscal year ended May 31, 1994 increased by $29,468 or 8.5%,
over the fiscal year ended May 31, 1993. Revenue from cable television
operations increased by $16,281 or 5.4%, over the corresponding fiscal year
as a result of increases in the number of cable television subscriptions and
in the subscriber revenues for cable television services. Average primary
basic cable television subscribers ("Basic Subscribers") for the twelve
months ended May 31, 1994, were approximately 941,200 as compared to
approximately 919,000 during the twelve-month period ended May 31, 1993, an
increase of 2.4%. Average monthly revenue per Basic Subscriber, including
programmer's share of such revenue, was approximately $33.49 during the
twelve months ended May 31, 1994, as compared to approximately $32.77 during
the prior twelve month period, an increase of 2.2%.
Revenue from cellular telephone operations for the fiscal year ended May 31,
1994 increased by $13,187 or 30.5%, over the fiscal year ended May 31, 1993,
primarily as a result of growth in subscriptions to cellular telephone
service.
Costs and expenses excluding depreciation and amortization for the fiscal
year ended May 31, 1994 increased by $13,758 or 9.1% over the fiscal year
ended May 31, 1993. Cost of services for the fiscal year ended May 31, 1994
increased by $2,417 or 3.0% over the corresponding period in the prior year,
while selling, general and administrative expenses increased by $11,341 or
16.0%. Cost of services of the Company's cable television operations
increased by $15, while selling, general and administrative expenses of the
Company's cable television operations for the fiscal year ended May 31, 1994
increased to $64,578 an increase of $8,793 or 15.8% over the $55,785 in the
fiscal year ended May 31, 1993. The principal reason for the increased
selling, general and administrative costs was expenditures associated with
the implementation of the 1992 Cable Act. In addition, the Company expanded
its managerial, customer service and marketing efforts to accommodate the
increased customer service and technical standards imposed by the Cable Act.
Depreciation and amortization for the fiscal year ended May 31, 1994
increased by $12,749 or 9.2% over the fiscal year ended May 31, 1993. The
cellular telephone operations and acquisitions accounted for 37.7% or $4,807
of this increase and the balance reflects capital expenditures made during
fiscal 1993 and during the fiscal year ended May 31, 1994.
Operating income for the twelve months ended May 31, 1994 increased by $2,961
or 5.4% over fiscal 1993. The cellular operating loss for the fiscal year
ended May 31, 1994 of $22,490 decreased by $3,433 or 13.2% below 1993 fiscal
year.
Interest expense for the fiscal year ended May 31, 1994 increased by $9,404
or 8.4% as compared with fiscal year 1993 reflecting higher average debt
levels as well as higher interest rates in effect during the fiscal year
ended May 31, 1994. The Company's weighted average interest rate excluding
borrowings of Centennial and the Company's 50% owned joint ventures was
approximately 10.9% in the fiscal year ended May 31, 1994 as compared to
approximately 9.5% in the prior fiscal year. The increase in such rates is
the result of fixing the interest rate of substantially all of the related
debt through either long-term fixed rate financings or interest rate hedge
transactions, the effects of which are reflected in the foregoing rates. At
May 31, 1994, the Company's effective weighted average variable interest rate
on its bank credit agreement was approximately 6.8%. During the fiscal year
ended May 31, 1994, the Company incurred interest expense of $6,009 in
respect of the interest rate hedge transactions compared to interest expense
of $9,755 in respect of the interest rate hedge transactions in the prior
fiscal year. See "Liquidity and Capital Resources". Centennial's weighted
average interest rate increased from 9.2% for the fiscal year ended May 31,
1993 to 9.5% for the fiscal year ended May 31, 1994.
After losses attributable to minority interests in subsidiaries for the
fiscal year ended May 31, 1994, a pretax loss of $47,560 was incurred, as
compared to a pretax loss of $50,192 in the fiscal year ended May 31, 1993.
The income tax benefit of $5,633 for the fiscal year ended May 31, 1994
represents an adjustment to the deferred tax liability of the Company offset
by current state and local taxes for the period. These tax benefits are
non-cash in nature and are attributable to the Company's acquisitions and
results of operations, calculated in accordance with the Financial Accounting
Standards Board Statement No. 109 for the fiscal year ended May 31, 1994.
The tax benefit of $12,401 for the fiscal year ended May 31, 1993 was
calculated in accordance with Financial Accounting Standards Board Statement
No. 109.
The net loss for the fiscal year ended May 31, 1994 of $41,927 represents an
increase of $4,136 or 10.9% over the loss for the prior fiscal year.
Included in the net loss for the fiscal year ended May 31, 1993, is a charge
of $7,144 related to the early termination of certain interest rate hedge
agreements related to the refinancing of one of the Company's bank credit
agreements, and the subsequent reduction of floating rate debt to which such
agreements were matched. The Company expects net losses to continue until
such time as the operations of the cellular telephone systems, cable
television systems and investments in plant associated with rebuilds and
extensions of its cable television systems and expansion of the cellular
telephone system infrastructure generate sufficient earnings to offset the
associated costs of acquisitions and operations described above.
Liquidity and Capital Resources (Dollar Amounts in Thousands except Share
Data)
The Company has grown through acquisitions as well as upgrading, extending
and rebuilding its existing cable television systems. In addition,
Centennial, since August of 1988, has acquired twenty eight cellular
telephone markets which it owns and manages, all of which are considered to
be in the start-up or early development phase of operations, and equity
investment interests in certain other cellular telephone systems. On March
13, 1995, Centennial successully bid for one of two Metropolitan Trading Area
(MTA) licenses to provide broadband personal communications services ("PCS")
in the Commonwealth of Puerto Rico and the U.S. Virgin Islands. Since both
the cable television and wireless telephone activities are capital intensive,
the Company continues to seek various sources of financing to meet its needs,
including growth in internally generated cash, bank financing, joint ventures
and partnerships and public and private placements of debt and equity
securities of the Company and its subsidiaries. Subsidiaries of the Company
have entered into credit agreements with various bank groups and private
lending institutions providing for an aggregate of approximately $975,000 of
potential borrowing capacity as of August 4, 1995.
The Company's internally-generated cash along with third party financing,
primarily bank borrowings and the issuance of public debentures, has enabled
it to fund its working capital requirements, capital expenditures for
property, plant and equipment, acquisitions, investments and debt service.
In addition, Centennial has funded certain of its obligations through the
sale of equity securities to third parties. The Company has funded the
principal obligations on its long-term borrowings by refinancing the
principal with expanded bank lines of credit, through the issuance of debt
securities in the public market and through private institutions as well as
internally generated cash flow. 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. Certain of the debt
instruments to which the Company and its subsidiaries are a party impose
restrictions on the incurrence of indebtedness.
The Company's future commitments for property, plant and equipment consist of
usual upgrades, extensions, betterments and replacements of cable plant and
equipment and start-up expenditures for the wireless telephone systems.
During the fiscal year ended May 31, 1995 the Company made capital
expenditures of $109,737 as compared to $55,024 for the prior fiscal year.
During the fiscal year ended May 31, 1995, Centennial made capital
expenditures of $17,538 or 16.0% of the Company's total capital expenditures.
As the Company completes capital projects started in prior fiscal years, it
is anticipated that the level of capital expenditures for its cable
television systems exclusive of those related to acquisitions described
herein will decline to an annualized rate of approximately $70,000. Various
construction projects have been undertaken to expand the operations of
certain cable television systems into adjacent and previously unbuilt areas
and to rebuild and upgrade its existing cable system plant. The Company is
currently considering the further upgrade of its cable television
distribution systems in certain of its cable television markets to expand its
capability for the delivery of video, voice and data transmission. Should
the Company undertake such an upgrade plan, it would result in an
acceleration of capital expenditures which would otherwise be incurred in
future years. The Company has not yet determined the feasibility, timing or
cost of such projects. Cellular telephone capital projects include the
addition of cell sites for greater coverage areas as well as enhancements to
the existing infrastructure of the cellular system. Centennial expects
capital expenditures for its cellular telephone markets of $20,000 over the
next fiscal year. Centennial during fiscal 1996 will begin construction of
its PCS network in Puerto Rico. Centennial currently estimates that the cost
to build out the infrastructure of its PCS network will be approximately
$75,000 in the aggregate over the next three years, approximately $55,000 of
which will be incurred during fiscal 1996. Funds for cable television
capital projects and related equipment are available from internally
generated cash and other financing resources. Funds for Centennial's capital
expenditure requirements may be provided by other bank borrowings, debt or
equity issuances or other financing resources.
For the fiscal year ended May 31, 1995, earnings were less than fixed charges
by $119,118. However, such amount reflects non-cash charges totaling
$176,350, consisting of depreciation and amortization of $171,931 and
non-cash subsidiary preferred stock dividends of $4,419. Historically, cash
generated from operating activities has exceeded fixed charges. The Company
believes that its cable television operations will continue to generate
sufficient cash to meet the debt service obligations under the debt
instruments applicable to its cable television businesses. It is anticipated
that in the next fiscal year, cash generated from cellular telephone
operations will not fully cover required capital expenditures and the debt
service under its credit agreements and preferred capital stock dividends.
It is currently anticipated that any shortfall will be made up either through
equity issuances or additional borrowing. In that regard, Centennial, during
July of 1994 completed a rights offering to holders of its Class A and Class
B common shares with net proceeds of $86,500.
The following table sets forth, for the periods indicated, the Company's net
cash provided by operating activities before interest payments ("net cash
provided") and the Company's principal uses of such cash.
Fiscal Year Ended May 31,
1995 1994 1993
Amount % Amount % Amount %
Net cash provided by
operating activities $82,060 40.0 % $101,184 47.7% $ 71,791 38.2%
Interest paid (including
debt issuance costs) 123,005 60.0 110,730 52.3 158,933 61.8
Net cash provided $205,065 100.0 % $211,914 100.0% $187,724 100.0%
Principal uses of
net cash provided:
Interest paid (including
debt issuance costs) $123,005 60.0 % $110,730 52.3% $115,933 61.8%
Property, plant and
equipment(excluding
acquisitions) 109,737 53.3 55,024 25.9 45,280 24.1
Total $232,742 113.3 % $165,754 78.2% $161,213 85.9%
Cash (required)
provided $(27,677) (13.3)% $ 46,160 21.8% $ 26,511 14.1%
Net cash provided by operating activities of $205,065 for the year ended May
31, 1995 and cash on hand were sufficient to fund the Company's expenditures
for property, plant and equipment and debt service. In addition, funds
provided by financing and investing activities of $188,662 were available for
general corporate purposes. The Company will continue to rely on internally
generated cash as well as various financing activities to fund these
requirements.
The following table sets forth the primary sources and uses of funds from
financing and investing activities for the periods indicated:
Fiscal Year Ended May 31,
1995 1994 1993
Proceeds from long-term borrowings $ 761,984 $346,584 $ 742,927
Principal payments on long-term debt (306,038) (277,429) (755,629)
Purchase of treasury stock (110,092) -- --
Issuance of common stock 50,617 2,672 1,769
Joint venture contributions 25,871 -- --
Cash provided by (used in)
financing activities 422,342 71,827 (10,933)
Net capital (invested in) returned
from equity investments (887) 896 (2,300)
Acquisition of and investments
in cable television, wireless
telephone systems, marketable
securities and other assets (232,793) (117,447) (11,159)
Cash available (required from)
operating activities $ 188,662 $ (44,724) $(24,392)
Financing and Capital Formation; The Company
On June 30, 1994, CCC-II, Inc. ("CCC-II"), a subsidiary of the Company that
owns the Company's interest in certain cable television systems that
accounted for approximately 45% of the Company's consolidated operating cash
flows in the year ended May 31, 1994, entered into a three year $350,000
unsecured revolving credit facility which converts to a five year term loan
with a syndicate of banks led by Citibank, N.A. as agent for the syndicate.
The proceeds of the facility may be used for acquisitions, working capital
and general corporate purposes. The interest rates payable on borrowings
under the credit facility are based on, at the election of CCC-II, (a) the
base rate of interest announced by Citibank, N.A. plus 1/8% to 3/4% per annum
based upon certain conditions, (b) the London Interbank Offering Rate plus 1
1/8% to 1 3/4% per annum based upon certain conditions, or (c) the average
consensus bid rates of certificate of deposit dealers for the purchase at
face value of certificates of deposit of Citibank, N.A. plus 1 1/4% to 1
7/8% per annum based upon certain conditions. The credit facility restricts
the incurrence of certain additional debt by CCC-II, limits the ability of
CCC-II to pay dividends to the Company and requires that certain operating
tests be met. The Company is in compliance with the terms of the credit
facility.
On January 25, 1993, CCC-I, Inc. ("CCC-I"), a subsidiary of the Company that
owns the Company's interest in certain cable television systems that
accounted for approximately 30% of the Company's consolidated operating cash
flows in the year ended May 31,1993, entered into a three year, $300,000
unsecured revolving credit facility which converts to a five year term loan
with a syndicate of banks led by Citibank, N.A. as agent for the syndicate.
The proceeds of the facility were used by the Company to repay existing
indebtedness and will be used for working capital and general corporate
purposes. The repayment by the Company of its existing indebtedness
discharged all of the Company's obligations under its then-existing credit
agreement and, as a result, such agreement was terminated. The interest
rates payable on borrowings under the new credit facility are based on, at
the election of CCC-I, (a) the base rate of interest announced by Citibank,
N.A. plus 0 to 1/2% per annum based upon certain conditions, (b) the London
Interbank Offering Rate plus 1 to 1 1/2% per annum based upon certain
conditions, or (c) the average of consensus bid rates of certificate of
deposit dealers for the purchase at face value of certificates of deposit of
Citibank, N.A. plus 1 1/8% to 1 5/8% per annum based upon certain conditions.
The new credit facility restricts the incurrence of certain additional debt
of CCC-I, limits the ability of CCC-I to pay dividends to the Company and
requires that certain operating tests be met. The Company is in compliance
with the terms of the credit facility.
On August 7, 1995, CCC-I paid in full the balance due on the $300,000 credit
facility with proceeds from a three year $525,000 unsecured revolving credit
facility. The new credit agreement converts to a five year term loan on
August 7, 1998. The repayment by CCC-I of its existing indebtedness
discharged all of CCC-I's obligations under its then-existing credit
agreement and, as a result, such agreement was terminated. The interest
rates payable on borrowings under the new credit facility are based on, at
the election of CCC-I, (a) the base rate of interest announced by Citibank,
N.A. plus 1/8% to 7/8% per annum based upon certain conditions, (b) the
London Interbank Offering Rate plus 1 1/8% to 1 7/8% per annum based upon
certain conditions, (c) the average of consensus bid rates of certificate of
deposit dealers for the purchase at face value of certificates of deposit of
Citibank, N.A. plus 1 1/8% to 1 7/8% per annum based upon certain conditions.
The credit facility restricts the incurrence of certain additional debt of
CCC-I, limits the ability of CCC-I to pay dividends to the Company and
requires that certain operating tests be met.
In connection with the terms and covenants of certain of the Company's bank
credit facilities, certain of the Company's subsidiaries were required to
enter into various interest rate hedge agreements (the "Hedge Agreements").
The credit facilities required that at least 50% of outstanding debt under
such facilities be hedged with agreements with an average life of three
years. The Hedge Agreements are designed to limit the Company's exposure to
the variable interest rate structure of the bank credit facilities. The
Hedge Agreements are structured such that the Company pays a fixed rate of
interest based upon a notional amount and in return receives a variable rate
of interest based on either three (3) month or six (6) month LIBOR. At May
31, 1995, the aggregate notional amount of the Hedge Agreements was $115,000
with a weighted average interest rate of 8.12%. Based upon current market
conditions and the current mix of fixed and floating rate debt securities of
the Company and the elimination of any future hedge requirements in its
current bank credit facilities, the Company currently has no plans to renew,
extend or replace the Hedge Agreements upon expiration.
On March 6, 1995, the Company issued $250,000 of ten year unsecured Senior
Notes. The interest rate of these notes is payable semi annually at an
interest rate of 9 1/2%. The maturity date of the notes is March 1, 2005.
Costs associated with the offering of $4,983 were capitalized and will be
written off on a straight-line basis over the life of the issue.
On October 26, 1993, the Company filed a registration statement with the
Securities and Exchange Commission relating to the shelf registration of
$500,000 of the Company's debt securities, augmenting the remaining $2,000
under a prior shelf registration. The registration statement became
effective July 14, 1994. The debt securities may be issued from time to time
in series on terms to be specified in one or more prospectus supplements at
the time of the offering. If so specified with respect to any particular
series, the debt securities may be convertible into shares of the Company's
Class A Common Stock. As of August 20, 1995, there was $252,000 available
for issuance under this registration.
The Company on March 6, 1995, filed a registration statement on Form S-3 with
the Securities and Exchange Commission (the "SEC"). The statement was filed
to permit the issuance of 3,581,632 shares of the Company's Class A Common
Stock, such shares to be issued in connection with the acquisition of certain
cable systems. (See Acquisitions). The registration statement is effective.
Financing and Capital Formation; Centennial
On August 30, 1991, Citizens Cellular Company merged with and into
Centennial, and in connection with the merger, Centennial issued to Citizens
Utilities Company ("Citizens"), Convertible Redeemable Preferred Stock valued
at $128,450 and Class B Common Stock representing 18.8% of the then common
equity of Centennial. In connection with an amendment to the Services
Agreement with the Company, Centennial issued its Second Series Convertible
Redeemable Preferred Stock valued at $5,000 to the Company. Although the
Convertible Redeemable Preferred Stock and the Second Series Convertible
Redeemable Preferred Stock carry no cash dividend requirement during the
first five years, the shares accrete liquidation preference and redemption
value at the rate of 7.5% per annum, compounded quarterly, in each of years
one through five. Assuming no change in the number of shares of such
classes outstanding, the fully accreted liquidation preference and redemption
value of the Convertible Redeemable Preferred Stock and the Second Series
Convertible Redeemable Preferred Stock, in years six through fifteen, will be
$186,287 and $7,252, respectively. Beginning in year six through year
fifteen, the holders of the Convertible Redeemable Preferred Stock and the
Second Series Convertible Redeemable Preferred Stock will be entitled to
receive cash dividends at the rate of 8.5% per annum. Assuming no change in
the number of shares of such classes outstanding, the annual dividend
payments, commencing in 1997, to be made in respect of the Convertible
Redeemable Preferred Stock and the Second Series Convertible Redeemable
Preferred Stock will be $15,834 and $616, respectively. The Convertible
Redeemable Preferred Stock and the Second Series Convertible Redeemable
Preferred Stock have mandatory redemption provisions at the end of fifteen
years.
It is anticipated that cash generated from Centennial's cellular telephone
operations will not be sufficient in the next several years to cover
interest, the preferred stock dividend requirements that commence in fiscal
1997 and required capital expenditures and that any shortfall will be made up
either through debt and equity issuances or additional financing arrangements
that may be entered into by Centennial. Centennial continues to seek various
sources of external financing to meet its current and future needs, including
bank financing, joint ventures and partnerships, and public and private
placements of debt and equity securities of Centennial. Although to date,
Centennial has been able to obtain financing on satisfactory terms, there is
no assurance that this will be the case in the future. In that regard,
Centennial on July 22, 1994, successfully completed its rights offering
involving the distribution to holders of record of Centennial's Class A
Common Stock ("Centennial Stock") outstanding on July 7, 1994 (the "Record
Date") transferable subscription rights (the "Rights") to subscribe for and
purchase an aggregate of 3,098,379 additional shares of Centennial Stock
based on 6,887,287 shares of Centennial Stock outstanding on the Record Date
for a subscription price of $14.00 per share. Record date stockholders
received 0.45 Right for each share of Centennial Stock owned by them and were
entitled to purchase one share of Centennial Stock for each full Right held.
Holders of Rights purchased an aggregate of 2,988,478 of the 3,098,379 shares
of Class A Common Stock. The remaining shares were sold pursuant to the
oversubscription privilege and were distributed pro rata among the holders of
Rights who requested an aggregate of 235,746 additional shares pursuant to
the oversubscription privilege.
Centennial also distributed to the Company and Citizens, the holders of
record of all of the shares of Centennial Class B Common Stock outstanding as
of the Record Date, nontransferable subscription rights (the "Class B
Rights") to subscribe for and purchase an aggregate of approximately
3,272,311 additional shares of Centennial Class B Common Stock. The Company
and Citizens each exercised all of the Class B Rights distributed to them.
The Company's obligation with respect to the exercise was $37,200. Such
amount was paid by the Company on July 22, 1994. The net proceeds of
approximately $86,500 from the rights offering (after deducting soliciting
fees and expenses of approximately $2.7 million) were used by Centennial for
general corporate purposes including the financing of working capital,
capital expenditures and acquisitions.
During fiscal 1994, Centennial filed a shelf registration statement with the
SEC for up to 8,000,000 shares of Centennial's Class A Common Stock that may
be offered from time to time in connection with acquisitions. At August 10,
1995, there were 4,465,896 shares available for issuance under this
registration statement.
Centennial on April 6, 1995, filed a shelf registration statement with the
SEC for the issuance of $500,000 of Centennial's debt securities. The debt
securities may be issued from time to time in series on terms to be specified
in one or more prospectus supplements at the time of the offering. If so
specified with respect to any particular series, the debt securities may be
convertible into shares of Centennial's Class A Common Stock. As of May 31,
1995, $400,000 remained available for issuance.
On November 15, 1993, Centennial issued $250,000 eight year unsecured senior
notes at an interest rate of 8 7/8% (the "8 7/8% Notes"). Centennial used
$182,700 of the net proceeds to retire in full all principal amounts
outstanding under the bank credit facility then in effect. The remaining
amount of approximately $62,600 (after debt issuance costs) was used for
general corporate purposes, including those described above. On May 11,
1995, Centennial issued $100,000 of ten year unsecured Senior Notes at an
interest rate of 10 1/8% (the "10 1/8% Notes"). At May 31, 1995, the net
proceeds of approximately $95,600 were available for general corporate
purposes. Both debt instruments contain similar limitations on certain
"restricted payments" included, but not limited to, dividends and investments
in unrestricted subsidiaries and other persons. Further, the debt securities
contain restrictions on the incurrence of certain additional debt and
limitations on Centennial's ability to incur liens with respect to additional
indebtedness.
In order to meet its obligations with respect to its debt and preferred stock
obligations, it is important that Centennial continue to improve operating
cash flow. In order to do so, Centennial's revenues must increase at a
faster rate than operating expenses. Increases in revenues will be dependent
upon continuing growth in the number of subscribers and maximizing revenue
per subscriber. Centennial has substantially completed the development of its
managerial, administrative and marketing functions, and is continuing the
construction of cellular systems in its existing and recently acquired
markets in order to achieve these objectives. There is no assurance that
growth in subscribers or revenue will occur. In addition, Centennial's
participation in the PCS business is expected to be capital intensive,
requiring network buildout costs of approxiately $75,000 over the next three
years. Further, due to the start-up nature of the PCS business, Centennial
expects the PCS business to require additional cash investment to fund its
operations over the next several years. The PCS business is expected to be
highly competetive with the two existing cellular telephone providers as well
as the other MTA PCS license holder. There is no assurance that the PCS
business will generate cash flow or reach profitability. Even if operating
cash flow does increase, it is anticipated that cash generated from
Centennial's cellular telephone operations and PCS business will not be
sufficient in the next several years to cover interest, the preferred stock
dividend requirements that commence in fiscal 1997 and required captial
expenditures. Centennial anticipates that shortfalls may be made up either
through debt and equity issuances or additional financing agreements that may
be entered into by Centennial.
Acquistions - Cable Television
On March 2, 1993, the Company and Citizens ("the Century/Citizens Joint
Venture") entered into an agreement to acquire the assets of two cable
television systems which serve in the aggregate approximately 45,000 primary
basic subscribers. The aggregate purchase price for the cable television
systems is $89,500 subject to adjustment. Citizens and the Company have
agreed that they will own and operate the cable television systems in a joint
venture structure in which each company will have a 50% ownership interest.
The obligations of the Century/Citizens Venture and the seller under the
agreement are subject to the satisfaction of various closing conditions. On
September 30, 1994, the Century/Citizens Joint Venture completed the
acquisition of one of these cable television systems serving approximately
24,000 primary basic subscribers. The purchase price of approximately
$51,900 was funded by the Company and Citizens equally.
On March 1, 1995, the Company acquired cable television systems located in
California, Colorado, Idaho, Montana and Washington for a purchase price
consisting of approximately $56,000 (subject to adjustment) in cash ($18,000
of which was paid to the sellers and $38,000 of which was used to satisfy
certain liabilities related to the acquired cable television systems) and the
issuance of 3,581,632 shares of Class A Common Stock of the Company (valued
at $12.25 per share, subject to post-closing adjustment based on the price
performance of the Class A Common Stock). The cash portion of the purchase
price was funded by available bank lines of credit. At February 28, 1995,
these cable television systems served an aggregate of approximately 45,000
basic subscribers.
On November 28, 1994, the Company entered into an agreement to acquire the
cable television systems serving Anaheim, Hermosa Beach/Manhattan Beach,
Fairfield and Rohnert Park/Yountville, California for an aggregate purchase
price of $286,000, subject to adjustment, payable in cash. At September 30,
1994, such cable television systems served an aggregate of approximately
135,000 primary basic subscribers. The obligation of the Company to
consummate this transaction is subject to certain closing conditions,
including the approval of the relevant franchise authorities and other
regulatory approvals. The Company anticipates completing this acquisition
during the first six months of fiscal 1996.
Acquisitions - Centennial
On June 29, 1994, Centennial acquired the non-wireline cellular telephone
system serving Jonesboro, Arkansas, representing approximately 201,000 Net
Pops. The purchase price for this acquisition was $18,500 subject to
adjustment, consisting of approximately $4,500 in cash and 700,670 registered
shares of Centennial Class A Common Stock valued at approximately $14,000.
On June 30, 1994, Centennial acquired the non-wireline cellular telephone
system serving Iberville, Louisiana, representing approximately 131,000 Net
Pops. The purchase price for this acquisition was $12,100 consisting of
approximately $750 in cash and 639,055 registered shares of Centennial Class
A Common Stock valued at approximately $11,350.
On August 23, 1994, Centennial acquired the cellular telephone systems
serving Louisiana RSA #3, Louisiana RSA #4 and Mississippi RSA #8,
representing an aggregate of approximately 381,500 Net Pops. The purchase
price for the acquisition was $45,500, subject to adjustment, consisting of
approximately $8,000 in cash and 2,345,953 registered shares of Centennial's
Class A Common Stock valued at $37,500.
On September 21, 1994, Centennial acquired the non-wireline cellular
telephone system serving Jackson, Iowa, representing approximately 107,800
Net Pops. The purchase price for this acquisition was $15,500 consisting of
approximately $5,000 in cash and 611,354 shares of Centennial Class A Common
Stock valued at approximately $10,500.
On September 30, 1994, Centennial acquired the non-wireline cellular
telephone license serving the Huntington-Marion, Indiana market representing
approximately 145,200 Net Pops. The purchase price for this acquisition was
approximately $18,400 consisting of approximately $4,500 in cash and 844,863
registered shares of Centennial Class A Common Stock valued at approximately
$13,900.
On October 24, 1994, Centennial acquired the non-wireline cellular telephone
system serving Louisiana RSA #7, representing approximately 170,900 Net Pops.
The purchase price for the acquisition was $17,000, consisting of
approximately 998,167 registered shares of Centennial Class A Common Stock
valued at $17,000.
On April 18, 1995, Centennial acquired the non-wireline cellular telephone
systems serving Michigan RSA #6 and Michigan RSA #7 representing an aggregate
of approximately 352,600 Net Pops. The aggregate purchase price for these
markets was $42,960, subject to adjustment, consisting of 898,000 registered
shares of Centennial Class A Common Stock (valued at $20 per share, subject
to post-closing adjustment based on the price performance of the Centennial
Class A Common Stock) and approximately $25,000 in cash.
On June 30, 1995, Centennial acquired the non-wireline cellular telephone
systems serving (a) Newtown, LaPorte, Starke, Pulaski, Jasper and White,
Indiana, (b) Kosciusko, Noble, Steuben and Lagrange, Indiana, (c) Williams,
Defiance, Henry and Paulding, Ohio and (d) Copiah, Simpson, Lawrence,
Jefferson Davis, Walthall and Marion, Mississippi, representing an aggregate
of approximately 608,100 Net Pops. The above-described systems were acquired
by Centennial in exchange for Centennial's non-wireline cellular telephone
systems serving the Roanoke, Virginia MSA, the Lynchburg, Virginia MSA, North
Carolina RSA #3 and Iowa RSA #5, representing an aggregate of approximately
644,000 Net Pops. Simultaneously with the consummation of the transaction
described above, Centennial sold its 72.2% interest in the non-wireline
cellular telephone system serving the Charlottesville, Virginia MSA,
representing an aggregate of approximately 94,700 Net Pops, for a cash
purchase price of approximately $9,452 subject to adjustment.
In summary, during fiscal 1995, Centennial acquired 10 markets covering
1,489,900 Net Pops. The aggregate purchase price for these acquisitions was
$173,860. The purchases were funded with cash in the amount of $51,761 and
7,023,383 shares of Centennial Class A Common shares valued at $122,099
Centennial is negotiating definitive purchase and sale agreements based upon
a letter of intent which was executed on May 30, 1995 to (i) obtain a
controlling interest in the non-wireline cellular telephone system serving
the Lafayette, Louisiana MSA in exchange for Centennial's non-wireline
cellular telephone system serving the Jonesboro, Arkansas RSA and a cash
payment by Centennial of approximately $5,200, subject to adjustment, and
(ii) obtain minority interests in the Elkhart, Indiana and Lake Charles,
Louisiana MSAs for a cash payment of approximately $2,950. Centennial's
obligation to consummate these transactions is subject to the execution of
the definitive purchase and sale agreements which will contain various
closing conditions, including FCC and other regulatory approvals. There can
be no assurance that the definitive purchase agreements will be executed, or
if executed, that the closing conditions set forth therein will be satisfied.
Centennial Personal Communications Services ("PCS")
Centennial was the successful bidder for one of two Metropolitan Trading Area
(MTA) licenses to provide broadband personal communications services in the
Commonwealth of Puerto Rico and the U.S. Virgin Islands. The licensed area
represents approximately 3,623,000 Net Pops. The amount of the final bid
submitted by Centennial was $54,672. A non-refundable deposit of $10,934,
representing approximately 20% of the purchase price, was made in connection
with the bid, and the balance of $43,738, was paid on June 29, 1995.
Centennial currently estimates that the cost to build out the infrastructure
of the systems will be approximately $75,000, in the aggregate over the next
three years. Centennial is exploring various sources of external financing
including but not limited to bank financing, joint ventures, partnerships and
placement of equity securities of Centennial. Centennial used a portion of
the net proceeds from the sale of the 10 1/8% Notes to pay the balance of the
purchase price for the license.
Centennial also plans to participate in the alternative access business in
Puerto Rico pursuant to FCC requirements for interstate service and pursuant
to an authorization issued to Centennial in December 1994 by the Public
Service Commission of the Commonwealth of Puerto Rico for intrastate service.
The issuance of the authorization is being challenged by the local telephone
service provider based on a claim to a statutory monopoly in the provision of
intrastate telecommunications services. Centennial is actively defending the
authorization against the challenge. There is no assurance that the matter
will be decided in Centennial's favor.
Centennial's participation in the PCS business is expected to be capital
intensive, requiring network buildout costs of approximately $75,000 over the
next three years. In addition, due to the startup nature of the PCS
business, the Company expects the PCS business to require additional cash
investment to fund its operations over the next several years. The PCS
business is expected to be highly competitive with the two existing cellular
telephone providers as well as the other MTA PCS license holder. There is no
assurance that the PCS business will generate cash flow or reach
profitability.
Investments
Australian Pay Television
Since fiscal 1994, the Company has invested through a wholly-owned subsidiary
approximately $92,206 in East Coast Pay Television Pty. Limited, an
Australian company ("ECT"), which is pursuing opportunities to own, operate
and invest in pay television services in Australia (which is an emerging pay
television market). Such investment was effected through the acquisition by
the Company of convertible debentures and ordinary shares of ECT representing
a 76.2% economic interest in ECT. In conjunction with such interest, the
Company has the right to designate five of the seven directors of ECT and to
approve certain corporate transactions. The Company has also entered into
management agreements with ECT and has agreed to fund up to an aggregate of
$20 ,000 for certain costs and working capital requirements.
ECT, through a wholly owned subsidiary, owns Satellite Subscription Broadcast
License A ("Satellite License A"), one of only three licenses which may be
granted by Australian authorities prior to July 1997 for direct-to-home
("DTH") satellite television broadcasting and which allows ECT to offer four
channels of programming via DTH satellite. Australis Media Limited
("Australis"), another pay television company in Australia, owns Satellite
Subscription Broadcast License B, the second of the three licenses currently
available in Australia for DTH satellite television broadcasting, which
allows it to offer four channels of programming via DTH satellite. ECT and
Australis have entered into agreements pursuant to which ECT will offer its
four channels of programming (the "License A Package") for distribution
individually as a single four channel package or as part of Australis' multi-
channel basic programming package known as the GALAXY Package. The
programming is distributed via DTH satellite, microwave multi-point
distribution system ("MDS") and other transmission technologies. The GALAXY
Package will be distributed by Australis through its distribution facilities
in six largest capital cities in Australia and in regional Western Australia
and by its Franchisees to substantially all of the remaining population of
Australia.
The distribution arrangements are subject to an agreement with Australis,
which is subject to regulatory review and approval, pursuant to which ECT has
the right to receive 25% of Australis' adjusted net cash flow from
broadcasting services and operations. Such percentage may be adjusted
downward depending upon whether ECT elects to fund a specified portion of any
funds expended by Australis to establish transmission, subscriber management,
customer service and certain other facilities as provided for in the
agreement. Notification has been received from one of the regulatory
authorities that certain aspects of this agreement raise concerns.
Discussions regarding such concerns are continuing and no assurance can be
given as to the ultimate outcome.
ECT, Australis and its other two Franchisees have acquired control of
substantially all of the currently issued licenses which can be used for
transmission of pay television programming via MDS in Australia. ECT owns or
controls all of the currently issued licenses which entitle it to transmit
pay television programming via MDS in most of coastal New South Wales and all
of Tasmania (including Wollongong, Hobart and Newcastle, Australia and
surrounding areas) (the "ECT Franchise Areas") and has entered into a
franchise agreement with Australis pursuant to which it has the exclusive
right (and is obligated) for at least a ten year period (with an option to
renew for an additional ten years) to deliver in each of the ECT Franchise
Areas any subscription broadcast service supplied by Australis, including the
GALAXY Package. As of December 1994, the ECT Franchise Areas contained
approximately 717,000 households or approximately 13% of all Australian
households.
Programming for the License A Package is provided by XYZ Entertainment Pty.
Limited ("XYZ"), a joint venture in which the Company holds a 25% interest.
The Company's 25% interest in XYZ is derived through the Company's joint
venture with United International Holdings, Inc., a leading international
provider of pay television services which holds interests in two other
Franchisees of Australis. Programming provided by XYZ includes Discovery
Australia, a documentary, adventure, history, and lifestyle channel; Red, a
music video channel; Max/Classic Max, a children and family channel; and
Arena, a general entertainment channel.
The Company has also acquired an approximate 2% economic interest in
Australis for approximately $10,000.
ECT has entered into a long-term agreement with FOXTEL pursuant to which
FOXTEL has agreed to distribute the License A Package as well as two
additional channels throughout Australia over FOXTEL's proposed cable
television network. FOXTEL, a joint venture between Telstra Corporation
Limited, the government-owned Australian national telecommunications carrier,
and The News Corporation Limited, a major international media and
entertainment company, owns the remaining 50% of XYZ.
The Australian operations described above are expected to be capital
intensive requiring funds for the buildout of the franchise infrastructure,
maintenance of its satellite distribution business, and the development of
its programming. In order to meet such requirements, ECT is currently
evaluating various financing alternatives including bank borrowings, debt or
equity issuances in the public and private markets and other financing
resources, including funding from the Company. There is no assurance ECT
will be successful in obtaining such funding on favorable terms.
The assets associated with the investments in Australia are in the
development stage and not yet operational. As of May 31, 1995, the Company
has an aggregate investment in the Australian pay subscription television
business of approximately $107,945.
Stock Repurchase
On March 10, 1995, the Company purchased 20,000,000 shares of its Class B
Common Stock from Sentry Insurance a Mutual Company, of Stevens Point,
Wisconsin ("Sentry Insurance") at an aggregate price of $110,000 utilizing
existing credit lines. For the present, the acquired shares will be held in
the Company's treasury. Upon acquisition the Class B shares were converted
automatically to Class A shares. Prior to this acquisition 65,406,115
shares of the Company's Class B Common Stock were outstanding of which
23,134,056 were held by Sentry Insurance.
On December 21, 1994, Centennial announced that its Board of Directors
authorized the repurchase, from time to time, of up to 1,000,000 shares of
Centennial's Class A Common Stock, depending on prevailing market conditions.
Regulation
On October 5, 1992, Congress enacted the Cable Television Consumer Protection
and Competition Act of 1992 ("Act"). The Act substantially reregulates the
cable television industry and imposes numerous requirements, including
provisions regarding rates which may be regulated by the applicable local
franchising authority and those to be regulated by the Federal Communications
Commission ("FCC"), exclusive programming arrangements, the carriage of
broadcast signals, customer service standards, leased access channels, VCR
compatibility and various other matters. Although this regulation under the
Act will be detrimental to the Company, it is premature to predict the full
impact of the Act on the Company. This will be dependent, among other
factors, on the interpretation to be afforded by the FCC and the courts to
both the Act and regulations as well as the actions of the Company in
response thereto.
Virtually all of the Company's cable systems are subject to rate regulation.
The Act (i) mandates that the FCC establish rate standards for basic cable
service rates and customer equipment which may be regulated by the applicable
local franchising authority, (ii) requires the FCC, upon complaint from a
franchising authority or a subscriber, to review rates for additional tiers
of cable service, (iii) regulates rates for mandatorily offered commercial
leased access channels and (iv) eliminates the prior automatic 5% annual
increase for basic rates. Rates for channels offered as individual purchase
options and pay-per-view events are excluded from rate regulation.
On April 1, 1993, the FCC announced the adoption of rate regulations which
became effective September 1, 1993. Under those regulations, rates must be
evaluated initially against "competitive benchmarks" and are generally
subject to rollbacks if they exceed the benchmark levels. On February 22,
1994, the FCC adopted further rate reductions effective May 15, 1994 based on
complex formulas and revised benchmarks. Future rate increases will be
subject to price caps, with rate increases limited to the general rate of
inflation and certain increases in system costs. Notwithstanding the
foregoing, the cable operator is afforded the opportunity to defend rates in
excess of these benchmarks based on utility-type cost-of-service rate
regulation. Cable systems are also required to unbundle all equipment
charges and base those charges on "actual cost" plus permitted mark-up. On
November 10, 1994, the FCC adopted two refinements to its rate regulation
rules in an effort to create incentives for the addition of new programming
services.The first, starting January 1, 1995, permits cable operators to
charge 20 cents per subscriber, plus the cost of programming, for each new
channel added, up to six channels, to certain regulated service tiers. The
maximum total rate increase for such channel additions is $1.50 through
December 31, 1996, and the maximum number of channels which can use this
pricing method is six (a seventh channel can be added in 1997, bringing the
total price increase to $1.70). The second, under certain conditions, cable
operators can create "New Product Tiers" made up of services not previously
carried on the system, and such tiers will not be rate regulated. Court
challenges to the FCC regulation are pending.
In view of the continuing changes to the FCC rate regulations, the Company is
currently unable to assess the full impact of the 1992 Cable Act upon its
future financial results. The Company's cable operations have sustained
higher operating costs in administering additional regulatory burdens. Such
increased costs are expected to continue. Although the financial impact of
the 1992 Cable Act cannot yet be ascertained precisely, once fully
implemented, certain aspects of the new law will have a negative impact on
the Company. Further, in complying with the benchmark regulatory for the
period September 1, 1993 to May 15, 1994, the Company, on a franchise basis,
was required to reduce regulated service rates such that the "average monthly
subscriber bill" for all cable service subject to rate regulation (including,
but not limited to basic service, cable programming service not offered on a
per channel basis, secondary outlets, converters and remote control units,
installation and service charges) was reduced by an amount of up to 10% of
such charges as of September 1992. Under the new FCC benchmarks, additional
reductions were required no later than July 14, 1994. These new benchmarks
are intended generally to reduce rates to a level 17% below September 1992
rates, subject to various adjustments. Where rates are found to exceed the
permitted levels, the Company will be subject to refunds and other penalties.
The extent of the anticipated decline in revenues and any potential refunds
or penalties cannot be determined at this time, but could have a negative
impact on the Company.
The Act establishes a choice for broadcasters between compelling the carriage
of their signals ("must carry" rights) and negotiating a fee for such
carriage ("retransmission consent" rights). As of October 1993, cable
operators were required to secure retransmission consent from broadcasters
who either have not selected "must carry" or who are not entitled under the
Act to make such selection, before transmitting such broadcasters' signals.
This requirement has the potential to increase the cost of carriage of
broadcast stations in the event particular broadcasters do not elect "must
carry" and the Company chooses to continue carriage of such broadcasters'
signals. No retransmission fees will be payable by the Company to
broadcasters who elect "must carry" although the Company will then be
obligated to carry signals of these "local" broadcast stations. Established
"super stations" are exempted from the "must carry"/"retransmission consent"
provision.
The Act directs the FCC to promulgate regulations intended to promote
distribution of cable programming by competing technologies such as DBS,
MMDS, SMATV and other potential programming distributors. The Act imposes
limitations on some volume discounts received by large cable operators and
strictly limits discriminatory programming contract terms favoring cable
operators over other programming distributors. On April 1, 1993, the FCC
adopted regulations to implement these program access provisions of the Act.
The full extent of the impact of these provisions and the implementing
regulations on the Company cannot be determined at this time.
FCC regulations adopted pursuant to the Act contain a number of other
regulatory provisions such as those relating to program carriage
requirements, ownership regulations and customer service/technical standards,
all of which will impose additional burdens and cost on a cable operator.
The full extent of the impact of these provisions and the implementing
regulations on the Company cannot be determined at this time.
Pending Telecommunications Legislation
Both the U.S. Senate and House of Representatives have recently passed
telecommunications bills and such legislation is likely to be enacted into
law this year. Although the final form of this legislation has not yet been
determined, it would, if adopted as anticipated, result in very significant
changes in laws and regulations applicable to cable television companies,
telephone companies and many other providers of communication services.
Generally, the legislation would eliminate the cross-ownership restrictions
between telephone companies and cable operators, subject to certain
conditions. This would permit telephone companies to provide cable
television cable services to subscribers within their telephone service area
over telephone or other facilities, and cable operators would be permitted to
provide telephone services under certain circumstances. In addition, the
legislation would provide some deregulation of cable television, but would
also impose some additional obligations and expense on cable operators,
including higher pole attachment fees. While the full impact of this
legislation cannot be predicted at this time, the Company anticipates that it
will face increased competition from telephone companies which generally have
significantly greater financial resources than the Company.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements and supplementary financial information that
are required to be included pursuant to this Item 8 are listed in Item 14
under the caption "1. Index of Financial Statements" in this Annual Report on
Form 10-K, together with the respective pages in this Annual Report on Form
10-K where such information is located. The financial statements and
supplementary financial information specifically referenced in such list are
incorporated in this Item 8 by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
During the two fiscal years ended May 31, 1995, the Company was not
involved in any disagreement with its independent certified public
accountants on accounting principles or practices or on financial disclosure.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information with respect to the directors of the Company required
to be included pursuant to this Item 10 will be included under the caption
"Election of Directors" in the Company's Proxy Statement relating to the 1995
Annual Meeting of Shareholders (the "Proxy Statement"), to be filed with the
Securities and Exchange Commission (the "Commission") pursuant to Rule 14a-6
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and is incorporated in this Item 10 by reference. The information with
respect to the executive officers of the Company required to be included
pursuant to this Item 10 is included under the caption "Executive Officers of
the Company" in Part I of this Annual Report on Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION.
The information with respect to executive compensation required to be
included pursuant to this Item 11 will be included under the caption
"Executive Compensation and Other Information" in the Proxy Statement and is
incorporated in this Item 11 by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The information with respect to the security ownership of (1) beneficial
owners of more than 5% of the Class A Common Stock, (2) the directors or
nominees for director of the Company, (3) each of the top five executive
officers and (4) all directors and officers of the Company as a group that is
required to be included pursuant to this Item 12 will be included under the
captions "Principal Shareholders", "Election of Directors" and "Executive
Compensation and Other Information -- Beneficial Ownership by Management" in
the Proxy Statement and is incorporated in this Item 12 by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information with respect to any reportable transaction, business
relationship or indebtedness between the Company and the beneficial owners of
more than 5% of the Class A Common Stock, the directors or nominees for
director of the Company, the executive officers of the Company or the members
of the immediate families of such individuals that is required to be included
pursuant to this Item 13 will be included under the caption "Executive
Compensation and Other Information -- Certain Relationships and Related
Transactions" in the Proxy Statement and is incorporated in this Item 13 by
reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) The following documents are filed as part of this Annual Report on
Form 10-K:
1. Index of Financial Statements
The following financial statements are included at the indicated page in
this Annual Report on Form 10-K and incorporated in this Item 14(a)1 by
reference:
Page
Independent Auditors' Report F-
Consolidated Balance Sheets F-
Consolidated Statements of Operations F-
Consolidated Statements of Common Stockholders'
Deficiency F-
Consolidated Statements of Cash Flows F-
Notes to Consolidated Financial Statements F-
2. Financial Statement Schedule
The following financial statement schedule is included at the indicated
page in this Annual Report on Form 10-K and incorporated in this Item 14(a)2
by reference:
Page
Schedule VIII - Valuation and qualifying accounts S-
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
Century Communications Corp.
New Canaan, Connecticut
We have audited the accompanying consolidated balance sheets of Century
Communications Corp. and Subsidiaries as of May 31, 1995 and 1994, and the
related consolidated statements of operations, common stockholders'
deficiency and cash flows for each of the three years in the period ended May
31, 1995. Our audits also included the financial statement schedule listed
in the index at Item 14(2). These consolidated financial statements and
financial statement schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
consolidated financial statements and financial statement schedule 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, such consolidated financial statements present fairly,
in all material respects, the financial position of Century Communications
Corp. and Subsidiaries as of May 31, 1995 and 1994, and the results of their
operations and their cash flows for each of the three years in the period
ended May 31, 1995 in conformity with generally accepted accounting
principles. Also, in our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial statements taken
as a whole, presents fairly in all material respects the information set
forth therein.
As discussed in Note 1 to the consolidated financial statements, the
Company changed its method of accounting for investments in marketable equity
securities to comply with Financial Accounting Standards Board Statement No.
115 during the year ended May 31, 1995.
DELOITTE & TOUCHE LLP
Stamford, Connecticut
August 18, 1995
<TABLE>
CENTURY COMMUNICATIONS CORP.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Amounts in Thousands
<CAPTION>
May 31,
1995 1994
<S> <C> <C>
ASSETS
Current assets:
Cash and short-term investments $ 228,764 $ 67,779
Accounts receivable less allowance for doubtful
accounts of $2,144 and $1,952, respectively 24,516 18,219
Prepaid expenses and other current assets 4,919 4,058
Total current assets 258,199 90,056
Property, plant and equipment - net 508,043 419,612
Investment in marketable equity securities 46,671 26,905
Equity investments in cable television and cellular telephone
systems - net 220,563 176,908
Debt issuance costs, less accumulated amortization of
$7,695 and $4,370, respectively 31,020 20,270
Cable television franchises, less accumulated amortization of
$236,409 and $204,391, respectively 246,455 168,133
Wireless telephone licenses, less accumulated amortization of
$146,305 and $104,000, respectively 394,184 220,366
Excess of purchase price over value of net assets acquired,
less accumulated amortization of $46,629 and $38,854 277,616 210,383
respectively
Other assets 21,666 17,793
$ 2,004,417 $ 1,350,426
See notes to consolidated financial statements
</TABLE>
<TABLE>
CENTURY COMMUNICATIONS CORP.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(continued)
Amounts in Thousands (Except Share Data)
<CAPTION>
May 31,
1995 1994
<S> <C> <C>
LIABILITIES AND COMMON STOCKHOLDERS'
DEFICIENCY
Current liabilities:
Current maturities of long-term debt $ 7,450 $ 2,866
Accounts payable 68,937 19,262
Accrued interest payable 29,068 18,431
Other accrued expenses 42,668 31,989
Customers' deposits and prepayments 13,203 10,706
Total current liabilities 161,326 83,254
Long-term debt 1,741,143 1,270,989
Deferred income taxes 126,235 65,410
Minority interest in subsidiaries 157,625 16,829
Commitments and contingencies (Note 7)
Preferred stock, par value $.01 per share authorized
100,000,000 shares, none issued - -
Subsidiary convertible redeemable preferred stock
(at aggregate liquidation value which approximates
the fair market value) par value $.01 per share.
authorized, issued and outstanding 102,187
shares (redemption value of $1,823 per share) 169,733 157,572
Common stockholders' deficiency:
Common stock, par value $.01 per share:
Class A, authorized 400,000,000 shares,
issued and outstanding 59,484,685
and 34,687,013 shares, respectively 595 347
Class B, authorized 300,000,000 shares,
issued and outstanding 45,406,115 shares,
respectively 454 662
Additional paid-in capital 175,545 105,301
Unrealized appreciation of marketable securities 14,416 -
Accumulated deficit (405,051) (322,426)
(214,041) (216,116)
Less: Cost of 31,337,530 and 11,324,266 Class A
common shares, respectively in treasury (137,604) (27,512)
Total common stockholders' deficiency (351,645) (243,628)
$ 2,004,417 $ 1,350,426
See notes to consolidated financial statements
</TABLE>
<TABLE>
CENTURY COMMUNICATIONS CORP.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Amounts in Thousands (Except Share Data)
<CAPTION>
Year ended May 31,
1995 1994 1993
<S> <C> <C> <C>
Revenues:
Cable service income $ 331,268 $ 318,226 $ 301,945
Cellular service income 85,419 56,373 43,186
416,687 374,599 345,131
Costs and expenses:
Cost of services - Cable 81,521 69,708 69,693
Cost of services - Cellular 22,152 13,424 11,022
Selling, general and administrative 110,381 82,368 71,027
Regulatory restructuring charge 4,000 - -
Depreciation and amortization 171,931 151,296 138,547
389,985 316,796 290,289
Operating income 26,702 57,803 54,842
Interest 139,001 121,698 112,294
Other expense (Notes 1 and 6) 2,400 - 7,144
Loss before income tax benefit and
minority interest (114,699) (63,895) (64,596)
Income tax benefit (8,061) (5,633) (12,401)
Loss before minority interest (106,638) (58,262) (52,195)
Minority interest in loss of subsidiaries 24,013 16,335 14,404
Net loss $ (82,625) $ (41,927) $ (37,791)
Dividend requirement on subsidiary convertible
redeemable preferred stock $ 4,419 $ 5,838 $ 5,883
Loss applicable to common shares $ (87,044) $ (47,765) $ (43,674)
Loss per common share $ (1.01) $ (0.53) $ (0.49)
Weighted average number of common shares
outstanding during the period 86,277,000 89,381,000 88,652,000
See notes to consolidated financial statements
</TABLE>
<TABLE>
CENTURY COMMUNICATIONS CORP.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS' DEFICIENCY
Amounts in Thosuands (Except Share Data)
<CAPTION>
Common Stock Additional
Class A Class B Paid-in Unrealized Accumulated Treasury
Shares Dollar Shares Dollars Capital Appreciation Deficit Stock Total
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at June 1, 1992 25,738,770 $ 257 56,943,229 $ 569 $ 91,040 $ - $ (242,708) $ (27,500) $
(178,342)
Shares issued in
connection with employee
incentive plans 719,407 7 1,761 1,768
Effect of two-3% and one
5% stock distributions 3,141,409 32 6,304,451 63 (95) -
Class B shares converted to
to Class A shares 1,934,000 19 (1,934,000) (19) -
Net paid in capital
contributed by
minority interests 4,546 4,546
Accretion in liquidation
value of subsidiary
preferred stock (5,883)
(5,883)
Vesting of subsidiary
stock options 464 464
Net loss (37,791)
(37,791)
Balance at May 31, 1993 31,533,586 315 61,313,680 613 91,833 - (280,499) (27,500)
(215,238)
Shares issued in
connection with employee
incentive plans 438,922 5 2,684 (12) 2,677
Effect on 5% and 3%
stock distributions 2,582,230 26 4,995,725 50 (82)
(6)
Class B shares converted
to Class A shares 132,275 1 (132,275) (1) -
Accretion in liquidation
value of subsidiary
preferred stock (5,838)
(5,838)
Vesting of subsidiary
stock options 413 413
Net paid in capital
contributed by
minority interests 16,291 16,291
Net loss (41,927)
(41,927)
Balance at May 31, 1994 34,687,013 347 66,177,130 662 105,301 - (322,426) (27,512)
(243,628)
Shares issued in
connection with employee
incentive plans 445,025 4 1,219 1,223
Class A shares purchased by
by the Company (110,092)
(110,092)
Unrealized appreciation of
marketable securities 14,416 14,416
Class A shares issued in
conjunction with
acquisition 3,581,632 36 43,839 43,875
Class B shares converted
to Class A shares 20,771,015 208 (20,771,015) (208)
- -
Net paid in capital
contributed by
minority interests 29,263 29,263
Accretion in liquidation
value of subsidiary
preferred stock (4,419)
(4,419)
Vesting of subsidary
stock options 342 342
Net loss (82,625)
(82,625)
Balance at May 31, 1995 59,484,685 $ 595 45,406,115 $ 454 $ 175,545 $ 14,416 $(405,051) $ (137,604) $(351,645)
See notes to consolidated financial statements
</TABLE>
<TABLE>
CENTURY COMMUNICATIONS CORP.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Amounts in Thousands
<CAPTION>
Year ended May 31,
1995 1994 1993
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Cash received from subscribers and others $ 494,671 $ 440,543 $ 394,921
Cash paid to suppliers, employees and
governmental agencies (289,606) (228,629) (207,197)
Interest paid (108,933) (105,733) (107,351)
Debt issuance costs (14,072) (4,997) (8,582)
NET CASH PROVIDED BY OPERATING ACTIVITIES 82,060 101,184 71,791
INVESTING ACTIVITIES:
Capital expenditures (109,737) (55,024) (45,280)
Cable television franchise expenditures (1,012) (1,384) (922)
Acquisition price adjustments - - (2,360)
Acquisition of other assets (7,116) (1,702) (2,953)
Acquisition and exchanges of cable television
and wireless telephone systems (219,315) (114,361) (4,924)
Purchase of marketable securities (5,350) - -
Capital returned from equity investments 2,896 2,853 -
Capital contributed to equity investments (3,783) (1,957) (2,300)
NET CASH USED IN INVESTING ACTIVITIES (343,417) (171,575) (58,739)
FINANCING ACTIVITES:
Proceeds from long-term borrowings 761,984 346,584 742,927
Principal payments on long-term debt (306,038) (277,429) (755,629)
Interest rate hedge fees paid - - (7,144)
Purchase of treasury stock (110,092) - -
Cash contributed by joint venture partners 25,871 - -
Issuance of common stock 1,191 2,672 1,768
Issuance of subsidiary preferred and common
stock, net of related costs 49,426 - -
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 422,342 71,827 (18,078)
NET INCREASE (DECREASE) IN CASH AND SHORT-TERM
INVESTMENTS 160,985 1,436 (5,026)
CASH AND SHORT-TERM INVESTMENTS - BEGINNING
OF YEAR 67,779 66,343 71,369
CASH AND SHORT-TERM INVESTMENTS - END OF YEAR $ 228,764 $ 67,779 $ 66,343
See notes to consolidated financial statements
</TABLE>
<TABLE>
CENTURY COMMUNICATIONS CORP.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(continued)
Amounts in Thousands
<CAPTION>
Year ended May 31,
1995 1994 1993
<S> <C> <C> <C>
RECONCILIATION OF NET LOSS TO NET CASH PROVIDED
BY OPERATING ACTIVITIES
NET LOSS $ (82,625) $ (41,927) $ (37,791)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation and amortization 171,931 151,296 138,547
Minority interest in loss of subsidiaries (24,013) (16,335) (14,404)
Deferred income taxes (11,518) (6,675) (13,748)
Interest charged on zero coupon bonds 18,792 17,204 2,763
Debt issuance costs (14,072) (4,997) (8,582)
Other expense - - 7,144
Other 1,773 286 1,057
Change in assets and liabilities net of effects
of acquired cable television and wireless
telephone systems:
Accounts receivable - (increase)/decrease (3,738) 286 (4,976)
Prepaid expenses and other current assets
(increase)/decrease (179) (1,139) 1,034
Accounts payable and accrued expenses
- increase 23,335 1,302 672
Customers' deposits and prepayments
- increase/(decrease) 2,374 1,883 75
Total adjustments 164,685 143,111 109,582
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 82,060 $ 101,184 $ 71,791
See notes to consolidated financial statements
</TABLE>
CENTURY COMMUNICATIONS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended May 31, 1995, 1994 and 1993
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation
The consolidated financial statements include the accounts of Century
Communications Corp., all of its subsidiaries and certain partnership
interests (the "Company") from their respective dates of acquisition (see
Note 3). Included in subsidiaries are the 50% indirectly-owned Century
Venture Corp. and Subsidiary, Century-ML Cable Venture and Subsidiary, and
Citizens Century Cable Television Venture (see Note 10). In addition, the
consolidated financial statements include the accounts of Centennial Cellular
Corp., ("Centennial") a 32.7% owned company (at May 31, 1995) in which the
Company controls 73.8% of the voting power of the common shares. All
material intercompany transactions and balances have been eliminated.
Purchase accounting
The Company undertakes a valuation of the net assets acquired in purchase
transactions in accordance with generally accepted accounting principles.
Accordingly, the Company has stated the net assets acquired from the
purchased companies at their estimated fair values at the date of
acquisition.
Revenue recognition
Cable service income includes earned subscriber service revenues and charges
for installation and connections, net of programmers' share of pay television
revenues and marketing discounts and promotions. Such programmers' share
netted against service income amounted to $69,572,000, $59,085,000 and
$52,001,000 in 1995, 1994 and 1993, respectively. Such marketing discounts
and promotions netted against installation income amounted to $0, $0, and
$7,435,000 in 1995, 1994 and 1993, respectively.
Cellular telephone service income includes service revenues and charges for
installation and connections, net of land line charges of $15,030,000,
$8,712,000 and $6,070,000 in 1995, 1994 and 1993, respectively.
Investment in marketable equity securities
The Company adopted the provisions of SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities" effective June 1, 1994. Under
SFAS 115, the Company must classify its debt and marketable securities in one
of three categories: trading, available-for-sale, or held-to-maturity. The
Company has classified equity securities as "Available for Sale".
Unrealized holding gains and losses, net of the related income tax effect on
the available-for-sale securities are excluded from earnings and are reported
as a separate component of stockholders' deficiency until realized. The
Company recorded an unrealized gain of $14,416,000 during the year ended May
31, 1995.
A decline in the market of any available-for-sale or held-to-maturity
security below cost that is deemed other than temporary is charged to
earnings resulting in the establishment of a new cost basis for the security.
The Company recorded such a writedown during the fiscal year ended May 31,
1991. At May 31, 1994, equity securities are stated at cost, net of the
writedown of approximately $21,702,000.
The market value of equity securities at May 31, 1994 was approximately
$52,754,000. For the year ended May 31, 1994, the equity securities are
stated at cost net of the recorded writedown of $26,905,000, resulting in an
unrealized and unrecognized gain of $25,849,000.
Debt issuance costs
Costs associated with the issuance of the Company's debt securities and
credit facilities (Note 6) have been capitalized and are being amortized on a
straight-line basis over the lives of the issues.
Equity investments in cable television and cellular systems
The Company records such investments at purchased cost at the date of
acquisition and adjusts for the Company's share of net income or loss from
the acquisition date. At May 31, 1995, the Company's equity investments
consist of a $107,945,000 investment in Australian pay television (see Note
3) and a $112,618,000 investment in cellular minority interests (see Note
12). The difference of $120,340,000 between the cost of the Company's
cellular equity investments and the underlying book value is amortized over
ten years. Accumulated amortization at May 31, 1995, 1994 and 1993 was
$45,341,000, $33,152,000 and $21,032,000, respectively (see Note 12).
Property, plant and equipment
Property, plant and equipment is stated at cost. Depreciation is computed
principally using the straight-line method over the following estimated
useful lives of the assets:
Buildings 15 - 25 years
Cable television and cellular telephone
transmission and distribution systems
and related equipment 8 - 15 years
Miscellaneous equipment and furniture and
fixtures 3 - 10 years
The cost of connections for new cable television subscribers are capitalized
at standard per subscriber rates for labor, materials and overhead.
Expenditures for maintenance and repairs are charged to operating expense as
incurred, and betterments, replacement equipment and additions are
capitalized.
Cable television franchises
Cable television franchises principally consist of amounts allocated under
purchase accounting (see Note 3). Such amounts are amortized using the
straight-line method over the lives of the franchises.
Wireless telephone licenses
Wireless telephone licenses consist of amounts allocated under purchase
accounting (see Note 3). Such amounts are amortized using the straight-line
method over a period of 10 years.
Excess of purchase price over value of net assets acquired
The excess of purchase price over value of net assets acquired is being
amortized using the straight-line method over a period of 40 years.
Income taxes
The income tax provision is calculated based on Internal Revenue Service
("IRS") regulations pertaining to filing of separate tax returns by
consolidated entities. Effective with the year ended May 31, 1993, the
Company adopted the provisions of Financial Accounting Standards Board
Statement "SFAS" No. 109 "Accounting for Income Taxes". The change in method
of accounting from SFAS No. 96 to SFAS No. 109 had no material effect on the
consolidated financial statements.
Loss per common share
Loss per common share is calculated using the average number of common shares
outstanding during each period and reflects, retroactively for all periods
presented, the stock distributions described in Note 8. Loss per common
share, as shown on the Consolidated Statements of Operations for the periods
presented, does not include stock options as a common stock equivalent as
their effect on loss per share is antidilutive. The loss per common share
reflects a charge for the dividend requirement on subsidiary convertible
redeemable preferred stock of $4,419,000, $5,838,000 and $5,883,000 for the
years ended May 31, 1995, 1994 and 1993, respectively.
Statement of cash flows
Short-term investments classified as cash equivalents in the consolidated
financial statements consist principally of overnight deposits and commercial
paper with acquired maturities of three months or less.
Stock distributions
In recent years, in recognition of improvements in the Company's general
business condition as measured by improvements in its liquidity and operating
performance, the Company has from time to time made pro rata distributions of
common stock to its stockholders. The effect of such distributions is to
increase the number of shares outstanding and reduce the proportionate
investment in the Company represented by each share. For accounting
purposes, since the Company continues to report net losses and has an
accumulated deficit, the amount equal to the aggregate par value ($.01 per
share) of the shares distributed is transferred from additional paid in
capital to the common stock account. If the Company had retained earnings,
the accounting treatment would be to transfer an amount equal to the market
value of the shares issued from retained earnings to additional paid-in
capital. Since the Company has neither retained earnings nor current
earnings, the stock distributions represent a reallocation of the
shareholder's investment over an increased number of shares and does not
represent distributions of corporate earnings and profits.
Valuation of intangible assets
The Company, on a quarterly basis, undertakes a review and valuation of the
net carrying value, recoverability and write-off period of all categories of
its intangible assets. The Company in its valuation considers current market
values of its properties, competition, prevailing economic conditions,
government policy including taxation, and the Company's and the industry's
historical and current growth patterns. The Company also considers its
financial structure, including the underlying cost of securities which
support the Company's internal growth and acquisitions, as well as the
recoverability of the cost of its intangible assets based on a comparison of
estimated undiscounted operating cash flows for the systems which generated
intangible assets with the carrying value of the intangible assets. The
Company's intangible assets are stated at the lower of cost or market and are
amortized over their respective expected lives.
NOTE 2. SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCIAL
ACTIVITIES
In connection with the completion of the acquisitions made during the years
ended May 31, 1995, 1994 and 1993 the Company recorded approximately
$72,343,000, $8,390,000 and $5,580,000, respectively, in excess of purchase
price over value of net assets acquired and deferred income taxes, resulting
from differences between the book and tax basis of certain assets acquired.
During the year ended May 31, 1994, the Company changed its estimate of
deferred tax liability and associated goodwill. Accordingly, the Company has
decreased goodwill and deferred income taxes by approximately $33,794,000 to
reflect this change in estimate (see Note 9).
During the year ended May 31, 1993, the Company recorded $2,200,000 of
deferred liability and cellular license relating to the carried interest of
its subsidiaries. In addition, the Company completed an $11,500,000
acquisition through the issuance of 786,325 shares of Class A Common Stock,
plus closing costs.
As a result of an exchange of properties (see Note 3), property, plant and
equipment, goodwill and other assets decreased by $2,088,000, $4,657,000 and
$1,276,000, respectively and cellular license, equity investments and
deferred taxes increased by $1,686,000, $998,000, and $950,000, respectively.
NOTE 3. ACQUISITIONS
During the three year period ended May 31, 1995, the Company acquired the net
assets of cable television and wireless telephone systems as follows (dollar
amounts in thousands):
Amounts allocated to
Number of Total Cable Wireless Property
Systems purchase television telephone plant and
Acquired price franchises licenses equipment
Year ended May 31, 1995 20 $381,661 $109,359 $214,088 $52,265
Year ended May 31, 1994 5 101,266 93,048 4,065
Year ended May 31, 1993 2 16,308 11,853 3,433
These transactions have been accounted for as purchases and the results of
operations of the acquired systems have been included in the accompanying
consolidated financial statements from the dates of acquisition. The Company
has recorded the purchase price of the cable television and wireless
telephone systems at the fair market value of acquired assets on the dates of
acquisition with the excess purchase price being recorded to cable television
franchises and cellular telephone licenses.
In addition to the above acquisitions, Centennial exchanged one of its
cellular telephone systems and the Company made investments as described
below:
During the year ended May 31, 1995, Centennial completed ten cellular market
acquisitions for a total purchase price of $173,860,000 consisting of
$51,761,000 in cash (including the assumption of acquired current
liabilities) and 7,023,383 shares of Centennial's Class A Common Stock valued
at $122,099,000. Centennial purchased one PCS license for $54,672,000.
During the year ended May 31, 1995, the Company acquired ten cable television
systems for a total purchase price of $153,129,000 consisting of $109,254,000
in cash (including the assumption of acquired current liabilities) and
3,681,632 shares of the Company's Class A Common Stock valued at $43,875,000.
During the year ended May 31, 1994, Centennial completed five cellular system
acquisitions for a total purchase price of $91,863,000 consisting of
$63,729,000 in cash and 1,356,182 shares of Centennial's Class A Common Stock
valued at $28,134,000.
On September 30, 1993, Centennial exchanged its majority owned interest in
its Lincoln, Nebraska cellular telephone system for $6,556,000 and a majority
interest in the Alexandria, Louisiana system together with an equity
investment in the Lake Charles, Louisiana system.
Australian Pay Television
Since fiscal 1994, the Company has invested through a wholly-owned subsidiary
approximately $92,000,000 in East Coast Pay Television Pty. Limited, an
Australian company ("ECT"), which is pursuing opportunities to own, operate
and invest in pay television services in Australia (which is an emerging pay
television market). Such investment was effected through the acquisition by
the Company of convertible debentures and ordinary shares of ECT representing
a 76.2% economic interest in ECT. In conjunction with such interest, the
Company has the right to designate five of the seven directors of ECT and to
approve certain corporate transactions. The Company has also entered into
management agreements with ECT and has agreed to fund up to an aggregate of
$20,000,000 for certain costs and working capital requirements.
ECT, through a wholly owned subsidiary, owns Satellite Subscription Broadcast
License A ("Satellite License A"), one of only three licenses which may be
granted by Australian authorities prior to July 1997 for direct-to-home
("DTH") satellite television broadcasting and which allows ECT to offer four
channels of programming via DTH satellite. Australis Media Limited
("Australis"), another pay television company in Australia, owns Satellite
Subscription Broadcast License B, the second of the three licenses currently
available in Australia for DTH satellite television broadcasting, which
allows it to offer four channels of programming via DTH satellite. ECT and
Australis have entered into agreements pursuant to which ECT will offer its
four channels of programming (the "License A Package") for distribution
individually as a single four channel package or as part of Australis' multi-
channel basic programming package known as the GALAXY Package. The
programming is distributed via DTH satellite, microwave multi-point
distribution system ("MDS") and other transmission technologies. The GALAXY
Package will be distributed by Australis through its distribution facilities
in the six largest capital cities in Australia and in regional Western
Australia and by its Franchisees, including ECT, to substantially all of the
remaining population of Australia.
The distribution arrangements are subject to an agreement with Australis,
which is subject to regulatory review and approval, pursuant to which ECT has
the right to receive 25% of Australis' adjusted net cash flow from
broadcasting services and operations. Such percentage may be adjusted
downward depending upon whether ECT elects to fund a specified portion of any
funds expended by Australis to establish transmission, subscriber management,
customer service and certain other facilities as provided for in the
agreement. Notification has been received from one of the regulatory
authorities that certain aspects of this agreement raise concerns.
Discussions regarding such concerns are continuing and no assurance can be
given as to the ultimate outcome.
ECT, Australis and its other two Franchisees have acquired control of
substantially all of the currently issued licenses which can be used for
transmission of pay television programming via MDS in Australia. ECT owns or
controls all of the currently issued licenses which entitle it to transmit
pay television programming via MDS in most of Coastal New South Wales and all
of Tasmania (including Wollongong, Hobart and Newcastle, Australia and
surrounding areas) (the "ECT Franchise Areas") and has entered into a
franchise agreement with Australis pursuant to which it has the exclusive
right (and is obligated) for at least a ten year period (with an option to
renew for an additional ten years) to deliver in each of the ECT Franchise
Areas any subscription broadcast service supplied by Australis, including the
GALAXY Package. As of December 1994, the ECT Franchise Areas contained
approximately 717,000 households or approximately 13% of all Australian
households.
Programming for the License A Package is provided by XYZ Entertainment Pty.
Limited ("XYZ"), is a joint venture in which the Company holds a 25%
interest. The Company's 25% interest in XYZ is derived through the Company's
joint venture with United International Holdings, Inc., a leading
international provider of pay television services which holds interest in two
other Franchisees of Australis. The above noted structure is pursuant to a
series of agreements entered into by the Company, UIH and FOXTEL. Closing of
the agreements is subject to certain conditions. There is no assurance that
such conditions will be met. Failing such closing, the Company will retain a
50% interest in XYZ, with UIH remaining as the other 50% holder. Programming
provided by XYZ includes Discovery Australia, a documentary, adventure,
history, and lifestyle channel; Red, a music video channel; Max/Classic Max,
a children's and family channel; and Arena, a general entertainment channel.
The Company has also acquired an approximate 2% economic interest in
Australis for approximately $10,000,000.
ECT has entered into a long-term agreement with FOXTEL pursuant to which
FOXTEL has agreed to distribute the License A Package as well as two
additional channels throughout Australia over FOXTEL's proposed cable
television network. FOXTEL, a joint venture between Telstra Corporation
Limited, the government-owned Australian national telecommunications carrier,
and The News Corporation Limited, a major international media and
entertainment company, owns the remaining 50% of XYZ.
The Australian operations described above are expected to be capital
intensive requiring funds for the buildout of the franchise infrastructure,
maintenance of its satellite distribution business, and the development of
its programming. In addition, ECT has approximately $13,000,000 in
borrowings which mature within the next 12 months. In order to meet such
requirements, ECT is currently evaluating various financing alternatives
including bank borrowings, debt or equity issuances in the public and private
markets and other financing resources, including funding from the Company.
There is no assurance ECT will be successful in obtaining such funding on
favorable terms.
The assets associated with the investments in Australia are in the
development stage and not yet operational. As of May 31, 1995, the Company
has an aggregate investment in the Australian pay subscription television
business of approximately $107,945,000.
The following summarizes the assets, equity and results of operations of the
Australian Venture accounted for by the equity method during the year ended
May 31, 1995. All amounts have been derived from the Australian Venture's
financial statements and adjusted for interim financial activity from the
Australian Venture's year end to the Company's fiscal year end and have been
converted to U.S. dollars using the exchange rate at May 31, 1995 (amounts in
thousands and unaudited)
Assets $ 161,400
Equity 72,817
Net loss (5,659)
The Company's equity share of the Australian Venture's net loss amounted to
$2,400,000 and is recorded in other expense on the Company's consolidated
statement of operations for the year ended May 31, 1995. This net loss
resulted from general and administrative expenses incurred while in the pre-
operating state during the year ended May 31, 1995.
Pro Forma Information
The summary pro forma information includes the accounts and operations of the
Company and all acquisitions and pending acquisitions described in Note 3, in
each case as if such acquisitions had been consummated as of the beginning of
each of the respective periods for the combined statement of operations
(amounts in thousands, except per share data and unaudited)
Year Ended May 31,
1995 1994 1993
Revenues $498,291 $476,881 $442,226
Net loss $(111,603) $(72,548) $(77,465)
Loss per common share $ (1.29) $ (.84) $ (.90)
Pro forma loss per common share for the years ended May 31, 1995, 1994 and
1993 is calculated on a fully diluted basis using the pro forma average
number of common shares outstanding during the period, including common stock
equivalents.
NOTE 4. TRANSACTIONS WITH RELATED PARTIES
The Company purchases health, life, property, casualty and other insurance
from Sentry Insurance (holder of 6.9% of Class B common stock at May 31,
1995) and its affiliated companies. The Company paid a total of $8,462,000,
$9,309,000 and $9,193,000 for such insurance for the fiscal years ended May
31, 1995, 1994 and 1993, respectively.
Leavy, Rosensweig & Hyman of which David Z. Rosensweig is a member, serves as
General Counsel to the Company. The Company paid approximately $1,960,000,
$1,329,000 and $1,056,000 to Leavy, Rosensweig & Hyman for the fiscal years
ended May 31, 1995, 1994 and 1993, respectively.
The Company believes that all of the transactions between it, Sentry
Insurance and Leavy, Rosensweig & Hyman have been on terms no less favorable
to the Company than would have been available from nonaffiliated parties.
NOTE 5. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
May 31,
1995 1994
(amounts in thousands)
Land $ 7,052 $ 6,581
Buildings 25,174 23,921
Cable television and cellular telephone
transmission and distribution systems
and related equipment 796,027 668,238
Miscellaneous equipment and furniture
and fixtures 44,987 35,889
873,240 734,629
Less accumulated depreciation (365,197) (315,017)
$ 508,043 $419,612
Depreciation expense was approximately $73,571,000, $72,026,000 and
$63,456,000 for the fiscal years ended May 31, 1995, 1994 and 1993,
respectively.
NOTE 6. LONG-TERM DEBT
Long-term debt consists of the following:
May 31,
1995 1994
(amounts in thousands)
Credit agreement (a) $ 148,000 $ 105,000
Credit agreement (b) 68,000 --
9 1/2% Senior notes due 2000 (c) 150,000 150,000
9 3/4% Senior notes due 2002 (d) 200,000 200,000
11 7/8% Senior subordinated
debentures due 2003 (e) 204,000 204,000
Zero Coupon Senior discount
notes due 2003 (f) 222,436 203,645
9 1/2% Senior notes due 2005 (g) 250,000 --
Subsidiary 8 7/8% Senior notes due 2001 (h) 250,000 250,000
Subsidiary 9.47% Senior secured notes
due 2002 (i) 100,000 100,000
Subsidiary 10 1/8% Senior notes due
2005 (j) 100,000 --
Subsidiary revolving credit and
term loan (k) 55,906 60,828
Subsidiary credit agreement (l) -- --
Other 251 382
1,748,593 1,273,855
Current maturities 7,450 2,866
$1,741,143 $1,270,989
(a) On January 25, 1993, CCC-I, Inc. ("CCC-I"), a subsidiary of the Company
entered into a three year, $300,000,000 unsecured revolving credit facility
which converts to a five year term loan. The proceeds of the facility were
used by the Company to repay existing indebtedness and will be used for
working capital and general corporate purposes. The repayment by the Company
of its existing indebtedness discharged all of the Company's obligations
under its then-existing credit agreement and, as a result, such agreement was
terminated. The interest rates payable on borrowings under this credit
facility are based on, at the election of CCC-I, (a) the base rate of
interest announced by Citibank, N.A. plus 0 to 1/2% per annum based upon
certain conditions, (b) the London Interbank Offering Rate plus 1 to 1 1/2%
per annum based upon certain conditions, or (c) the average consensus bid
rates of certificate of deposit dealers for the purchase at face value of
certificates of deposit of Citibank, N.A. plus 1 1/8% to 1 5/8% per annum
based upon certain conditions. The carrying value of the credit facility
approximates fair value which was estimated based upon the current rates
offered to the Company for debt with similar remaining maturities.
The agreement expires on February 28, 2001 and provides for mandatory
principal repayments, among other possible reductions, in the following
percentages:
Last day Last day Last day Last day
Year of February of May of August of November
1996 2.50% 2.50% 2.50% 2.50%
1997 5.00% 5.00% 5.00% 5.00%
1998 5.00% 5.00% 5.00% 5.00%
1999 6.25% 6.25% 6.25% 6.25%
2000 5.00% 5.00% 5.00% 5.00%
2001 5.00% - - -
The credit facility restricts the incurrence of certain additional debt of
CCC-I, limits the ability of CCC-I to pay dividends to the Company and
requires that certain operating tests be met. CCC-I refinanced this facility
on August 4, 1995 (see Note 15).
(b) On June 30, 1994, CCC-II, Inc. ("CCC-II"), a subsidiary of the Company
entered into a three year $350,000,000 unsecured revolving credit facility
which converts to a five year term loan with a syndicate of banks led by
Citibank, N.A. as agent for the syndicate. The proceeds of the facility may
be used for acquisitions, working capital and general corporate purposes.
The interest rates payable on borrowings under the new credit facility are
based on, at the election of CCC-II, (a) the base rate of interest announced
by Citibank, N.A. plus 1/8% to 3/4% per annum based upon certain conditions,
(b) the London Interbank Offering Rate plus 1 1/8% to 1 3/4% per annum based
upon certain conditions, or (c) the average consensus bid rates of
certificate of deposit dealers for the purchase at face value of certificates
of deposit of Citibank, N.A. plus 1 1/4% to 1 7/8% per annum based upon
certain conditions. This credit facility restricts the incurrence of certain
additional debt by CCC-II, limits the ability of CCC-II to pay dividends to
the Company and requires that certain operating tests be met. The carrying
value of the credit facility approximates fair value which was based upon the
current rates offered to the Company for debt with similar remaining
maturities.
The agreement expires on May 31, 2002 and provides for mandatory principal
repayments, among other possible reductions, in the following percentages:
Last day Last day Last day Last day
Year of February of May of August of November
1997 -- -- 2.50% 2.50%
1998 2.50% 2.50% 5.00% 5.00%
1999 5.00% 5.00% 5.00% 5.00%
2000 5.00% 5.00% 6.25% 6.25%
2001 6.25% 6.25% 6.25% 6.25%
2002 6.25% 6.25% - -
As a requirement of the CCC-I and CCC-II credit agreements (see Note 6a and
6b above), in order to limit the Company's exposure to the variable interest
rates, the subsidiary secured interest rate swap agreements with certain of
the lender banks. The fixed interest rate swaps have the effect of
increasing the cost of borrowings under the credit agreements during periods
when the variable interest rates charged on bank borrowings are less than the
fixed interest rate swap agreements. During periods when the variable
interest rates on bank borrowings exceed the fixed interest rates of the
swaps, the agreements have the effect of lowering the Company's cost on such
bank borrowings. At May 31, 1995 and 1994, the Company's effective weighted
average variable interest rate on the credit agreements was approximately
6.81% and 4.55%, respectively. At May 31, 1995 and 1994, the Company's
effective weighted average interest rate on its SWAP agreements was
approximately 8.12%. The Company's effective interest rate combining both
the variable and fixed components of such rates, as of May 31, 1995 and 1994,
was approximately 7.26% and 6.4%, an increase of 0.45% and 1.85%,
respectively over the variable rate.
The following table summarizes each agreement's notional amount, the due
date, fixed interest rate and current redemption price which is the cost to
terminate such agreement at May 31, 1995 and 1994 (amounts in thousands):
Notional Unrealized Loss
Principal Fixed Contract (Redemption
Amount Rate Expiration Date Price)
At May 31, 1995
SWAPS: $ 40,000 7.93% 06/03/95 $ 239
25,000 8.22 02/05/96 445
25,000 7.95 06/03/95 154
25,000 8.50 01/21/96 945
$ 115,000 8.12% (weighted average)
At May 31, 1994
SWAPS: $ 40,000 7.93% 06/03/95 $ 1,759
25,000 8.22 02/05/96 1,245
25,000 7.95 06/03/95 1,103
25,000 8.50 01/21/96 1,582
$ 115,000 8.12% (weighted average)
The Company is subject to credit loss in the event of nonperformance by
parties to the interest rate swap agreements. However, the Company does not
anticipate nonperformance by the counterparties.
(c) On August 21, 1992, the Company issued Senior Notes Due 2000 ("9 1/2%
Notes") in the principal amount of $150,000,000 which mature on August 15,
2000. The 9 1/2% Notes bear interest at 9 1/2% payable semiannually on
February 15 and August 15 of each year commencing February 15, 1993. The 9
1/2% Notes may not be redeemed prior to maturity.
The 9 1/2% Notes are senior in right of payment to all existing and future
subordinated indebtedness of the Company and rank pari passu with its 9 3/4%
Senior Notes Due 2002. The 9 1/2% Notes limit the ability of the Company and
its subsidiaries (as defined) to incur indebtedness and liens, restrict the
payment or declaration of dividends on its Capital Stock, and restrict the
purchase or redemption of its Capital Stock.
The 9 1/2% Notes provide that the holders will have the right to require the
Company to purchase the 9 1/2% Notes following a transaction or transactions
which reduce below 300 the number of record holders of the Company's Class A
Common Stock and which result in certain reductions in the ratings of the 9
1/2% Notes. At May 31, 1995 and 1994, the Notes were trading at 101.2% and
96.75% of par or $151,782,000 and $145,125,000, respectively.
(d) On February 13, 1992, the Company issued Senior Notes Due 2002 ("the 9
3/4% Notes") in the principal amount of $200,000,000 which mature on February
15, 2002. The notes bear interest at 9 3/4% payable semiannually on February
15 and August 15 of each year commencing August 15, 1992. The 9 3/4% Notes
may be redeemed prior to maturity. The 9 3/4% Notes limit the ability of the
Company and its subsidiaries (as defined) to incur indebtedness or liens.
The 9 3/4%Notes provide that the holders will have the right to require the
Company to purchase the 9 3/4% Notes following a transaction or transactions
which reduce below 300 the number of record holders of the Company's Class A
Common Stock and which result in certain reductions in the ratings of the 9
3/4% Notes. At May 31, 1995 and 1994, the 9 3/4% Notes were trading at
101.75% and 97% of par or $203,500,000 and $194,000,000, respectively.
(e) On October 17, 1991, the Company redeemed all of its $200,000,000 12
3/4% Senior Subordinated Reset Debentures Due 2000 and concurrently sold
$204,000,000 11 7/8% Senior Subordinated Debentures Due 2003 (the
"Debentures"). The Debentures are not callable for five and one-half years,
and provide for a sinking fund of $68,000,000 on each of October 15, 2001 and
2002, with the balance of $68,000,000 due on October 15, 2003. Reported as
an extraordinary item was the call premium of $2,000,000 paid for the early
extinguishment of the 12 3/4% Senior Subordinated Reset Debentures Due 2000
and the accelerated amortization of unamortized deferred financing costs
totaling $7,888,000. No tax benefit was provided on the loss.
The Debentures bear interest at 11 7/8% payable semiannually on April 15 and
October 15 of each year commencing April 15, 1992. The Debentures are
redeemable, in whole or in part, at the option of the Company on April 15,
1997 and 1998 at a redemption price equal to 105% and 102.5% of the principal
amount, respectively. On April 15, 1999 and thereafter, the Debentures are
redeemable at 100% of the principal amount. The Debentures are subordinate
to all future and existing Senior Indebtedness (as defined). The Debentures
limit the ability of the Company and its subsidiaries (as defined) to incur
indebtedness or liens.
The Debentures provide that the holders will have the right to require the
Company to purchase the Debentures following a transaction or transactions
which reduce below 300 the number of record holders of the Company's Class A
Common Stock and which result in certain reductions in ratings of the
Debentures. At May 31, 1995 and 1994, the Notes were trading at 107% and106%
of par or $218,280,000 and $216,240,000, respectively.
(f) On April 1, 1993, the Company issued Senior Discount Notes Due 2003
("the Discount Notes") in the discounted amount of $183,678,360 yielding
8.875% annually to maturity. The Discount Notes mature on March 15, 2003 at
$444,000,000. There will be no periodic payments of interest on the Discount
Notes, and they may not be redeemed prior to maturity. During the years
ended May 31, 1995 and 1994, approximately $18,792,000 and $17,204,000 of
interest, respectively was amortized in the consolidated financial
statements.
The Discount Notes are general unsecured obligations of the Company and are
senior in right of payment to all existing and future subordinated
indebtedness of the Company. The Discount Notes rank pari passu with the
Company's 9 1/2% Senior Notes Due 2000 and its 9 3/4% Senior Notes Due 2002.
The Discount Notes limit the ability of the Company and its subsidiaries (as
defined) to incur indebtedness and liens, restrict the payment or declaration
of dividends on its Capital Stock, and restrict the purchase or redemption of
its Capital Stock.
The Discount Notes provide that the holders will have the right to require
the Company to purchase the Notes following a transaction or transactions
which reduce below 300 the number of record holders of the Company's Class A
Common Stock and which result in certain reductions in the ratings of the
Notes. At May 31, 1995 and 1994, the Notes were trading at 48.8% and 40.25%
of par or $216,672,000 and $178,710,000, respectively.
(g) On March 6, 1995, the Company issued unsecured Senior Notes due 2005
("the 9 1/2% Notes") in the principal amount of $250,000,000 which mature
March 1, 2005. The Notes bear interest at 9 1/2% payable semi-annually on
March 1 and September 1 of each year commencing September 1, 1995. The 9
1/2% Notes may not be redeemed by the Company.
The 9 1/2% Notes are senior in right of payment to all existing and future
subordinated indebtedness of the Company and rank pari passu with its 9 3/4%
Senior Notes Due 2002 , the 9 1/2% Notes Due 2000 and the Discount Notes.
The 9 1/2% Notes limit the ability of the Company and its subsidiaries (as
defined) to incur indebtedness and liens, restrict the payment or declaration
of dividends on Capital Stock, and restrict the purchase or redemption of its
Capital Stock.
The 9 1/2% Notes provide that the holders will have the right to require the
Company to purchase the 9 1/2% Notes following a transaction or transactions
which reduce below 300 the number of record holders of the Company's Class A
Common Stock and which result in certain reductions in the ratings of the 9
1/2% Notes. At May 31, 1995, the Notes were trading at 99% of par or
$247,500,000.
(h) On November 15, 1993, Centennial issued $250,000,000 of eight year
unsecured Senior Notes (the 8 7/8% Notes). The interest on these notes is
payable semi-annually at an interest rate of 8 7/8%. The interest is
computed on the basis of a 360-day year (twelve 30 day months). The maturity
date of the 8 7/8% Notes is November 1, 2001 unless redeemed earlier at the
option of Centennial, however not prior to May 1, 1999. If early redemption
is sought during the twelve-month period beginning May 1 of each of the
following years, the redemption price is calculated using:
Year Percentage
1999 105.25%
2000 103.50%
2001 101.75%
The proceeds of the 8 7/8% Notes were used to retire all outstanding bank
debt. At November 15, 1993, the amount was $182,700,000. Costs associated
with the bond offering were capitalized and are being written off on a
straight-line basis over the life of the issue. At May 31, 1995 and 1994,
the 8 7/8% Notes were trading at 95.25% and 90.75% of par or $238,125,000 and
$226,875,000, respectively.
(i) On December 31, 1992, Century-ML Cable Corporation ("CML") and
Century/ML Cable Venture ("CCV"), subsidiaries of the Company through which
the Company owns a 50% interest in a cable television systems in Puerto Rico,
entered into separate note agreements (the "Note Agreements") with a group of
institutional lenders providing for the issuance by CML of $100 million
aggregate principal amount of its 10-year 9.47% Senior Secured Notes Due
2002. $98,787,000 of the proceeds from the sale of the notes was used to
pay down all amounts outstanding under CML's credit agreement (see Note 6l)
with a syndicate of banks led by Citibank, N.A., which credit agreement was
replaced by a new $20,000,000 secured credit facility simultaneously with the
sale of the notes. A portion of the remaining proceeds was used to pay the
transaction costs associated with such sale and the remainder will be used
for general corporate purposes. Interest on the notes is payable
semiannually and principal will be payable in installments of 20% of the
original principal amount beginning in year six, with final maturity at the
end of year ten. The notes are subject to various other prepayment
provisions, including prepayment with premium at the option of CML at any
time prior to their expressed maturity and prepayment with premium at the
option of the holders thereof upon the occurrence of certain events
involving changes in control of CML and CCV. The Note Agreements contain
various financial and operating covenants, including, among other things,
maintenance of certain financial ratios, restrictions on the ability of CML
and CCV to incur indebtedness or liens and to make certain distributions and
capital expenditures and limits on certain other corporate actions. The
notes are entitled to the benefits of certain security agreements and
guarantees, including a guaranty by CCV of the payment of all principal of,
premium, if any, and interest on the notes. The notes are secured by
substantially all of the assets of CCV. The carrying value of the credit
facility approximates fair value which was estimated based upon the current
rates offered to CCV for debt with similar remaining maturities.
(j) On May 11, 1995, Centennial issued $100,000,000 of ten year unsecured
Senior Notes ("the 10 1/8% Notes"). The interest rate on the 10 1/8% Notes
is payable semi-annually on the basis of a 360-day year (twelve 30 day
months). The 10 1/8% Notes rank "pari passu" with Centennial's 8 7/8% Notes
and may not be redeemed prior to maturity on May 15, 2005. Costs associated
with the May 11, 1995 bond offering were capitalized and will be written off
on a straight line basis over the life of the issue. At May 31, 1995, the
notes were trading at 99.922% of par or $99,922,000.
The proceeds of the 10 1/8% notes will be used by Centennial for general
corporate purposes including the financing of capital expenditures related to
cellular telephone and personal communications systems infrastructure,
licenses authorizing personal communications services as well as related
telecommunications businesses. Pending any specific application of the net
proceeds, the net proceeds will be added to working capital and invested in
short-term interest-bearing obligations.
Both the 8 7/8% and 10 1/8% Notes restrict Centennial from directly or
indirectly declaring or paying any dividends on its presently or subsequently
issued common stock, limit the ability of Centennial to incur additional
indebtedness and limit making any distributions of assets to its
stockholders. At May 31, 1995, Centennial was in compliance with all
covenants of the Notes.
(k) This agreement, amended May 14, 1990, February 27, 1995 and March 30,
1995 allows a subsidiary of the Company to borrow up to $80,000,000.
Beginning August 31, 1993, the line of credit decreased by scheduled amounts
and the scheduled decreases will continue until it expires on March 30, 1996.
The Agreement requires mandatory prepayments of principal to the extent that
the loan balance exceeds the line of credit. As of May 31, 1995 and 1994,
the total available line of credit was $62,500,000 and $71,250,000,
respectively. The outstanding balances at May 31, 1995 and 1994 were
$55,906,000 and $60,828,000, respectively.
The Agreement contains covenants limiting, among other things, additional
indebtedness, liens, contingent obligations, sale or discount of receivables,
and investment activity. The subsidiary refinanced this facility on July
31, 1995 (see Note 15).
In June 1990, this subsidiary entered into interest rate swap agreements
whereby it paid to various financial institutions interest on $40,000,000
notional amount of indebtedness at a weighted average fixed rate of 8.72%.
The swap agreements were terminated on February 23, 1995 and February 27,
1995.
(l) This agreement, amended and restated as of March 8, 1989, allowed CCV to
borrow up to $114,000,000. Under the terms of the agreement, the
availability of funds was reduced in accordance with the predetermined
schedule of amortization. As noted in note (i) above, the borrowings under
this credit agreement were fully repaid on December 31, 1992 and the credit
agreement was amended to provide a committed credit line of $20,000,000.
Borrowings are to be repaid in accordance with a predetermined schedule of
amortization beginning December 31, 1993. At May 31, 1995 and 1994, no
amounts were outstanding on this facility. The carrying value of the credit
facility approximates fair value which was estimated based upon the current
rates offered to CCV for debt with similar remaining maturities.
The aggregate annual principal payments for the next five years and
thereafter are summarized as follows (amounts in thousands):
1996 $ 7,450
1997 22,250
1998 36,450
1999 66,950
2000 66,950
2001 and thereafter 1,548,543
$1,748,593
At May 31, 1995, the Company and its subsidiaries were in compliance with all
covenants of the above noted agreements.
NOTE 7. COMMITMENTS AND CONTINGENCIES
Leases
At May 31, 1995, the Company's approximate annual lease obligations and
expenses (under operating leases) were as follows (amounts in thousands):
Pole rentals $ 2,144
Vehicles and equipment 287
Antenna site and property access 884
Warehouse, studio and office 3,090
$ 6,405
The above leases are substantially all short-term or cancelable by either
party upon notice.
Regulatory Restructuring Charge
The Company recorded a one time charge of $4,000,000 in the fourth quarter of
1995 in accordance with a plan adopted to restructure the Company's cable
television operations in response to recent FCC mandated rules. The charge
includes related employee severance costs, coincident with the restructuring.
The restructuring charge was substantially cash in nature and did not result
in the writeoff of the Company's assets.
Regulation - See Note 16.
Letters of Credit
The Company is a party to several letters of credit totaling $4,898,000. No
payments have been made under these agreements.
Litigation
The Company and its subsidiaries are involved in litigation and regulatory
matters which involve certain claims which arise in the normal course of
business, none of which, in the opinion of management, is expected to have
materially adverse effect on the Company's consolidated financial position or
results of operations.
Employment Agreement
The Chief Executive Officer of the Company has an employment agreement
expiring on June 30, 1998, which provides for an annual base salary of
$1,750,000 adjusted annually in proportion to increases in the Consumer Price
Index.
Pending Acquisitions
On February 26, 1993, the Company and Citizens Utilities Company entered into
an agreement to acquire the assets of a cable television system which served
in the aggregate approximately 19,200 primary basic subscribers. The
aggregate purchase price for the cable television system is $40,500,000
subject to adjustment. Citizens Utilities Company and the Company have
agreed that they shall own and operate the cable television system in a joint
venture structure yet to be determined. It is anticipated that each Company
will have a 50% ownership interest in the joint venture.
On November 28, 1994, the Company entered into an agreement to acquire the
assets of four cable television systems which serve in the aggregate
approximately 135,000 primary basic subscribers. The aggregate purchase
price for the cable television systems is $286,000,000 subject to adjustment.
The Company anticipates completing this acquisition by December 31, 1995.
Centennial was the successful bidder for one of two Metropolitan Trading Area
(MTA) licenses to provide broadband personal communications services in the
Commonwealth of Puerto Rico and the U.S. Virgin Islands. The licensed area
represents approximately 3,623,000 Net Pops. The amount of the final bid
submitted by Centennial was $54,672,000. A non-refundable deposit of
$10,934,000, representing approximately 20% of the purchase price, was made
in connection with the bid, and the balance of $43,738,000, was paid on June
29, 1995. Centennial currently estimates that the cost to build out the
infrastructure of the systems will be approximately $75,000,000, in the
aggregate over the next three years. Centennial is exploring various sources
of external financing including but not limited to bank financing, joint
ventures, partnerships and placement of equity securities of Centennial.
Centennial used a portion of the net proceeds from the sale of the 10 1/8%
Notes to pay the balance of the purchase price for the license.
Centennial is negotiating definitive purchase and sale agreements based upon
a letter of intent which was executed on May 30, 1995 to (i) obtain a
controlling interest in the non-wireline cellular telephone system serving
the Lafayette, Louisiana MSA in exchange for the Company's non-wireline
cellular telephone system serving the Jonesboro, Arkansas RSA and a cash
payment by the Company of approximately $5,200,000, subject to adjustment,
and (ii) obtain minority interests in the Elkhart, Indiana and Lake Charles,
Louisiana MSAs for a cash payment of approximately $2,950,000. Centennial's
obligation to consummate these transactions is subject to the execution of
the definitive purchase and sale agreements which will contain various
closing conditions, including FCC and other regulatory approvals. There can
be no assurance that the definitive purchase agreements will be executed or,
if executed, that the closing conditions set forth therein will be satisfied.
NOTE 8. COMMON STOCKHOLDERS' DEFICIENCY
Common Stock
The voting rights with respect to the two classes of common stock are as
follows: Class A shares entitle the holder to one vote per share, Class B
shares entitle the holder to ten votes per share. Shares of Class B common
stock are convertible into shares of Class A common stock on a one-for-one
basis upon transfer from the current Class B stockholders.
The Company is restricted from paying cash dividends on its common stock by
its credit agreements (Note 6).
Stock Distributions
Since the Company has neither retained earnings nor current earnings, the
stock distributions represent a reallocation of the shareholders' investment
over an increased number of shares and does not represent distributions of
corporate earnings and profits.
On June 18, 1992, the Company declared a 3% stock distribution on its issued
shares of Class A and Class B common stock. Payment in shares of the
respective class was made on July 24, 1992 to stockholders of record on July
3, 1992. No fractional shares were issued. As a result, $28,000
representing the total par value of the new shares issued was transferred
from additional paid-in-capital to common stock.
On October 28, 1992, the Company declared a 5% stock distribution on its
issued shares of Class A and Class B common stock. Payment in shares of the
respective class was made on November 30, 1992 to stockholders of record on
November 11, 1992. No fractional shares were issued. As a result, $40,000
representing the total par value of the new shares issued was transferred
from additional paid-in-capital to common stock.
On February 17, 1993, the Company declared a 3% stock distribution on its
issued shares of Class A and Class B common stock. Payment in shares of the
respective class was made on March 22, 1993 to stockholders of record on
March 1, 1993. No fractional shares were issued. As a result, $27,000
representing the total par value of the new shares issued was transferred
from additional paid-in-capital to common stock.
On July 2, 1993, the Company declared a 5% stock distribution on its issued
shares of Class A and Class B common stock. Distribution of shares of the
respective class was made on August 6, 1993 to stockholders of record on July
15, 1993. No fractional shares were issued. As a result, approximately
$47,000 representing the total par value of the additional shares distributed
was transferred from additional paid-in-capital to common stock.
On October 28, 1993, the Company declared a 3% stock distribution on its
issued shares of Class A and Class B common stock. Distribution in shares of
the respective class was made on November 18, 1993 to stockholders of record
on November 10, 1993. No fractional shares were issued. As a result,
approximately $29,000 representing the total par value of the new shares
distributed was transferred from additional paid-in-capital to common stock.
All references in the consolidated financial statements with regard to the
number of shares of common stock, (except issued and authorized shares),
related prices and per share amounts have been restated to give retroactive
effect to the stock distributions.
Treasury Stock
On March 10, 1995, the Company purchased 20,000,000 shares of its Class B
Common Stock from Sentry Insurance a Mutual Company, of Stevens Point,
Wisconsin ("Sentry Insurance") at an aggregate price of $110,000,000
utilizing existing credit lines. For the present, the acquired shares will
be held in the Company's treasury. Upon acquisition the Class B shares were
converted automatically to Class A shares. Prior to this acquisition,
65,406,115 shares of the Company's Class B Common Stock were outstanding of
which 23,134,056 were held by Sentry Insurance.
NOTE 9. INCOME TAXES
The Company and its consolidated subsidiaries, except for Century Venture
Corporation and Subsidiaries (including Century Colorado Corp. and
Subsidiary), Century-ML Cable Venture and Subsidiary, Citizens Century Cable
Television Venture and Centennial Cellular Corp. and Subsidiaries
(collectively the "Unconsolidated Tax Group"), file a consolidated federal
income tax return. The provisions (benefit) for income taxes are summarized
as follows:
Year Ended May 31,
1995 1994 1993
(amounts in thousands)
Current $ 3,457 $ 1,042 $ 1,347
Deferred (11,518) (6,675) (13,748)
$ (8,061) $ (5,633) $(12,401)
Deferred income taxes result primarily from nondeductible depreciation and
amortization resulting from book and tax basis differences of certain
acquired subsidiaries.
The effective income tax rate of the Company differs from the statutory rate
as a result of the effect of the following items:
Year Ended May 31,
1995 1994 1993
(amounts in thousands)
Computed tax benefit at federal
statutory rate on loss before
income taxes and minority
interest $(40,059) $(22,798) $(21,963)
Computed tax benefit of
Unconsolidated Tax Group 15,186 13,512 13,442
Recognized tax benefit of
Unconsolidated Tax Group (15,518) (10,675) (13,824)
Nondeductible amortization
resulting from acquired
subsidiaries 2,600 2,122 1,059
State and local income taxes,
net of federal income tax
effect (1,832) 3,696 1,459
Tax benefits related to net
operating loss carryforwards
not recognized and changes in
valuation allowance 30,722 7,925 7,463
Other 840 585 (37)
$(8,061) $(5,633) $(12,401)
Temporary differences and carryforwards which give rise to a significant
portion of deferred tax assets and (liabilities) are as follows:
Year Ended May 31,
1995 1994
(amounts in thousands)
Deferred Tax Assets:
Tax loss carryforward $145,731 $ 119,719
Valuation allowance (92,006) (56,037)
$ 53,725 $ 63,682
Deferred Tax Liabilities:
Amortization of intangible assets $116,296 $ 69,538
Depreciation of fixed assets 63,664 59,554
$179,960 $ 129,092
Net deferred tax liabilities $126,235 $ 65,410
The valuation allowance recorded at May 31, 1995 and 1994 represents the
portion of recorded tax loss carryforwards for which the ultimate
deductibility is not yet assured.
During the year ended May 31, 1994, the deferred tax liability was reduced
due to a change in the tax deductibility of intangible assets.
The Company and its subsidiaries, except for the Unconsolidated Tax Group,
have an investment tax credit carryover (after the 35% reduction mandated by
TRA 86) for federal income tax purposes of approximately $11,942,000 and net
operating loss carryforwards for federal income tax purposes of approximately
$351,160,000 expiring through 2001 and 2010, respectively.
Century Venture Corporation and Subsidiaries have an investment tax credit
carryover of approximately $2,058,000 and net operating loss carryforwards of
approximately $17,928,000 which will expire through 2001 and 2010,
respectively.
Centennial Cellular Corp. and Subsidiaries has approximately $107,331,000 of
net operating loss carryforwards for federal income tax purposes, expiring
through 2010 some of which are subject to limitation on their future
utilization under Section 382 of the Internal Revenue Code of 1986.
The operations of Century ML Cable Venture and Subsidiary are subject to
Puerto Rico income taxes. The Subsidiary has made a Section 936 election
whereby no U.S. tax is due based upon the fact that the Subsidiary generates
all of its taxable income in a U.S. possession.
NOTE 10. JOINT VENTURES
The combined operations and certain other information related to the 50%
indirectly owned Century Venture Corp. and Subsidiaries, Century-ML Cable
Venture and Subsidiary and Citiziens Century Cable Television Venture
included in the consolidated balances of the Company are as follows:
Year Ended May 31,
1995 1994
(amounts in thousands)
Combined Statement of Earnings
Revenues $ 86,299 $ 73,573
Costs and expenses:
Costs of services 25,646 19,704
Selling, general and administrative 14,986 11,305
Depreciation and amortization 27,295 24,802
67,927 55,811
Operating Income 18,372 17,762
Interest 14,825 14,382
Income before taxes 3,547 3,380
Income tax provision 574 1,596
Net Income $ 2,973 $ 1,784
Combined Balance Sheet Data
Property, plant and equipment - net $113,771 $ 102,235
Total assets 251,669 189,050
Long-term debt 155,906 158,094
Total liabilities 191,307 185,261
The Company's joint venture partner, ML Media Partners, L.P. ("Media
Partners") has the right to cause a sale of Century-ML Cable Venture and
Subsidiary. If Media Partners proposes such a sale, the Company will have
the right to purchase Media Partners' interest for the appraised fair market
value of Media Partners' 50% interest in Century-ML Cable Venture and
Subsidiary.
NOTE 11. EMPLOYEE BENEFIT PLANS
Stock Option Plans
The Company's 1985 Stock Option Plan (the "1985 Option Plan"), adopted by the
Board of Directors and approved by the stockholders on December 5, 1985,
expired by its terms on May 31, 1995. Accordingly, the Board of Directors
adopted and the stockholders ratified the Company's 1994 Stock Option Plan
(the "1994 Option Plan") on October 26, 1994. Upon ratification of the 1994
Option Plan, no more grants are to be made under the 1985 Option Plan. The
1985 Stock Option Plan and the 1994 Stock Option Plan, collectively the
"Option Plans", permit the issuance of "incentive stock options," as defined
in Section 422 of the Internal Revenue Code of 1986, as amended, as well as
non-qualified options. The 1985 Option Plan and the 1994 Option Plan provide
for the grant of options to purchase up to 6,897,079 and 5,000,000 shares,
respectively, of Class A Common Stock to directors, officers and other key
employees of the Company and its subsidiaries. The Option Plans are
administered by a committee of the Board of Directors (the "Stock Option
Committee") that determines the recipients and provisions of options granted
under the Option Plans, including the option price, term and number of shares
subject to option. The Board of Directors may amend the Option Plans, except
that the approval of the stockholders is necessary to increase the total
number of shares which may be issued or shares subject to options, to change
the minimum purchase price for shares subject to options, to change the
maximum period during which options may be exercised, to extend the period
during which options may be granted under the Option Plans, or to materially
increase benefits to option recipients. Generally, the option price of
incentive and non-qualified stock options granted may be as determined by the
Stock Option Committee, but must be at least equal to 100% of the fair market
value of the shares on the date of the grant. The maximum term of each
option is ten years.
For any participant who owns shares possessing more than 10% of the voting
rights of the Company's outstanding common stock, the exercise price of any
incentive stock option must be at least equal to 110% of the fair market
value of the shares subject to such option on the date of grant and the term
of the option may be no longer than five years. Options become exercisable
at such time or times as the Stock Option Committee may determine when it
grants options. All options granted on or before December 31, 1985 must be
exercised in the sequence in which they were granted. The Option Plans
permit the exercise of options by the payment of cash or shares of Class A
Common Stock equal in value to the option price. Under the terms of the
Option Plan with respect to options granted on or before December 31, 1986,
the aggregate fair market value of the Class A Common Stock (determined at
the date of the option grant) for which any employee may be granted incentive
stock options in any calendar year may not exceed $100,000, plus certain
carry-over allowances from the previous three years. Options granted under
the Option Plans are not transferable by the holder other than by will or the
laws of descent and distribution.
Under the Option Plans, the Company awarded options to purchase shares of
Class A Common Stock to employees of the Company, including executive
officers and directors. Transactions for 1993, 1994 and 1995 are as follows:
1993
Outstanding June 1, 1992 3,162,400 $2.65 - 9.30
Granted October 6, 1992 46,786 6.20 - 6.70
Granted December 28, 1992 2,785 7.96 - 8.20
Granted March 15, 1993 28,660 9.13 - 9.13
Exercised (517,993) 2.65 - 6.35
Canceled (29,149) 2.65 - 8.46
2,693,489 2.65 - 9.30
1994
Granted November 23, 1993 61,682 10.75 - 10.75
Exercised (438,922) 2.65 - 8.46
Canceled (35,340) 2.65 - 8.46
2,280,909
1995
Granted during fiscal 1995 949,750 6.25 - 9.76
Exercised (215,584) 2.65 - 8.46
Canceled (58,269) 2.65 - 10.75
Options outstanding as
of May 31, 1995 2,956,806 2.65 - 10.75
As of May 31, 1995, approximately 180 employees were participating in the
Option Plan. 1,328,982 options were exercisable at May 31, 1995.
Director Option Plan
The Company's 1993 Non-Employee Directors' Stock Option Plan (the "Directors'
Option Plan") was adopted on October 26, 1994. The Directors' Option Plan
replaced the Non-Employee Director Option Plan adopted in 1989 (the "1989
Director Option Plan") which was terminated by the Board of Directors. Under
the Directors' 1993 Option Plan a total of 323,123 shares of Class A Common
Stock were reserved for issuance. Options for 1,000 shares of Class A Common
Stock will be automatically granted under the Directors' 1993 Option Plan to
each person who is elected or re-elected a non-employee Director on the date
of the annual meeting of shareholders of the Company in each of the years
1994 through 2003.
The Directors' Option Plan shall be administered by the Board of Directors or
a committee (the "Board Committee"). In administering the Directors' Option
Plan, the Board of Directors or the Board Committee may adopt rules and
regulations for carrying out the Directors' Option Plan. The Board of
Directors may amend the Directors' Option Plan and amend the terms and
conditions of any option granted under the Directors' Option Plan, except
that the approval of the stockholders is necessary to increase the total
number of shares which may be issued or transferred under the Directors'
Option Plan and to change the minimum purchase price for shares subject to
options.
Options granted under the Directors' Option Plan are nonqualified options not
qualifying as incentive stock options under Section 422 of the Code. The
option price that shares of the Company's Class A Common Stock may be
purchased upon exercise of any option granted under the Directors' Option
Plan, will be the fair market value of such shares on the last trading day
prior to the date of the grant of such option. The Directors' Option Plan
permits the exercise of options in cash, shares of Class A Common Stock
valued at the fair market value on the date of purchase or a combination
thereof. The maximum term of each option is five years and six months
immediately succeeding the date of grant. Options granted under the
Directors' Option Plan are not transferable by the holder other than by will
or the laws of descent and distribution. During 1991 and 1990, options to
purchase 8,052 and 6,710 shares, respectively, of Class A Common Stock were
granted at an exercise price of $2.79 per share under the 1989 Directors'
Option Plan. 3,221 of these options were exercisable as of May 31, 1995.
Under the 1993 Directors' Option Plan, options to purchase 5,000 shares of
Class A Common Stock were granted at an exercise price of $8.50 per share.
None of these options were vested at May 31, 1995.
Incentive Award Plan
An Incentive Award Plan (the "Incentive Plan") was adopted by the Board of
Directors and approved by the stockholders of the Company on December 5,
1985. The Incentive Plan permits the grant of awards to key employees of the
Company and its subsidiaries, which may include directors and officers,
payable in cash or shares of Class A Common Stock. The Company has reserved
559,529 shares of Class A Common Stock for issuance under the Incentive Plan.
The awards are payable in five to ten equal annual installments on January 1
of the succeeding years after the grant of the award, provided that the
recipient is an employee on the installment payment date. The Incentive Plan
is administered by the Compensation Committee, which selects the recipients
of awards as well as the amount of such awards. The Board of Directors may
amend the Incentive Plan. Awards granted under the Incentive Plan may not be
transferred by the recipients and may be forfeited in the event of the
recipient's termination of employment. On December 5, 1985, $2,200,000 in
awards were granted under the Incentive Plan.
Employee Stock Purchase Plan
On December 5, 1985, the Company adopted the 1985 Employee Stock Purchase
Plan. On October 26, 1994, the Board of Directors and shareholders approved
an amendment to the Company's 1985 Employee Stock Purchase Plan (the "Amended
Purchase Plan"). Under the Amended Purchase Plan, eligible employees (which
generally includes all full-time employees of the Company) may subscribe for
shares of Class A Common Stock at a purchase price of 85% of the average
market price (as defined) of the Class A Common Stock on the first day or
last day of the purchase period, whichever is lower. Payment of the purchase
price of the shares will be made in installments through payroll deductions,
with no right of prepayment. The Company has reserved 1,125,767 shares of
Class A Common Stock for issuance under the Amended Purchase Plan. The
Amended Purchase Plan is administered by the Compensation Committee. As of
May 31, 1995, approximately 53,000 shares of Class A Common Stock were
subscribed for under the Amended Purchase Plan.
Stock Equivalent Plan
The Company's 1985 Stock Equivalent Plan (the "Equivalent Plan") was adopted
by the Board of Directors and approved by the stockholders on December 5,
1985. The Equivalent Plan permits the grants of units of Class A Common
Stock Equivalents ("units") to key employees of the Company and its
subsidiaries, including officers and directors. The Equivalent Plan is
administered by the Compensation Committee which selects the employees to be
granted units, determines the number of units covered by each grant,
determines the time or times when units will be granted and the conditions
subject to which any amount may become payable with respect to the units, and
prescribes the form of instruments evidencing units granted under the Plan.
Payments for units may be made by the Company in cash or in shares of Class A
Common Stock at the fair market value of the units on the date of payment.
The Company has reserved 566,155 shares of Class A Common Stock for issuance
under the Equivalent Plan. Under the terms of the Equivalent Plan, the total
number of units included in all grants to any participant may not exceed 10%
of the total number of units for which grants may be made under the
Equivalent Plan. Units granted under the Equivalent Plan are not
transferable by the holder other than by will or the laws of descent and
distribution. As of May 31, 1995, no units have been granted under the
Equivalent Plan.
Equity Incentive Plan
The Company's 1992 Equity Incentive Plan (the "Equity Plan") was adopted by
the Board of Directors and approved by the stockholders on October 28, 1992.
The plan permits the issuance of up to 1,113,945 shares of the Company's
Class A Common Stock for high levels of performance and productivity by
officers and other management employees of the Company. The Equity Plan is
administered by the Compensation Committee of the Company's Board of
Directors. The plan authorizes the Committee to grant stock based awards
that include but are not limited to, restricted stock, performance shares and
deferred stock. The Committee determines the recipients and provisions of
the grants under the Equity Plan, including the grant price, term and number
of shares subject to grant.
Generally, an employee will realize compensation taxable as ordinary income,
and the Company will be entitled to a corresponding tax deduction in an
amount equal to the sum of any cash received by the employee plus the fair
market value of any shares of Class A Common Stock received by the employee.
As of May 31, 1995, the Company had granted 508,701 shares of restricted
stock to nine officers and employees of the Company. The restrictions lapse
at the rate of 20% per year over a five-year period. As of May 31, 1995,
605,243 shares were available for awards under the Equity Plan.
Retirement Plans
Effective April 1, 1992, the Company adopted a 401K defined contribution
retirement plan covering employees of its wholly owned cable subsidiaries who
are not covered by collective bargaining arrangements. Effective July 1,
1992, the Company adopted a similar 401K plan covering employees of its
wholly-owned cable subsidiaries who are covered by collective bargaining
agreements. If a participant decides to contribute, a portion of the
contribution is matched by the Company. Total expense under the plans was
approximately $755,000, $578,000 and $475,000 for the years ended May 31,
1995, 1994 and 1993, respectively.
Subsidiary Stock Option Grants
On May 24, 1991 and August 30, 1991, Centennial awarded options to purchase
396,313 and 278,145 shares, respectively of Centennial Cellular Corp. Class A
Common Stock to certain directors, officers, and employees of the Company and
certain third parties in conjunction with the Cellular Merger (see Note 12).
Such options are non-qualified, were issued at $.01 per share and vest, on a
cumulative basis over a period of five years. With respect to the August 30,
1991 award, the difference between the estimated fair market value of the
stock at the date of grant of $17 over the option price was recorded as a
purchase price adjustment. All option shares issued under the plan were
adjusted subsequent to July 22, 1994 to account for the dilutive effect of
Centennial's stock rights offering.
On December 27, 1991, February 11, 1992, and December 9, 1994, Centennial
awarded options to purchase approximately 343,000, 2,000 and 452,000 shares,
respectively, of Centennial's Class A Common Stock to approximately 50
employees of Centennial, including executive officers and directors. At May
31, 1995, 112,066 options were exercisable.
NOTE 12. CELLULAR MERGER
On August 30, 1991, the Company's subsidiary Centennial Cellular Corp.
("Centennial Cellular") completed an agreement with Citizens Cellular Company
(a wholly owned subsidiary of Citizens Utilities Company) to merge Citizens
Cellular Company with and into Centennial Cellular. In connection with the
Merger, Centennial Cellular Corp. issued Convertible Redeemable Preferred
Stock valued at $128,450,000 and 1,367,099 shares of Centennial Cellular
Corp. Class B Common Stock representing 18.8% of the then common equity of
Centennial. The Convertible Redeemable Preferred Stock is convertible on or
after the third anniversary from the date of issuance into 2,972,335 shares
of Centennial Cellular Corp. Class A or B common stock. Although the
Convertible Redeemable Preferred Stock carries no cash dividend requirement
during the first five years, the shares accrete liquidation preference and
redemption value at the rate of 7.5% per annum, compounded quarterly, in each
of years one through five. The accretion for the years ended May 31, 1995,
1994 and 1993 totaled approximately $12,160,000, $11,240,000 and $10,525,000,
respectively. Of this amount $4,419,000, $5,838,000 and $5,883,000 was
charged against paid-in-capital in the years ended May 31, 1995, 1994 and
1993, respectively with the remainder of $7,741,000, $5,402,000 and
$4,642,000 charged to minority interests. At the end of year five, such
preferred stock will accrete to $186,287,000. Beginning in year six through
fifteen, the holders of the Convertible Redeemable Preferred Stock are
entitled to receive cash dividends at the rate of 8.5% per annum. The
Convertible Redeemable Preferred Stock carries a mandatory redemption
provision at the end of fifteen years.
The following summarizes the assets, partners' capital, and results of
operations of the six Cellular Partnerships contributed in the Merger that
the Company accounts for by the equity method. All amounts have been derived
from the individual Cellular Partnerships' financial statements through
December 31, 1994 and adjusted for interim financial activity from the
Cellular Partnerships' calendar year end to the Company's fiscal year end
(amounts in thousands and unaudited):
May 31,
1995 1994
Assets $400,440 $ 327,200
Partners' Capital 359,155 299,024
Net Income 73,045 62,208
NOTE 13. SUBSIDIARY COMMON STOCK RIGHTS OFFERING
Subsidiary Rights Offering
On July 22, 1994, Centennial successfully completed a rights offering
involving the distribution to holders of record of its Class A Common Stock
outstanding on July 7, 1994 (the "Record Date") transferable subscription
rights (the "Rights") to subscribe for and purchase an aggregate of 3,098,379
additional shares of Class A Common Stock based on 6,887,287 shares of Class
A Common Stock outstanding on the Record Date for a subscription price of
$14.00 per share. Record date stockholders received 0.45 right for each
share of Class A Common Stock owned by them and were entitled to purchase one
share of Class A Common Stock for each full right held. Holders of Rights
purchased an aggregate of 2,988,478 of the 3,098,379 shares of Class A Common
Stock available for purchase pursuant to the basic subscription privilege.
The balance of 109,901 shares of Class A Common Stock were sold pursuant to
the oversubscription privilege and were distributed pro rata among the
holders of Rights who requested an aggregate of 235,746 additional shares
pursuant to the oversubscription privilege.
Centennial also distributed to Century Communications and Citizens, the
holders of record of all the shares of Class B Common Stock outstanding as of
the Record Date, nontransferable subscription rights (the "Class B Rights")
to subscribe for and purchase an aggregate of approximately 3,272,311
additional shares of Class B Common Stock. Century Communications and
Citizens each exercised all of the Class B Rights distributed to them. Each
share of Class B Common Stock is convertible into one share of Class A Common
Stock at any time at the option of the holder.
The net proceeds of approximately $86,500,000 from the rights offering (after
deducting soliciting fees and expenses of approximately $2,700,000) are
available to be used by Centennial for general corporate purposes, including
financing of capital expenditures and acquisitions.
NOTE 14. REGISTRATION STATEMENTS
On October 26, 1993, the Company filed a registration statement with the
Securities and Exchange Commission relating to the shelf registration of
$500,000,000 of the Company's debt securities, augmenting the remaining
$2,000,000 under a prior shelf registration. The registration statement
became effective July 14, 1994. The debt securities may be issued from time
to time in series on terms to be specified in one or more prospectus
supplements at the time of the offering. If so specified with respect to any
particular series, the debt securities may be convertible into shares of the
Company's Class A Common Stock. As of August 20, 1995, there was
$252,000,000 available for issuance under this registration.
The Company on March 6, 1995, filed a registration statement on Form S-3 with
the Securities and Exchange Commission (the "SEC"). The statement was filed
to permit the issuance of 3,500,000 shares of the Company's Class A Common
Stock, such shares to be issued in connection with the acquisition of certain
cable systems. (See Acquisitions).
During fiscal 1994, Centennial filed a shelf registration statement with the
SEC for up to 8,000,000 shares of Centennial's Class A Common Stock that may
be offered from time to time in connection with acquisitions. At August 20,
1995, there were 4,465,896 shares available for issuance under this
registration statement.
Centennial on April 5, 1995, filed a shelf registration statement with the
SEC for the issuance of $500,000,000 of Centennial's debt securities. The
debt securities may be issued from time to time in series on terms to be
specified in one or more prospectus supplements at the time of the offering.
If so specified with respect to any particular series, the debt securities
may be convertible into shares of Centennial's Class A Common Stock. As of
August 20, 1995, $400,000,000 remained available for issuance.
NOTE 15. SUBSEQUENT EVENT
(a) On August 4, 1995, CCC-I entered into a three year, $525,000,000
unsecured revolving credit facility which converts to a five year term loan.
The proceeds of the facility were used by CCC-I to repay existing
indebtedness of CCC-I (see Note 6a) and will be used for working capital and
general corporate purposes. The repayment by CCC-I of its existing
indebtedness discharged all of CCC-I's obligations under its then-existing
credit agreement and, as a result, such agreement was terminated. The
interest rates payable on borrowings under the new credit facility are based
on, at the election of CCC-I, (a) the base rate of interest announced by
Citibank, N.A. plus 1/8% to 7/8% per annum based upon certain conditions, (b)
the London Interbank Offering Rate plus 1 1/8% to 1 7/8% per annum based upon
certain conditions, or (c) the average consensus bid rates of certificate of
deposit dealers for the purchase at face value of certificates of deposit of
Citibank, N.A. plus 1 1/4% to 2% per annum based on certain conditions.
The agreement expires on August 31, 2003 and provides for mandatory principal
repayments, among other possible reductions, in the following percentages:
Last day Last day Last day Last day
Year of February of May of August of November
1998 -- -- 3.00% 3.00%
1999 3.00% 3.00% 4.00% 4.00%
2000 4.00% 4.00% 5.00% 5.00%
2001 5.00% 5.00% 5.25% 5.25%
2002 5.25% 5.25% 6.25% 6.25%
2003 6.25% 6.25% 6.00% --
The credit facility restricts the incurence of certain addtional debt of CCC-
I, limits the ability of CCC-1 to pay dividends to the Company and requires
that certain operating tests be met.
(b) On July 31, 1995, a subsidiary of the Company, Century Venture Corp.
("CVC") entered into a three year, $80,000,000 revolving credit facility
which converts to a five year term loan. The proceeds of the facility were
used by CVC to repay existing indebtedness of CVC (see Note 6k) and will be
used for working capital and general corporate purposes. The repayment by
CVC of its existing indebtedness discharged all of CVC's obligations under
its then-existing credit agreement and, as a result, such agreement was
terminated. The interest rates payable on borrowings under the new credit
facility are based on, at the election of CVC, (a) "C/D Base Rate" plus an
applicable margin, as defined or (b)"Eurodollar Base Rate" plus an applicable
margin as defined or (c) "ABR" rate as defined.
The agreement expires on February 28, 2004 and provides for a reduction in
the aggregate commitment, among other possible reductions, in the following
amounts:
Last day Last day Last day Last day
Year of February of May of August of November
1998 $ --$ -- $1,875,000 $1,875,000
1999 1,875,000 1,875,000 2,500,000 2,500,000
2000 2,500,000 2,500,000 3,125,000 3,125,000
2001 3,125,000 3,125,000 3,750,000 3,750,000
2002 3,750,000 3,750,000 3,750,000 3,750,000
2003 3,750,000 3,750,000 6,666,667 6,666,667
2004 6,666,667
The credit facility restricts the incurence of certain addtional debt of CVC,
limits the ability of CVC to pay dividends to the Company and requires that
certain operating tests be met.
NOTE 16. REGULATORY MATTERS
Regulation
On October 5, 1992, Congress enacted the Cable Television Consumer Protection
and Competition Act of 1992 ("Act"). The Act substantially reregulates the
cable television industry and imposes numerous requirements, including
provisions regarding rates which may be regulated by the applicable local
franchising authority and those to be regulated by the FCC, exclusive
programming arrangements, the carriage of broadcast signals, customer service
standards, leased access channels, VCR compatibility and various other
matters. Although this regulation under the Act will be detrimental to the
Company, it is premature to predict the full impact of the Act on the
Company. This will be dependent, among other factors, on the interpretation
to be afforded by the Federal Communications Commission ("FCC") and the
courts to both the Act and regulations as well as the actions of the Company
in response thereto.
Virtually all of the Company's cable systems are subject to rate regulation.
The Act (i) mandates that the FCC establish rate standards for basic cable
service rates and customer equipment which may be regulated by the applicable
local franchising authority, (ii) requires the FCC, upon complaint from a
franchising authority or a subscriber, to review rates for additional tiers
of cable service, (iii) regulates rates for mandatorily offered commercial
leased access channels and (iv) eliminates the prior automatic 5% annual
increase for basic rates. Rates for channels offered as individual purchase
options and pay-per-view events are excluded from rate regulation.
On April 1, 1993, the FCC announced the adoption of rate regulations which
became effective September 1, 1993. Under those regulations, rates must be
evaluated initially against "competitive benchmarks" and are generally
subject to rollbacks if they exceed the benchmark levels. On February 22,
1994, the FCC adopted further rate reductions effective May 15, 1994 based on
complex formulas and revised benchmarks. Future rate increases will be
subject to price caps, with rate increases limited to the general rate of
inflation and certain increases in system costs. Notwithstanding the
foregoing, the cable operator is afforded the opportunity to defend rates in
excess of these benchmarks based on utility-type cost-of-service rate
regulation. Cable systems are also required to unbundle all equipment
charges and base those charges on "actual cost" plus permitted mark-up. On
November 10, 1994, the FCC adopted two refinements to its rate regulation
rules in an effort to create incentives for the addition of new programming
services. The first, starting January 1, 1995, permits cable operators to
charge 20 cents per subscriber, plus the cost of the programming, for each
new channel added up to six channels to certain regulated tiers. The maximum
total rate increase for such channel additions is $1.50 through December 31,
1996, and the maximum number of channels which can use this pricing method is
six (a seventh channel can be added in1997, bringing the total price increase
to $1.70).The second, under certain conditions, cable operators can create
"New Product Tiers" made up of services not previously carried on the system,
and such tiers will not be rate regulated. Court challenges to the FCC
regulation are pending.
In view of the continuing changes to the FCC rate regulations, the Company is
currently unable to assess the full impact of the 1992 Cable Act upon its
future financial results. It is expected that the Company's cable operations
will sustain higher operating costs in administering additional regulatory
burdens. Although the financial impact of the 1992 Cable Act cannot yet be
ascertained precisely, once fully implemented, certain aspects of the new law
will have a negative impact on the Company. Further, in complying with the
benchmark regulatory scheme for the period September 1, 1993 to May 15, 1994,
the Company, on a franchise basis, was required to reduce regulated service
rates such that the "average monthly subscriber bill" for all cable service
subject to rate regulation (including, but not limited to basic service,
cable programming service not offered on a per channel basis, secondary
outlets, converters and remote control units, installation and service
charges) was reduced by an amount of up to 10% of such charges as of
September 1992. Under the new FCC benchmarks, additional reductions were
required no later than July 14, 1994. These new benchmarks are intended
generally to reduce rates to a level 17% below September 1992 rates, subject
to various adjustments. Where rates are found to exceed the permitted
levels, the Company will be subject to refunds and other penalties. The
extent of the anticipated decline in revenues and any potential refunds or
penalties cannot be determined at this time, but could have a negative impact
on the Company.
The Act establishes a choice for broadcasters between compelling the carriage
of their signals ("must carry" rights) and negotiating a fee for such
carriage ("retransmission consent" rights). As of October 1993, cable
operators were required to secure retransmission consent from broadcasters
who either have not selected "must carry" or who are not entitled under the
Act to make such selection, before transmitting such broadcasters' signals.
This requirement has the potential to increase the cost of carriage of
broadcast stations in the event particular broadcasters do not elect "must
carry" and the Company chooses to continue carriage of such broadcasters'
signals. No retransmission fees will be payable by the Company to
broadcasters who elect "must carry" although the Company will then be obliged
to carry signals of these "local" broadcast stations. Established "super
stations" are exempted from the "must carry"/"retransmission consent"
provision.
The Act directs the FCC to promulgate regulations intended to promote
distribution of cable programming by competing technologies such as DBS,
MMDS, SMATV and other potential programming distributors. The Act imposes
limitations on some volume discounts received by large cable operators,
strictly limits discriminatory programming contract terms favoring cable
operators over other programming distributors. On April 1, 1993, the FCC
adopted regulations to implement these program access provisions of the Act.
The full extent of the impact of these provisions and the implementing
regulations on the Company cannot be determined at this time.
FCC regulations adopted pursuant to the Act contain a number of other
regulatory provisions such as those relating to program carriage
requirements, ownership regulations and customer service/technical standards,
all of which will impose additional burdens and cost on a cable operator.
The full extent of the impact of these provisions and the implementing
regulations on the Company cannot be determined at this time.
Pending Telecommunications Legislation
Both the U.S. Senate and House of Representatives have recently passed
telecommunications bills and such legislation is likely to be enacted into
law this year. Although the final form of this legislation has not yet been
determined, it would, if adopted as anticipated, result in very significant
changes in laws and regulations applicable to cable television companies,
telephone companies and many other providers of communication services.
Generally, the legislation would eliminate the cross-ownership restrictions
between telephone companies and cable operators, subject to certain
conditions. This would permit telephone companies to provide cable
television cable services to subscribers within their telephone service area
over telephone or other facilities, and cable operators would be permitted to
provide telephone services under certain circumstances. In addition, the
legislation would provide some deregulation of cable television, but would
also impose some additional obligations and expense on cable operators,
including higher pole attachment fees. While the full impact of this
legislation cannot be predicted at this time, the Company anticipates that it
will face increased competition from telephone companies which generally have
significantly greater financial resources than the Company.
<TABLE>
Note 17. BUSINESS SEGMENTS
The Company's consolidated financial statements include
two distinct business segments. Century Communications
owns, operates and develops cable television systems.
Centennial Cellular Corp. a 32.7%, 46.4% and 53.4% owned
subsidiary in 1995, 1994 and 1993 owns, operates and
invests in wireless telephone systems and an SMR and
paging business.
Information about the Company's operations in its two
business segments for the years ended May 31, 1995
1994 and 1993 is as follows (amounts in thousands):
<CAPTION>
Year ended May 31,
1995 1994 1993
<S> <C> <C> <C>
Revenue:
Cable television $ 331,439 $ 318,456 $ 302,174
Cellular telephone 85,419 56,373 43,186
Eliminations (171) (230) (229)
$ 416,687 $ 374,599 $ 345,131
Operating income (loss):
Cable television $ 55,303 $ 80,523 80,994
Cellular telephone (28,430) (22,490) (25,923)
Eliminations (171) (230) (229)
$ 26,702 $ 57,803 $ 54,842
Net (loss):
Cable television $ (70,622) $ (27,207) $ (23,064)
Cellular telephone (32,730) (27,784) (25,908)
Eliminations 20,727 13,064 11,181
$ (82,625) $ (41,927) $ (37,791)
Assets, at end of period:
Cable television $ 1,291,748 $ 941,866 $ 935,788
Cellular telephone 844,384 502,834 470,295
Eliminations (131,715) (94,274) (102,599)
$ 2,004,417 $ 1,350,426 $ 1,303,484
Depreciation and amortization:
Cable television $ 106,289 $ 103,644 $ 95,702
Cellular telephone 65,642 47,652 42,845
$ 171,931 $ 151,296 $ 138,547
Captial expenditures:
Cable television $ 92,199 $ 46,077 $ 37,402
Cellular telephone 17,538 8,947 7,878
$ 109,737 $ 55,024 $ 45,280
Intersegment sales are not significant. No single customer accounted for
more than 10% of revenues.
The financial information which follows is that of Century Communications
before the consolidation of Centennial Cellular Corp.; Centennial Cellular
Corp., which comprises the Company's wireless telephone business
segment, as well as consolidated information.
</TABLE>
<TABLE>
Note 17. Segment Information (continued)
BALANCE SHEET FINANCIAL DATA
May 31, 1995
(Amounts in thousands)
<CAPTION>
Century
Communications
Corp. before
consolidation of Reclassifications
Centennial Centennial and
Cellular Corp. Cellular Corp.Eliminations Consolidate
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and short-term investments $ 107,136 $ 121,628 $ - $ 228,764
Accounts receivable - net 8,155 16,361 - 24,516
Prepaid expenses and other
current assets 3,182 1,737 - 4,919
Total current assets 118,473 139,726 - 258,199
Property, plant and equipment - net 446,684 61,359 - 508,043
Investment in marketable equity securities 46,671 - - 46,671
Investment in Centennial Cellular
Corp. at cost 139,013 - (139,013) -
Equity investments in cable television and
cellular telephone systems - net 107,945 106,280 6,338 220,563
Debt issuance cost - net 22,501 8,519 - 31,020
Cable television franchise - net 246,455 - - 246,455
Wireless telephone licenses - net - 394,184 - 394,184
Excess of purchase price over value of
net assets acquired - net 146,580 131,036 - 277,616
Other assets 17,426 3,280 960 21,666
$1,291,748 $ 844,384 $ (131,715) $ 2,004,417
</TABLE>
<TABLE>
Note 17. Segment Information (continued)
BALANCE SHEET FINANCIAL DATA
(continued)
May 31, 1995
(Amounts in thousands)
<CAPTION>
Century
Communications
Corp. before
consolidation of Centennial Reclassifications
Centennial Cellular and
Cellular Corp. Corp. Eliminations Consolidated
<S> <C> <C> <C> <C>
LIABILITIES AND COMMON STOCKHOLDERS'
EQUITY (DEFICIENCY)
Current Liabilities:
Current maturities of long-term
debt $ 7,450 $ - $ - $ 7,450
Accounts payable and accrued
expenses 78,820 61,853 - 140,673
Customers' deposits and
prepayments 9,451 3,752 - 13,203
Total current liabilities 95,721 65,605 - 161,326
Long-term debt 1,391,143 350,000 - 1,741,143
Deferred liability 5,000 3,140 (8,140) -
Deferred income taxes 65,767 60,468 - 126,235
Minority interest in subsidiaries 29,948 - 127,677 157,625
Convertible redeemable preferred stock - 169,733 - 169,733
Second series convertible redeemable
preferred stock - 6,607 (6,607) -
Common stockholders' equity (deficiency):
Common stock, par value $.01 per share:
Class A 595 157 (157) 595
Class B 454 105 (105) 454
Additional paid-in capital 81,868 395,735 (302,058) 175,545
Unrealized appreciation of
marketable securities 14,416 - - 14,416
Accumulated deficit (255,560) (202,365) 52,874 (405,051)
(158,227) 193,632 (249,446) (214,041)
Less: Cost of Class A common shares
in treasury (137,604) (1,801) 1,801 (137,604)
Shareholder Note Receivable - (3,000) 3,000 -
Total common stockholders' equity
(deficiency) (295,831) 188,831 (244,645) (351,645)
$ 1,291,748 $ 844,384 $ (131,715) $ 2,004,417
</TABLE>
<TABLE>
Note 17. Segment Information (continued)
STATEMENT OF OPERATIONS FINANCIAL DATA
Year Ended May 31, 1995
(Amounts in thousands)
<CAPTION>
Century
Communications
Corp. before
consolidation of Reclassifications
Centennial Centennial and
Cellular Corp. Cellular Corp. Eliminations Consolidated
<S> <C> <C> <C> <C>
Revenues:
Service income $ 331,439 $ 85,419 $ (171) $ 416,687
Costs and expenses:
Cost of services 81,521 22,152 - 103,673
Selling, general and administrative 84,326 26,055 - 110,381
Regulatory restructuring charge 4,000 - - 4,000
Depreciation and amortization 106,289 65,642 - 171,931
276,136 113,849 - 389,985
Operating income (loss) 55,303 (28,430) (171) 26,702
Income from equity investments - 4,670 (4,670) -
Interest 115,644 23,357 - 139,001
Other expense 2,400 - - 2,400
Loss before income tax benefit and
minority interest (62,741) (47,117) (4,841) (114,699)
Income tax (benefit) provision 6,395 (14,456) - (8,061)
Loss before minority interest (69,136) (32,661) (4,841) (106,638)
Minority interest in loss of subsidiaries (1,486) (69) 25,568 24,013
Net Loss $ (70,622) $ (32,730) $ 20,727 $ (82,625)
</TABLE>
<TABLE>
CENTURY COMMUNICATIONS CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
NOTE 18. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Unaudited quarterly financial information follows (amounts in thousands except per share data):
<CAPTION>
Three months ended
August 31, November 30, February 28, May 31,
<S> 1992 1992 1993 1993
<C> <C> <C>
Revenues $ 84,616 $ 85,740 $ 85,434 $ 89,341
Operating income 12,350 12,171 9,393 20,928
Net loss (8,326) (9,059) (10,979) (9,427)
Net loss per common share (1) (.11) (.12) (.14) (.12)
Three months ended
August 31, November 30, February 28, May 31,
1993 1993 1994 1994
<S> <C> <C> <C>
Revenues $ 91,091 $ 94,458 $ 93,080 $ 95,970
Operating income 16,505 15,024 17,588 8,686
Net loss (8,552) (9,521) (7,960) (15,894)
Net loss per common share (1) (.11) (.12) (.11) (.19)
Three months ended
August 31, November 30, February 28, May 31,
1994 1994 1995 1995
<S> <C> <C> <C>
Revenues $ 97,421 $ 104,271 $ 106,129 $ 108,866
Operating income 10,306 9,439 5,395 1,562
Net loss (14,957) (16,617) (20,058) (30,993)
Net loss per common share (1) (.18) (.20) (.23) (.42)
(1) See Note 1 loss per common share.
</TABLE>
<TABLE>
SCHEDULE VIII
CENTURY COMMUNICATIONS CORP. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
Amounts in Thousands
<CAPTION>
Column A Column B Column C Column D Column E
Additions
Balance at Charged to Charged to Balance a
beginning costs and other accounts Deductions end
Description of period expenses - describe - describe of period
<S> <C> <C> <C> <C> <C>
Deducted from assets
to which they apply:
Allowance for doubtful
accounts:
Year end May 31, 1993 $ 2,413 $ 3,199 $ 11,316 (B) $ 14,408 (A) $ 2,520
Year end May 31, 1994 $ 2,520 $ 4,501 $ 13,505 (B) $ 18,574 (A) $ 1,952
Year end May 31, 1995 $ 1,952 $ 4,952 $ 16,067 (B) $ 20,827 (A) $ 2,144
(A) Accounts written-off
(B) Charges billed to disconnected subscribers for Company owned equipment held by the sub-
scriber. Experience has shown that such amounts billed are generally not collectible and
accordingly, are reserved for at the time of billing, with no effect on the statement of
operations.
</TABLE>
3. Reports on Form 8-K
The Company filed one Current Report on Form 8-K during the fiscal
quarter ended May 31, 1995, which Report was filed on May 15, 1995.
4. Exhibits
The following documents are filed as part of this Annual Report on Form
10-K:
3(a) - Restated Certificate of Incorporation of the Company, filed as Exhibit
6(a)(i) to the Company's Quarterly Report on Form 10-Q for the quarter ended
February 28, 1990 and incorporated herein by reference and Amendment to
Restated Certificate of Incorporation of the Company, filed as Exhibit
6(a)(i) to the Company's Quarterly Report on Form 10-Q for the quarter ended
November 30, 1990 and incorporated herein by reference.
3(b) - By-laws of the Company, as amended.
4(a) - Eighth Restated Credit Agreement, dated as of July 10, 1990, between
Century Texas, Century Investors and Citibank, N.A., on behalf of itself and
as agent, and The Chase Manhattan Bank (National Association), The Bank of
Nova Scotia, The First National Bank of Chicago, Bank of Montreal, The Royal
Bank of Canada, Continental Bank N.A., Bankers Trust Company, Nippon Credit
Bank, Provident National Bank, and Security Pacific National Bank (the
"Eighth Restated Banks"), filed as an Exhibit to the Company's Current Report
on Form 8-K, filed July 13, 1990, and incorporated herein by reference.
4(b) - Third Amendment, dated as of November 21, 1990 (the "Third
Amendment"), among Centennial Cellular Corp., a Delaware corporation
("Centennial Cellular Corp."), the Lender parties on the signature page
thereto, Citibank, N.A., as agent, Century Cellular Holding Corp., and the
Guarantor of parties on the signature page thereto, to the Credit Agreement,
dated as of October 11, 1989, among Centennial Cellular Corp., and Citibank,
N.A., on behalf of itself and as agent, and Kansallis-Osake-Pankki, Provident
National Bank, DnC America Banking Corporation, Meridian Bank, Lincoln
Savings Bank, Toronto Dominion Bank, and The Bank of Nova Scotia(the
"Cellular Banks"), filed as an Exhibit to the Company's Quarterly Report on
Form 10-Q for the quarter ended November 30, 1991, and incorporated herein by
reference.
4(c) - Credit Agreement, dated as of October 11, 1989, among Centennial
Cellular Corp., and Citibank, N.A., on behalf of itself and as agent, and the
Cellular Banks, filed as Exhibit 4(c) to the Company's Annual Report on Form
10-K for the year ended May 31, 1990, and incorporated herein by reference.
4(d) - Credit Agreement, dated as of October 11, 1989, among Centennial
Cellular Corp., and Citibank, N.A., on behalf of itself and as agent, and the
Cellular Banks, as Amended and Restated pursuant to the Third Amendment,
filed as an Exhibit to the Company's Quarterly Report on Form 10-Q for the
quarter ended November 30, 1991, and incorporated herein by reference.
The Company hereby agrees to furnish to the Securities and Exchange
Commission, upon its request, a copy of each instrument omitted pursuant to
item 601(b)(4)(iii) of Regulation S-K.
4(e) - Second Restated Consolidated Guaranty and Pledge Agreement, dated as
of July 10, 1990, made by the subsidiaries of the Company set forth on the
signature pages thereto to Citibank, N.A., as agent for the Eighth Restated
Banks, filed as Exhibit 4(g) to the Company's Annual Report on Form 10-K for
the year ended May 31, 1990 and incorporated herein by reference.
4(f) - Third Restated Pledge Agreement and Guaranty, dated as of July 10,
1990, made by the Company to Citibank, N.A., as agent for the Eighth Restated
Banks, filed as Exhibit 4(h) to the Company's Annual Report on Form 10-K for
the year ended May 31, 1990 and incorporated herein by reference.
4(g) - Seventh Restated Pledge and Security Agreement, dated as of July 10,
1990, made by Century Texas to Citibank, N.A., as agent for the Eighth
Restated Banks, filed as Exhibit (i)A to the Company's Annual Report on Form
10-K for the year ended May 31, 1990 and incorporated herein by reference.
4(h) - Third Collateral Agreement Amendment, dated as of July 10, 1990 made
by Century Texas, the Company and Citibank, N.A. as agent for the Eighth
Restated Banks, filed as Exhibit 4(i)B to the Company's Annual Report on Form
10-K for the year ended May 31, 1990 and incorporated herein by reference.
4(i) - Pledge Agreement, dated as of October 11, 1989, made by Century
Cellular Holding Corp., a New York corporation, to Citibank, N.A., as agent
for the Cellular Banks, filed as Exhibit 4(j) to the Company's Annual Report
on Form 10-K for the year ended May 31, 1990 and incorporated herein by
reference.
4(j) - Pledge Agreement, dated as of October 11, 1989, made by Century
Cellular Holding Corp., a New York corporation, to Citibank, N.A., as agent
for the Cellular Banks, filed as an Exhibit to the Company's Quarterly Report
on Form 10-Q for the period ended November 30, 1990 and incorporated herein
by reference.
4(k) - Pledge and Security Agreement, dated as of October 11, 1989, made by
Centennial Cellular Corp. to Citibank, N.A., as agent for the Cellular Banks,
filed as Exhibit 4(k) to the Company's Annual Report on Form 10-K for the
year ended May 31, 1990 and incorporated herein by reference.
4(l) - Pledge and Security Agreement, dated as of October 11, 1989, made by
Centennial Cellular Corp. to Citibank, N.A., as agent for the Cellular Banks,
as Amended and Restated pursuant to the Third Amendment, filed as an Exhibit
to the Company's Quarterly Report on Form 10-Q for the period ended November
30, 1990 and incorporated herein by reference.
4(m) - Consolidated Guaranty and Pledge Agreement, dated as of October 11,
1989, made by the subsidiaries of Centennial Cellular Corp. set forth on the
signature pages thereto to Citibank, N.A., as agent for the Cellular Banks,
filed as Exhibit 4(l) to the Company's Annual Report on Form 10-K for the
year ended May 31, 1990 and incorporated herein by reference.
4(n) - Consolidated Guaranty and Pledge Agreement, dated as of October 11,
1989, made by the subsidiaries of Centennial Cellular Corp. set forth on the
signature pages thereto to Citibank, N.A., as agent for the Cellular Banks,
as Amended and Restated pursuant to the Third Amendment, filed as an Exhibit
to the Company's Quarterly Report on Form 10-Q for the period ended November
30, 1990 and incorporated herein by reference.
4(o) - Equity Subscription Agreement, dated as of November 21, 1990, among
Centennial Cellular, Century Communications Corp., a Texas corporation, and
Century Cellular Holding Corp., a New York corporation, filed as Exhibit 4(o)
to the Company's Annual Report on Form 10-K for the year ended May 31, 1992
and incorporated herein by reference.
4(p) - Indenture, dated as of November 15, 1988, by and between the Company
and the Bank of Montreal Trust Company, as Trustee, filed as Exhibit 4(l) to
Amendment No. 7 to the Company's Registration Statement on Form S-1 (File No.
33-21394) under the Securities Act of 1933, as amended, (the "1988 Form
S-1"); said 1988 Form S-1 having been filed with the Commission on April 22,
1988 and incorporated herein by reference, and said Amendment No. 7 to the
1988 Form S-1 having been filed with the Commission on November 10, 1988 and
incorporated herein by reference.
4(q) - Indenture, dated as of October 15, 1991, be and between the Company
and the Bank of Montreal Trust Company, as Trustee, filed as Exhibit 4.2 to
Amendment No. 2 to the Company's Registration Statement on Form S-3 (File No.
33-33787) under the Securities Act of 1933, as amended (the "1991 Form S-3);
said 1991 Form S-3 having been filed with the Commission on August 31, 1990
and incorporated herein by reference, and said Amendment No. 2 to the 1991
Form S-3 having been filed with the Commission on March 1, 1991 and
incorporated herein by reference.
4(r) - First Supplemental Indenture, dated as of October 15, 1991, by and
between the Company and the Bank of Montreal Trust Company, as Trustee, filed
as Exhibit 7(2) to the Company's current report on Form 8-K, dated October
17, 1991 and incorporated herein by reference.
4(s) - Indenture, dated as of February 15, 1992, by and between the Company
and the Bank of America National Trust and Savings Association, as Trustee,
filed as Exhibit 4.3 to Amendment No. 2 to the Company's Registration
Statement on Form S-3 (File No. 33-33787) under the Securities Act of 1933,
as amended (the "1991 Form S-3"); said 1991 Form S-3 having been filed with
the Commission on March 9, 1990 and incorporated herein by reference, and
said Amendment No. 2 to the 1991 Form S-3 having been filed with the
Commission on March 1, 1991 and incorporated herein by reference.
4(t) - First Supplemental Indenture, dated as of February 15, 1992, by and
between the Company and the Bank of America National Trust and Savings
Association, as Trustee, filed as Exhibit 4(t) to the Company's Annual Report
on Form 10-K for the year ended May 31, 1992 and incorporated herein by
reference.
4(u) - Second Supplemental Indenture dated as of August 15, 1992 by and
between the Company and Bank of America National Trust and Savings
Association, as Trustee, filed as Exhibit 4(u) to the Company's Annual Report
on Form 10-K for the year ended May 31, 1992 and incorporated herein by
reference.
4(v) - Third Supplemental Indenture dated as of April 1, 1993 by and between
the Company and Bank of America National Trust and Savings Association, as
Trustee, and incorporated herein by reference.
4(w) - Fourth Supplemental Indenture dated as of March 6, 1995 by and
between the Company and Bank of America National Trust and Savings
Association, as Trustee.
10(a) - Employment Agreement, dated February 11, 1986, between the Company
and Leonard Tow, filed as Exhibit 10(a) to the 1988 Form S-1 and incorporated
herein by reference.
10(a)(1) - Amended Employment Agreement, dated as of July 1, 1991, between
the Company and Leonard Tow, filed as Exhibit 10(a)(1) to the Company's
Annual Report on Form 10-K for the year ended May 31, 1992 and incorporated
herein by reference.
10(a)(2) - Agreement, dated July 30, 1992, between the Company and the
Leonard and Claire Tow Life Insurance Trust, filed as Exhibit 10(a)(2) to the
Company's Annual Report on Form 10-K for the year ended May 31, 1992 and
incorporated herein by reference.
10(a)(3) - Employment Agreement, dated as of December 28, 1993, between the
Company and Scott N. Schneider, filed as Exhibit 10(a) to the Company's
Quarterly Report on Form 10-Q for the quarter ended February 28, 1994 and
incorporated herein by reference.
10(a)(4) - Employment Agreement, dated as of December 28, 1993, between the
Company and Andrew Tow, filed as Exhibit 10(b) to the Company's Quarterly
Report on Form 10-Q for the quarter ended February 28, 1994 and incorporated
herein by reference.
10(a)(5) - Employment Agreement, dated as of December 28, 1993, between the
Company and Michael G. Harris, filed as Exhibit 10(c) to the Company's
Quarterly Report on Form 10-Q for the quarter ended February 28, 1994 and
incorporated herein by reference.
10(a)(6) - Employment Agreement, dated December 28, 1993, between the
Company and Bernard P. Gallagher.
10(b) - Principal Stockholders' Agreement, dated as of December 7, 1985,
between Sentry Insurance a Mutual Company ("Sentry"), the Company, Leonard
Tow individually and as Trustee, and Claire Tow as Trustee, filed as Exhibit
10(a) to the Company's Registration Statement on Form S-1 (No. 33-2025) under
the Securities Act of 1933, as amended, filed with the Commission on December
9, 1985 (the "1986 Form S-1") and incorporated herein by reference.
10(c) - Amendment to Principal Stockholders' Agreement, dated August 31,
1987, filed as an Exhibit to the Company's Current Report on Form 8-K dated
September 11, 1987 and incorporated herein by reference.
10(d) - Lease, dated July 15, 1987, between Locust Avenue Associates and
Century-Texas, filed as Exhibit 10(h) to the 1988 Form S-1 and incorporated
herein by reference.
10(e) - Addendum to Lease, effective December 1, 1988, between Locust
Avenue Associates and Century-Texas, filed as Exhibit 10(i) to the Company's
Annual Report on Form 10-K for the year ended May 31, 1989 and incorporated
herein by reference.
10(f) - Addendum to Lease, effective April 1, 1990, between Locust Avenue
Associates and Century-Texas, filed as Exhibit 10(j) to the Company's Annual
Report on Form 10-K for the year ended May 31, 1990 and incorporated herein
by reference.
10(g) - Addendum to Lease, effective December 1, 1990, between Locust
Avenue Associates and Century-Texas, filed as Exhibit 10(k) to the Company:
Annual Report on Form 10-K for the year ended May 31, 1991 and incorporated
herein by reference.
10(h) - Addendum to Lease, effective May 1, 1991, between Locust Avenue
Associates and Century-Texas, filed as Exhibit 10(1) to the Company's Annual
Report on Form 10-K for the year ended May 31, 1991 and incorporated herein
by reference.
10(i) - Addendum to Lease, effective December 1, 1992, between Locust
Avenue Associates and Century-Texas filed as Exhibit 10(i) to the Company's
Annual Report on Form 10-K for the year ended May 31, 1993 and incorporated
herein by reference.
10(j) - Floating Rate Subordinated Note, dated November 5, 1981, of Century
Texas payable to The Sentry Corporation, filed as Exhibit 10(e) to the 1986
Form S-1 and incorporated herein by reference.
10(k) - Floating Rate Subordinated Note, dated March 1, 1982, of Century
Texas payable to The Sentry Corporation, filed as Exhibit 10(f) to the 1986
Form S-1 and incorporated herein by reference.
10(l) - Floating Rate Subordinated Note, dated November 13, 1987, of
Century-Texas to Sentry, filed as Exhibit 10(k) to the 1988 Form S-1 and
incorporated herein by reference.
10(m) - Joint Venture Agreement, dated as July 26, 1974, among American
Television and Communications Corporation, Century Texas and Century Venture
Corporation, filed as Exhibit 10(g) to the 1986 Form S-1 and incorporated
herein by reference.
10(n) - Third Agreement of Amendment to the Amended and Restated Joint
Venture Agreement, dated June 18, 1987, among American Television and
Communications Corporation, Daniels & Associates, Inc., Tele-Communications,
Inc., Comcast Corporation and Century Southwest Cable Television, Inc., filed
as Exhibit 10(m) to the 1988 Form S-1 and incorporated herein by reference.
10(o) - Colorado Springs Joint Sharing and Buy-Sell Agreement, dated
November 1, 1974, among Century Venture Corporation, Century Colorado Corp.,
American Television and Communications Corporation, Century Texas and
Vumore-Video Corporation of Colorado, Inc., filed as Exhibit 10(h) to the
1986 Form S-1 and incorporated herein by reference.
10(p) - 1985 Stock Option Plan of the Company, filed as Annex A to the
Company's Registration Statement on Form S-8 (File No. 33-34387) under the
Securities Act of 1933, as amended, filed with the Commission on April 19,
1990 and incorporated herein by reference.
10(q) - Incentive Award Plan of the Company, filed as Annex A to the
Company's Registration Statement on Form S-8 (File No. 33-23717) under the
Securities Act of 1933, as amended, filed with the Commission on August 11,
1988 and incorporated herein by reference.
10(r) - 1985 Employee Stock Purchase Plan of the Company, as amended.
10(s) - Non-Employee Director Stock Option Plan of the Company, filed as
Annex A to the Company's Registration Statement on Form S-8 (File No.
33-34388) under the Securities Act of 1933, as amended, filed with the
Commission on April 19, 1990 and incorporated herein by reference.
10(t) - 1985 Stock Equivalent Plan, filed as Exhibit 10(m) to the 1986 Form
S-1 and incorporated herein by reference.
10(u) - Century Retirement Investment Plan, filed as Exhibit 10(x) to the
Company's Annual Report on Form 10-K for the year ended May 31, 1992 and
incorporated herein by reference.
10(v)(1) - Century 1992 Management Equity Incentive Plan, filed as Exhibit
10(x)(1) to the Company's Annual Report on Form 10-K for the year ended May
31, 1992 and incorporated herein by reference.
10(v)(2) - 1993 Non-Employee Directors' Stock Option Plan of the Company.
10(v)(3) - 1994 Stock Option Plan of the Company.
10(w) - Interest Rate Swap Agreement, dated as of July 18, 1986, between
Citibank, N.A. and Century-Texas, filed as Exhibit 10(v) to Amendment No. 5
to the 1988 Form S-1 and incorporated herein by reference.
10(x) - Interest Rate Swap Agreement, dated as of May 20, 1987, between The
First National Bank of Chicago and Century-Texas, filed as Exhibit 10(g) to
Amendment No. 5 to the 1988 Form S-1 and incorporated herein by reference.
10(y) - Interest Rate and Currency Exchange Agreement, dated as of February
14, 1990, between Centennial Cellular Corp. and Citibank, N.A., filed as
Exhibit 10(x) to the Company's Annual Report on Form 10-K for the year ended
May 31, 1990 and incorporated herein by reference.
10(z) - Interest Rate and Currency Exchange Agreement dated January 17,
1991 between Century Communications Corp. and Bankers Trust Company, filed as
Exhibit 10(aaa) to the Company's Annual Report on Form 10-K for the year
ended May 31, 1991 and incorporated herein by reference.
10(aa) - Interest Rate and Currency Exchange Agreement dated between Century
Communications Corp. and Security Pacific National Bank, filed as Exhibit
10(aaaa) to the Company's Annual Report on Form 10-K for the year ended May
31, 1991 and incorporated herein by reference.
10(bb) - Management Agreement and Joint Venture Agreement (Century-ML
Venture), dated December 16, 1986, between Century Texas, and ML Media
Partners, L.P., a Delaware limited partnership, filed as Exhibit 10(v) to the
Company's Annual Report on Form 10-K for the year ended May 31, 1989 and
incorporated herein by reference.
10(cc) - Amendment No. 1 to Management Agreement and Joint Venture Agreement
(Century ML Venture), dated September 21, 1987, between Century Texas and ML
Media Partners, L.P., a Delaware limited partnership, filed as Exhibit 10(w)
to the Company's Annual Report on Form 10-K for the year ended May 31, 1989
and incorporated herein by reference.
10(dd) - Management Agreement and Joint Venture Agreement (Century-ML Radio
Venture), dated as of February 15, 1989, between Century Texas and ML Media
Partners, L.P., a Delaware limited partnership, filed as Exhibit 10(x) to the
Company's Annual Report on Form 10-K for the year ended May 31, 1989 and
incorporated herein by reference.
10(ee) - Plan and Agreement of Merger, dated August 2, 1991, by and among
Century Cellular Holding Corp., Century Cellular Corp., Citizens Utilities
Company and Citizens Cellular Corp., together with exhibits, including
Management Agreement, Conflicts/Non-Compete Agreement, Stock Transfer
Agreement and Registration Rights Agreement, filed as Exhibit 10(cc) to the
Company's Annual Report on Form 10-K for the year ended May 31, 1991 and
incorporated herein by reference.
10(ff) - Credit Agreement, dated as of August 4, 1995, by and among CCC-I,
Inc., Pullman TV Cable Co., Inc., Kootenai Cable, Inc., Citibank N.A., as
agent, and each of the banks parties thereto. The Company, hereby agrees to
furnish to the Securities and Exchange Commission, upon request, a copy of
each instrument omitted pursuant to item 601(b)(4)(iii) of Regulation S-K.
10(gg) - Credit Agreement, dated as of June 30, 1994, by and among CCC-II,
Inc., Citibank N.A. as managing agent, and each of the banks parties thereto,
filed as Exhibit 10 to the Company's report on Form 8-K dated July 25, 1994
and incorporated herein by reference.
10(hh) - Terms Agreement, dated February 27, 1995, between Century
Communications Corp. and Merrill, Lynch, Pierce, Fenner &
Smith Incorporated.
11 - Computation of loss per common share.
21 - List of subsidiaries of the Company.
23.1 - Consent of Deloitte & Touche LLP.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Company has duly caused this Annual
Report on Form 10-K for the fiscal year ended May 31, 1995 to be signed on
its behalf by the undersigned, thereunto duly authorized, on the 29th day of
August, 1995.
CENTURY COMMUNICATIONS CORP.
By:/s/ Leonard Tow
Leonard Tow
Chief Executive Officer
and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this Annual Report on Form 10-K for the fiscal year ended May 31,
1995 has been signed below by the following persons in the capacities
indicated on the 29th day of August, 1995.
/s/ Leonard Tow Chief Executive Officer, Chief
Leonard Tow Financial Officer (principal
executive and financial officer),
Chairman and Director
/s/ Scott N. Schneider Senior Vice President, Treasurer,
Scott N. Schneider Chief Officer Accounting Officer
(principal accounting officer)
and Director
/s/ Bernard P. Gallagher Director
Bernard P. Gallagher
/s/ William Kraus Director
William Kraus
Director
Andrew Tow
/s/ Claire Tow Director
Claire Tow
/s/ David Z. Rosensweig Director
David Z. Rosensweig
/s/ Peter J. Solomon Director
Peter J. Solomon
/s/ Robert D. Siff Director
Robert D. Siff
EXHIBIT INDEX
EXHIBIT SEQUENTIALLY
NUMBER EXHIBIT NUMBERED PAGE
3(a) Restated Certificate of Incorporation of the Company, filed as
Exhibit 6(a)(i) to the Company's Quarterly Report on Form 10-Q for the
quarter ended February 28, 1990 and incorporated herein by reference and
Amendment to Restated Certificate of Incorporation of the Company, filed as
Exhibit 6(a)(i) to the Company's Quarterly Report on Form 10-Q for the
quarter ended November 30, 1990 and incorporated herein by reference.
3(b) By-laws of the Company, as amended. [ ]
4(a) Eighth Restated Credit Agreement, dated as of July 10, 1990,
between Century Texas, Century Investors and Citibank, N.A., on behalf of
itself and as agent, and The Chase Manhattan Bank (National Association), The
Bank of Nova Scotia, The First National Bank of Chicago, Bank of Montreal,
The Royal Bank of Canada, Continental Bank N.A., Bankers Trust Company,
Nippon Credit Bank, Provident National Bank, and Security Pacific National
Bank (the "Eighth Restated Banks"), filed as an Exhibit to the Company's
Current Report on Form 8-K, filed July 13, 1990, and incorporated herein by
reference.
4(b) Third Amendment, dated as of November 21, 1990 (the "Third
Amendment"), among Centennial Cellular Corp., a Delaware corporation
("Centennial Cellular Corp."), the Lender parties on the signature page
thereto, Citibank, N.A., as agent, Century Cellular Holding Corp., and the
Guarantor of parties on the signature page thereto, to the Credit Agreement,
dated as of October 11, 1989, among Centennial Cellular Corp., and Citibank,
N.A., on behalf of itself and as agent, and Kansallis-Osake-Pankki, Provident
National Bank, DnC America Banking Corporation, Meridian Bank, Lincoln
Savings Bank, Toronto Dominion Bank, and The Bank of Nova Scotia (the
"Cellular Banks"), filed as an Exhibit to the Company's Quarterly Report on
Form 10-Q for the quarter ended November 30, 1991, and incorporated herein by
reference.
4(c) Credit Agreement, dated as of October 11, 1989, among Centennial
Cellular Corp., and Citibank, N.A., on behalf of itself and as agent, and the
Cellular Banks, filed as Exhibit 4(c) to the Company's Annual Report on Form
10-K for the year ended May 31, 1990, and incorporated herein by reference.
4(d) Credit Agreement, dated as of October 11, 1989, among Centennial
Cellular Corp., and Citibank, N.A., on behalf of itself and as agent, and the
Cellular Banks, as Amended and Restated pursuant to the Third Amendment,
filed as an Exhibit to the Company's Quarterly Report on Form 10-Q for the
quarter ended November 30, 1991, and incorporated herein by reference.
The Company hereby agrees to furnish to the Securities and Exchange
Commission, upon its request, a copy of each instrument omitted pursuant to
item 601(b)(4)(iii) of Regulation S-K.
4(e) Second Restated Consolidated Guaranty and Pledge Agreement, dated
as of July 10, 1990, made by the subsidiaries of the Company set forth on the
signature pages thereto to Citibank, N.A., as agent for the Eighth Restated
Banks, filed as Exhibit 4(g) to the Company's Annual Report on Form 10-K for
the year ended May 31, 1990 and incorporated herein by reference.
4(f) Third Restated Pledge Agreement and Guaranty, dated as of July 10,
1990, made by the Company to Citibank, N.A., as agent for the Eighth Restated
Banks, filed as Exhibit 4(h) to the Company's Annual Report on Form 10-K for
the year ended May 31, 1990 and incorporated herein by reference.
4(g) Seventh Restated Pledge and Security Agreement, dated as of
July 10, 1990, made by Century Texas to Citibank, N.A., as agent for the
Eighth Restated Banks, filed as Exhibit (i)A to the Company's Annual Report
on Form 10-K for the year ended May 31, 1990 and incorporated herein by
reference.
4(h) Third Collateral Agreement Amendment, dated as of July 10, 1990
made by Century Texas, the Company and Citibank, N.A. as agent for the Eighth
Restated Banks, filed as Exhibit 4(i)B to the Company's Annual Report on Form
10-K for the year ended May 31, 1990 and incorporated herein by reference.
4(i) Pledge Agreement, dated as of October 11, 1989, made by Century
Cellular Holding Corp., a New York corporation, to Citibank, N.A., as agent
for the Cellular Banks, filed as Exhibit 4(j) to the Company's Annual Report
on Form 10-K for the year ended May 31, 1990 and incorporated herein by
reference.
4(j) Pledge Agreement, dated as of October 11, 1989, made by Century
Cellular Holding Corp., a New York corporation, to Citibank, N.A., as agent
for the Cellular Banks, filed as an Exhibit to the Company's Quarterly Report
on Form 10-Q for the period ended November 30, 1990 and incorporated herein
by reference.
4(k) Pledge and Security Agreement, dated as of October 11, 1989, made
by Centennial Cellular Corp. to Citibank, N.A., as agent for the Cellular
Banks, filed as Exhibit 4(k) to the Company's Annual Report on Form 10-K for
the year ended May 31, 1990 and incorporated herein by reference.
4(l) Pledge and Security Agreement, dated as of October 11, 1989, made
by Centennial Cellular Corp. to Citibank, N.A., as agent for the Cellular
Banks, as Amended and Restated pursuant to the Third Amendment, filed as an
Exhibit to the Company's Quarterly Report on Form 10-Q for the period ended
November 30, 1990 and incorporated herein by reference.
4(m) Consolidated Guaranty and Pledge Agreement, dated as of October 11,
1989, made by the subsidiaries of Centennial Cellular Corp. set forth on the
signature pages thereto to Citibank, N.A., as agent for the Cellular Banks,
filed as Exhibit 4(l) to the Company's Annual Report on Form 10-K for the
year ended May 31, 1990 and incorporated herein by reference.
4(n) Consolidated Guaranty and Pledge Agreement, dated as of October 11,
1989, made by the subsidiaries of Centennial Cellular Corp. set forth on the
signature pages thereto to Citibank, N.A., as agent for the Cellular Banks,
as Amended and Restated pursuant to the Third Amendment, filed as an Exhibit
to the Company's Quarterly Report on Form 10-Q for the period ended November
30, 1990 and incorporated herein by reference.
4(o) Equity Subscription Agreement, dated as of November 21, 1990, among
Centennial Cellular, Century Communications Corp., a Texas corporation, and
Century Cellular Holding Corp., a New York corporation, filed as Exhibit 4(o)
to the Company's Annual Report on Form 10-K for the year ended May 31, 1992
and incorporated herein by reference.
4(p) Indenture, dated as of November 15, 1988, by and between the
Company and the Bank of Montreal Trust Company, as Trustee, filed as Exhibit
4(l) to Amendment No. 7 to the Company's Registration Statement on Form S-1
(File No. 33-21394) under the Securities Act of 1933, as amended, (the "1988
Form S-1"); said 1988 Form S-1 having been filed with the Commission on April
22, 1988 and incorporated herein by reference, and said Amendment No. 7 to
the 1988 Form S-1 having been filed with the Commission on November 10, 1988
and incorporated herein by reference.
4(q) Indenture, dated as of October 15, 1991, be and between the Company
and the Bank of Montreal Trust Company, as Trustee, filed as Exhibit 4.2 to
Amendment No. 2 to the Company's Registration Statement on Form S-3 (File No.
33-33787) under the Securities Act of 1933, as amended (the "1991 Form S-3);
said 1991 Form S-3 having been filed with the Commission on August 31, 1990
and incorporated herein by reference, and said Amendment No. 2 to the 1991
Form S-3 having been filed with the Commission on March 1, 1991 and
incorporated herein by reference.
4(r) First Supplemental Indenture, dated as of October 15, 1991, by and
between the Company and the Bank of Montreal Trust Company, as Trustee, filed
as Exhibit 7(2) to the Company's current report on Form 8-K, dated October
17, 1991 and incorporated herein by reference.
4(s) Indenture, dated as of February 15, 1992, by and between the
Company and the Bank of America National Trust and Savings Association, as
Trustee, filed as Exhibit 4.3 to Amendment No. 2 to the Company's
Registration Statement on Form S-3 (File No. 33-33787) under the Securities
Act of 1933, as amended (the "1991 Form S-3"); said 1991 Form S-3 having been
filed with the Commission on March 9, 1990 and incorporated herein by
reference, and said Amendment No. 2 to the 1991 Form S-3 having been filed
with the Commission on March 1, 1991 and incorporated herein by reference.
4(t) First Supplemental Indenture, dated as of February 15, 1992, by and
between the Company and the Bank of America National Trust and Savings
Association, as Trustee, filed as Exhibit 4(t) to the Company's Annual Report
on Form 10-K for the year ended May 31, 1992 and incorporated herein by
reference.
4(u) Second Supplemental Indenture dated as of August 15, 1992 by and
between the Company and Bank of America National Trust and Savings
Association, as Trustee, filed as Exhibit 4(u) to the Company's Annual Report
on Form 10-K for the year ended May 31, 1992 and incorporated herein by
reference.
4(v) Third Supplemental Indenture dated as of April 1, 1993 by and
between the Company and Bank of America National Trust and Savings
Association, as Trustee, filed as Exhibit 4(v) to the Company's Annual Report
on Form 10-K for the year ended May 31, 1993 and incorporated herein by
reference.
4(w) - Fourth Supplemental Indenture dated as of March 6, 1995 by and [
]
between the Company and Bank of America National Trust and Savings
Association, as Trustee.
10(a) Employment Agreement, dated February 11, 1986, between the Company
and Leonard Tow, filed as Exhibit 10(a) to the 1988 Form S-1 and incorporated
herein by reference.
10(a)(1) Amended Employment Agreement, dated as of July 1, 1991, between the
Company and Leonard Tow, filed as Exhibit 10(a)(1) to the Company's Annual
Report on Form 10-K for the year ended May 31, 1992 and incorporated herein
by reference.
10(a)(2) Agreement, dated July 30, 1992, between the Company and the Leonard
and Claire Tow Life Insurance Trust, filed as Exhibit 10(a)(2) to the
Company's Annual Report on Form 10-K for the year ended May 31, 1992 and
incorporated herein by reference.
10(a)(3) Employment Agreement, dated as of December 28, 1993, between the
Company and Scott N. Schneider, filed as Exhibit 10(a) to the Company's
Quarterly report on Form 10-Q for the quarter ended February 28, 1994 and
incorporated herein by reference.
10(a)(4) Employment Agreement, dated as of December 28, 1993, between the
Company and Andrew Tow, filed as Exhibit 10(b) to the Company's Quarterly
Report on Form 10-Q for the quarter ended February 28, 1994 and incorporated
herein by reference.
10(a)(5) Employment Agreement, dated as of December 28, 1993, between the
Company and Michael G. Harris, filed as Exhibit 10(c) to the Company's
Quarterly Report on Form 10-Q for the quarter ended February 28, 1994 and
incorporated herein by reference.
10(a)(6) Employment Agreement, dated December 28, 1993, between the [ ]
Company and Bernard P. Gallagher.
10(b) Principal Stockholders' Agreement, dated as of December 7, 1985,
between Sentry Insurance a Mutual Company ("Sentry"), the Company, Leonard
Tow individually and as Trustee, and Claire Tow as Trustee, filed as Exhibit
10(a) to the Company's Registration Statement on Form S-1 (No. 33-2025) under
the Securities Act of 1933, as amended, filed with the Commission on December
9, 1985 (the "1986 Form S-1") and incorporated herein by reference.
10(c) Amendment to Principal Stockholders' Agreement, dated August 31,
1987, filed as an Exhibit to the Company's Current Report on Form 8-K dated
September 11, 1987 and incorporated herein by reference.
10(d) Lease, dated July 15, 1987, between Locust Avenue Associates and
Century-Texas, filed as Exhibit 10(h) to the 1988 Form S-1 and incorporated
herein by reference.
10(e) Addendum to Lease, effective December 1, 1988, between Locust
Avenue Associates and Century-Texas, filed as Exhibit 10(i) to the Company's
Annual Report on Form 10-K for the year ended May 31, 1989 and incorporated
herein by reference.
10(f) Addendum to Lease, effective April 1, 1990, between Locust Avenue
Associates and Century-Texas, filed as Exhibit 10(j) to the Company's Annual
Report on Form 10-K for the year ended May 31, 1990 and incorporated herein
by reference.
10(g) Addendum to Lease, effective December 1, 1990, between Locust
Avenue Associates and Century-Texas, filed as Exhibit 10(k) to the Company's
Annual Report on Form 10-K for the year ended May 31, 1991 and incorporated
herein by reference.
10(h) Addendum to Lease, effective May 1, 1991, between Locust Avenue
Associates and Century-Texas, filed as Exhibit 10(1) to the Company's Annual
Report on Form 10-K for the year ended May 31, 1991 and incorporated herein
by reference.
10(i) Addendum to Lease, effective December 1, 1992, between Locust
Avenue Associates and Century-Texas, filed as Exhibit 10(i) to the Company's
Annual Report on Form 10-K for the year ended May 31, 1993 and incorporated
herein by reference.
10(j) Floating Rate Subordinated Note, dated November 5, 1981, of Century
Texas payable to The Sentry Corporation, filed as Exhibit 10(e) to the 1986
Form S-1 and incorporated herein by reference.
10(k) Floating Rate Subordinated Note, dated March 1, 1982, of Century
Texas payable to The Sentry Corporation, filed as Exhibit 10(f) to the 1986
Form S-1 and incorporated herein by reference.
10(l) Floating Rate Subordinated Note, dated November 13, 1987, of
Century-Texas to Sentry, filed as Exhibit 10(k) to the 1988 Form S-1 and
incorporated herein by reference.
10(m) Joint Venture Agreement, dated as July 26, 1974, among American
Television and Communications Corporation, Century Texas and Century Venture
Corporation, filed as Exhibit 10(g) to the 1986 Form S-1 and incorporated
herein by reference.
10(n) Third Agreement of Amendment to the Amended and Restated Joint
Venture Agreement, dated June 18, 1987, among American Television and
Communications Corporation, Daniels & Associates, Inc., Tele-Communications,
Inc., Comcast Corporation and Century Southwest Cable Television, Inc., filed
as Exhibit 10(m) to the 1988 Form S-1 and incorporated herein by reference.
10(o) Colorado Springs Joint Sharing and Buy-Sell Agreement, dated
November 1, 1974, among Century Venture Corporation, Century Colorado Corp.,
American Television and Communications Corporation, Century Texas and
Vumore-Video Corporation of Colorado, Inc., filed as Exhibit 10(h) to the
1986 Form S-1 and incorporated herein by reference.
10(p) 1985 Stock Option Plan of the Company, filed as Annex A to the
Company's Registration Statement on Form S-8 (File No. 33-34387) under the
Securities Act of 1933, as amended, filed with the Commission on April 19,
1990 and incorporated herein by reference.
10(q) Incentive Award Plan of the Company, filed as Annex A to the
Company's Registration Statement on Form S-8 (File No. 33-23717) under the
Securities Act of 1933, as amended, filed with the Commission on August 11,
1988 and incorporated herein by reference.
10(r) 1985 Employee Stock Purchase Plan of the Company, as amended. [
]
10(s) Non-Employee Director Stock Option Plan of the Company, filed as
Annex A to the Company's Registration Statement on Form S-8 (File No.
33-34388) under the Securities Act of 1933, as amended, filed with the
Commission on April 19, 1990 and incorporated herein by reference.
10(t) 1985 Stock Equivalent Plan, filed as Exhibit 10(m) to the 1986 Form
S-1 and incorporated herein by reference.
10(u) Century Retirement Investment Plan, filed as Exhibit 10(x) to the
Company's Annual Report on Form 10-K for the year ended May 31, 1992 and
incorporated herein by reference.
10(v)(1) Century 1992 Management Equity Incentive Plan, filed as Exhibit
10(x)(1) to the Company's Annual Report on Form 10-K for the year ended May
31, 1992 and incorporated herein by reference.
10(v)(2) 1993 Non-Employee Directors' Stock Option Plan of the Company. [
]
10(v)(3) 1994 Stock Option Plan of the Company. [ ]
10(w) Interest Rate Swap Agreement, dated as of July 18, 1986, between
Citibank, N.A. and Century-Texas, filed as Exhibit 10(v) to Amendment No. 5
to the 1988 Form S-1 and incorporated herein by reference.
10(x) Interest Rate Swap Agreement, dated as of May 20, 1987, between The
First National Bank of Chicago and Century-Texas, filed as Exhibit 10(g) to
Amendment No. 5 to the 1988 Form S-1 and incorporated herein by reference.
10(y) Interest Rate and Currency Exchange Agreement, dated as of February
14, 1990, between Centennial Cellular Corp. and Citibank, N.A., filed as
Exhibit 10(x) to the Company's Annual Report on Form 10-K for the year ended
May 31, 1990 and incorporated herein by reference.
10(z) Interest Rate and Currency Exchange Agreement dated January 17,
1991 between Century Communications Corp. and Bankers Trust Company, filed as
Exhibit 10(aaa) to the Company's Annual Report on Form 10-K for the year
ended May 31, 1991 and incorporated herein by reference.
10(aa) Interest Rate and Currency Exchange Agreement dated between Century
Communications Corp. and Security Pacific National Bank, filed as Exhibit
10(aaaa) to the Company's Annual Report on Form 10-K for the year ended May
31, 1991 and incorporated herein by reference.
10(bb) Management Agreement and Joint Venture Agreement (Century-ML
Venture), dated December 16, 1986, between Century Texas, and ML Media
Partners, L.P., a Delaware limited partnership, filed as Exhibit 10(v) to the
Company's Annual Report on Form 10-K for the year ended May 31, 1989 and
incorporated herein by reference.
10(cc) Amendment No. 1 to Management Agreement and Joint Venture Agreement
(Century ML Venture), dated September 21, 1987, between Century Texas and ML
Media Partners, L.P., a Delaware limited partnership, filed as Exhibit 10(w)
to the Company's Annual Report on Form 10-K for the year ended May 31, 1989
and incorporated herein by reference.
10(dd) Management Agreement and Joint Venture Agreement (Century-ML Radio
Venture), dated as of February 15, 1989, between Century Texas and ML Media
Partners, L.P., a Delaware limited partnership, filed as Exhibit 10(x) to the
Company's Annual Report on Form 10-K for the year ended May 31, 1989 and
incorporated herein by reference.
10(ee) Plan and Agreement of Merger, dated August 2, 1991, by and among
Century Cellular Holding Corp., Century Cellular Corp., Citizens Utilities
Company and Citizens Cellular Corp., together with exhibits, including
Management Agreement, Conflicts/Non-Compete Agreement, Stock Transfer
Agreement and Registration Rights Agreement, filed as Exhibit 10(cc) to the
Company's Annual Report on Form 10-K for the year ended May 31, 1991 and
incorporated herein by reference.
10(ff) Credit Agreement, dated as of August 4, 1995, by and among [ ]
CCC-I, Inc., Pullman TV Cable Co., Inc., Kootenai Cable, Inc., Citibank N.A.,
as agent, and each of the banks parties thereto. The Company, hereby agrees
to furnish to the Securities and Exchange Commission, upon request, a copy of
each instrument omitted pursuant to item 601(b)(4)(iii) of Regulation S-K.
10(gg) Credit Agreement, dated as of June 30, 1994, by and among CCC-II,
Inc., Citibank N.A. as managing agent, and each of the banks parties thereto,
filed as Exhibit 10 to the Company's report on Form 8-K dated July 25, 1994
and incorporated herein by reference.
10(hh) Terms Agreement, dated February 27, 1995, between Century [ ]
Communications Corp. and Merrill, Lynch, Pierce, Fenner & Smith Incorporated.
11 Computation of loss per common share.
21 List of subsidiaries of the Company.
23.1 Consent of Deloitte & Touche LLP.
EXHIBIT 3(b)
BY-LAWS
OF
CENTURY COMMUNICATIONS CORP.
As originally adopted on December 5, 1985, revised to
reflect amendments through August 17, 1994.
BY-LAWS
CENTURY COMMUNICATIONS CORP.
a New Jersey corporation (the "Corporation")
ARTICLE I - OFFICES
Section 1.1. Location. The address of the registered office of the
Corporation in the State of New Jersey and the name of the registered agent
at such address shall be as specified in the Certificate of Incorporation or,
if subsequently changed, as specified in the most recent certificate of
change filed pursuant to law. The Corporation may also have other offices at
such places within or without the State of New Jersey as the Board of
Directors may from time to time designate or the business of the Corporation
may require.
Section 2.2. Change of Location. In the manner permitted by law, the
Board of Directors or the registered agent may change the address of the
Corporation's registered office in the State of New jersey and the Board of
Directors may make, revoke or change the designation of the registered agent.
ARTICLE II - MEETINGS OF STOCKHOLDERS
Section 2.1. Annual Meeting. The annual meeting of the stockholders of
the Corporation for the election of directors and for the transaction of such
other business as may properly come before the meeting shall be held at the
registered office of the Corporation, or at such other place within or
without the State of New Jersey as the Board of Directors may fix, at 10 A.M.
o'clock on the third Wednesday in October of each year, commencing with the
year 1986, but if such a date is a legal holiday, then on the next succeeding
business day. Notwithstanding the foregoing, the Board of Directors may fix
another date for the holding of the Annual Meeting of the Stockholders.
Section 2.2. Special Meetings. Special meetings of stockholders,
unless otherwise prescribed by law, may be called at any time by the Chairman
of the Board, or by order of the Board of Directors. Special meetings of
stockholders prescribed by law for the election of directors shall be called
by the Board of Directors, the Chairman of the Board, or the Secretary
whenever required to do so pursuant to the applicable law. Special meetings
of stockholders shall be held at such place within or without the State of
New Jersey as shall be designated in the notice of meeting.
Section 2.3. List of Stockholders Entitled to Vote. The officer who
has charge of the stock ledger of the Corporation shall prepare and make, or
cause to be prepared and made, at least ten days before every meeting of
stockholders, a complete list, based upon the record date for such meeting
determined pursuant to Section 5.8, of the stockholders entitled to vote at
the meeting, arranged in alphabetical order and showing the address of each
stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder
for any purpose germane to the meeting, during ordinary business hours for a
period of at least ten 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 the meeting, or if such place shall not be so specified, at the
place where said meeting is to be held. The list shall also be produced and
kept at the time and place of the meeting during the whole time thereof and
may be inspected by any stockholder who is present.
The stock ledger shall be the only evidence as to who are the
stockholders entitled (i) to examine the stock ledger, the list of
stockholders entitled to vote at any meeting or the books of the Corporation
or (ii) to vote in person or proxy at any meeting of stockholders.
Section 2.4. Notice of Meetings. Written notice of each annual and
special meeting of stockholders, other than any meeting the giving of notice
of which is otherwise prescribed by law, stating the place, date and hour of
the meeting and, in the case of a special meeting, the purpose or purposed
thereof, shall be delivered or mailed in writing at least ten but not more
than sixty days before such meeting to each stockholder required or permitted
to take any action or entitled to vote thereat. If mailed, such notice shall
be deposited in the United States mail, postage prepaid, directed to such
stockholder at this address as the same appears on the records of the
Corporation. An affidavit of the Secretary, an Assistant Secretary or the
transfer agent of the Corporation that notice has been duly given shall be
evidence of the facts stated therein.
Section 2.5. Adjourned Meetings and Notice Thereof. Any meeting of
stockholders may be adjourned to another time or place and the Corporation
may transact at any adjourned meeting any business which might have been
transacted at the original meeting. Notice need not be given of the
adjourned meeting if the time and place thereof are announced at the meeting
at which the adjournment is taken, unless (a) any adjournment or series of
adjournments cause the original meeting to be adjourned for more than thirty
days after the date originally fixed therefor or (b) a new record date is
fixed for the adjourned meeting. If notice of an adjourned meeting is given,
such notice shall be given to each stockholder of record entitled to vote at
the adjourned meeting in the manner prescribed in Section 2.4 for the giving
of notice of meetings.
Section 2.6. Quorum. Except for meetings ordered by the Superior Court
to be called and held pursuant to Sections 14A:5-2 and 14A:5-3 of the New
Jersey Business Corporation Act, at any meeting of stockholders, except as
otherwise expressly required by law or by the Certificate of Incorporation,
the holders of record of a majority of the combined voting power of the
outstanding shares of capital stock entitled to vote or act at such meetings
shall be present or represented by proxy in order to constitute a quorum for
the transaction of any business, but less than a quorum shall have power to
adjourn any meeting until a quorum shall be present. When a quorum is once
present to organize a meeting, the quorum cannot be destroyed by the
subsequent withdrawal or revocation of the proxy of any stockholder. Shares
of capital stock owned by the Corporation or by another corporation, if a
majority of the shares of such other corporation entitled to vote in the
election of directors is held by the Corporation, shall not be counted for
quorum purposes or entitled to vote.
Section 2.7. Voting. Except for the election of directors and as
otherwise provided by the New Jersey Business Corporation Act, at any meeting
of stockholders each stockholder holding as of the record date shares of
Class A Common Stock entitled to be voted on any matter at such meeting shall
have one vote per share, and each stockholder holders as of the record date
shares of Class B Common Stock entitled to be voted on any matter at such
meeting shall have ten votes per shares, on each such matter submitted to a
vote at such meeting, for each such share of Class A Common Stock or Class B
Common Stock, respectively, held by such stockholder as of the record date as
shown by the list of stockholders entitled to vote at the meeting. In the
election of directors, the holders of Class A Common Stock, voting as a
separate class, are entitled to elect one of the Company's directors except
that in the event and so long as the Class A Common Stock is listed for
trading on the American Stock Exchange, the holders of the Class A Common
Stock, shall be entitled by Class vote, exclusive of all other stockholders,
to elect one-fourth of the directors constituting the Board of Directors
round up (in the event same is not a whole number) to the nearest whole
number. The holders of Class A Common Stock and Class B Common Stock, voting
as a single class with each share of Class A Common Stock entitled to one
vote and each share of Class B Common Stock entitled to ten votes are
entitled to elect the remaining directors. Holders of Class A Common Stock
and Class B Common Stock are not entitled to cumulate votes in the election
of directors. At any meeting of stockholders at which a quorum of
stockholders entitled to vote shall be present, each matter shall be decided
by majority vote of the combined voting power of all shares entitled to vote
and voting on such matter, except as otherwise expressly required by law or
by the Certificate of Incorporation and except as otherwise expressly
provided in these By-Laws. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy, provided that no proxy shall be voted or acted upon after three years
from its date unless the proxy provides for a longer period. A duly executed
proxy shall be irrevocable if it states that it is irrevocable and if, and
only so long as, it is coupled with an interest, whether in the stock itself
or in the Corporation, sufficient in law to support an irrevocable power.
The Board of Directors, the Chairman or the person presiding at a
meeting of stockholders may appoint one or more persons to act as inspectors
of voting at any meeting with respect to any matter to be submitted to a vote
of stockholders at such meeting, with such powers and duties, not
inconsistent with applicable law as may be appropriate.
Section 2.8. Action by Consent of Stockholders. Unless otherwise
provided in the Certificate of Incorporation, whenever any action by the
stockholders at a meeting thereof is required or permitted by law, the
Certificate of Incorporation or these By-Laws, such action may be taken
without a meeting, without prior notice and without a vote if a consent in
writing, setting forth the action so taken, shall be signed by the holders of
the 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. Prompt notice of the
taking of such action without a meeting and by less than unanimous written
consent shall be given to those stockholders who have not consented in
writing.
ARTICLE III - BOARD OF DIRECTORS
Section 3.1. General Powers. The property, business and affairs of the
Corporation shall be managed by the Board of Directors. The Board of
Directors may exercise all such powers of the Corporation and have such
authority and do all such lawful acts and things as are permitted by law, the
Certificate of Incorporation or these By-Laws.
Section 3.2. Number of Directors. The Board of Directors of the
Corporation shall consist of a minimum of two and a maximum of eleven
members; the exact number of directors which shall constitute the whole Board
of Directors shall be fixed from time to time by resolution adopted by a
majority of the whole Board of Directors. The Board of Directors may, by
resolution adopted by a majority of the whole Board of Directors, from time
to time change the number of directors constituting the whole Board of
Directors.
Section 3.3. Qualification. Directors need not be stockholders of the
Corporation. Directors who wilfully neglect or refuse to produce a list of
stockholders entitled to vote at any meeting for the election of directors
shall be ineligible for election to any office at such meeting.
Section 3.4. Election. Except as otherwise provided by law, the
Certificate of Incorporation or these By-Laws, after the first meeting of the
Corporation at which directors are elected, directors of the Corporation
shall be elected in each year at the annual meeting of stockholders or at a
special meeting in lieu of the annual meeting called for such purpose, as
provided in these By-Laws, by a plurality of votes cast at such meeting. The
voting on directors at any such meeting shall be by written ballot unless
otherwise provided in the Certificate of Incorporation.
Section 3.5. Term. Each director shall hold office until his successor
is duly elected and qualified, except in the event of the earlier termination
of his term of office by reason of death, resignation, removal or other
reason.
Section 3.6. Resignation and Removal. Any director may resign at any
time upon written notice to the Board of Directors, the Chairman or the
Secretary. The resignation of any director shall take effect upon receipt of
notice thereof or at such later time as shall be specified in such notice,
and unless otherwise specified therein the acceptance of such resignation
shall not be necessary to make it effective. Except as otherwise provided by
law or in the Certificate of Incorporation, any director or the entire Board
of Directors may be removed, with or without cause, by the holders of a
majority of the combined voting power of the shares then entitled to vote at
an election of directors.
Section 3.7. Vacancies. Vacancies in the Board of Directors (unless
the vacancy is caused by the removal of a director) and newly created
directorships resulting from any increase in the authorized number of
directors shall be filed by a majority of the directors then in office,
though less than a quorum, or by a sole remaining director. The vacancy
caused by the removal of a director (other than a director who is elected by
the holders of Class A Common stock, voting as a Class) shall be filled by
vote of the holders of a plurality of the votes cast at a meeting of the
stockholders called for such purpose; a vacancy caused by removal of director
who was elected by the holders of the Class A Common stock voting as a Class,
shall be filled by the holders of a plurality of the votes of the Class A
Stock voting as a Class cast at a meeting of stockholders called for such
purposes.
If one or more directors shall resign from the Board of Directors
effective at a future date, a majority of the directors then in office,
including those who have so resigned at a future date, shall have power to
fill such vacancy or vacancies, the vote thereon to take effect and the
vacancy to be filled when such resignation or resignations shall become
effective, and each director so chosen shall hold office as provided in this
section with respect to the filling of the vacancies.
Each director chosen to fill a vacancy on the Board of Directors shall
hold office until the next annual election of directors and until his
successor shall be elected and qualified.
Section 3.8. Quorum and Voting. Unless the Certificate of
Incorporation provides otherwise, at all meetings of the Board of Directors a
majority of the total number of directors shall be present to constitute a
quorum for the transaction of business. A director interested in a contract
or transaction may be counted in determining the presence of a quorum at a
meeting of the Board of Directors which authorizes the contract or
transaction. In the absence of a quorum, a majority of the directors present
may adjourn the meeting until a quorum shall be present.
Unless the Certificate of Incorporation provides otherwise, members of
the Board of Directors or any committee designated by the Board of Directors
may participate in a meeting of the Board of Directors or such committee by
means of a conference telephone or similar communications equipment by means
of which all persons participating in the meeting can hear each other, and
participation in such a meeting shall constitute presence in person at such
meeting.
The vote of the majority of the directors present at a meeting at which
a quorum is present shall be the act of the Board of Directors unless the
Certificate of Incorporation or these By-Laws shall require a vote of a
greater number.
Section 3.9. Regulations. The Board of Directors may adopt such rules
and regulations for the conduct of the business and management of the
Corporation, not inconsistent with law or the Certificate of Incorporation or
these By-Laws, as the Board of Directors may deem proper. The Board of
Directors may hold its meetings and cause the books and records of the
Corporation to be kept at such place or places within or without the State of
New Jersey as the Board of Directors may from time to time determine. A
member of the Board of Directors shall, in the performance of his duties, be
fully protected in relying in good faith upon the books of account or reports
made to the Corporation by any of its officers, by an independent certified
public accountant or by an appraiser selected with reasonable care by the
Board of Directors or any committee of the Board of Directors or in relying
in good faith upon other records of the Corporation.
Section 3.10. Annual Meeting of Board of Directors. An annual meeting
of the Board of Directors shall be called and held for the purpose of
organization, election of officers and transaction of any other business. If
such meeting is held promptly after and at the place specified for the annual
meeting of stockholders, no notice of the annual meeting of the Board of
Directors need be given. Otherwise such annual meeting shall be held at such
time (not more than thirty days after the annual meeting of stockholders) and
place as may be specified in a notice of the meeting.
Section 3.11. Regular Meetings. Regular meetings of the Board of
Directors shall be held at the time and place, within or without the State of
New Jersey, as shall from time to time be determined by the Board of
Directors. After there has been such determination and notice thereof has
been given to each member of the Board of Directors, no further notice shall
be required for any such regular meeting. Except as otherwise provided by
law, any business may be transacted at any regular meeting.
Section 3.12. Special Meeting. Special meetings of the Board of
Directors may, unless otherwise prescribed by law, be called from time to
time by the Chairman of the Board, and shall be called by the Chairman of the
Board or the Secretary upon the written request of a majority of the whole
Board of Directors directed to the Chairman of the Board, President or
Secretary. Except as provided below, notice of any special meeting of the
Board of Directors, stating the time, place and purpose of such special
meeting, shall be given to each director.
Section 3.13. Notice of Meetings; Waiver of Notice. Notice of any
meeting of the Board of Directors shall be deemed to be duly given to a
director (i) if mailed to such director, addressed to him at his address as
it appears upon the books of the Corporation or at the address last made
known in writing to the Corporation by such director as the address to which
such notices are to be sent, at least two days before the day on which such
meeting is to be held, (ii) if sent to him at such address by telecopier,
telex, telegraph, cable, radio or wireless not later than the day before the
day on which such meeting is to be held or (iii) if delivered to him
personally or orally, by telephone or otherwise, no later than the day before
the day on which such meeting is to be held. Each such notice shall state
the time and place of the meeting and the purposes thereof.
Notice of any meeting of the Board of Directors need not be given to any
director if waived by him in writing (or by telecopier, telex, telegram,
cable, radio or wireless and confirmed in writing) whether before or after
the holding of such meeting or if such director is present at such meeting.
Any meeting of the Board of Directors shall be a duly constituted meeting
without any notice thereof having been given if all directors then in office
shall be present thereat.
Section 3.14. Committees of Directors. The Board of Directors may, by
resolution or resolutions passed by a majority of the whole Board of
Directors, designate one or more committees, each committee to consist of one
or more of the directors of the Corporation.
Except as herein provided, vacancies in membership of any committee
shall be filled by the vote of a majority of the whole Board of Directors.
The Boards of Directors may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member
at any meeting of the committee. In the absence or disqualification of any
member of a committee, the member or members thereof present at any meeting
and not disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another member of the Board of Directors to
act at the meeting in the place of any such absent or disqualified member.
Members of a committee shall hold office for such period as may be fixed by a
resolution adopted by a majority of the whole Board of Directors, subject,
however, to removal at any time by the vote of a majority of the whole Board
of Directors.
Section 3.15. Powers and Duties of Committees. Any committee, to the
extent provided in the resolution or resolutions creating such committee,
shall have and may exercise the powers of the Board of Directors 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.
No such committee shall have the power or authority with regard to amending
the Certificate of Incorporation, adopting an agreement of merger or
consolidation, recommending to the stockholders the sale, lease or exchange
of all substantially all of the Corporation's property and assets,
recommending to the stockholders a dissolution of the Corporation or a
revocation of a dissolution or amending the By-Laws or taking any other
action which is prohibited by Section 14A:6-9 of the New Jersey Business
Corporation Act. The Board of Directors may, in the resolution creating a
committee, grant to such committee the power and authority to declare a
dividend or authorize the issuance of stock.
Each committee may adopt its own rules of procedure and may meet at
stated times or on such notice as such committee may determine. Except as
otherwise permitted by these By-Laws, each committee shall keep regular
minutes of its proceedings and report the same to the Board of Directors when
required.
Section 3.16. Compensation of Directors. The Board of Directors may
from time to time, in its discretion, fix the amounts which shall be payable
to directors and to members of any committee of the Board of Directors for
attendance at the meetings of the Board of Directors or of such committee and
fore services rendered to the Corporation.
Section 3.17. Action Without Meeting. Unless otherwise restricted by
the Certificate of Incorporation, any action required or permitted to be
taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting if a written consent thereto is signed by all
members of the Board of Directors or of such committee, as the case may be,
and such written consent is filed with the minutes of proceedings of the
Board of Directors or such committee.
ARTICLE IV - OFFICERS
Section 4.1. Principal Officers. The principal officers of the
Corporation shall be elected by the Board of Directors and shall include a
President, a Secretary and a Treasurer and may, at the discretion of the
Board of Directors, also include a Chairman of the Board, one or more Vice
Presidents and a Controller. Except as otherwise provided in the Certificate
of Incorporation or these By-Laws, one person may hold the offices and
perform the duties of any two or more of said principal offices except the
offices and duties of President and Vice President or of President and
Secretary. None of the principal officers, except the Chairman of the Board,
need be directors of the Corporation.
Section 4.2. Election of Principal Officers; Term of Office. The
principal officers of the Corporation shall be elected annually by the Board
of Directors at each annual meeting of the Board of Directors. Failure to
elect annually any principal officer shall not dissolve the Corporation.
If the Board of Directors shall fail to fill any principal office at an
annual meeting, if any vacancy in any principal office shall occur or if any
principal office shall be newly created, such principal office may be filled
at any regular or special meeting of the Board of Directors.
Each principal officer shall hold office until his successor is duly
elected and qualified, or until his earlier death, resignation or removal,
provided that the terms of office of all Vice Presidents shall terminate at
any annual meeting of the Board of Directors at which the President or any
Vice President is elected.
Section 4.3. Subordinate Officers, Agents and Employees. In addition
to the principal officers, the Corporation may have one or more Assistant
Treasurers, Assistant Secretaries and such other subordinate officers, agents
and employees as the Board of Directors may deem advisable, each of whom
shall hold office for such period and have such authority and perform such
duties as the Board of Directors, the Chairman or any officer designated by
the Board of Directors may from time to time determine. The Board of
Directors at any time may appoint and remove, or may delegate to any
principal officer the power to appoint and to remove, any subordinate
officer, agent or employee of the Corporation.
Section 4.4. Delegation of Duties of Officers. The Board of Directors
may delegate the duties and powers of any officer of the Corporation to any
other officer or to any director for a specified period of time for any
reason that the Board of Directors may deem sufficient.
Section 4.5. Removal of Officers. Any officer of the Corporation may
be removed with or without cause by resolution adopted by a majority of the
directors then in office at any regular or special meeting of the Board of
Directors or by a written consent signed by all of the directors then in
office.
Section 4.6. Resignations. Any officer may resign at any time by
giving written notice of resignation to the Board of Directors, to the
President or to the Secretary. Any such resignation shall take effect upon
receipt of such notice or at any later time specified therein. Unless
otherwise specified in the notice, the acceptance of a resignation shall not
be necessary to make the resignation effective.
Section 4.7. Chairman of the Board. The Chairman of the Board shall
preside at all meetings of stockholders and of the Board of Directors at
which he is present. The Chairman shall be the Chief Executive Officer of
the Corporation and shall have general supervision over the business of the
Corporation. The Chairman shall also be the Chief Financial Officer of the
Corporation and have general supervision over the financial and fiscal
affairs of the Corporation. The Chairman of the Board shall have all powers
and duties usually incident to the positions of the Chairman of the Board,
Chief Executive Officer and Chief Financial Officer, except as specifically
limited by a resolution of the Board of Directors. The Chairman of the Board
shall have such other powers and perform such other duties as may be assigned
to him from time to time by the Board of Directors.
Section 4.8. President. The President shall be the Chief Operating and
Administrative Officer of the Corporation and have general supervision over
the administration of the affairs of the Corporation reporting to and subject
to the Chief Executive Officer. The President shall have such other powers
and perform such other duties as may be assigned to him from time to time by
the Board of Directors.
Section 4.9. Vice-President. In the absence or disability of the
President or if the office of President be vacant, the Vice Presidents in the
order determined by the Board of Directors, or if no such determination has
been made in the order of their seniority, shall perform the duties and
exercise the powers of the President, subject to the right of the Board of
Directors at any time to extend or confine such powers and duties or to
assign them to others. Any Vice President may have such additional
designation in his title as the Board of Directors may determine. The Vice
Presidents shall generally assist the President in such manner as the
President shall direct. Each Vice President shall have such other powers and
perform such other duties as may be assigned to him from time to time by the
Board of Directors or the Chairman.
Section 1.10. Secretary. The Secretary shall act as Secretary of all
meetings of stockholders and of the Board of Directors at which he is
present, shall record all the proceedings of all such meetings in a book to
be kept for that purpose, shall have supervision over the giving and service
of notices of the Corporation and shall have supervision over the care and
custody of the records and seal of the Corporation. The Secretary shall be
empowered to affix the corporate seal to documents, the execution of which on
behalf of the Corporation under its seal is duly authorized, and when so
affixed may attest the same. The Secretary shall have all powers and duties
usually incident to the office of Secretary except as specifically limited by
a resolution of the Board of Directors. The Secretary shall have such other
powers and perform such other duties as may be assigned to him from time to
time by the Board of Directors or the Chairman.
Section 4.11. Treasurer. The Treasurer shall have general supervision
over the care and custody of the funds and over the receipts and
disbursements of the Corporation and shall cause the funds of the Corporation
to be deposited in the name of the Corporation in such banks or other
depositories as the Board of Directors may designate. The Treasurer shall
have supervision over the care and safekeeping of the securities of the
Corporation. The Treasurer shall have all powers and duties usually incident
to the office of Treasurer except as specifically limited by a resolution of
the Board of Directors. The Treasurer shall have such other powers and
perform such other duties as may be assigned to him from time to time by the
Board of Directors or the Chairman.
Section 4.13. Controller. The Controller shall have supervision over
the maintenance and custody of the accounting operations of the Corporation,
including the keeping of accurate accounts of all receipts and disbursements
and all other financial transactions. The Controller shall have all powers
and duties usually incident to the office of Controller except as
specifically limited by a resolution of the Board of Directors. The
Controller shall have such other powers and perform such other duties as may
be assigned to him from time to time by the board of Directors or the
Chairman.
ARTICLE V - CAPITAL STOCK
Section 5.1. Issuance of Certificates for Stock. Each stockholder of
the Corporation shall be entitled to a certificate or certificates in such
form as shall be approve by the Board of Directors certifying the number of
shares of capital stock of the Corporation owned by such stockholder.
Certificates representing shares shall set forth thereon the statements
prescribed by Section 14A: 7-11 and, where applicable, by Sections 14A; 5-21
and 14A: 12-5, of the New Jersey Business Corporation Act.
Section 5.2. Signatures on Stock Certificates. Certificates for shares
of capital stock of the Corporation shall be signed by, or in the name of the
Corporation by, the Chairman of the Board, the President or a Vice President
and by the Secretary, the Treasurer, an Assistant Secretary or an Assistant
Treasurer. Any of or all the signatures on the certificate may be a
facsimile. In case any officer, transfer agent or registrar who has signed
or whose facsimile signature has been placed upon a certificate shall have
ceased to be such officer, transfer agent or registrar before such
certificate is issued, such certificate may be issued by the Corporation with
the same effect as if such signer were such officer, transfer agent or
registrar at the date of issue.
Section 5.3. Fractional Share Interests. The Corporation may, but
shall not be required to, issue fractions of a share. If the Corporation
does not issue fractions of a share, it shall (i) arrange for the disposition
of fractional interests by those entitled thereto, (ii) pay in cash the fair
value of fractions of a share as of the time when those entitled to receive
such fractions are determined, or (iii) issue scrip or warrants in registered
or bearer form which shall entitle the holder to receive a certificate for a
full share upon the surrender of such scrip or warrants aggregating a full
share. A certificate for a fractional share shall, but scrip or warrants
shall not unless otherwise provided therein, entitle the holder to exercise
voting rights, to receive dividends thereon, and to participate in any of the
assets of the Corporation in the event of liquidation. The Board of
Directors may cause scrip or warrants to be issued subject to the condition
that they shall become void if not exchanged for certificates representing
full shares before a specified date, or subject to the condition that the
shares for which scrip or warrants are exchangeable may be sold by the
corporation and the proceeds thereof distributed to the holders of scrip or
warrants, or subject to any other condition which the Board of Directors may
impose.
Section 5.4. Stock Ledger. A record of all certificates for capital
stock issued by the Corporation shall be kept by the Secretary or any other
officer or employee of the Corporation designated by the Secretary or by any
transfer clerk or transfer agent appointed pursuant to Section 5.5 hereof.
Such record shall show the name and address of the person, firm or
corporation in which certificates for capital stock are registered, the
number of shares represented by each such certificate, the date of each such
certificate and in case of certificates which have been cancelled the dates
of cancellation thereof.
The Corporation shall be entitled to treat the holder of record of
shares of capital stock as shown on the stock ledger as the owner thereof and
as the person entitled to receive dividends thereon, to vote such shares and
to receive notice of meetings and for all other purposes. The Corporation
shall not be bound to recognize any equitable or other claim to or interest
in any share of capital stock on the part of any other person whether or not
the Corporation shall ave express or other notice thereof.
Section 5.5. Regulations Relating to Transfer. The Board of Directors
may make such rules and regulations as it may deem expedient, not
inconsistent with law, the Certificate of Incorporation or there By-Laws,
concerning issuance, transfer and registration of certificates for shares of
capital stock of the Corporation. The Board of Directors may appoint, or
authorize any principal officer to appoint, one or more transfer clerks or
one or more transfer agents and one or more registrars and may require all
certificates for capital stock to bear the signature or signatures of any of
them.
Section 5.6. Transfers. Transfers of capital stock shall be made on
the books of the Corporation only upon delivery to the Corporation or its
transfer agent of (i) a written direction of the registered holder named in
the certificate or such holder's attorney lawfully constituted in writing,
(ii) the certificate for the shares of capital stock being transferred and
(iii) a written assignment of the shares of capital stock evidenced thereby.
Section 5.7. Cancellation. Each certificate for capital stock
surrendered to the Corporation for exchange or transfer shall be cancelled
and no new certificate or certificates shall be issued in exchange for any
existing certificate (other than pursuant to Section 5.8) until such existing
certificate shall have been cancelled.
Section 5.8. Lost, Destroyed, Stolen and Mutilated Certificates. In
the event that any certificate for shares of capital stock of the Corporation
shall be mutilated the Corporation shall issue a new certificate in place of
such mutilated certificate. In case any such certificate shall be list,
stolen or destroyed the Corporation may, in the discretion of the Board of
Directors or a committee designated thereby with power so to act, issue a new
certificate for capital stock in the place of any such lost, stolen or
destroyed certificate. The applicant for any substituted certificate or
certificates shall surrender any mutilated certificate or, in the case of any
lost, stolen or destroyed certificate, furnish satisfactory proof of such
loss, theft or destruction of such certificate and of the ownership thereof.
The Board of Directors or such committee may, in its discretion, require the
owner of a lost or destroyed certificate or his representatives to furnish to
the Corporation a bond with an acceptable surety or sureties and in such sum
as will be sufficient to indemnify the corporation against any claim that may
be made against it on account of the lost, stolen or destroyed certificate or
the issuance of such new certificate. A new certificate may be issued
without requiring a bond when, in the judgment of the Board of Directors, it
is proper to do so.
Section 5.9. Fixing of Record Dates. (a) The Board of Directors may
fix in advance a record date, which shall not be more than sixty nor less
than ten days before the date of any meeting of stockholders nor more than
sixty days prior to any other action, for the purpose of determining
stockholders entitled to notice of or to vote at such meeting of stockholders
or any adjournment thereof, to express consent or dissent 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 for the purpose of any
other lawful action.
(b) If no record date is fixed by the Board of Directors:
(i) The record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or if
notice is waived at the close of business on the day next preceding the day
on which the meeting is held;
(ii) The record date for determining stockholders entitled to
express consent to corporate action in writing without a meeting when no
prior action by the Board of Directors is necessary shall be the day on which
the first consent is expressed;
(iii) The record date for determining stockholders for any
other purpose shall be at the close of business on the day on which the Board
of Directors adopts the resolution relating thereto.
(c) A determination of stockholders of record entitled to notice of or
to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided that the Board of Directors may fix a new record date for
the adjourned meeting.
ARTICLE VI - INDEMNIFICATION
Section 6.1 Right of Indemnification. The Corporation, to the fullest
extent permitted by applicable law as then in effect, shall indemnify any
person (the "indemnitee") who was or is involved in any manner (including,
without limitation, as a party or a witness) or was or is threatened to be
made so involved in any threatened, pending or completed investigation,
claim, action, suit or proceeding, whether civil, criminal, administrative or
investigative (including, without limitation, any action or proceeding by or
in the right of the Corporation to procure a judgment in its favor) (a
"Proceeding") by reason of the fact that he or she is or was a director or
officer of the Corporation, or is or was serving at the request of the
Corporation as a director or officer of another corporation, or of a
partnership, joint venture, trust or other enterprise (including, without
limitation, service with respect to any employee benefit plan), whether the
basis of any such Proceeding is alleged action in an official capacity as
director or officer or in any other capacity while serving as a director or
officer, against all liability, loss and expenses (including, without
limitation, attorneys' fees, judgments, fines, and amounts paid or to be paid
in settlement) actually and reasonably incurred by him or her in connection
with such Proceeding. Such indemnification shall continue as to a person who
has ceased to be a director or officer and shall inure to the benefit of his
or her heirs, executors, administrators and legal representatives. The right
to indemnification conferred in this By-law shall include the right to
receive payment of any expenses incurred by the indemnitee in connection with
such Proceeding in advance of the final disposition of the Proceeding, as
herein set forth, consistent with applicable law as then in effect. All
rights to indemnification conferred in this By-law, including rights to
advancement of expenses and the evidentiary, procedural and other provisions
of this By-law, shall be contract rights. The Corporation, by action of its
Board of Directors, may provide indemnification for employees, agents,
attorneys and representatives of the Corporation with the same, or with more
or less, scope and extent as herein provided for officers and directors. No
amendment to the Restated Certificate of Incorporation or amendment or repeal
of the By-laws purporting to have the effect of modifying or repealing any of
the provisions of this By-law in a manner adverse to the indemnitee shall
abridge or adversely affect any right to indemnification or other similar
rights and benefits with respect to any acts or omissions occurring prior to
such amendment or repeal. This By-law shall be applicable to all
Proceedings, whether arising from acts or omissions occurring before or after
the adoption of this By-law. The phrases "this By-law" and "By-law" shall
refer to this Article VI.
Section 6.2 By-law Not Exclusive. The right of indemnification,
including the right to receive payment in advance of expenses, conferred in
this By-law shall not be exclusive of any other rights to which any person
seeking indemnification may otherwise be entitled under any provision of the
Restated Certificate of Incorporation, By-law, agreement, applicable
corporate law and statute, vote of disinterested directors or stockholders or
otherwise. The indemnitee is free to proceed under any of the rights or
procedures available to him or her.
Section 6.3 Burden of Proof. In any determination, review of a
determination, action, or other proceeding relating to the right to
indemnification conferred in this By-law, the Corporation shall have the
burden of proof to the fullest extent permitted by applicable law, that the
indemnitee has not met any standard of conduct or belief which may be
required by applicable law to be applied in connection with a determination
that the indemnitee is not entitled to indemnity and also, to the fullest
extent permitted by applicable law, the burden of proof on any of the issues
which may be material to a determination that the indemnitee is not entitled
to indemnification. Neither a failure to make such a determination of
entitlement nor an adverse determination of entitlement to indemnity shall
be a defense of the Corporation in an action or proceeding brought by the
indemnitee or by or on behalf of the Corporation relating to indemnification
or create any presumption that the indemnitee has not met any such standard
of conduct or belief, or is otherwise not entitled to indemnity. If
successful in whole or in part in such an action or proceeding, the
indemnitee shall be entitled to be further indemnified by the Corporation for
the expenses actually and reasonably incurred by him in connection with such
action or proceeding.
Section 6.4 Advancement of Expenses. All reasonable expenses incurred
by or on behalf of indemnitee in connection with any Proceeding shall be
advanced from time to time to the indemnitee by the Corporation promptly
after the receipt by the Corporation of a statement from the indemnitee
requesting such advance, whether prior to or after final disposition of such
Proceeding. Provided however that as a condition to such advance the
indemnitee shall have delivered an undertaking as may be required by Section
6.7(A).
Section 6.5 Insurance, Contracts and Funding. The Corporation may
purchase and maintain insurance to protect itself and any person who is, or
may become an officer, director, employee, agent, attorney, trustee or
representative (any of the foregoing being herein referred to as a
"Representative") of the Corporation against any expenses, liability or loss
asserted against him or her or incurred by him or her in connection with any
Proceeding in any such capacity, or arising out of his or her status as such,
whether or not the Corporation would have the power to indemnify him or her
against such expense, liability or loss under the provisions of this By-law
or otherwise. The Corporation may enter into contracts with any
Representative of the Corporation, or any person serving as such at the
request of the Corporation for another corporation or entity, in furtherance
of the provisions of this By-law.
Section 6.6 Severability. If any provision or provisions of this
By-law shall be held to be invalid, illegal or unenforceable for any reason
whatsoever (i) the validity, legality and enforceability of all of the
remaining provisions of this By shall not in any way be affected or impaired
thereby; and (ii) to the fullest extent possible, the remaining provisions of
this By-law shall be construed so as to give effect to the intent manifested
by the provision held invalid, illegal or unenforceable.
Section 6.7 Procedures; Presumptions and Effect of Certain Proceedings;
Remedies. In furtherance, but not in limitation, of the foregoing provisions
of this By-law, the following procedures, presumptions and remedies shall
apply with respect to advancement of expenses and the right to
indemnification under this By-law:
(A) Advancement of Expenses. The advancement or reimbursement of
expenses to an indemnitee shall be made within 30 days after the receipt by
the Corporation of a request therefor from the indemnitee. Such request
shall reasonably evidence the expenses incurred or about to be incurred by
the indemnitee and, if required by law at the time of such advance, shall
include or be accompanied by an undertaking by or on behalf of the indemnitee
to repay the amounts advanced if it should ultimately be determined that the
indemnitee is not entitled to be indemnified against such expenses.
(B) Procedure for Determination of Entitlement to Indemnification.
(i) To obtain indemnification (except with respect to the
advancement of expenses), an indemnitee shall submit to the Chief Executive
Officer or Secretary of the Corporation a written request, including such
documentation and information as is reasonably available to the indemnitee
and reasonably necessary to determine whether and to what extent the
indemnitee is entitled to indemnification (the "Supporting Documentation").
The Secretary of the Corporation shall promptly advise the Board of Directors
in writing that the indemnitee has requested indemnification. The
determination of the indemnitee's entitlement to indemnification shall be
made not later than 30 days after receipt by the Corporation of the written
request and Supporting Documentation.
(ii) The indemnitee's entitlement to indemnification shall be
determined in one of the following ways: (a) by the Board of Directors or a
committee thereof, acting by a majority vote of a quorum consisting of the
Disinterested Directors (as hereinafter defined) (which term shall mean the
sole Disinterested Director, if there is only one); (b) by a written opinion
of the Independent Counsel (as hereinafter defined) if such a quorum is not
obtainable, or even if obtainable and such quorum of the Board of Directors
or committee by majority vote of the Disinterested Directors, so directs, a
(c) by the stockholders of the Corporation (but only if a resolution of the
Directors determines that the issue of entitlement to indemnification should
be submitted to the stockholders for their determination); or (d) as provided
in Section 6.8 of this By-law.
(iii) In the event the determination of entitlement to
indemnification is to be made by Independent Counsel pursuant to Section
6.7(B)(ii) of this By-law, the Independent Counsel shall be selected by
resolution of the Board of Directors, but only an Independent Counsel to
which the indemnitee does not reasonably object.
Section 6.8 Presumptions and Effect of Certain Proceedings. Except as
otherwise expressly provided in this By-law, and to the full extent permitted
by applicable law, (i) the indemnitee shall be presumed to be entitled to
indemnification upon submission of a request for indemnification together
with the Supporting Documentation, and (ii) thereafter in any determination
or review of any determination, and in any proceeding or adjudication the
Corporation shall have the burden of proof to overcome that presumption in
reaching a contrary determination. In any event, if the person or persons
empowered under Section 6.7(B)(ii) of this By-law to determine entitlement to
indemnification shall not have been appointed or shall not have made a
determination within 30 days after receipt by the Corporation of the request
therefor, together with the Supporting Documentation, the indemnitee shall be
deemed to be entitled to indemnification. In either case, the indemnitee
shall be entitled to such indemnification, unless (a) the indemnitee
misrepresented or failed to disclose a material fact in making the request
for indemnification or in the Supporting Documentation or (b) such
indemnification is prohibited by law, in either case as finally determined by
adjudication. The termination of any Proceeding, or of any claim, issue or
matter therein, by judgment, order, settlement or conviction, or upon a plea
of nolo contender or its equivalent, shall not, of itself, adversely affect
the right of the indemnitee to indemnification or create any presumption with
respect to any standard of conduct or belief or any other matter which might
form a basis for a determination that the indemnitee is not entitled to
indemnification. With regard to the right to indemnification for expenses,
(a) if and to the extent that the indemnitee has been successful on the
merits or otherwise in any Proceeding, or (b) if a Proceeding was terminated
without a determination of liability on the part of the indemnitee with
respect to any claim, issue or matter therein or without any payments in
settlement or compromise being made by the indemnitee with respect to a
claim, issue or matter therein, the indemnitee shall be deemed to be entitled
to indemnification, which entitlement shall not be defeated or diminished by
any determination which may be made pursuant to clauses (a), (b) or (c) of
Section 6.7(B)(ii), provided, however, that the indemnitee shall not be
entitled to be indemnified for expenses in the event it is finally
adjudicated that he or she was not entitled to such indemnification, unless
applicable law so permits. The indemnitee shall be presumptively entitled to
indemnification in all respects for any act, omission or conduct taken or
occurring which (whether by condition or otherwise) is required, authorized
or approved by any order issued or other action by any commission or
governmental body pursuant to any federal statute or state statute regulating
the Corporation or any of its subsidiaries. To the extent permitted by law,
the presumption shall be conclusive on all parties with respect to acts,
omissions or conduct of the indemnitee if he or she acted in good faith and
in a manner he or she reasonably believed to be in or not opposed to the best
interests of the Corporation or its subsidiary. No presumption adverse to an
indemnitee shall be drawn with respect to any act, omission or conduct of the
indemnitee, if he or she acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Corporation or
its applicable subsidiary or subsidiaries.
Section 6.9 Remedies of Indemnitee; Payment of Indemnification.
(a) In the event that a determination is made pursuant to Section
6.7 of this By-law that the indemnitee is not entitled to indemnification or
the Corporation fails to provide indemnification under this By-law, the
indemnitee shall be entitled to seek an adjudication of his entitlement to
such indemnification to the full extent and in the manner provided by
applicable law.
(b) If a determination shall have been made or deemed to have been
made, pursuant to Sections 6.7 or 6.8 of this By-law, that the indemnitee is
entitled to indemnification, the Corporation shall be obligated to pay the
amounts constituting such indemnification within ten business days after such
determination has been made or deemed to have been made and shall be
conclusively bound by such determination, unless (a) the indemnitee
misrepresented or failed to disclose a material fact in making the request
for indemnification or in the Supporting Documentation or (b) such
indemnification is prohibited by law, in either case as finally determined by
adjudication as provided in Section 6.9(A) of this By-law. The Corporation
may bring an action, in an appropriate court in the State of New Jersey or
any other court of competent jurisdiction, contesting the right of the
indemnitee to receive indemnification hereunder due to the occurrence of a
circumstance described in subclause (a) of this Section 6.9(B) or a
prohibition of law (both of which are herein referred to as a "Disqualifying
Circumstance"). In any such enforcement action or other proceeding whether
brought by the indemnitee or the Corporation, indemnitee shall be entitled to
indemnification unless the Corporation can satisfy the burden of proof that
indemnification is prohibited by reason of a Disqualifying Circumstance.
(c) The Corporation shall be precluded from asserting in any
judicial proceeding commenced pursuant to this Section 6.9 that the
procedures and presumptions of this By-law are not valid, binding and
enforceable and shall stipulate in any such court that the Corporation is
bound by all the provisions of this By-law.
(d) In the event that the indemnitee, pursuant to this By-law,
seeks a judicial adjudication to enforce his rights under, or to recover
damages for breach of, this By-law, or is otherwise involved in any
adjudication or with respect to his or her right to indemnification, the
indemnitee shall be entitled to recover from the Corporation, and shall be
indemnified by the Corporation against, any expenses actually and reasonably
incurred by him if the indemnitee prevails in such judicial adjudication. If
it shall be determined in such judicial adjudication that the indemnitee is
entitled to receive part, but not all of the indemnification or advancement
of expenses sought, the expenses incurred by the indemnitee in connection
with such judicial adjudication shall be prorated accordingly.
Section 6.10 Definitions. For purposes of indemnification under this
By-law or otherwise.
(b) "Disinterested Director" means a Director of the Corporation
who is not or was not a material party to the Proceeding in respect of which
indemnification is sought by the indemnitee.
(c) "Independent Counsel" means a law firm or a member of a law
firm that neither presently is, nor in the past five years, has been retained
to represent (a) the Corporation or the indemnitee in any manner or (b) any
other party to the Proceeding giving rise to a claim for indemnification
under this By-law. Notwithstanding the foregoing, the term "Independent
Counsel" shall not include any person who, under applicable standards of
professional conduct then prevailing, would have a conflict of interest in
representing either the Corporation or the indemnitee in an action to
determine the indemnitee's rights under this By-law.
Section 6.11 Acts of Disinterested Directors. Disinterested Directors
considering or acting on any indemnification matter under this By-law or
under governing corporate law or otherwise may consider or take action as the
Board of Directors or may consider or take action as a committee or
individually or otherwise. In the event that Disinterested Directors
consider or take action as the Board of Directors, one-third of the total
number of Directors in office shall constitute a quorum."
ARTICLE VII - MISCELLANEOUS PROVISIONS
Section 7.1. Corporate Seal. The seal of the Corporation shall be
circular in form with the name of the Corporation in the circumference and
the words and figures "Corporate Seal - 1985 New Jersey" in the center. The
seal may be used by causing it to be affixed or impressed, or a facsimile
thereof may be reproduced or otherwise used in such manner as the Board of
Directors may determine.
Section 7.2. Fiscal Year. The fiscal year of the Corporation shall be
from the period June 1 in each calendar year to May 31, inclusive, in the
following calendar year, or such other twelve consecutive months as the Board
of Directors may designate.
Section 7.3. Waiver of Notice. Whenever any notice is required to be
given under any provision of law, the Certificate of Incorporation or these
By-Laws, a written waiver thereof, signed by the person or persons entitled
to such notice, whether before or after the time stated therein, shall be
deemed equivalent to notice. Neither the business to be transacted at nor
the purpose of any regular or special meeting of the stockholders, directors
or members of a committee of directors need be specified in any written
waiver of notice unless so required by the Certificate of Incorporation.
Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting at the beginning of the meeting to the transaction of
any business because the meeting is not lawfully called or convened.
Section 7.4. Execution of Instruments, contracts, etc. (a) All
checks, drafts, bills of exchange, notes or other obligations or orders for
the payment of money shall be signed i the name of the corporation by such
officer or officers or person or persons as the Board of Directors may from
time to time designate.
(b) Except as otherwise provided by law, the Board of Directors,
any committee given specific authority in the premises by the Board of
Directors or any committee given authority to exercise generally the powers
of the Board of Directors during the intervals between meetings of the board
of Directors may authorize any officer, employee or agent, in the name of and
on behalf of the corporation, to enter into or execute and deliver deeds,
bonds, mortgages, contracts and other obligations or instruments, and such
authority may be general or confined to specific instances.
(c) All applications, written instruments and papers required by
or filed with any department of the United States Government or any state,
county, municipal or other governmental official or authority may if
permitted by applicable law be executed in the name of the Corporation by any
principal officer or subordinate officer of the Corporation or, to the extent
designated for such purpose from time to time by the Board of Directors, by
an employee or agent of the Corporation. Such designation may contain the
power to substitute, in the discretion of the person named, one or more other
persons.
ARTICLE VIII - AMENDMENTS; EMERGENCY BY-LAWS
Section 8.1. By Stockholders. These By-Laws may be amended, added to,
altered or repealed, or new By-Laws may be adopted, at any meeting of
stockholders by the vote of the holders of not less than a majority of the
combined voting power of the outstanding shares of stock entitled to vote
thereat, provided that, in the case of a special meeting, notice that an
amendment is to be considered and acted upon shall be inserted in the notice
or waiver of notice of said meeting.
Section 8.2. By Directors. To the extent permitted by the Certificate
of Incorporation, these By-Laws may be amended, added to, altered or
repealed, or new By-Laws may be adopted, at any regular or special meeting of
the Board of Directors.
Section 8.3. Emergency By-Laws. The Board of Directors may adopt
emergency by-laws subject to repeal or change by action of the stockholders
which shall, notwithstanding any different provision of law, the Certificate
of Incorporation or these By-Laws, be operative during any emergency
resulting from any nuclear or atomic disaster, an attack on the United States
or on a locality in which the Corporation conducts its business or
customarily holds meetings of the Board of Directors or stockholders, any
catastrophe or other similar emergency condition, as a result of which a
quorum of the Board of Directors or a standing committee thereof cannot
readily be convened for action. Such emergency by-laws may make any
provision that may be practicable and necessary for the circumstances of the
emergency. No officer, director or employee acting in accordance with any
emergency bylaws shall be liable except for willful misconduct.
EXHIBIT 4(w)
CENTURY COMMUNICATIONS CORP.
and
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, Trustee
______________________________
Fourth Supplemental Indenture
Dated as of March 6, 1995
______________________________
9 1/2% Senior Notes Due 2005
FOURTH SUPPLEMENTAL INDENTURE, dated as of March 6, 1995 (the
"Fourth Supplemental Indenture"), to the Indenture, dated as of February 15,
1992 (the "Indenture"), between CENTURY COMMUNICATIONS CORP., a corporation
duly organized and existing under the laws of the State of New Jersey (the
"Company"), having its principal office at 50 Locust Avenue, New Canaan,
Connecticut 06840, and BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, a national banking association organized and existing under the
laws of the United States (the "Trustee").
RECITALS OF THE COMPANY
WHEREAS, the Company has duly authorized the execution and delivery
of the Indenture to provide for the issuance from time to time of one or more
series of its senior debt securities (the "Securities") to be issued in one
or more series as in the Indenture provided;
WHEREAS, the Company desires and has requested the Trustee to join
it in the execution and delivery of this Fourth Supplemental Indenture in
order to establish and provide for the issuance by the Company of a series of
Securities designated as its 9 1/2% Senior Notes Due 2005 in the aggregate
principal amount of $250,000,000, a specimen copy of which is attached hereto
as Exhibit A (the "9 1/2% Notes"), on the terms set forth herein;
WHEREAS, Section 10.01 of the Indenture provides that a
supplemental indenture may be entered into by the Company and the Trustee
without the consent of any holder of any Securities for such purpose provided
certain conditions are met;
WHEREAS, the conditions set forth in the Indenture for the
execution and delivery of this Fourth Supplemental Indenture have been
complied with; and
WHEREAS, all things necessary to make this Fourth Supplemental
Indenture a valid agreement of the Company and the Trustee, in accordance
with its terms, and a valid amendment of, and supplement to, the Indenture
have been done;
NOW THEREFORE:
In consideration of the premises and the purchase and acceptance of
the 9 1/2% Notes by the holders thereof the Company mutually covenants and
agrees with the Trustee, for the equal and proportionate benefit of all
holders of the 9 1/2% Notes, that the Indenture is supplemented and amended, to
the extent and for the purposes expressed herein, as follows:
PARAGRAPH A. SCOPE OF THIS FOURTH SUPPLEMENTAL INDENTURE
The changes, modifications and supplements to the Indenture
effected by this Fourth Supplemental Indenture in Paragraphs B and C hereof
shall only be applicable with respect to, and govern the terms of, the 9 1/2%
Notes issued by the Company, which shall be limited in aggregate principal
amount to $250,000,000, except as provided in Section 3.01(2) of the
Indenture, and shall not apply to any other Securities which may be issued
under the Indenture unless a supplemental indenture with respect to such
other Securities specifically incorporates such changes, modifications and
supplements.
PARAGRAPH B. ADDITIONAL PROVISIONS
B1. ADDITIONAL DEFINITIONS - Each of the following definitions,
which constitute part of this Fourth Supplemental Indenture, shall be
inserted in proper alphabetical order in Article 1:
"Advance" shall mean any direct or indirect advance, loan,
guarantee, transfer (pursuant to contract or otherwise) or other extension of
credit or capital contribution (in cash or other property) by the Company or
any Subsidiary, as the case may be, to, or any purchase or other acquisition
by such Person of any Capital Stock, equity or other ownership interests,
bonds, notes, debentures or other securities of, any Subsidiary or any other
Affiliate of the Company, as the case may be, but not including: (i) any
Advance from the Company or any Subsidiary to any Affiliate for use by such
Affiliate in the ordinary course of its business on terms that are no less
favorable to the Company or the relevant Subsidiary than those that could
have been obtained in a comparable transaction by the Company or such
Subsidiary from a Person who is not an Affiliate, or (ii) any Advance from
the Company or any directly or indirectly 90%-owned Subsidiary to any other
directly or indirectly 90%-owned Subsidiary or the Company. For purposes of
subclause (i) of this definition, expenditures in the ordinary course of
business shall mean and include expenditures for working capital, capital
improvements and acquisitions in the communications and media fields whether
by purchase of assets, capital stock or partnership or other equity interests
or by the formation of joint ventures, partnerships or other entities.
"Asset Sale" shall mean the sale, transfer or other disposition
(other than to the Company or any of its Subsidiaries) in any single
transaction or series of related transactions of (a) any Capital Stock of any
Subsidiary, (b) all or substantially all of the assets of the Company or any
Subsidiary or (c) all or substantially all of the assets of a division, line
of business, or comparable business segment of the Company or any Subsidiary.
"Base Date", with respect to any Triggering Event, shall mean the
date which is 60 days prior to the occurrence of such Triggering Event.
"B Minus" shall mean, with respect to ratings by Standard & Poor's
Corporation, a rating of B- and, with respect to ratings by Moody's Investor
Service, Inc., a rating of B3, or the equivalent thereof by any substitute
agency, as provided in Section 12.10.
"B Plus" shall mean, with respect to ratings by Standard & Poor's
Corporation, a rating of B+ and, with respect to ratings by Moody's Investor
Service, Inc., a rating of B1, or the equivalent thereof by any substitute
agency, as provided in Section 12.10.
"Capitalized Lease Obligation" shall mean, as applied to any
Person, any lease of any property (whether real, personal or mixed) by that
Person or lessee which, in conformity with GAAP, is required to be accounted
for as a capital lease on the balance sheet of that Person.
"Cash Flow Available for Interest Expense" shall mean, for any
Person, for any period, (A) the sum of the amount for such period of (i) Net
Income, (ii) Interest Expense, (iii) provisions for taxes based on income
(excluding taxes related to gains and losses excluded from the definition of
Net Income), (iv) depreciation expense, (v) amortization expense, and (vi)
any other non-cash items reducing the Net Income of such Person for such
period, minus (B) all non-cash items increasing Net Income of such Person;
all as determined in accordance with GAAP; provided that if, during such
period, such Person shall have made any Asset Sale, Cash Flow Available for
Interest Expense of such Person for such period shall be reduced by an amount
equal to the Cash Flow Available for Interest Expense (if positive) directly
attributable to the assets which are the subject of such Asset Sale for the
period subsequent to such sale or increased by an amount equal to the Cash
Flow Available for Interest Expense (if negative) directly attributable
thereto for such period.
"Century/Texas" shall mean Century Communications Corp., a Texas
corporation, a wholly owned subsidiary of the Company.
"Class A Common Stock" shall mean the Class A Common Stock, par
value $.01 per share, of the Company.
"Consolidated Cash Flow Available for Interest Expense" shall mean,
for any Person, for any period, (A) the sum of the amount for such period of
(i) Consolidated Net Income, (ii) Consolidated Interest Expense, (iii)
provisions for taxes based on income (excluding taxes related to gains and
losses excluded from the definition of Consolidated Net Income or Net
Income), (iv) depreciation expense, (v) amortization expense, and (vi) any
other non-cash items reducing the Consolidated Net Income of such Person for
such period, minus (B) all non-cash items increasing Consolidated Net Income
of such Person for such period; all as determined on a consolidated basis for
such Person and its Subsidiaries in accordance with GAAP; provided that if,
during such period, the Company or any of its Subsidiaries shall have made
any Asset Sale, Consolidated Cash Flow Available for Interest Expense of the
Company for such period shall be reduced by an amount equal to the
Consolidated Cash Flow Available for Interest Expense (if positive) directly
attributable to the assets which are the subject of such Asset Sale for the
period subsequent to such sale or increased by an amount equal to the
Consolidated Cash Flow Available for Interest Expense (if negative) directly
attributable thereto for such period.
"Consolidated Interest Expense" of any Person shall mean, with
respect to any period, the aggregate Interest Expense of such Person and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP;
provided, however, that Consolidated Interest Expense of the Company shall
only include the Interest Expense of any Subsidiary of the Company which, at
the date of determination of the Interest Expense Ratio of the Company, has
an Interest Expense Ratio of less than the ratios set forth below:
Period Ratio
November 15, 1988 - November 14, 1990 1.25 to 1.0
November 15, 1990 - November 14, 1991 1.35 to 1.0
Thereafter 1.50 to 1.0
"Consolidated Net Income" with respect to any specified Person
shall mean, for any period, the aggregate of the Net Income of such specified
Person and its Subsidiaries for such period, on a consolidated basis,
determined in accordance with GAAP; provided that (i) the Net Income of any
other Person which is not a Subsidiary or is accounted for by such specified
Person by the equity method of accounting shall be included only to the
extent of the amount of dividends or distributions paid to such specified
Person or a Subsidiary, and (ii) the Net Income of any other Person acquired
by such specified Person or a Subsidiary of such Person in a pooling of
interests transaction for any period prior to the date of such acquisition
shall be excluded and (iii) the Net Income (if positive) of any Subsidiary
that is subject to restrictions, direct or indirect, on the payment of
dividends or the making of distributions to such specified Person shall be
excluded to the extent of such restrictions.
"Currency Agreement" shall mean any foreign exchange contract,
currency swap agreement or other similar agreement or arrangement designed to
protect against fluctuations in currency values.
"Debt" of any Person shall mean (without duplication) any
indebtedness, contingent or otherwise, in respect of borrowed money (whether
or not the recourse of the lender is to the whole of the assets of such
Person or only to a portion thereof), or evidenced by bonds, notes,
debentures or similar instruments or representing the balance deferred and
unpaid of the purchase price of any property (except any such balance that
constitutes a trade payable or an accrued liability arising in the ordinary
course of business that is not overdue by more than 120 days or that is being
contested in good faith), if and to the extent any of the foregoing
indebtedness would appear as a liability upon a balance sheet of the Company
in accordance with GAAP.
"Designated Downgrading" shall mean (i) in the event that the
rating of the 9 1/2% Notes by both Rating Agencies on any Base Date is equal to
or higher than B Plus, the reduction of such rating by either or both Rating
Agencies on the date of the relevant event or transaction resulting in the
Class A Common Stock of the Company being held of record by less than 300
holders (or, if the rating on such date does not reflect the effect of such
event or transaction, then on the earliest date on which such rating shall
reflect the effect of such event or transaction) (as applicable, the
"Triggering Event Date") to a rating equal to or lower than B Minus; and (ii)
in the event that on any Base Date the rating of the 9 1/2% Notes by either or
both Rating Agencies is lower than B Plus, the reduction of such rating by
either or both Rating Agencies to a lower rating. In determining whether a
rating has been reduced, a reduction of a gradation (+ and - for S&P and 1, 2
and 3 for Moody's or the equivalent thereof by any substitute rating agency
as provided in Section 12.10) shall be taken into account.
"Discharged" shall have the meaning assigned to such term in
Section 5.02 hereof.
"Incurrence" shall have the meaning assigned to such term in
Section 11.13 hereof.
"Indebtedness" of any Person shall mean the Debt of such Person and
shall also include, to the extent not otherwise included, any Capitalized
Lease Obligation, the maximum fixed repurchase price of any Redeemable Stock,
Indebtedness secured by a Lien to which the property or assets owned or held
by the Company are subject (whether or not the obligations secured thereby
shall have been assumed), guarantees of items that would constitute
Indebtedness under this definition (whether or not such items would appear
upon the balance sheet of such Person), letters of credit and letter of
credit reimbursement obligations (whether or not such items would appear on
such balance sheet), and obligations in respect of Currency Agreements and
Interest Swap Obligations, and any renewal, extension, refunding or amendment
of any of the foregoing. For purposes of the preceding sentence, the maximum
fixed repurchase price shall be calculated in accordance with the terms of
such Redeemable Stock as if such Redeemable Stock were repurchased on any
date on which Indebtedness shall be required to be determined pursuant to the
Indenture, and if such price is based upon or measured by the fair market
value of such Redeemable Stock (or any equity security for which it may be
exchanged or converted), such fair market value shall be determined in good
faith by the Board of Directors. The amount of Indebtedness of any Person at
any date shall be the outstanding balance at such date of all unconditional
obligations as described above and the maximum liability of any such
contingent obligations at such date.
"Interest Expense" of any Person shall mean, for any period, the
aggregate amount of (i) interest in respect of Indebtedness of such Person
(including amortization of original issue discount on any such Indebtedness
and the interest portion of any deferred payment obligation, calculated in
accordance with the effective interest method of accounting, all commissions,
discounts and other fees and charges owed with respect to letters of credit
and bankers' acceptance financing and the net costs associated with Interest
Swap Obligations and Currency Agreements), (ii) all but the principal
component of rentals in respect of Capitalized Lease Obligations, paid,
accrued or scheduled to be paid or accrued by such Person during such period,
and (iii) any dividends or distributions paid on any Redeemable Stock of such
Person, all as determined in accordance with GAAP.
"Interest Expense Ratio" shall mean, for the Company, the ratio of
(i) the aggregate amount of Consolidated Cash Flow Available for Interest
Expense of the Company for the four fiscal quarters for which financial
information in respect thereof is available immediately prior to the date of
the transaction giving rise to the need to calculate the Interest Expense
Ratio (the "Transaction Date") to (ii) the aggregate Consolidated Interest
Expense which the Company will accrue during the fiscal quarter in which the
Transaction Date occurs and the three fiscal quarters immediately subsequent
to such fiscal quarter, assuming the Consolidated Interest Expense accruing
on the amount of the Company's Indebtedness on the Transaction Date and
reasonably anticipated by the Company in good faith to be outstanding from
time to time during such period (assuming the continuation of market interest
rate levels prevailing on the Transaction Date in any calculation of Interest
Expense relating to Indebtedness the interest on which is a function of such
market interest rate levels). "Interest Expense Ratio" shall mean, for any
other Person, the ratio of (i) the aggregate amount of Cash Flow Available
for Interest Expense of such other Person for the four fiscal quarters for
which financial information in respect thereof is available immediately prior
to the relevant Transaction Date to (ii) the aggregate Interest Expense which
such other Person will accrue during the fiscal quarter in which the
Transaction Date occurs and the three fiscal quarters immediately subsequent
to such fiscal quarter, assuming the Interest Expense accruing on the amount
of such other Person's Indebtedness on the Transaction Date and reasonably
anticipated by such other Person in good faith to be outstanding from time to
time during such period (assuming the continuation of market interest rate
levels prevailing on the Transaction Date in any calculation of Interest
Expense relating to Indebtedness the interest on which is a function of such
market interest rate levels).
"Interest Swap Obligations" 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
Person calculated by applying a fixed or a floating rate of interest on the
same notional amount.
"Lien" shall mean any lien, security interest, charge or
encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any agreement to
give any security interest).
"Maturity Date" shall mean the earlier to occur of March 1, 2005
and the date upon which the 9 1/2% Notes shall be declared due and payable
pursuant to the terms of Section 6.01.
"Net Income" of any Person shall mean the net income (loss) of such
Person, determined in accordance with GAAP, excluding, however, any gain (but
not loss) realized upon the sale or other disposition (including, without
limitation, dispositions pursuant to sale and leaseback transactions) of any
real property or equipment of such Person which is not sold or otherwise
disposed of in the ordinary course of business and any gain (but not loss)
realized upon the sale or other disposition of any Capital Stock of such
Person or a Subsidiary of such Person.
originally issued in the aggregate principal amount of $250,000,000 pursuant
to this Indenture.
"Permitted Investment" shall mean any investment after November 10,
1988 (a) which when aggregated with all other outstanding Permitted
Investments does not exceed the aggregate of $50 million (excluding amounts
which may be used to acquire the remaining interests in the non-wireline
cellular telephone systems in Elkhart, Indiana, Lincoln, Nebraska and
Charlottesville and Lynchburg, Virginia) plus (i) the amount of Proceeds from
the issuance or sale of Capital Stock of the Company after November 15, 1988,
(ii) the amount of Proceeds from the issuance of indebtedness which is
converted or exchanged for Capital Stock of the Company after November 15,
1988, and (iii) amounts from dividends or distributions made to the Company
or any Restricted Subsidiary from an Unrestricted Subsidiary after November
15, 1988, and (b) which is (i) loaned or contributed to any Affiliate
controlled, directly or indirectly, by the Company in the ordinary course of
business on terms that are no less favorable to the Company or the Restricted
Subsidiary than those that could have been obtained in a comparable
transaction by the Company or such Restricted Subsidiary from a Person who is
not an Affiliate, or (ii) (A) loaned or contributed to any Unrestricted
Subsidiary or (B) made by way of a guarantee by the Company, or a Restricted
Subsidiary of Indebtedness of an Unrestricted Subsidiary. A Permitted
Investment in an Unrestricted Subsidiary will be deemed to be no longer
outstanding if such Unrestricted Subsidiary has been classified a Restricted
Subsidiary.
"Preferred Stock" shall mean the $3.50 Preferred Shares and the
Special Preferred Shares of the Company.
"Proceeds" shall mean, with respect to any issuance or sale of
securities, cash or the fair market value of property other than cash (as
determined by the Board of Directors whose determination shall be evidenced
by a resolution of the Board of Directors filed with the Trustee) received in
connection therewith.
"Pro Forma Operating Cash Flow" shall mean, for any period, (A) the
sum of the amount for such period of (i) Net Income, (ii) Interest Expense,
(iii) provisions for taxes based on income (excluding taxes related to gains
and losses excluded from the definition of Consolidated Net Income or Net
Income), (iv) depreciation expense, (v) amortization expense, and (vi) any
other non-cash items reducing the Net Income of such Person for such period,
minus (B) all non-cash items increasing Net Income of such Person for such
period; all as determined on a consolidated basis for the Company and its
Restricted Subsidiaries in accordance with GAAP after giving effect to the
following: (i) if, during such period, the Company or any of its Restricted
Subsidiaries shall have made any Asset Sale, Pro Forma Operating Cash Flow of
the Company for such period shall be reduced by an amount equal to the Pro
Forma Operating Cash Flow (if positive) directly attributable to the assets
which are the subject of such Asset Sale for the period subsequent to such
sale or increased by an amount equal to the Pro Forma Operating Cash Flow (if
negative) directly attributable thereto for such period and (ii) if, during
such period, Indebtedness is incurred by the Company or any of its Restricted
Subsidiaries for or in connection with the acquisition of any Person or
business which immediately after acquisition is a Subsidiary or whose assets
are held directly by the Company or a Subsidiary, Pro Forma Operating Cash
Flow shall be computed so as to give pro forma effect to the acquisition of
such Person or business.
"Rating Agency" shall mean either Standard & Poor's Corporation or
its successor ("S&P") or Moody's Investors Service, Inc. or its successor
("Moody's").
"Redeemable Stock" shall mean any Capital Stock which, by its terms
(or by the terms of any security into which it is convertible or for which it
is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise,
or redeemable at the option of the holder thereof, in whole or in part, on or
prior to the Maturity Date.
"Repurchase Date" shall have the meaning assigned to such term in
Section 12.10 hereof.
"Repurchase Notice" shall have the meaning assigned to such term in
Section 12.10 hereof.
"Restricted Payments" shall have the meaning assigned to such term
in Section 11.11.
"Restricted Subsidiary" shall mean (a) any Subsidiary of the
Company, whether existing on or after the date of the Indenture, unless such
Subsidiary is an Unrestricted Subsidiary or shall have been classified as an
Unrestricted Subsidiary by a resolution adopted by the Board of Directors of
the Company and (b) an Unrestricted Subsidiary which is reclassified as a
Restricted Subsidiary by a resolution adopted by the Board of Directors of
the Company, provided that on and after the date of such reclassification
such Unrestricted Subsidiary shall not incur Indebtedness other than that
permitted to be incurred by a Restricted Subsidiary under the provisions of
the Indenture. Notwithstanding the foregoing, Century-ML Cable Venture and
its Subsidiaries and Century Venture Corp. and its Subsidiaries shall be
Restricted Subsidiaries unless any of the foregoing shall be reclassified as
an Unrestricted Subsidiary pursuant to clause (d) of the definition of an
Unrestricted Subsidiary.
"Transaction Date" shall have the meaning assigned to such term in
the definition of "Interest Expense Ratio" herein.
"Triggering Event" shall mean the occurrence of any transaction or
event or series of transactions or events which results in (a) the Class A
Common Stock of the Company being held of record by less than three hundred
holders and (b) a Designated Downgrading. For purposes of clause (a) above,
"held of record" shall have the meaning set forth in Rule 12g5-1 promulgated
by the Securities and Exchange Commission under the Securities Exchange Act
of 1934, as amended.
"Triggering Event Date" shall have the meaning assigned to such
term in the definition of "Designated Downgrading" herein.
"Unrestricted Subsidiary" shall mean (a) Century Cellular Holding
Corp.; provided that Century Cellular Holding Corp. may be reclassified as a
Restricted Subsidiary pursuant to clause (b) of the definition of Restricted
Subsidiary, (b) any Subsidiary as of the date of the Indenture which is not a
Restricted Subsidiary, (c) any Subsidiary of an Unrestricted Subsidiary and
(d) any Subsidiary organized or acquired after the date of the Indenture
which is classified as an Unrestricted Subsidiary by a resolution adopted by
the Board of Directors of the Company; provided that a Subsidiary may be so
classified as an Unrestricted Subsidiary only if immediately after the date
of such classification, the Company and its Restricted Subsidiaries would
have investments in such Subsidiary which would be Permitted Investments; and
provided further, that, notwithstanding the foregoing, no Subsidiary which is
a Restricted Subsidiary as of the date of the Indenture shall be reclassified
as an Unrestricted Subsidiary or be a Subsidiary of an Unrestricted
Subsidiary. The Trustee shall be given prompt notice by the Company of each
resolution adopted by the Board of Directors under this provision, together
with a copy of each such resolution adopted.
B2. ADDITIONAL SECTIONS - Each of the following provisions, which
constitutes part of this Fourth Supplemental Indenture, is numbered to
conform with the format of the Indenture:
SECTION 3.11 Establishment of Terms.
The 9 1/2% Notes shall have such terms as are set forth in the
9 1/2% Note, a copy of which is attached hereto as Exhibit A.
SECTION 11.10. Restrictions on Mergers, Sales and
Consolidations.
The Company will not consolidate or merge with or into, or sell,
lease, convey or otherwise dispose of all or substantially all of its
property to another corporation, Person or entity except as permitted in
Article Nine.
SECTION 11.11. Restriction on Dividends and Other
Payments.
Except as set forth below the Company shall not, directly or
indirectly:
(1) declare or pay any dividend on, or make any distribution to the
holders (as such) of, any shares of its Capital Stock (other than dividends
or distributions payable in Capital Stock (other than Redeemable Stock) of
the Company);
(2) purchase, redeem or otherwise acquire or retire for value any
Capital Stock of the Company, any Subsidiary or other Affiliate of the
Company (other than any such Capital Stock owned by the Company or any
directly or indirectly wholly-owned Subsidiary of the Company);
(3) permit any Subsidiary to declare or pay any dividend on, or
make any distribution to the holders (as such) of, any shares of its Capital
Stock except to the Company or a directly or indirectly wholly-owned
Subsidiary of the Company (other than dividends or distributions payable in
Capital Stock (other than Redeemable Stock) of such Subsidiary or the
Company);
(4) permit any Subsidiary to purchase, redeem or otherwise acquire
or retire for value any Capital Stock of such Subsidiary, the Company or any
Affiliate of either of them (other than any such Capital Stock owned by the
Company or any directly or indirectly wholly-owned Subsidiary of the
Company); or
(5) make an Advance or permit any Subsidiary to make an Advance
(such dividends, distributions, purchases, redemptions, other acquisitions,
retirements or Advances referred to in (1) through (5) above being
collectively referred to as "Restricted Payments;" provided, however, that
Restricted Payments shall not include any amounts paid for the acquisition
from a Person not an Affiliate of the Company of any Capital Stock of a
Subsidiary or other Affiliate of the Company); if at the time of such
Restricted Payment:
(i) an Event of Default shall have occurred and be continuing, or
shall occur as a consequence thereof, or
(ii) if upon giving effect to such payment the aggregate amount
expended for all such Restricted Payments subsequent to November 21, 1988
shall exceed the sum of (a) the excess of (x) the aggregate of Consolidated
Cash Flow Available for Interest Expense of the Company accrued during all
fiscal quarters ended subsequent to May 31, 1988 over (Y) the product of (1)
1.2 and (2) the aggregate of Consolidated Interest Expense of the Company
accrued during all fiscal quarters ended subsequent to May 31, 1988, (b) the
aggregate net proceeds, including cash and the fair market value of property
other than cash, received by the Company from the issue or sale, after
November 21, 1988, of Capital Stock of the Company (other than Redeemable
Stock), including upon the exercise of any warrant, other than in connection
with the conversion or exchange of any Indebtedness or Capital Stock, and (c)
the aggregate net proceeds received by the Company, subsequent to November
21, 1988, from the issue or sale of any debt securities or Redeemable Stock
of the Company, if, at the time the determination is made, such debt
securities or Redeemable Stock, as the case may be, has been converted into
or exchanged for Capital Stock of the Company (other than Redeemable Stock).
For purposes of any calculation pursuant to the preceding sentence
which is required to be made within 60 days after the declaration of a
dividend by the Company or any Subsidiary, such dividend shall be deemed to
be paid at the date of declaration, and the subsequent payment of such
dividend during such 60-day period shall not be treated as an additional
Restricted Payment. For purposes of determining under clause (ii) above the
amount expended for Restricted Payments, property other than cash shall be
valued at its fair market value.
Notwithstanding the foregoing, the provisions of this Section 11.11
will not prevent (i) the payment of an amount not to exceed $150,000,000 in
the aggregate to repurchase shares of the common stock of the Company, (ii)
the payment of any dividend within 60 days after the date of declaration when
the payment would have complied with the foregoing provisions on the date of
declaration or (iii) the purchase, redemption, acquisition or other
retirement of any shares of the Company's Capital Stock by exchange for, or
out of the proceeds of the substantially concurrent sale of, other shares of
its Capital Stock (other than Redeemable Stock).
SECTION 11.12. Limitation on Transactions with Affiliates.
Neither the Company nor any Subsidiary may engage in any
transaction with an Affiliate of the Company (other than a Restricted
Subsidiary), or any director, officer or employee of the Company or any
Subsidiary, on terms less favorable to the Company or such Subsidiary than
would be obtainable at the time in comparable transactions of the Company or
such Subsidiary with Persons which are not Affiliates; provided, however,
that nothing in this Section 11.12 shall prevent (i) the Company from making
any payments permitted pursuant to the terms of Section 11.11 or (ii) the
Company or any Subsidiary from entering into any transaction permitted
pursuant to the terms of Sections 9.01, 11.10 and 11.14.
SECTION 11.13. Limitation on Indebtedness.
The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, create, incur, issue, assume or become
liable for, contingently or otherwise (collectively an "incurrence"), any
Indebtedness (other than the 9 1/2% Notes) unless, after giving effect to such
incurrence on a pro forma basis, Indebtedness of the Company and its
Restricted Subsidiaries, on a consolidated basis, shall not be more than nine
times Pro Forma Operating Cash Flow for the four fiscal quarters immediately
preceding such incurrence. For purposes of this Section 11.13, an incurrence
will not be deemed to occur when any Person becomes a Subsidiary by merger,
consolidation, acquisition or otherwise. Notwithstanding the above, neither
the Company nor any Restricted Subsidiary shall be prohibited from incurring
(i) Indebtedness incurred in connection with Currency Agreements or Interest
Swap Obligations, (ii) Indebtedness which is subordinated in right of payment
to the 9 1/2% Notes and which has an average life to maturity longer than that
of the 9 1/2% Notes and (iii) Indebtedness resulting in the extension, refunding
or renewal of any Indebtedness existing prior to such extension, renewal or
refunding which does not result in an increase in the principal amount of
such existing Indebtedness then outstanding.
SECTION 11.14. Investments in Affiliates and
Subsidiaries.
(a) After February 27, 1995, the Company shall not, nor shall the
Company allow any Restricted Subsidiary to, invest in any Affiliate (other
than the Company or a Restricted Subsidiary) or in any Unrestricted
Subsidiary other than by way of Permitted Investments.
(b) After February 27, 1995, neither the Company nor any
Restricted Subsidiary shall guarantee or secure, pledge, encumber or
otherwise become directly or indirectly liable for investments in or
borrowings by Unrestricted Subsidiaries, except for Permitted Investments and
except that the Capital Stock of an Unrestricted Subsidiary may be pledged to
secure borrowings by such Unrestricted Subsidiary or other Unrestricted
Subsidiaries.
SECTION 12.10. Right to Require Repurchase of
9 1/2% Notes.
(a) In the event of the occurrence of a Triggering Event, each
holder of 9 1/2% Notes shall have the right, at such holder's option, to sell to
the Company, and the Company hereby agrees to purchase, all or any part of
such holder's 9 1/2% Notes on the date (the "Repurchase Date") that is 115 days
after a Triggering Event Date, for an amount equal to 101% of their principal
amount plus accrued interest to the Repurchase Date.
(b) The Company shall mail to all holders of record of the 9 1/2%
Notes, within 30 days after a Triggering Event Date, a notice of the
occurrence of such Triggering Event, specifying the date by which a holder of
9 1/2% Notes must notify the Trustee of such holder's intention to exercise the
repurchase right and describing the procedure which such holder must follow
to exercise such right. The Company shall deliver a copy of such notice to
the Trustee on the same such date and shall cause a copy of such notice to be
published in an Authorized Newspaper. To exercise the repurchase right, the
holder of a 9 1/2% Note must deliver, on or before the ninetieth day after a
Triggering Event Date, written notice (which shall be irrevocable) (such
notice, as to any holder of 9 1/2% Notes its "Repurchase Notice") to the Trustee
of the holder's exercise of such right, together with the 9 1/2% Note or
9 1/2% Notes with respect to which the right is being exercised, duly
endorsed for transfer. Not later than the ninety-fifth day after such
Triggering Event Date, the Trustee shall notify the Company of the
aggregate principal amount of 9 1/2% Notes or portions thereof with
respect to which it has received Repurchase Notices and the certificate
numbers and the names of the holders of the 9 1/2% Notes tendered for
repurchase. No later than the date that is 110 days after a Triggering
Event Date, the Company shall deposit with the Trustee money in an
amount sufficient to repurchase on the Repurchase Date all such 9 1/2%
Notes or portions thereof. The Company shall not be required pursuant
to Section 3.05 to exchange or register the transfer of any 9 1/2% Note or
portion thereof with respect to which the holder thereof has delivered a
Repurchase Notice.
(c) The Company shall take all reasonable action necessary to
enable each of the Rating Agencies to provide a rating for the 9 1/2% Notes.
If, however, either or both of the Rating Agencies shall not make such a
rating available, a nationally recognized investment banking firm selected by
the Company shall select a nationally recognized securities rating agency or
two nationally recognized securities rating agencies to act as substitute
rating agency or substitute rating agencies, as the case may be.
PARAGRAPH C. CHANGED PROVISIONS.
C1. CHANGED DEFINITIONS. The definitions of "Capital Stock",
"GAAP" and "Subsidiary" set forth in Article 1 of the Indenture shall be
amended and restated in their entirety to read as follows:
"Capital Stock" shall mean, (i) in respect of any Person, any and
all shares, interests, rights to purchase, warrants, options, participations
or other equivalents of or interests in (however designated) corporate stock
and any and all equity, beneficial or ownership interests in, or
participations or other equivalents in, any partnership, association, joint
venture or other business entity and (ii) when used to refer to "Capital
Stock" into which Securities of a particular series are convertible, stock of
any class of the Company into which Securities of such series are convertible
in accordance with their terms (as contemplated by Section 3.01).
"GAAP" shall mean generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment
of the accounting profession as in effect on the date of the Indenture.
"Subsidiary" of any specified Person shall mean (i) a corporation a
majority of whose Capital Stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly,
owned by such Person or by such Person and a Subsidiary or Subsidiaries of
such Person or by a Subsidiary or Subsidiaries of such Person or (ii) any
other Person (other than a corporation) in which such Person or such Person
and a Subsidiary or Subsidiaries of such Person or a Subsidiary or
Subsidiaries of such Person, directly or indirectly, at the date of
determination thereof has at least majority ownership interest.
C2. CHANGED SECTIONS.
SECTION 2.02. Certificate of Authentication.
Section 2.02 of the Indenture, which shall apply to the 9 1/2% Notes,
is amended and restated in its entirety to read as follows:
SECTION 2.02. Form of Trustee's Certificate
of Authentication.
The Trustee's certificate of authentication on the 9 1/2% Notes shall
be in substantially the following form:
This is one of the 9 1/2% Senior Notes Due 2005 referred to in the
Indenture dated as of February 15, 1992, as supplemented by the Fourth
Supplemental Indenture, dated as of March 6, 1995, between Century
Communications Corp. and Bank of America National Trust and Savings
Association, as Trustee.
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Trustee
Authentication Date: Authorized Officer
SECTION 5.02. Defeasance.
Section 5.02 of the Indenture, which shall apply to the 9 1/2% Notes,
is amended and restated in its entirety to read as follows:
SECTION 5.02. Defeasance Upon Deposit of Moneys or U.S.
Government Obligations.
At the Company's option indicated by notice to the Trustee, either
(a) the Company shall be deemed to have been Discharged (as defined below)
from its obligations with respect to the 9 1/2% Notes or (b) the Company shall
cease to be under any obligation to comply with any term, provision or
condition set forth in Sections 11.10 through 11.12 at any time after the
applicable conditions set forth below have been satisfied:
(1) the Company shall have deposited or caused to be deposited
irrevocably with the Trustee as trust funds in trust, specifically pledged as
security for, and dedicated solely to, the benefit of the holders of the 9 1/2%
Notes (A) money in an amount, or (B) U.S. Government Obligations which
through the payment of interest thereon and principal in respect thereof in
accordance with their terms will provide, not later than one day before the
due date of any payment, money in an amount, or (C) a combination of (A) and
(B), sufficient, in the opinion (with respect to (B) and (C)) of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, to pay and discharge all of
the principal of the outstanding 9 1/2% Notes on the date such payment of
principal is due in accordance with the terms of the 9 1/2% Notes;
(2) if the 9 1/2% Notes are then listed on the American Stock
Exchange or any other stock exchange, and if the Company has elected to be
deemed Discharged from its obligations with respect to the 9 1/2% Notes pursuant
to option (a) above, the Company shall have delivered to the Trustee an
Opinion of Counsel to the effect that the Company's exercise of its option
(a) would not cause the
9 1/2% Notes to be delisted; and
(3) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that holders of the 9 1/2% Notes will not recognize
income, gain or loss for Federal income tax purposes as a result of the
Company's exercise of its option under this Section 5.02 and will be subject
to Federal income tax on the same amount and in the same manner and at the
same times as would have been the case if such option had not been exercised
or deliver a ruling to that effect received from or published by the Internal
Revenue Service.
"Discharged" means, for purposes of this Section 5.02, that the
Company shall be deemed to have paid and discharged the entire indebtedness
represented by, and obligations under, the 9 1/2% Notes and to have satisfied
all the obligations under this Indenture relating to the
9 1/2% Notes and the Trustee, at the expense of the Company, shall execute
proper instruments acknowledging the same. "U.S. Government Obligations"
means securities that are (i) direct obligations of the United States of
America for 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 of
the United States of America, which, in either case under clauses (i) or
(ii), are not callable or redeemable at the option of the issuer thereof, and
will also include a depositary receipt issued by a bank or trust company as
custodian with respect to any such U.S. Government Obligation or a specified
payment of interest on or principal of any such U.S. Government Obligation
held by such custodian for the account of the holder of a 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 interest on or principal of
the U.S. Government Obligation evidenced by such depository receipt.
Notwithstanding the satisfaction and discharge of this Indenture
under this Section 5.02, the Company's obligations in Sections 3.05, 3.06,
7.07 and 11.02, however, shall survive until the 9 1/2% Notes are no longer
outstanding.
SECTION 9.01. Company May Consolidate, etc. Only On Certain Terms.
Section 9.01 is amended by (i) deleting the word "and" at the end
of subclause 1, (ii) deleting the period at the end of subclause 2 and
substituting in lieu thereof a semicolon and (iii) adding the following two
subclauses at the end thereto, to read in their entirety as follows:
(3) immediately after the transaction, no Event of Default exists;
and
(4) immediately after giving effect to such transaction on a pro
forma basis, the Interest Expense Ratio of the surviving or successor entity
on a pro forma basis is at least 1:1; provided that, if the Interest Expense
Ratio of the Company immediately prior to any such transaction is within the
range set forth in Column A below, then the pro forma Interest Expense Ratio
of the surviving or successor entity shall be at least equal to the
percentage of the Interest Expense Ratio of the Company set forth in Column B
below:
(A) (B)
1.1111:1 to 1.4999:1 90%
1.5:1 and higher 75%
and provided further, that, if the pro forma Interest Expense Ratio of the
surviving or successor entity is 2.0:1 or more, the calculation in the
preceding proviso shall be inapplicable and such transaction shall be deemed
to have complied with the requirements of such provision.
ARTICLE TWELVE - REDEMPTION OF SECURITIES
Sections 12.01, 12.06, 12.07 and 12.08 are amended and restated in
their entirety to read as follows:
SECTION 12.01. Applicability of Article.
Securities of any series which are subject to repurchase before
their Stated Maturity shall be repurchased in accordance with their terms and
(except as otherwise specified as contemplated by Section 3.01 for Securities
of any series) in accordance with this Article.
SECTION 12.06. Securities Payable on Repurchase Date.
Notice of repurchase having been given as aforesaid, the Securities
so to be repurchased shall, on the Repurchase Date, become due and payable at
the applicable repurchase price therein specified, and from and after such
date (unless the Company shall default in the payment of the applicable
repurchase price and accrued interest) such Securities shall cease to bear
interest. Upon surrender of any such Security for repurchase in accordance
with said notice, such Security shall be paid by the Company at the
applicable repurchase price, together with accrued interest to the applicable
Repurchase Date; provided, however, that, subject to Section 16.04,
installments of interest whose Stated Maturity is on or prior to the
applicable Repurchase Date shall be payable to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at the
close of business on the relevant Record Dates according to their terms and
the provisions of Section 3.07.
If any Security called for repurchase shall not be so paid upon
surrender thereof for repurchase, the principal (and premium, if any) shall,
until paid, bear interest from the applicable Repurchase Date at the rate
prescribed therefor in the Security.
SECTION 12.07. Securities Repurchased in Part.
Any Security which is to be repurchased only in part shall be
surrendered at a Place of Payment therefor (with, if the Company or the
Trustee so requires, due endorsement by, or a written instrument of transfer
in form satisfactory to the Company and the Trustee duly executed by, the
Holder thereof or his attorney duly authorized in writing), and the Company
shall execute, and the Trustee shall authenticate and deliver to the Holder
of such Security without service charge, a new Security or Securities of the
same series, of any authorized denomination as requested by such Holder, in
aggregate principal amount equal to and in exchange for the portion not
repurchased of the principal of the security so surrendered. Securities in
denominations larger than $1,000 may be repurchased in part, but only in
whole multiples of $1,000.
SECTION 12.08. Securities No Longer Outstanding
After Notice to Trustee and
Deposit of Cash.
If the Company, having given notice to the Trustee as provided in
Section 12.02 or 12.10, shall have deposited with the Trustee or a Paying
Agent, for the benefit of the Holders of any Securities of any series or
portions thereof tendered for repurchase in whole or in part, cash or other
form of payment if permitted by the terms of such Securities (which amount
shall be immediately due and payable to the Holders of such Securities or
portions thereof) in the amount necessary so to repurchase all such
Securities or portions thereof on the applicable Repurchase Date and
provision satisfactory to the Trustee shall have been made for the giving of
notice of such repurchase, such Securities or portions thereof shall
thereupon, for all purposes of this Indenture, be deemed to be no longer
Outstanding, and the Holders thereof shall be entitled to no rights
thereunder or hereunder, except the right to receive payment of the
applicable repurchase price, together with interest accrued to the applicable
Repurchase Date, on or after the applicable Repurchase Date of such
Securities or portions thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Fourth
Supplemental 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.
CENTURY COMMUNICATIONS CORP.
By: ________________________
Title:
[CORPORATE SEAL]
ATTEST:
_____________________________
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: ________________________
Title:
[CORPORATE SEAL]
ATTEST:
_____________________________
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 6th day of March, 1995, before me personally came Scott N.
Schneider, to me known, who, being by me duly sworn, did depose and say that
he is the Vice President and Treasurer of CENTURY COMMUNICATIONS CORP., one
of the corporations described in and which executed the foregoing instrument;
that he knows the seal of said corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by authority of the
Board of Directors of said corporation; and that he signed his name thereto
by like authority.
[NOTARIAL SEAL]
____________________________
Notary Public
EXHIBIT A
SPECIMEN COPY OF 9 1/2% NOTE
EXHIBIT 10(a)(6)
EMPLOYMENT AGREEMENT
AGREEMENT made this 28th day of December 1993 by and between CENTURY
COMMUNICATIONS CORP., a corporation organized and subsisting under the laws
of New Jersey, and whose address for the purposes of this Agreement is 50
Locust Avenue, New Canaan, CT 06840 (the "Company"), and BERNARD P.
GALLAGHER, an individual, residing at 115 Lone Tree Farm Road, New Canaan, CT
06840 ("Employee").
W I T N E S S E T H:
WHEREAS:
A. The Employee is presently employed by the Company as its chief
operating officer.
B. The Company desires that it continue to employ the Employee in such
capacity or such other capacities as may be permitted by this Agreement, and
under all of the terms, provisions and conditions set forth herein.
C. Employee is willing to accept such continued employment, and such
other employment as may be provided for herein, all under the terms,
provisions and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein set forth and other good and valuable consideration, the receipt and
adequacy of which is mutually acknowledged, it is agreed by and between the
parties as follows:
1. Representations and Warranties
1.1 Employee represents and warrants that he is not subject to any
restrictive covenants or other agreements or legal restrictions in favor of
any person which would in any way preclude, inhibit, impair or limit his
employment by the Company or the performance of his duties, all as
contemplated herein.
2. Employment
2.1 The Company hereby employs Employee and Employee accepts such
employment as chief operating officer of the Company. As its chief operating
officer, Employee shall supervise and be responsible for the operations and
administration of business activities of the Company, subject to the
direction and control of the chief executive officer of the Company and the
Board of Directors of the Company. At the direction of the chief executive
officer or Board of Directors of the Company, Employee shall also serve in
such other senior executive and/or administrative capacities with any
subsidiaries of the Company ("Subsidiaries" or individually a "Subsidiary",
as hereafter defined), as the Board of Directors or the chief executive
officer of the Company may determine. Without limitation of the foregoing,
Employee agrees to act as chief executive officer of Centennial Cellular
Corp.
2.2 Subject to Employee's election as such by the Board of
Directors and/or the Board of Directors of one or more Subsidiaries, Employee
agrees to act and serve as President of the Company and as Chairman or
President of all applicable Subsidiaries and, if duly elected, agrees further
to serve and act as a director of the Company and all applicable
Subsidiaries. Without limitation of the foregoing,Employee agrees to act as
a Director and as Chairman of Centennial Cellular Corp. Employee also agrees
to adhere to all fiduciary duties and responsibilities inherent in the office
of President of the Company and as an officer of any of the Subsidiaries and,
if elected, as a director of the Company and of any Subsidiaries, and to
comply with all applicable laws relating to same.
3. Place of Employment
3.1 Employee shall render his services where and as required by
the Company, it being understood and agreed, however, the Employee's base of
operations shall be the greater Fairfield County, Connecticut and/or
Westchester County, N.Y. areas and that Employee shall not be required to
render his services on a permanent basis outside of said area. In
conformance with the foregoing and not in limitation thereof, Employee agrees
to take such trips outside said area from time to time as shall be consistent
with or reasonably necessary in connection with his duties.
4. Term
4.1 The term of this Agreement (the "Term") shall be three
consecutive years commencing January 1, 1994 and expiring on December 31,
1996.
4.2 In the event this Employment Agreement has not then been
terminated, the parties hereto agree that within the last six months of the
Term, they shall meet to negotiate the terms and provisions relating to a
renewal or extension of this Agreement, it being understood and agreed that
nothing herein shall obligate either of the parties to come to agreement with
respect to any such renewal or extension.
5. Compensation
5.1 Subject to prior termination, as compensation for all services
rendered and to be rendered by Employee hereunder and the fulfillment by
Employee of all of his obligations herein, the Company shall pay employee a
base salary (the "Base Salary") at the rate of $375,000 per year of each year
of the Term on such days as the Company normally pays its employees and
subject to withholdings as may be required by law. The Base Salary for each
of the second and third years of the Term (the "Applicable Year") shall be
increased by the percentage increase in the Consumer Price Index prepared by
the United States Labor Department for the United States as a whole, or
equivalent measure of increase in the cost of living if such Consumer Price
Index is not then being issued (hereafter sometimes referred to as the
"Consumer Price Index"), for the last calendar month in such Applicable Year
over and above such Consumer Price Index for the last full calendar month of
the year immediately preceding the commencement of the Applicable Year.
5.2 Nothing herein shall prevent or preclude the Board of
Directors of the Company or the applicable committee of the Board of
Directors, in its sole discretion, and from time to time, to award a bonus or
bonuses to Employee for his services as an Employee and/or from awarding or
granting Employee (i) options to acquire shares of stock in the Company or
(ii) shares of stock in the Company or (iii) any other incentive or stock
related awards in addition to Base Salary. In exercising its discretion with
respect to whether a bonus should be awarded and the amount thereof, the
Board or the applicable Committee may consider among other factors, the
contribution of Employee (i) to the growth in revenues earnings, cash flow
and subscribers of the Company and those subsidiaries to or for which
Employee renders service, (ii) in connection with acquisitions, offering of
securities and various financings, and (iii) to the operations of the Company
and its various subsidiaries as an entity.
6. Reimbursement for Business Expenses Fringe Benefits
6.1 The Company agrees that all reasonable expenses incurred by
Employee in the discharge and fulfillment of his duties for the Company, as
set forth in Section 2, will be reimbursed or paid by the Company upon
written substantiation therefor signed by Employee, itemizing said expenses
and containing all applicable vouchers. Without limitation of the foregoing
the Company shall provide Employee with an automobile for use by Employee in
the performance of his duties, and for the maintenance thereof. The
automobile shall be of the type presently being provided to Employee by the
Company and shall be no more than three years old.
6.2 The Company agrees that it will cause Employee to be insured
under such group life, medical and major medical and disability insurance
that the Company may maintain and keep in force from time to time during the
Term for the benefit of all of the Company employees, subject to the terms,
provisions and conditions of such insurance and the agreements with
underwriters relating to same. It is understood and agreed that in its
discretion the Company, from time to time may terminate or modify any or all
of such insurance without obligation or liability to Employee.
7. Exclusivity
7.1 During the Term, employee agrees to devote his services and
his best energies and abilities, exclusively, to the business and activities
of the Company, including any Subsidiaries, and not engage or have an
interest in or perform services for any other business or entity of any kind
or nature; provided, however, that nothing herein shall prevent Employee from
investing in (but not rendering services to) other businesses (other than for
charitable organizations, provided same does not interfere with Employee's
performance of his duties hereunder) which are not competitive in any manner
with the business then being conducted by the Company or any of its
Subsidiaries, or in investing in (but not rendering services to) other
businesses which are competitive in any manner with the business then being
constructed by the Company, provided in the latter instance, that (i) the
shares of such business are listed and traded over either a national
securities exchange or in the over-the-counter market, and (ii) employee's
stock interest or potential stock interest (based on grants, options,
warrants, or other arrangements or agreements then in existence) in any such
business which is so traded (together with any and all interest, actual or
potential, of all members of Employee's immediate family) is not a
controlling or substantial interest and specifically does not exceed one
percent of the issued and outstanding shares or a one percentage interest of
or in such business.
8. Uniqueness
8.1 Employee agrees that his services hereunder are special,
unique and extraordinary and that in the event of any material breach or
attempted material breach of this Agreement by Employee including, without
limitation, the provisions of Section 9 and 10, the Company will sustain
substantial injury and damage, and Employee hereby consents and agrees that,
in the event of breach hereof, the Company shall be entitled to injunctive
relief against Employee or any third party to prevent or in respect of any
such breach, in addition to, such other rights or remedies available to it.
Employee's said consent and agreement shall not survive the expiration date
set forth in Section 4.1 (December 31, 1996) except as same relates to any of
Employee's obligations pursuant to Section 9.1 and 10.1 hereof.
9. Trade Secrets
9.1 Employee acknowledges that his employment hereunder will
necessarily involve his understanding of and access to certain trade secrets
and confidential information pertaining to the business and activities of the
Company and its Subsidiaries. Accordingly, Employee agrees that during the
period of employment and at all times thereafter, he will not disclose to any
unauthorized third party any such trade secrets or confidential information
and will not (other than in connection with carrying out his duties) for any
reason remove or retain without the express consent of the Company any
figures or calculations, letters, papers, records or other information of a
type likely to be regarded as confidential. The provisions of this Section
shall survive the termination, for any reason, of this Agreement or the
Employee's employment.
10. Inventions, Creations
10.1 All right, title and interest of every kind and nature
whatsoever in and to inventions, patents, trademarks, copyrights, films,
scripts, ideas, creations, intellectual property and literary, intellectual
and other properties furnished by the Company or any of its Subsidiaries
and/or used in connection with any of the activities of the Company or any of
its Subsidiaries, or with which employee is connected or associated in
connection with the performance of his services, shall as between parties
hereto be, become and remain the sole and exclusive property of the Company
or any of its Subsidiaries, as the case may be, for any and all purposes and
uses whatsoever, regardless of whether the same were invented, created,
written, developed, furnished, produced or disclosed by Employee or by any
other party, and Employee shall have no right, title or interest of any kind
or nature therein or thereto, or in any results and proceeds therefrom.
Employee agrees during and after the term hereof to execute any and all
documents which the Company may deem necessary and appropriate to effectuate
the provisions of this Section 10.1 and, further, that the provisions of this
Section shall survive the termination, for any reason, of this Agreement or
Employee's employment.
11. Death - Permanent Incapacity
11.1 The death of Employee shall work an immediate termination of
this Agreement, in which event no additional Base Salary shall be paid to
Employee except that the payments of Base Salary, to which Employee would
have been entitled to receive were he not deceased and were he fully
performing his obligations hereunder, shall continue to be paid to his Estate
or legal representatives during the balance of the Term.
11.2 In the event Employee suffers a disability which prevents him
from performing his services hereunder (herein called "Disability"), and in
the event such Disability continues for longer than 90 consecutive days or
120 days in any 12-month period, Employee shall be deemed to have suffered a
Permanent Incapacity, in which event the Company shall have the right to
terminate this Agreement upon not less than fifteen days' notice to Employee,
and this Agreement shall terminate on the date set forth therefor in said
notice.
Upon termination of this Agreement by reason of such Permanent
Incapacity, Employee's Base Salary shall continue to be paid to Employee or
his legal representatives during the greater of (i) the balance of the Term,
and (ii) a period of not less than 12 months.
11.3 In the event there is a dispute between the parties as to
whether or not Employee has suffered a Permanent Incapacity, same shall be
determined by an impartial physician located in the City of New York and
agreed upon by the parties or, failing agreement within 10 days of a written
request therefor by either of the parties to the other, then such a physician
as may be designated by the then acting President of the New York Academy of
Medicine or if he fails or is unable to designate such impartial physician,
then one designated by the Chief of Medicine at one of the following
hospitals located in New York City and selected by the Company: (i) New
York Hospital, (ii) Columbia Presbyterian Hospital, (iii) New York University
(or Tisch) Hospital, (iv) Mt. Sinai Hospital, and if no such hospital shall
designate such physician, as designated by the American Arbitration
Association. The determination of any such physician shall be final and
binding upon the parties hereto.
12. Termination
12.1 In addition to termination pursuant to Section 11, Employee's
employment hereunder may be terminated for "cause". "Cause" for purposes of
this Agreement shall mean the following:
(i) alcoholism or drug addition materially affecting Employee's
performance, (ii) conviction of a felony involving moral turpitude, (iii)
failure to comply within a period of ten business days with a reasonable
directive of the chief executive officer, or the Board of Directors of the
Company relating to Employee's duties or Employee's performance and
consistent with Employee's position, after written notice that such failure
will be deemed to be "cause", to the extent such failure can be cured within
such ten business days and if not so curable, fails to commence curing during
said ten day period and diligently pursue the curing of same until cured,
(iv) gross neglect or gross misconduct of Employee in carrying out his duties
under this Agreement, resulting, in either case, in material economic harm to
the Company, unless Employee believed in good faith that such act or nonact
was in the best interests of the Company and, (v) misappropriation of
corporate assets or corporate opportunity or other act of dishonesty or
breach of fiduciary obligation to the Company.
12.2 In the event the Company terminates this Agreement and
Employee's employment other than for "cause", and other than for death or
disability, Employee shall be entitled, in addition to whatever other rights
and remedies which may be available to him, to the following subject to the
applicable provisions of the Company's 1985 Employee Stock Option Plan, the
Company's 1992 Management Equity Incentive Plan and other applicable Plan:
(i) the right to exercise any stock option in full, whether or not fully
exercisable, for the remainder of the original term of such option, (ii) the
balance of payments of Base Salary, to be paid at the times they would
otherwise have become payable to Employee pursuant to the terms of this
Agreement and (iii) a cash bonus for each remaining year of the term (or
fraction of year if termination occurs during a particular year of the term
and a bonus has not previously been paid to Employee for such year) in an
amount equal to the most recently paid cash bonus paid to Employee.
Additionally any restrictions on shares of stock previously issued to
Employee shall be deemed inoperative and of no further force and effect.
12.3 Employee shall be deemed to have been terminated without
cause if, without Employee's written consent, (i) Employee is not elected
President of the Company during the term, and is not designated chief
operating officer of the Company, (ii) his Base Salary is reduced, (iii) is
relocated in violation of Section 3.1 or (iv) there has been a material
diminution in the Employee's duties or the assignment to Employee of duties
which are materially inconsistent with his duties or which materially impair
the Employee's ability to function as President and Chief Operating Officer
of the Company.
13. Vacation
13.1 Employee shall be entitled to a vacation of four weeks
duration in the aggregate during each year of the Term at times reasonably
agreeable to both Employee and the Company, it being understood that any
portion of such vacation not taken in such year shall not be available to be
taken during any other year.
14. Insurance
14.1 In addition to insurance referenced in Section 6.2, Employee
agrees that the Company or any Subsidiary may apply for and secure and/or own
and/or be the beneficiary of insurance on the Employee's life or disability
insurance (in each instance in amounts to be determined by the Company), and
Employee agrees to cooperate fully in the applying and securing of same,
including the submission to various physical and other examinations and
answering of questions and furnishing of information as may be required by
various insurance carriers. However, nothing contained herein shall require
the Company to obtain any such life or disability insurance.
15. Miscellaneous
15.1 The Company shall have the right to assign this Agreement and
to delegate all duties and obligations hereunder to any successor, affiliated
or parent company or to any person, firm or corporation which acquires the
Company or substantially all of its assets, or with or into which the Company
may consolidate or merge. This Agreement shall be binding upon and inure to
the benefit of the permitted successors and assigns of the Company. Employee
agrees that this Agreement is personal to him and may not be assigned by him.
15.2 This Agreement is being delivered in the State of Connecticut
and shall be construed and enforced in accordance with the laws of such State
applicable to contracts made and fully to be performed therein, and without
any reference to any rules of conflict of laws.
15.3 Except as may herein otherwise be provided, all notices,
requests, demands and other communications hereunder shall be in writing and
shall be deemed to have been duly given if delivered personally or if mailed,
first class postage prepaid, registered or certified mail, return receipt
requested, or if sent by telecopier or overnight express delivery service,
(a) to Employee at his address set forth on the facing page hereof or at such
other address as Employee may have notified the Company, sent by registered
or certified mail, return receipt requested, or by telecopier or overnight
express delivery service, or (b) if to the Company, at its address set forth
on the facing page hereof, attention: Chairman of the Board, or at such
other address as the Company may have notified Employee in writing sent by
registered or certified mail, return receipt requested or by telecopier or
overnight express delivery service, and with a copy to Leavy, Rosensweig &
Hyman, 11 East 44th Street, New York, NY 10017 (Attention: David Z.
Rosensweig, Esq.). Notice shall be deemed given (i) upon personal delivery,
or (ii) on the second business day immediately succeeding the posting of
same, prepaid, in the U.S. mail, (iii) on the date sent by telecopy if the
addressee has compatible receiving equipment and provided the transmittal is
made on a business day during the hours of 9:00 A.M. to 6:00 P.M. of the
receiving party and if sent on other times, on the immediately succeeding
business day, or (iv) on the first business day immediately succeeding
delivery to the express overnight carrier for the next business day delivery.
15.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Each party shall
deliver such further instruments and take such further action as may be
reasonably requested by the other in order to carry out the provisions and
purposes of this Agreement. This Agreement represents the entire
understanding of the parties with reference to the transaction set forth
herein and neither this Agreement nor any provision thereof may be modified,
discharged or terminated except by an agreement in writing signed by the
party against whom the enforcement of any waiver, change, discharge or
termination is sought. Any waiver by either party of a breach of any
provision of this Agreement must be in writing and no waiver of a particular
breach shall operate as or be construed as a waiver of any subsequent breach
thereof.
15.5 "Subsidiaries" or "Subsidiary" shall include and mean any
corporation, partnership or other entity 50% or more of the then issued and
outstanding voting stock is owned directly or indirectly by the Company in
the instance of a Corporation, and 50% or more of the interest in capital or
in profits is owned directly or indirectly by the Company in the instance of
a partnership and/or other entity, or any corporation, partnership, venture
or other entity, the business of which is managed by the Company or any of
its Subsidiaries.
IN WITNESS WHEREOF, the parties hereto have executed and have caused
this Agreement to be executed as of the day and year first above written.
CENTURY COMMUNICATIONS CORP.
By:/s/ Leonard Tow
Its Chairman of the Board
/s/ Bernard P. Gallagher
BERNARD P. GALLAGHER
EXHIBIT 10(r)
CENTURY COMMUNICATIONS CORP.
1985 EMPLOYEE STOCK PURCHASE PLAN, AS AMENDED
1. PURPOSE
The purpose of this 1985 Employee Stock Purchase Plan (the 'Plan') is to
enable eligible employees of Century Communications Corp. (the 'Company') to
acquire proprietary interests in the Company through the ownership of common
stock of the Company. The Company believes that employees who participate in
the Plan will have a closer identification with the Company by virtue of
their ability as stockholders to participate in the Company's growth and
earnings. It is the intention of the Company to have the Plan qualify as an
'employee stock purchase plan' under Section 423 of the Internal Revenue Code
of 1986 (the 'Code'). Accordingly, the provisions of the Plan shall be
construed so as to extend and limit participation in a manner consistent with
the requirements of that section of the Code.
2. DEFINITIONS
The following terms have the following meanings:
(a) 'Common Stock' shall mean shares of the $.01 par value Class A common
stock of the Company.
(b) 'Subsidiary' shall mean any present or future corporation which is or
would be a 'subsidiary corporation' of the Company as the term is defined in
Section 424 of the Code.
(c) 'Eligible Employee' shall mean a person regularly employed by the Company
or a Subsidiary on the effective date of any offering of stock pursuant to
the Plan; provided, however, that no person shall be considered an Eligible
Employee unless he is customarily employed by the Company or a Subsidiary for
more than twenty hours per week and more than five months in a calendar year;
and provided further, that the Board of Directors may exclude the employees
of any specified Subsidiary from any offering under the Plan.
(d) 'Purchase Period' shall mean the number of calendar months during which
installment payments for stock purchased under the Plan shall be made.
(e) 'Option' shall mean the right granted to Eligible Employees to purchase
the Company's Common Stock under an offering made under the Plan.
(f) 'Subscription Period' shall mean that period of time prescribed in any
offer of stock under the Plan beginning on the first day employees may elect
to purchase shares and ending on the last day such elections to purchase are
authorized to be received and accepted.
(g) 'Average Market Price' shall mean the mean between the high and low
prices for the Company's Common Stock on the American Stock Exchange as
reported by such exchange, or if the Company's Common Stock is not traded on
the American Stock Exchange but is traded on the Boston Stock Exchange, as
reported by such exchange, or if the Company's Common Stock is not traded on
such exchanges, the high 'bid' and low 'ask' prices for the Company's Common
Stock in the over-the-counter market, as reported by the National Association
of Securities Dealers Automated Quotation System (NASDAQ) or other quotation
service.
(h) 'Annual Pay' shall mean an amount equal to the annual basic rate of pay
of an Eligible Employee as determined from the payroll records of the Company
or a Subsidiary on the effective date of an offer of stock made pursuant to
the Plan.
3. SHARES RESERVED FOR PLAN
The shares of the Company's Common Stock to be sold to Eligible Employees
under the Plan may, at the election of the Company, be either treasury shares
or shares originally issued for such purpose. The maximum number of shares of
Common Stock which shall be reserved and made available for sale under the
Plan shall be 1,125,767. The shares reserved may be issued and sold pursuant
to one or more offerings under the Plan. With respect to each offering, the
Committee referred to in Section 4 will specify the number of shares to be
made available, the length of the Subscription Period, the length of the
Purchase Period and such other terms and conditions not inconsistent with the
Plan as may be appropriate. In no event shall the Subscription Period and the
Purchase Period together exceed 27 months for any offering.
In the event of a subdivision or combination of the Company's shares, the
maximum number of shares which may thereafter be issued and sold under the
Plan and the number of shares under elections to purchase at the time of such
subdivision or combination will be proportionately increased or decreased,
the terms relating to the price at which shares under elections to purchase
will be sold will be appropriately adjusted, and such other action will be
taken as in the opinion of the Board of Directors is appropriate under the
circumstances. In case of a reclassification or other change in the Company's
shares, the Board of Directors also will make appropriate adjustments.
4. ADMINISTRATION OF THE PLAN
The Plan shall be administered by a Committee consisting of not less than
three directors of the Company who shall be appointed by the Board of
Directors. No director of the Company serving as a member of the Committee
shall be eligible, at any time while serving as a member of the Committee, to
be granted options under the Plan. The Committee shall be vested with full
authority to make, administer and interpret such rules and regulations
regarding the Plan or to make amendments to the Plan itself as it may deem
advisable; provided, however, that no such amendment shall increase the
maximum number of shares available for sale under the Plan, otherwise than as
required to reflect a subdivision or a combination as provided in Article 3
hereof, nor shall any such amendment act to expand the persons eligible to
participate in the Plan beyond the employees of the Company and its
Subsidiaries. Any determination, decision, or action of the Committee in
connection with the construction, interpretation, administration, or
application of the Plan shall be binding upon all Eligible Employees and all
persons claiming under an Eligible Employee.
5. PARTICIPATION IN THE PLAN
Options to purchase the Company's Common Stock under the Plan shall be
granted only to Eligible Employees. Options to purchase shares shall be
granted to all Eligible Employees of the Company or any of its Subsidiaries
whose Eligible Employees are granted such rights; provided, however, that the
Board of Directors may determine that any offering of Common Stock under the
Plan will not be extended to highly compensated employees (within the meaning
of Section 414(q) of the Code) of the Company or its Subsidiaries or to those
employees whose principal duties consist of supervising the work of other
employees, and provided further that in no event may an employee be granted
an option under this Plan if such employee, immediately after the option is
granted, owns stock possessing 5% or more of the total combined voting power
or value of all classes of capital stock of the Company or of its
Subsidiaries. For the purposes of determining stock ownership under this
paragraph, the rules of Section 424(d) of the Code shall apply and stock
which the employee may purchase under all outstanding options shall be
treated as stock owned by the employee.
6. PURCHASE PRICE
The purchase price for shares of Common Stock purchased pursuant to the Plan
(except as otherwise provided herein) will be the lesser of 85% of the
Average Market Price on the first day of the Purchase Period or 85% of the
Average Market Price on the last day of the Purchase Period. If no Average
Market Price was available on either or both of those days, the purchase
price shall be established based upon 85% of the Average Market Price on the
last day prior thereto on which an Average Market Price was available.
7. METHOD OF PAYMENT
Payment for shares purchased pursuant to the Plan shall be made in
installments through payroll deductions, with no right of prepayment. Each
Eligible Employee electing to purchase shares will authorize the Company to
withhold a designated amount from his regular weekly, biweekly, semimonthly
or monthly pay for each payroll period during the Purchase Period. All such
payroll deductions made for an Eligible Employee shall be credited to his
account under the Plan. At the end of the Purchase Period, each Eligible
Employee shall receive in cash the balance remaining in his account, if any,
after the amount in his account has been applied to the purchase of whole
shares at the applicable purchase price.
8. EMPLOYEE'S ELECTION TO PURCHASE -- GRANT OF OPTIONS
In order to participate in the Plan, an Eligible Employee must sign an
election to purchase shares on a form provided by the Company stating the
Eligible Employee's desire to purchase shares under the Plan and showing the
amount which the Eligible Employee elects to have withheld from his pay for
such payroll period during the Purchase Period and applied to the purchase of
shares. The election to purchase shares must be delivered on or before the
last day of the Subscription Period to the person or office designated to
receive and accept such elections. Subject to the limitations set forth in
Paragraph 9, each participating Eligible Employee shall be granted an option
to purchase a fixed maximum number of shares determined by the following
procedure:
Step 1 -- Multiply 20% of the Eligible Employee's Annual Pay by a fraction,
the numerator of which is the number of months in the Purchase Period and the
denominator of which is 12;
Step 2 -- Determine the figure which represents 85% of the AverageMarket
Price on the first day of the Purchase Period;
Step 3 -- Divide the figure determined in Step 1 by the figure determined in
Step 2 and round off the quotient to the nearest whole number. This final
figure shall be the fixed maximum number of shares for which the Eligible
Employee may be granted an option to purchase.
An Eligible Employee may elect to purchase less than the total number of
shares which he is entitled to elect to purchase.
The date on which the option is granted to each participating Eligible
Employee shall be the first day of the Purchase Period. Notice that an option
has been granted shall be given to each participating Eligible Employee and
shall show the maximum number of shares which may be purchased by withholding
from such Eligible Employee's pay for each payroll period during the Purchase
Period.
In the event the total maximum number of shares resulting from all elections
to purchase under any offering of shares under the Plan exceeds the number of
shares offered, the Company reserves the right to reduce the maximum number
of shares which Eligible Employees may purchase pursuant to their elections
to purchase, to allot the shares available in such manner as it shall
determine, but generally pro rata to subscriptions received and to grant
options to purchase only for such reduced number of shares.
All shares included in any offering under the Plan in excess of the total
number of shares which all Eligible Employees elect to purchase and all
shares with respect to which elections to purchase are canceled as provided
in Paragraph 12 shall continue to be reserved for the Plan and shall be
available for inclusion in any subsequent offering under the Plan.
9. LIMITATIONS ON NUMBER OF SHARES WHICH MAY BE PURCHASED
The following limitations shall apply with respect to the number of shares
which may be purchased by each Eligible Employee who elects to participate in
an offering under the Plan.
(a) No Eligible Employee shall be granted an option to purchase shares under
the Plan if such Eligible Employee, immediately after such option is granted,
owns stock or holds options to purchase stock possessing 5% or more of the
total combined voting power or value of the capital stock of the Company or
of any Subsidiary; and
(b) No Eligible Employee may be granted an option to purchase shares which
permits his rights to purchase stock under the Plan and all other stock
option plans of the Company and of any Subsidiary pursuant to Section 423 of
the Internal Revenue Code to accrue at a rate which exceeds in any one
calendar year $25,000 of the fair market value of such stock (determined on
the date the option to purchase is granted).
10. RIGHTS AS STOCKHOLDER
An Eligible Employee will become a stockholder of the Company with respect to
shares for which payment has been completed at the close of business on the
last business day of the Purchase Period. An Eligible Employee will have no
rights as a stockholder with respect to shares under an election to purchase
shares until he has become a stockholder as provided above. A certificate for
the shares purchased will be issued as soon as practicable after an Eligible
Employee becomes a stockholder.
11. RIGHTS TO PURCHASE SHARES NOT TRANSFERABLE
An Eligible Employee's rights under his election to purchase shares may not
be sold, pledged, assigned or transferred in any manner otherwise than by
will or the laws of descent and distribution. If this provision is violated
the right of the Eligible Employee to purchase shares shall terminate and the
only right remaining under such Eligible Employee's election to purchase will
be to have paid over to the person entitled thereto the amount then credited
to the Eligible Employee's account.
12. CANCELLATION OF ELECTION TO PURCHASE
An Eligible Employee who has elected to purchase shares may cancel his
election in its entirety or may partially cancel his election by reducing the
amount which he has authorized the Company to withhold from his pay for each
payroll period during the Purchase Period. Any such full or partial
cancellation shall be effective upon the delivery by the Eligible Employee of
written notice of cancellation to the office or person designated to receive
elections. Such notice of cancellation must be so delivered before the close
of business on the last business day of the Purchase Period. If an Eligible
Employee partially cancels his original election by reducing the amount
authorized to be withheld from his pay, he shall continue to make installment
payments at the reduced rate for the remainder of the Purchase Period. Only
one partial cancellation may be made during a Purchase Period.
An Eligible Employee's rights upon the full or partial cancellation of his
election to purchase shares shall be limited to the following:
(a) He may receive in cash, as soon as practicable after delivery of the
notice of cancellation, the amount then credited to his account, except that
in the case of a partial cancellation, he must retain in his account an
amount equal to the amount of his new payroll deduction times the number of
payroll periods in the Purchase Period through the date of cancellation, or
(b) He may have the amount credited to his account at the time the
cancellation becomes effective applied to the purchase of the number of
shares such amount will then purchase.
If option (b) is elected, installment payments must be continued for the
month in which the notice of cancellation is given. The cancellation and
purchase of shares will become effective at the close of business on the last
day of business of such month. The purchase price of the shares so purchased
will be 85% of the Average Market Price on the first day of the Purchase
Period. The credit in an Employee's account shall be the aggregate of the
amounts withheld from the Employee's pay and any amounts paid pursuant to
Paragraphs 13, 14, 15 and 16.
13. LEAVE OF ABSENCE OR LAYOFF
An Eligible Employee purchasing stock under the Plan who is granted a leave
of absence (including a military leave) during the Purchase Period and such
absence is for a period of 90 days or less (or if for a period in excess of
90 days, the Employee's right of reemployment with the Company is guaranteed
either by statute or by contract), may during such period of absence make
payments in cash to the Company in amounts equal to what such payments would
have been pursuant to corresponding payroll deductions.
14. EFFECT OF FAILURE TO MAKE PAYMENTS WHEN DUE
If in any payroll period, for any reason not set forth in Paragraph 13, an
Eligible Employee who has filed an election to purchase shares under the Plan
has no pay or his pay is insufficient (after other authorized deductions) to
permit deduction of his installment payment, such payment may be made in cash
at the time. If not so made, the Eligible Employee, when his pay is again
sufficient to permit the resumption of installment payments, must pay in cash
the amount of the deficiency in his account or arrange for uniformly
increased installment payments so that, assuming the maximum purchase price
per share, payment for the maximum number of shares covered by his option
will be completed in the last month of the Purchase Period. If the Eligible
Employee elects to make increased installment payments, he may, nevertheless,
at any time make up the remaining deficiency by a lump sum payment.
Subject to the above provisions of the Plan permitting postponement, the
Company may treat the failure by an Eligible Employee to make any payment as
a cancellation of his election to purchase shares. Such cancellation will be
effected by mailing notice to him at his last known business or home address.
Upon such mailing, his only right will be to receive in cash the amount
credited to his account.
15. RETIREMENT
If an Eligible Employee retires on a Company retirement plan and has an
election to purchase shares in effect at the time of his retirement, he may,
within three months after the date of his retirement (but in no event later
than the end of the Purchase Period), by delivering written notice to the
office or person designated to receive elections, elect to:
(a) Complete the remaining installment payments in cash,
(b) Make a lump sum payment in the amount of any deficiency for the remaining
portion of the Purchase Period, or
(c) Cancel his election to purchase shares in accordance with the provisions
of Paragraph 12.
If no such notice is given within such period, the election will be deemed
canceled as of the date of retirement and the only right of the Eligible
Employee will be to receive in cash the amount credited to his account.
16. DEATH
If an Eligible Employee, including a retired Eligible Employee, dies and has
an election to purchase shares in effect at the time of his death, the legal
representative of the deceased Eligible Employee may, within three months
from the date of death (but in no event later than the end of the Purchase
Period), by delivering written notice to the office or person designated to
receive elections, elect to:
(a) Complete the remaining installment payments in cash,
(b) Make a lump sum payment in the amount of any deficiency for the remaining
portion of the Purchase Period, or
(c) Cancel the election to purchase shares in accordance with the provisions
of Paragraph 12.
If no such notice is given within such period, the election will be deemed
canceled as of the date of death, and the only right of such legal
representative will be to receive in cash the amount credited to the deceased
Eligible Employee's account.
17. TERMINATION OF EMPLOYMENT OTHER THAN FOR RETIREMENT OR DEATH
If an Eligible Employee's employment is terminated for any reason other than
retirement or death prior to the end of the Purchase Period, his election to
purchase shall thereupon be deemed canceled as of the date on which his
employment ended. In such an event, no further payments under such election
will be permitted, and the Eligible Employee's only right will be to receive
in cash the amount credited to his account.
18. APPLICATION OF FUNDS
All funds received by the Company in payment for shares purchased under the
Plan and held by the Company at any time may be used for any valid corporate
purpose.
19. GOVERNMENTAL APPROVALS OR CONSENTS
The Plan shall not be effective unless it is approved by the stockholders of
the Company within 12 months after the Plan is adopted by the Board of
Directors of the Company. The Plan and any offerings and sales to Eligible
Employees under it are subject to any governmental approvals or consents that
may be or become applicable in connection therewith. The Board of Directors
of the Company may make such changes in the Plan and include such terms in
any offering under the Plan as may be necessary or desirable, in the opinion
of counsel, so that the Plan will comply with the rules and regulations of
any governmental authority and so the Eligible Employees participating in the
Plan will be eligible for tax benefits under the Code or the laws of any
state.
EXHIBIT 10(v)(2)
CENTURY COMMUNICATIONS CORP.
1993 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
1. Purpose. The purpose of the 1993 Non-Employee Directors' Stock Option Plan
of Century Communications Corp. (the 'Company' and the 'Plan' respectively)
is to secure for the Company and its stockholders the benefits of incentive
inherent in increased common stock ownership by the members of the Board of
Directors of the Company who are not employees or officers of the Company or
any of its subsidiaries (the 'Non-Employee/Officer Directors').
2. Effectiveness and Termination of Plan. This Plan shall become effective
upon adoption by the Board of Directors; provided, however, that all grants
of options under this Plan prior to the ratification or the adoption of this
Plan by the stockholders of the Company at the 1994 Annual Meeting of
Stockholders shall be subject to such ratification.
This Plan shall terminate on the earliest of (i) ten (10) years from its
adoption date, (ii) when all shares of Class A Stock (as defined) which may
be issued under this Plan shall have been issued through exercise of options
granted under this Plan or (iii) such time as the Board may determine.
3. The Common Stock. The maximum number of shares which may be issued through
the exercise of options granted under this Plan shall be 323,123 shares of
the Class 'A' Common Stock of the Company, par value $.10 per share (the
'Class `A' Stock'), subject to adjustment as provided in Section 7 hereof.
Such number of shares may be set aside out of the authorized but unissued
shares of Common Stock not reserved for any other purpose or out of shares of
Class A Stock held in or acquired for the treasury of the Company. Shares of
Class A Stock subjected under this Plan to an option which, for any reason,
is cancelled or terminates unexercised as to such shares may again be
subjected to an option under this Plan.
4. Formula Grant of Options. (a) Subject to the ratification of the adoption
of this Plan by the stockholders of the Company as provided in Section 2
hereof, options for 1,000 shares of Class A Stock shall be automatically
granted under this Plan to each person who is elected or re-elected a
Non-Employee/Officer Director on the date of the regularly scheduled meeting
of the Board of Directors held on the same date as the annual meeting of the
stockholders of the Company in each of the years 1994 through 2003.
(b) The options granted under this Plan shall be in addition to regular
director's fees and other benefits provided to Non-Employee/Officer
Directors. Neither this Plan nor any option granted under this Plan shall
confer upon any person any right to continue to serve as a member of the
Board of Directors of the Company.
5. Type of Option and Terms and Conditions.
(a) Options granted under this Plan shall not be incentive stock options as
defined in Section 422 of the Internal Revenue Code of 1986, as amended.
(b) Except as hereinafter provided, all options granted pursuant to this Plan
shall be subject to the following terms and conditions:
(i) Price. The purchase price of the shares of Class A Stock issuable upon
exercise of an option granted under this Plan shall be the fair market value
of the Class A Stock on the last trading day prior to the date of the meeting
of the Board of Directors in any year scheduled to be held on the same date
as the Annual Meeting of Stockholders of the Company. The purchase price
shall be paid in full at the time of such exercise, in (A) cash, (B) shares
of Class A Stock of the Company valued at the fair market value of the Class
A Stock on the date of purchase or (C) any combination of cash and Class A
Stock. The purchase price shall be subject to adjustment, but only as
provided in Section 7 hereof.
(ii) Exercisability of Options. Except as provided in (iii) below, each
option granted under this Plan shall become exercisable as to an amount equal
to 20% of the shares of Class A Stock covered by such option on the first
anniversary of the date of grant; thereafter an additional 20% of the total
number of shares of Class A Stock covered by such option shall become
exercisable on each subsequent anniversary of the date of grant until on the
fifth anniversary of the date of grant the total number of Class A Stock
covered by such option shall be exercisable.
(iii) Termination of Option Period. Options granted under this Plan shall
terminate on the date which is five years and six months immediately
succeeding the date of grant. In the event any Non-Employee/Officer Director
to whom an option has been granted under this Plan ceases to be a member of
the Board of Directors of the Company while holding an option that has not
expired and has not been fully exercised, the right to exercise such option
shall be only as follows:
Death. If a Non-Employee/Officer Director ceases to be a member of the Board
of Directors of the Company by reason of death, his or her estate shall have
the right for a period of one year following the date of such death (but in
no event after the date which is five years and six months from the date of
grant) to exercise the option with respect to all or any part of the shares
of Class A Stock subject thereto, regardless of whether the right to purchase
such shares had accrued at the date of his or her death. The term 'estate'
when used in this Plan with respect to any Non-Employee/Officer Director
shall mean such person's legal representatives upon such Non-Employee and
Non-Officer Director's death or any person who acquires the right under the
laws of descent and distribution to exercise an option by reason of such
Non-Employee/Officer Director's death.
Retirement or Disability. If a Non-Employee/Officer Director ceases to be a
member of the Board of Directors upon attaining the age at which the
Company's policy precludes reelection as a director or, with the approval of
the Board of Directors, because of disability, such Non- Employee/Officer
Director or his or her estate (in the event of his or her death after such
termination) shall have the right for a period of six months following such
cessation (but in no event after the date which is five years and six months
from the date of grant) to exercise the option with respect to all or any
part of the shares of Class A Common Stock subject thereto, regardless of
whether the right to purchase such shares had accrued prior to such
Non-Employee/Officer Director ceasing to be a member of the Board of
Directors of the Company.
Other Reasons. If a Non-Employee/Officer Director ceases to be a member of
the Board of Directors of the Company for any reason other than those
provided under 'Death' and 'Retirement or Disability,' such
Non-Employee/Officer Director or his or her estate (in the event of his or
her death after such termination) may, within the three month period
following such cessation of service (but in no event after the date which is
five years and six months from the date of grant), exercise the option with
respect to only such number of shares of Class 'A' Stock as to which the
right of exercise had accrued prior to such Non-Employee/Officer Director
ceasing to be a member of the Board of Directors of the Company.
(iv) Transferability of Option. Options granted under this Plan shall be
transferable only by will or the laws of descent and distribution and shall
be exercisable during the Non-Employee/Officer Director's lifetime only by
him or her or by his or her guardian, conservator or legal representative.
6. Rights of a Shareholder. A Non-Employee/Officer Director shall have no
rights as a shareholder with respect to any shares issuable or transferable
upon exercise of an option granted under this Plan until the date of issuance
of a stock certificate for such shares. Except as otherwise provided pursuant
to Section 7 hereof, no adjustment shall be made for dividends or other
rights for which the record date is prior to the date of such stock
certificate.
7. Adjustment of and Changes in Class A Stock. In the event that the shares
of Class 'A' Stock, as presently constituted, shall be changed into or
exchanged for a different kind of shares of stock or other securities of the
Company or of another corporation (whether by reason of merger,
consolidation, recapitalization, reclassification, split-up, combination of
shares, or otherwise) or if the number of such shares of Class A Stock shall
be increased through the payment of a stock dividend or a dividend on the
shares of Class A Stock of rights or warrants to purchase securities of the
Company shall be made, then there shall be substituted for or added to each
share of Class A Stock theretofore appropriated or thereafter subject or
which may become subject to an option under this Plan, the number and kind of
shares of stock or other securities into which each outstanding share of
Class A Stock shall be so changed, or for which each such share shall be
exchanged, or to which each such share shall be entitled, as the case may be,
and references herein to the Stock shall be deemed to be references to any
such stock or other securities as appropriate. Outstanding options shall also
be appropriately amended as to price and other terms as may be necessary to
reflect the foregoing events. In the event there shall be any other change in
the number or kind of the outstanding shares of Class A Stock, or of any
stock or other securities into which such Class A Stock shall have been
changed or for which it shall have been exchanged, then if the Board of
Directors shall, in its sole discretion, determine that such change equitably
requires an adjustment in any option theretofore granted under this Plan,
such adjustment shall be made in accordance with such determination.
Fractional shares resulting from any adjustment in options pursuant to this
Section 7 may be settled in cash or otherwise as the Board of Directors shall
determine. Notice of any adjustment shall be given by the Company to each
holder of an option which shall have been so adjusted and such adjustment
(whether or not such notice is given) shall be effective and binding
for all purposes of this Plan.
8. Securities Act Requirements. No option granted pursuant to this Plan shall
be exercisable in whole or in part, and the Company shall not be obligated to
sell any shares of Class A Stock subject to any such option, if such exercise
and sale would, in the opinion of counsel for the Company, violate the
Securities Act of 1933 (or other Federal or State statutes having similar
requirements), as in effect at that time. Each option shall be subject to the
further requirement that, if at any time the Board of Directors shall
determine in its discretion that the listing or qualification of the shares
of Class A Stock subject to such option under any securities exchange
(including without limitation any listing under any rule of NASDAQ)
requirements or under any applicable law, or the consent or approval of any
governmental regulatory body, s necessary or desirable as a condition of, or
in connection with, the granting of such option or the issue of shares
thereunder, such option may not be exercised in whole or in part unless such
listing, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Board of Directors.
9. Withholding. Appropriate provision (which may, in accordance with rules
determined by the Board of Directors, and subject to its approval or the
approval of the Committee, include the election by a Non-Employee/Officer
Director to have the Company withhold from the shares of Class A Stock
otherwise to be issued to the Non-Employee/Officer Director upon exercise,
such number of shares as would satisfy the withholding amount due or to
deliver to the Company shares of Class A Stock already owned to satisfy the
withholding amount valued at the fair market value of the Class A Stock on
the date of exercise) shall be made for all taxes required to be withheld
from shares of Class A Stock issued under this Plan under the applicable laws
or other regulations of any governmental authority, whether federal, state or
local, and domestic or foreign. To that end, the Company may at any time take
such steps as it may deem necessary or appropriate (including sale or
retention of shares) to provide for payment of such taxes.
10. Administration and Amendment of Plan. The Board of Directors from time to
time may adopt rules and regulations for carrying out this Plan and may
designate a committee of the Board (the 'Committee') to administer the Plan
and to adopt such rules and regulations. The interpretation and construction
by the Board of Directors, or the Committee if same has been designated by
the Board, of any provision of this Plan or any option granted pursuant
hereto shall be final and conclusive. No member of the Board of Directors of
the Committee shall be liable for any action or determination made in good
faith with respect to this Plan or any option granted pursuant hereto. The
Board of Directors may from time to time make such changes in and additions
to this Plan and, with the consent of the Non-Employee/Officer Director or
the estate of the Non-Employee/Officer Director, to the terms and conditions
of any option granted under this Plan as it may deem proper and in the best
interests of the Company, without further action on the part of the
stockholders of the Company; provided, however, that, except as provided in
Section 7 hereof, unless the stockholders of the Company shall have first
approved thereof (i) the total number of shares of Class A Stock subject to
this Plan shall not be increased and the minimum purchase price shall not be
changed, (ii) no option shall be exercisable more than five years and six
months after the date is granted, (iii) the expiration date of this Plan
shall not be extended and (iv) no amendment of this Plan or of any option
granted under this Plan may materially increase the benefits accruing to
Non-Employee/Officer Directors under this Plan; and provided, further, that
Sections 4 and 5 hereof may not be amended more often than once every six
months unless such amendment is required to comport with changes in the
Internal Revenue Code of 1986, as amended, or the rules thereunder.
The Board of Directors shall have the power, in the event of any disposition
of substantially all of the assets of the Company, its dissolution or of any
consolidation or merger of the Company with or into any other corporation, to
amend all outstanding options granted under this Plan prior to the
effectiveness of any such transaction and to terminate such options as of
such effectiveness. If the Board of Directors shall exercise such power, each
option then outstanding shall be deemed to have been amended to permit the
exercise thereof in whole or in part by the Non-Employee/Officer Director to
whom it was issued or his or her estate as provided herein at any time or
from time to time as determined by the Board of Directors prior to the
effectiveness of such transaction and such option shall be deemed to
terminate upon such effectiveness.
EXHIBIT 10(v)(3)
CENTURY COMMUNICATIONS CORP.
1994 STOCK OPTION PLAN
1. PURPOSE
The purpose of this 1994 Stock Option Plan (the 'Plan') is to enable
selected officers and full-time employees of Century Communications Corp.
(the 'Company') and its subsidiaries to acquire a proprietary interest in the
Company through the ownership of common stock of the Company. Such
ownership will provide such employees with a more direct stake in the
future welfare of the Company, and encourage them to remain with the
Company and its subsidiaries. It is also expected that the Plan will
encourage qualified persons to seek andaccept employment with the Company
and its subsidiaries. Pursuant to the Plan, such employees will be offered
the opportunity to acquire such common stock through the grant of options
or stock appreciation rights under the Plan.
As used herein, the term 'subsidiary' shall mean any present or future
corporation which is or would be a 'subsidiary corporation' of the Company
as the term is defined in Section 424 of the Internal Revenue Code of
1986, as amended (the 'Code').
2. ADMINISTRATION OF THE PLAN
The Plan shall be administered by an Employee Stock Option Committee (the
`Committee') as appointed from time to time by the Board of Directors of
the Company. The Committee shall consist of not less than two (2) members
of such Board of Directors and shall be constituted in such a manner as to
satisfy the requirements of applicable law and of Rule 16b-3 under the
Securities ExchangeAct of 1934, as amended (the 'Exchange Act'). No director
of the Company servingas a member of the Committee shall be eligible, at
any time while serving as a member of the Committee, to be granted options
or stock appreciation rights under the Plan.
In administering the Plan, the Committee may adopt rules and regulations
for carrying out the Plan. The interpretation and decision with regard to
any question arising under the Plan made by the Committee shall be
final and conclusive on all employees of the Company and its subsidiaries
participating or eligible to participate in the Plan. The Committee shall
determine the employees to whom, and the time or times at which, grants shall
be made and the number of shares or stock appreciation rights to be included
in the grants.
3. SHARES OF STOCK SUBJECT TO THE PLAN
The number of shares that may be issued or transferred pursuant to the
exercise of options and stock appreciation rights granted under the Plan
shall not exceed 5,000,000 shares of the $.01 par value Class A Common
Stock of the Company (the 'Common Stock'), except for adjustments as provided
in subparagraph (g) of paragraph 10 of this Plan. Such shares may be
authorized and unissued shares or previously issued shares acquired or to be
acquired by the Company and held in treasury. Any shares subject to an
option or stock appreciation right which for any reason expires or is
terminated unexercised as to such shares may again be subject to an option
or stock appreciation right under the Plan.
4. ELIGIBILITY
The Committee shall determine from time to time the employees and officers
of the Company (including employees and officers who are directors of
the Company) who shall be granted options. All officers and all full-time
employees of the Company are eligible to be granted options under the Plan.
5. DURATION OF THE PLAN
Subject to the provisions of Paragraph 11, the Plan shall remain in effect
until all shares subject or which may become subject to the Plan shall have
been purchased pursuant to the exercise of options granted under the
Plan or distributed pursuant to the exercise of stock appreciation rights
granted under the Plan, provided that no options or stock appreciation
rights may be granted after May 31, 2004.
6. TYPES OF OPTIONS
Options granted under this Plan shall be in the form of (i) incentive stock
options as defined in Section 422 of the Code, or (ii) options not
qualifying under such section ('nonqualified options'), or both, in the
discretion of the
Committee.
7. TERMS AND CONDITIONS OF INCENTIVE STOCK OPTIONS
Incentive stock options shall be evidenced by stock option agreements in
such form, not inconsistent with this Plan, as the Committee shall approve
from time to time, which agreements shall be subject to the terms and
conditions set forth in Paragraph 10 of this Plan and shall contain in
substance the following terms and conditions and such other terms and
conditions not inconsistent therewith as the Committee may approve:
(a) Option Price. Except as hereinafter provided, the option price per share
of the Common Stock underlying each option shall be the fair market value of
the Common Stock at the time such option is granted.
(b) Ten Percent Shareholders. The option price per share of the Common Stock
underlying any incentive stock option granted to any individual who, at the
time of the grant, owns stock possessing more than ten (10) percent of the
total combined voting power of all classes of stock of the Company or any
of its subsidiary corporations shall be 110% of the fair market value of
the Common Stock at the time such option is granted.
(c) Annual Limit. No incentive stock option may be granted under this Plan
if such grant, together with applicable prior grants which are
incentive stock options within the meaning of Section 422 of the Code,
would exceed any maximum established under the Code for incentive stock
options that may be granted to an individual employee. To the extent such
maximum is exceeded, the option shall be treated as a nonqualified option.
(d) Medium and Time of Payment. Stock purchased pursuant to an option
agreement shall be paid for in full at the time of purchase. The purchase
price upon exercise of an option may be paid in whole or in part in (a)
cash or (b) whole shares of Common Stock evidenced by negotiable
certificates, valued at their fair market value on the date of exercise.
Upon receipt of payment the Company shall, without stock transfer tax to
the optionee or other person entitled to exercise the option, deliver to
the optionee (or other person entitled to exercise the option) a
certificate or certificates for such shares. If certificates representing
shares of Common Stock are used to pay all or part of the purchase price of
an option, the Committee shall determine acceptable methods for
tendering Common Stock and may impose such limitations and prohibitions on
the use of Common Stock to pay all or part of the purchase price of an
option as it deems appropriate.
(e) Withholding. It shall be a condition to the performance of the
Company's obligation to issue or transfer Common Stock upon exercise of an
option or options that the optionee pay, or make provision satisfactory to
the Company for the payment of, any taxes (other than stock transfer taxes)
which the Company is obligated to collect with respect to the issue or
transfer of Common Stock upon such exercise. Such payment may also be made
at the election of the participant by the surrender of shares of Common
Stock then owned by the participant, or the withholding of shares of Common
Stock otherwise to be issued to the participant on exercise, valued at the
fair market value of the Common Stock on the date of exercise. Any election
so made by a participant subject to Section 16(b) of the Exchange Act shall
be subject to the approval of the Committee and shall be in accordance with
the requirements of Rule 16b-3 under such Act.
(f) Reduction of Shares. The number of shares to which an optionee is
entitled upon exercise of an option shall be reduced by the number of
related stock appreciation rights previously or concurrently exercised.
8. TERMS AND CONDITIONS OF NONQUALIFIED OPTIONS
Nonqualified options shall be evidenced by stock option agreements which
shall be subject to the terms and conditions set forth in paragraph 10 of
this Plan and shall contain in substance the terms and conditions set
forth in subparagraphs (a), (d), (e) and (f) of paragraph 7 of this Plan
and such other terms and conditions not inconsistent therewith as the
Committee may approve.
9. STOCK APPRECIATION RIGHTS
Stock appreciation rights may be granted by the Committee in connection
with any stock option at the time of grant of such option. Such
appreciation rights shall be subject to the terms and conditions set forth in
paragraph 10 of this Plan and to such other terms and conditions, not
inconsistent with the Plan, as the Committee shall determine including
the following terms and conditions:
(a) Stock appreciation rights shall be exercisable, in whole or in part,
at such time or times and to the extent that the option to which they relate
shall be exercisable, and shall expire simultaneously with the option to
which they relate.
(b) Upon exercise of a stock appreciation right, the related option or
portion thereof shall be surrendered to the Company in exchange for payment
by the Company of shares of Common Stock (at the fair market value thereof)
or cash or a combination thereof in an amount equal to the excess of the
aggregate fair market value of the shares subject to the option or portion
thereof being surrendered over the aggregate option price thereof;
provided, however, that fractional shares shall not be issued. Any option,
to the extent surrendered, shall thereupon cease to be exercisable.
(c) The Committee shall have the sole discretion to determine the form in
which payment (i.e., cash, shares of Common Stock, or any combination
thereof) will be made.
(d) Stock appreciation rights shall be transferable only when the
options to which they relate are transferable, and under the same
conditions.
10. PROVISIONS RELATING TO OPTIONS AND STOCK APPRECIATION RIGHTS
All options and stock appreciation rights granted under this Plan shall be
subject to the following provisions:
(a) Term. An option and stock appreciation right shall have such term as
is fixed by the Committee, provided that no option may be exercised after
the expiration of ten (10) years from the date of grant of such option,
no incentive stock option granted to any individual who, at the time of
the grant, owns stock of the Company possessing more than ten percent
of the total combined voting power of all classes of stock of the Company or
any of its subsidiary companies may be exercised after the expiration
of five (5) years from the date of grant of such option, and no stock
appreciation right may be exercised after the related option becomes
non-exercisable.
(b) Partial Exercise. Partial exercise will be permitted from time to time,
provided that no partial exercise may result in the issuance or
transfer of less than fifty (50) shares of Common Stock.
(c) Rights as a Stockholder. A recipient of options and stock
appreciation rights shall have no rights as a stockholder with respect to
any shares issuable or transferable upon exercise thereof until the date of
issuance of a stock certificate to him for such shares. Except as otherwise
expressly provided in the Plan, no adjustment shall be made for dividends
or other rights for which the record date is prior to the date such stock
certificate is issued.
(d) Non-Assignability of Options and Stock Appreciation Rights. No option
or stock appreciation right shall be assignable or transferable by the
recipient except by will or by the laws of descent and distribution. During
the life of a recipient, options and stock appreciation rights shall be
exercisable only by him.
(e) Effect of Termination of Employment or Death. No option or stock
appreciation right shall be exercisable after the expiration of a period of
three (3) months from the date of termination of employment, unless such
termination of employment occurs by reason of death or disability within
the meaning of Section 22(e)(3) of the Code. In the event of the death of a
recipient of options or stock appreciation rights while an employee of the
Company or any subsidiary of the Company, the unexercised portion of
options and stock appreciation rights granted to the deceased employee
shall be exercisable by his personal representatives, heirs or legatees at
any time prior to the expiration of two (2) years from the date of his
death. In the event of the termination of employment of a recipient of
options or stock appreciation rights because of disability within the
meaning of Section 22(e)(3) of the Code, the unexercised portion of options
and stock appreciation rights granted to such recipient shall expire unless
exercised within one (1) year from the date of such termination. In no
event shall an option be exercisable after the expiration of the term of
the option fixed by the Committee pursuant to subparagraph (a) of this
paragraph 10, and no stock appreciation right shall be exercisable after
the expiration of the related option.
(f) Leave of Absence. In the case of a recipient on an approved leave of
absence, the Committee may, if it determines that to do so would be in the
best interests of the Company, provide in a specific case for
continuation of options and stock appreciation rights during such leave of
absence, such continuation to be in such terms and conditions as the
Committee determines to be appropriate, except that in no event shall an
option be exercisable after the expiration of the term of the option fixed
by the Committee pursuant to subparagraph (a) of this paragraph 10, and no
stock appreciation right shall be exercisable after the expiration of the
related option.
(g) Adjustment in Event of Recapitalization of the Company. In the event
of a reorganization, recapitalization, stock split, stock dividend,
combination of shares, merger, consolidation, rights offering, or any other
change in the corporate structure or shares of the Company, the Board of
Directors shall make an appropriate adjustment in the number and the kind
of shares that may be subjected to options and stock appreciation rights
under the Plan and the number and kind of shares covered by options and
stock appreciation rights granted, and in the option price.
(h) Acceleration. Notwithstanding anything to the contrary set forth in
this Plan, the Committee as well as the Board of Directors of the
Company shall have the power to cause all options and stock appreciation
rights then outstanding to be deemed to have been amended to permit the
exercise thereof in whole or in part by the holder at any time or from time
to time.
To the extent that an acceleration of the exercisability of an
incentive stock option pursuant to this paragraph causes the aggregate fair
market value of Common Stock (determined as of the time the option with
respect to such stock was granted) with respect to which incentive stock
options are exercisable for the first time by an employee during any
calendar year under the Plan (or any other plan of the Company or a parent
or subsidiary thereof providing for the grant of incentive stock options)
to exceed $100,000, such options shall be treated as nonqualified options.
(i) General Restriction. Each option or stock appreciation right
granted under the Plan shall be subject to the requirement that, if at any
time the Board of Directors shall determine, in its discretion, that the
listing, registration, or qualification of the shares issuable or
transferable upon exercise thereof upon any securities exchange or under
any state or federal law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition of, or in
connection with, the granting of such option or stock appreciation right or
the issue or transfer of shares thereunder, such option or stock
appreciation right may not be exercised in whole or in part unless such
listing, registration, qualification, consent, or approval shall have been
effected or obtained free of any conditions not acceptable to the Board of
Directors.
11. AMENDMENT TO THE PLAN
The Board of Directors shall have the right to amend, suspend, or terminate
the Plan at any time; provided, however, that no such action shall affect or
in any way impair the rights of a recipient under any option or stock
appreciation right theretofore granted under the Plan; and, provided,
further, that unless first duly approved by the holders of stock
entitled to vote thereon at a meeting (which may be the annual meeting)
duly called and held for such purpose, no amendment or change shall be made
in the Plan (a) increasing (except as provided in subparagraph (g) of
Paragraph 10 of this Plan) the total number of shares which may be issued
or transferred under the Plan; (b) changing the minimum purchase price
herein before specified for the shares subject to options;(c) changing the
maximum period during which options or stock appreciation rights may be
exercised; (d) extending the period during which options or stock
appreciation rights may be granted under the Plan beyond May 31, 2004; or
(e)materially increasing the benefits accruing to a recipient of options
under the Plan.
12. USE OF PROCEEDS
The proceeds from the sale of Common Stock pursuant to options
granted under the Plan shall constitute general funds of the Company.
13. EFFECTIVE DATE OF THE PLAN
The Plan shall be effective as of October 26, 1994, subject to ratification
of the Plan by the affirmative vote of a majority of the issued and
outstanding shares of Common Stock.
EXHIBIT 10(ff)
COPIED AS EXECUTED WITH
EXHIBITS E, F, H, I AND J
AS SEPARATELY EXECUTED
U.S. $525,000,000
CREDIT AGREEMENT
Dated as of August 4, 1995
Among
CCC-I, INC.,
and
PULLMAN TV CABLE CO., INC.
and
KOOTENAI CABLE, INC.,
as Borrowers
CITIBANK, N.A.,
as Agent
BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION
CHEMICAL BANK
CIBC INC.,
LTCB TRUST COMPANY,
SOCIETE GENERALE,
THE SUMITOMO BANK, LIMITED - CHICAGO BRANCH
and
THE TORONOT-DOMINION BANK,
as Managing Agents,
and
THE BANKS NAMED HEREIN,
as Banks
CREDIT AGREEMENT
Dated as of August 4, 1995
CCC - I, INC., a Delaware corporation ("CCC-I"), PULLMAN TV CABLE
CO., INC., a Washington corporation ("Pullman"), KOOTENAI CABLE, INC., a
Delaware corporation ("Kootenai"; CCC-I, Pullman and Kootenai are,
individually, each a "Borrower" and, collectively, the "Borrowers"),
CITIBANK, N.A. ("Citibank"), as agent (the "Agent") for the banks (the
"Banks") listed on the signature pages hereof, BANK OF AMERICA NATIONAL TRUST
& SAVINGS ASSOCIATION, CHEMICAL BANK, CIBC INC., LTCB TRUST COMPANY, SOCIETE
GENERALE, THE SUMITOMO BANK, LIMITED - CHICAGO BRANCH and THE TORONTO-
DOMINION BANK, as Managing Agents (the "Managing Agents"), and the Banks,
agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this Agreement,
the following terms shall have the following meanings (such meanings to be
equally applicable to both the singular and plural forms of the terms
defined):
"A Advance" means an advance by a Lender to a Borrower as part of
an A Borrowing and refers to an Adjusted CD Rate Advance, a Base Rate Advance
or a Eurodollar Rate Advance, each of which shall be a "Type" of A Advance.
"A Borrowing" means a borrowing consisting of simultaneous A
Advances of the same Type made by each of the Lenders pursuant to Section
2.01.
"A Note" means a promissory note of a Borrower payable to the order
of any Lender, in substantially the form of Exhibit A-1 hereto, evidencing
the aggregate indebtedness of such Borrower to such Lender resulting from the
A Advances made by such Lender.
"Additional Unsecured Debt" has the meaning specified in Section
5.02(b)(viii).
"Adjusted CD Rate" means, for any Interest Period for each Adjusted
CD Rate Advance comprising part of the same Borrowing, an interest rate per
annum equal to the sum of:
(a) the rate per annum obtained by dividing (i) the rate of
interest determined by the Agent to be the average (rounded upward to the
nearest whole multiple of 1/100 of 1% per annum, if such average is not such
a multiple) of the consensus bid rate determined by each Reference Bank for
the bid rates per annum, at 9:00 A.M. (New York City time) (or as soon
thereafter as practicable) three Business Days before the first day of such
Interest Period, of New York certificate of deposit dealers of recognized
standing selected by such Reference Bank for the purchase at face value of
certificates of deposit of such Reference Bank in an amount substantially
equal to such Reference Bank's Adjusted CD Rate Advance comprising part of
such Borrowing and with a maturity equal to such Interest Period, by (ii) a
percentage equal to 100% minus the Adjusted CD Rate Reserve Percentage (as
defined below) for such Interest Period, plus
(b) the Assessment Rate (as defined below) for such Interest
Period.
The "Adjusted CD Rate Reserve Percentage" for any Interest Period for
each Adjusted CD Rate Advance comprising part of the same Borrowing means the
reserve percentage applicable three Business Days before the first day of
such Interest Period under regulations issued from time to time by the Board
of Governors of the Federal Reserve System (or any successor) for determining
the maximum reserve requirement (including, but not limited to, any
emergency, supplemental or other marginal reserve requirement) for a member
bank of the Federal Reserve System in New York City with deposits exceeding
one billion dollars with respect to liabilities consisting of or including
(among other liabilities) U.S. dollar nonpersonal time deposits in the United
States with a maturity equal to such Interest Period. The "Assessment Rate"
for any Interest Period for each Adjusted CD Rate Advance comprising part of
the same Borrowing means the annual assessment rate estimated by the Agent
three Business Days before the first day of such Interest Period for
determining the then current annual assessment payable by Citibank to the
Federal Deposit Insurance Corporation (or any successor) for insuring U.S.
dollar deposits of Citibank in the United States. The Adjusted CD Rate for
any Interest Period for each Adjusted CD Rate Advance comprising part of the
same Borrowing shall be determined by the Agent on the basis of applicable
rates furnished to and received by the Agent from each Reference Bank three
Business Days before the first day of such Interest Period, subject, however,
to the provisions of Section 2.08.
"Adjusted CD Rate Advance" means an A Advance which bears interest
as provided in Section 2.07(a)(iii).
"Advance" means an A Advance or a B Advance.
"Affiliate" means, as to any Person, any other Person that,
directly or indirectly, controls, is controlled by or is under common control
with such Person or is a director or officer of such Person. For purposes of
this definition, the term "control" (including the terms "controlling,"
"controlled by" and "under common control with") of a Person means the
possession, direct or indirect, of the power to vote 5% or more of the Voting
Stock of such Person or to direct or cause the direction of the management
and policies of such Person, whether through the ownership of Voting Stock,
by contract or otherwise.
"Agent" has the meaning specified in the recital of parties to this
Agreement.
"Applicable Lending Office" means, with respect to each Lender,
such Lender's Domestic Lending Office in the case of a Base Rate Advance,
such Lender's CD Lending Office in the case of an Adjusted CD Rate Advance,
and such Lender's Eurodollar Lending Office in the case of a Eurodollar Rate
Advance and, in the case of a B Advance, the office of such Lender notified
by such Lender to the Agent as its Applicable Lending Office with respect to
such B Advance.
"Approved Acquisition" means any acquisition, approved by the
Required Lenders, of cable television assets or 100% of the ownership
interests of a company that owns directly or through one or more other wholly
owned companies all or substantially all of such assets.
"Approved Company" means a company whose cable television assets or
ownership interests will be acquired in an Approved Acquisition.
"Asset EBIDT" has the meaning specified in Section 5.02(e).
"Asset Purchase Agreement" means that certain Asset Purchase
Agreement, dated November 28, 1994, between ML Media and Century/Jersey, as
amended, supplemented and modified by that certain letter agreement dated
November 28, 1994 between ML Media and Century/Jersey.
"Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender and an Eligible Assignee, and accepted by the Agent,
in substantially the form of Exhibit C hereto.
"B Advance" means an advance by a Lender to a Borrower as part of a
B Borrowing resulting from the auction bidding procedure described in Section
2.03.
"B Borrowing" means a borrowing consisting of simultaneous B
Advances from each of the Lenders whose offer to make one or more B Advances
as part of such borrowing has been accepted by a Borrower under the auction
bidding procedure described in Section 2.03.
"B Note" means a promissory note of a Borrower payable to the order
of any Lender, in substantially the form of Exhibit A-2 hereto, evidencing
the indebtedness of such Borrower to such Lender resulting from a B Advance
made by such Lender.
"B Reduction" has the meaning specified in Section 2.01.
"Bank" has the meaning specified in the recital of parties to this
Agreement.
"Base Rate" means, for any period, a fluctuating interest rate per
annum as shall be in effect from time to time which rate per annum shall at
all times be equal to the higher of:
(a) the rate of interest announced publicly by Citibank in
New York, New York, from time to time, as Citibank's base rate;
(b) the sum (adjusted to the nearest 1/16 of one percent or,
if there is no nearest 1/16 of one percent, to the next higher 1/16 of one
percent) of (i) 1/2 of one percent per annum, plus (ii) the rate per annum
obtained by dividing (A) the latest three-week moving average of secondary
market morning offering rates in the United States for three-month
certificates of deposit of major United States money market banks, such
three-week moving average (adjusted to the basis of a year of 365 or 366
days, as the case may be) being determined weekly on each Monday (or, if any
such day is not a Business Day, on the next succeeding Business Day) for the
three-week period ending on the previous Friday by Citibank on the basis of
such rates reported by certificate of deposit dealers to and published by the
Federal Reserve Bank of New York or, if such publication shall be suspended
or terminated, on the basis of quotations for such rates received by Citibank
from three New York certificate of deposit dealers of recognized standing
selected by Citibank, by (B) a percentage equal to 100% minus the average of
the daily percentages specified during such three-week period by the Board of
Governors of the Federal Reserve System (or any successor) for determining
the maximum reserve requirement (including, but not limited to, any
emergency, supplemental or other marginal reserve requirement) for a member
bank of the Federal Reserve System in New York City with respect to
liabilities consisting of or including (among other liabilities) three-month
U.S. dollar nonpersonal time deposits in the United States, plus (iii) the
average during such three-week period of the annual assessment rates
estimated by Citibank for determining the then current annual assessment
payable by Citibank to the Federal Deposit Insurance corporation (or any
successor) for insuring U.S. dollar deposits of Citibank in the United
States; and
(c) 1/2 of one percent per annum above the Federal Funds
Rate.
"Base Rate Advance" means an A Advance which bears interest as
provided in Section 2.07(a)(i).
"Basic Subscribers" means Subscribers to whom no separate charge in
addition to that paid by all Subscribers is assessed for any particular
programming and Subscribers to a group of channels of programming which are
not offered individually to Subscribers; provided that, in the case of a
multiple-unit building, the number of Basic Subscribers shall be computed by
dividing the monthly revenues derived from such services to such building by
the prevailing basic rate charged for such services to Subscribers in
single-unit buildings.
"Borrowing" means an A Borrowing or a B Borrowing.
"Business Day" means a day of the year on which banks are not
required or authorized to close in New York City and, if the applicable
Business Day relates to any Eurodollar Rate Advances, on which dealings are
carried on in the London interbank market.
"Capital Lease" means a lease which shall have been, or should be,
in accordance with generally accepted accounting principles, recorded as a
capital lease.
"CCC-I" has the meaning specified in the recital of parties to this
Agreement.
"CCC-I Preferred Stock" means the Preferred Stock, par value $.01
per share, issued by CCC-I to Century/Holding described in the Certificate of
Amendment of Certificate of Incorporation of CCC-I filed with the Secretary
of State of the State of Delaware on June 7, 1995.
"CD Lending Office" means, with respect to any Lender, the office
of such Lender specified as its "CD Lending Office" opposite its name on
Schedule I hereto or in the Assignment and Acceptance pursuant to which it
became a Lender (or, if no such office is specified, its Domestic Lending
Office), or such other office of such Lender as such Lender may from time to
time specify to the Borrowers and the Agent.
"Century/Holding" means Century Cable Holding Corp., a New York
corporation.
"Century/Jersey" means Century Communications Corp., a New Jersey
corporation.
"Century/Texas" means Century Communications Corp., a Texas
corporation.
"Century/Texas Agreement" has the meaning specified in Section
3.01(h)(iv).
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time.
"Citibank" means Citibank, N.A., a national banking association.
"Combined" refers to the combination of accounts of the Borrowers
in accordance with generally accepted accounting principles, including
principles of combination, consistent with those applied in the preparation
of the combined financial statements referred to in Sections 4.0l(e) and
4.01(f).
"Commercial Paper" means one or more unsecured instruments of
indebtedness issued from time to time by a Borrower having a maturity of 270
days or less and denominated in U.S. Dollars (including, without limitation,
euronotes, eurobonds, domestic notes, domestic bonds and other types of
commercial paper).
"Commitment" has the meaning specified in Section 2.01.
"Consolidated" refers to the consolidation of accounts of a
Borrower with the accounts of its Subsidiaries, all in accordance with
generally accepted accounting principles, including principles of
consolidation, consistent with those applied in the preparation of
Consolidated financial statements of the Borrowers.
"Convert", "Conversion" and "Converted" each refers to a conversion
of Advances of one Type into Advances of another Type pursuant to Section
2.08, 2.09, 2.11 or 2.12.
"CSI" means Citicorp Securities, Inc., a Delaware corporation.
"Debt" of any Person means (i) indebtedness for borrowed money or
for the deferred purchase price of property or services in respect of which
such Person is liable, contingently or otherwise, as obligor, guarantor or
otherwise, or in respect of which such Person otherwise assures a creditor
against loss, (ii) obligations evidenced by bonds, debentures, notes or other
similar instruments, including, but not limited to, Commercial Paper, (iii)
obligations, contingent or otherwise, under acceptance, letter of credit or
similar facilities, (iv) obligations as lessee under Capital Leases, and (v)
obligations under direct or indirect guaranties in respect of, and
obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (i) through (iv)
above; provided that Debt shall not include trade accounts payable unless
payment thereof has been deferred by agreement beyond the customary period in
the industry.
"Debt Service" means, for any period and for any Debt, the Combined
sum of all amounts payable (whether or not actually paid) during such period
by each Borrower and its Subsidiaries to any other Person on account of (a)
principal of such Debt (including the principal component of Capital Lease
payments and trade accounts payable with respect to which payment has been
deferred by agreement beyond the customary period in the industry but
excluding amounts which the Borrowers have a right to reborrow at the time
such amount is payable under this Agreement or a comparable revolving credit
agreement, as the case may be, amounts payable under Section 2.11(b) and
amounts required to be paid as the result of an optional election to pay on
the part of the obligor of any Debt) and (b) interest on, or commitment,
letter of credit, agency or other fees with respect to, such Debt.
"Deferred Amount" has the meaning specified in Section 2.10(b)(ii).
"Domestic Lending Office" means, with respect to any Lender, the
office of such Lender specified as its "Domestic Lending Office" opposite its
name on Schedule I hereto or in the Assignment and Acceptance pursuant to
which it became a Lender, or such other office of such Lender as such Lender
may from time to time specify to the Borrowers and the Agent.
"EBIDT" means, for any period, the Combined sum of the Consolidated
net income or loss for such period, excluding gains or losses from
extraordinary items, of each Borrower and its Subsidiaries plus the sum of
interest expense, depreciation and amortization expense and provision for
income taxes to the extent deducted in computing such net income or loss (but
excluding from the calculation of such Consolidated net income or loss, (i)
that percentage of the accounts of each Minority Entity equal to the
percentage ownership interest of such Minority Entity which is not owned by
such Borrower or any of its Subsidiaries and (ii) interest income and
interest expense in respect of any advance made by such Borrower to any such
Subsidiary, by any such Subsidiary to such Borrower, by any such Subsidiary
to any other Subsidiary of such Borrower or by such Borrower to its Parent
Company). Amounts that become payable under Section 2.11(b) shall not be
included in calculating EBIDT except, to the extent actually paid, for the
purposes of Section 2.10.
(i) If any Borrower or any of its Subsidiaries has made an
acquisition permitted by Section 5.02(f)(i) or 5.02(f)(ii) during any Fiscal
Period for which EBIDT is to be computed (or, solely for purposes of
calculating EBIDT in determining the Rate Ratio, during the period from the
last day of the Fiscal Period for which EBIDT is to be computed to and
including the date as of which the Rate Ratio is being calculated), then
EBIDT shall be computed as if such system had been owned by such Borrower or
such Subsidiary throughout such Fiscal Period. Each computation of EBIDT for
such system shall be based on the following financial statements to the
extent available on the date on which the computation is made:
(a) the most recent Qualified annual statements of operations
and cash flows for such system, or
(b) if such annual statements are not available, the
statements described in (I) or (II) below, whichever is applicable,
annualized for such Fiscal Period,
(I) the most recent Qualified statements of operations
and cash flows for such system, if such statements cover at least three
consecutive months out of the twelve months preceding the date as of which
EBIDT is to be computed, or
(II) if none of the foregoing statements is available,
pro forma statements of the operations and cash flows of such system for the
then most recent Fiscal Period prepared by such Borrower so as to be
Qualified and otherwise reasonably satisfactory to the Majority Lenders,
where the term "Qualified" means financial statements which reflect
the expenses and income of such system in a manner consistent with that used
in financial reports of such Borrower for systems it has then been operating
for at least one Fiscal Period.
(ii) If any Borrower or any of its Subsidiaries has sold or
otherwise disposed of any cable television system during any Fiscal Quarter
or Fiscal Period for which EBIDT is to be computed (or, solely for purposes
of calculating EBIDT in determining the Rate Ratio, during the period from
the last day of any such Fiscal Period to and including the date as of which
the Rate Ratio is being calculated), EBIDT shall be computed as if such
system had not been owned by such Borrower or such Subsidiary during any part
of such Fiscal Quarter or Fiscal Period, as the case may be.
"Eligible Assignee" means a Person (a) (i) that is (A) a commercial
bank organized under the laws of the United States, or any State thereof, and
having total assets in excess of $500,000,000; (B) a commercial bank
organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development ("OECD"), or a
political subdivision of any such country, and having total assets in excess
of $500,000,000, provided that such bank is acting through a branch or agency
located in the United States or another country which is also a member of
OECD; or (C) a Lender or an Affiliate of any Lender immediately prior to an
assignment and (ii) whose long-term public senior debt securities are rated
at least "BBB-" by Standard & Poor's, a division of McGraw-Hill, Inc., or at
least "Baa3" by Moody's Investors Service, Inc.; or (b) that is approved by
the Borrowers (whose approval shall not be unreasonably withheld), the Agent
and the Lenders.
"Environmental Action" means any administrative, regulatory or
judicial action, suit, demand, demand letter, claim, notice of non-compliance
or violation, investigation, proceeding, consent order or consent agreement
relating in any way to any Environmental Law or any Environmental Permit,
including without limitation (a) any claim by any governmental or regulatory
authority for enforcement, cleanup, removal, response, remedial or other
actions or damages pursuant to any Environmental Law and (b) any claim by any
third party seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from Hazardous Materials or
arising from alleged injury or threat of injury to health, safety or the
environment.
"Environmental Law" means any federal, state or local law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
relating to the environment, health, safety or Hazardous Materials,
including, without limitation, CERCLA, the Resource Conservation and Recovery
Act, the Hazardous Materials Transportation Act, the Clean Water Act, the
Toxic Substances Control Act, the Clean Air Act, the Safe Drinking Water Act,
the Atomic Energy Act, the Federal Insecticide, Fungicide and Rodenticide Act
and the Occupational Safety and Health Act.
"Environmental Permit" means any permit, approval, identification
number, license or other authorization required under any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"ERISA Affiliate" means any Person who for purposes of Title IV of
ERISA is a member of any Borrower's controlled group, or under common control
with any Borrower, within the meaning of Section 414 of the Internal Revenue
Code of 1986, as amended from time to time, and the regulations promulgated
and rulings issued thereunder.
"ERISA Event" with respect to any Person means (a) the occurrence
of a reportable event, within the meaning of Section 4043 of ERISA, with
respect to any Plan of such Person or any of its ERISA Affiliates unless the
30-day notice requirement with respect to such event has been waived by the
PBGC; (b) the provision by the administrator of any Plan of such Person or
any of its ERISA Affiliates of a notice of intent to terminate such Plan,
pursuant to Section 4041(a)(2) of ERISA (including any such notice with
respect to a plan amendment referred to in Section 4041(e) of ERISA); (c) the
cessation of operations at a facility of such Person or any of its ERISA
Affiliates in the circumstances described in Section 4062(e) of ERISA; (d)
the withdrawal by such Person or any of its ERISA Affiliates from a Multiple
Employer Plan during a plan year for which it was a substantial employer, as
defined in Section 4001(a)(2) of ERISA; (e) the failure by such Person or any
of its ERISA Affiliates to make a payment to a Plan required under Section
302(f)(1) of ERISA; (f) the adoption of an amendment to a Plan of such Person
or any of its ERISA Affiliates requiring the provision of security to such
Plan, pursuant to Section 307 of ERISA; or (g) the institution by the PBGC of
proceedings to terminate a Plan of such Person or any of its ERISA
Affiliates, pursuant to Section 4042 of ERISA, or the occurrence of any event
or condition described in Section 4042 of ERISA that could constitute grounds
for the termination of, or the appointment of a trustee to administer, such
Plan.
"Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"Eurodollar Lending Office" means, with respect to any Lender, the
office of such Lender specified as its "Eurodollar Lending Office" opposite
its name on Schedule I hereto or in the Assignment and Acceptance pursuant to
which it became a Lender (or, if no such office is specified, its Domestic
Lending Office), or such other office of such Lender as such Lender may from
time to time specify to the Borrowers and the Agent.
"Eurodollar Rate" means, for any Interest Period for each
Eurodollar Rate Advance comprising part of the same A Borrowing, an interest
rate per annum equal to the average (rounded upward to the nearest whole
multiple of 1/16 of 1% per annum, if such average is not such a multiple) of
the rate per annum at which deposits in U.S. dollars are offered by the
principal office of each Reference Bank in London, England to prime banks in
the London interbank market at 11:00 A.M. (London time) two Business Days
before the first day of such Interest Period in an amount substantially equal
to such Reference Bank's Eurodollar Rate Advance comprising part of such
Borrowing and for a period equal to such Interest Period. The Eurodollar
Rate for any Interest Period for each Eurodollar Rate Advance comprising part
of the same Borrowing shall be determined by the Agent on the basis of
applicable rates furnished to and received by the Agent from each Reference
Bank two Business Days before the first day of such Interest Period, subject,
however, to the provisions of Section 2.08.
"Eurodollar Rate Advance" means an A Advance which bears interest
as provided in Section 2.07(a)(ii).
"Eurodollar Rate Reserve Percentage" for any Interest Period for
each Eurodollar Rate Advance comprising part of the same A Borrowing means
the reserve percentage applicable two Business Days before the first day of
such Interest Period under regulations issued from time to time by the Board
of Governors of the Federal Reserve System (or any successor) for determining
the maximum reserve requirement (including, without limitation, any
emergency, supplemental or other marginal reserve requirement) for a member
bank of the Federal Reserve System in New York City with respect to
liabilities or assets consisting of or including Eurocurrency Liabilities (or
with respect to any other category of liabilities that includes deposits by
reference to which the interest rate on Eurodollar Rate Advances is
determined) having a term equal to such Interest Period.
"Events of Default" has the meaning specified in Section 6.01.
"Excess Cash Flow" means, for any Fiscal Quarter, the amount by
which
(i) EBIDT for such Fiscal Quarter exceeds
(ii) the Combined sum of
(A) the Consolidated amount of all interest expense paid
to third parties by each Borrower and its Subsidiaries during such Fiscal
Quarter on account of Debt,
(B) the Consolidated amount of all income taxes paid by
each Borrower and its Subsidiaries during such Fiscal Quarter,
(C) the Consolidated amount of all principal amounts
required to be paid during such Fiscal Quarter with respect to Debt of each
Borrower and its Subsidiaries, and
(D) the amount equal to the capital expenditures made by
each Borrower and its Subsidiaries for such Fiscal Quarter.
"Excess Cash Flow Surplus" means, with respect to any Fiscal
Quarter that ends after the Termination Date, that portion of Excess Cash
Flow for the immediately preceding Fiscal Quarter which remains after the
Borrowers have either (i) made the prepayment required by Section 2.10(b)(ii)
in respect of Excess Cash Flow for such immediately preceding Fiscal Quarter
or (ii) if, pursuant to the proviso contained in Section 2.10(b)(ii), the
Borrowers' obligation to make such prepayment has been deferred, reserved
amounts equal to the prepayment the Borrowers would otherwise have made in
respect of Excess Cash Flow for such immediately preceding Fiscal Quarter
pursuant to such Section 2.10(b)(ii).
"Existing CCC-I Credit Agreement" means the Credit Agreement dated
as of January 25, 1993, as amended, among CCC-I, the banks named therein and
Citibank, as agent.
"FCC" means the Federal Communications Commission or any successor
thereto.
"Federal Bankruptcy Code" means title I of the Bankruptcy Reform
Act of 1978, Pub. L. No. 95-598, 92 Stat. 2549 (1978), as amended, and as set
forth in sections 101 et seq. of title 11, United States Code, and any
succeeding statute.
"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted average
of the rates on overnight Federal funds transactions with 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 Agent from three
Federal funds brokers of recognized standing selected by it.
"Financial Officer" means, as to any Person, the chief executive
officer, the chief financial officer, the treasurer or the controller of that
Person.
"Fiscal Period" means the period of four consecutive Fiscal
Quarters ended on the last day of May, August, November or February, as the
case may be.
"Fiscal Quarter" means the period of three calendar months ending
on the last day of May, August, November or February, as the case may be.
"Fiscal Year" means the period from and including June 1 of any
calendar year to and including May 31 of the next succeeding calendar year
(made up of four Fiscal Quarters), and when followed by the designation of a
year shall mean such period ending on May 31 of such year.
"Foreign Subsidiary" shall mean any Subsidiary of any Person that
is incorporated or organized under the laws of any jurisdiction other than
the United States or any state thereof, the U.S. Virgin Islands or Puerto
Rico and does substantially all of its business outside the United States,
the U.S. Virgin Islands or Puerto Rico.
"Franchise" shall mean a franchise, license, authorization or right
to construct, own, operate, promote, extend and/or otherwise exploit any
cable television system, television station or radio station operated or to
be operated by any Borrower or any of its Subsidiaries granted by the FCC (or
any successor agency of the federal government) or any state, county, city,
town, village or other local governmental authority.
"Guaranteed Obligations" has the meaning specified in Section 8.01.
"Guaranty" has the meaning specified in Section 8.01.
"Hazardous Materials" means (a) petroleum or petroleum products,
natural or synthetic gas, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation and radon gas, (b) any substances
defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," "extremely hazardous wastes,"
"restricted hazardous wastes," "toxic substances," "toxic pollutants,
contaminants" or "pollutants," or words of similar import, under any
Environmental Law and (c) any other substance exposure to which is regulated
under any Environmental Law.
"Insufficiency" means, with respect to any Plan, the amount, if
any, of its unfunded benefit liabilities, as defined in Section 4001(a)(18)
of ERISA.
"Intercompany Debt" means Debt owing (i) by any Subsidiary of a
Borrower to such Borrower or to any other Subsidiaries of such Borrower, (ii)
by any Borrower to a Subsidiary of such Borrower and (iii) by any Borrower to
another Borrower.
"Interest Period" means, for each Adjusted CD Rate Advance or
Eurodollar Rate Advance comprising part of the same A Borrowing, the period
commencing on the date of such A Advance or the date of the Conversion of any
A Advance into such an A Advance and ending on the last day of the period
selected by the Borrower to whom such Advance was made pursuant to the
provisions below and, thereafter, each subsequent period commencing on the
last day of the immediately preceding Interest Period and ending on the last
day of the period selected by such Borrower pursuant to the provisions below.
The duration of each such Interest Period shall be 30, 60, 90, 180 or, if
offered by all Lenders, 270 or 360 days, in the case of an Adjusted CD Rate
Advance, and one, two, three, six or, if offered by all Lenders, nine or
twelve months, in the case of a Eurodollar Rate Advance, in each case as such
Borrower may, upon notice received by the Agent not later than 11:00 A.M.
(New York City time) on the third Business Day prior to the first day of such
Interest Period, select; provided, however, that:
(i) such Borrower may not select any Interest Period which
ends after any principal repayment installment date unless, after giving
effect to such selection, the aggregate unpaid principal amount of Base Rate
Advances and Advances having Interest Periods which end on or prior to such
principal repayment installment date shall be at least equal to the principal
amount of Advances due and payable on and prior to such date;
(ii) Interest Periods commencing on the same date for A
Advances comprising part of the same A Borrowing shall be of the same
duration; and
(iii) whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day of such
Interest Period shall be extended to occur on the next succeeding Business
Day, provided, in the case of any Interest Period for a Eurodollar Rate
Advance, that, if such extension would cause the last day of such Interest
Period to occur in the next following calendar month, the last day of such
Interest Period shall occur on the next preceding Business Day.
"Interim Certificate" has the meaning specified in Section 2.07(c).
"Investment" in any Person means any loan or advance to such
Person, any purchase or other acquisition of any capital stock, joint venture
or partnership interest, asset (other than purchases or other acquisitions
from merchants of operating assets of such Person in the ordinary course of
business), warrant, right, option, obligation or other security of such
Person, any capital contribution to such Person or any other investment in
such Person, including, without limitation, any arrangement pursuant to which
the investor incurs Debt of the types referred to in clause (v) of the
definition of "Debt" in respect of such Person.
"Kootenai" has the meaning specified in the recital of parties to
this Agreement.
"Lender Agents" means the Agent and each of the Managing Agents.
"Lenders" means the Banks listed on the signature pages hereof and
each Eligible Assignee that shall become a party hereto pursuant to Section
9.07.
"Lien" means any lien, security interest or other charge or
encumbrance of any kind, or any other type of preferential arrangement,
including, without limitation, the lien or retained security title of a
conditional vendor, any lien or security interest created in connection with
a sale/leaseback transaction and any easement, right of way or other
encumbrance on title to real property.
"Loan Documents" means this Agreement, the Notes, the Parent
Agreement and the Century/Texas Agreement.
"Majority Lenders" means at any time Lenders holding at least 51%
of the then aggregate unpaid principal amount of the A Notes held by the
Lenders, or, if no such principal amount is then outstanding, Lenders having
at least 51% of the Commitments.
"Managing Agents" has the meaning specified in the recital of
parties to this Agreement.
"Margin Stock" has the meaning specified in Regulation U.
"Material Adverse Change" means any material adverse change in the
business, condition (financial or otherwise), operations, performance or
properties of all of the Borrowers and their Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a)
the business, condition (financial or otherwise), operations, performance or
properties of all of the Borrowers and their Subsidiaries taken as a whole,
(b) the rights and remedies of the Agent, any Lender or any other creditor
under any Loan Document or (c) the ability of the Borrowers to perform their
obligations under any Loan Document to which they are or are to be a party.
"Minority Entity" means any corporation less than 50% of the Voting
Rights of which corporation are at the time directly or indirectly owned by
any Borrower, by any Borrower and one or more of its Subsidiaries, or by one
or more other Subsidiaries.
"ML Acquisition" means the acquisition of certain cable television
assets of ML Media pursuant to the terms of the Asset Purchase Agreement,
which acquisition may, in accordance with the terms of the Asset Purchase
Agreement, be consummated in two separate closings.
"ML Acquisition Price" means, subject to the adjustments contained
in Sections 2.2(b), (c) and (d) of the Asset Purchase Agreement,
$286,000,000.
"ML Media" means ML Media Partners, L.P., a Delaware limited
partnership.
"Multiemployer Plan" means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which any Borrower or any ERISA Affiliate is
making or accruing an obligation to make contributions, or has within any of
the preceding five plan years made or accrued an obligation to make
contributions, such plan being maintained pursuant to one or more collective
bargaining agreements.
"Multiple Employer Plan" means a single employer plan, as defined
in Section 4001(a)(15) of ERISA, which (i) is maintained for employees of any
Borrower or an ERISA Affiliate and at least one Person other than such
Borrower and its ERISA Affiliates or (ii) was so maintained and in respect of
which such Borrower or an ERISA Affiliate could have liability under Section
4064 or 4069 of ERISA in the event such plan has been or were to be
terminated.
"Net Cash Proceeds" means, with respect to any sale, lease,
transfer or other disposition of any asset or the sale, issuance or
incurrence of any Additional Unsecured Debt, the aggregate amount of cash
received from time to time by or on behalf of such Person in connection with
such transaction after deducting therefrom only (a) reasonable and customary
brokerage commissions, underwriting fees and discounts, legal fees, finder's
fees, rating agency fees and other similar fees and commissions and (b) the
amount of taxes payable in connection with or as a result of such transaction
and (c) the amount of any Debt secured by a Lien on such asset that, by the
terms of such transaction, is required to be repaid upon such disposition, in
each case to the extent, but only to the extent, that the amounts so deducted
are, at the time of receipt of such cash, actually paid to a Person that is
not an Affiliate of the Person making such payment (other than payments made
to a director of any Person in his capacity as a member or partner of a law
firm or partnership rendering legal services to such Person; provided that
the terms of such compensation are fair and reasonable and no less favorable
to such Person than it would obtain in a comparable arm's-length transaction
with a Person not an Affiliate) and are properly attributable to such
transaction or to the asset that is the subject thereof.
"Note" means an A Note or a B Note.
"Notice of A Borrowing" has the meaning specified in Section 2.02.
"Notice of B Borrowing" has the meaning specified in Section
2.03(a).
"Obligation" means, with respect to any Person, any payment,
performance or other obligation of such Person of any kind, including,
without limitation, any liability of such Person on any claim, whether or not
the right of any creditor to payment in respect of such claim is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, disputed,
undisputed, legal, equitable, secured or unsecured, and whether or not such
claim is discharged, stayed or otherwise affected by any proceeding referred
to in Section 6.01(g). Without limiting the generality of the foregoing, the
Obligations of the Borrowers under the Loan Documents include (a) the
obligation to pay principal, interest, charges, expenses, fees, attorneys'
fees and disbursements, indemnities and other amounts payable by any Borrower
under the Loan Documents and (b) the obligation of any Borrower to reimburse
any amount in respect of any of the foregoing that any Lender, in its sole
discretion, may elect to pay or advance on behalf of such Borrower.
"Parent Agreement" has the meaning specified in Section 3.01(h)(v).
"Parent Company" means Century/Holding in the case of CCC-I and
Century/Texas in the case of Pullman or Kootenai.
"Pay TV Units" means the aggregate number of premium or pay
television services to which Subscribers subscribe.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Cable System" means (i) any one or more of the cable
television systems listed on Schedule 6.01(c), including, but not limited to,
all of the property, real or personal, tangible or intangible (including, but
not limited to, all Franchises), owned or used in connection with the
operation of such system or (ii) capital stock representing 100% of the
Voting Rights of one or more corporations owning any one or more of such
cable television systems; provided that at the time of contribution of any
such system or capital stock to a Borrower pursuant to Section 6.01(c), such
system (i) operates under a valid Franchise (or under other authority
reasonably acceptable to the Majority Lenders) which shall be duly assigned
to such Borrower or a Subsidiary of such Borrower at the time of such
contribution and for which assignment all necessary governmental consents and
approvals shall have been duly obtained and be in full force and effect and
(ii) has suffered no material adverse change in its business, condition
(financial or otherwise), operations, performance, properties or prospects
since the effective date of this Agreement and (iii) prior to such
contribution is owned by one or more Persons other than a Borrower or any of
its Subsidiaries; and provided further that prior to the contribution of any
such system or capital stock to a Borrower, such Borrower shall have
delivered to the Agent and the Lenders such information as shall have been
reasonably requested by any Lender through the Agent as being necessary to
the Agent's and the Lenders' determination of compliance with the foregoing
conditions to contribution, including the most recent Qualified statements of
operations and cash flows or other financial statements of such system. For
the purposes of this definition, the term "Qualified" means financial
statements which reflect the expenses and income of such system in a manner
consistent with that used in financial reports of the relevant Borrower for
systems it has then been operating for at least one Fiscal Period.
"Person" means an individual, corporation (including a business
trust), joint stock company, trust, unincorporated association, joint venture
or other entity, or a government or any political subdivision or agency
thereof.
"Plan" means a Single Employer Plan or a Multiple Employer Plan.
"Pro-Forma Debt Service Ratio" means, as of the last day of any
Fiscal Quarter, the ratio of (i) EBIDT of the Borrowers and their
Subsidiaries for the four consecutive Fiscal Quarters just ended less the
aggregate amount of taxes paid by any of them during such four Fiscal
Quarters to (ii) the sum of (A) projected interest expense of all Debt of the
Borrowers and their Subsidiaries for the succeeding four Fiscal Quarters
(calculated using the weighted average of interest rates at the time of
calculation and at the principal outstanding at the time of calculation after
giving effect to any scheduled payments of principal during such four Fiscal
Quarters) plus (B) the aggregate principal amounts of all Debt required to be
paid during the same succeeding four Fiscal Quarters by the Borrowers and
their Subsidiaries.
"Pullman" has the meaning specified in the recital of parties to
this Agreement.
"Ratable Amount" has the meaning specified in Section 2.10(b)(iv).
"Rate Ratio" means, as of any date, the ratio of
(a) Total Debt as of such date to
(b) EBIDT for the most recent Fiscal Period which ends on or
before such date.
"Reference Banks" means Citibank.
"Register" has the meaning specified in Section 9.07(c).
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Required Lenders" means at any time Lenders holding at least 66_%
of the then aggregate unpaid principal amount of the A Notes held by the
Lenders, or, if no such principal amount is then outstanding, Lenders having
at least 66_% of the Commitments.
"Reserve Amount" means (a) if both stages of the ML Acquisition
have been consummated, 0 or (b) if both stages of the ML Acquisition have not
been consummated, $286,000,000 less the sum of (i) the amount that has been
paid to consummate the first stage of the ML Acquisition, if such stage is
consummated, and (ii) the amount that has been paid to consummate each
Approved Acquisition.
"Rock Acquisition" means the acquisition of cable television
systems in the states of California, Colorado, Idaho, Montana and Washington
from Rock Associates, Inc., CDA Cable, Inc., Southwest Colorado Cable, Inc.,
Kootenai and Pullman pursuant to the terms of five separate acquisition
agreements, all dated as of February 28, 1995, which acquisition was
consummated on February 28, 1995.
"Rock Associates" means Rock Associates, Inc., a Delaware
corporation.
"Single Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, which (i) is maintained for employees of any
Borrower or an ERISA Affiliate and no Person other than such Borrower and its
ERISA Affiliates or (ii) was so maintained and in respect of which such
Borrower or an ERISA Affiliate could have liability under Section 4069 of
ERISA in the event such plan has been or were to be terminated.
"Solvent" means, with respect to any Person on a particular date,
that on such date (a) the fair value of the property of such Person is not
less than the total amount of its liabilities (including, without limitation,
liabilities on all claims, whether or not reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured) of such Person, (b) the present fair
salable value of the assets of such Person is not less than the amount that
will be required to pay the probable liability of such Person on its existing
debts as they become absolute and matured, (c) such Person is able to realize
upon its assets and pay its debts and other liabilities, contingent
obligations and other commitments as they mature in the normal course of
business, (d) such Person does not intend to, and does not believe that it
will, incur debts or liabilities beyond such Person's ability to pay as such
debts and liabilities mature and (e) such Person is not engaged in business
or a transaction, and is not about to engage in business or a transaction,
for which such Person's property would constitute unreasonably small capital
after giving due consideration to the prevailing practice in each respective
industry in which such Person is engaged; it being understood that in
applying the foregoing criteria in respect of any Person:
(i) the value of the property and assets of such Person
includes the value of its interest in its subsidiaries and any rights to
contribution (whether by equity or loan) from any of its Affiliates, and
(ii) its ability to pay its debts and liabilities may be
measured by reference to, among other things, amounts received or to be
received in respect of any such property or assets.
"Subscriber" means a Person who subscribes to one or more of the
cable television services of (i) a Borrower or (ii) any Subsidiary of such
Borrower and includes both Basic Subscribers and Persons who subscribe to Pay
TV Units, but excludes each such Person whose account is more than 90 days
past due.
"Subsidiary" means, for any Borrower, any corporation 50% or more
of the voting Rights of which corporation are at the time directly or
indirectly owned by such Borrower, by such Borrower and one or more other
subsidiaries, or by one or more other Subsidiaries of such Borrower.
"Termination Date" means May 31, 1998 or the earlier date of
termination in whole of the Commitments pursuant to Section 2.05 or 6.01.
"Total Debt" means, as of any date, the Combined Consolidated Debt
of each Borrower and its Subsidiaries, including, without limitation, Capital
Leases, guaranties and obligations with respect to letters of credit and
trade accounts payable for which payment has been deferred by agreement
beyond the customary period in the industry.
"Unsecured Debt Documents" means the agreement or agreements
pursuant to which a Borrower shall sell, issue or incur Additional Unsecured
Debt, together with all other agreements, documents, certificates and
instruments relating to, arising out of, or in any way connected with the
sale, issuance or incurrence of Additional Unsecured Debt of such Borrower or
any of the transactions contemplated thereby, as such agreements, documents,
certificates and instruments may be amended, supplemented or otherwise
modified from time to time.
"Voting Rights" means, as to any corporation, ordinary voting power
(whether associated with outstanding common stock or outstanding preferred
stock, or both) to elect members of the Board of Directors of such
corporation (irrespective of whether or not at the time capital stock of any
class or classes of such corporation shall or might have voting power or
additional voting power upon the occurrence of any contingency).
"Voting Stock" means capital stock issued by a corporation, or
equivalent interests in any other Person, the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for the
election of directors (or Persons performing similar functions) of such
Person, even though the right so to vote has been suspended by the happening
of such a contingency.
"Wholly-Owned Subsidiary" means, for any Borrower, any corporation
of which 100% of the Voting Rights are at the time directly or indirectly
owned by such Borrower, by such Borrower and one or more of its other
Wholly-Owned Subsidiaries, or by one or more of its other Wholly-Owned
Subsidiaries.
"Withdrawal Liability" has the meaning specified in Part I of
Subtitle E of Title IV of ERISA.
SECTION 1.02. Computation of Time Periods. In this Agreement in
the computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including" and the words "to" and
"until" each means "to but excluding".
SECTION 1.03. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles consistent with those applied in the
preparation of the financial statements referred to in Sections 4.01(e) and
4.01(f), as modified from time to time by changes in accounting principles
which are required by generally accepted accounting principles in effect from
time to time.
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. The A Advances. Each Lender severally agrees, on
the terms and conditions hereinafter set forth, to make A Advances to the
Borrowers from time to time on any Business Day during the period from the
date hereof until the Termination Date in an aggregate amount not to exceed
at any time outstanding the amount set forth opposite such Lender's name on
the signature pages hereof or, if such Lender has entered into any Assignment
and Acceptance, set forth for such Lender in the Register maintained by the
Agent pursuant to Section 9.07(c), as such amount may be reduced pursuant to
Section 2.05 (such Lender's "Commitment") minus, except in the case of a
Borrowing described in Section 3.04 or 3.05, such Lender's ratable share of
the Reserve Amount, based on such Lender's share of the aggregate amount of
the Commitments of the Lenders, provided that the aggregate amount of the
Commitments of the Lenders shall be in each case deemed used from time to
time to the extent of the aggregate amount of the B Advances then outstanding
and such deemed use of the aggregate amount of the Commitments shall be
applied to the Lenders ratably according to their respective Commitments
(such deemed use of the aggregate amount of the Commitments being a "B
Reduction"), and provided further that Advances made under Section 3.04 or
3.05 shall not exceed, in the aggregate, either (i) the ML Acquisition Price,
if both stages of the ML Acquisition have been consummated, or (ii)
$286,000,000, if both stages of the ML Acquisition have not been consummated.
Each A Borrowing shall be in an aggregate amount not less than $5,000,000 or
an integral multiple of $1,000,000 in excess thereof (or, if less, an
aggregate amount equal to the difference between the aggregate amount of a
proposed B Borrowing requested by a Borrower and the aggregate amount of B
Advances offered to be made by the Lenders and accepted by such Borrower in
respect of such B Borrowing, if such B Borrowing is made on the same date as
such A Borrowing) and shall consist of A Advances of the same Type made on
the same day by the Lenders ratably according to their respective
Commitments. Within the limits of each Lender's Commitment, the Borrowers
may borrow, prepay pursuant to Section 2.10 and reborrow under this Section
2.01.
SECTION 2.02. Making the A Advances. (a) Each A Borrowing shall
be made on notice, given not later than 11:00 A.M. (New York City time) on
the third (or, in the case of a Base Rate Advance, the first) Business Day
prior to the date of the proposed A Borrowing, by the relevant Borrower to
the Agent, which shall give to each Lender prompt notice thereof by
telecopier, telex or cable. Each such notice of an A Borrowing (a "Notice of
A Borrowing") shall be by telecopier, telex or cable, confirmed immediately
by mail or delivery in writing, in substantially the form of Exhibit B-1
hereto, specifying therein the requested (i) date of such A Borrowing, (ii)
Type of A Advances comprising such A Borrowing, (iii) aggregate amount of
such A Borrowing, and (iv) in the case of an A Borrowing comprised of
Adjusted CD Rate Advances or Eurodollar Rate Advances, initial Interest
Period for each such A Advance. Each Lender shall, before 11:00 A.M. (New
York City time) on the date of such A Borrowing, make available for the
account of its Applicable Lending Office to the Agent at its address referred
to in Section 9.02, in same day funds, such Lender's ratable portion of such
A Borrowing. After the Agent's receipt of such funds and upon fulfillment of
the applicable conditions set forth in Article III, the Agent will make such
funds available to the relevant Borrower at the Agent's aforesaid address.
(b) Anything in subsection (a) above to the contrary
notwithstanding, a Borrower may not select Adjusted CD Rate Advances or
Eurodollar Rate Advances for any A Borrowing if the aggregate amount of such
A Borrowing is less than $5,000,000 or if the obligation of the Lenders to
make Eurodollar Rate Advances shall then be suspended pursuant to Section
2.08.
(c) Each Notice of A Borrowing shall be irrevocable and binding on
the Borrower giving such notice. In the case of any A Borrowing which the
related Notice of A Borrowing specifies is to be comprised of Adjusted CD
Rate Advances or Eurodollar Rate Advances, the Borrower giving such notice
shall indemnify each Lender against any loss, cost or expense incurred by
such Lender as a result of any failure to fulfill on or before the date
specified in such Notice of A Borrowing for such A Borrowing the applicable
conditions set forth in Article III, including, without limitation, any loss,
cost or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by such Lender to fund the A Advance to be
made by such Lender as part of such A Borrowing when such A Advance, as a
result of such failure, is not made on such date.
(d) Unless the Agent shall have received notice from a Lender
prior to the date of any A Borrowing that such Lender will not make available
to the Agent such Lender's ratable portion of such A Borrowing, the Agent may
assume that such Lender has made such portion available to the Agent on the
date of such A Borrowing in accordance with subsection (a) of this Section
2.02 and the Agent may, in reliance upon such assumption, make available to
the relevant Borrower on such date a corresponding amount. If and to the
extent that such Lender shall not have so made such ratable portion available
to the Agent, such Lender and the relevant Borrower severally agree to repay
to the Agent forthwith on demand such corresponding amount together with
interest thereon, for each day from the date such amount is made available to
such Borrower until the date such amount is repaid to the Agent, at (i) in
the case of such Borrower, the interest rate applicable at the time to A
Advances comprising such A Borrowing and (ii) in the case of such Lender, the
Federal Funds Rate. If such Lender shall repay to the Agent such
corresponding amount, such amount so repaid shall constitute such Lender's A
Advance as part of such A Borrowing for purposes of this Agreement.
(e) The failure of any Lender to make the A Advance to be made by
it as part of any A Borrowing shall not relieve any other Lender of its
obligation, if any, hereunder to make its A Advance on the date of such A
Borrowing, but no Lender shall be responsible for the failure of any other
Lender to make the A Advance to be made by such other Lender on the date of
any A Borrowing.
SECTION 2.03. The B Advances. (a) Each Lender severally agrees
that the Borrowers may make B Borrowings under this Section 2.03 from time to
time on any Business Day during the period from the date hereof until the
date occurring 30 days prior to the Termination Date in the manner set forth
below; provided that, following the making of each B Borrowing, (x) the
aggregate amount of the B Advances of all Lenders then outstanding shall not
exceed $25,000,000, (y) the aggregate amount of the B Advances of any one
Lender then outstanding shall not exceed $25,000,000 and (z) the aggregate
amount of the Advances then outstanding shall not exceed the aggregate amount
of the Commitments of the Lenders (computed without regard to any B
Reduction).
(i) A Borrower may request a B Borrowing under this Section 2.03
by delivering to the Agent, by telecopier, telex or cable, confirmed
immediately by mail or delivery in writing, a notice of a B Borrowing (a
"Notice of B Borrowing") in substantially the form of Exhibit B-2 hereto,
specifying the date and aggregate amount of the proposed B Borrowing, the
maturity date for repayment of each B Advance to be made as part of such B
Borrowing (which maturity date may not be earlier than the date occurring 30
days after the date of such B Borrowing or later than the Termination Date),
the interest payment date or dates relating thereto, and any other terms to
be applicable to such B Borrowing, not later than 10:00 A.M. (New York City
time) (A) at least two Business Days prior to the date of the proposed B
Borrowing, if such Borrower shall specify in the Notice of B Borrowing that
the rates of interest to be offered by the Lenders shall be fixed rates per
annum and (B) at least five Business Days prior to the date of the proposed B
Borrowing, if such Borrower shall instead specify in the Notice of B
Borrowing the basis to be used by the Lenders in determining the rates of
interest to be offered by them. The Agent shall in turn promptly notify each
Lender of each request for a B Borrowing received by it from such Borrower by
sending such Lender a copy of the related Notice of B Borrowing.
(ii) Each Lender may, if, in its sole discretion, it elects to do
so, irrevocably offer to make one or more B Advances to such Borrower as part
of such proposed B Borrowing at a rate or rates of interest specified by such
Lender in its sole discretion, by notifying the Agent (which shall give
prompt notice thereof to such Borrower), before 10:00 A.M. (New York City
time) (A) on the date of such proposed B Borrowing, in the case of a Notice
of B Borrowing delivered pursuant to clause (A) of paragraph (i) above and
(B) three Business Days before the date of such proposed B Borrowing, in the
case of a Notice of B Borrowing delivered pursuant to clause (B) of paragraph
(i) above, of the minimum amount and maximum amount of each B Advance which
such Lender would be willing to make as part of such proposed B Borrowing
(which amounts may, subject to the proviso to the first sentence of this
Section 2.03(a), exceed such Lender's Commitment), the rate or rates of
interest therefor and such Lender's Applicable Lending Office with respect to
such B Advance; provided that if the Agent in its capacity as a Lender shall,
in its sole discretion, elect to make any such offer, it shall notify such
Borrower of such offer before 9:30 A.M. (New York City time) on the date on
which notice of such election is to be given to the Agent by the other
Lenders. If any Lender shall elect not to make such an offer, such Lender
shall so notify the Agent, before 10:00 A.M. (New York City time) on the date
on which notice of such election is to be given to the Agent by the other
Lenders, and such Lender shall not be obligated to, and shall not, make any B
Advance as part of such B Borrowing; provided that the failure by any Lender
to give such notice shall not cause such Lender to be obligated to make any B
Advance as part of such proposed B Borrowing.
(iii) Such Borrower shall, in turn, (A) before 11:00 A.M. (New
York City time) on the date of such proposed B Borrowing, in the case of a
Notice of B Borrowing delivered pursuant to clause (A) of paragraph (i) above
and (B) before 1:00 P.M. (New York City time) three Business Days before the
date of such proposed B Borrowing, in the case of a Notice of B Borrowing
delivered pursuant to clause (B) of paragraph (i) above, either:
(x) cancel such B Borrowing by giving the Agent notice to
that effect, or
(y) accept one or more of the offers made by any Lender or
Lenders pursuant to paragraph (ii) above, in its sole discretion, by giving
notice to the Agent of the amount of each B Advance (which amount shall be
equal to or greater than the minimum amount, and equal to or less than the
maximum amount, notified to such Borrower by the Agent on behalf of such
Lender for such B Advance pursuant to paragraph (ii) above) to be made by
each Lender as part of such B Borrowing, and reject any remaining offers made
by Lenders pursuant to paragraph (ii) above by giving the Agent notice to
that effect.
(iv) If such Borrower notifies the Agent that such B Borrowing is
cancelled pursuant to paragraph (iii)(x) above, the Agent shall give prompt
notice thereof to the Lenders and such B Borrowing shall not be made.
(v) If such Borrower accepts one or more of the offers made by any
Lender or Lenders pursuant to paragraph (iii)(y) above, the Agent shall in
turn promptly notify (A) each Lender that has made an offer as described in
paragraph (ii) above, of the date and aggregate amount of such B Borrowing
and whether or not any offer or offers made by such Lender pursuant to
paragraph (ii) above have been accepted by such Borrower, (B) each Lender
that is to make a B Advance as part of such B Borrowing, of the amount of
each B Advance to be made by such Lender as part of such B Borrowing, and (C)
each Lender that is to make a B Advance as part of such B Borrowing, upon
receipt, that the Agent has received forms of documents appearing to fulfill
the applicable conditions set forth in Article III. Each Lender that is to
make a B Advance as part of such B Borrowing shall, before 12:00 noon (New
York City time) on the date of such B Borrowing specified in the notice
received from the Agent pursuant to clause (A) of the preceding sentence or
any later time when such Lender shall have received notice from the Agent
pursuant to clause (C) of the preceding sentence, make available for the
account of its Applicable Lending Office to the Agent at its address referred
to in Section 9.02 such Lender's portion of such B Borrowing, in same day
funds. Upon fulfillment of the applicable conditions set forth in Article
III and after receipt by the Agent of such funds, the Agent will make such
funds available to such Borrower at the Agent's aforesaid address. Promptly
after each B Borrowing the Agent will notify each Lender of the amount of the
B Borrowing, the consequent B Reduction and the dates upon which such B
Reduction commenced and will terminate.
(b) Each B Borrowing shall be in an aggregate amount not less than
$5,000,000 or an integral multiple of $1,000,000 in excess thereof and,
following the making of each B Borrowing, each Borrower and each Lender shall
be in compliance with the limitations set forth in the proviso to the first
sentence of subsection (a) above.
(c) Within the limits and on the conditions set forth in this
Section 2.03, a Borrower may from time to time borrow under this Section
2.03, repay or prepay pursuant to subsection (d) below, and reborrow under
this Section 2.03, provided that a B Borrowing shall not be made within three
Business Days of the date of any other B Borrowing.
(d) The Borrower that makes a B Borrowing shall repay to the Agent
for the account of each Lender which has made a B Advance to such Borrower,
or each other holder of a B Note of such Borrower, on the maturity date of
each such B Advance (such maturity date being that specified by such Borrower
for repayment of such B Advance in the related Notice of B Borrowing
delivered pursuant to subsection (a)(i) above and provided in the B Note
evidencing such B Advance), the then unpaid principal amount of such B
Advance. Such Borrower shall have no right to prepay any principal amount of
any B Advance unless, and then only on the terms, specified by such Borrower
for such B Advance in the related Notice of B Borrowing delivered pursuant to
subsection (a)(i) above and set forth in the B Note evidencing such B
Advance.
(e) The Borrower that makes a B Borrowing shall pay interest on
the unpaid principal amount of each B Advance made to it from the date of
such B Advance to the date the principal amount of such B Advance is repaid
in full, at the rate of interest for such B Advance specified by the Lender
making such B Advance in its notice with respect thereto delivered pursuant
to subsection (a)(ii) above, payable on the interest payment date or dates
specified by such Borrower for such B Advance in the related Notice of B
Borrowing delivered pursuant to subsection (a)(i) above, as provided in the B
Note evidencing such B Advance, which interest payment date or dates shall
occur no less frequently than on the last day of each three month period
occurring during the term of each B Advance.
(f) The indebtedness of each Borrower resulting from each B
Advance made to such Borrower as part of a B Borrowing shall be evidenced by
a separate B Note of such Borrower payable to the order of the Lender making
such B Advance.
SECTION 2.04. Fees. (a) Commitment Fee. The Borrowers jointly
and severally agree to pay to the Agent for the account of each Lender a
commitment fee on the average daily unused portion of such Lender's
Commitment (determined without giving effect to any B Reduction) from the
date hereof in the case of each Bank and from the effective date specified in
the Assignment and Acceptance pursuant to which it became a Lender in the
case of each other Lender until the Termination Date at the rate of 3/8 of l%
per annum, payable on the last day of each November, February, May and August
during the term of such Lender's Commitment, commencing August 31, 1995, and
on the Termination Date.
(b) Agent Fee. The Borrowers jointly and severally agree to pay
to the Agent, for its own account, the fees set forth in the Letter Agreement
between the Agent and the Borrowers dated the date hereof.
SECTION 2.05. Reduction of the Commitments (a) Mandatory. On
each date on which a prepayment is required under Section 2.10(b)(i), (iii)
or (iv), the respective Commitments of the Lenders shall be automatically and
permanently reduced by an amount for each Lender equal to the amount of such
prepayment which is to be applied under Section 2.10(c) to A Advances owing
to such Lender.
(b) Optional. The Borrowers shall have the right, upon at least 5
Business Days' notice to the Agent, to terminate in whole or permanently
reduce ratably in part the unused portions of the respective Commitments of
the Lenders, provided that each partial reduction shall be in the aggregate
amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof.
SECTION 2.06. Repayment of A Advances. Each Borrower shall repay
the principal amount of each A Advance made to it owing to each Lender on
each of the principal installment dates listed below commencing August 31,
1998 and ending August 31, 2003, and the amount to be paid on each such
principal repayment installment date shall equal the product obtained by
multiplying (x) the unpaid principal amount of such A Advance outstanding on
the Termination Date by (y) the percentage set forth below for that principal
repayment installment date:
Last day of Last day of Last day of Last day of
Year February May August November
1998 XXX XXX 3.000% 3.000%
1999 3.000% 3.000% 4.000% 4.000%
2000 4.000% 4.000% 5.000% 5.000%
2001 5.000% 5.000% 5.250% 5.250%
2002 5.250% 5.250% 6.250% 6.250%
2003 6.250% 6.250% 6.000% XXX
provided, however, that the last such installment shall be in the amount
necessary to repay in full the unpaid principal amount of such A Advance.
SECTION 2.07. Interest on the A Advances. (a) Ordinary Interest.
Each Borrower shall pay interest on the unpaid principal amount of each A
Advance made to such Borrower owing to each Lender in accordance with the A
Note of such Borrower to the order of such Lender at the following rates per
annum:
(i) Base Rate Advances. During such periods as such A Advance is
a Base Rate Advance, a rate per annum equal at all times to the sum of the
Base Rate in effect from time to time plus:
(A) 7/8 of 1% per annum during each period in which the
applicable Rate Ratio is greater than or equal to 6.0:1,
(B) 3/4 of 1% per annum during each period in which the
applicable Rate Ratio is less than 6.0:1 and greater than or equal to 5.5:1,
(C) 1/2 of l% per annum during each period in which the
applicable Rate Ratio is less than 5.5:1 and greater than or equal to 5.0:1,
(D) 3/8 of l% per annum during each period in which the
applicable Rate Ratio is less than 5.0:1 and greater than or equal to 4.5:1,
(E) 1/4 of 1% per annum during each period in which the
applicable Rate Ratio is less than 4.5:1 and greater than 4.0:1, and
(F) 1/8 of 1% per annum during each period in which the
applicable Rate Ratio is less than or equal to 4.0:1,
payable in arrears on the last day of each May, August, November and
February during such periods and on the date such Base Rate Advance shall be
Converted or paid in full.
(ii) Eurodollar Rate Advance. During such periods as such A
Advance is a Eurodollar Rate Advance, a rate per annum equal at all times
during each Interest Period for such A Advance to the sum of the Eurodollar
Rate for such Interest Period for such A Advance plus:
(A) 1 and 7/8% per annum during each period in which the
applicable Rate Ratio is greater than or equal to 6.0:1,
(B) 1 and 3/4% per annum during each period in which the
applicable Rate Ratio is less than 6.0:1 and greater than or equal to 5.5:1,
(C) 1 and 1/2% per annum during each period in which the
applicable Rate Ratio is less than 5.5:1 and greater than or equal to 5.0:1,
(D) 1 and 3/8% per annum during each period in which the
applicable Rate Ratio is less than 5.0:1 and greater than or equal to 4.5:1,
(E) 1 and 1/4% per annum during each period in which the
applicable Rate Ratio is less than 4.5:1 and greater than 4.0:1, and
(F) l and 1/8% per annum during each period in which the
applicable Rate Ratio is less than or equal to 4.0:1,
payable in arrears on the last day of such Interest Period and, if such
Interest Period is greater than three months, on the last day of each
three-month period during such Interest Period.
(iii) Adjusted CD Rate Advances. During such periods as such
A Advance is an Adjusted CD Rate Advance, a rate per annum equal at all times
during each Interest Period for such A Advance to the sum of the Adjusted CD
Rate Advance for such Interest Period for such A Advance plus:
(A) 2% per annum during each period in which the applicable
Rate Ratio is greater than or equal to 6.0:1,
(B) 1 and 7/8% per annum during each period in which the
applicable Rate Ratio is less than 6.0:1 and greater than or equal to 5.5:1,
(C) 1 and 5/8% per annum during each period in which the
applicable Rate Ratio is less than 5.5:1 and greater than or equal to 5.0:1,
(D) 1 and 1/2% per annum during each period in which the
applicable Rate Ratio is less than 5.0:1 and greater than or equal to 4.5:1,
(E) 1 and 3/8% per annum during each period in which the
applicable Rate Ratio is less than 4.5:1 and greater than 4.0:1, and
(F) 1 and 1/4% per annum during each period in which the
applicable Rate Ratio is less than or equal to 4.0:1,
payable in arrears on the last day of such Interest Period and, if such
Interest Period is greater than 90 days, on the last day of each 90-day
period during such Interest Period.
(b) Default Interest. Each Borrower shall pay interest, to the
maximum extent permitted by law, on the unpaid principal amount of each A
Advance made to such Borrower that is not paid when due and on the unpaid
amount of all interest, fees and other amounts payable hereunder by such
Borrower that is not paid when due, payable on demand, at a rate per annum
equal at all times to (i) in the case of any amount of principal, the greater
of (x) 2% per annum above the rate per annum required to be paid on such A
Advance immediately prior to the date on which such amount became due and (y)
2% per annum above the rate per annum on a hypothetical Borrowing consisting
of a Eurodollar Rate Advance in a principal amount equal to the principal
amount of such defaulted A Advance and having consecutive Interest Periods of
three months' duration, the first day of the initial Interest Period for such
hypothetical Eurodollar Rate Advance being deemed to occur on the first day
on which such defaulted A Advance shall not have been paid when due and (ii)
in the case of all other amounts payable by such Borrower, 2% per annum above
the Base Rate in effect from time to time.
(c) Rate Ratio Certificates. The Borrowers shall deliver a
certificate, in substantially the form of Exhibit D, to the Agent (i) on each
date on which financial statements are delivered pursuant to Sections 5.03(b)
and 5.03(c) (each such certificate being a "Periodic Certificate"), (ii) on
the date of each Borrowing and (iii) on each other date on which Total Debt
shall change by an amount in excess of $5,000,000 from Total Debt when the
most recent prior certificate was delivered under this Section 2.07(c) (each
certificate delivered pursuant to clause (ii) or (iii) being an "Interim
Certificate").
(A) Each Periodic Certificate shall certify the Rate Ratio in
effect on each day during the period commencing on the last day of the most
recent Fiscal Period which ends on or before the date on which such
certificate is delivered and ending on the date on which such certificate is
delivered, based in each case upon EBIDT for such most recent Fiscal Period
and Total Debt as of each date for which a Rate Ratio is certified after
giving effect to all changes of Total Debt on each such date.
(B) Each Interim Certificate shall certify the Rate Ratio in
effect on the date on which such certificate is delivered, except that, if
such certificate is delivered before financial statements have been delivered
pursuant to Section 5.03(b) or 5.03(c) for the most recent Fiscal Period
which ends on or before the date on which such certificate is delivered, such
certificate shall certify a provisional Rate Ratio based upon EBIDT for the
Fiscal Period immediately preceding such most recent Fiscal Period and upon
Total Debt as of the date on which such certificate is delivered after giving
effect to all changes of Total Debt on such date.
Each certificate shall have attached to it financial statements certified by
a Financial Officer of each Borrower on the date on which such certificate is
delivered as the then most currently available Combined financial statements
of the Borrowers and their Subsidiaries, and each certificate shall provide,
in reasonable detail, the calculations (and the basis for such calculations)
used in determining the Rate Ratio for each date for which a calculation is
to be made by that certificate, including but not limited to the calculation
of EBIDT as derived from the attached financial statements.
(d) Effective Dates for Rate Ratios. Each Rate Ratio certified in
any Periodic Certificate or Interim Certificate shall (absent manifest error)
become effective on the date such certificate is delivered in compliance with
this Agreement. The Rate Ratio certified for the date on which such
certificate is delivered shall apply to each date thereafter until the
delivery in compliance with this Agreement of the next certificate called for
by Section 2.07(c), except that such Rate Ratio shall be a provisional Rate
Ratio as applied to any date on or after the last day of the Fiscal Period
which first ends after the Fiscal Period with respect to which EBIDT was
determined in calculating such Rate Ratio. The Rate Ratio certified in a
Periodic Certificate for any date prior to the date on which such certificate
is delivered shall be applied retroactively to supersede each provisional
Rate Ratio certified for the same date in an Interim Certificate or a
Periodic Certificate previously delivered. Notwithstanding the foregoing,
(i) in no event will any Rate Ratio certified in any Periodic Certificate or
Interim Certificate be given retroactive effect for a date in any Fiscal
Quarter other than the Fiscal Quarter in which such Periodic Certificate or
Interim Certificate is delivered and (ii) if the Borrowers fail to deliver
financial statements and the related Periodic Certificate when required by
Section 5.03(b) or 5.03(c), as the case may be, then the applicable Rate
Ratio shall be the Rate Ratio in effect on the date on which such Periodic
Certificate should have been delivered and shall continue in effect until a
certificate in compliance with this Section 2.07 is delivered.
(e) Retroactive Interest Adjustment. Each retroactive change in
the Rate Ratio pursuant to Section 2.07(d) shall be given retroactive effect
in determining the applicable interest rates for A Advances pursuant to
Section 2.07(a) for a period of time identical to that given such retroactive
change in the Rate Ratio. If any such retroactive change occurs in the
interest rate payable on account of an A Advance for a period for which a
Borrower has already paid interest, then any overpayment of interest by such
Borrower resulting therefrom shall be credited to future interest or other
payment obligations of such Borrower with respect to that Advance and any
underpayment of interest by such Borrower resulting therefrom shall be paid
by such Borrower to the Agent for the account of the Lender to whom such
Advance is owed upon demand by the Agent.
SECTION 2.08. Interest Rate Determination and Protection. (a)
Each Reference Bank agrees to furnish to the Agent timely information for the
purpose of determining each Adjusted CD Rate or Eurodollar Rate, as
applicable. If any Reference Bank shall not furnish such timely information
to the Agent for the purpose of determining any such interest rate, the Agent
shall determine such interest rate on the basis of timely information
furnished by any remaining Reference Banks.
(b) The Agent shall give prompt notice to the Borrowers and the
Lenders of the applicable interest rate determined by the Agent for purposes
of Section 2.07(a)(i), (ii) or (iii), and the applicable rate, if any,
furnished by each Reference Bank for the purpose of determining the
applicable interest rate under Section 2.07(a)(ii) or (iii).
(c) If no Reference Bank furnishes timely information to the Agent
for determining the Adjusted CD Rate for any Adjusted CD Rate Advances, or
the Eurodollar Rate for any Eurodollar Rate Advances,
(i) the Agent shall forthwith notify the Borrowers and the Lenders
that the interest rate cannot be determined for such Adjusted CD Rate
Advances or Eurodollar Rate Advances, as the case may be,
(ii) each such Advance will automatically, on the last day of the
then existing Interest Period therefor, Convert into a Base Rate Advance (or
if such Advance is then a Base Rate Advance, will continue as a Base Rate
Advance), and
(iii) the obligation of the Lenders to make, or to Convert A
Advances into, Adjusted CD Rate Advances or Eurodollar Rate Advances, as the
case may be, shall be suspended until the Agent shall notify the Borrowers
and the Lenders that the circumstances causing such suspension no longer
exist.
(d) If, with respect to any Eurodollar Rate Advances, the Majority
Lenders notify the Agent that the Eurodollar Rate for any Interest Period for
such Advances will not adequately reflect the cost to such Majority Lenders
of making, funding or maintaining their respective Eurodollar Rate Advances
for such Interest Period, the Agent shall forthwith so notify the Borrowers
and the Lenders, whereupon
(i) each Eurodollar Rate Advance will automatically, on the last
day of the then existing Interest Period therefor, Convert into a Base Rate
Advance, and
(ii) the obligation of the Lenders to make, or to Convert A
Advances into, Eurodollar Rate Advances shall be suspended until the Agent
shall notify the Borrowers and the Lenders that the circumstances causing
such suspension no longer exist.
(e) If a Borrower shall fail to select the duration of any
Interest Period for any Adjusted CD Rate Advances or any Eurodollar Rate
Advances in accordance with the provisions contained in the definition of
"Interest Period" in Section 1.01, the Agent will forthwith so notify such
Borrower and the Lenders and such Borrower will be deemed to have selected,
for the Interest Period immediately succeeding the then existing Interest
Period therefor, if such Advance is a Eurodollar Advance, an Interest Period
for such Advance of three months' duration and, if such Advance is an
Adjusted CD Rate Advance, an Interest Period for such Advance of 90-days'
duration.
(f) On the date on which the aggregate unpaid principal amount of
A Advances comprising any A Borrowing shall be reduced, by payment or
prepayment or otherwise, to less than $5,000,000, such A Advances shall, if
they are Advances of a Type other than Base Rate Advances, automatically
Convert into Base Rate Advances, and on and after such date the right of the
Borrower making such A Borrowing to Convert such Advances into Advances of a
Type other than Base Rate Advances shall terminate; provided, however, that,
if and so long as each such A Advance shall be of the same Type and have the
same Interest Period as A Advances comprising another A Borrowing or other A
Borrowings, and the aggregate unpaid principal amount of all such A Advances
shall equal or exceed $5,000,000, such Borrower shall have the right to
continue all such A Advances as, or to Convert all such A Advances into, A
Advances of such Type having such Interest Period.
SECTION 2.09. Voluntary Conversion of A Advances. Any Borrower
may on any Business Day, upon notice given to the Agent not later than 11:00
A.M. (New York City time) on the third Business Day prior to the date of the
proposed Conversion and subject to the provisions of Sections 2.08, 2.11 and
2.12, Convert all A Advances of one Type comprising the same Borrowing made
by such Borrower into Advances of another Type; provided, however, that any
Conversion of any Adjusted CD Rate Advances or Eurodollar Rate Advances into
Advances of another Type shall be made on, and only on, the last day of an
Interest Period for such Adjusted CD Rate Advances or Eurodollar Rate
Advances. Each such notice of a Conversion shall, within the restrictions
specified above, specify (i) the date of such Conversion, (ii) the A Advances
to be Converted, and (iii) if such Conversion is into Adjusted CD Rate
Advances or Eurodollar Rate Advances, the duration of the Interest Period for
each such A Advance.
SECTION 2.10. Prepayments of A Advances. (a) Optional. Any
Borrower may, upon at least three Business Days' notice to the Agent stating
the proposed date and aggregate principal amount of the prepayment, and if
such notice is given such Borrower shall, prepay the outstanding principal
amount of the A Advances comprising part of the same A Borrowing made by such
Borrower in whole or ratably in part, together with accrued interest to the
date of such prepayment on the principal amount prepaid; provided, however,
that (x) each partial prepayment shall be in an aggregate principal amount
not less than $5,000,000 and, if made after the Termination Date, shall be
applied ratably to the respective principal repayment installments of such A
Advances and (y) in the event of any such prepayment of an Adjusted CD Rate
Advance or Eurodollar Rate Advance, such Borrower shall be obligated to
reimburse the Lenders in respect thereof pursuant to Section 9.04(b).
(b) Mandatory. (i) Sales of Assets. Each Borrower shall, on
each date on which such Borrower or any of its Subsidiaries receives any Net
Cash Proceeds from the sale, lease, transfer or other disposition of any
asset of such Borrower or any such Subsidiary (other than sales of assets in
the ordinary course of business and any exchange of assets permitted by
Section 5.02(e)(v)), prepay an aggregate principal amount of the A Advances
comprising part of the same A Borrowings equal to such Net Cash Proceeds (or,
if less, the aggregate unpaid principal amount of all A Advances), together
with accrued interest to the date of such prepayment on the principal amount
prepaid and all amounts then owing under Section 9.04(b) in respect of such
prepayment.
(ii) Excess Cash Flow. On the last day of each Fiscal Quarter
commencing after the Termination Date, the Borrowers shall prepay the
outstanding principal amount of the A Advances in an aggregate amount equal
to the sum of (A) 40% of Excess Cash Flow for the Borrowers for the
immediately preceding Fiscal Quarter plus (B) the Deferred Amount (as defined
below) as of such last day (or, if less than such sum, the aggregate unpaid
principal amount of all A Advances), together with accrued interest to the
date of such prepayment on the principal amount prepaid and all amounts then
owing under Section 9.04(b) in respect of such prepayment; provided, however,
that if such sum shall be less than $500,000, the time when such prepayment
shall become due shall be deferred until the earlier of (x) the last day of
the first Fiscal Quarter thereafter on which such sum (including, without
limitation, all Deferred Amounts) shall equal or exceed $500,000 or (y) the
occurrence of an Event of Default. "Deferred Amount" means, as of any day,
the cumulative unpaid amount of all prepayments which were required to be
made under this Section 2.10(b)(ii) prior to such day but whose due date has
been deferred at any time pursuant to the proviso set forth in the preceding
sentence.
(iii) Sale, Issuance or Incurrence of Additional Unsecured
Debt. Each Borrower shall, on each date on which such Borrower receives any
Net Cash Proceeds from the sale, issuance or incurrence of Additional
Unsecured Debt, prepay the A Advances comprising part of the same A
Borrowings in an aggregate principal amount equal to such Net Cash Proceeds
(or, if less, the aggregate unpaid principal amount of all A Advances),
together with accrued interest to the date of such prepayment on the
principal amount prepaid and all amounts then owing under Section 9.04(b) in
respect of such prepayment.
(iv) Optional Prepayment or Repurchase of Additional Unsecured
Debt. To the extent that the Unsecured Debt Documents permit optional
prepayments, on each date on which a Borrower shall voluntarily prepay,
redeem, purchase, defease or otherwise acquire all or any portion of the
Additional Unsecured Debt in a transaction permitted by Section 5.02(m), such
Borrower shall prepay the A Advances in an aggregate principal amount equal
to the Ratable Amount (as defined below) as of such date, together with
accrued interest to the date of such prepayment on the principal amount
prepaid and all amounts then owing under Section 9.04(b) in respect of such
prepayment. "Ratable Amount" means, as of any date, the product obtained by
multiplying the entire unpaid principal amount of the A Advances made to such
Borrower then outstanding times a fraction the numerator of which shall be
the principal amount of the Additional Unsecured Debt of such Borrower being
prepaid, redeemed, purchased, defeased or otherwise acquired and the
denominator of which shall be the entire unpaid principal amount of such
Additional Unsecured Debt then outstanding.
(v) Notice. A Borrower shall give the Agent at least five
Business Days' prior written notice of each prepayment required by this
Section 2.10(b) stating the aggregate amount (or in the case of each
prepayment required pursuant to Section 2.10(b)(i) and 2.10(b)(iii), stating
the approximate aggregate amount) of such prepayment and the date on which
such prepayment shall be made; provided that failure by any Borrower to give
any notice shall not relieve such Borrower of its obligation to make such
prepayment.
(c) Application of Prepayment Proceeds. Each prepayment by a
Borrower or Borrowers, as the case may be, under Section 2.10(b) shall be
applied ratably to all A Advances owed by such Borrower or the Borrowers, as
the case may be. Each prepayment by a Borrower or Borrowers, as the case may
be, under Section 2.10(b) made after the Termination Date shall be applied
ratably to the respective principal repayment installments of the A Advances
owed by such Borrower or the Borrowers, as the case may be, being prepaid.
SECTION 2.11. Increased Costs, Etc. (a) If, due to either (i)
the introduction of or any change (other than any change by way of imposition
or increase of reserve requirements, in the case of Adjusted CD Rate
Advances, included in the Adjusted CD Rate Reserve Percentage) in or in the
interpretation of any law or regulation or (ii) the compliance with any
guideline or request from any central bank or other governmental authority
(whether or not having the force of law), there shall be any increase in the
cost to any Lender of agreeing to make or making, funding or maintaining
Adjusted CD Rate Advances or Eurodollar Rate Advances, then, if such costs
are or will be charged to customers of such Lender generally, the Borrower to
whom such Advances were made shall from time to time, upon demand by such
Lender (with a copy of such demand to the Agent), pay to the Agent for the
account of such Lender additional amounts sufficient to compensate such
Lender for such increased cost. A certificate as to the amount of such
increased costs setting forth in reasonable detail the calculations used in
determining such increased costs, submitted to such Borrower and the Agent by
such Lender, shall be conclusive and binding for all purposes, absent
manifest error. Notwithstanding anything to the contrary contained in this
subsection (a), a Lender shall only be entitled to receive reimbursement for
such increased costs to the extent incurred within 90 days prior to, and at
any time after, the date on which such Lender gives to such Borrower a notice
that an event has occurred as a result of which such increased costs will
arise or a notice that such Borrower is obligated to pay increased costs,
whichever first occurs.
(b) If, due to either (i) the introduction of any change in or in
the interpretation of any law or regulation occurring on or after the
effective date hereof or (ii) the compliance with any guideline or request
from any central bank or other governmental authority (whether or not having
the force of law) issued on or after the 90th day prior to the effective date
hereof, any Lender determines that there shall be any increase in the amount
of capital required or expected to be maintained by such Lender or any
corporation controlling such Lender as a result of or based upon the
existence of such Lender's commitment to lend hereunder and other commitments
of this type, then, upon demand by such Lender (with a copy of such demand to
the Agent), the Borrowers shall immediately pay to the Agent for the account
of such Lender, from time to time as specified by such Lender, additional
amounts (without duplication) sufficient to compensate such Lender or such
corporation in the light of such circumstances, to the extent that such
Lender reasonably determines such increase in capital to be allocable to the
existence of such Lender's commitment to lend hereunder. A certificate as to
such amounts setting forth in reasonable detail the calculations used in
determining such amounts, submitted to the Borrowers and the Agent by such
Lender, shall be conclusive and binding for all purposes, absent manifest
error. Notwithstanding anything to the contrary contained in this subsection
(b), a Lender shall only be entitled to receive reimbursement for such
additional amounts pursuant to this subsection (b) to the extent incurred
within 90 days prior to, and at any time after, the date on which such Lender
gives to the Borrowers a notice that an event has occurred as a result of
which such additional amounts will arise or a notice that the Borrowers are
obligated to pay such additional amounts, whichever first occurs.
(c) Upon the occurrence and during the continuance of any Event of
Default, (i) each Eurodollar Rate Advance will automatically, on the last day
of the then existing Interest Period therefor, Convert into a Base Rate
Advance and (ii) the obligation of the Lenders to make, or to Convert
Advances into, Eurodollar Rate Advances shall be suspended.
(d) Any Lender claiming any additional amounts payable pursuant to
Section 2.11(a) and 2.11(b) shall, upon request from each relevant Borrower
delivered to such Lender and the Agent specifying an Eligible Assignee
willing and able to assume and accept all such Lender's right and obligations
under this Agreement and the other Loan Documents, assign, in accordance with
the provisions of Section 9.07, all of its rights and obligations under this
Agreement and the other Loan Documents to another Lender or an Eligible
Assignee in consideration for (i) the payment by such assignee to the Lender
of the principal of, and interest on, the Note or Notes of such Lender
accrued to the date of such assignment, together with any and all other
amounts owing to such Lender under any provision of this Agreement or the
other Loan Documents accrued to the date of such assignment and (ii) the
release of such Lender from any further liability hereunder. The processing
and recordation fee required under Section 9.07(a) shall be paid by the
Borrowers under this Section 2.11(d).
SECTION 2.12. Illegality. Notwithstanding any other provisions of
this Agreement, if the introduction of or any change in or in the
interpretation of any law or regulation shall make it unlawful, or any
central bank or other governmental authority shall assert that it is
unlawful, for any Lender or its Eurodollar Lending Office to perform its
obligations hereunder to make Eurodollar Rate Advances or to continue to fund
or maintain Eurodollar Rate Advances hereunder, then, on notice thereof and
demand therefor by such Lender to the Borrowers through the Agent,
accompanied by an opinion of counsel to such Lender (which counsel may be
in-house counsel) with respect to such illegality, (i) each Eurodollar Rate
Advance will automatically, upon such demand, Convert into a Base Rate
Advance and (ii) the obligation of the Lenders to make, or to Convert
Advances into, Eurodollar Rate Advances shall be suspended until the Agent
shall notify the Borrowers that such Lender has determined that the
circumstances causing such suspension no longer exist.
SECTION 2.13. Payments and Computations. (a) The Borrowers shall
make each payment hereunder and under the Notes not later than 11:00 A.M.
(New York City time) on the day when due in U.S. dollars to the Agent at its
address referred to in Section 9.02 in same day funds. The Agent will
promptly thereafter cause to be distributed like funds relating to the
payment of principal or interest or commitment fees ratably (other than
amounts payable pursuant to Section 2.03 (except to the extent set forth in
the proviso to this sentence), 2.11, 2.14 or 2.16) to the Lenders for the
account of their respective Applicable Lending Offices, and like funds
relating to the payment of any other amount payable to any Lender to such
Lender for the account of its Applicable Lending Office, in each case to be
applied in accordance with the terms of this Agreement; provided, however, so
long as an Event of Default shall have occurred and be continuing under
Section 6.01(a) or the Advances shall have been declared or shall become due
and payable in accordance with the last paragraph of Section 6.01, then the
Agent will cause to be distributed all funds relating to the payment of
principal or interest in respect of A Advances and B Advances received by the
Agent from the Borrowers ratably to the Lenders based on the A Advances and B
Advances then outstanding. Upon its acceptance of an Assignment and
Acceptance and recording of the information contained therein in the Register
pursuant to Section 9.07(c), from and after the effective date specified in
such Assignment and Acceptance, the Agent shall make all payments hereunder
and under the Notes in respect of the interest assigned thereby to the Lender
assignee thereunder, and the parties to such Assignment and Acceptance shall
make all appropriate adjustments in such payments for periods prior to such
effective date directly between themselves.
(b) The Borrowers hereby authorize each Lender, if and to the
extent payment owed to such Lender is not made when due hereunder or under
any Note held by such Lender, to charge from time to time against any or all
of the Borrowers' respective accounts with such Lender any amount so due.
(c) All computations of interest based on the Base Rate, Federal
Funds Rate and of commitment fees shall be made by the Agent on the basis of
a year of 365 or 366 days, as the case may be, and all computations of
interest based on the Adjusted CD Rate or the Eurodollar Rate shall be made
by the Agent, and all computations of interest pursuant to Section 2.16 shall
be made by a Lender, on the basis of a year of 360 days, in each case for the
actual number of days (including the first day but excluding the last day)
occurring in the period for which such interest or commitment fees are
payable. Each determination by the Agent (or, in the case of Section 2.16 by
a Lender) of an interest rate hereunder shall be conclusive and binding for
all purposes, absent manifest error.
(d) Whenever any payment hereunder or under the Notes shall be
stated to be due on a day other than a Business Day, such payment shall be
made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of payment of interest or commitment
fee, as the case may be; provided, however, if such extension would cause
payment of interest on or principal of Eurodollar Rate Advances to be made in
the next following calendar month, such payment shall be made on the next
preceding Business Day.
(e) Unless the Agent shall have received notice from a Borrower
prior to the date on which any payment is due to the Lenders hereunder that
such Borrower will not make such payment in full, the Agent may assume that
such Borrower has made such payment in full to the Agent on such date and the
Agent may, in reliance upon such assumption, cause to be distributed to each
Lender on such due date an amount equal to the amount then due such Lender.
If and to the extent a Borrower shall not have so made such payment in full
to the Agent, each Lender shall repay to the Agent forthwith on demand such
amount distributed to such Lender together with interest thereon, for each
day from the date such amount is distributed to such Lender until the date
such Lender repays such amount to the Agent, at the Federal Funds Rate.
SECTION 2.14. Taxes. (a) Any and all payments by the Borrowers
hereunder or under the A Notes shall be made, in accordance with Section
2.13, free and clear of and without deduction for any and all present or
future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of each Lender and
the Agent, taxes imposed on its income, and franchise taxes imposed on it, by
the jurisdiction under the laws of which such Lender or the Agent (as the
case may be) is organized or any political subdivision thereof and, in the
case of each Lender, taxes imposed on its income, and franchise taxes imposed
on it, by the jurisdiction of such Lender's Applicable Lending Office or any
political subdivision thereof (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred
to as "Taxes"). If any Borrower shall be required by law to deduct any Taxes
from or in respect of any sum payable hereunder or under any A Note to any
Lender or the Agent, (i) the sum payable shall be increased as may be
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.14) such Lender or
the Agent (as the case may be) receives an amount equal to the sum it would
have received had no such deductions been made, (ii) such Borrower shall make
such deductions and (iii) such Borrower shall pay the full amount deducted to
the relevant taxation authority or other authority in accordance with
applicable law.
(b) In addition, each Borrower jointly and severally agrees to pay
any present or future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies which arise from any payment made
hereunder or under the A Notes or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or the A Notes
(hereinafter referred to as "Other Taxes").
(c) Each Borrower jointly and severally agrees to indemnify each
Lender and the Agent for the full amount of Taxes or Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed by any jurisdiction on
amounts payable under this Section 2.14) paid by such Lender or the Agent (as
the case may be) and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such
Taxes or Other Taxes were correctly or legally asserted. This
indemnification shall be made within 30 days from the date such Lender or the
Agent (as the case may be) makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes, the
paying Borrower will furnish to the Agent, at its address referred to in
Section 9.02, the original or a certified copy of a receipt evidencing
payment thereof. If no Taxes are payable in respect of any payment hereunder
or under the A Notes, the Borrowers will furnish to the Agent, at such
address, a certificate from each appropriate taxing authority, or an opinion
of counsel acceptable to the Agent, in either case stating that such payment
is exempt from or not subject to Taxes.
(e) Each Lender organized under the laws of a jurisdiction outside
the United States, on or prior to the date of its execution and delivery of
this Agreement in the case of each initial Lender and on the date of the
Assignment and Acceptance pursuant to which it becomes a Lender in the case
of each other Lender, and from time to time thereafter if requested in
writing by the Borrowers (but only so long as such Lender remains lawfully
able to do so), shall provide the Borrowers with Internal Revenue Service
form 1001 or 4224, as appropriate, or any successor form prescribed by the
Internal Revenue Service, certifying that such Lender is entitled to benefits
under an income tax treaty to which the United States is a party which
reduces the rate of withholding tax on payments of interest or certifying
that the income receivable pursuant to this Agreement is effectively
connected with the conduct of a trade or business in the United States. If
the form provided by a Lender at the time such Lender first becomes a party
to this Agreement indicates a United States interest withholding tax rate in
excess of zero, withholding tax at such rate shall be considered excluded
from "Taxes" as defined in Section 2.14(a).
(f) For any period with respect to which a Lender has failed to
provide the Borrowers with the appropriate form described in Section 2.14(e)
(other than if such failure is due to a change in law occurring subsequent to
the date on which a form originally was required to be provided, or if such
form otherwise is not required under the first sentence of subsection (e)
above), such Lender shall not be entitled to indemnification under Section
2.14(a) with respect to Taxes imposed by the United States; provided,
however, should a Lender become subject to Taxes because of its failure to
deliver a form required hereunder, the Borrowers shall take such steps as the
Lender shall reasonably request to assist the Lender to recover such Taxes.
(g) Notwithstanding any contrary provisions of this Agreement, in
the event that a Lender that originally provided such form as may be required
under Section 2.14(e) thereafter ceases to qualify for complete exemption
from United States withholding tax, such Lender may assign its interest under
this Agreement to any assignee and such assignee shall be entitled to the
same benefits under this Section 2.14 as the assignor provided that the rate
of United States withholding tax applicable to such assignee shall not exceed
the rate then applicable to the assignor.
(h) Without prejudice to the survival of any other agreement of
any Borrower hereunder, the agreements and obligations of each Borrower
contained in this Section 2.14 shall survive the payment in full of principal
and interest hereunder and under the A Notes.
SECTION 2.15. Sharing of Payments, Etc. If any Lender shall obtain
any payment (whether voluntary, involuntary, through the exercise of any
right of set-off, or otherwise) on account of the A Advances made by it
(other than pursuant to Section 2.11, 2.14 or 2.16) in excess of its ratable
share of payments on account of the A Advances obtained by all the Lenders,
such Lender shall forthwith purchase from the other Lenders such
participations in the A Advances made by them as shall be necessary to cause
such purchasing Lender to share the excess payment ratably with each of them;
provided, however, if all or any portion of such excess payment is thereafter
recovered from such purchasing Lender, such purchase from each Lender shall
be rescinded and such Lender shall repay to the purchasing Lender the
purchase price to the extent of such recovery together with an amount equal
to such Lender's ratable share (according to the proportion of (i) the amount
of such Lender's required repayment to (ii) the total amount so recovered
from the purchasing Lender) of any interest or other amount paid or payable
by the purchasing Lender in respect of the total amount so recovered. Each
Borrower agrees that any Lender so purchasing a participation from another
Lender pursuant to this Section 2.15 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 as if such Lender were the direct
creditor of such Borrower in the amount of such participation.
SECTION 2.16. Additional Interest on Eurodollar Rate Advances.
Each Borrower shall pay to each Lender, so long as such Lender shall be
required under regulations of the Board of Governors of the Federal Reserve
System to maintain reserves with respect to liabilities or assets consisting
of or including Eurocurrency Liabilities, additional interest on the unpaid
principal amount of each Eurodollar Rate Advance of such Lender made to such
Borrower, from the date of such A Advance until such principal amount is paid
in full, at an interest rate per annum equal at all times to the remainder
obtained by subtracting (i) the Eurodollar Rate for such Interest Period for
such A Advance from (ii) the rate obtained by dividing such Eurodollar Rate
by a percentage equal to 100% minus the Eurodollar Rate Reserve Percentage of
such Lender for such Interest Period, payable on each date on which interest
is payable on such A Advance. Such additional interest shall be determined
by such Bank and notified to such Borrower through the Agent.
SECTION 2.17. Use of Proceeds. The proceeds of each Advance shall
be used by the Borrowers solely for one or more of the following: (a) in the
case of the initial Borrowing, to repay in full all advances outstanding
under the Existing CCC-I Credit Agreement, together with all accrued and
unpaid interest thereon and all fees, expenses and other amounts payable
thereunder, (b) to finance working capital requirements of the Borrowers and
their Subsidiaries, (c) to pay to each seller of assets or stock being
acquired in a transaction permitted by Section 5.02(f) the purchase price of
such assets or stock, as the case may be, up to an amount permitted under
clauses (i) and (ii), as applicable, of Section 5.02(f), (d) to make capital
expenditures, (e) in the case of a Borrowing described in Section 3.04 or
3.05, solely to finance the ML Acquisition or an Approved Acquisition, as the
case may be, (f) to pay dividends in a manner permitted by Section 5.02(g)
and (g) to make intercompany advances as described in Section 5.02(f)(vi).
SECTION 2.18. Pullman and Kootenai as Subsidiaries of CCC-I. In
the event that Pullman and Kootenai become Subsidiaries of CCC-I as permitted
by Section 5.02(f)(viii), (a) CCC-I will assume all of the Obligations of
Pullman and Kootenai hereunder and under the Notes and (b) the parties hereto
will amend this Agreement in form and substance satisfactory to the Borrower,
the Agent and the Majority Lenders (subject to Section 9.01, except as
described in the immediately following sentence). Such amendment will
contain all modifications necessary to reflect the change in corporate
structure (including, but not limited to, removing Pullman and Kootenai as
Borrowers and deleting Article VIII in its entirety).
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent to Initial Advances. The
Obligation of each Lender to make its initial Advance is subject to the
following conditions precedent:
(a) The Agent shall have received from each Borrower A Notes
payable to the order of each of the Lenders, respectively, duly executed by
such Borrower.
(b) The Lenders shall be reasonably satisfied with the corporate
and legal structure and capitalization of each Borrower and each subsidiary,
including the terms and conditions of the charter, bylaws and each class of
capital stock or other equity interest of each Borrower and each subsidiary
and of each agreement or instrument relating to such structure or
capitalization and the amount, parties, terms and conditions of the existing
Debt of each Borrower and each such subsidiary.
(c) The Borrowers shall have paid all accrued fees and expenses of
the Agent, CSI and the Lenders (including the accrued fees and disbursements
of counsel to the Agent, CSI and the Lenders).
(d) All commitments of the lenders under the Existing CCC-I Credit
Agreement shall have been terminated and all outstanding amounts owed by CCC-
I under the Existing CCC-I Credit Agreement shall be paid in full with the
proceeds of the initial Borrowing and the purchase of CCC-I Preferred Stock
referred to in Section 3.01(e).
(e) The Borrowers shall provide evidence that Century/Holding has
purchased in the aggregate $100,000,000 of CCC-I Preferred Stock under terms
and conditions acceptable to the Lenders.
(f) The Borrowers shall have provided evidence of the completion
of the Rock Acquisition under terms reasonably acceptable to the Agent.
(g) The Lenders shall be reasonably satisfied with the insurance
maintained by each Borrower and each of their respective Subsidiaries.
(h) The Agent shall have received on or before the day of the
initial Borrowing the following, each dated such day (unless otherwise
specified), in form and substance satisfactory to the Agent and (except for
the B Notes) in sufficient copies for each Lender:
(i) With respect to each Borrower and each of its
subsidiaries, (A) a copy of the certificate or articles of incorporation, as
amended, of such Borrower and each of its Subsidiaries, certified by the
Secretary of State or other appropriate official of the state of its
organization as of a date reasonably near the initial Borrowing; (B) a
certificate of the Secretary of each Borrower certifying (I) that attached
thereto is a true and complete copy of the bylaws of such Borrower and each
such Subsidiary as in effect on the date of such certificate and, with
respect to such Borrower, such bylaws of such Borrower as in effect at all
times since a date prior to the date of the resolutions described in item
(II) below, (II) that attached thereto is a true and complete copy of the
resolutions adopted by the Board of Directors of such Borrower authorizing
the execution, delivery and performance of this Agreement, the Notes and each
other document or instrument which is to be delivered by it in connection
with this Agreement after the date hereof and authorizing the Borrowings
hereunder or otherwise, and that such resolutions have not been modified,
rescinded or amended and are in full force and effect, (III) that the
certificate or articles of incorporation of such Borrower and its
Subsidiaries have not been amended since the date of the last amendment
thereto shown on the certificate furnished pursuant to clause (A) above and
(IV) as to the incumbency and specimen signature of each of the officers of
such Borrower executing this Agreement and the Notes, or any other document
or instrument delivered in connection herewith or therewith; and (C) all
documents evidencing other necessary corporate action and governmental and
third party consents and approvals, if any, reasonably requested by any
Lender through the Agent.
(ii) With respect to Century/Texas, (A) a certificate of the
Secretary or an Assistant Secretary of Century/Texas certifying (I) that
attached thereto is a true and complete copy of the resolutions of the Board
of Directors of Century/Texas (x) approving the Century/Texas Agreement, (y)
authorizing the execution and delivery of the Century/Texas Agreement and
each other document or instrument which is to be delivered by it in
connection with this Agreement after the date hereof and (z) authorizing, as
sole shareholder of Century/Holding, Century/Holding's execution, delivery
and performance of the Parent Agreement, (II) as to the incumbency and
specimen signature of each of the officers of Century/Texas executing the
Century/Texas Agreement or any other document or instrument delivered in
connection herewith or therewith and (B) all documents evidencing other
necessary corporate action and governmental approvals, if any, with respect
to the Century/Texas Agreement and the Parent Agreement.
(iii) With respect to Century/Holding, (A) a certificate
of the Secretary or an Assistant Secretary of Century/Holding certifying (I)
that attached thereto is a true and complete copy of the resolutions of the
Board of Directors of Century/Holding (x) approving this Agreement and the
Notes, if required, and the Parent Agreement, and (y) authorizing the
execution and delivery of the Parent Agreement and each other document or
instrument which is to be delivered by it in connection with this Agreement
after the date hereof, and (II) as to the incumbency and specimen signature
of each of the officers of Century/Holding executing the Parent Agreement or
any other document or instrument delivered in connection herewith or
therewith and (B) all documents evidencing other necessary corporate action
and governmental approvals, if any, with respect to this Agreement, the
Notes, the Century/Texas Agreement and the Parent Agreement.
(iv) An agreement duly executed by Century/Texas and
Century/Jersey in favor of the Agent in substantially the form of Exhibit F
hereto (as amended, supplemented or otherwise modified from time to time, the
"Century/Texas Agreement").
(v) An agreement duly executed by Century/Holding in favor of
the Agent in substantially the form of Exhibit E hereto (as amended,
supplemented or otherwise modified from time to time, the "Parent
Agreement").
(vi) A certificate of the Chief Financial Officer of each
Borrower, in substantially the form of Exhibit G, attesting to the Solvency
of such Borrower and such Borrower and its Subsidiaries taken as whole after
giving effect to the transactions contemplated hereby.
(vii) A certificate as to the Rate Ratio substantially in
the form of Exhibit D hereto.
(viii) A favorable opinion of Leavy Rosensweig & Hyman,
counsel for the Borrowers, substantially in the form of Exhibit H hereto and
as to such other matters as any Lender through the Agent may reasonably
request.
(ix) A favorable opinion of Leavy Rosensweig & Hyman, counsel
for the Borrowers, substantially in the form of Exhibit I hereto and as to
such other matters as any Lender through the Agent may reasonably request.
(x) A favorable opinion of Cole, Raywid & Braverman, special
communications counsel for the Borrowers, substantially in the form of
Exhibit J hereto and as to such other matters as any Lender through the Agent
may reasonably request.
(xi) A favorable opinion of Shearman & Sterling, counsel for
the Agent, in form and substance satisfactory to the Agent.
SECTION 3.02. Conditions Precedent to Each A Borrowing. The
obligation of each Lender to make an A Advance on the occasion of each A
Borrowing (including the initial A Borrowing) shall be subject to the further
conditions precedent that on the date of such A Borrowing (a) the following
statements shall be true (and each of the giving of the applicable Notice of
A Borrowing and the acceptance by any Borrower of the proceeds of such A
Borrowing shall constitute a representation and warranty by each Borrower
that on the date of such A Borrowing such statements are true):
(i) The representations and warranties contained in Section 4.01
and in each other Loan Document are correct on and as of the date of such A
Borrowing, before and after giving effect to such A Borrowing and to the
application of the proceeds therefrom, as though made on and as of such date,
and
(ii) No event has occurred and is continuing, or would result from
such A Borrowing or from the application of the proceeds therefrom, which
constitutes an Event of Default or would constitute an Event of Default but
for the requirement that notice be given or time elapse or both;
and (b) the Agent shall have received such other approvals, opinions or
documents as any Lender through the Agent may reasonably request.
SECTION 3.03. Conditions Precedent to Each B Borrowing. The
obligation of each Lender which is to make a B Advance on the occasion of a B
Borrowing (including the initial B Borrowing) to make such B Advance as part
of such B Borrowing is subject to the conditions precedent that (i) the Agent
shall have received the written confirmatory Notice of B Borrowing with
respect thereto, (ii) on or before the date of such B Borrowing, but prior to
such B Borrowing, the Agent shall have received from the Borrower making the
B Borrowing a B Note payable to the order of such Lender for each of the one
or more B Advances to be made by such Lender as part of such B Borrowing, in
a principal amount equal to the principal amount of the B Advance to be
evidenced thereby and otherwise on such terms as were agreed to for such B
Advance in accordance with Section 2.03, and (iii) on the date of such B
Borrowing the following statements shall be true (and each of the giving of
the applicable Notice of B Borrowing and the acceptance by any Borrower of
the proceeds of such B Borrowing shall constitute a representation and
warranty by each Borrower that on the date of such B Borrowing such
statements are true):
(a) The representations and warranties contained in Section 4.01
and in each other Loan Document are correct on and as of the date of such B
Borrowing, before and after giving effect to such B Borrowing and to the
application of the proceeds therefrom, as though made on and as of such date,
(b) No event has occurred and is continuing, or would result from
such B Borrowing or from the application of the proceeds therefrom, which
constitutes an Event of Default or which would constitute an Event of Default
but for the requirement that notice be given or time elapse or both, and
(c) No event has occurred and no circumstance exists as a result
of which the information concerning any Borrower that has been provided to
the Agent and each Lender by any Borrower in connection herewith would
include an untrue statement of a material fact or omit to state any material
fact or any fact necessary to make the statements contained therein, in the
light of the circumstances under which they were made, not misleading.
SECTION 3.04. Conditions Precedent to Borrowings for the ML
Acquisition. The obligation of each Lender to make an Advance any proceeds
of which are to be used to finance either stage of the ML Acquisition shall
be subject to the conditions precedent that (a) coincident with the making of
such Advance, CCC-I shall own directly or through one or more wholly owned
Subsidiaries all of the cable television assets of ML Media sold in such
stage of the ML Acquisition, (b) there shall exist no action, suit,
investigation, litigation or proceeding that purports to affect the legality,
validity or enforceability of such acquisition or the agreements and other
documents to be entered into in connection with such acquisition or the
consummation of such acquisition or that purports to restrict CCC-I's control
or operation of the cable television assets being acquired from ML Media, and
(c) the Agent shall have received evidence, in form and substance
satisfactory to the Agent and in sufficient copies for each Lender,
coincident with the making of such Advance, as to the consummation of such
stage of such acquisition on terms substantially the same as those contained
in the Asset Purchase Agreement and as the rights of Century/Jersey
thereunder have been assigned pursuant to the Assignment and Assumption dated
as of December 5, 1994 by and among Century/Jersey, Century Bay Area Cable
Corp., a Delaware corporation, and Century Valley Cable Corp., a Delaware
corporation.
SECTION 3.05. Conditions Precedent to Borrowings for an Approved
Acquisition. The obligation of each Lender to make an Advance any proceeds
of which are to be used to finance an Approved Acquisition shall be subject
to the conditions precedent that (a) the Asset Purchase Agreement shall have
been terminated in accordance with its terms pursuant to Section 3.2, 10.1 or
10.2 thereof, (b) the Borrower making such Approved Acquisition shall have
presented the terms of the proposed acquisition to the Lenders prior to being
legally obligated to consummate such acquisition and in any event no less
than 30 days prior to consummating such acquisition (the Lenders agreeing to
attempt in good faith to respond to such request within such 30-day period),
(c) there shall exist no action, suit, investigation, litigation or
proceeding that purports to affect the legality, validity or enforceability
of such acquisition or the agreements and other documents to be entered into
in connection with such acquisition or the consummation of such acquisition
or that purports to restrict the Borrowers' control or operation of the cable
television assets or ownership interests being acquired from the Approved
Company, and (c) the Agent shall have received evidence, in form and
substance satisfactory to the Agent and in sufficient copies for each Lender,
coincident with the making of such Advance, as to the consummation of such
acquisition on terms that have not changed in a manner materially adverse to
the Borrower making such Approved Acquisition from those presented to the
Lenders and approved by the Required Lenders.
SECTION 3.06. Determinations Under Section 3.01. For purposes of
determining compliance with the conditions specified in Section 3.01, each
Lender shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter required thereunder to be
consented to or approved by or acceptable or satisfactory to the Lenders
unless an officer of the Agent responsible for the transactions contemplated
by the Loan Documents shall have received notice from such Lender prior to
the initial Borrowing specifying its objection thereto and such Lender shall
not have made available to the Agent such Lender's ratable portion of such
Borrowing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrowers.
Each Borrower represents and warrants as follows:
(a) Each Borrower and each of its Subsidiaries (i) is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, (ii) is duly qualified and in
good standing as a foreign corporation in each other jurisdiction in which it
owns or leases property or in which the conduct of its business requires it
to so qualify or be licensed except where the failure to so qualify or be
licensed would not have a Material Adverse Effect and (iii) has all requisite
corporate power and authority to own or lease and operate its properties and
to carry on its business as now conducted and as proposed to be conducted.
All of the outstanding capital stock of each Borrower has been validly
issued, is fully paid and non-assessable and is owned by its respective
Parent Company, free and clear of all Liens, and all of the outstanding
capital stock of Century/Holding has been validly issued, is fully paid and
non-assessable and is owned by Century/Texas, free and clear of all Liens.
(b) The execution, delivery and performance by each Borrower of
this Agreement, the Notes and the other Loan Documents and each other
document to which it is or is to be a party, and the acquisition by any
Borrower of any Subsidiary and the acquisition by any Subsidiary of any other
Subsidiary and the other transactions contemplated hereby, are within the
corporate powers of such Borrower and such Subsidiaries, as the case may be,
have been duly authorized by all necessary corporate action, and do not (i)
contravene the charter or bylaws of such Borrower or such Subsidiary, as the
case may be, (ii) violate any law, rule, regulation (including, without
limitation, Regulation X of the Board of Governors of the Federal Reserve
System), order, writ, judgment, injunction, decree, determination or award,
(iii) conflict with or result in the breach of, or constitute a default
under, any contract, loan agreement, indenture, mortgage, deed of trust,
lease or other instrument binding on or affecting such Person, any of its
Subsidiaries or any of their properties or (iv) result in or require the
creation or imposition of any Lien upon or with respect to any of the
properties of the Borrowers or any of their Subsidiaries. None of the
Borrowers or any of their Subsidiaries is in violation of any such law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
or in breach of any such contract, loan agreement, indenture, mortgage, deed
of trust, lease or other instrument, the violation or breach of which is
reasonably likely to have a Material Adverse Effect.
(c) No authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body or any other
third party (including, without limitation, the FCC) is required for the due
execution, delivery and performance by the Borrowers of this Agreement or the
Notes or any Borrowing hereunder or for the ownership or control by the
Borrowers of all Subsidiaries or for the ownership or control by any
Subsidiary of any other Subsidiary owned or controlled by it.
(d) This Agreement is and the Notes and each other Loan Document
to which a Borrower is a party when delivered hereunder will be, legal, valid
and binding obligations of such Borrower enforceable against such Borrower in
accordance with their respective terms, subject, in the case of
enforceability, (i) to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar law affecting creditors' rights
generally and (ii) to the effect of general principles of equity, including,
without limitation, concepts of materiality, reasonableness, good faith and
fair dealing (regardless of whether considered in a proceeding in equity or
at law). The Parent Agreement and the Century/Texas Agreement when delivered
hereunder will be the legal, valid and binding obligations of Century/Holding
and Century/Texas, respectively, enforceable against Century/Holding and
Century/Texas, respectively, in accordance with their respective terms,
subject, in the case of enforceability, to the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar law affecting
creditors' rights generally.
(e) The Combined and combining balance sheet of the Borrowers and
their Subsidiaries as at May 31, 1994, and the related Combined and combining
statements of income and cash flows of the Borrowers and their Subsidiaries
for the Fiscal Year then ended, accompanied by an opinion of Deloitte &
Touche, independent public accountants, and the Combined and combining
balance sheet of the Borrowers and their Subsidiaries as at February 28,
1995, and the related Combined and combining statements of income and cash
flows of the Borrowers and their Subsidiaries for the nine months then ended,
duly certified by the chief financial officer of each Borrower, copies of
which have been furnished to each Lender, fairly present, subject, in the
case of said balance sheet as at February 28, 1995, and said statement of
income and cash flows for the nine months then ended, to year-end audit
adjustments, the Combined and combining financial condition of the Borrowers
and their Subsidiaries as at such date and the Combined and combining results
of the operations of the Borrowers and their Subsidiaries for the period
ended on such date, all in accordance with generally accepted accounting
principles consistently applied, and since May 31, 1994 there has been no
Material Adverse Change.
(f) The Combined and combining pro forma balance sheet of the
Borrowers and their Subsidiaries as at May 31, 1994, and the related Combined
and combining pro forma statements of income and cash flows of the Borrowers
and their Subsidiaries for the Fiscal Year then ended, and the Combined and
combining pro forma balance sheet of the Borrowers and their Subsidiaries as
at February 28, 1995, and the related Combined and combining pro forma
statements of income and cash flows of the Borrowers and their Subsidiaries
for the nine months then ended, copies of which have been furnished to each
Lender, fairly present, subject, in the case of said pro forma balance sheet
as at February 28, 1995, and said pro forma statement of income and cash
flows for the nine months then ended, to year-end audit adjustments, the
Combined and combining pro forma financial condition of the Borrowers and
their Subsidiaries as at such date and the Combined and combining pro forma
results of the operations of the Borrowers and their Subsidiaries for the
period ended on such date, all in accordance with generally accepted
accounting principles consistently applied, and since May 31, 1994 there has
been no Material Adverse Change.
(g) The Combined and combining forecasted statements of income and
cash flows of the Borrowers and their Subsidiaries for each Fiscal Year
ending May 31, 1995, through May 31, 2004, copies of which have been
furnished to each Lender, were prepared in good faith on the basis of the
assumptions stated therein, which assumptions were reasonable in light of
conditions existing at the time of delivery of such forecasts, and
represented, at the time of delivery, the Borrowers' best estimate of their
future financial performance.
(h) No information, exhibit, report, document, certificate or
written statement, including this Agreement, furnished in writing to any
Lender by or on behalf of any Borrower, any Subsidiary, Century/Texas or
Century/Holding to the Agent or any Lender in connection with the negotiation
of the Loan Documents or pursuant to the terms of the Loan Documents
contained as of the date so furnished any untrue statement of a material fact
or omitted as of the date so furnished to state a material fact necessary to
make the statements contained therein, in light of the circumstances under
which such information, exhibit, report or other written information is or is
to be used, not misleading, nor did such information, exhibits, reports,
documents, certificates and statements, taken as a whole, contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements contained therein not misleading. There is no
fact known to any Borrower or any officer of any Borrower which the Borrowers
have not disclosed to the Lenders in writing which in the reasonable judgment
of the Borrowers and such officers would have a Material Adverse Effect.
(i) There is no pending or threatened action, suit, investigation
or proceeding against any Borrower or any Subsidiaries before any court,
governmental agency or arbitrator, which (i) could be reasonably likely to
have a Material Adverse Effect or (ii) purports to affect the legality,
validity or enforceability of this Agreement or any Note or the consummation
of the transactions contemplated hereby.
(j) No Borrower is engaged in the business of extending credit for
the purpose of purchasing or carrying Margin Stock, and no proceeds of any
Advance will be used to purchase or carry any Margin Stock or to extend
credit to others for the purpose of purchasing or carrying any Margin Stock.
(k) Following application of the proceeds of each Advance, not
more than 25 percent of the value of the assets (either of any Borrower only
or of any Borrower and its Subsidiaries on a Consolidated basis) subject to
the provisions of Section 5.02(a) or 5.02(e), or subject to any restriction
contained in any agreement or instrument between any Borrower and any Lender
or any Affiliate of any Lender relating to Debt, will be Margin Stock.
(l) Set forth on Schedule 4.01(l) hereto, and, after the date
hereof, set forth on the most recent schedule delivered pursuant to Section
5.03(k), is a complete and accurate list of all Subsidiaries of each
Borrower, showing as of the date hereof or thereof (as to each such
Subsidiary) the jurisdiction of its incorporation, the number of shares of
each class of capital stock authorized, and the number outstanding, on the
date hereof and the percentage of the outstanding shares of each such class
owned (directly or indirectly) by each Borrower and the number of shares
covered by all outstanding options, warrants, rights of conversion or
purchase and similar rights at the date hereof. The outstanding capital
stock of all Wholly-Owned Subsidiaries has been validly issued, is fully paid
and non-assessable and the outstanding capital stock of all Subsidiaries
owned by each Borrower and its Subsidiaries is free and clear of all Liens,
except those permitted by Section 5.02(a). Each such Subsidiary (i) is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, (ii) is duly qualified and in
good standing as a foreign corporation in each other jurisdiction in which it
owns or leases property or in which the conduct of its business requires it
to so qualify or be licensed except where the failure to so qualify or be
licensed would not have a Material Adverse Effect and (iii) has all requisite
corporate power and authority to own or lease and operate its properties and
to carry on its business as now conducted and as proposed to be conducted.
(m) Set forth in Schedule 4.01(m) hereto is a complete and correct
list for each Borrower of all of the Franchises granted to and held by, as of
the date of the execution and delivery of this Agreement, such Borrower
and/or its Subsidiaries, or for which application has been made or is planned
to be made by such Borrower and/or its Subsidiaries, together with the date
on which each such Franchise expires in accordance with its terms, the
issuing authority therefor and the Person to whom such Franchise has been, or
is to be, issued. As of such date, each Franchise is in full force and
effect and no other approval, application, filing, registration, consent or
other action of any local, state or federal authority is required to enable
such Borrower and/or its Subsidiaries to exploit any such Franchise except as
is otherwise indicated on said Schedule 4.01(m). As of such date, none of
the Borrowers or any of their respective Subsidiaries has received any notice
from the granting body or any other governmental authority with respect to
any breach of any covenant under, or any default with respect to, any such
Franchise except as is otherwise indicated on said Schedule 4.01(m). As of
such date, before and after giving effect to this Agreement, no material
default has occurred and is continuing under any such Franchise except as is
otherwise indicated on said Schedule 4.01(m).
(n) The operations and properties of each Borrower and each of its
Subsidiaries comply in all material respects with all Environmental Laws, all
necessary Environmental Permits have been obtained and are in effect for the
operations and properties of each Borrower and its Subsidiaries, each
Borrower and its Subsidiaries are in compliance in all material respects with
all such Environmental Permits, and no circumstances exist that could (i)
form the basis of an Environmental Action against any Borrower or any of its
Subsidiaries or any of their properties that could have a Material Adverse
Effect or (ii) cause any such property to be subject to any restrictions on
ownership, occupancy, use or transferability under any Environmental Law.
(o) None of the properties of any Borrower or any of its
Subsidiaries is listed or proposed for listing on the National Priorities
List under CERCLA or on the Comprehensive Environmental Response,
Compensation and Liability Information System maintained by the Environmental
Protection Agency or any analogous state list of sites requiring
investigation or cleanup or is adjacent to any such property, and no
underground storage tanks, as such term is defined in 42 U.S.C. 6991, are
located on any property of any Borrower or any of its Subsidiaries or, to the
best of its knowledge, on any adjoining property.
(p) None of the Borrowers or any of its Subsidiaries is an
"investment company," or an "affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company," as such terms are
defined in the Investment Company Act of 1940, as amended. Neither the
making of any Advances, nor the application of the proceeds or repayment
thereof by the Borrowers, nor the consummation of the other transactions
contemplated hereby, will violate any provision of such Act or any rule,
regulation or order of the Securities and Exchange Commission thereunder.
(q) Each Borrower is, individually and together with its
Subsidiaries, Solvent.
(r) Set forth in Schedule 4.01(r) hereto is a complete and correct
list, as of the date hereof and as of the date of the initial Borrowing, of
all credit agreements, indentures, purchase agreements, obligations in
respect of letters of credit, guarantees and other instruments presently in
effect (including, but not limited to, Capital Lease obligations and Debt
owed by CCC-I to Century/Texas) providing for, evidencing, securing or
otherwise relating to any Debt of any Borrower or any of its Subsidiaries
(other than Debt under the Loan Documents) in a principal or face amount
equal to $500,000 or more, and such list correctly sets forth the names of
the debtor or lessee and creditor or lessor with respect to such Debt
outstanding or to be outstanding, the rate of interest or rentals, a
description of any security given or to be given therefor, and the maturity
or maturities or expiration date or dates thereof.
(s) There are no Liens of any nature whatsoever on any properties
of any Borrower nor any Subsidiary of a Borrower other than (i) those
permitted by Section 5.02(a) and (ii) nonconsensual Liens which could not,
individually or in the aggregate, have a Material Adverse Effect.
(t) None of the Borrowers or any of its Subsidiaries is a party to
any indenture, loan or credit agreement or any lease or other agreement or
instrument or subject to any charter or corporate restriction which is
reasonably likely to have a Material Adverse Effect.
(u) (i) Each Borrower and each of its Subsidiaries has filed all
tax returns (Federal, State and local) required to be filed, and paid all
taxes shown thereon to be due, including interest and penalties, or provided
adequate reserves for payment thereof, and (ii) each Borrower and each of its
Subsidiaries have timely filed all reports and applications required by the
FCC or any other governmental authority which has issued a Franchise to such
Borrower or any such Subsidiary, in each case except such filings the failure
of which to file is not, individually or in the aggregate, reasonably likely
to have a Material Adverse Effect.
(v) Each Borrower and each of its Subsidiaries is in compliance
with the requirements of all applicable laws, rules, regulations, orders and
licensing requirements of all governmental authorities the violation of which
could have a Material Adverse Effect; and none of the Borrowers or any of
their respective Subsidiaries is the subject of any outstanding citation,
order or investigation by the FCC which could have a Material Adverse Effect,
and no such citation, order or investigation, to the knowledge of any
Borrower or any Subsidiary, is contemplated by the FCC or any such authority.
(w) Set forth in Schedule 4.01(w) hereto is a true and correct
summary as of February 28, 1995 of Subscribers with respect to the cable
television systems of each Borrower and its Subsidiaries indicating the
number of Subscribers (in each case differentiating between Basic Subscribers
and Pay TV Units) categorized by system. The information previously supplied
to the Lenders in relation to Subscribers is a true and correct summary as of
the dates there indicated of Subscribers with respect to the cable television
systems of each Borrower and its Subsidiaries.
(x) On the date of the initial Borrowing, proceeds of the initial
Borrowing have been used to pay in full all outstanding Debt under the
Existing CCC-I Credit Agreement.
(y) None of the Borrowers or any ERISA Affiliate has either a
Multiemployer Plan or a Plan, other than a Multiemployer Plan or a Plan to
which the Majority Lenders have given their consent after the date hereof.
(z) Each Borrower and each of its Subsidiaries owns all franchises
(including Franchises), licenses, patents, copyrights, trademarks, service
marks or trade names material to the conduct of its businesses.
ARTICLE V
COVENANTS OF THE BORROWERS
SECTION 5.01. Affirmative Covenants. So long as any Advance or
any other amount hereunder shall remain unpaid or any Lender shall have any
Commitment hereunder, each Borrower will, unless the Majority Lenders shall
otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply, and cause each of its
Subsidiaries to comply, in all material respects with all applicable laws
(including ERISA), rules, regulations, orders and licensing requirements,
such compliance to include, without limitation, paying before the same become
delinquent all taxes, assessments and governmental charges imposed upon it or
upon its property except to the extent contested in good faith and by
appropriate proceedings and with respect to which adequate reserves for
payment have been established.
(b) Maintenance of Insurance. Maintain, and cause each of its
Subsidiaries to maintain, insurance with responsible and reputable insurance
companies or associations in such amounts and covering such risks as is
usually carried by companies engaged in similar businesses and owning similar
properties in the same general areas in which such Borrower or such
Subsidiary operates.
(c) Corporate Existence and Approvals. Obtain, preserve and
maintain, and cause each of its Subsidiaries to obtain, preserve and maintain
(i) its corporate existence, rights, franchises (including Franchises) and
privileges in the jurisdiction of its incorporation, and qualify and remain
qualified, and cause each such Subsidiary to qualify and remain qualified, as
a foreign corporation in each jurisdiction in which such qualification is
necessary or desirable in view of its business and operations or the
ownership of its properties; provided, however, nothing herein contained
shall prevent any merger or consolidation permitted by Section 5.02(d)
without the written consent of the Majority Lenders and (ii) all approvals,
authorizations, licenses, franchises (including Franchises) and other
permissions of all governmental, judicial, regulatory and other agencies and
authorities necessary to enable such Borrower and each such Subsidiary to
operate and maintain its property, business and operations as the same is
currently being carried on or as it may hereafter be carried on in accordance
with the Loan Documents.
(d) Visitation Rights. At any reasonable time and from time to
time upon reasonable notice, permit the Agent or any of the Lenders or any
agents or representatives thereof, to examine and make copies of and
abstracts from the records and books of account of, and visit the properties
of, such Borrower and any of its Subsidiaries, and to discuss the affairs,
finances and accounts of such Borrower and any of its Subsidiaries with any
of their officers or directors and with their independent certified public
accountants.
(e) Keeping of Books. Keep, and cause each of its Subsidiaries to
keep, proper books of record and account, in which full and correct entries
shall be made of all financial transactions and the assets and business of
such Borrower and each such Subsidiary in accordance with generally accepted
accounting principles consistent with those applied in the preparation of the
financial statements referred to in Sections 4.01(e) and 4.01(f), reflecting
all financial transactions of such Borrower and each such Subsidiary.
(f) Maintenance of Properties, Etc. Maintain and preserve, and
cause each of its Subsidiaries to maintain and preserve, to the extent that
the management of such Borrower in its reasonable business judgment deems
such maintenance and preservation necessary or reasonably useful in the
proper conduct of the business of such Borrower and such Subsidiary, all of
its properties that are used or useful in the conduct of its business in good
working order and condition, ordinary wear and tear excepted; and at all
times do or cause to be done, and cause each such Subsidiary to do or cause
to be done, all things necessary to obtain, preserve, renew and keep in full
force and effect all franchises (including Franchises), licenses, patents,
copyrights, trademarks, service marks or trade names material to the conduct
of its businesses.
(g) Maintenance of Corporate Separateness. Conduct its business
and operations and the business and operations of each Subsidiary of such
Borrower separately from that of Century/Texas, Century/Holding, each
Minority Entity and each other Affiliate of such Borrower (other than any
Subsidiary of such Borrower), including, without limitation, (i) not
commingling funds or other assets of such Borrower or any such Subsidiary
with the funds or other assets of Century/Texas, Century/Holding, a Minority
Entity or any other Affiliate of such Borrower; (ii) maintaining separate
corporate and financial records and observing all corporate procedures and
formalities for such Borrower and each such Subsidiary, including, without
limitation, the holding of meetings of shareholders and boards of directors,
the recordation and maintenance of minutes of such meetings, and the
recordation and maintenance of resolutions adopted at such meetings; (iii)
causing each such Subsidiary to pay its liabilities from its assets or from
the assets of such Borrower or another Subsidiary of such Borrower; and (iv)
causing each such Subsidiary to conduct its dealings with third parties in
its own name and as a separate and independent entity.
(h) Ratio of EBIDT to Debt Service for Total Debt/Pro-Forma Debt
Service Ratio. Maintain, as of the last day of each Fiscal Period, the ratio
of
(i) EBIDT for such Fiscal Period, to
(ii) the aggregate Debt Service for Total Debt for such Fiscal
Period,
of at least 1.15:1 as of each such day that occurs on or before May 31,
1998 and a Pro-Forma Debt Service Ratio for such Borrower of at least 1.15:1
as of each such day that occurs thereafter.
(i) Ratio of Total Debt to EBIDT. Maintain, as of the last day of
each Fiscal Period whose last day occurs during any period set out below, the
ratio of Total Debt as of such last day to EBIDT for such Fiscal Period of
less than the ratio set out below next to such period; plus (i) during the
period commencing on the date CCC-I or one or more of its wholly owned
Subsidiaries acquires the assets purchased in the first stage of the ML
Acquisition and ending on the first anniversary of such date, 0.25 multiplied
by the fraction containing as its numerator that portion of the ML
Acquisition Price required for the first stage of the ML Acquisition and as
its denominator $286,000,000 and (ii) during the period commencing on the
date CCC-I or one or more of its wholly owned Subsidiaries acquires the
assets purchased in the second stage of the ML Acquisition and ending on the
first anniversary of such date, 0.25 less the figure calculated in accordance
with subsection (i) of this Section 5.01(i).
Period Ratio
from the date hereof
through 5/31/97 6.00:1
thereafter through 5/31/98 5.50:1
thereafter through 5/31/99 5.00:1
thereafter through 5/31/00 4.50:1
thereafter 4.00:1
(j) Ratio of EBIDT to Interest Expense for Total Debt. Maintain,
as of the last day of each Fiscal Period, the ratio of
(i) EBIDT for such Fiscal Period, to
(ii) the sum of all amounts payable during such Fiscal Period
by the Borrowers and their Subsidiaries on account of interest and
amortization of debt discount and expense, and commitment, letter of credit,
agency and other fees with respect to Total Debt,
of at least 1.50:1 for each Fiscal Period ending on or before May 31,
1997, at least 1.75:1 for each Fiscal Period ending after May 31, 1997 and on
or before May 31, 1998, and at least 2.00:1 for each Fiscal Period ending
thereafter.
(k) Pari Passu. Cause the obligations of such Borrower under this
Agreement to rank at least pari passu in right of payment with all Additional
Unsecured Debt, if any, and all other Debt of such Borrower which is not
secured or the subject of any statutory trust or preference or which is not
expressly subordinated in right of payment to any Debt.
SECTION 5.02. Negative Covenants. So long as any Advance or any
other amount hereunder shall remain unpaid or any Lender shall have any
Commitment hereunder, each Borrower will not, without the written consent of
the Majority Lenders:
(a) Liens, Etc. Create, incur, assume or suffer to exist, or
permit any of its Subsidiaries to create, incur, assume or suffer to exist,
any Lien on or with respect to any of its properties, whether personal or
real, and whether tangible or intangible, now owned or hereafter acquired, or
sign or file, or permit any such Subsidiary to sign or file, under the
Uniform Commercial Code of any jurisdiction, a financing statement that names
such Borrower or any such Subsidiary as debtor, or sign, or permit any such
Subsidiary to sign, any security agreement authorizing any secured party
thereunder to file such financing statement, or assign, or permit any such
Subsidiary to assign, any right to receive income, excluding, however, from
the operation of the foregoing restrictions, Liens:
(i) for taxes, assessments or governmental charges or levies
on property of such Borrower or any such Subsidiary if the same shall not at
the time be delinquent or thereafter can be paid without penalty, or are
being contested in good faith and by appropriate proceedings and for which
adequate reserves have been established;
(ii) imposed by law, such as carrier's, warehouseman's
and mechanic's liens and other similar liens arising in the ordinary course
of business;
(iii) arising out of pledges or deposits under worker's
compensation laws or similar legislation, arising in the ordinary course of
business;
(iv) constituting easements, rights of way and other
encumbrances on title to real property that do not render title to the
property encumbered thereby unmarketable or materially adversely affect the
use of such property for its present purposes;
(v) arising in connection with Capital Leases permitted by
Section 5.02(c) and encumbering only the assets covered by such Capital
Leases; or
(vi) constituting purchase money Liens on or in property
acquired or held by such Borrower or any such Subsidiary in the ordinary
course of business to secure the purchase price of such property or to secure
Debt incurred solely for the purpose of financing the acquisition of such
property, or Liens existing on such property at the time of its acquisition;
provided that the Debt secured thereby does not exceed the purchase price
thereof;
provided, however, the aggregate principal amount of the Debt secured by
the Liens referred to in clauses (v) and (vi) shall not exceed $10,000,000 at
any one time outstanding for all the Borrowers and their Subsidiaries, on a
Combined basis.
(b) Debt. Create, incur, assume or suffer to exist, or permit any
of its Subsidiaries to create, incur, assume or suffer to exist, any Debt,
except
(i) Debt under the Loan Documents;
(ii) Intercompany Debt permitted by Section 5.02(f)(v);
provided that such Debt does not contravene any other contractual restriction
binding on or affecting the indebted Person;
(iii) Debt secured by any Lien permitted by Section
5.02(a)(v) or (vi);
(iv) unsecured Debt incurred in the ordinary course of
business for the deferred purchase price of property or services, maturing
within one year from the date created;
(v) Debt consisting of (A) guarantees by endorsement of
negotiable instruments for deposit or collection or similar transactions in
the ordinary course of business and (B) guarantees of the obligations of such
Borrower or any Subsidiary of such Borrower;
(vi) Debt consisting of obligations as lessee permitted
by Section 5.02(c);
(vii) Debt consisting of reimbursement or other
obligations with respect to letters of credit which do not support in any way
Debt of a Person other than such Borrower or any of its Subsidiaries;
(viii) Unsecured Debt, evidenced by promissory notes or
other instruments (including Commercial Paper), sold, issued or incurred by
such Borrower from time to time after the date hereof ranking pari passu or
subordinated in right of payment with the Debt of such Borrower under this
Agreement and its Notes (the "Additional Unsecured Debt" of such Borrower);
provided that (A) all Unsecured Debt Documents shall have been delivered to
the Agent and the Lenders, together with such other information relating to
the sale, issuance or incurrence of the Additional Unsecured Debt as any
Lender through the Agent shall have reasonably requested, at least twenty
days prior to the sale, issuance or incurrence of such Additional Unsecured
Debt, (B) such Unsecured Debt Documents shall be in form and substance and
contain terms and provisions satisfactory to the Agent and the Majority
Lenders (including, unless the Net Cash Proceeds of the sale, issuance or
incurrence of such Additional Unsecured Debt have previously been applied to
repay in full all amounts outstanding under this Agreement, the Notes and the
other Loan Documents after termination of the Lenders' Commitments, terms and
provisions providing for scheduled amortization of not more than 25% of the
aggregate principal amount of such Additional Unsecured Debt prior to August
31, 2003), (C) the Borrowers shall have entered into such amendments to this
Agreement and the other Loan Documents as the Agent and the Lenders shall
have reasonably requested as a condition precedent to their approval of the
terms and conditions of the Additional Unsecured Debt, (D) 100% of the Net
Cash Proceeds of the sale, issuance or incurrence of such Additional
Unsecured Debt are used to prepay the A Advances in accordance with Section
2.10(b)(iii) and to reduce the respective Commitments of the Lenders pursuant
to Section 2.05, (E) the representations and warranties contained in Section
4.01 and in each other Loan Document shall be true and correct on and as of
the date of sale, issuance or incurrence of the Additional Unsecured Debt,
before and after giving effect to such sale, issuance or incurrence, as
though made on and as of such date and (F) no event shall have occurred and
be continuing, or would result from the sale, issuance or incurrence of the
Additional Unsecured Debt or any other action or transaction contemplated
thereby, which constitutes an Event of Default or would constitute an Event
of Default but for the requirement that notice be given or time elapse or
both; or
(ix) any extension, refunding or renewal of any Debt
permitted by clauses (i), (ii), (iv), and (vii) hereof, and any extension or
renewal of any Debt permitted by clause (viii) hereof, not resulting in an
increase in the principal amount then outstanding or change in any direct or
contingent obligor thereof;
provided that the aggregate principal amount of Debt referred to in
clauses (iv), (v)(B), (vi) and (vii) shall not exceed $10,000,000 at any one
time outstanding for all the Borrowers and their Subsidiaries, on a Combined
basis.
(c) Lease Obligations. Create, incur, assume or suffer to exist,
or permit any of its Subsidiaries to create, incur, assume or suffer to
exist, any obligations as lessee (i) for the rental or hire of real or
personal property in connection with any sale and leaseback transaction, or
(ii) for the rental or hire of other real or personal property of any kind
under leases or agreements to lease (including, but not limited to, Capital
Leases) having a term of one year or more which would cause the aggregate,
direct or contingent, liabilities of all the Borrowers and their
Subsidiaries, on a Combined basis, in respect of all such obligations (under
clause (i) and under clause (ii) above taken together) payable in any period
of 12 consecutive calendar months to exceed $5,000,000.
(d) Mergers, Etc. Merge or consolidate with or into, or sell,
assign, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to, any Person, or permit or cause any of its
Subsidiaries to do so, except that (i) any of its Wholly-Owned Subsidiaries
may merge or consolidate with or into, or dispose of assets to, or acquire
assets of, any of its other Wholly-Owned Subsidiaries and (ii) any of its
Subsidiaries may merge into, or dispose of assets to, such Borrower, provided
in each case that, immediately prior to and after giving effect to such
transaction, no event shall have occurred or be continuing which constitutes
an Event of Default or which, with the giving of notice or lapse of time or
both, would constitute an Event of Default and in the case of any such merger
to which such Borrower is a party, such Borrower is the surviving
corporation.
(e) Sales, Etc. of Assets. Sell, assign, lease, transfer or
otherwise dispose of, or permit any of its Subsidiaries to sell, assign,
lease, transfer or otherwise dispose of, any of its assets, including
(without limitation) substantially all assets constituting the business of a
division, branch or other unit operation, except (i) for sales of assets in
the ordinary course of its business, (ii) for disposition of obsolete
equipment no longer needed in the conduct of such Borrower's or such
Subsidiary's business, (iii) in a transaction authorized by subsection (d) of
this Section 5.02, (iv) for sales of fixed assets for cash, the book value of
which does not exceed in the aggregate for any Fiscal Year, 10% of the fair
market value of the Combined fixed assets of the Borrowers and their
Subsidiaries computed as of the beginning of such Fiscal Year or (v) in
exchange (by way of trade or the like) for an asset whose value (exclusive of
cash) is equal to or greater than the value of, and whose Asset EBIDT (as
defined below) as of the date of such exchange is equal to or greater than
the Asset EBIDT of, the asset disposed of; provided that (A) the cumulative
value of all assets so exchanged by the Borrowers and their Subsidiaries, on
a Combined basis, shall not exceed $20,000,000 in the aggregate and (B) each
Borrower shall have given the Agent at least 30 days' prior written notice
with a copy to the Agent for delivery to each Lender of each such exchange
together with sufficient information with a copy to the Agent for delivery to
each Lender to enable the Agent to determine the respective value and Asset
EBIDT of the assets involved in such exchange. The term "Asset EBIDT" means,
for any asset, the net income (or loss) attributable to the operation of such
asset during the most recent period reasonably acceptable to the Agent for
which accounting data shall be available plus the sum of interest expense,
depreciation and amortization expense and provision for income taxes to the
extent deducted in computing such net income (or loss). For the purposes of
clause (v) above, value shall mean the value determined in an arm's-length
transaction between unaffiliated parties.
(f) Investments in Other Persons. On or after the date hereof
make, or permit any of its Subsidiaries to make, any Investment in any Person
(including, but not limited to, its officers and employees) other than:
(i) the acquisition by any Borrower or any of its
Subsidiaries from any Person not an Affiliate of such Borrower or any of its
Subsidiaries of (A) all or substantially all of the stock or assets of one or
more cable television systems operating under a valid Franchise (or under
other authority reasonably acceptable to the Majority Lenders) both before
and after such acquisition or (B) capital stock representing at least a
majority of the Voting Rights of one or more corporations which owns directly
or through one or more other wholly owned corporations all or substantially
all of such assets; provided that the aggregate cost (including cash paid,
securities issued and obligations assumed) of all such acquisitions (other
than the ML Acquisition, the Rock Acquisition and any Approved Acquisitions)
does not exceed $40,000,000;
(ii) the acquisition by any Borrower or any of its
Subsidiaries from any Person not an Affiliate of such Borrower or any of its
Subsidiaries of capital stock representing less than a majority of the Voting
Rights of one or more corporations and capital contributions by such Borrower
or any of its Subsidiaries to Minority Entities in which such Person has an
ownership interest; provided that the aggregate cost (including cash paid,
securities issued and obligations assumed) of all such acquisitions and
contributions does not exceed $15,000,000; and provided further that, if any
such target corporation is in the cable television business, such corporation
owns directly or through one or more other wholly owned corporations all or
substantially all of the assets of one or more cable television systems
operating under a valid Franchise (or under other authority reasonably
acceptable to the Majority Lenders);
(iii) the acquisition by such Borrower or any such
Subsidiary as a capital contribution to it of one or more Permitted Cable
Systems for the purpose of curing a default under Section 5.01(h), (i) or
(j), as permitted pursuant to Section 6.01(c);
(iv) purchases by such Borrower or any such Subsidiary of
shares of, or capital contributions to, any Person which (A) is a direct,
wholly owned Subsidiary of such Person or (B) in connection with any
acquisition described in clause (i) above, becomes a direct, wholly owned
Subsidiary of such Person;
(v) advances by such Borrower to any other Borrower, advances
by such Borrower to any such Subsidiary, advances by any such Subsidiary to
such Borrower and advances by any such Subsidiary to any other such
Subsidiary;
(vi) advances by the Borrowers to their respective Parent
Companies in an aggregate amount not to exceed, for any Fiscal Quarter, the
remainder of (i) the amount permitted to be dividended by the Borrowers to
their respective Parent Companies pursuant to Section 5.02(g)(iii) for such
Fiscal Quarter less (ii) (A) the aggregate amount of dividends actually
distributed by the Borrowers to their respective Parent Companies for such
Fiscal Quarter pursuant to such Section 5.02(g)(iii) plus (B) the aggregate
amount actually used to redeem the CCC-I Preferred Stock described in Section
3.01(e) for such Fiscal Quarter pursuant to Section 5.02(g)(iv);
(vii) purchases of readily marketable direct obligations
of the United States of America, certificates of deposit issued by any
commercial bank of recognized standing operating in the United States of
America with capital in excess of $100,000,000 and readily marketable and
freely transferable short-term Commercial Paper rated "A-2" or better by
Standard & Poor's, a division of McGraw-Hill, Inc., or "P-2" or better by
Moody's Investors Service, Inc.;
(viii) the acquisition by CCC-I of 100% of the capital
stock of Kootenai or Pullman;
(ix) in the case of CCC-I or one or more of its wholly owned
Subsidiaries, the ML Acquisition; and
(x) an Approved Acquisition;
provided in each case that, immediately prior to and after giving effect
to any such Investments no event shall have occurred or be continuing which
constitutes an Event of Default or which, with the giving of notice or lapse
of time or both, would constitute an Event of Default.
(g) Dividends, Etc. Declare or pay any dividends, purchase,
redeem, retire, defease or otherwise acquire for value any of its capital
stock or any warrants, rights or options to acquire such capital stock, now
or hereafter outstanding, return any capital to its stockholders as such,
make any distribution of assets, capital stock, warrants, rights, options,
obligations or securities to its stockholders as such, or issue or sell any
capital stock or any warrants, rights or options to acquire such capital
stock, or permit any of its Subsidiaries to do any of the foregoing, except
that, upon compliance with all applicable requirements of law, (i) any such
Subsidiary may declare and make payment of cash and stock dividends, return
capital and make distributions of assets to such Borrower or to other
Subsidiaries of such Borrower, (ii) such Borrower may declare and deliver
distributions payable only in common stock of such Borrower, (iii) the
Borrowers may declare and pay cash dividends to their respective Parent
Companies in an amount not to exceed in the aggregate
(x) for any Fiscal Quarter of the Borrowers ending on or
prior to the Termination Date, 75% of Excess Cash Flow for the Borrowers for
the immediately preceding Fiscal Quarter, and
(y) for any Fiscal Quarter of the Borrowers ending after the
Termination Date, the Excess Cash Flow Surplus for the Borrowers for such
Fiscal Quarter less the aggregate amount of advances made by the Borrowers to
their respective Parent Companies for such Fiscal Quarter pursuant to Section
5.02(f)(vi);
provided that, immediately prior to and after giving effect to any such
declaration or payment, no event shall have occurred or be continuing which
constitutes an Event of Default or which, with the giving of notice or lapse
of time or both, would constitute an Event of Default, and (iv) CCC-I may
redeem outstanding CCC-I Preferred Stock at a price per share not in excess
of the price per share originally received by CCC-I therefor; provided that
CCC-I may not redeem the CCC-I Preferred Stock described in Section 3.01(e)
unless such redemption occurs in accordance with the requirements of this
clause (iv) and the proceeds used for such redemption are those permitted to
be dividended under clause (iii) of this Section 5.02(g); and provided
further that, immediately prior to and after giving effect to any such
redemption, no event shall have occurred or be continuing which constitutes
an Event of Default or which, with the giving of notice or lapse of time or
both, would constitute an Event of Default.
(h) Change in Nature of Business, Fiscal Year or Charter
Amendment. Make, or permit any of its Subsidiaries to make, any material
change in the nature of its business as carried on at the date hereof or
change, or permit any such Subsidiary to change, its fiscal year from the
Fiscal Year or amend, or permit any such Subsidiary to amend, its certificate
of incorporation.
(i) Transactions with Affiliates. Engage, or permit any of its
Subsidiaries to engage, in any transaction with an Affiliate of such
Subsidiary (other than another Subsidiary of such Borrower or such Borrower
or another Borrower) on terms less favorable to such Borrower or such
Subsidiary than would be obtainable at the time in comparable transactions of
such Borrower or such Subsidiary with Persons not Affiliates; and without
limiting the foregoing, such Borrower will not permit any of its Subsidiaries
to pay dividends (to the extent otherwise permitted by Section 5.02(g))
except in compliance with applicable law, contract, and the charter and by-
laws of such Subsidiary.
(j) Termination of Franchise. Terminate, permit any of its
Subsidiaries to terminate or authorize the termination by any other Person of
any Franchise of such Borrower or any such Subsidiary if such termination
(either alone or taken together with a termination of one or more other
Franchises) is reasonably likely, in the reasonable opinion of the Majority
Lenders, to have a Material Adverse Effect.
(k) Restriction on Negative Pledges. Enter into or suffer to
exist, or permit any of its Subsidiaries to enter into or suffer to exist,
any agreement prohibiting or conditioning the creation or assumption of any
Lien of any nature upon any of its property or assets other than (i) in favor
of the Agent and the Lenders or (ii) in connection with any Debt permitted by
Section 5.02(b)(iii) to the extent such agreement is applicable only to the
property on which a Lien is permitted under Section 5.02(a)(v) or (vi).
(l) Accounting Changes. Make or permit, or permit any of its
Subsidiaries to make or permit, any change in accounting policies or
reporting practices, except as required by generally accepted accounting
principles.
(m) Prepayments, Etc. of Debt. Prepay, redeem, purchase, defease
or otherwise satisfy prior to the scheduled maturity thereof in any manner,
or make any payment in violation of any subordination terms of, any Debt
(including any of its Additional Unsecured Debt), other than (i) the
prepayment of the Advances in accordance with the terms of this Agreement,
(ii) regularly scheduled or required repayments or redemptions of Debt
(including required repayments or redemptions of its Additional Unsecured
Debt arising in connection with such Borrower's making of optional
prepayments pursuant to Section 2.10(a) of this Agreement), provided that any
such required prepayment or redemption does not require such Borrower to pay
any "make-whole" or other premium in connection with such prepayment or
redemption; and (iii) optional prepayments or redemptions of its Additional
Unsecured Debt, provided that simultaneously with any such optional
prepayment or redemption, such Borrower prepays the outstanding principal
amount of the A Advances to the extent required by Section 2.10(b)(iv)
hereof.
(n) Amendments to Unsecured Debt Documents. Amend, modify or
change, or agree to any amendment, modification or change, of any term or
condition of any of its Unsecured Debt Documents, or give any consent, waiver
or approval thereunder, which (i) increases the monetary obligations of such
Borrower thereunder, (ii) accelerates any date fixed for any payment by such
Borrower thereunder or (iii) otherwise materially impairs the value of the
interest or rights of such Borrower thereunder (including, but not limited
to, any amendment, modification or change which makes any covenant or event
of default thereunder materially more restrictive as to such Borrower).
(o) Issuance of Stock. Suffer or permit any of its Subsidiaries,
directly or indirectly, to issue any stock of such Subsidiary, except (a) to
such Borrower, (b) to a Wholly-Owned Subsidiary of such Borrower, (c) to
qualified directors if and to the minimum extent required by applicable law,
or (d) as otherwise required by applicable law in the case of Foreign
Subsidiaries of such Borrower; provided that such transaction complies with
all other provisions of this Agreement.
SECTION 5.03. Reporting Requirements. So long as any amount
hereunder shall remain unpaid or any Lender shall have any Commitment
hereunder, each Borrower will, unless the Majority Lenders shall otherwise
consent in writing, furnish to the Agent for distribution to the Lenders:
(a) as soon as possible and in any event within five Business Days
after the occurrence of each Event of Default or each event which, with the
giving of notice or lapse of time or both, would constitute an Event of
Default, continuing on the date of such statement, a statement of a Financial
Officer of such Borrower setting forth details of such Event of Default or
event and the action which such Borrower has taken or proposes to take with
respect thereto;
(b) as soon as available and in any event within 60 days after the
end of each of the first three Fiscal Quarters of each Fiscal Year of the
Borrowers, Combined and combining balance sheets of the Borrowers and their
Subsidiaries as of the end of such quarter and the related Combined and
combining statements of operations, statements of retained earnings and
statements of cash flows of such Persons for such quarter and for the period
commencing at the end of the previous Fiscal Year and ending with the end of
such quarter, all in reasonable detail and duly certified (subject to normal
year-end audit adjustments) by a Financial Officer of each Borrower as having
been prepared in accordance with generally accepted accounting principles
consistent with those applied in the preparation of the financial statements
referred to in Sections 4.01(e) and 4.01(f), together with (i) a certificate
of such Financial Officers dated the date of delivery of such statements
stating that each has no knowledge that an Event of Default, or any event
which, with the giving of notice or lapse of time or both, would constitute
an Event of Default, has occurred and is continuing, or if an Event of
Default or such an event has occurred and is continuing, a statement as to
the nature thereof and the action which such Borrower has taken or proposes
to take with respect thereto, and (ii) a certificate in the form of Exhibit K
attached hereto, appropriately completed, setting forth, with respect to the
Fiscal Period ending on the last day of such quarter, a computation of each
amount, including the ratios, described in Sections 5.01(h), (i) and (j);
(c) as soon as available and in any event within 90 days after the
end of each Fiscal Year of the Borrowers, a copy of the annual audit report
for such year for the Borrowers and their Subsidiaries (including therein
Combined and combining balance sheets of such Persons as a group in each case
as at the end of such Fiscal Year and the related Combined and combining
statements of operations, statements of retained earnings and statements of
cash flows of such Persons for such Fiscal Year), duly certified by Deloitte
& Touche or other independent certified public accountants of recognized
standing reasonably acceptable to the Majority Lenders, together with a
certificate of such accounting firm to the Agent stating that in the course
of the regular audit of the business of the Borrowers and their Subsidiaries,
which audit was conducted by such accounting firm in accordance with
generally accepted auditing standards, such accounting firm has obtained no
knowledge that an Event of Default or an event which, with the giving of
notice or lapse of time or both, would constitute an Event of Default, has
occurred and is continuing, or if, in the opinion of such accounting firm, an
Event of Default or such an event has occurred and is continuing, a statement
as to the nature thereof;
(d) together with the financial statements delivered pursuant to
subsection (c) above, a certificate in the form of Exhibit K attached hereto,
appropriately completed, of a Financial Officer of each Borrower setting
forth for the Fiscal Year a computation of each amount, including the ratios,
described in Sections 5.01(h), (i), and (j);
(e) each certificate regarding the Rate Ratio, as required
pursuant to Section 2.07(c);
(f) promptly after the commencement thereof, notice of all
actions, suits and proceedings of the type described in Section 4.01(i)
before any court or governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign;
(g) promptly after the sending or filing thereof, copies of all
proxy statements, financial statements and reports which such Borrower or any
Subsidiary of such Borrower sends to its stockholders, and copies of all
regular, periodic and special reports, and all registration statements, which
such Borrower or any Subsidiary of such Borrower files with the Securities
and Exchange Commission or any governmental authority which may be
substituted therefor, with any national securities exchange or with the FCC
or any other governmental authority which has issued a Franchise to such
Borrower or any Subsidiary of such Borrower;
(h) as soon as available and in any event within 60 days after the
end of each of the first three Fiscal Quarters of each Fiscal Year of such
Borrower and within 90 days of the end of each Fiscal Year of such Borrower a
report updating the information regarding Subscribers to the cable television
systems of such Borrower and its Subsidiaries previously furnished to the
Lenders as at the end of such Fiscal Quarter, which report shall be included
in the certificate in the form of Exhibit K to be delivered pursuant to
Section 5.03(b) and Section 5.03(d);
(i) promptly after the filing or receiving thereof, copies of all
reports and notices which such Borrower or any Subsidiary of such Borrower
files under ERISA with the Pension Benefit Guaranty Corporation or the U.S.
Department of Labor or which such Borrower or any Subsidiary of such Borrower
receives from such Corporation or Department;
(j) promptly after the receipt thereof, notice of any lapse,
termination or relinquishment of any material franchise (including
Franchise), license, permit or other authorization from the FCC held by such
Borrower or any Subsidiary of such Borrower or any failure of the FCC to
renew or extend any such franchise (including Franchise), license, permit or
other authorization for the usual period thereof and of any complaint or
other matter filed with or communicated to the FCC, of which such Borrower or
any Subsidiary of such Borrower has knowledge and which could have a material
adverse effect upon the renewal or extension of any franchise (including
Franchise), license, permit or other authorization held by such Borrower or
any Subsidiary of such Borrower;
(k) within 15 days after any change occurs with respect to any
information regarding any Subsidiary of such Borrower contained in the most
recent schedule furnished under this Section 5.03(k) or, if no such schedule
has been furnished, in Schedule 4.01(l), a schedule, in substantially the
form of Schedule 4.01(l), setting forth as of the date such schedule is
furnished the information described in the first sentence of Section 4.01(l);
(l) promptly upon such Borrower's obtaining knowledge thereof,
notice of any issuance of a rating of any of such Borrower's long term Debt
(including borrowings under this Agreement and the Unsecured Debt Documents);
and
(m) such other information respecting the business or properties
or the condition or operations, financial or otherwise, of such Borrower or
any of its Subsidiaries, as the Agent or any Lender may from time to time
reasonably request.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following events
("Events of Default") shall occur and be continuing:
(a) Any Borrower shall fail to pay any principal of, or interest
on, any Note when the same becomes due and payable; or
(b) Any representation or warranty made or deemed made by any
Borrower, Century/Texas or Century/Holding in or in connection with any Loan
Document shall prove to have been incorrect in any material respect when
made; or
(c) (i) Any Borrower shall fail to perform or observe any term,
covenant or agreement contained in Section 5.02 (other than Section 5.02(h)
or (l)) or 5.03(a); or
(ii) Any Borrower shall fail to perform or observe any other term,
covenant or agreement contained in this Agreement on its part to be performed
or observed, other than those listed in subsections (a) or (c)(i) above, if
such failure shall remain unremedied for 30 days after the earlier of (A)
written notice thereof shall have been given to such Borrower by the Agent or
any Lender and (B) such Borrower's knowledge of such failure; provided that a
breach by such Borrower of any or all of its financial covenants set forth in
Sections 5.01(h), (i) or (j) may be cured (and thus shall be deemed not to
have occurred) if, within five Business Days after the occurrence of such
breach, such Borrower shall have received from Century/Texas capital
contributions in the form of cash or Permitted Cable Systems (whether or not
in connection with the issuance by such Borrower to Century/Texas of
additional shares of its capital stock) which, if such capital contributions
had been received by such Borrower prior to the last day of the Fiscal Period
with respect to which such Borrower has breached any such financial
covenants, would have resulted in such Borrower's compliance with all such
covenants whether or not so breached (deeming, for the purpose of this
determination, any such cash capital contributions received from
Century/Texas to be an addition to the net income component of EBIDT of such
Borrower and its Subsidiaries for such Fiscal Period); provided further,
however, that the cure mechanism described in this subclause (c) shall not be
available to any Borrower (x) more than three times during the term of this
Agreement or (y) to cure the breach of any financial covenant occurring as of
the last day of any Fiscal Period if such provision was availed of to cure
any such breach of financial covenant occurring as of the last day of the
immediately preceding Fiscal Period; or
(d) Century/Texas or Century/Holding shall fail to perform or
observe (i) any term, covenant or agreement contained in Section 1 of the
Century/Texas Agreement or Section 1 of the Parent Agreement, respectively,
or (ii) any other term, covenant or agreement contained in the Century/Texas
Agreement or the Parent Agreement on its respective part to be performed or
observed if such failure shall remain unremedied for 30 days after the
earlier of (A) written notice thereof shall have been given to the Borrowers
by the Agent or any Lender and (B) any Borrower's, or Century/Texas' or
Century/Holding's, as applicable, knowledge of such failure; or
(e) Any Borrower or any of its Subsidiaries shall fail to pay any
principal of or premium or interest on any Debt (but excluding Debt evidenced
by the Notes) of such Borrower or such Subsidiary (as the case may be), when
the same becomes due and payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise), and such failure shall
continue after the applicable grace period, if any, specified in the
agreement or instrument relating to such Debt, and the aggregate amount of
all such Debt with respect to which any such failure shall have occurred and
be continuing shall equal or exceed $10,000,000; or any other event shall
occur or condition shall exist under any agreement or instrument relating to
any such Debt and shall continue after the applicable grace period, if any,
specified in such agreement or instrument, if the effect of such event or
condition is to accelerate, or to permit the acceleration of, the maturity of
such Debt; or any such Debt shall be declared to be due and payable, or
required to be prepaid (other than by a regularly scheduled required
prepayment), redeemed, purchased or defeased, or an offer to prepay, redeem,
purchase or defease such Debt shall be required to be made, in each case
prior to the stated maturity thereof; or
(f) Any Affiliates of any Borrower (other than a Subsidiary of
such Borrower and whether or not acting as debtor-in-possession in a case
under the Federal Bankruptcy Code), or any party in interest in a case
involving such Affiliate under the Federal Bankruptcy Code, shall assert or
claim in connection with any case or proceeding under the Federal Bankruptcy
Code or otherwise, or shall assert or claim in writing in any negotiation
regarding any Debt or other obligation of any such Affiliate, that the assets
and liabilities of such Borrower or any such Subsidiary should be
consolidated substantively with the assets and liabilities of any such
Affiliate or shall assert or claim that such Borrower is liable for any or
all of such Affiliate's liabilities; or
(g) Any Borrower or any of its Subsidiaries shall generally not
pay its debts as such debts become due, or shall admit in writing its
inability to pay its debts generally, or shall make a general assignment for
the benefit of creditors; or any proceeding shall be instituted by or against
any Borrower or any of its Subsidiaries seeking to adjudicate it a bankrupt
or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its
debts under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other similar official for
it or for any substantial part of its property and, in the case of any such
proceeding instituted against it (but not instituted or consented to by it),
either such proceeding shall remain undismissed or unstayed for a period of
60 days, or any of the actions sought in such proceeding (including, without
limitation, the entry of an order for relief against, or the appointment of a
receiver, trustee, custodian or other similar official for, it or for any
substantial part of its property) shall occur; or any Borrower or any of its
Subsidiaries shall take any corporate action to authorize any of the actions
set forth above in this subsection (g); or
(h) Any material provision of any Loan Document shall for any
reason cease to be binding on or enforceable against any Borrower or, in the
case of the Parent Agreement, Century/Holding or, in the case of the
Century/Texas Agreement, Century/Texas or any Borrower, Century/Holding,
Century/Texas or any Subsidiary of any Borrower shall so state in writing; or
(i) Any "Event of Default" under and as defined in any Unsecured
Debt Document shall have occurred and be continuing; or any other event shall
have occurred under any Unsecured Debt Document if the effect of such event
is to require any or all of the Additional Unsecured Debt of any Borrower to
be prepaid (other than by a regularly scheduled or permitted prepayment)
prior to the stated maturity thereof; or
(j) Any judgment or order for the payment of money in excess of
$10,000,000 shall be rendered against any Borrower or any of its Subsidiaries
and either (i) enforcement proceedings shall have been commenced by any
creditor upon such judgment or order or (ii) there shall be any period of 10
consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not be in effect; or
(k) Leonard Tow, who is currently the Chief Executive Officer of
Century/Jersey and Century/Texas, or his estate, and/or members of his
immediate family (which include without limitation, his grandchildren),
and/or trusts wholly for their benefit, shall fail to own in the aggregate,
beneficially and of record, stock of Century/Jersey entitled to cast a
majority of the votes at a meeting of its shareholders with respect to
election of a majority of its directors; or Century/Jersey shall fail to own
100% of the outstanding capital stock of Century/Texas; or Century/Texas
shall fail to own 100% of the outstanding capital stock of Century/Holding,
Pullman or Kootenai; or Century/Holding shall fail to own 100% of the
outstanding capital stock of CCC-I; or
(l) There shall occur in the reasonable judgment of the Majority
Lenders any Material Adverse Change; or
(m) Any ERISA Event shall have occurred with respect to a Plan and
the sum of the Insufficiency of such Plan and the Insufficiency of any and
all other Plans with respect to which an ERISA Event shall have occurred and
then exist (or, in the case of a Plan with respect to which an ERISA Event
described in clause (c) through (g) of the definition of ERISA Event shall
have occurred and then exist, the liability related thereto) is equal to or
greater than $10,000,000; or
(n) Any Borrower or any ERISA Affiliate shall have been notified
by the sponsor of a Multiemployer Plan that it has incurred Withdrawal
Liability to such Multiemployer Plan in an amount which, when aggregated with
all other amounts required to be paid to Multiemployer Plans by such Borrower
and its ERISA Affiliates as Withdrawal Liability, exceeds $5,000,000 or
requires payments exceeding $10,000,000 per annum; or
(o) Any Borrower or any ERISA Affiliate shall have been notified
by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or is being terminated, within the meaning of Title IV of
ERISA, if as a result of such reorganization or termination the aggregate
annual contributions of such Borrower and its ERISA Affiliates to all
Multiemployer Plans which are then in reorganization or being terminated have
been or will be increased over the amounts contributed to such Multiemployer
Plans for the respective plan year of each such Multiemployer Plan
immediately preceding the plan year in which the reorganization or
termination occurs by an amount exceeding $10,000,000; or
(p) The grantor of any Franchise of any Borrower or any Subsidiary
of any Borrower shall have revoked or terminated such Franchise or given
notice of its intent to revoke or terminate such Franchise prior to the
scheduled expiration of such Franchise or any Franchise shall expire without
renewal, provided, however, that such a revocation, termination or expiration
shall not constitute an Event of Default if (i) the revocation, termination
or expiration is not reasonably likely, to have a Material Adverse Effect, or
(ii) in the instance of an expiration, an application for renewal or
extension has been duly made by the Borrower or the Subsidiary concerned and
is being diligently pursued by the Borrower or the concerned Subsidiary and
the Borrower or the Subsidiary concerned is not prohibited by a final order
of a court of competent jurisdiction from continuing to provide cable service
during the pendency of such application and the Franchise has not been
granted to another Person, or (iii) in the instance of a revocation or
termination, the Borrower or the Subsidiary concerned is not prohibited by
final order of a court of competent jurisdiction from continuing to provide
cable service, and the Franchise has not been granted to another Person;
then, and in any such event, the Agent (i) shall at the request, or may with
the consent, of the Majority Lenders, by notice to the Borrowers, declare the
obligation of each Lender to make Advances to be terminated, whereupon the
same shall forthwith terminate, and (ii) shall at the request, or may with
the consent, of the Majority Lenders, by notice to the Borrowers, declare the
Advances, all interest thereon and all other amounts payable under this
Agreement and the other Loan Documents to be forthwith due and payable,
whereupon the Advances, all such interest and all such amounts shall become
and be forthwith due and payable, without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived by each
Borrower; provided, however, in the event of an actual or deemed entry of an
order for relief with respect to CCC-I under the Federal Bankruptcy Code, (A)
the obligation of each Lender to make Advances to any Borrower shall
automatically be terminated and (B) all of the Borrowers' Notes, all such
interest and all such amounts shall automatically become and be due and
payable, without presentment, demand, protest or any notice of any kind, all
of which are hereby expressly waived by each Borrower; provided further in
the event of an actual or deemed entry of an order for relief with respect to
Pullman or Kootenai under the Federal Bankruptcy Code, (A) the obligation of
each Lender to make Advances to such Borrower shall automatically be
terminated and (B) all of such Borrower's Notes and all such interest and all
such amounts payable by such Borrower shall automatically become and be due
and payable, without presentment, demand, protest or any notice of any kind,
all of which are hereby expressly waived by each such Borrower.
ARTICLE VII
THE LENDER AGENTS
SECTION 7.01. Authorization and Action. Each Lender hereby
appoints and authorizes the Agent to take such action as agent on its behalf
and to exercise such powers under this Agreement and the other Loan Documents
as are delegated to the Agent by the terms hereof, together with such powers
as are reasonably incidental thereto. As to any matters not expressly
provided for by this Agreement or any other Loan Document (including, without
limitation, enforcement or collection of the Notes), the Agent shall not be
required to exercise any discretion or take any action, but shall be required
to act or to refrain from acting (and shall be fully protected in so acting
or refraining from acting) upon the instructions of the Majority Lenders, and
such instructions shall be binding upon all Lenders; provided, however, that
the Agent shall not be required to take any action which exposes the Agent to
personal liability or which is contrary to any Loan Document or applicable
law.
SECTION 7.02. Lender Agents' Reliance, Etc. Neither the Agent nor
any of its directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken by it or them under or in connection with
this Agreement, except for its or their own gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, each of
the Lender Agents: (i) may treat the payee of any Note as the holder thereof
until the Agent receives and accepts an Assignment and Acceptance entered
into by the Lender which is the payee of such Note, as assignor, and an
Eligible Assignee, as assignee, as provided in Section 9.07; (ii) may consult
with legal counsel (including counsel for any Borrower), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with
the advice of such counsel, accountants or experts; (iii) makes no warranty
or representation to any Lender and shall not be responsible to any Lender
for any statements, warranties or representations (whether written or oral)
made in or in connection with any Loan Document or for any financial
projection or other information furnished by any Borrower before or after the
execution of this Agreement; (iv) shall not have any duty to ascertain or to
inquire as to the performance or observance of any of the terms, covenants or
conditions of any Loan Document on the part of any Borrower or any other
Person or to inspect the property (including the books and records) of any
Borrower; (v) shall not be responsible to any Lender for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of, or
the perfection or priority of any lien or security interest created or
purported to be created under or in connection with, any Loan Document or any
other instrument or document furnished pursuant hereto; and (vi) shall incur
no liability under or in respect of any Loan Document by acting upon any
notice, consent, certificate or other instrument or writing (which may be by
telecopier, telegram, cable or telex) believed by it to be genuine and signed
or sent by the proper party or parties.
SECTION 7.03. The Lender Agents and their Affiliates. With
respect to its Commitment and the Advances made by it and the Notes issued to
it, each of the Lender Agents, in its capacity as a Lender hereunder, shall
have the same rights and powers under this Agreement as any other Lender and
may exercise the same as though it were not a Lender Agent; and the term
"Lender" or "Lenders" shall, unless otherwise expressly indicated, include
each of the Lender Agents in their respective individual capacities. Each of
the Lender Agents and their respective affiliates may accept deposits from,
lend money to, act as trustee under indentures of, and generally engage in
any kind of business with, any Borrower, any of its Subsidiaries and any
Person who may do business with or own securities of any Borrower or any such
Subsidiary, all as if such Lender Agent were not a Lender Agent and without
any duty to account therefor to the Lenders.
SECTION 7.04. Lender Credit Decision. (a) Each Lender
acknowledges that it has, independently and without reliance upon any Lender
Agent or any other Lender and based on the financial statements referred to
in Section 4.01 and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and
without reliance upon any Lender Agent or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue
to make its own credit decisions in taking or not taking action under this
Agreement.
(b) Without limiting the foregoing, each Lender acknowledges that
none of the Lender Agents is responsible for the forecasts and projections
received from time to time by such Lender whether or not such forecasts or
projections were prepared by any Borrower, any other Loan Party, any of the
Lender Agents or any other party or based on information provided by any such
party. None of the Lender Agents makes any representation or warranty
whatsoever as to the truth, accuracy or content of the information contained
therein.
SECTION 7.05. Indemnification by Lenders. The Lenders agree to
indemnify each of the Lender Agents (to the extent not reimbursed by the
Borrowers), ratably according to the respective principal amounts of the A
Notes then owing to each of them (or if no A Notes are at the time
outstanding or if any A Notes are held by persons which are not Lenders
ratably according to the respective amounts of their Commitments), from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against
any Lender Agent in any way relating to or arising out of this Agreement or
any action taken or omitted by any Lender Agent under this Agreement;
provided that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from such Lender Agent's gross negligence
or willful misconduct. Without limitation of the foregoing, each Lender
agrees to reimburse such Lender Agent promptly upon demand for its ratable
share of any out-of-pocket expenses (including counsel fees) incurred by such
Lender Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect
of rights or responsibilities under, this Agreement or any other Loan
Document, or in connection with any refinancing or restructuring of the
credit arrangements provided pursuant to the Loan Documents, including,
without limitation, in the nature of a workout or of any insolvency or
bankruptcy proceedings to the extent that such Lender Agent is not reimbursed
for such expenses by the Borrowers.
SECTION 7.06. Successor Agent, Etc. (a) The Agent may resign at
any time by giving written notice thereof to the Lenders and the Borrowers
and may be removed at any time with or without cause by the Majority Lenders.
Upon any such resignation or removal, the Majority Lenders shall have the
right to appoint a successor Agent so long as all of the long-term public
senior debt securities of such successor Agent are rated at least "BBB-" by
Standard & Poor's, a division of McGraw-Hill, Inc., or "Baa3" by Moody's
Investors Service, Inc. at the time of its acceptance of appointment as
successor Agent. If no successor Agent shall have been so appointed by the
Majority Lenders, and shall have accepted such appointment, within 30 days
after the retiring Agent's giving of notice of resignation or the Majority
Lenders' removal of the retiring Agent, then the retiring Agent may, on
behalf of the Lenders, appoint a successor Agent, which shall be a commercial
bank organized under the laws of the United States of America or of any State
thereof, having a combined capital and surplus of at least $50,000,000 and
all of whose long-term public senior debt securities are rated at least "BBB-
" by Standard & Poor's, a division of McGraw-Hill, Inc., or at least "Baa3"
by Moody's Investors Service, Inc. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Agent, and the retiring Agent shall be discharged from
its duties and obligations under this Agreement. After any retiring Agent's
resignation or removal hereunder as Agent, the provisions of this Article VII
shall inure to its benefit as to any actions taken or omitted to be taken by
it while it was Agent under this Agreement.
(b) Any Managing Agent may resign at any time by giving written
notice thereof to the other Lender Agents, the Lenders and the Borrowers and
may be removed at any time with or without cause by the Majority Lenders.
ARTICLE VIII
GUARANTY
SECTION 8.01. Guaranty. (a) Each Borrower hereby jointly and
severally unconditionally and irrevocably guarantees (the undertaking by each
Borrower contained in this Article VIII being the "Guaranty") the punctual
payment when due, whether at stated maturity, by acceleration or otherwise,
of all Obligations of the other Borrowers now or hereafter existing under
this Agreement, whether for principal, interest, fees, expenses or otherwise
(such Obligations being the "Guaranteed Obligations"), and agrees to pay any
and all expenses (including counsel fees and expenses) incurred by the Agent
or the Lenders in enforcing any rights under this Guaranty. Without limiting
the generality of the foregoing, each Borrower's liability shall extend to
all amounts that constitute part of the Guaranteed Obligations and would be
owed by any Borrower to the Agent or the Lenders under this Agreement but for
the fact that they are unenforceable or not allowable due to the existence of
a bankruptcy, reorganization or similar proceeding involving such Borrower.
(b) The liability of any Borrower under this Guaranty (the
"Guarantor") shall not exceed the greater of (i) the net benefit realized by
the Guarantor from the proceeds of the Advances made from time to time by any
other Borrower to the Guarantor or any Subsidiary of the Guarantor and
(ii) the greater of (x) 95% of the Adjusted Net Assets of the Guarantor on
the date of delivery hereof and (y) 95% of the Adjusted Net Assets of the
Guarantor on the date of any payment hereunder. "Adjusted Net Assets" of the
Guarantor at any date means the lesser of (x) the amount by which the fair
value of the property of the Guarantor exceeds the total amount of
liabilities, including, without limitation, contingent liabilities, but
excluding liabilities under this Guaranty, of the Guarantor at such date and
(y) the amount by which the present fair salable value of the assets of the
Guarantor at such date exceeds the amount that will be required to pay the
probable liability of the Guarantor on its debts, excluding debt in respect
of this Guaranty, as they become absolute and matured.
SECTION 8.02. Guaranty Absolute. Each Borrower guarantees that
the Guaranteed Obligations will be paid strictly in accordance with the terms
of this Agreement, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Agent or the Lenders with respect thereto. The Obligations of
each Borrower under this Guaranty are independent of the Guaranteed
Obligations or any other Obligations of any other Borrower under this
Agreement, and a separate action or actions may be brought and prosecuted
against each Borrower to enforce this Guaranty. The liability of each
Borrower under this Guaranty shall be irrevocable, absolute and unconditional
irrespective of, and each Borrower hereby irrevocably waives any defenses it
may now or hereafter have in any way relating to, any or all of the
following:
(a) any lack of validity or enforceability of any Loan Document or
any agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Guaranteed Obligations or any other
Obligations of any other Borrower under the Loan Documents, or any other
amendment or waiver of or any consent to departure from any Loan Document,
including, without limitation, any increase in the Guaranteed Obligations
resulting from the extension of additional credit to any Borrower or any of
its Subsidiaries or otherwise;
(c) any taking, exchange, release or non-perfection of any
collateral, or any taking, release or amendment or waiver of or consent to
departure from any other guaranty, for all or any of the Guaranteed
Obligations;
(d) any manner of application of collateral, or proceeds thereof,
to all or any of the Guaranteed Obligations, or any manner of sale or other
disposition of any collateral for all or any of the Guaranteed Obligations or
any other Obligations of any other Borrower under the Loan Documents or any
other assets of any Borrower or any of its Subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of any Borrower or any of its Subsidiaries;
(f) any failure of the Agent or any Lender to disclose to any
Borrower any information relating to the financial condition, operations,
properties or prospects of any other Borrower now or in the future known to
the Agent or any Lender (each Borrower waiving any duty on the part of the
Agent or any Lender to disclose such information); or
(g) any other circumstance (including, without limitation, any
statute of limitations) or any existence of or reliance on any representation
by the Agent or any Lender that might otherwise constitute a defense
available to, or a discharge of, any Borrower or any other guarantor or
surety.
This Guaranty shall continue to be effective or be reinstated, as the case
may be, if at any time any payment of any of the Guaranteed Obligations is
rescinded or must otherwise be returned by the Agent or any Lender upon the
insolvency, bankruptcy or reorganization of any Borrower or otherwise, all as
though such payment had not been made.
SECTION 8.03. Waivers and Acknowledgments. (a) Each Borrower
hereby irrevocably waives promptness, diligence, notice of acceptance and any
other notice with respect to any of the Guaranteed Obligations and this
Guaranty and any requirement that the Agent or any Lender protect, secure,
perfect or insure any Lien or any property subject thereto or exhaust any
right or take any action against any Borrower or any other Person.
(b) Each Borrower hereby waives any right to revoke this Guaranty,
and acknowledges that this Guaranty is continuing in nature and applies to
all Guaranteed Obligations, whether existing now or in the future.
(c) Each Borrower acknowledges that it will receive substantial
direct and indirect benefits from the financing arrangements contemplated by
this Agreement and that the waivers set forth in this Section 8.03 are
knowingly made in contemplation of such benefits.
SECTION 8.04. Subrogation. Each Borrower will not exercise any
rights that it may now or hereafter acquire against the other Borrowers or
any other insider guarantor that arise from the existence, payment,
performance or enforcement of the Guarantor's Obligations under this
Agreement or any other Loan Document, including, without limitation, any
right of subrogation, reimbursement, exoneration, contribution or
indemnification and any right to participate in any claim or remedy of the
Agent or any Lender against any Borrower whether or not such claim, remedy or
right arises in equity or under contract, statute or common law, including,
without limitation, the right to take or receive from any Borrower or any
other insider guarantor, directly or indirectly, in cash or other property or
by set-off or in any other manner, payment or security on account of such
claim, remedy or right, unless and until all of the Obligations and all other
amounts payable under this Guaranty shall have been paid in full in cash and
the Commitments shall have expired or terminated. If any amount shall be
paid to any Borrower in violation of the preceding sentence at any time prior
to the later of the payment in full in cash of the Guaranteed Obligations and
all other amounts payable under this Guaranty and the Termination Date, such
amount shall be held in trust for the benefit of the Agent and the Lenders
and shall forthwith be paid to the Agent to be credited and applied to the
Guaranteed Obligations and all other amounts payable under this Guaranty,
whether matured or unmatured, in accordance with the terms of Loan Documents,
or to be held as collateral for any Guaranteed Obligations or other amounts
payable under this Guaranty thereafter arising. If (i) any Borrower shall
make payment to the Agent or any Lender of all or any part of the Guaranteed
Obligations, (ii) all of the Guaranteed Obligations and all other amounts
payable under this Guaranty shall be paid in full in cash and (iii) the
Termination Date shall have occurred, the Agent and the Lenders will, at the
any Borrower's request and expense, execute and deliver to such Borrower
appropriate documents, without recourse and without representation or
warranty, necessary to evidence the transfer by subrogation to such Borrower
of an interest in the Guaranteed Obligations resulting from such payment by
such Borrower.
SECTION 8.05. Indemnification. Without limitation on any other
Obligations of any Borrower or remedies of the Agent or any Lender under this
Guaranty, each Borrower shall, to the fullest extent permitted by law,
indemnify, defend and save and hold harmless the Agent and each Lender from
and against, and shall pay on demand, any and all losses, liabilities,
damages, costs, expenses and charges (including the fees and disbursements of
the Agent's and Lenders' legal counsel) suffered or incurred by the Agent or
such Lender as a result of any failure of any Guaranteed Obligations to be
the legal, valid and binding obligations of such Borrower enforceable against
such Borrower in accordance with their terms.
SECTION 8.06. Continuing Guaranty; Assignments Under this. This
Guaranty is a continuing guaranty and shall (a) remain in full force and
effect until the later of the payment in full in cash of the Guaranteed
Obligations and all other amounts payable under this Agreement and the
Termination Date, (b) be binding upon each Borrower, its successors and
assigns and (c) inure to the benefit of and be enforceable by the Agent and
the Lenders and their successors, transferees and assigns. Without limiting
the generality of the foregoing clause (c), any Lender may assign or
otherwise transfer all or any portion of its rights and obligations under the
Loan Documents (including, without limitation, all or any portion of its
Commitment, the Advances owing to it and the Note or Notes held by it) to any
other Person, and such other Person shall thereupon become vested with all
the benefits in respect thereof granted to such Lender herein or otherwise,
in each case as and to the extent provided in Section 9.07.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Amendments, Etc No amendment or waiver of any
provision of this Agreement or the A Notes, nor consent to any departure by
the Borrowers therefrom, shall in any event be effective unless the same
shall be in writing and signed by the Majority Lenders, and then such waiver
or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, no amendment, waiver or
consent shall, unless in writing and signed by all the Lenders, do any of the
following: (a) waive any of the conditions specified in Article III, (b)
increase the Commitments of the Lenders or subject the Lenders to any
additional obligations, (c) reduce the principal of, or interest on, the A
Notes or any fees or other amounts payable hereunder, (d) postpone any date
fixed for any payment of principal of, or interest on, the A Notes or any
fees or other amounts payable hereunder, (e) change the percentage of the
Commitments or of the aggregate unpaid principal amount of the A Notes, or
the number of Lenders, which shall be required for the Lenders or any of them
to take any action hereunder, (f) amend the Guaranty (other than as provided
in Section 2.18) or the joint and several nature of any other joint and
several Obligation of the Borrowers hereunder or (g) amend this Section 9.01;
and provided further that no amendment, waiver or consent shall, unless in
writing and signed by the Agent in addition to the Lenders required above to
take such action, affect the rights or duties of the Agent under this
Agreement or any Note. No amendment or waiver of any provision of the B
Notes nor consent to any departure by the Borrowers therefrom shall in any
event be effective after an Event of Default has occurred and is continuing
under 6.01(a) or the Advances have been declared or have become due and
payable in accordance with the last paragraph of Section 6.01, unless the
Majority Lenders shall otherwise consent in writing.
SECTION 9.02. Notices, Etc All notices and other communications
provided for hereunder shall be in writing (including telecopier,
telegraphic, telex or cable communication) and mailed, telecopied,
telegraphed, telexed, cabled or delivered, if to any Borrower, at its address
at c/o Century Communications Corp., 50 Locust Avenue, New Canaan,
Connecticut 06840, Attention: Treasurer; if to any Bank or Managing Agent,
at its Domestic Lending Office specified opposite its name on Schedule I
hereto; if to any other Lender, at its Domestic Lending Office specified in
the Assignment and Acceptance pursuant to which it became a Lender; and if to
the Agent, at its address at 399 Park Avenue, New York, New York 10043,
Attention: NAFG Media; or, as to each party, at such other address as shall
be designated by such party in a written notice to the other parties. All
such notices and communications shall be effective when received by the
addressee thereof.
SECTION 9.03. No Waiver; Remedies. No failure on the part of any
Lender or the Agent to exercise, and no delay in exercising, any right
hereunder or under any Note shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
SECTION 9.04. Costs, Expenses and Taxes. (a) Each Borrower
jointly and severally agrees to pay on demand all reasonable costs and
expenses of the Agent and CSI in connection with the syndication of the
Commitments under this Agreement and the preparation, execution, delivery,
administration (other than routine administrative expenses), modification,
waiver and amendment of this Agreement, the Notes and the other documents to
be delivered hereunder, including, without limitation, the reasonable fees
and out-of-pocket expenses of counsel for the Agent with respect thereto and
with respect to advising the Agent as to its rights and responsibilities
under this Agreement. Each Borrower further jointly and severally agrees to
pay on demand all costs and expenses, if any (including, without limitation,
reasonable counsel fees and expenses) of the Agent and each of the Lenders,
in connection with the enforcement (whether through negotiations, legal
proceedings or otherwise and whether or not resulting in a settlement of any
claim, proceeding or case) of, or legal advice in respect of rights and
responsibilities under, this Agreement, the Notes and the other documents to
be delivered hereunder or in connection with the refinancing or restructuring
of the credit arrangements provided pursuant to the Loan Documents,
including, without limitation, in the nature of a workout or insolvency or
bankruptcy proceedings, including, without limitation, reasonable counsel
fees and expenses in connection with the enforcement of rights under this
Section 9.04(a).
(b) If any payment of principal of, or Conversion of, any Adjusted
CD Rate Advance or Eurodollar Rate Advance is made by any Borrower to or for
the account of a Lender other than on the last day of the Interest Period for
such A Advance, as a result of a payment or Conversion pursuant to Section
2.08(f) or 2.12, acceleration of the maturity of the Notes pursuant to
Section 6.01 or for any other reason, such Borrower shall, upon demand by
such Lender (with a copy of such demand to the Agent), pay to the Agent for
the account of such Lender any amounts required to compensate such Lender for
any additional losses, costs or expenses which it may reasonably incur as a
result of such payment or Conversion, including, without limitation, any
loss, cost or expense incurred by reason of the liquidation or reemployment
of deposits or other funds acquired by any Lender to fund or maintain such A
Advance. A certificate as to such amounts, submitted to such Borrower and
the Agent by such Lender, shall be conclusive and binding for all purposes,
absent manifest error.
SECTION 9.05. Right of Set-off. Upon (i) the occurrence and
during the continuance of any Event of Default and (ii) the making of the
request or the granting of the consent specified by Section 6.01 to authorize
the Agent to declare the Notes due and payable pursuant to the provisions of
Section 6.01, each Lender is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by such Lender to or
for the credit or the account of the Borrowers against any and all of the
Obligations of the Borrowers now or hereafter existing under this Agreement
and any Note held by such Lender, whether or not such Lender shall have made
any demand under this Agreement or such Note and although such obligations
may be unmatured. Each Lender agrees promptly to notify the Borrowers after
any such set-off and application made by such Lender, provided that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of each Lender under this Section 9.05 are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) which such Lender may have.
SECTION 9.06. Binding Effect. This Agreement shall become
effective when (a) it shall have been executed by the Borrowers and the Agent
and when the Agent shall have been notified by each Managing Agent and each
Lender that such Managing Agent and Lender has executed it and (b) when the
commitments of the lenders party to the Existing CCC-I Credit Agreement shall
have been terminated in whole pursuant to the terms thereof and the Borrowers
shall have delivered to the Agent copies of irrevocable notices effecting
such termination pursuant to Section 2.05 thereof, and all amounts then due
and payable by CCC-I under the Existing CCC-I Credit Agreement shall have
been paid in full, and thereafter this Agreement shall be binding upon and
inure to the benefit of the Borrowers, each Lender Agent and each Lender and
their respective successors and assigns, except that the Borrowers shall not
have the right to assign its rights hereunder or any interest herein without
the prior written consent of the Lenders.
SECTION 9.07. Assignments and Participations. (a) Each Lender
may and, if demanded by the Borrowers (following a demand by the Lender
pursuant to Section 2.11(a) and 2.11(b)) upon at least 5 Business Days'
notice to such Lender and the Agent, shall assign to one or more banks or
other entities all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Commitment
and the A Note or A Notes held by it); provided, however, (i) each such
assignment shall be of a constant, and not a varying, percentage of all
rights and obligations under this Agreement other than any B Advance or B
Note, (ii) except in the case of assignments to Affiliates or other Lenders,
the amount of the Commitment of the assigning Lender being assigned pursuant
to each such assignment (determined as of the date of the Assignment and
Acceptance with respect to such assignment) shall in no event be less than
$5,000,000 and shall be an integral multiple of $1,000,000, (iii) each such
assignment shall be to an Eligible Assignee, (iv) each such assignment made
as a result of a demand by the Borrowers shall be arranged by the Borrowers
after consultation with the Agent and shall be either an assignment of all of
the rights and obligations of the assigning Lender under this Agreement or an
assignment of a portion of such rights and obligations made concurrently with
another such assignment or other such assignments that together cover all of
the rights and obligations of the assigning Lender under this Agreement, (v)
no Lender shall be obligated to make any such assignment as a result of a
demand by the Borrowers unless and until such Lender shall have received one
or more payments from either the Borrowers or one or more Eligible Assignees
in an aggregate amount at least equal to the aggregate outstanding principal
amount of the Advances owing to such Lender, together with accrued interest
thereon to the date of payment of such principal amount and all other amounts
payable to such Lender under this Agreement and (vi) the parties to each such
assignment shall execute and deliver to the Agent, for its acceptance and
recording in the Register, an Assignment and Acceptance, together with any A
Note or A Notes subject to such assignment and a processing and recordation
fee of $2,500. Upon such execution, delivery, acceptance and recording, from
and after the effective date specified in each Assignment and Acceptance,
which effective date shall be at least 5 days after the execution and
delivery thereof to the Agent, (x) the assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, have the rights
and obligations of a Lender hereunder and (y) the Lender assignor thereunder
shall, to the extent that rights and obligations hereunder have been assigned
by it pursuant to such Assignment and Acceptance, relinquish its rights and
be released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an
assigning Lender's rights and obligations under this Agreement, such Lender
shall cease to be a party hereto).
(b) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with any
Loan Document or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of any Loan Document or any other
instrument or document furnished pursuant to any Loan Document; (ii) such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrowers or
the performance or observance by the Borrowers of any of its obligations
under this Agreement or any other instrument or document furnished pursuant
hereto; (iii) such assignee confirms that it has received a copy of this
Agreement, together with copies of the financial statements referred to in
Section 4.01 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance upon any Lender Agent, such assigning Lender or any other Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking
action under any Loan Document; (v) such assignee confirms that it is an
Eligible Assignee; (vi) such assignee appoints and authorizes each Lender
Agent to take such action as agent on its behalf and to exercise such powers
under any Loan Document as are delegated to such Lender Agent by the terms
hereof, together with such powers as are reasonably incidental thereto; and
(vii) such assignee agrees that it will perform in accordance with their
terms all of the obligations which by the terms of any Loan Document are
required to be performed by it as a Lender.
(c) The Agent shall maintain at its address referred to in Section
9.02 a copy of each Assignment and Acceptance delivered to and accepted by it
and a register for the recordation of the names and addresses of the Lenders
and the Commitment of, and principal amount of the A Advances owing to, each
Lender from time to time (the "Register"). The entries in the Register shall
be conclusive and binding for all purposes, absent manifest error, and the
Borrowers, the Lender Agents and the Lenders may treat each Person whose name
is recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrowers
or any Lender at any reasonable time and from time to time upon reasonable
prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed by
an assigning Lender and an assignee representing that it is an Eligible
Assignee, together with any A Note or A Notes subject to such assignment, the
Agent shall, if such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit C hereto, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Borrowers. Within five Business Days
after its receipt of such notice, the Borrowers, at their own expense, shall
execute and deliver to the Agent in exchange for the surrendered A Note or A
Notes a new A Note to the order of such Eligible Assignee in an amount equal
to the Commitment assumed by it pursuant to such Assignment and Acceptance
and, if the assigning Lender has retained a Commitment hereunder, a new A
Note to the order of the assigning Lender in an amount equal to the
Commitment retained by it hereunder. Such new A Note or A Notes shall be in
an aggregate principal amount equal to the aggregate principal amount of such
surrendered A Note or A Notes, shall be dated the effective date of such
Assignment and Acceptance and shall otherwise be in substantially the form of
Exhibit A-1 hereto.
(e) Each Lender may assign to one or more banks or other entities
any B Note or B Notes held by it.
(f) Each Lender may sell participations to one or more banks or
other entities in or to all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its
Commitment and the Advances owing to it); provided, however, (i) such
Lender's obligations under this Agreement (including, without limitation, its
Commitment to the Borrowers hereunder and the Advances owing to it and the
Note or Notes held by it) shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (iii) the Borrowers, the Agent and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement and (iv) no participant
under any such participation shall have any right to approve any amendment or
waiver of any provision of any Loan Document, or any consent to any departure
by any Loan Party therefrom, except to the extent that such amendment, waiver
or consent would reduce the principal of, or interest on, the Advances or any
fees or other amounts payable hereunder, in each case to the extent subject
to such participation, or postpone any date fixed for any payment of
principal of, or interest on, the Advances or any fees or other amounts
payable hereunder, in each case to the extent subject to such participation.
(g) Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this
Section 9.07, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrowers furnished to such
Lender by or on behalf of the Borrowers; provided that, prior to any such
disclosure, the assignee or participant or proposed assignee or participant
shall agree to preserve the confidentiality of any confidential information
relating to the Borrowers received by it from such Lender.
(h) Notwithstanding any other provision set forth in this
Agreement, any Lender may at any time create a security interest in all or
any portion of its rights under this Agreement (including, without
limitation, the Advances owing to it and the Notes held by it) in favor of
any Federal Reserve Bank in accordance with Regulation A of the Board of
Governors of the Federal Reserve System.
SECTION 9.08. Indemnification by the Borrowers. The Borrowers
agree, jointly and severally, to indemnify and hold harmless each Lender
Agent, each Lender and CSI and each of their respective Affiliates, and each
of their respective officers, directors, employees, agents, advisors,
representatives, and controlling persons (each, an "Indemnified Party") from
and against any and all claims, damages, liabilities, obligations, losses,
penalties, actions, judgments, suits, costs, expenses and disbursements
(including, without limitation, fees and disbursements of counsel and
reasonable allocated costs of in-house counsel) of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against any
Indemnified Party in connection with or arising out of, or in connection with
the preparation of a defense of, (a) any investigation, litigation, or
proceeding related to any acquisition or proposed acquisition by any
Borrower, or by any Subsidiary or Affiliate of any Borrower, of all or any
portion of the stock or substantially all the assets of any Person or (b) any
other investigation, litigation or proceeding involving any Borrower or any
of its Affiliates, in each case whether or not such investigation, litigation
or proceeding is brought by any Borrower or any of its Affiliates or any of
their directors, shareholders or creditors or an Indemnified Party is
otherwise a party thereto, except to the extent that such claim, damage,
liability, obligation, loss, penalty, action, judgment, suit, cost, expense
or disbursement is found in a final judgment by a court of competent
jurisdiction to have resulted from (i) the gross negligence or willful
misconduct of such Indemnified Party or such Indemnified Party's Affiliates,
or (ii) if such Indemnified Party is a Lender Agent, a Lender, CSI or any of
their respective Affiliates, the gross negligence or willful misconduct of
such Indemnified Party's officers, directors, employees, agents, advisors,
representatives and controlling persons or (iii) if such Indemnified Party is
an officer, director, employee, agent, advisor, representative or controlling
person of another Indemnified Party, the gross negligence or willful
misconduct of such other Indemnified Party.
SECTION 9.09. Confidentiality. In connection with the negotiation
and administration of this Agreement and the other Loan Documents, the
Borrowers have furnished and will from time to time furnish to the Agent and
the Lenders (each, a "Recipient") written information which is identified to
the Recipient in writing when delivered as confidential (such information,
other than any such information which (a) was publicly available, or
otherwise known to the Recipient, at the time of disclosure, (b) subsequently
becomes publicly available other than through any act or omission by the
Recipient or (c) otherwise subsequently becomes known to the Recipient other
than through a Person whom the Recipient knows to be acting in violation of
his or its obligations to the Borrowers, being hereinafter referred to as
"Confidential Information"). The Recipient will treat confidentially any
Confidential Information in accordance with such procedures as the Recipient
applies generally to information of that nature. It is understood, however,
that the foregoing will not restrict the Recipient's ability to freely
exchange such Confidential Information with (x) directors, employees,
auditors, accountants or counsel of such Recipient or its Affiliates and (y)
current or prospective assignees of and participants in the Recipient's
position herein, but in the case of prospective assignees of and participants
in the Recipient's position herein, the Recipient's ability to so exchange
Confidential Information shall be conditioned upon any such prospective
assignee's or participant's entering into an understanding as to
confidentiality similar to this provision. It is further understood that the
foregoing will not prohibit the disclosure of any or all Confidential
Information if and to the extent that such disclosure may be required (i) by
a regulatory agency or otherwise in connection with an examination of the
Recipient's records by appropriate authorities, (ii) pursuant to court order,
subpoena or other legal process or in connection with any pending or
threatened litigation, (iii) pursuant to any order, regulation or ruling
applicable to such Recipient or at the express direction of any other
authorized governmental agency, (iv) as may be required or appropriate in any
report, statement or testimony submitted to any municipal, state or Federal
regulatory body having or claiming to have jurisdiction over such Recipient
or to the Federal Reserve Board or the FDIC or similar organizations (whether
in the United States or elsewhere) or their successors, (v) otherwise as
required by law, or (vi) in order to protect its interests or its rights or
remedies hereunder or under the other Loan Documents; in the event of any
required disclosure under clause (ii), (iii), (iv) or (v) above, the
Recipient agrees to use reasonable efforts to inform the Borrowers as
promptly as practicable.
SECTION 9.10. Governing Law. This Agreement and the Notes shall
be governed by, and construed in accordance with, the laws of the State of
New York.
SECTION 9.11. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be
an original and all of which taken together shall constitute one and the same
agreement.
SECTION 9.12. WAIVER OF JURY TRIAL. EACH OF THE BORROWERS, THE
LENDER AGENTS AND THE LENDERS HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.
SECTION 9.13. Submission to Jurisdiction; Waivers. The Borrowers
hereby irrevocably and unconditionally:
(a) submit for themselves and their property in any legal action
or proceeding relating to this Agreement and the other Loan Documents to
which they are a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the Courts of
the State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof;
(b) consent that any such action or proceeding may be brought in
such courts and waive any objection that they may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agree not to
plead or claim the same;
(c) agree that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
return receipt requested (or any substantially similar form of mail), postage
prepaid, to the Borrowers at the address set forth in subsection 9.02 or at
such other address of which the Agent shall have been notified pursuant
thereto with a copy to Leavy Rosensweig & Hyman, 11 East 44th Street, New
York, New York 10017, Attention David Z. Rosensweig, Esq.; and
(d) agree that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction.
SECTION 9.14. Acknowledgments. The Borrowers hereby acknowledge
that:
(a) they have been advised by counsel in the negotiation,
execution and delivery of this Agreement and the Notes and the other Loan
Documents;
(b) none of the Lender Agents or the Lenders has any fiduciary
relationship to the Borrowers, and the relationship between the Lender Agents
and the Lenders, on one hand, and the Borrowers, on the other hand, is solely
that of debtor and creditor; and
(c) no joint venture exists among the Borrowers and the Lenders.
SECTION 9.15. Joint and Several Liability; Contribution. Unless
and except to the extent otherwise expressly stated herein, the liability and
Obligations of the Borrowers hereunder shall be joint and several. In order
to provide for fair and equitable contribution among the Borrowers, the
Borrowers agree, between and among themselves, that on the date following the
day on which the aggregate outstanding principal amount of all Advances shall
have been reduced to zero, (a) the Borrowers shall make a computation of
payments made and proceeds of Advances received by each Borrower hereunder
and the payments that each Borrower would have made and proceeds of Advances
received hereunder had such Borrower been the only Borrower hereunder, taking
into account (among other amounts) all fees, costs and expenses and (b) the
appropriate Borrower shall make a payment to the other Borrowers in such
amount as to cause each Borrower to incur obligations and to receive benefits
hereunder which are reasonable and fair in light of the amount of proceeds of
Advances received by such Borrower and payments made by such Borrower with
respect thereto.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly authorized, as of
the date first above written.
BORROWERS
CCC-I, INC.
By
Title:
PULLMAN TV CABLE CO., INC.
By
Title:
KOOTENAI CABLE, INC.
By
Title:
AGENT
CITIBANK, N.A.,
as Agent
By
Title:
MANAGING AGENTS
BANK OF AMERICA NATIONAL TRUST
& SAVINGS ASSOCIATION,
as Managing Agent
By
Title:
CHEMICAL BANK,
as Managing Agent
By
Title:
CIBC INC.,
as Managing Agent
By
Title:
LTCB TRUST COMPANY,
as Managing Agent
By
Title:
SOCIETE GENERALE,
as Managing Agent
By
Title:
THE SUMITOMO BANK, LIMITED -
CHICAGO BRANCH,
as Managing Agent
By
Title:
THE TORONTO-DOMINION BANK,
as Managing Agent
By
Title:
BANKS
Commitment
$50,000,000 CITIBANK, N.A.
By
Title:
$38,000,000 BANK OF AMERICA NATIONAL TRUST
& SAVINGS ASSOCIATION
By
Title:
$38,000,000 CHEMICAL BANK
By
Title:
$38,000,000 CIBC INC.
By
Title:
$38,000,000 LTCB TRUST COMPANY
By__________________________________
Title:
$38,000,000 SOCIETE GENERALE
By
Title:
$38,000,000 THE SUMITOMO BANK, LIMITED -
CHICAGO BRANCH
By
Title:
$38,000,000 THE TORONTO-DOMINION BANK
By
Title:
$33,000,000 BANK OF BOSTON
By
Title:
$33,000,000 CREDIT LYONNAIS CAYMAN
ISLANDS BRANCH
By
Authorized Signature
$33,000,000 THE NIPPON CREDIT BANK, LTD.
By
Title:
$20,000,000 MITSUBISHI BANK
By
Title:
$20,000,000 BANK OF TOKYO TRUST
By
Title:
$15,000,000 CORESTATES BANK, N.A.
By
Title:
$15,000,000 THE DAIWA BANK LIMITED
By
Title:
By
Title:
$15,000,000 THE DAI-ICHI KANGYO BANK, LTD.,
NEW YORK BRANCH
By
Title:
$15,000,000 THE SUMITOMO TRUST & BANKING
CO. LTD.
By
Title:
$10,000,000 BANK OF HAWAII
By
Title:
EXHIBIT 10(hh)
TERMS AGREEMENT
February 27, 1995
CENTURY COMMUNICATIONS CORP.
50 Locust Avenue
New Canaan, Connecticut 06840
Attention: Senior Vice President & Treasurer
Dear Sirs:
We (the "Underwriter") understand that Century Communications
Corp., a New Jersey corporation (the "Company"), proposes to issue and sell
$250,000,000 aggregate principal amount of its debt securities (the
"Securities") pursuant to its Registration Statements on Form S-3 (Nos. 33-
47386 and 33-50779). Subject to the terms and conditions set forth herein or
incorporated by reference herein, the Underwriter offers to purchase the
Securities at 98.107% of the principal amount thereof. The Closing Date
shall be March 6, 1995, at 10:00 A.M. at the offices of Simpson Thacher &
Bartlett, 425 Lexington Avenue, New York, New York 10017.
The Underwritten Securities shall have the following terms:
Title: 9 1/2% Senior Notes Due 2005.
Principal Amount to be Issued: $250,000,000.
Date of Maturity: March 1, 2005.
Interest Rate: 9 1/2%.
Interest Payment Dates: March 1 and September 1 of each year,
commencing September 1, 1995
Redemption provisions:
The Company may not redeem the Securities prior to maturity.
Additional Terms:
The Supplemental Indenture relating to the Securities shall contain
the same covenants as are contained in the Indenture relating to
Company's Senior Discount Notes Due 2003.
Current Ratings on Company's other Senior Public Debt:
BB- (Standard & Poor's)
Ba3 (Moody's)
All the provisions contained in the document entitled "Century
Communications Corp. -- Debt Securities -- Underwriting Agreement Basic
Provisions" and dated March 8, 1990 (the "Basic Provisions"), a copy of which
you have previously received, are herein incorporated by reference in their
entirety and shall be deemed to be a part of this Terms Agreement to the same
extent as if the Basic Provisions had been set forth in full herein. Terms
defined in the Basic Provisions are used herein as therein defined.
In addition to the Basic Provisions, the Company agrees that the
Underwriter may terminate its obligations under this Terms Agreement, in its
absolute discretion, by notice given to and received by the Company on or
prior to the date for delivery and payment of the Securities, if prior to
that time there shall have occurred any material adverse change in the
existing financial, political or economic conditions in the United States or
elsewhere that makes it impractical or inadvisable to proceed with the
completion of the sale of, and payment for, the Securities.
The Underwriter confirms that the statements with respect to the
public offering of the Securities set forth on the cover page of, and under
the caption "Underwriting" in, the Prospectus Supplement are correct and
constitute the only information furnished in writing to the Company by or on
behalf of the Underwriter specifically for inclusion in the Registration
Statement, the Prospectus Supplement or the Prospectus.
Any notice by the Company to the Underwriter pursuant to this Terms
Agreement shall be in writing and shall be deemed to have been duly given if
mailed or transmitted by any standard form of telecommunication addressed to:
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated,
World Financial Center, North Tower, 250 Vesey Street, New York, New York
10281 Attn: Marisa D. Drew fax: (212) 449-7750.
Please accept this offer by signing a copy of this Terms Agreement
in the space set forth below and returning the signed copy to us.
Very truly yours,
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
By_____________________________
Authorized Representative
Accepted:
CENTURY COMMUNICATIONS CORP.
By________________________
Title:
<TABLE>
EXHIBIT 11
CENTURY COMMUNICATIONS CORP. AND SUBSIDIARIES
EXHIBIT TO FORM 10-K ANNUAL REPORT
For the Three Years Ended May 31, 1995
COMPUTATION OF LOSS PER COMMON SHARE
<CAPTION>
1995 1994 1993
(In thousands, except per share data)
<S> <C> <C> <C>
Primary and fully diluted:
Loss $ (82,625) $ (41,927) $ (37,791)
Dividend requirement on subsidiary convertible
redeemable preferred stock 4,419 5,838 5,883
Loss applicable to common shares $ (87,044) $ (47,765) $ (43,674)
Average number of common shares and common
share equivalents outstanding:
Average number of common shares
outstanding during the year (B) 86,277 89,381 88,652
Add common share equivalents - Options
to purchase common stock - net (B) 607 832 575
Average number of common shares and common
shares equivalents outstanding (B) 86,884 (A) 90,213 (A) 89,227 (A)
Loss per common share (B) $ (1.00) (A) $ (.53) (A) $ (.49) (A)
(A)In accordance with Accounting Principles Board Opinion No. 15, the inclusion of common
share equivalents in the computation of earnings per share need not be considered if the
reduction in earnings per share is less than 3% or the effect is antidilutive. Therefore,
loss per common share and common share equivalent as shown on the Consolidated
Statements of Operations for the three years ended May 31, 1995 do not include
common share equivalents as their effect is antidilutive.
(B)All share and per share amounts have been adjusted for the three 5% stock distributions
issued on November 30, 1992, August 6, 1993 and July 2, 1993 and the three 3% stock
dividends issued on July 3, 1992, March 22, 1993 and October 28, 1993.
</TABLE>
EXHIBIT 21
CENTURY COMMUNICATIONS CORP.
A NEW JERSEY CORPORATION
SUBSIDIARIES
State of
Name of Corporation Organization
Century Communications Corp. Texas
Badger Holding Corp. Delaware
Century Cable Management Corp. Connecticut
Century Norwich Corp. Connecticut
FAE Cable Management Corp. Delaware
Century Australia Communications Corp. Nevada
Century Oregon Cable Corp. Delaware
Century Cable Holding Corp. New York
Century Radio Corp. Delaware
Century Microwave Corp. Delaware
Century Investment Holding Corp. Delaware
S/T Cable Corp. Delaware
Century Southwest Cable Television, Inc. Delaware
Century Washington Cable Television Inc. Delaware
Century Ohio Cable Television Corp. Delaware
Century Wyoming Cable Television Corp. Delaware
Century Cable of Southern California California
Century Cable of Northern California California
Century Indiana Corp. Wyoming
Valley Video Inc. New York
Century Virginia Corp. Delaware
Century Huntington Company Delaware
Century Trinidad Cable Television Corp. Delaware
Century Kansas Cable Television Corp. Delaware
Rentavision of Brunswick Inc. Georgia
Paragon Cable Television, Inc. Wisconsin
Paragon Cablevision Construction Corp. Wisconsin
Paragon Cablevision Management Corp. Wisconsin
Century New Mexico Cable Television Corp. Delaware
Century Investors, Inc. Delaware
Century Pacific Cable TV Inc. Delaware
Century Mendocino Cable Television Inc. Delaware
Century Berkshire Cable Corp. Delaware
State of
Name of Corporation Organization
Century Mississippi Corp. Delaware
Century Mountain Corp. Delaware
Century Cullman Corp. Delaware
Century Alabama Corp. Delaware
Century Enterprise Cable Corp. Delaware
Century Shenango Cable Television, Inc. Delaware
Century Lykens Cable Corp. Delaware
Century Carolina Corp. Delaware
Wilderness Cable Company West Virginia
Owensboro on the Air, Inc. Kentucky
Cowlitz Cablevision Inc. Washington
Sentinel Communications of Muncie, Indiana, Inc. Indiana
Huntington CATV, Inc. Indiana
Century Warrick Cable Corp. Delaware
Grafton Cable Company W. Virginia
Star Cable Inc. W. Virginia
Imperial Valley Cablevision, Inc. Texas
Yuma Cablevision, Inc. Texas
Mickelson Media, Inc. Minnesota
Warrick Cablevision Inc. Indiana
Mickelson Media of Florida, Inc. Florida
E.& E. Cable Service, Inc. W. Virginia
Westover T.V. Cable Co., Incorporated W. Virginia
Enchanted Cable Corporation New Mexico
Century Realty Corp. Delaware
CCC-I, Inc. Delaware
CCC-II, Inc. Delaware
Star Cablevision, Inc. Georgia
Century Federal, Inc. California
Century Cellular Holding Corp. New York
CT Investment Corp. Delaware
Century Programming Ventures Corp. Nevada
Centennial Cellular Corp.1 Delaware
Century Roanoke Cellular Corp.2 Delaware
Century Roanoke Cellular Corp.2 Virginia
Century Elkhart Cellular Corp.2 Delaware
Century Michiana Cellular Corp.2 Delaware
State of
Name of Corporation Organization
Centennial Cellular Corp.1 Delaware
Century Roanoke Cellular Corp.2 Delaware
Century Roanoke Cellular Corp.2 Virginia
Century Elkhart Cellular Corp.2 Delaware
Century Michiana Cellular Corp.2 Delaware
Century South Bend Cellular Corp.2 Delaware
Century Charlottesville Cellular Corp.2 Virginia
Century Charlottesville Cellular Corp.2 Delaware
Century Lynchburg Cellular Corp.2 Delaware
Century Lynchburg Cellular Corp.2 Virginia
Century Rural Cellular Corp.2 Delaware
Century Montgomery Cellular Corp.2 Delaware
Century Beaumont Cellular Corp.2 Delaware
Century Yuma Cellular Corp.2 Delaware
Century Cellular Realty Corp.2 Delaware
Century Yuma Paging Corp.2 Delaware
El Centro Cellular Corporation2 Delaware
Century Indiana Cellular Corp.2 Delaware
Centennial Cellular Telephone
Company of Coconino2 Delaware
Centennial Cellular Telephone
Company of Del Norte2 Delaware
Centennial Cellular Telephone
Company of Modoc2 Delaware
Centennial Cellular Telephone
Company of Lawrence2 Delaware
Centennial Cellular Telephone Company
of Sacramento Valley2 Delaware
Centennial Cellular Telephone Company
of San Francisco2 Delaware
Michiana Metronet, Inc.2, 3 Indiana
South Bend Metronet, Inc.2 Indiana
Elkhart Metronet, Inc.2 Indiana
Bauce Communications, Inc.2 Oregon
Hendrix Electronics, Inc.2 California
Century El Centro Cellular Corp.2 California
Bauce Communications of Beaumont, Inc.2 Oregon
Hendrix Radio Communications, Inc.2 California
Century Michigan Cellular Corp.2 Delaware
Centennial Microwave Corp.2 Delaware
Centennial Jackson Cellular Corp.2 Delaware
State of
Name of Corporation Organization
Centennial Randolph Cellular Corp.2 Delaware
Centennial Beauregard Cellular Corp2 Delaware
Centennial Clay Cellular Corp.2 Delaware
Alexandria Cellular License Corp.3 Delaware
Alexandria Cellular Corp.3 Delaware
Centennial Ashe Cellular Corp. Delaware
Centennial Caldwell Cellular Corp. Delaware
Centennial Louisiana Holding Corp. Delaware
Centennial DeSoto Cellular Corp. Delaware
Centennial Claiborne Cellular Corp. Delaware
Iberia Cellular Telephone Company, Inc. Washington
Centennial Morehouse Cellular Corp. Delaware
Centennial Hammond Cellular Corp. Delaware
Centennial Lake Charles Cellular Corp. Delaware
Centennial Asia Pacific Cellular Holding Corp.2 Nevada
Mega Comm, Inc.2 Delaware
Centennial Clinton Cellular Corp.2 Delaware
Lambda Communications, Inc. Puerto Rico
Century Telecommunications Venture Corp. Delaware
Century International Holding Corp. Nevada
Century Western Cable Corp. Nevada
Century Granite Cable Television Corp. Delaware
Centennial Michigan RSA 6 Cellular Corp.2 Delaware
Centennial Michigan RSA 7 Cellular Corp.2 Delaware
Pullman TV Cable Co., Inc. Washington
Century Colorado Springs Corp. Delaware
Century Shasta Cable Television Corp. Delaware
Century Southwest Colorado Cable Television Corp. Delaware
Century Island Associates, Inc. Delaware
CDA Cable, Inc. Idaho
Southwest Colorado Cable, Inc. Delaware
Century Island Cable Television Corp. Delaware
Kootenai Cable, Inc. Delaware
Centennial Virginia RSA 2 Cellular Corp.2 Virginia
Century Valley Cable Corp. Delaware
Century Bay Area Cable Corp. Delaware
Century Advertising,Inc. Delaware
Century Programming, Inc. Delaware
Century Alabama Holding Corp. Delaware
Century International Investment Corp. Nevada
Centennial Puerto Rico Wireless Corporation Delaware
Lambda PCS Corp. Nevada
State of
Name of Corporation Organization
Joint Venture or Partnership4 Organization
Century Venture Corporation5 Delaware
Century-ML Cable Venture5
Century-ML Cable Corporation5 Delaware
Charlottesville Cellular Partnership6
Franem Cable Company7
Citizens Century Cable Television Venture8
Century Colorado Springs Partnership Delaware
Centennial Cellular Tri-State Operating Partnership New York
____________
1. Class A Common shares publicly held: 81.2% of Class B Common shares
owned by Century Cellular Holding Corp., 18.8% of Class B shares owned by
Citizens Utilities Company. Class B Common shares have fifteen votes. Class
A Common shares have one vote.
2. Owned 100% by Centennial Cellular Corp.
3. Minority interest held by third parties.
4. Excludes minority interests in cellular partnerships or settlement
agreements.
5. Part of a joint venture owned 50% by Century Communications Corp.
6. Owned 72.22% by Century Charlottesville Cellular Corp.
7. Owned 50% by Century Cable of Northern California and 50% by Century
Cable of Southern California.
8. Owned 50% by Century Telecommunications Venture Corp. and 50% by
Citizens Cable Company.
______________
The address of each of the above entities is 50 Locust Avenue, New Canaan, CT
06840.
EXHIBIT 23.1
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in Registration Statement No. 33-
50779 of Century Communications Corp. on Form S-3 of our report dated August
18, 1995, appearing in the Annual Report on Form 10-K of Century
Communications Corp. for the year ended May 31, 1995, and to the reference
to us under the heading "Experts" in the Prospectus, which is part of the
Registration Statement.
Deloitte & Touche LLP
Stamford, Connecticut
August 28, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> May-31-1995
<PERIOD-END> May-31-1995
<CASH> 228,764
<SECURITIES> 46,671
<RECEIVABLES> 24,516
<ALLOWANCES> 2,144
<INVENTORY> 0
<CURRENT-ASSETS> 258,199
<PP&E> 508,043
<DEPRECIATION> 365,197
<TOTAL-ASSETS> 2,004,417
<CURRENT-LIABILITIES> 161,326
<BONDS> 0
<COMMON> 1,049
0
169,733
<OTHER-SE> (352,694)
<TOTAL-LIABILITY-AND-EQUITY> 2,004,417
<SALES> 416,687
<TOTAL-REVENUES> 416,687
<CGS> 103,673
<TOTAL-COSTS> 389,985
<OTHER-EXPENSES> 2,400
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 139,001
<INCOME-PRETAX> (114,699)
<INCOME-TAX> 8,061
<INCOME-CONTINUING> (106,638)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (82,625)
<EPS-PRIMARY> (1.01)
<EPS-DILUTED> 0
</TABLE>
