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UNITED STATES
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, 1997
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 0-16899
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. Yes [X] No [ ]
As of August 13, 1997, there were 31,003,597 shares of Class A Common
Stock outstanding and 44,357,308 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 13, 1997 of $6.50 per share, was $195,000,988.
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 1997 Annual Meeting of Shareholders are
incorporated by reference in Part III, Items 10-13 of this Annual Report on Form
10-K.
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TABLE OF CONTENTS
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PART I
ITEM 1. Business.................................................................. 1
General................................................................... 1
Cable Television........................................................... 1
Wireless Telephone........................................................ 8
Australian Pay Television................................................. 12
Regulation and Legislation................................................ 13
Employees................................................................. 21
ITEM 2. Properties................................................................ 21
ITEM 3. Legal Proceedings......................................................... 22
ITEM 4. Submission of Matters to a Vote of Security Holders....................... 22
Executive Officers of the Company......................................... 22
PART II
ITEM 5. Market for Registrant's Common Equity and Related Stockholder Matters..... 24
ITEM 6. Selected Financial Data................................................... 26
ITEM 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations............................................... 28
Cautionary Statement for Purposes of the "Safe Harbor"
Provisions of the Private Securities Litigation
Reform Act of 1995.......................................................43
ITEM 8. Financial Statements and Supplementary Data................................47
ITEM 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure......................................47
PART III
ITEM 10. Directors and Executive Officers of the Registrant.........................47
ITEM 11. Executive Compensation.....................................................47
ITEM 12. Security Ownership of Certain Beneficial Owners and
Management...............................................................48
ITEM 13. Certain Relationships and Related Transactions.............................48
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.......... 48
SIGNATURES........................................................................... II-1
EXHIBIT INDEX.........................................................................II-2
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PART I
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, unless
the context otherwise requires, the term "Company" means Century Communications
Corp., a New Jersey corporation, and its subsidiaries. The Company is engaged
primarily in the ownership and operation of cable television systems. References
to a "fiscal" year mean the Company's fiscal year ended May 31.
At May 31, 1997, the Company owned and operated 70 cable television
systems in 25 states and Puerto Rico. At that date, the Company's cable systems
passed approximately 2,245,000 homes and served a total of approximately
1,273,000 primary basic subscribers. Certain of the Company's cable systems
referred to above are owned 50% by the Company and 50% by unaffiliated entities.
At May 31, 1997, these systems passed approximately 549,000 homes and served
approximately 278,000 primary basic subscribers.
The Company has a common stock interest of approximately 32% and,
through ownership of shares of a class of Common Stock which has
disproportionate votes per share (15 votes per share), a voting interest in
Centennial Cellular Corp. ("Centennial" or "Centennial Cellular") of
approximately 74%. The Company also provides management services to Centennial.
Solely as a result of the Company's controlling interest in the voting power of
Centennial, the operations of Centennial are consolidated with those of the
Company for financial reporting purposes only. Centennial is engaged in the
ownership and operation of wireless telephone systems, primarily in four
geographic areas in the United States and Puerto Rico.
The Company has interests in businesses in the pay television
industry in Australia. See "Business - Australian Pay Television." The Company
is pursuing a strategy to sell its Australian investments and is currently in
discussion with investment advisors with respect thereto.
The Company expects to continue to consider acquisitions of or
investments in cable television systems and other communications-related
properties. Centennial Cellular expects to continue to consider acquisitions of
or investments in wireless telephone systems and other communications-related
products and services.
For certain industry segment information regarding the Company's
cable television business, as well as its investments in the wireless telephone
and Australian pay television businesses, see Note 16 of the 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 information, and to
subscribers who pay a monthly fee for the service.
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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 system to system but, pursuant to the Cable
Television Consumer Protection and Competition Act of 1992 (the "1992 Cable
Act"), must include local television signals and public, governmental and
educational access channels. Basic service may also include certain
satellite-delivered cable programming channels. In addition to basic service,
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 service tiers are generally subject to
the rate regulation provisions of the 1992 Cable Act and the Telecommunications
Act of 1996 (the "1996 Act").
Most cable television systems also offer premium services, such as
Home Box Office, Showtime, The Movie Channel and Cinemax, on a per channel basis
or as a part of a package of premium services 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. Per channel and per program services are
not subject to the rate regulation provisions of the 1992 Cable Act.
See "Business - Regulation and Legislation - Cable Television -
Federal Regulation" and "Business - Regulation and Legislation - Cable
Television - Rates."
DEVELOPMENT OF CABLE TELEVISION SYSTEMS
The following table indicates the growth of the Company's cable
television systems since May 31, 1993:
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May 31,
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1997 1996 1995 1994 1993
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Homes passed by cable 2,245,000 2,060,000 1,790,000 1,675,000 1,650,900
Primary basic subscribers 1,273,000 1,250,000 1,100,000 945,000 934,000
Primary basic subscribers as a
percentage of homes passed 56.7% 60.7% 61.4% 56.4% 56.6%
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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, 1997, the Company had 70 cable television systems in 25
states and Puerto Rico, with the largest concentrations of subscribers in its
systems in Southern California, Puerto Rico and Colorado Springs, Colorado.
Substantially all the Company's cable television systems were wholly owned by
the Company. The balance of the Company's systems, including systems serving
Brunswick, Georgia, Owensboro, Kentucky, Wauwatosa, Wisconsin, Glendora, Chino
and Chino Hills, California and greater San Juan, Puerto Rico were owned 50% by
the Company.
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On August 16, 1996, the Company entered into agreements to acquire two
cable television systems which serve an aggregate of approximately 35,000
primary basic subscribers, which agreements were subsequently assigned to a
joint venture in which each of the Company and Citizens Utilities Company
("Citizens Utilities" or "Citizens") have a 50% interest (the "Century/Citizens
Joint Venture"). These systems are primarily located in Yorba Linda, Orange
County and Diamond Bar, California. Pursuant to the agreements, the aggregate
purchase price for these systems was approximately $69.5 million. The Company
currently expects to fund the acquisitions using available credit facilities.
The purchase of these systems by the Company is subject to regulatory approvals.
There is no assurance that the Company will obtain such approvals or that such
acquisitions will be consumated.
The Company and Citizens Utilities own, through the Century/Citizens
Joint Venture, cable television systems serving certain areas of Southern
California serving approximately 52,400 primary basic subscribers.
Citizens Utilities is a diversified utility company in which the Company
owns approximately 1.8% of the issued and outstanding Common Stock as of August
13, 1997. Leonard Tow is Chairman of the Board and Chief Executive Officer of
the Company and Chairman of the Board, Chief Executive Officer and Chief
Financial Officer of Citizens Utilities. Two other directors of the Company,
Robert D. Siff and Claire L. Tow, are also directors of Citizens Utilities.
SUBSCRIBER SERVICES AND RATES
Like other cable television operators, the Company offers to its
subscribers multiple channels of television programming, primarily video
entertainment and information programming. Services vary from system to system
because of differences in channel capacity, regulatory requirements and viewer
interest.
The Company's cable television revenues are derived principally from
monthly subscription fees. Rates to subscribers vary from market to market and
in accordance with the type of service selected. In virtually all the Company's
cable television systems, basic service has been expanded to include many
satellite-delivered cable programming channels previously offered on expanded
tiers of service, while certain other satellite-delivered cable programming
channels are offered on a per channel basis and as part of a package of
services. Effective September 1, 1993, as part of its rate adjustments, the
Company implemented a plan whereby subscribers were given the choice of buying
certain satellite-delivered programming services individually on a per channel
basis ("a la carte") or as part of a package of services at a discounted price.
The Federal Communications Commission (the "FCC") in its reconsideration of rate
regulations promulgated under the 1992 Cable Act, reviewed the validity of such
a la carte service offerings, and it empowered franchising authorities to do the
same. A la carte packages which were determined to be evasions of rate
regulation rather than true enhancements of subscriber choice were treated as
regulated tiers, and cable operators that engaged in such practices became
subject to further rate adjustments and refund orders.
Further adjustments to the Company's rates were made pursuant to the
November 10, 1994 revision by the FCC to the FCC's rate formula. As part of such
revisions, the FCC decided that discounted packages of non-premium a la carte
services would 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 would be treated as if it were a tier of new program services and thus
not subject
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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 are subject to the
rate settlement described below.
Several of the Company's systems, along with numerous other cable
operators, received specific inquiries from the FCC regarding their
implementation of the a la carte method of offering cable services. A proposed
resolution of the inquiry based, in part, upon pending basic and cable
programming service tier rate complaints in several of the Company's cable
systems serving approximately 180,000 subscribers in Los Angeles County,
requires the Company to adjust its rates for cable basic and cable programming
services tiers and make subscriber refunds. For recent developments in cable
programming service tier rate regulations, see "Business - Regulation and
Legislation - Cable Television - Federal Regulation" and "Business - Regulation
and Legislation - Cable Television - Rates."
In addition to monthly subscription fees, other 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 these revenue
sources is subject to rate regulation.
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, 1997, all
or certain portions of 45 of the Company's systems, serving an aggregate of
approximately 1,050,000 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 facilitate the Company's ability 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. Generally, under the terms of the Company's franchises, a franchise fee
(ranging up to 5% of revenues of the cable system) is payable to the
governmental authority. As of May 31, 1997, the Company held 359 franchises with
unexpired terms ranging from under one year to over 15 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 1992 Cable Act
and the 1996 Act. See "Business - Regulation and Legislation - Cable Television
- - Federal 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. However, as a condition to
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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 23,800 primary basic subscribers as of May 31, 1997, 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 oppose
vigorously 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 programming permitting suppliers
of such programming to charge increased fees, inflationary increases and other
factors. See "Business - Regulation and Legislation - Cable Television -
Carriage of Broadcast Television Signals."
OTHER TECHNOLOGIES
Digital. The Company expects to utilize compressed digital video
technology, which converts, on average, from ten to 12 analog signals (now used
to transmit video) into a digital format and compresses such signals into the
space normally occupied by one analog signal. The digitally compressed signal is
uplinked to a satellite, which sends the signal back down to a cable system's
headend to be distributed, via optical fiber and coaxial cable, to the
customer's home. At the home, a set-top video terminal converts the digital
signal back into analog channels that can be viewed on a normal television set.
The implementation of digital technology will significantly enhance the quantity
and quality of channel offerings. It is expected that, initially, such digital
services will include expanded pay-per-view movies, additional packages of
premium services and satellite-delivered channels.
Cable Modem Services. The Company is presently in the initial deployment
stage of high-speed cable modem services. Cable modems are capable of providing
access to online information at much faster speeds than conventional modems. The
Company expects to expand its deployment of cable modem services throughout
fiscal 1998.
COMPETITION
General. 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
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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. The extent to which a cable communications system
is competitive depends, in part, upon the cable system's ability to provide, at
a reasonable price to consumers, a greater variety of programming and other
communications services than are available off-air or through other alternative
delivery sources (see "Business - Regulation and Legislation") and upon
high-quality technical performance and customer service.
Other Technologies. Other technologies supply services that compete with
certain services provided by cable television. These technologies include: (i)
direct broadcast satellite to home transmission ("DBS"), whereby signals are
transmitted by satellite to receiving facilities located on the premises of
subscribers; (ii) "wireless cable" including multichannel multipoint
distribution system ("MMDS") and similar technologies, which use low-power
microwave frequencies to transmit programming over the air to subscribers; (iii)
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; (iv) television translator stations, which
rebroadcast television broadcast signals at different frequencies at lower power
to improve reception; and (v) "low-power" television stations, which have begun
operations in certain communities, and may increase the number of free and
subscription broadcast television signals in many areas.
The FCC has implemented regulations to enhance the ability of cable
competitors to purchase and make available to home satellite dish owners certain
satellite-delivered cable programming at competitive costs. The 1996 Act and FCC
regulations implementing the 1996 Act preempt certain local restrictions on the
use of home satellite dishes and roof-top antennae to receive satellite
programming and over-the-air broadcasting services (see "Business - Regulation
and Legislation").
All 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. Federal law generally prohibits 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 existing regulatory framework, there is expected to
be increased competition adversely affecting the business of the Company. In
addition, certain provisions of the 1996 Act, such as the change in the
definition of a "cable system" so that competitive providers of video services
will only be regulated as a cable system if they use public rights-of-way, could
materially affect the growth and operation of the cable television industry and
the cable services provided by the Company. See "Business Regulation and
Legislation - Cable Television - Federal Regulation."
Non-Exclusive Franchises. 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.
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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. Congress has repealed the prohibition against the national
television networks owning cable systems, and telephone companies may now enter
the cable industry, as more fully discussed below.
Regulation. Pursuant to the 1996 Act, local telephone companies,
including the Regional Bell Operating Companies, which were previously barred
from the ownership and operation of cable systems in their service areas, are
now permitted to enter the cable television business. Local telephone companies
may obtain a local franchise and provide cable television service in direct
competition with cable operators. Alternatively, telephone companies may utilize
a concept called open video systems ("OVS") whereby telephone companies will be
able to become FCC-certified to offer channel capacity to third parties and to
offer video programming directly on up to one-third of the system's capacity. An
OVS operator will not have to obtain a local franchise, nor will it be subject
to rate regulation, but it will have to abide by a number of the rules that
govern cable operators.
The 1996 Act also provides that registered utility holding companies and
subsidiaries may provide telecommunications services (including cable
television), notwithstanding the Public Utility Holding Company Act of 1935, as
amended. Because of their substantial resources, telephone companies and
utilities could be formidable competitors to traditional cable systems, and
several have begun offering cable service.
Other new technologies, including Internet-based services, may become
competitive with services that cable communications systems can offer. The FCC
has authorized television broadcast stations to transmit textual and graphic
information. The FCC also permits commercial and non-commercial FM stations to
use their subcarrier frequencies to provide non-broadcast services including
data transmissions. The FCC established an over-the-air Interactive Video and
Data Service that will permit two-way interaction with commercial and
educational programming along with informational and data services. Local
exchange carriers ("LECs") and other common carriers also provide facilities for
the transmission and distribution to homes and businesses of interactive
computer-based services, including the Internet, as well as data and other
non-video services. See "Business - Wireless Telephone - Competition."
Advances in communications technology, as well as changes in the
marketplace and the regulatory and legislative environment, are constantly
occurring. Thus, it is not possible to predict the effect that ongoing or future
developments might have on the cable communications industry or on the
operations of the Company.
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WIRELESS TELEPHONE
The Company has a common stock interest of approximately 32% and,
through ownership of shares of a class of Common Stock which has
disproportionate votes per share (15 votes per share), a voting interest in
Centennial of approximately 74%. The Company also provides management services
to Centennial. Solely as a result of the Company's controlling interest in the
voting power of Centennial, the operations of Centennial are consolidated with
those of the Company for financial reporting purposes only. The market value of
the Company's interest in Centennial, based solely on the equivalent number of
publicly traded shares of Class A Common Stock of Centennial, was $121,485,406
on May 31, 1997. At May 31, 1997, Citizens Utilities owned 1,982,294 shares of
Class B Common Stock of Centennial and 102,187 shares of Convertible Redeemable
Preferred Stock of Centennial. As a result of its ownership of securities of
Centennial and in accordance with an agreement with Citizens Utilities, the
Company has the ability to nominate at least a majority and elect all the
directors of Centennial. The Company has agreed to vote for one director to be
nominated by Citizens Utilities.
Centennial is engaged in the ownership and operation of wireless
telephone systems, primarily in four geographic areas in the United States and
Puerto Rico. It was organized in 1988. Centennial operates its wireless
telephone systems located in the continental United States (the "Domestic
Wireless Telephone Systems") pursuant to 29 cellular licenses which it owns, and
operates its developing PCS telephone system located in the Commonwealth of
Puerto Rico (the "Puerto Rico Wireless Telephone System") pursuant to a PCS
license which it owns. Centennial also plans to participate in a full range of
telecommunications services in Puerto Rico including wireless PCS, competitive
local exchange and alternative access in Puerto Rico. Centennial's current
wireless interests represent markets that cover approximately 10.1 million Net
Pops. Approximately 6.5 million of these Net Pops are represented by
Centennial's Domestic Wireless Telephone Systems. Approximately 5.4 million of
these Net Pops are represented by interests in those Domestic Wireless Telephone
Systems that Centennial owns and operates. The balance of approximately 1.1
million Net Pops of the Domestic Wireless Telephone Systems represents minority
interests in limited partnerships, controlled by other parties, that own
wireless telephone systems that primarily serve the Sacramento Valley and the
San Francisco Bay area in California ("Investment Interests"). The balance of
approximately 3.6 million Net Pops represents Centennial's Puerto Rico Wireless
Telephone System.
THE WIRELESS SYSTEMS
Centennial's wireless telephone systems, which include systems utilizing
both cellular and PCS licenses, provide communications services to
vehicle-installed ("mobile"), ready-to-carry ("transportable") and hand-held
("portable") wireless telephones. Wireless telephone systems are designed to
allow for mobility of the subscriber. In addition to mobility, wireless
telephone systems provide access through system interconnections to local and
long distance telecommunications networks and offer other ancillary services
such as voice mail, call waiting, call forwarding and conference calling. These
communications services can be integrated with a variety of competing and
complementary networks. The wireless system operator has a traffic interchange
agreement with, and pays a fee to, the local wireline telephone company so that
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 - Wireless
Telephone - Federal Regulation."
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As used in this Annual Report on Form 10-K, "Pops" 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 owns in an entity licensed
by the FCC to construct or operate a cellular telephone system (or to provide
PCS) in that market.
The chart below sets forth certain information about the Domestic
Wireless Telephone Systems, the Puerto Rico Wireless Telephone System and the
Investment Interests as of August 13, 1997.
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Pops Net Pops
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Domestic Wireless Telephone Systems
Michiana Cluster 3,327,800 3,261,300
East Texas/Louisiana Cluster 1,950,600 1,928,000
Southwestern Cluster 230,000 230,000
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Total Domestic Wireless Telephone
Systems 5,508,400 5,419,300
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Puerto Rico Wireless Telephone
System 3,600,000 3,600,000
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Investment Interests* 10,776,800 1,100,800
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Total Domestic Wireless Telephone
Systems, Puerto Rico Wireless
Telephone System and Investments
Interests 19,885,200 10,120,100
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* Centennial has determined to pursue a strategy to sell or otherwise dispose
of its Investment Interests. Centennial has not yet made a final
determination as to the estimated sale proceeds or the timing of such
disposition and believes that the fair market value exceeds the net book
value of the recorded assets.
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As of May 31, 1997, Centennial's Domestic and Puerto Rico Wireless
Telephone Systems had 203,900 subscribers in the markets listed above and for
each of fiscal 1996, 1995, 1994 and 1993, Centennial had 135,000, 85,920, 49,040
and 33,600 subscribers, respectively, in such markets. At May 31, 1997,
Centennial's pro rata share of subscribers relating to the Investment Interests
was approximately 105,000.
All of Centennial's systems are currently operational. 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.
Puerto Rico Wireless Telephone System; Other Telecommunications
Services. Centennial has commenced the design, construction and operation of its
developing Puerto Rico Wireless Telephone System. Centennial has substantially
completed installation of the initial system. Centennial 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 and the FCC granted the
30 Mhz Block B broadband PCS license for the Puerto Rico-Virgin Islands MTA to
Centennial in fiscal 1996. The licensed area represents approximately 3.6
million Net Pops.
Centennial currently estimates that the total cost of the acquisition
and build out of the infrastructure of the PCS system will be approximately $150
million in the aggregate (including a license fee that Centennial has paid of
approximately $55 million). Of this budgeted amount, Centennial has incurred
costs of approximately $69 million related to equipment and installation through
fiscal year 1997 and anticipates expending approximately $26 million to complete
the buildout through fiscal 1999.
Centennial also plans to participate in the intra-island and interstate
telecommunications market in Puerto Rico as a service provider pursuant to FCC
requirements for interstate service and pursuant to an authorization issued to
Centennial in December 1994, as amended in July 1996, by the Public Service
Commission of the Commonwealth of Puerto Rico for intra-island service.
CENTENNIAL ACQUISITIONS
On September 12, 1996, Centennial acquired 100% of the ownership
interests in the partnership owning the non-wireline cellular telephone system
serving the Benton Harbor, Michigan MSA for approximately $35 million in cash.
The Benton Harbor market represents approximately 161,400 Net Pops.
COMPETITION
The FCC grants two 25 MHz licenses to operate cellular telephone systems
in each of 306 Metropolitan Statistical Areas ("MSAs") and in each of 428 Rural
Statistical Areas ("RSAs"). The FCC also grants two 30 MHz licenses to operate
broadband PCS systems in each of 51 defined Major Trading Areas ("MTAs") and one
30 MHz and three 10 MHz licenses in each of 493 Basic Trading Areas ("BTAs")
which are component parts of MTAs. The Domestic Wireless Telephone Systems and
the systems in which Centennial has Investment Interests compete directly with
the other wireless licensees in each market on the basis of quality, price, area
served, services offered and responsiveness of customer service. Centennial also
may be placed at a competitive disadvantage with the other licensees in a market
if such licensees provide wireless telephone service in adjacent markets.
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It is uncertain what effect PCS will have on Centennial's wireless
operations. The FCC revised its rules to state explicitly that cellular
licensees may provide any PCS-type services on their channels without prior
notification to the FCC. Management of Centennial believes that technological
advances in present cellular telephone technology, including the use of digital
technology, in conjunction with buildout of the present cellular systems
throughout the nation with cell splitting and microcell technology, will provide
essentially the same services as the services that PCS providers are expected to
provide, but there can be no assurance that this will happen.
Many of Centennial's competitors are larger and may have access to more
substantial financial resources than Centennial. These competitors include
Regional Bell Operating Companies, large independent telephone companies and
AT&T Wireless, among others.
Centennial's Puerto Rico Wireless Telephone System faces primary
competition from the incumbent wireless telephone licensees in Puerto Rico,
which include the Puerto Rico Telephone Company ("PRTC"), an entity owned by the
Commonwealth of Puerto Rico, and Corecom Inc., a publicly held company.
In addition to competition from cellular and broadband PCS licensees,
Centennial faces competition from other current technologies, including enhanced
SMR systems, narrowband PCS systems, satellite-based mobile telephony and
conventional landline telephone service. Regional and nationwide one-way paging
service also may be a competitive alternative adequate for those who do not need
a two-way service or may reduce wireless telephone usage among subscribers to
both cellular and paging services.
Technological advances in the communications field continue to occur
which make it difficult to predict the extent of additional future competition
for wireless systems, but it is certain that in the future there will be more
potential substitutes for Centennial's current wireless technology. There can be
no assurance that Centennial will not face significant future competition or
that Centennial's current wireless technology will not eventually become
obsolete.
Potential Conflicts of Interest and Competition. Substantially all of
the Company's current wireless operations and investments are conducted or held
by Centennial. Although exceptions are permitted by the Conflicts/Non-Compete
Agreement described below, the Company has indicated to Centennial that it
intends to conduct all its wireless telephone operations through Centennial,
subject to FCC restrictions. Citizens has agreed with the Company and Centennial
that Citizens will conduct all its wireless telephone operations through
Centennial, except in areas where Citizens operates or acquires landline
telephone systems and areas contiguous thereto. There can be no assurance that
Centennial 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.
The Company, Centennial 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 in the
acquisition of cellular telephone businesses or ownership interests therein, and
Centennial 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 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.
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AUSTRALIAN PAY TELEVISION
GENERAL
Since fiscal 1994, the Company has invested, through a wholly owned
subsidiary, approximately $148 million in the pay television industry in
Australia, including approximately $126 million in East Coast Pay Television Pty
Limited (together with its wholly owned subsidiaries, "ECT"), a corporation
organized under the laws of New South Wales, Australia. Through a wholly owned
subsidiary, the Company also entered into a programming joint venture, XYZ
Entertainment Pty Limited ("XYZ"), a corporation organized under the laws of New
South Wales, Australia, in which it has a net 25% interest. The Company is
pursuing a strategy to sell its Australian interests and is currently in
discussion with investment advisors with respect thereto (See Note 3 to
consolidated financial statements).
DESCRIPTION OF AUSTRALIAN INTERESTS
ECT owns Satellite Subscription Broadcast License A, described below
("License "A"), one of three such licenses that were permitted to be granted by
Australian authorities prior to July 1997. From and after July 1997, more than
three such licenses may be granted; as of August 15, 1997, only three such
licenses have been granted. The license allows for direct-to-home ("DTH")
satellite television broadcasting and allows ECT to offer four channels of
programming via DTH. Australis Media Limited ("Australis"), another pay
television company in Australia, owns Satellite Subscription Broadcast License B
("License "B"), the second of the three licenses currently in use for DTH
services, allowing for the DTH broadcast of four channels of programming. ECT
and Australis have entered into agreements pursuant to which ECT may offer its
four License A channels for distribution individually or as part of a combined
package with License B programming in a package of services known as the Galaxy
Package. It was contemplated that the Galaxy Package be distributed by Australis
through DTH and MMDS in the six largest capital cities in Australia (as well as
Western Australia) and in distinct regional areas outside the capital cities by
its franchisees. Arrangements were also made for the distribution of the License
A package throughout Australia via cable pursuant to a long-term agreement with
FOXTEL (a competitive cable television provider and owner of a cable television
network).
ECT, Australis and Australis' other franchisee have acquired control of
substantially all of the currently issued licenses which can be used for
transmission of pay television programming via MMDS in Australia. ECT owns or
controls all of the currently issued licenses which entitle it to transmit pay
television programming via MMDS in regions covering approximately 755,000
households in Coastal New South Wales and all of Tasmania (including Wollongong,
Hobart and Newcastle, Australia and surrounding areas) (the "ECT Franchise
Areas"). ECT has entered into a franchise agreement with Australis (the
"Franchise Agreement") pursuant to which it has the exclusive right (and is
obligated) for at least a 15-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.
Programming for the License A package is provided by XYZ. The other
participants in XYZ are United International Holdings, a leading international
provider of pay television services, and FOXTEL.
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Pursuant to an agreement between ECT and Australis (the "IUA"), ECT has
a contractual right to maintain, at ECT's option, up to a 25% interest (a
percentage based on the aggregate capital originally invested by each party) in
the accumulated revenues net of certain associated expenses of Australis with
respect to all of its pay television services, referred to in the IUA as the
adjusted infrastructure net cash flow ("AINCF"). The extent of ECT's
participation in the AINCF is conditioned upon its contribution to certain of
Australis' costs in connection with its operations (the "IUA Costs"). Australis
has asserted that as of January 1996, ECT's participation in the AINCF has
decreased (from 25% to 13.4% and possibly to 10% at May 31, 1996 due to ECT's
failure to contribute funds for IUA Costs (approximately Australian $136
million) which assertion ECT has contested. Although it is likely that the total
amount of IUA Costs has increased since May 31, 1996, Australis has not made any
further assertions with respect to further funds owed by ECT. There can be no
assurance that this dispute will be resolved. See "Business - Australian Pay
Television - Dependence on Australis; Weak Financial Position of Australis;
Disputes with Australis."
DEPENDENCE ON AUSTRALIS; WEAK FINANCIAL POSITION OF AUSTRALIS;
DISPUTES WITH AUSTRALIS
ECT is dependent on the efforts of Australis in the pay television
industry in Australia. The Company has become aware that Australis' financial
position has significantly deteriorated to the point where its ability to
continue as a going concern is in doubt. ECT's financial position (and, as a
result, the Company's investment in ECT) may be materially and adversely
affected if Australis were to become insolvent. ECT's pay television subscriber
business is dependent on acceptance of the Galaxy Package as a well-known
national product, as well as the infrastructure established by Australis,
including the national marketing and subscriber management service.
The Company is currently unable to predict the ultimate resolution of
these matters. The remaining net book value of its investments in the various
aspects of Australian pay television aggregated approximately $24 million at May
31, 1997. See Item 7. "Management's Discussion and Analysis of Financial
Condition and Results of Operations." The Company will continue to assess the
potential impact of the above noted matters on its interests in its Australian
pay television businesses.
REGULATION AND LEGISLATION
CABLE TELEVISION
General. The cable television industry is regulated by the FCC, some
state governments and substantially all local governments. In addition, various
legislative and regulatory proposals under
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consideration from time to time by the Congress and various federal agencies
have in the past, and may in the future, materially affect the Company and the
cable television industry.
Federal Statutory Laws. The principal federal statute governing cable
television is the Communications Act of 1934, as amended. Amendments in 1984 and
1992 and amendments in 1996 (codified as the 1996 Act) have had particular
impact on the way in which cable systems are regulated. The 1984 and 1992
amendments added significantly to the regulatory burdens of cable operators,
particularly in the areas of (i) cable system rates for both basic and certain
nonbasic services; (ii) programming access and exclusivity arrangements; (iii)
access to cable channels by unaffiliated programming services; (iv) leased
access terms and conditions; (v) horizontal and vertical ownership of cable
systems; (vi) customer service requirements; (vii) franchise renewals; (viii)
television broadcast signal carriage and retransmission consent; (ix) technical
standards; (x) customer privacy; (xi) consumer protection issues; (xii) cable
equipment compatibility; (xiii) obscene or indecent programming; and (xiv)
requiring subscribers to subscribe to tiers of service other than basic service
as a condition of purchasing premium services.
The 1996 Act, enacted into law in February 1996, substantially amended
the Communications Act by, among other things, removing barriers to competition
in the cable television and telephone markets and reducing the regulation of
cable television rates.
Federal Regulation. The FCC, the principal federal regulatory agency
with jurisdiction over cable television, has promulgated extensive regulations
covering such areas as the regulation of cable service rates in areas where
cable television systems are not subject to effective competition,
cross-ownership between cable television systems and certain other
communications businesses, carriage of television broadcast programming,
ownership of inside wiring, programming agreements, programmer access to cable
channels, signal leakage and frequency use, technical standards and performance,
consumer protection and customer service, indecent programs, parental control
devices, origination cablecasting, consumer electronics equipment compatibility,
sponsorship identification, equal employment opportunity, children's
programming, maintenance of various records, and antenna structure notification,
marking and lighting. The FCC has the authority to enforce these regulations
through the imposition of substantial fines, the issuance of cease and desist
orders and/or the imposition of other administrative sanctions, such as the
revocation of FCC licenses needed to operate certain transmission facilities
often used in connection with cable operations.
Rates. Under federal law, nearly all cable television systems are
subject to local rate regulation of basic service. Franchising authorities are
empowered under the law to ensure that basic cable rates are reasonable and that
rates for installation of cable service, converter boxes and additional outlets
are based on actual costs. In addition, the FCC is required to review rates for
nonbasic service tiers (other than per-channel or per-program services) under
certain circumstances. The FCC also is authorized to impose restrictions on the
retiering and rearrangement of cable services under certain circumstances. Local
franchising authorities and/or the FCC are empowered to limit future rate
increases and to order a reduction of existing rates which exceed the maximum
permitted level for either basic and/or nonbasic cable services and associated
equipment, and refunds can be required.
The 1996 Act eliminates regulation of rates for nonbasic service tiers
for all cable operators as of March 31, 1999. In the interim, regulation of
rates for nonbasic service tiers can only be triggered if a franchising
authority complaint based on more than one subscriber complaint is made with the
FCC within 90
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days after a rate increase. These 1996 Act provisions should materially alter
the applicability of FCC rate regulations previously adopted.
Although rates for video programming offered on a per channel or a per
program basis are not regulated, cable operators must permit customers to
purchase such programming without the necessity of subscribing to any tier of
service, other than the basic service tier, unless the cable system is
technically incapable of doing so. Generally, this exemption from compliance
with the statute for cable systems that lack such technical capability is only
available until a cable system obtains the capability, but not later than
December 2002.
Carriage of Broadcast Television Signals. Commercial television
broadcast stations which are "local" to a cable system, i.e., the system is
located in the station's Area of Dominant Influence, must elect every three
years whether to require the cable system to carry the station, subject to
certain exceptions, or whether the cable system must negotiate for
"retransmission consent" to carry the station. Local noncommercial television
stations also are given similar mandatory carriage rights, but are not given the
option to negotiate retransmission consent for the carriage of their signal. In
addition, cable systems must obtain retransmission consent for the carriage of
all commercial broadcast stations, except for certain "superstations."
Franchise Fees. Although franchising authorities may impose franchise
fees, such payments cannot exceed five percent of a cable system's annual gross
revenues from cable services. Franchising authorities are also empowered in
awarding new franchises or renewing existing franchises to require cable
operators to provide cable-related facilities and equipment and to enforce
compliance with voluntary commitments.
Renewal of Franchises. Renewal procedures and criteria designed to
protect incumbent franchisees against arbitrary denials of renewal have been
established by federal law governing the cable television industry. These
procedures can provide substantial protection to incumbent franchisees, although
renewal is by no means assured, as the franchisee must meet certain statutory
standards. Even if a franchise is renewed, a franchising authority may impose
new and more onerous requirements such as upgrading facilities and equipment,
although the municipality must take into account the cost of meeting such
requirements.
Channel Set-Asides. Under federal law, local franchising authorities may
require cable operators to set aside certain channels for public, educational
and governmental access programming. Further, cable television systems with 36
or more activated channels must designate a portion of their channel capacity
for commercial leased access by unaffiliated third parties. Leased access rates
must be set according to a formula determined by the FCC.
Competing Franchises. Franchising authorities are prohibited from
unreasonably refusing to grant franchises to competing cable television systems.
Franchising authorities are permitted to operate their own cable television
systems without franchises.
Ownership Restrictions and Market Entry. The 1996 Act allows telephone
companies to compete directly with cable operators by repealing the historic
telephone company/cable cross-ownership ban. This allows LECs, including the
Regional Bell Operating Companies, to compete with cable operators both inside
and outside their telephone service areas. Because of their resources, LECs
could be formidable competitors to traditional cable operators, and certain LECs
have begun offering cable service.
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The 1996 Act also provides that registered utility holding companies and
subsidiaries may provide telecommunications services (including cable
television) notwithstanding the Public Utility Holding Company Act of 1935, as
amended. Because of their resources, utilities could be formidable competitors
to traditional cable systems.
The 1996 Act eliminates statutory restrictions on broadcast/cable
cross-ownership (including broadcast network/cable restrictions), but leaves in
place existing FCC regulations prohibiting local cross-ownership between
television stations and cable systems. The 1996 Act also eliminates the three
year holding period previously required under a statutory provision regarding
"anti-trafficking." The present federal regulatory scheme leaves in place
existing restrictions on cable cross-ownership with SMATV and MMDS facilities,
but lifts those restrictions where the cable operator is subject to effective
competition. However, the FCC has adopted regulations which permit cable
operators to own and operate SMATV systems within their franchise area, provided
that such operation is consistent with local cable franchise requirements.
FCC rules preclude a cable system from devoting more than 40% of its
activated channel capacity to the carriage of affiliated national program
services. A companion rule establishing a nationwide ownership cap on any cable
operator equal to 30% of all domestic cable subscribers has been stayed pending
further judicial review.
Cable Entry Into Telecommunications. The 1996 Act provides that no state
or local laws or regulations may prohibit or have the effect of prohibiting any
entity from providing any interstate or intrastate telecommunications service.
States are authorized, however, to impose "competitively neutral" requirements
regarding universal service, public safety and welfare, service quality and
consumer protection. State and local governments also retain their authority to
manage the public rights-of-way. Although the 1996 Act clarifies that
traditional cable franchise fees may be based only on revenues related to the
provision of cable television services, it also provides that local franchising
authorities ("LFAs") may require reasonable, competitively neutral compensation
for management of the public rights-of-way when cable operators provide
telecommunications service. However, many of the specific terms and conditions
for such interconnection will remain uncertain until they are resolved by the
courts, the FCC and state regulatory commissions.
Cable entry into telecommunications will be affected by the regulatory
landscape now being fashioned by the FCC and state regulators. One critical
component of the 1996 Act to facilitate the entry of new telecommunications
providers (including cable operators) is the interconnection obligation imposed
on all telecommunications carriers.
Technical Requirements. The FCC has adopted technical standards for
cable television, and local franchising authorities are prohibited from adopting
standards which are in conflict with or more restrictive than those established
by the FCC. Cable systems must also limit signal leakage to prevent harmful
interference with aeronautical navigation and safety radio services.
Pole Attachments. The FCC currently regulates the rates, terms and
conditions imposed by certain public utilities for use of their poles unless
state public service commissions are able to demonstrate that they regulate such
rates, terms and conditions. Under the 1996 Act, investor-owned utilities must
make poles and conduits available to cable systems under delineated terms.
Electric utilities are given the right to deny access
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to particular poles on a nondiscriminatory basis for lack of capacity, safety,
reliability, and generally accepted engineering reasons. The current method for
determining attachment rates charged by telephone and utility companies will
continue for five years. However, the 1996 Act directs the FCC to establish a
new formula for the rental rate for poles used by cable operators who provide
"telecommunications services" which will result in higher pole rental rates for
such cable operators. Any increases pursuant to this formula may not begin for
five years and will be phased-in in equal increments over years five through
ten. This new FCC formula does not apply in states which certify they regulate
pole rents, nor will it apply to cable operators who provide only traditional
cable services.
Copyright. Cable television systems are subject to federal copyright
licensing covering carriage of broadcast signals. In exchange for making
semi-annual payments to a federal copyright royalty pool and meeting certain
other obligations, cable operators obtain a statutory license to retransmit
broadcast signals. The amount of this royalty payment varies, depending on the
amount of system revenues from certain sources, the number of distant signals
carried, and the location of the cable system with respect to over-the-air
television stations.
Copyrighted music performed in programming supplied to cable television
systems by pay cable networks (such as HBO) and basic cable networks (such as
USA Network) is licensed by the networks through private agreements with the
American Society of Composers and Publishers ("ASCAP") and BMI, Inc. ("BMI"),
the two major performing rights organizations in the United States. Copyrighted
music performed by cable systems themselves on local origination channels, in
advertisements inserted locally on cable networks, et cetera, also must be
licensed.
State and Local Regulation. Because a cable television system uses local
streets and rights-of-way, cable television systems are subject to state and
local regulation, typically imposed through the franchising process. State
and/or local officials are usually involved in franchise selection, system
design and construction, safety, service rates, consumer relations, billing
practices and community related programming and services.
Cable television systems generally are operated pursuant to nonexclusive
franchises, permits or licenses granted by a municipality or other state or
local government entity. Franchises generally are granted for fixed terms and in
many cases are terminable if the franchise operator fails to comply with
material provisions. Although federal law 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 a percentage of the system's gross
customer revenues, to the granting authority. Upon receipt of a franchise, the
cable system owner usually is subject to a broad range of obligations to the
issuing authority directly affecting the business of the system. 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. Under the existing federal
regulatory scheme, there are certain limitations on a franchising authority's
ability to control the operation of a cable system operator. However, exclusive
franchises are prohibited and franchising authorities are permitted to exercise
greater control over the operation of franchised cable television systems,
especially in the area of customer service and rate regulation. Federal law also
allows franchising authorities to operate their own multichannel video
distribution system without having to obtain a franchise and permits states or
local franchising authorities to adopt certain restrictions on the ownership of
cable television systems.
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Moreover, franchising authorities are immunized from monetary damage awards
arising from regulation of cable television systems or decisions made on
franchise grants, renewals, transfers and amendments.
In addition to the foregoing, other existing federal regulations,
copyright licensing and, in many jurisdictions, state and local franchise
requirements, currently are the subject of a variety of judicial proceedings,
legislative hearings and administrative and legislative proposals that could
change, in varying degrees, the manner in which cable television systems
operate. Neither the outcome of these proceedings nor their impact upon the
cable television industry can be predicted at this time. Moreover, changes in
the regulatory and legislative environment are constantly occurring. The Company
cannot predict the effect that ongoing or future developments may have on the
cable television industry generally or the Company specifically.
WIRELESS TELEPHONE
Federal Regulation. Pursuant to the Communications Act, the cellular,
PCS, paging, conventional mobile telephone systems and SMR systems operated by
Centennial are licensed and regulated by the FCC as Commercial Mobile Radio
Service ("CMRS") facilities. The FCC limits entities to a total of 45 MHz of
licensed CMRS spectrum in any given market area.
Cellular and PCS 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's rules provide for a
significant renewal preference to a cellular and PCS licensee that has used its
spectrum for its intended purpose and complied with FCC regulations and the
federal communications statutes.
The FCC's rules prohibit cellular telephone and broadband PCS licensees
from imposing restrictions on the resale of wireless service by parties who
purchase blocks of telephone numbers from an operational system and then resell
them to the public. This prohibition expires for wireless licensees five years
after the date that the last group of initial PCS licenses are granted.
The FCC also regulates a number of other aspects of the operation and
ownership of CMRS systems. There can be no assurance that any FCC requirements
currently applicable to Centennial'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
jurisdictions in which it will offer CMRS service. At present, none of the
states in which Centennial's CMRS operations are located may regulate the entry
of CMRS providers or the rates charged for CMRS service. However, they can
regulate other terms and conditions of service.
The siting and construction of the CMRS 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 for the transmitter sites and
MTSO locations.
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Recent Federal and State Legislation. The 1996 Act contains significant
provisions aimed, in part, at opening local telecommunications markets to
competition. These provisions govern, among other telecommunications matters,
the removal of market-entry barriers and impose on incumbent LECs duties to
negotiate, in good faith, interconnection agreements and provide under
reasonable and nondiscriminatory terms interconnection for exchange services and
access to unbundled network elements at any technically feasible point within
the carrier's network. The 1996 Act also provides for the development of
competitive markets through such provisions governing resale, number
portability, dialing parity, access to right-of-ways and numbering
administration.
The overall impact of the 1996 Act on the business of Centennial is
unclear and will likely remain so for the foreseeable future. Centennial may
benefit from reduced costs in acquiring required communications services, such
as LEC interconnection. However, other provisions of the 1996 Act relating to
interconnection, telephone number portability, equal access and resale could
subject Centennial to increased competition.
Comprehensive telecommunications reform legislation was enacted in 1996
by the Commonwealth of Puerto Rico. This legislation, titled the Puerto Rico
Telecommunications Act of 1996 (the "Puerto Rico Act"), purports to open the
Puerto Rico telecommunications market to competition and, among other things, it
establishes the Puerto Rico Telecommunications Regulatory Board (the "Board")
which has been given primary regulatory jurisdiction in Puerto Rico over all
telecommunications services, all service providers, and all persons with a
direct or indirect interest in said services or providers. On December 11, 1996,
the Board assumed jurisdiction over all intra-island telecommunications matters.
FCC and State Proceedings. The 1996 Act imposes interconnection
obligations on all telecommunications carriers in order to facilitate the entry
of new telecommunications providers. This requirement has the potential of
realizing benefits for Centennial's cellular, PCS and other telecommunications
businesses. In August 1996, the FCC issued comprehensive rules regarding the
introduction of competition into the local telephone market. These rules address
most aspects of the provision of competitive local telephony services from both
facilities-based and non-facilities-based competitors and address the process by
which potential competitors negotiate with incumbent telephone companies for
interconnection, the facilities that must be available for interconnection, the
use of components of the incumbents' networks, the resale of services of others,
and the pricing of interconnection and other services and facilities used for
offering competitive local telephone services. The rules also provide that
incumbent LECs must begin paying Centennial and other wireless providers
immediately for terminating landline-originated traffic on the wireless
facilities. On appeal, the U.S. Court of Appeals for the Eighth Circuit
overturned several of the FCC's rules, the most important of which were the
pricing rules. The FCC is expected to seek review of this decision from the
Supreme Court.
Decisions related to universal service and access charge reform have
also been released by the FCC. These decisions have been appealed.
Centennial has filed a Petition for Declaratory Ruling and Preemption
with the FCC in which it seeks a ruling that the regulatory approach as well as
certain provisions of the Puerto Rico Act are preempted pursuant to Sections
253(a) and 332(c) of the Communications Act because they are inconsistent with
the pro-competition language and/or objectives of the 1996 Act, constitute
impermissible barriers to the entry of local
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telecommunications competition and/or constitute impermissible regulation of
CMRS entry or rates. Several other entities subsequently filed similar petitions
with the FCC. This matter is currently pending.
On December 26, 1996, Centennial, on behalf of its PCS subsidiary, filed
a petition with the Board seeking arbitration of the many unresolved issues in
the negotiation with PRTC for interconnection of Centennial's PCS network with
PRTC's landline telephone network. On January 21, 1997, Centennial filed a
petition with the Board seeking arbitration of the many unresolved issues in the
negotiation with PRTC for interconnection of Centennial's fiber optic network
with PRTC's landline telephone network. The two petitions were substantially
consolidated by the arbitrator and after several sessions with the arbitrator
and PRTC, Centennial's PCS subsidiary successfully negotiated interconnection
agreements with PRTC covering most of the unresolved issues. Those agreements,
which reflect considerably lower interconnection rates than those PRTC had been
charging, have been approved by the Board and are currently in effect.
AUSTRALIAN PAY TELEVISION
Australia. Australia is a Federal jurisdiction. The provision of
subscription television services is regulated by the Federal Government under
various Commonwealth statutes. In addition, State and Territory laws, including
environmental and consumer contract legislation, may impact on the construction
and maintenance of a transmission system for subscription television services,
and the content of those services, as well as on various aspects of the
subscription television business itself.
The Australian regulatory framework distinguishes between the regulation
of the content of subscription television services themselves and the regulation
of the facilities used to transmit those services.
The transmission facilities used to provide services are principally
regulated by the Radiocommunications Act 1992 ("RCA") and the Telecommunications
Act 1991 ("TCA"). The RCA, which commenced on July 1, 1993, regulates the use of
the radio frequency spectrum, including the use of MMDS transmission and the
spectrum used by satellite operations. The TCA, which commenced on July 1, 1991,
regulates the provision of telecommunications services including certain aspects
of carrier operated satellites.
The majority of the major city MMDS licenses held by ECT expire in 1999
while the majority of MMDS licenses held by ECT for regional areas expire in
2000. If renewed, an MMDS license will remain in force, unless canceled or
suspended on an earlier date, for the period specified in the MMDS license,
which may be a period of up to five years.
The Company's ability to sell or transfer its Australian interests is
limited by the Australian regulatory framework which contains various
limitations on foreign ownership. The Broadcasting Services Act of 1992
prohibits ownership of company interests, as defined, by foreign persons with
respect to Subscription Television Broadcast licensees. Additionally, the
Foreign Acquisitions and Takeovers Act 1975 ("FATA") requires notification to
and approval of the Australian Treasurer before a foreign natural person or
corporation may hold a substantial interest in any Australian corporation. A
person is taken to hold a "substantial interest": (a) in a corporation, if the
person, alone or together with any associates (as defined in the FATA), is in a
position to control not less than 15% of the voting power in the corporation or
holds interest in not less than 15% of the issued shares in the corporation; or
(b) in a trust estate, if the person alone
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<PAGE>
or together with any associates (as defined), holds a beneficial interest in not
less than 15% of the corpus or income of the trust estate.
EMPLOYEES
At May 31, 1997, the Company had approximately 3,930 employees. Certain
of the employees of 12 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's wireless systems, Centennial owns or leases
sales and administrative offices and sites for the MTSOs and cell sites.
Centennial also leases office space at 1305 and 1325 Campus Parkway, Neptune,
New Jersey where it has its principal corporate office. Cell sites typically
include a tower and transmitting, receiving and signaling equipment and are
connected by landline, microwave or other means to the systems' computers in the
MTSO.
As of May 31, 1997, the Company leases approximately 35,000 square feet
of office space at 50 Locust Avenue, New Canaan, Connecticut, where it has its
corporate headquarters, pursuant to a newly renegotiated lease which expires
December 31, 2004 and provides for two five-year renewal terms. The monthly
rental payments pursuant to the lease are approximately $68,000.
With respect to the property owned by the Company or Centennial, the
Company is of the opinion that it or Centennial, as the case may be, has
generally satisfactory title to such properties used in their respective
businesses, subject to the liens for current taxes and liens incident to minor
encumbrances. In addition, the Company considers the properties owned and leased
by it and Centennial to be suitable and adequate for the conduct of their
respective business operations in the future.
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<PAGE>
ITEM 3. LEGAL PROCEEDINGS.
There were no material pending legal proceedings, other than routine
litigation incidental to the business, to which the Company or any of its
subsidiaries is a part of or to which any of their property is subject.
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, 1997.
* * *
EXECUTIVE OFFICERS OF THE COMPANY
The names, ages and positions of all the executive officers of the
Company as of May 31, 1997 are listed below along with their business experience
during the past five years. Officers serve at the discretion of the Board of
Directors. 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, 69, has been Chairman of the Board of the Company since
October 1989. He has also been a director and the Chief Executive 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 was Chief Financial
Officer of the Company until December 1996. 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 30 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.
BERNARD P. GALLAGHER, 50, 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 since August 1991 and has been a director of
Centennial since March 1991. From February 1990 to August 1991, Mr. Gallagher
was President and Chief Operating Officer of Centennial. 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.
MICHAEL G. HARRIS, 51, has been Senior Vice President - Engineering of
the Company since June 1991, and was Vice President, Engineering of the Company
from 1982 to June 1991. 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 from the date of its incorporation in 1988 to August 1991.
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SCOTT N. SCHNEIDER, 39, has been a director of the Company since October
1994. Mr. Schneider has been Chief Financial Officer of the Company since
December 1996, Senior Vice President and Treasurer of the Company since June
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 1991 and was
Controller of the Company from December 1985 to June 1991. He was Controller of
Century Texas from December 1982 to December 1985. Mr. Schneider has also been a
director and Senior Vice President, Chief Financial Officer and Treasurer of
Centennial since August 1991. He was a Vice President and Controller of
Centennial from the date of its incorporation in 1988 to August 1991.
DANIEL E. GOLD, 61, 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, 66, 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.
DAVID Z. ROSENSWEIG, 71, 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 since its incorporation in 1988. He has been a member of the New York
law firm of Leavy Rosensweig & Hyman since May 1987, which acts as general
counsel to the Company and Centennial.
ROBERT J. LARSON, 38, 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 since March
1995 and was Vice President - Controller of Centennial from October 1994 to
March 1995, Controller of Centennial from 1990 to October 1994, and was
Assistant Controller of Centennial from 1989 to 1990. Prior to joining the
Company and Centennial, Mr. Larson was a manager with Touche Ross & Co., a
predecessor firm of Deloitte & Touche LLP.
CLIFFORD A. BAIL, 42, has been Vice President-Legal Affairs and
Corporate Counsel of the Company since January 1997. Mr. Bail has also been Vice
President - Legal Affairs and Corporate Counsel of Centennial since January
1997. From 1992 to 1996, Mr. Bail was a member of the law firm of Leavy
Rosensweig & Hyman, which acts as general counsel to the Company and Centennial.
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<PAGE>
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. 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 Nasdaq for the calendar quarters indicated.
1995 High Low
---- ------ ----
First Quarter.............. 10 1/8 7 1/4
Second Quarter............. 10 1/8 7 5/8
Third Quarter.............. 10 1/2 8 5/8
Fourth Quarter............. 10 3/8 7 3/4
1996
First Quarter.............. 10 1/8 7 1/2
Second Quarter............. 10 1/8 8 1/4
Third Quarter.............. 8 7/8 6 1/8
Fourth Quarter............. 7 5/8 5 1/8
1997
First Quarter.............. 6 1/4 3 7/8
Second Quarter............. 7 1/8 3 5/8
Third Quarter (through August 13) 7 3/8 5 1/8
On August 13, 1997, the last sale price of the Class A Common Stock, as
reported on Nasdaq, was $6.50 per share. At August 13, 1997, there were
approximately 1,140 holders of record of shares of Class A Common Stock and 4
holders of record of shares of Class B Common Stock.
DIVIDEND POLICY
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.
If all cumulative dividends shall have been paid as declared or set
apart for payment upon shares of Preferred Stock then outstanding, if any,
holders of shares of Class A Common Stock and Class B Common Stock are entitled
to receive such dividends as may be declared by the Company's Board of Directors
out of funds legally available for such purpose. No dividend may be declared or
paid in cash or property on any share of Class B Common Stock, however, unless
simultaneously the same dividend is paid on each share of
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<PAGE>
Class A Common Stock. Dividends can be declared and paid on shares of Class A
Common Stock without being declared and paid on the shares of Class B Common
Stock. In the case of any stock dividend, holders of Class A Common Stock are
entitled to receive the same percentage dividend (payable in shares of Class A
Common Stock) as the holders of Class B Common Stock receive (payable in shares
of Class B Common Stock).
25
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<PAGE>
ITEM 6. SELECTED FINANCIAL DATA.
The selected consolidated financial data set forth below for the five
years ended May 31, 1997 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.
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
-------------------
1997 1996 1995 1994 1993
------------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Revenues $ 643,490 $ 495,274 $ 416,687 $ 374,599 $ 345,131
------------- ----------- ----------- ----------- -----------
Cost of services 139,017 108,403 103,673 83,132 80,715
Selling, general and
administrative 166,362 119,779 110,381 82,368 71,027
Regulatory restructuring -- -- 4,000 -- --
charge
Depreciation and 261,778 216,777 171,931 151,296 138,547
amortization
Write-down of Australian 40,000 10,000 -- -- --
assets
Australian expenses 30,562 24,067 -- -- --
------------- ----------- ----------- ----------- -----------
637,719 479,026 389,985 316,796 290,289
------------- ----------- ----------- ----------- -----------
Operating income 5,771 16,248 26,702 57,803 54,842
Interest expense 200,743 172,215 139,001 121,698 112,294
Other (income) expense (14,570) (11,107) (2,270) (3,645) 5,218
-------------- ----------- ----------- ----------- -----------
Loss before income tax
benefit
minority interest (180,402) (144,860) (110,029) (60,250) (62,670)
and extraordinary item
Income tax benefit (30,658) (34,326) (8,061) (5,633) (12,401)
------------- ----------- ----------- ----------- -----------
Loss before minority
interest (149,744) (110,534) (101,968) (54,617) (50,269)
and extraordinary item
Minority interest in loss of
subsidiaries 15,451 8,417 19,343 12,690 12,478
------------- ----------- ----------- ----------- -----------
Loss before extraordinary (134,293) (102,117) (82,625) (41,927) (37,791)
item
Extraordinary item-loss on
early retirement of
debt, net (7,582) -- -- -- --
------------- ----------- ----------- ----------- -----------
Net loss $(141,875) $(102,117) $ (82,625) $ (41,927) $ (37,791)
============= =========== =========== =========== ===========
Dividend on subsidiary
convertible redeemable
preferred stock $ 4,850 $ 4,256 $ 4,419 $ 5,838 $ 5,883
============= =========== =========== =========== ===========
Loss applicable to common
shares $(146,725) $(106,373) $ (87,044) $ (47,765) $ (43,674)
============= =========== =========== =========== ===========
Loss per common share:
Loss before extraordinary
item $(1.86) $ (1.44) $ (1.01) $ (0.53) $ (0.49)
Extraordinary item (0.10) -- -- -- --
------------- ----------- ----------- ----------- -----------
Net loss $(1.96) $ (1.44) $ (1.01) $ (0.53) $ (0.49)
============= =========== =========== =========== ===========
Weighted average number of
common shares outstanding
during the period 74,675,000 73,748,000 86,277,000 89,381,000 88,652,000
============= =========== =========== =========== ===========
</TABLE>
26
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<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
------------------
1997 1996 1995 1994 1993
---------- ----------- ----------- ----------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Total assets $2,154,231 $2,234,909 $2,004,417 $1,350,426 $1,303,484
Long-term debt 2,186,981 2,081,611 1,741,143 1,270,989 1,167,423
Common stockholders'
deficiency (598,643) (448,013) (351,645) (243,628) (215,238)
</TABLE>
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.
27
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<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS (dollar amounts in thousands except subscriber,
pop and share data)
The Company is primarily engaged in the ownership and operation of cable
television systems and earns its revenues primarily from subscriber fees. At May
31, 1997, the Company owned and operated 70 cable television systems in 25
states and Puerto Rico. At that date, the Company's cable systems passed
approximately 2,245,000 homes and served a total of approximately 1,273,000
primary basic subscribers. Certain of the Company's cable systems referred to
above are owned 50% by the Company and 50% by unaffiliated entities. At May 31,
1997, these systems passed approximately 549,000 homes and served approximately
278,000 primary basic subscribers.
The Company has a common stock interest of approximately 32% and a voting
interest of approximately 74% in Centennial Cellular Corp. ("Centennial") and
provides management services to Centennial. Centennial is engaged in the
ownership and operation of wireless telephone systems, primarily in four
geographic areas in the United States and Puerto Rico. The market value of this
interest, based solely on the equivalent number of publicly-traded shares of
Class A Common Stock, was $121,485,406 on May 31, 1997. In accordance with
Financial Accounting Standards Board Statement No. 94, the accounts of
Centennial are consolidated with those of the Company for reporting purposes for
all periods presented.
The Company has interests in businesses in the pay television industry in
Australia. The interests include investments in entities (which include East
Coast Pay Television Pty. Limited ("ECT") and XYZ Entertainment Pty. Limited
("XYZ") which have the following: (i) programming arrangements and ownership of
a satellite subscription broadcast license which permits distribution of
programming via direct-to-home (DTH) satellite television broadcasting
throughout Australia; (ii) ownership of wireless cable distribution licenses
(MDS) in areas covering approximately 755,000 households; (iii) an interest in
net cash flow of Australis Media Limited ("Australis"), another Australian pay
television operator; and (iv) programming services. During the first quarter of
the fiscal year ended May 31, 1996, for accounting and reporting purposes, the
Company consolidated the operations of ECT, which was previously accounted for
by the equity method of accounting. There was no significant impact on the
consolidated statement of operations as a result of such change. During fiscal
1997 and 1996, the Company recorded writedowns of its Australian investments of
$40,000 and $10,000, respectively. The Company has determined to sell its
Australian investments and has retained an investment banker to assist in the
separate sale of its interests in ECT and XYZ (See Note 3 to consolidated
financial statements).
Certain of the Company's cable television systems are subject to rate regulation
which has negatively affected the Company's business. The Company has
implemented new rate and service offerings which give subscribers 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. Several of the
Company's systems, along with numerous other cable operators, received specific
inquiries from the Federal Communications Commission (the "FCC") regarding their
implementation of this method of offering cable services. A proposed resolution
of the inquiry which is based, in part, upon pending basic and cable programming
service tier rate complaints in several Los Angeles area cable systems served by
the Company, requires the Company to adjust its rates for its basic and cable
programming services tiers and make subscriber refunds.
28
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<PAGE>
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 services and so called "external
costs" as delineated in the rules. The bulk of such price adjustments became
effective during the first quarter of fiscal years 1996, 1997 and 1998.
On February 8, 1996, "The Telecommunications Act of 1996" (the "Act") was
enacted into law. The new law alters federal, state and local laws and
regulations regarding telecommunications providers and services, including the
cable television industry. The Act deregulates (except for basic service) cable
service rates over a three year period. Implementing regulations of the Act are
currently being promulgated. The effect that the Act will have on the Company's
cable television business cannot be determined at this time.
FISCAL YEARS ENDED MAY 31, 1997 AND MAY 31, 1996
The following discussion describes the Company's three business segments: cable
television, wireless telephone investment and Australian investments.
Cable Television
Consolidated revenues for the year ended May 31, 1997 increased by $148,216 or
29.9%, over the year ended May 31, 1996. Revenue from cable television
operations increased by $90,713 or 24.6%, over the corresponding year ended May
31, 1996 as a result of regulated price increases, increases in the number of
cable television subscribers and acquisitions. Acquisitions of cable television
systems accounted for $54,846 of the increase or 60.5%. Average primary basic
cable television subscribers ("Basic Subscribers") for the year ended May 31,
1997 were approximately 1,255,000 as compared to approximately 1,088,000 Basic
Subscribers for the year ended May 31, 1996, an increase of 15.3%. The impact of
acquisitions of cable television systems accounted for 95.7% of the increase.
Average monthly revenue per Basic Subscriber, including programmers' share of
such revenue, was approximately $38.57 during the year ended May 31, 1997, as
compared to approximately $34.84 during the year ended May 31, 1996, an increase
of 10.7%.
Cost of services of the Company's cable television operations increased by
$18,516 or 22.5%, while selling, general and administrative expenses of the
Company's cable television operations increased by $25,639 or 30.0%. The
Company's recent cable television acquisitions accounted for $11,849 or 64.0% of
the $18,516 increase in cost of services and $14,948 or 58.3% of the $25,639
increase in selling, general and administrative expense. As a result, before
giving effect to increased costs associated with acquisitions, costs of services
and selling, general and administrative expenses increased by $6,667 and
$10,691, respectively, during the year ended May 31, 1997. The principal reason
for the increase in these costs was the increase in the variable component of
the Company's cost structure which increases in relation to increased revenue.
The Company anticipates continued increases in the cost of services and selling,
general and administrative expenses as the growth of its businesses continues.
29
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<PAGE>
Consolidated depreciation and amortization (domestic) for the year ended May 31,
1997 increased by $47,842 or 24.5% over the year ended May 31, 1996. The cable
television operations accounted for $35,111 of which $30,069 was attributable to
recent cable television acquisitions. Consolidated operating income for the year
ended May 31, 1997 was $5,771 or $10,477 below the operating income for the year
ended May 31, 1996, principally as a result of the Company's $40,000 write-down
of Australian assets. (See Liquidity and Capital Resources - Australian Pay
Television). The wireless telephone operations contributed $26,057 of operating
losses. The Company's operating income related to its cable television
operations was $87,652, an increase of $11,447 or 15.0% over the year ended May
31, 1996.
Consolidated other income represents primarily the Company's proportionate share
of the net income or loss of minority investment interests accounted for by the
Company using the equity method of accounting. The Company has recorded $4,258
and $7,126 of expense for the years ended May 31, 1997 and May 31, 1996,
respectively for its minority investments in Australia. These expenses were
offset by $15,180 and $10,743 of income for the years ended May 31, 1997 and May
31, 1996, respectively, related to minority wireless telephone investments held
by Centennial. Additionally, the Company recognized gains on the sale of assets
of $3,819, and $8,310 during the years ended May 31, 1997 and 1996,
respectively.
Consolidated interest expense for year ended May 31, 1997 increased by $28,528
or 16.6% as compared with the year ended May 31, 1996. Each of the Company's
three business segments contributed to the increase: cable television $14,700,
wireless telephone investment $5,493 and Australian investments $8,335. Interest
expense of the Company's cable segment rose as a result of higher average debt
levels. For the year ended May 31, 1997, the average debt outstanding was
approximately $1,727,000 or $323,000 above the average outstanding debt balance
of $1,404,000 during the year ended May 31, 1996. The increase in expense was
partially offset by a decline in interest rates. The Company's weighted average
interest rate excluding borrowings of Centennial, the Australian investments and
the Company's 50% owned joint ventures was approximately 9.2% in the year ended
May 31, 1997 as compared to approximately 10.2% in the year ended May 31, 1996.
In addition, the Company increased the proportion of floating rate bank debt in
its capital structure. Short-term interest rates of the Company's variable rate
bank credit agreement increased from 6.7% at May 31, 1996 to 7.3% at May 31,
1997.
After losses attributable to minority interests in subsidiaries for the year
ended May 31, 1997, a consolidated pretax loss, before extraordinary item of
$164,951 was incurred, as compared to a pretax loss of $136,443 for the year
ended May 31, 1996. The income tax benefit of $30,658 for the year ended May 31,
1997 represents a reduction of the deferred tax liability by the tax effect of
the current period losses of the Company, offset by current state and local
taxes for the period. These tax benefits are non-cash in nature. The Company
anticipates, beginning in fiscal 1998, that it will no longer record tax
benefits resulting from operating losses. As a result, the Company expects that
net losses and loss per share will increase.
The consolidated net loss for the year ended May 31, 1997 of $141,875 represents
an increase of $39,758 from the loss of $102,117 for the year ended May 31,
1996, principally as a result of the Company's $40,000 write-down of Australian
assets. (See Liquidity and Capital Resources - Australian Investment). Included
in the net loss for the fiscal year ended May 31, 1997 is an extraordinary loss
(net of tax benefit of $5,379) of $7,582 related to the early retirement of
debt. Such amount represents the accelerated write-off of deferred financing
costs and call premiums paid related to the Company's 11 7/8% Senior
Subordinated Debentures Due 2003 which Debentures were redeemed on April 15,
1997 (See Liquidity and Capital Resources). The Company expects net losses to
continue until such time as the cable television systems and
30
<PAGE>
<PAGE>
investments in plant associated with rebuilds and extensions of its cable
television systems and expansion of Centennial's wireless telephone system
infrastructure generate sufficient earnings to offset the associated costs of
acquisitions and operations.
Wireless Telephone
Centennial's revenue increase accounted for 26.2% of the total increase in the
revenue of the Company. Revenue from wireless telephone operations for the year
ended May 31, 1997 increased by $38,826 or 34.6%, over the year ended May 31,
1996. The increase in revenue was the result of growth in subscriptions to and
the resulting increased usage of wireless telephone service. Acquisitions
accounted for $4,572 or 11.8% of the increase for the year ended May 31, 1997.
Cost of services related to Centennial's wireless telephone operations, which
accounted for 27.5% of the total cost of services for the Company, during the
year ended May 31, 1997 was $38,228, an increase of $12,099 or 46.3% as compared
to the year ended May 31, 1996. The increase was due in part to a larger number
of telephone units sold, the variable costs associated with a larger revenue and
subscription base and increased wireless telephone coverage areas resulting from
the continued expansion of Centennial's network and the commencement of PCS
telephone service in Puerto Rico. Included in cost of services during the period
ended May 31, 1997 were $1,927 of costs associated with the start-up of
Centennial's Puerto Rico telecommunications business.
Selling, general and administrative expenses related to Centennial's wireless
telephone operations, representing 33.1% of the total amount for the Company,
rose to $55,132, an increase of $20,944 or 61.3% above the $34,188 recorded
during the year ended May 31, 1996. The increase resulted primarily from the
variable costs associated with a larger subscription and revenue base and an
increase in Centennial's managerial, customer service and sales staff to
accommodate the larger subscription and revenue base and the anticipated growth
of its wireless telephone business as well as the commencement of PCS telephone
service in Puerto Rico. Included in selling, general and administrative expenses
during the year ended May 31, 1997 were $5,086 of costs associated with the
start-up of Centennial's Puerto Rico telecommunications network.
The wireless telephone operations and acquisitions accounted for $12,731 or
26.6% of the increase in the Company's domestic depreciation and amortization
for the 1997 period. Centennial's wireless telephone operating loss for the year
ended May 31, 1997 of $26,057 increased by $6,948 or 36.4% from the loss of
$19,109 for the year ended May 31, 1996.
Interest expense of the Company's wireless segment increased to $33,379 for the
year ended May 31, 1997, an increase of $5,493 or 20.0% from the year ended May
31, 1996. After giving effect to interest capitalized during the pre-operating
stage of Centennial's PCS business ($2,752 during fiscal 1997 and $5,200 during
fiscal 1996), gross interest costs of the wireless segment for the year ended
May 31, 1997 and May 31, 1996 were $36,131 and $33,086, respectively. The
increase is the result of additional borrowings for acquisitions, working
capital and debt service. Centennial's average debt outstanding during the year
ended May 31, 1997 was $374,893, an increase of $24,893 as compared to the
average debt level of $350,000 during the year ended May 31, 1996. Centennial's
weighted average interest rate decreased to 9.3% for the year ended May 31, 1997
from 9.5% for the year ended May 31, 1996.
31
<PAGE>
<PAGE>
The Company expects net losses in Centennial's wireless operations to continue
until such time as the operations of the wireless telephone systems and
expansion of the wireless telephone system infrastructure generate sufficient
earnings to offset the associated costs of acquisitions and operations.
Australian Investments
The Australian investment accounted for $18,677, or 12.6% of the total increase
in revenue of the Company. Australian operating expenses for the year ended May
31, 1997 increased by $6,495 or 27% over the year ended May 31, 1996.
Depreciation and amortization expense, the result of its initial buildout and
license acquisition was $18,511. Including a $40,000 write-down of Australian
assets, the Australian operating loss for the year ended May 31, 1997 was
$55,825.
FISCAL YEARS ENDED MAY 31, 1996 AND MAY 31, 1995
Revenue for the year ended May 31, 1996 increased by $78,587 or 18.9%, over the
year ended May 31, 1995. Revenue from cable television operations increased by
$37,238 or 11.2%, over the corresponding year ended May 31, 1995 as a result of
increases in the number of cable television subscriptions and acquisitions.
Acquisitions of cable television systems accounted for $17,868 of the increase
or 48.0%. 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 twelve months ended May 31, 1996, were approximately
1,088,000 as compared to approximately 995,000 during the twelve-month period
ended May 31, 1995, an increase of 9.3%. The impact of acquisitions of cable
television systems accounted for 41.5% of the increase. Average monthly revenue
per Basic Subscriber, including programmer's share of such revenue, was
approximately $34.84 during the twelve months ended May 31, 1996, as compared to
approximately $33.11 during the comparable prior twelve month period, an
increase of 5.2%. The Australian operations accounted for $14,571, or 18.5% of
the total increase in revenue.
Revenue from wireless telephone operations for the year ended May 31, 1996
increased by $26,778 or 31.4%, over the year ended May 31, 1995. The increase in
revenue was the result of growth in subscriptions to and the resulting increased
usage of wireless telephone service. Acquisitions accounted for increased
revenue of $21,279 for fiscal 1996, which increase more than offset a decline in
revenue from cellular systems which were sold or exchanged of $12,756.
Costs and expenses excluding depreciation and amortization and the Australian
operations for the year ended May 31, 1996 increased by $14,128 or 6.6% over the
year ended May 31, 1995. Cost of services for the year ended May 31, 1996
increased by $4,730 or 4.6% over the corresponding period in the prior year,
while selling, general and administrative expense increased by $9,398 or 8.5%.
Cost of services of the Company's cable television operations increased by $753
or 0.9%, while selling, general and administrative expenses of the Company's
cable television operations for the year ended May 31, 1996 increased to
$85,591, an increase of $1,265 or 1.5% over the $84,326 in the year ended May
31, 1995. However, the Company's recent cable television acquisitions accounted
for $3,734 or 495% of the $753 increase in cost of services and $2,794 or 220%
of the $1,265 increase in selling, general and administrative expense. As a
result, before giving effect to increased costs associated with acquisitions,
costs of services and selling, general and administrative expenses declined by
$2,981 and $1,529,
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respectively during the year ended May 31, 1996. The principal reason for the
decline in these costs was the Company's implementation of a planned
restructuring of its operations.
Cost of services related to the wireless telephone operations during the year
ended May 31, 1996 was $26,129, an increase of $3,977 or 18.0% as compared to
the year ended May 31, 1995. The reason for the increase was a larger number of
telephone units sold, 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. Included in cost of services
during fiscal year ended 1996 were $195 of pre-operating costs associated with
the start-up of Centennial's Puerto Rico telecommunications business.
Selling, general and administrative expenses related to the wireless telephone
operations rose to $34,188, an increase of $8,133 or 31% above the $26,055
recorded during the year ended May 31, 1995. The increase resulted primarily
from the variable costs associated with a larger subscription and revenue base
and anticipated growth of its wireless telephone business. Included in selling,
general and administrative expenses during fiscal year ended 1996 were $218 of
pre-operating costs associated with the start-up of Centennial's Puerto Rico
telecommunications business.
The Company anticipates continued increases in the cost of services and selling,
general and administrative expenses as the growth of its wireless 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.
Depreciation and amortization (domestic) for the year ended May 31, 1996
increased by $23,494 or 13.7% over the year ended May 31, 1995. The wireless
telephone operations and acquisitions accounted for $5,347 of this increase, the
cable television operations accounted for $18,147.
The Australian operations incurred expenses of $45,419, including $21,352
of depreciation and amortization.
Operating income for the year ended May 31, 1996 decreased by $10,454 or 39.2%
below the year ended May 31, 1995, principally as a result of a $10,000
write-down of Australian assets. The Centennial operating loss for the year
ended May 31, 1996 of $19,109 decreased by $9,321 or 33% from the loss of
$28,430 for the year ended May 31, 1995. The Australian operating loss for the
year ended May 31, 1996 was $40,848. The Company's operating income before the
inclusion of its cellular and Australian operations was $76,205 an increase of
$21,073 or 38.2% over the year ended May 31, 1995.
Other income represents the Company's proportionate share of the net income or
loss of minority investment interests accounted for by the Company using the
equity method of accounting. The Company has recorded $7,126 and $2,400 of
expense for fiscal years ended May 31, 1996 and 1995 for its minority
investments in Australia, offset by $10,473, $4,670 and $3,645 of income for
fiscal years ended May 31, 1996, 1995 and 1994 related to minority investments
of the Company's wireless telephone operations. Included in other income for the
fiscal year ended May 31, 1996, was the recognition of approximately $8,310 of
gain on the sale of assets held by Centennial.
Interest expense for the year ended May 31, 1996 increased by $33,214 or 23.9%
as compared with the year ended May 31, 1995 reflecting higher average debt
levels and secondarily, higher interest rates in effect
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during the year ended May 31, 1996. In addition, the Company incurred a non cash
charge of $2,647 reflecting the write off of debt issuance costs associated with
a bank credit agreement refinanced during the year ended May 31, 1996. For the
year ended May 31, 1996, the average debt outstanding was approximately
$1,754,000 or $310,000 above the average outstanding debt balance of $1,444,000
during the year ended May 31, 1995. The wireless telephone operations accounted
for $94,247 or 30.4% of the increase. The Company's weighted average interest
rate excluding borrowings of Centennial and the Company's 50% owned joint
ventures was approximately 10.2% in the year ended May 31, 1996 as compared to
approximately 9.8% in the year ended May 31, 1995. The increase in such rates is
primarily the result of a one time non cash charge of $2,647 of deferred debt
issuance costs as a result of the Company's refinancing of a bank credit
facility (see Financing and Capital Formation - The Company). Short-term
interest rates of the Company's variable rate bank credit agreements declined
from 6.8% at May 31, 1995 to 6.7% at May 31, 1996. Additionally, as described
below interest expense related to the Company's interest rate hedge agreements
declined during the year ended May 31, 1996. During the year ended May 31, 1996,
the Company incurred interest expense of $741 in respect of the interest rate
hedge transactions compared to interest expense of $2,794 in respect of the
interest rate hedge transactions in the year ended May 31, 1995. All of the
Company's obligations under interest rate hedge agreements expired during the
year ended May 31, 1996. See "Liquidity and Capital Resources". Centennial's
weighted average interest rate increased to 9.5% for the year ended May 31, 1996
from 9.2% for the year ended May 31, 1995. Centennial capitalized $5,200 of
interest related to its ownership of a PCS license (see Centennial
Acquisitions). Interest expense of the Company's Australian operations was
$1,299 during the fiscal year ended May 31, 1996.
After losses attributable to minority interests in subsidiaries for the year
ended May 31, 1996, a pretax loss of $136,443 was incurred, as compared to a
pretax loss of $90,686 for the year ended May 31, 1995. The income tax benefit
of $34,326 for the year ended May 31, 1996 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 years ended May 31, 1996 and May 31, 1995.
The net loss for the year ended May 31, 1996 of $102,117 represents an increase
of $19,492 or 23.6% over the loss for the year ended May 31, 1995. The Company
expects net losses to continue until such time as the operations of the wireless
telephone systems, Australian operations, cable television systems and
investments in plant associated with rebuilds and extensions of its cable
television systems and expansion of the wireless 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. Since both the Company's
business and related investments are capital intensive, the Company and
Centennial must continue to seek various sources of financing to meet their
respective needs, including growth in internally generated cash, bank financing,
joint ventures and partnerships and public and private placements of debt and
equity securities. Certain subsidiaries of the Company (other than Centennial)
have entered into credit agreements with various bank groups and private lending
institutions providing for an aggregate of approximately $1,055,000 of potential
borrowing capacity for cable
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operations. Approximately $642,500 of that aggregate availability has been
drawn. Subsidiaries of Centennial have entered into agreements which furnish
approximately $130,000 of potential borrowing capacity for wireless telephone
operations at May 31, 1997 which indebtedness is non-recourse to the Company. In
addition, Centennial had $45,000 of undrawn lines of credit available at May 31,
1997.
The Company's internally-generated cash, along with third party financing,
primarily bank borrowings and the issuance of debt securities to the public,
have enabled it to fund its working capital requirements, capital expenditures
for property, plant and equipment, acquisitions, investments and debt service.
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.
During the year ended May 31, 1997, the Company made consolidated capital
expenditures of $170,767 of which 52% was made by Centennial. The Company's
future commitments for property, plant and equipment in its cable television
business consist of usual upgrades, extensions, betterments and replacements of
cable plant and equipment. As the Company completes capital projects started in
prior fiscal years, it anticipates an annualized rate of approximately $100,000
for cable television capital expenditures in fiscal 1998. 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. Funds for cable television capital projects and
related equipment are currently available from internally generated cash and
other financing resources.
Centennial's wireless telephone capital projects include the addition of cell
sites for greater coverage areas, as well as enhancements to the existing
infrastructure of the wireless system. Centennial expects capital expenditures
for its domestic wireless telephone markets of $30,000 during the 1998 fiscal
year. During fiscal 1996, Centennial began construction of its PCS network in
Puerto Rico and spent approximately $48,960 during the year ended May 31, 1997.
Centennial currently estimates that the remaining cost to complete the build-out
of the infrastructure of its PCS network will be approximately $26,300 to be
expended through fiscal 1999. Funds for Centennial's capital expenditure
requirements may be provided by other bank borrowings, debt or equity issuances
or other financing resources.
For the year ended May 31, 1997, consolidated earnings were less than fixed
charges by $188,004. However, such amount reflects non-cash charges totaling
$266,628, consisting of depreciation and amortization and subsidiary preferred
stock dividends. 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.
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It is anticipated that in the next fiscal year, cash generated from Centennial's
wireless telephone operations will not fully cover required capital
expenditures, the debt service under its credit agreements and preferred stock
dividends. Although to date, Centennial has been able to obtain financing on
satisfactory terms, there is no assurance that this will continue to be the case
in the future. It is currently anticipated that any shortfall will be made up
either through equity issuances or additional borrowing. Based upon current
market conditions, the Company expects that cash flows from operations and funds
from currently available credit facilities will be sufficient to enable
Centennial to meet required cash commitments through the next twelve month
period.
Cash on hand was sufficient to fund the Company's expenditures for property,
plant and equipment and financing and investing activities. The Company will
continue to rely on internally generated cash as well as various financing
activities to fund these requirements.
FINANCING AND CAPITAL FORMATION - THE COMPANY
CCC-II, Inc. ("CCC-II"), a subsidiary of the Company, entered into a credit
agreement as amended August 12, 1996, that provides CCC-II 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
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 0% to 0.5% per annum based upon certain conditions, or (b) the London
Interbank Offering Rate plus 0.75% to 1.375% 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. CCC-II is in compliance with the
terms of the credit facility. At May 31, 1997, $185,000 was available for
borrowing under this facility.
CCC-I, Inc. ("CCC-I"), a subsidiary of the Company, entered into a credit
agreement as amended August 12, 1996, that provides CCC-I a three year $525,000
unsecured revolving credit facility that 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 was used for working capital and general corporate purposes. The repayment
by the Company on August 7, 1995, of its existing indebtedness discharged all of
the Company's obligations under its then-existing $300,000 credit agreement and,
as a result, such agreement was terminated. The interest rates payable on
borrowings under the 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 0.625% per
annum based upon certain conditions, or (b) the London Interbank Offering Rate
plus 0.75% to 1.625% 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. CCC-I is in compliance with the terms of the credit
facility. At May 31, 1997, $201,000 was available for borrowing under this
facility.
The terms and covenants of certain of the Company's bank credit facilities
require certain of the Company's subsidiaries to enter into various interest
rate hedge agreements (the "Hedge Agreements"). During the fiscal year ended May
31, 1996, all of the Company's obligations with respect to Hedge Agreements
expired.
On January 17, 1997, the Company issued $250,000 aggregate principal amount of
8-7/8% Senior Notes due 2007 pursuant to a registration statement that was filed
with the Securities and Exchange Commission (the
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"SEC") on October 26, 1993. The primary use of proceeds was the redemption of
the Company's 11-7/8% Senior Subordinated Debenture due 2003. On March 27, 1997,
the Company gave notice of redemption of the entire principal amount outstanding
of its $204,000 11-7/8% Senior Subordinated Debentures maturing 2003. The Senior
Subordinated Debentures were redeemed on April 15, 1997 at a redemption price of
105% of the principal amount thereof. Including the 5% redemption premium, the
aggregate funds required for such redemption was $214,200. The effect of the
redemption resulted in an extraordinary loss during the fourth quarter of fiscal
1997 of approximately $12,961 reflecting the call premium and write-off of
deferred financing costs ($7,582 net of income tax benefit).
On April 4, 1997, the Company filed a registration statement with the SEC
relating to the shelf registration of an additional $500,000 of the Company's
debt securities, augmenting the remaining $2,000 available under the July 1994
registration statement. The registration became effective July 15, 1997. 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 18,
1997 there was $502,000 available for issuance.
On April 15, 1997, Citizens Century Cable Television Venture ("CCCTV") entered
into an agreement for the provision of a three-year revolving credit facility in
the principal amount of $200,000 with Bank of America and Societe General, which
converts into a five-year term loan. The facility is secured by the assets of
CCCTV. The loan is non-recourse to both Citizens and the Company. Borrowings
under the facility are to be repaid in semi-annual installments commencing June
30, 2000. The facility requires mandatory prepayments of principal refinancing
to the extent that the loan balance exceeds the refinancing on working capital
commitment (as defined in the facility). Borrowings under the facility bear
interest, at the option of CCCTV, at either the base rate, certificate of
deposit rate, or the Eurodollar rate, plus the applicable margin (as defined in
the facility). The principal use of proceeds will be to fund acquisitions as
well as general corporate purposes (all of which was available at May 31, 1997).
The agreement expires on March 31, 2005.
FINANCING AND CAPITAL FORMATION - CENTENNIAL
Centennial, since August 1988, has acquired 29 wireless telephone markets in the
United States that it owns and manages, some of which are considered to be in
the early development phase of operations. Centennial also owns minority equity
investment interests in certain other wireless telephone systems. Centennial
successfully bid on March 13, 1995 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. The Puerto Rico
Wireless Telephone System is in the start-up and construction stage.
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 outstanding common
equity of Centennial. In connection with an amendment to a services agreement
with the Company, Centennial issued its Second Series Convertible Redeemable
Preferred Stock valued at $5,000 to the Company. The preferred stock carried no
cash dividend requirements through August 31, 1996, but the shares accreted
liquidation preference and redemption value at the rate of 7.5% per annum,
compounded quarterly until then. The fully accreted liquidation preference and
redemption value of the Convertible
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Redeemable Preferred Stock and the Second Series Convertible Redeemable
Preferred Stock held by Citizens and Century at August 31, 1996 was $186,287 and
$7,252, respectively. Beginning September 1, 1996, the holders of the
Convertible Redeemable Preferred Stock and the Second Series Convertible
Redeemable Preferred Stock were 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.
Both classes of Preferred Stock are subject to mandatory redemption in fiscal
2007. Any unpaid dividends continue to accumulate without additional cost to
Centennial. On December 19, 1996, Centennial paid cash dividends to Citizens and
Century of $3,959 and $154, respectively and, during March 1997, declared a cash
dividend in the same amounts to each of Citizens and Century. Centennial will
determine from time to time, the timing, amount, and distribution (if any) of
additional preferred stock dividends of Centennial.
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 May 31, 1997,
4,239,231 shares were 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. At May 31, 1997, $400,000
remained available for issuance.
On September 12, 1996, as amended, Centennial entered into a $50,000 credit
facility with Citibank, N.A. (the "Amended Credit Facility"). The facility
terminates on January 31, 2001. The commitment of the lender under the Amended
Credit Facility may be increased to $90,000 at the election of the lenders. As
of July 30, 1997 the commitment was increased to $75,000. Approximately $35,000
of the Amended Credit Facility was used to fund the Benton Harbor, Michigan
cellular telephone system acquisition (see "Acquisitions, Exchanges,
Dispositions - Centennial"), and has since been repaid. The Amended Credit
Facility is available for acquisitions, working capital and general corporate
purposes. The interest rate payable on borrowings under the new credit facility
is based on, at the election of Centennial, (a) "Base Rate" plus a margin of 2%
or (b) "Eurodollar Rate" plus a margin of 3%. The Amended Credit Facility is
secured by the stock of certain of Centennial's subsidiaries not otherwise
subject to restrictions under Centennial's Senior Note Indentures. The Amended
Credit Facility restricts the incurrence of certain additional debt of
Centennial, and limits Centennial's ability to pay dividends. As of May 31, 1997
$5,000 was outstanding under the Amended Credit Facility. Centennial was in
compliance with the covenants of the Amended Credit Facility at May 31, 1997.
Centennial Puerto Rico Wireless Corporation ("CPRW"), a wholly owned subsidiary
of Centennial, which is engaged in the ownership and operation of the PCS
business in Puerto Rico, entered into a four-year $130,000 revolving credit
facility with Citibank, N.A. (the "Puerto Rico Credit Facility") which converts
into a four year term loan on April 25, 2001. The principal use of proceeds will
be to fund the buildout of the Company's PCS business in Puerto Rico. The
proceeds will also be used by CPRW for working capital and general corporate
purposes and were used to pay certain cash dividends to Centennial as permitted
by the Puerto Rico Credit Facility. The interest rate payable on borrowings
under the Puerto Rico Credit Facility are based on, at the election of CPRW, (a)
the "Base Rate", as defined, plus a margin of 1.50% or
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(b) the "Eurodollar Rate", as defined, plus a margin of 2.50%, adjusted for the
maintenance of certain specified leverage ratios, as applicable. The Puerto Rico
Credit Facility, which is non-recourse to the Company, is secured by
substantially all of the assets of CPRW and its direct and indirect subsidiaries
and requires CPRW to meet and maintain certain financial and operating
covenants, including the maintenance of certain minimum annualized cash flows
(as defined), the maintenance of certain ratios of operating cash flow to debt
service and total outstanding debt to operating cash flow and performance
requirements including minimum subscriber levels. The facility will restrict the
use of borrowing, limit the incurrence of certain additional indebtedness by
CPRW and limits CPRW's ability to declare and pay dividends to the Company and
management fees to affiliates. As of May 31, 1997, $74,000 was outstanding under
the Puerto Rico Credit Facility. Centennial was in compliance with the covenants
of the Puerto Rico Credit Facility at May 31, 1997.
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
wireless 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
in Puerto Rico is expected to be capital intensive, with remaining network
buildout costs of approximately $26,300 to be expended through 1999. 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 competitive with
the two existing wireless 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 wireless telephone operations
and PCS business will not be sufficient in the next several years to cover
interest, the preferred stock dividend requirements that commenced in the
current fiscal year, and required capital expenditures. 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.
ACQUISITIONS - CABLE TELEVISION
On March 2, 1993, a joint venture in which each of the Company and Citizens have
a 50% interest ("the Century/Citizens Joint Venture") entered into agreements 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 was $92,900, subject to adjustment. 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. On December 1, 1995, the second acquisition serving approximately
21,000 primary basic subscribers was completed. The purchase price of
approximately $51,900 at September 30, 1994 and $41,000 at December 1, 1995 was
funded by the Company and Citizens equally.
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On May 31, 1996, the Company acquired the cable television systems serving
Anaheim, Hermosa Beach/Manhattan Beach, Fairfield and Rohnert Park/Yountville,
California for an aggregate purchase price of approximately $287,600, subject to
adjustment. Funds for this acquisition were provided by an existing bank credit
facility. At May 31, 1996, such cable television systems served an aggregate of
approximately 135,000 primary basic subscribers.
On August 16, 1996, the Company entered into agreements to acquire two cable
television systems which serve an aggregate of approximately 35,000 primary
basic subscribers, which agreements were subsequently assigned to the
Century/Citizens Joint Venture. These systems are primarily located in Yorba
Linda, Orange County and Diamond Bar, California (the "CCCTV Acquisitions").
Pursuant to the agreements, the aggregate purchase price for these systems was
approximately $69,500. The Company currently expects to fund these acquisitions
using available credit facilities. The purchase of these systems by the Company
is subject to regulatory approvals. There is no assurance that the Company will
obtain such approvals or that such acquisitions will be consumated.
ACQUISITIONS, EXCHANGES, DISPOSITIONS - CENTENNIAL
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
$9,914. Centennial recognized a gain of approximately $4,176 as a result of the
sale. "Net Pops" means a market's Pops multiplied by the percentage interest
that Centennial 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 and "Pops" means the population of a market based upon the final
1990 Census Report of the Bureau of the Census, United States Department of
Commerce.
On October 31, 1995, Centennial acquired (i) a 94.3% interest in the
non-wireline cellular telephone system serving the Lafayette, Louisiana MSA,
representing approximately 205,700 Net Pops, in exchange for Centennial's
non-wireline cellular telephone system serving the Jonesboro, Arkansas RSA
(comprising approximately 205,000 Net Pops), the license rights and assets
located in and covering Desoto and Red River Parishes of Louisiana 3 RSA
(comprising approximately 34,700 Net Pops), the license rights and assets
located in and covering a section of Morehouse Parish of Louisiana 2 RSA
(comprising approximately 24,100 Net Pops) and a cash payment by Centennial of
approximately $5,580, subject to adjustment, and (ii) an additional 14.3%
minority interest in the Elkhart, Indiana RSA, a market in which Centennial now
has a 91.4% interest, and an additional 12.7% equity investment interest in the
Lake Charles, Louisiana MSA, a market in which Centennial now has a 25.1%
interest, for a cash payment of approximately $2,951.
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In summary, during fiscal 1996, Centennial acquired 813,800 Net Pops, additional
minority interests in existing Centennial markets and $1,383, in cash (net), in
exchange for 1,002,500 Net Pops previously owned by Centennial.
On September 12, 1996, Centennial acquired for approximately $35,000 in cash,
100% of the ownership interests in the partnership owning the non-wireline
cellular telephone system serving the Benton Harbor, Michigan MSA. The Benton
Harbor market represents approximately 161,400 Net Pops.
Centennial has determined to pursue a strategy to sell or otherwise dispose of
substantially all of its minority interests in cellular telephone systems
representing approximately 1,100,000 Net Pops. Centennial has not yet made a
final determination as to the estimated sale proceeds or timing of such
disposition.
CENTENNIAL PERSONAL COMMUNICATIONS SERVICES ("PCS")
Centennial was the successful bidder for one of two MTA licenses to provide
broadband personal communications services (PCS) 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 and paid by Centennial
was $54,672. Approximately, $15,500 of capital expenditures were incurred during
fiscal 1996 and approximately $48,960 during the year ended May 31, 1997.
Centennial's participation in the PCS business is expected to be capital
intensive, requiring additional network buildout costs of approximately $26,300
to be expended through 1999. In addition, 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 competitive with the two existing wireless telephone
providers as well as the other MTA PCS license holder. At May 31, 1997,
Centennial had approximately 16,900 PCS customers. There is no assurance that
the PCS business will generate cash flow or reach profitability. Centennial is
exploring various sources of external financing including but not limited to
bank financing, joint ventures, partnerships and placement of debt and 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 intra-island and interstate
telecommunications market in Puerto Rico as a service provider pursuant to FCC
requirements for interstate service and pursuant to an authorization issued to
Centennial in December 1994, as amended in July 1996, by the Public Service
Commission of the Commonwealth of Puerto Rico for intra-island service.
INVESTMENTS
Australian Pay Television
Since fiscal 1994, the Company has invested, through a wholly-owned subsidiary,
approximately $148,000 in the Australian pay television industry, including
approximately $126,000 in ECT. Since the fourth fiscal quarter of 1996, the
Company has written down $50,000 of this investment. The Company has determined
to pursue a strategy to sell its investments in its Australian operations and
has retained an investment banker to assist in the separate sale of ECT and XYZ.
It has also determined to make no further investments in ECT. Once the Company
has developed its formal plan for disposition, including the means to complete
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that plan and the period expected to be required for completion of the
disposition, the Company anticipates accounting for its Australian operations as
discontinued operations.
The Company is currently unable to predict the ultimate
resolution of these matters. At May 31, 1997, the remaining net book value of
its investments in the various aspects of the Australian pay television
industry, after giving effect to the aforementioned write-down of Australian
assets, aggregated approximately $24,000. The Company will continue to assess
the impact, if any, of the above noted matters on the carrying value of its
investments in the Australian pay television businesses.
FOREIGN CURRENCY EXCHANGE RATE RISKS: HEDGING
The Company's monetary assets and liabilities are subject to foreign currency
exchange risk as certain equipment purchases and payments for certain operating
expenses, such as programming expenses, are denominated in currencies other than
their own functional currency. In addition, certain of the Company's
subsidiaries have notes payable and notes receivable which are denominated in a
currency other than their own functional currency or intercompany loans payable
linked to the U.S. dollar.
In general, the Company does not execute hedge transactions to reduce its
exposure to foreign currency exchange rate risks. Accordingly, the Company may
experience economic loss and a negative impact on earnings with respect to its
holdings solely as a result of foreign currency exchange rate fluctuations,
which include foreign currency devaluations against the dollar. The Company may
also experience economic loss and a negative impact on earnings related to these
monetary assets and liabilities. In general, exchange rate risk to the Company's
commitments for equipment purchases and operating expenses is generally limited
due to the insignificance of the related monetary asset and liability balances;
however, exchange rate risk to the Company of these notes payable and notes
receivable and debt linked to the U.S. dollar have and will continue to impact
its reported earnings.
Australia generally does not restrict the removal or conversion of local or
foreign currency; however, there is no assurance this position will continue.
STOCK REPURCHASE
In October 1992, the Company announced that its Board of Directors authorized
the repurchase, from time to time, of up to 2,000,000 shares of its Class A
Common Stock, depending on prevailing market conditions. The Company has
purchased 907,500 shares at a total cost of $4,650 as of August 5, 1997.
Subsequent to May 31, 1997, the Company announced that its Board of Directors
authorized the repurchase in the open market and in privately negotiated
transactions, from time to time, of up to an additional 5,000,000 shares of its
Class A Common Stock, depending on prevailing market conditions.
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.
Centennial has purchased 244,000 shares at a total cost of $3,902 as of August
5, 1997.
Subsequent to May 31, 1997, Centennial announced that its Board of Directors
authorized the repurchase in the open market and in privately negotiated
transactions of up to an additional 3,000,000 shares of Centennial's Class A
Common Stock, depending on prevailing market conditions.
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CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS
OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SUBSCRIBER, POP AND SHARE DATA)
This report contains or incorporates by reference forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Where any such forward-looking statement includes a statement of the
assumptions or bases underlying such forward-looking statement, the Company
cautions that assumed facts or bases almost always vary from the actual results,
and the differences between assumed facts or bases and actual results can be
material, depending upon the circumstances. Where, in any forward-looking
statement, the Company or its management expresses an expectation or belief as
to future results, there can be no assurance that the statement of expectation
or belief will result or be achieved or accomplished. The words "believe",
"expect", "estimate", "anticipate", "project" and similar expressions may
identify forward-looking statements.
Taking into account the foregoing, the following are identified as
important factors that could cause actual results to differ materially from
those expressed in any forward-looking statement made by, or on behalf of, the
Company:
NET LOSSES; STOCKHOLDERS' DEFICIENCY
The Company has reported net losses of $141,875, $102,117 and $82,625
for the fiscal years ended May 31, 1997, 1996 and 1995, respectively. The
Company expects net losses to continue for the foreseeable future, at least
until such time as the operations of its cable television systems and cellular
telephone systems can generate sufficient earnings to offset the charges,
including depreciation and amortization and interest expense, incurred in
connection with such operations and its investments in plants associated with
rebuilds and extensions of its cable television systems and expansion of the
cellular telephone system infrastructure.
Reflecting net losses in prior periods, the common stockholders'
deficiency as stated on the Company's consolidated balance sheet at May 31, 1997
was $598,643. The Company's assets, including its cable television franchises
and cellular telephone and PCS licenses, are recorded on its balance sheet at
historical cost. The Company believes that the current fair value of such assets
is significantly in excess of their historical cost.
LEVERAGE; CAPITAL REQUIREMENTS
The Company has met and believes, based on current market conditions,
that it will continue to meet its cash obligations with internally generated
cash from operations, along with third party financing, primarily bank
borrowings and the issuance of debt securities to the public, and anticipates
that its cable television operations will continue to meet the debt service
obligations under debt instruments applicable to the cable television
operations. Principal payments are due under the Company's cable operations and
Centennial's debt instruments beginning in the fiscal year ended May 31, 2001.
The Company will need to refinance certain such obligations on or before such
time and believes, based on current market conditions, that it will be able to
do so. However, there can be
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<PAGE>
no assurance that the Company will be successful in any such refinancing or that
the terms of any such financing will be favorable to the Company. The Indentures
for the Company's outstanding issues of publicly-held debt (the "Indentures")
impose certain restrictions on the incurrence of additional indebtedness. See "
- --Restrictive Covenants; Consequences of Default."
For the year ended May 31, 1997, earnings were less than fixed charges
by $188,004. Such amount reflects non-cash charges totaling $266,628, consisting
of depreciation and amortization and subsidiary preferred stock dividends.
HIGHLY COMPETITIVE INDUSTRY
The Company's ability to maintain or increase its offering of cable
television services and wireless telephone and other communications services can
be subject to the changes in consumer demand, price competition, and the cost
and supply of hardware, software and other technology required to provide such
services. Future profitability also may be affected by the Company's ability to
compete with other cable television services and communications service
enterprises which may be larger, offer more services, and possess greater
resources.
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. The extent to which a cable communications system is competitive
demands, in part, upon the cable system's ability to provide, at a reasonable
price to consumers, a greater variety of programming and other communications
services than are available off-air or through other alternative delivery
sources (see Item 1. "Business - Regulation and Legislation") and upon superior
technical performance and customer service. Additionally, because the Company's
systems are operated under non-exclusive franchises, other applicants may obtain
franchises in areas where the Company currently has franchises.
HIGHLY REGULATED INDUSTRY
The 1996 Act alters federal, state and local laws and regulations
regarding telecommunications providers and services, including the cable
television industry. The 1996 Act deregulates (except for basic service) cable
service rates over a three year period. Implementing regulations of the 1996 Act
are currently being written. The effect that the 1996 Act will have on the
Company's cable television business cannot be determined at this time. See Item
1. "Business - Regulation and Legislation - Cable Television."
Additionally, the licensing, ownership, construction, operation and sale
of controlling interests in wireless telephone systems are regulated by the FCC.
Certain aspects of wireless telephone system ownership, construction, operation
(including, but not limited to, rates and the resale of wireless service) and
sale may be subject to public utility or other state and municipal regulation in
the states in
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which service is provided. Changes in the regulation of wireless telephone
system operators or their activities (such as increased price regulation by
state authorities or a decision by the FCC to permit more than two licensees in
each service area) could have a material adverse effect on Centennial's
operations.
RESTRICTIVE COVENANTS; CONSEQUENCES OF DEFAULT
The Credit Agreements limit the ability of certain subsidiaries of the
Company to incur additional indebtedness, including intercompany indebtedness,
or liens, to pay dividends to the Company and require that certain operating and
financial tests be met, including the maintenance of the ratio of earnings
before interest, depreciation and taxes (as defined in the Credit Agreements,
"EBIDT") to debt service for the Total Debt (as defined therein) of such
subsidiaries, the ratio of Total Debt to EBIDT and the ratio of EBIDT to
interest expense for the Total Debt of such subsidiaries at certain prescribed
levels. The Note Agreements impose similar restrictions and requirements. The
Indentures also contain various covenants including, but not limited to, the
following: (i) restrictions on mergers, sales and consolidations, (ii)
restrictions on dividends, redemptions or repurchase of the Company's capital
stock or the capital stock of any of its affiliates, (iii) limitations on
transactions with, or investments in, affiliates, (iv) restrictions on the
ability to make loans to, or act as guarantor for, certain of its subsidiaries
and affiliates, which presently consist of those subsidiaries and affiliates
engaged in the wireless telephone and related businesses, and (v) the
maintenance of various financial ratios. There can be no assurance that the
assets of the Company would be sufficient to repay all such senior debt and any
Senior Subordinated Debt Securities and Subordinated Debt Securities then
outstanding.
Management believes that the Company is not presently at risk of
noncompliance with any of the covenants described above. However, there can be
no assurance that this will continue to be the case.
CONTROL BY CERTAIN STOCKHOLDERS
The ownership interest in the Company of Leonard Tow and certain trusts
for the benefit of members of his family (the "Tow Trusts"), constituting
approximately 93% of the combined voting power of both the Class A Common Stock
and the Class B Common Stock of the Company as of August 13, 1997, presently
gives them the power to elect all but one member of the Board of Directors of
the Company and to control the vote on all other matters submitted to a vote of
the Company's stockholders.
Under certain of the Credit Agreements, an event of default occurs if
Leonard Tow and/or members of his immediate family or the Tow Trusts cease to
own, in the aggregate, stock of the Company having at least a majority of the
combined voting power of both classes of Common Stock of the Company.
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RECOVERY OF AUSTRALIAN INVESTMENT
At May 31, 1997, the remaining net book value of the Company's
Australian investments was approximately $24 million. With respect to such net
book value on its books, the Company is currently evaluating the current and
potential future operating cash flows of ECT and its equity interest in an
Australian programming venture. Further, the Company is in discussion with its
investment advisors with respect to a strategy to sell its investments in its
Australian operations. The Company currently believes that the remaining net
book value of its Australian investments is realizable, but there can be no
assurance as to the timing or amount of any receipts. See Item 1. "Business --
Australian Pay Television."
OPERATING HAZARDS AND UNINSURED RISKS
While the Company maintains insurance against certain of the risks
associated with its cable television and wireless communications businesses, the
occurrence of a significant event that is not fully insured against could have a
material adverse affect on the Company.
REFINANCING AND INTEREST RATE EXPOSURE RISKS
The business and operating results of the Company can be adversely
affected by factors such as the availability or cost of capital, changes in
interest rates, changes in tax rates due to new tax laws, market perceptions of
the cable television or wireless communications businesses of the Company, or
security ratings.
POTENTIAL FOR CHANGES IN ACCOUNTING STANDARDS
Authoritative generally accepted accounting principle or policy changes
from such standard setting bodies as the Financial Accounting Standards Board,
and the SEC may affect the Company's results of operations or financial
position.
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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 fiscal year ended May 31, 1997, 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 1997
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.
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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-1
Consolidated Balance Sheets..................... F-2
Consolidated Statements of Operations........... F-4
Consolidated Statements of Cash Flows........... F-5
Notes to Consolidated Financial Statements...... F-7
2. FINANCIAL STATEMENT SCHEDULE
None.
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3. REPORTS ON FORM 8-K
None.
4. EXHIBITS
The following documents are filed as part of this Annual Report on
Form 10-K:
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<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------ -------
<S> <C>
3.1 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 fiscal quarter
ended November 30, 1990 and incorporated herein by reference).
3.2 By-laws of the Company, as amended (filed as Exhibit 3(b) to the
Company's Annual Report on Form 10-K for the fiscal year ended
May 31, 1995, and incorporated herein by reference).
4.1 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 fiscal year ended May 31, 1992 and
incorporated herein by reference).
4.2 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).
4.3 Indenture, dated as of October 15, 1991, by 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).
4.4 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).
4.5 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
</TABLE>
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<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------ -------
<S> <C>
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).
4.6 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 fiscal year
ended May 31, 1992 and incorporated herein by reference).
4.7 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 fiscal year ended
May 31, 1992 and incorporated herein by reference).
4.8 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 fiscal year ended
May 31, 1993 and incorporated herein by reference).
4.9 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 (filed as Exhibit 4(w) to the
Company's Annual Report on Form 10-K for the fiscal year ended
May 31, 1995, and incorporated herein by reference).
'D'4.10 Fifth Supplemental Indenture, dated as of January 23, 1997, by
and between the Company and First Trust of California, National
Association, successor trustee to Bank of America National Trust
and Savings Association, as Trustee.
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.
*10.1 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 fiscal year ended
May 31, 1992 and incorporated herein by reference).
*10.2 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
fiscal year ended May 31, 1992 and incorporated herein by
reference).
*10.3 Employment Agreement, dated as of January 1, 1995, between the
Company and
</TABLE>
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<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------ -------
<S> <C>
Daniel E. Gold (filed as Exhibit 10(a)(7) to the Company's
Annual Report on Form 10-K for the fiscal year ended May 31,
1996 and incorporated herein by reference).
'D'*10.4 Employment Agreement, dated as of January 1, 1997, between the
Company and Scott N. Schneider.
'D'*10.5 Employment Agreement, dated as of January 1, 1997, between the
Company and Michael G. Harris.
'D'*10.6 Employment Agreement, dated as of January 1, 1997, between the
Company and Frank Tow.
'D'*10.7 Employment Agreement, dated as of January 1, 1997, between the
Company and Clifford A. Bail.
10.8 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).
10.9 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).
10.10 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).
'D'10.11 Agreement for lease dated as of January 1, 1997 by and between
Locust Avenue Associates Limited Partnership and Century Texas.
10.12 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).
10.13 Colorado Springs Joint Sharing and Buy-Sell Agreement, dated
November 1, 1974,
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------ -------
<S> <C>
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).
*10.14 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).
*10.15 Incentive Award Plan of the Company (filed as Annex A to the
Company's Registration Statement on Form S-8 (File No 33-23718)
under the Securities Act of 1933, as amended, filed with the
Commission on August 11, 1988 and incorporated herein by
reference.
*10.16 1985 Employee Stock Purchase Plan of the Company, as amended
(filed as Exhibit 10(r) to the Company's Annual Report on Form
10-K for the year ended May 31, 1995, and incorporated herein by
reference).
*10.17 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).
*10.18 1985 Stock Equivalent Plan (filed as Exhibit 10(m) to the 1986
Form S-1 and incorporated herein by reference).
*10.19 Century Retirement Investment Plan (filed as Exhibit 10(x) to
the company's Annual Report on Form 10-K for year ended May 31,
1992 and incorporated herein by reference).
*10.20 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).
*10.21 1993 Non-Employee Directors' Stock Option Plan of the Company
(filed as Exhibit 10(v)(2) to the Company's Annual Report on
Form 10-K for the fiscal year ended May 31, 1995, and
incorporated herein by reference).
*10.22 1994 Stock Option Plan of the Company (filed as Exhibit 10(v)(3)
to the Company's Annual Report on Form 10-K for the fiscal year
ended May 31, 1995, and incorporated herein by reference).
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------ -------
<S> <C>
10.23 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).
10.24 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 fiscal year ended May 31,
1989 and incorporated herein by reference).
10.25 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 fiscal year ended May 31, 1989 and
incorporated herein by reference).
10.26 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 fiscal year ended May 31, 1991 and
incorporated herein by reference).
10.27 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
(filed as Exhibit 10(ff) to the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1996 and incorporated
herein by reference).
10.28 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. 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).
10.29 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).
</TABLE>
54
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------ -------
<S> <C>
10.30 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 fiscal quarter ended
November 30, 1991, and incorporated herein by reference).
10.31 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 fiscal quarter ended November 30,
1991, and incorporated herein by reference).
10.32 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 fiscal
year ended May 31, 1990 and incorporated herein by reference).
10.33 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 fiscal year ended
May 31, 1990 and incorporated herein by reference).
10.34 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 fiscal year ended
May 31, 1990 and incorporated herein by reference).
10.35 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 fiscal year ended
May 31, 1990 and incorporated herein by reference).
10.36 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
quarterly ended November 30, 1990 and incorporated herein by
reference).
</TABLE>
55
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------ -------
<S> <C>
10.37 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 quarterly period ended November 30,
1990 and incorporated herein by reference).
10.38 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 quarterly period ended
November 30, 1990 and incorporated herein by reference).
'D'10.39 Amendment No. 1 dated as of August 9, 1996 among CCC-I, Inc.,
Pullman TV Cable Co., Inc. and Kootenai Cable, Inc., Citibank,
N.A., as agent, and each of the bank parties thereto.
'D'10.40 Amendment No. 1 dated as of August 9, 1996 among CCC-II, Inc.,
Citibank, N.A., as managing agent, and each of the bank
parties thereto.
'D'10.41 Credit Agreement dated as of April 15, 1997 among Citizens
Century Cable Television Venture, Bank of America, National
Trust and Savings Association, as Syndication Agent, and
Societe General, as Agent, Corestates Bank, N.A., The First
National Bank of Boston, LTCB Trust Company, and PNC Bank,
National Association, as Co-Agents, and each of the
bank parties thereto.
</TABLE>
'D'11 Computation of loss per common share.
'D'12 Computation of ratios.
'D'21 List of subsidiaries of the Company.
'D'23.1 Consent of Deloitte & Touche LLP.
'D'27 Financial Data Schedule.
- --------------------------
* Constitutes a management contract or compensatory plan or arrangement.
'D' Filed herewith.
56
<PAGE>
<PAGE>
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, 1997 and 1996, and the
related consolidated statements of operations and cash flows for each of the
three years in the period ended May 31, 1997. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conductd 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 disclosure in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
managment, as well as evaluting 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, 1997 and 1996, and the results of their
operations and their cash flows for each of the three years in the period ended
May 31, 1997 in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Stamford, Connecticut
August 4, 1997
F-1
<PAGE>
<PAGE>
CENTURY COMMUNICATIONS CORP.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Amounts in Thousands
<TABLE>
<CAPTION>
May 31,
--------------------------------
1997 1996
----------- --------------
<S> <C> <C>
ASSETS
Current assets:
Cash and short-term investments $ 151,947 $ 164,592
Accounts receivable less allowance for doubtful
accounts of $3,592 and $3,008 respectively 48,958 41,002
Prepaid expenses and other current assets 14,649 6,632
---------- ----------
Total current assets 215,554 212,226
Property, plant and equipment - net 715,418 651,607
Investment in marketable equity securities 45,118 53,069
Equity investments in cable television and wireless telephone
systems - net 102,097 108,256
Debt issuance costs, less accumulated amortization of
$13,270 and $11,652, respectively 31,735 28,352
Cable television franchises, less accumulated amortization of
$322,309 and $285,991, respectively 401,775 525,194
Wireless telephone licenses, less accumulated amortization of
$214,494 and $164,786, respectively 347,206 360,213
Excess of purchase price over value of net assets acquired, less
accumulated amortization of $58,920 and $51,529, respectively 280,643 279,202
Other assets 14,685 16,790
---------- ----------
$2,154,231 $2,234,909
========== ==========
</TABLE>
See notes to consolidated financial statements
F-2
<PAGE>
<PAGE>
CENTURY COMMUNICATIONS CORP.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(continued)
Amounts in Thousands (Except Share Data)
<TABLE>
<CAPTION>
May 31,
-----------------------------
1997 1996
---------- -----------
<S> <C> <C>
LIABILITIES AND COMMON STOCKHOLDERS'
DEFICIENCY
Current liabilities:
Current maturities of long-term debt $ 15,011 $ 15,084
Accounts payable 26,711 26,102
Accrued expenses and other current liabilities 150,407 115,048
---------- ----------
Total current liabilities 192,129 156,234
Long-term debt 2,186,981 2,081,611
Deferred income taxes 53,959 99,474
Minority interest in subsidiaries 133,518 162,790
Commitments and contingencies (See Notes)
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) 186,287 182,813
Common stockholders' deficiency:
Common stock, par value $.01 per share:
Class A, authorized 400,000,000 shares,
issued, 62,695,127 and 59,946,280 shares, respectively,
and outstanding 30,968,289 and 28,591,658 shares, respectively 627 599
Class B, authorized 300,000,000 shares, issued and outstanding 45,126,115 and
45,406,115 shares, respectively 451 454
Additional paid-in capital 176,871 175,804
Other, including 31,726,838 and 31,354,622 treasury shares, respectively (127,549) (117,702)
Accumulated deficit (649,043) (507,168)
---------- ----------
Total common stockholders' deficiency (598,643) (448,013)
---------- ----------
$2,154,231 $2,234,909
========== ==========
</TABLE>
See notes to consolidated financial statements
F-3
<PAGE>
<PAGE>
CENTURY COMMUNICATIONS CORP.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Amounts in Thousands (Except Share Data)
<TABLE>
<CAPTION>
Year ended May 31,
--------------------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Revenues:
Cable service income $ 459,219 $ 368,506 $ 331,268
Wireless telephone service income 151,023 112,197 85,419
Australian operations 33,248 14,571 -
----------- ----------- -----------
643,490 495,274 416,687
----------- ----------- -----------
Costs and expenses:
Cost of services - Cable 100,789 82,274 81,521
Cost of services -Wireless telephone 38,228 26,129 22,152
Selling, general and administrative 166,362 119,779 110,381
Regulatory restructuring charge - - 4,000
Depreciation and amortization - domestic 243,267 195,425 171,931
Depreciation and amortization - Australia 18,511 21,352 -
Write-down of Australian assets 40,000 10,000 -
Australian expenses 30,562 24,067 -
----------- ----------- -----------
637,719 479,026 389,985
----------- ----------- -----------
Operating income 5,771 16,248 26,702
Interest expense 200,743 172,215 139,001
Other income (Notes 1 and 3) 14,570 11,107 2,270
----------- ----------- -----------
Loss before income tax (benefit),
minority interest and extraordinary item (180,402) (144,860) (110,029)
Income tax (benefit) (30,658) (34,326) (8,061)
----------- ----------- -----------
Loss before minority interest and extraordinary item (149,744) (110,534) (101,968)
Minority interest in loss of subsidiaries 15,451 8,417 19,343
----------- ----------- -----------
Loss before extraordinary item (134,293) (102,117) (82,625)
Extraordinary item - loss on early retirement of debt,
net of income tax benefit of $5,379. (7,582) - -
----------- ----------- -----------
Net loss $ (141,875) $ (102,117) $ (82,625)
=========== =========== ===========
Dividend on subsidiary convertible
redeemable preferred stock $ 4,850 $ 4,256 $ 4,419
=========== =========== ===========
Loss applicable to common shares $ (146,725) $ (106,373) $ (87,044)
=========== =========== ===========
Loss per common share:
Loss before extraordinary item $ (1.86) $ (1.44) $ (1.01)
Extraordinary item (0.10) - -
----------- ----------- -----------
Loss $ (1.96) $ (1.44) $ (1.01)
=========== =========== ===========
Weighted average number of common shares
outstanding during the period 74,675,000 73,748,000 86,277,000
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements
F-4
<PAGE>
<PAGE>
CENTURY COMMUNICATIONS CORP.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Amounts in Thousands
<TABLE>
<CAPTION>
Year ended May 31,
------------------------------------------
1997 1996 1995
------------ ---------- ----------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Cash received from subscribers and others $ 774,680 $ 590,137 $ 494,671
Cash paid to suppliers, employees and
governmental agencies (482,936) (333,930) (289,606)
Australian operations - (1,213) -
Interest paid (162,409) (154,219) (108,933)
----------- --------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 129,335 100,775 96,132
----------- --------- ---------
INVESTING ACTIVITIES:
Capital expenditures (170,767) (100,287) (109,737)
Cable television and wireless telephone
franchise expenditures (2,916) (2,723) (1,012)
(Acquisition) disposition of other assets (648) 1,969 (7,116)
Acquisition and exchanges of cable television and
wireless telephone systems (35,446) (355,215) (219,315)
Australian activities - (24,434) -
Purchase of marketable securities - - (5,350)
Distributions received from equity investments 6,863 6,870 2,896
Capital contributed to equity investments (2,878) (1,463) (3,783)
----------- --------- ---------
NET CASH USED IN INVESTING ACTIVITIES (205,792) (475,283) (343,417)
----------- --------- ---------
FINANCING ACTIVITIES:
Proceeds from long-term borrowings 1,162,000 728,500 761,984
Principal payments on long-term debt (1,079,200) (415,956) (306,038)
Debt issuance costs (12,666) (5,025) (14,072)
Purchase of treasury stock (2,359) (158) (110,092)
Cash contributed by joint venture partners - - 25,871
Payment of subsidiary preferred stock dividends (7,918) - -
Issuance of common stock 3,955 2,975 1,191
Issuance of subsidiary preferred and common
stock, net of related costs - - 49,426
----------- --------- ---------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 63,812 310,336 408,270
----------- --------- ---------
NET (DECREASE) INCREASE IN CASH AND SHORT-TERM
INVESTMENTS (12,645) (64,172) 160,985
CASH AND SHORT-TERM INVESTMENTS - BEGINNING
OF YEAR 164,592 228,764 67,779
----------- --------- ---------
CASH AND SHORT-TERM INVESTMENTS - END OF YEAR $ 151,947 $ 164,592 $ 228,764
=========== ========= =========
</TABLE>
See notes to consolidated financial statements
F-5
<PAGE>
<PAGE>
CENTURY COMMUNICATIONS CORP.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(continued)
Amounts in Thousands
<TABLE>
<CAPTION>
Year ended May 31,
---------------------------------------
1997 1996 1995
---------- ----------- ----------
<S> <C> <C> <C>
RECONCILIATION OF NET LOSS TO NET CASH PROVIDED
BY OPERATING ACTIVITIES
NET LOSS $(141,875) $(102,117) $(82,625)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation and amortization 261,778 216,777 171,931
Gain on sale of assets - (4,176) -
Minority interest in loss of subsidiaries (15,451) (8,417) (19,343)
Deferred income taxes (38,145) (37,170) (11,518)
Non cash interest charges 28,769 28,044 18,792
Write-down of Australian assets 40,000 10,000 -
Non cash Australian operations - 8,554 -
Other (14,558) (16,016) (2,897)
Change in assets and liabilities net of effects of acquired
cable television and wireless telephone systems:
Accounts receivable - (increase) (1,336) (4,014) (3,738)
Prepaid expenses and other current assets
(increase) (2,279) (249) (179)
Accounts payable and accrued expenses - increase/(decrease) 10,632 (5,179) 23,335
Customers' deposits and prepayments - increase 1,800 6,584 2,374
Net working capital change - Australian operations - 8,154 -
--------- --------- --------
Total adjustments 271,210 202,892 178,757
--------- --------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 129,335 $ 100,775 $ 96,132
========= ========= ========
</TABLE>
See notes to consolidated financial statements
F-6
<PAGE>
<PAGE>
CENTURY COMMUNICATIONS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MAY 31, 1997, 1996 AND 1995
(AMOUNTS IN THOUSANDS EXCEPT SUBSCRIBER, POP AND SHARE DATA)
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"), an
approximately 32% owned company (at May 31, 1997) in which the Company controls
approximately 74% of the voting power of the common shares. During the fiscal
year ended May 31, 1996, the Company, for accounting and reporting purposes,
consolidated the operations of East Coast Pay Television Pty. Limited, ("ECT")
an Australian Company. ECT was previously accounted for by the equity method of
accounting. There was no significant impact on the consolidated statement of
operations as a result of this change. The Company has determined to pursue a
strategy to sell its investments in its Australian operations, including ECT
(see Note 3 - Australian Pay Television). All material intercompany transactions
and balances have been eliminated.
REVENUE RECOGNITION
Cable service income includes earned subscriber service revenues and charges for
installation and connections, net of programmers' share of pay television
revenues. Such programmers' share netted against service income amounted to
$114,591, $92,014, and $69,572 in 1997, 1996 and 1995, respectively.
Wireless telephone service income includes service revenues and charges for
installation and connections, net of land line charges of $28,049, $20,000, and
$15,030 in 1997, 1996 and 1995, respectively.
Charges for installations and connections for both cable television and wireless
telephone operations are recognized into revenue upon completion of the
installation or reconnection. Subscriber services paid in advance are recognized
as income when earned.
INVESTMENT IN MARKETABLE EQUITY SECURITIES
The Company classifies its investments in debt and equity securities as
available for sale in accordance with SFAS No. 115 "Accounting for Certain
Investments in Debt and Equity Securities".
Unrealized holding gains and losses, net of the related income tax effect on
these securities are excluded from earnings and are reported as a separate
component of stockholders' deficiency until realized.
F-7
<PAGE>
<PAGE>
Equity securities at May 31, 1997 and 1996 are stated at their fair market
values. The adjusted cost basis of these equity securities at May 31, 1997 and
1996 was $32,255. The Company recorded a decrease in the unrealized gain of
$7,950 during the year ended May 31, 1997 and an increase in the unrealized gain
of $6,397 and $14,416 during the years ended May 31, 1996 and 1995,
respectively. As of August 13, 1997, the market value of these securities had
declined approximately $4,500 from May 31, 1997.
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 WIRELESS 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, 1997, the Company's equity investments principally
consist of a $94,153 investment in wireless minority interests (see Note 12).
The difference of $123,024 between the cost of the Company's equity investments
in wireless systems and the underlying book value is amortized over ten years.
Accumulated amortization at May 31, 1997, 1996 and 1995 was $69,878, $57,588 and
$45,341, 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 - 15 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 (generally ranging from 10
to 15 years).
F-8
<PAGE>
<PAGE>
WIRELESS TELEPHONE LICENSES
Wireless telephone licenses consist of amounts allocated under purchase
accounting (see Note 3). Such amounts are amortized, commencing with the date of
operations, using the straight-line method over a period of 10 and 40 years for
cellular and personal communications services ("PCS") licenses, respectively.
Centennial, during the fiscal years ended May 31, 1997 and 1996, capitalized
interest costs of $2,752 and $5,200, respectively, related to the acquisition of
the PCS license.
EXCESS OF PURCHASE PRICE OVER VALUE OF NET ASSETS ACQUIRED
The excess of purchase price over value of net assets acquired ("goodwill") is
being amortized using the straight-line method over a period of 40 years.
INCOME TAXES
The Company accounts for income taxes in accordance with Financial Accounting
Standards No. 109, "Accounting for Income Taxes" which provides that the
deferred tax provision is determined by the liability method. Deferred tax
assets and liabilities are recognized based on the differences between the book
and tax basis of assets and liabilities using presently enacted tax rates.
LOSS PER COMMON SHARE
Loss per common share is calculated using the weighted average number of common
shares outstanding during each period. 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 on subsidiary convertible redeemable preferred stock of $4,850, $4,256
and $4,419 for the years ended May 31, 1997, 1996 and 1995, respectively.
STATEMENT OF CASH FLOWS
Short-term investments classified as cash equivalents in the consolidated
financial statements consist principally of overnight deposits, government
securities and commercial paper with acquired maturities of three months or
less.
FOREIGN CURRENCY TRANSLATION
The functional currency for the Company's foreign operations is the applicable
local currency. The translation of the applicable foreign currency into U.S.
dollars is performed for the balance sheet accounts using current exchange rates
in effect at the balance sheet date and for revenue and expense accounts using a
weighted average exchange rate during the period. The gains and losses, net of
applicable deferred income taxes if any, resulting from such translation are
included in stockholders' equity.
MANAGEMENT ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and
F-9
<PAGE>
<PAGE>
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting periods. Actual results could differ from those estimates.
VALUATION OF LONG LIVED 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
long lived 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 long
lived assets based on a comparison of estimated undiscounted operating cash
flows for the systems which generated long lived assets with the carrying value
of the long lived assets. The Company's long lived assets are stated at the
lower of cost or market and are amortized over their respective expected lives.
DISCLOSURE OF FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount reported in the balance sheets for cash and cash
equivalents, accounts receivable, accounts payable and accrued expenses
approximates fair value because of the immediate short-term maturity of these
financial instruments.
RECLASSIFICATIONS
Certain prior year balances have been reclassified to conform with the current
year presentation.
NEW ACCOUNTING PRONOUNCEMENTS
In 1997, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 128, "Earnings Per Share", which is effective for
financial statements ending after December 15, 1997. This statement supercedes
Accounting Principles Board Opinion No. 15 and replaces the presentation of
primary Earnings Per Share ("EPS") on the face of the statement of operations.
Adoption of SFAS 128 would not result in a change of EPS previously reported by
the Company using APB 15. Disclosure of Diluted EPS is not required due to the
anti-dilutive effect of the Company's equity instruments.
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 129 "Disclosure of Information about Capital
Structure", Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income," and Statement of Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related Information" in 1997.
The Company believes these Statements will not have a material impact on the
Consolidated Financial Statements of the Company when adopted in Fiscal 1998.
F-10
<PAGE>
<PAGE>
NOTE 2. SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
The table below summarizes non-cash reclassifications that occurred during the
years ended May 31, 1997, 1996 and 1995. The reclassifications result primarily
from the Company's acquisitions (including deferred taxes) and exchanges and
consolidation of entities previously accounted for by the equity method of
accounting:
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- ---------
<S> <C> <C>
Current assets $ $ 3,835 $
Property, plant and equipment 3,026
Marketable securities 6,398 14,416
Equity investments (86,941)
Cable television franchises (14,828) 111,067
Wireless telephone licenses 2,635
Goodwill 14,828 10,659 72,343
Other assets (1,338)
-------- -------- -------
$ -- $ 49,341 $86,759
======== ======== =======
Current liabilities $ (462) $ 27,225 $
Deferred taxes 13,529 72,343
Minority interest 650
Additional paid in capital 1,539
Other stockholders' deficiency 462 6,398 14,416
-------- -------- -------
$ -- $ 49,341 $86,759
======== ======== =======
</TABLE>
F-11
<PAGE>
<PAGE>
NOTE 3. ACQUISITIONS
During the three year period ended May 31, 1997, the Company acquired the net
assets of cable television and wireless telephone systems as follows:
<TABLE>
<CAPTION>
AMOUNTS ALLOCATED TO
-----------------------------------------
NUMBER OF TOTAL CABLE WIRELESS PROPERTY
SYSTEMS PURCHASE TELEVISION TELEPHONE PLANT AND
ACQUIRED PRICE FRANCHISES LICENSES EQUIPMENT
-------- -------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
EQUIPMENT
Year ended May 31, 1997 1 $ 35,316 $ -- $ 33,429 $ 1,234
Year ended May 31, 1996 5 $329,868 $212,693 $ 9,623 $111,565
Year ended May 31, 1995 20 $381,661 $109,359 $214,088 $ 52,265
</TABLE>
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
wireless telephone licenses.
CABLE TELEVISION DIVISION ACQUISITIONS
On May 31, 1996, the Company acquired the cable television systems serving
Anaheim, Hermosa Beach/Manhattan Beach, Fairfield and Rohnert Park/Yountville,
California for an aggregate purchase price of approximately $287,600, subject to
adjustment. Funds for this acquisition were provided by an existing bank credit
facility. At May 31, 1996, such cable television systems served an aggregate of
approximately 135,000 primary basic subscribers.
On May 8, 1996, the Company acquired the Orange County News Channel ("OCN") for
approximately $2,500.
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 $92,900 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. 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.
On December 1, 1995, the second acquisition serving approximately 21,000 primary
basic subscribers was completed. The purchase price of approximately $51,900 at
September 30, 1994 and $41,000 at December 1, 1995 was funded by the Company and
Citizens equally.
During the year ended May 31, 1995, the Company acquired ten cable television
systems for a total purchase price of $153,129 consisting of $109,254 in cash
(including the assumption of acquired current liabilities) and 3,581,632 shares
of the Company's Class A Common Stock valued at $43,875, and issued an
additional 1,732,357 shares in fiscal 1997 in relation to the acquisition.
F-12
<PAGE>
<PAGE>
WIRELESS TELEPHONE DIVISION ACQUISITIONS, EXCHANGES AND DISPOSITIONS
On September 12, 1996, Centennial acquired, for approximately $35,000 in cash,
100% of the ownership interests in the partnership owning the wireless telephone
system serving the Benton Harbor, Michigan MSA. The Benton Harbor market
represents approximately 161,400 Net Pops. Approximately $33,429 of the purchase
price was allocated to cellular telephone license.
On October 31, 1995, Centennial acquired (i) a 94.3% interest in the wireless
telephone system serving the Lafayette, Louisiana MSA, representing
approximately 205,700 Net Pops, in exchange for Centennial's wireless telephone
system serving the Jonesboro, Arkansas RSA (comprising approximately 205,000 Net
Pops), the license rights and assets located in and covering Desoto and Red
River Parishes of Louisiana 3 RSA (comprising approximately 34,700 Net Pops),
the license rights and assets located in and covering a section of Morehouse
Parish of Louisiana 2 RSA (comprising approximately 24,100 Net Pops) and a cash
payment by Centennial of approximately $5,580 subject to adjustment, and (ii) an
additional 14.3% minority interest in the Elkhart, Indiana RSA and additional
12.7% minority interest in the Lake Charles, Louisiana MSA for a cash payment of
approximately $2,951.
On June 30, 1995, Centennial acquired the wireless 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
wireless 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 wireless
telephone system serving the Charlottesville, Virginia MSA, representing an
aggregate of approximately 94,700 Net Pops, for a cash purchase price of
approximately $9,914 subject to adjustment. The Company recognized a gain of
approximately $4,176 as a result of the sale.
During 1995, Centennial was the successful bidder 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.
The licensed area represents approximately 3,623,000 Net Pops. The amount of the
final bid submitted and paid by Centennial was $54,672.
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 the Company in December, 1994 by the Public Service
Commission of the Commonwealth of Puerto Rico for intrastate service.
During the year ended May 31, 1995, Centennial completed ten wireless market
acquisitions for a total purchase price of $173,860 consisting of $51,761 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. An additional
226,665 shares of Centennial's Class A Common Stock were issued during fiscal
1996 to satisfy a post closing adjustment to the purchase price of one of the
acquisitions completed during the year ended May 31, 1995.
F-13
<PAGE>
<PAGE>
AUSTRALIAN PAY TELEVISION
Since fiscal 1994, the Company has invested, through a wholly-owned subsidiary,
approximately $148,000 in the Australian Pay TV industry, including
approximately $126,000 in ECT. The Company's investment in ECT was effected
through the acquisition by the Company of convertible debentures and ordinary
shares of ECT representing a 76.2% economic interest in ECT. 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 long-term management
agreements with ECT.
The Company also holds a 25% interest in a joint venture which provides
programming to ECT and other pay television services in Australia. 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.
Since the fourth fiscal quarter of fiscal 1996, the Company has written down
$50,000 of its Australian investment. The Company has determined to pursue a
strategy to sell its investments in its Australian operations and has retained
an investment banker to assist in the separate sale of ECT and XYZ. It has also
determined to make no further investments in ECT. Once the Company has developed
its formal plan for disposition, including the means to complete that plan and
the period expected to be required for completion of the disposition, the
Company anticipates accounting for its Australian operations as discontinued
operations.
The Company is currently unable to predict the ultimate resolution of these
matters. At May 31, 1997, the remaining net book value of its investments in the
various aspects of the Australian pay television industry, after giving effect
to the aforementioned write-down of Australian assets and the Company's
percentage of cumulative losses of ECT and XYZ, aggregated approximately
$24,000. The Company currently believes that the remaining net book value is
realizable.
The following summarizes the assets, stockholders' deficiency and results of
operations of XYZ which was accounted for by the equity method during the years
ended May 31, 1997, 1996 and 1995. All amounts have been derived from XYZ'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 rates for the applicable periods
(amounts in thousands and unaudited).
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Assets $ 11,786 $ 14,400 $ 9,388
Stockholders' deficiency (48,180) (31,128) (2,220)
Net loss (17,052) (28,908) (2,220)
</TABLE>
The Company's equity share of XYZ's net loss amounted to $4,263, $7,126 and $800
and is recorded in other income on the Company's consolidated statement of
operations for the years ended May 31, 1997, 1996 and 1995, respectively.
F-14
<PAGE>
<PAGE>
The components of costs and expenses included in Australian operations in the
Company's financial statements at May 31, 1997 and 1996 were as follows:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Cost of services $16,054 $10,546
Selling, general and administrative 14,508 13,521
------- -------
$30,562 $24,067
======= =======
</TABLE>
PRO FORMA INFORMATION
The summary pro forma information includes the results of the Company and all
acquisitions and pending acquisitions, in each case as if such acquisitions had
been consummated as of June 1, 1994 (unaudited).
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
--------------------------------------------
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Revenues $ 660,763 $ 574,586 $ 514,898
Net loss $(145,451) $(125,368) $(109,707)
Loss per common share $ (2.01) $ (1.72) $ (1.25)
</TABLE>
Pro forma loss per common share for the years ended May 31, 1997, 1996 and 1995
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 purchased workers compensation and general insurance from Sentry
Insurance (holder of 6.3% of Class B Common stock at May 31, 1997) and its
affiliated companies. In fiscal 1996 and 1995 the Company also purchased group
health, life and casualty insurance coverage. The Company paid a total of
$7,810, $10,155 and $8,462 for such insurance for the fiscal years ended May 31,
1997, 1996 and 1995, respectively.
Leavy, Rosensweig & Hyman of which David Z. Rosensweig is a member, serves as
General Counsel to the Company. Mr. Rosensweig is also a director and secretary
of the Company. The Company paid approximately $2,008, $1,772 and $1,960 to
Leavy, Rosensweig & Hyman for the fiscal years ended May 31, 1997, 1996 and
1995, respectively.
The Company believes that all 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.
F-15
<PAGE>
<PAGE>
NOTE 5. ACCOUNT ANALYSIS
Property, plant and equipment consists of the following:
<TABLE>
<CAPTION>
MAY 31,
------------------------------
1997 1996
----------- -------
<S> <C> <C>
Land $ 8,651 $ 8,344
Buildings 35,674 35,873
Cable television and wireless telephone
transmission and distribution systems
and related equipment 1,021,686 969,031
Miscellaneous equipment and furniture
and fixtures 57,226 51,289
Australian plant and equipment 21,524 20,979
---------- ----------
1,144,761 1,085,516
Less accumulated depreciation (429,343) (433,909)
---------- ----------
$ 715,418 $ 651,607
========== ==========
</TABLE>
Depreciation expense was approximately $119,336, $89,299 and $73,571 for the
fiscal years ended May 31, 1997, 1996, and 1995, respectively. Approximately
$4,743 of accumulated depreciation was written off in relation to the sale of
wireless telephone equipment during the year ended May 31, 1997. During fiscal
1997 the Company wrote-off $119,000 of fully depreciated property, plant and
equipment.
Accrued expenses and other current liabilities consist of the following:
<TABLE>
<CAPTION>
MAY 31,
-------------------------
1997 1996
-------- --------
<S> <C> <C>
Accrued Interest $ 32,409 $ 22,921
Accrued capital purchases 11,317 --
Accrued unpaid invoices 9,620 --
Australian A/P & Accrued 17,070 20,874
Accrued Other 58,821 51,883
Customer Deposits & Prepaids 21,170 19,370
-------- --------
$150,407 $115,048
======== ========
</TABLE>
F-16
<PAGE>
<PAGE>
NOTE 6. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
MAY 31,
----------------------------
1997 1996
--------- ----------
<S> <C> <C>
Credit facility (a) $ 324,000 $ 305,000
Credit facility (b) 165,000 226,000
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
Zero Coupon Senior discount notes due 2003 (f) 265,381 242,962
9 1/2% Senior notes due 2005 (g) 250,000 250,000
8 7/8% Senior Notes due 2007 (h) 250,000 --
Subsidiary 8 7/8% Senior notes due 2001 (i) 250,000 250,000
Subsidiary 9.47% Senior secured notes due 2002 (j) 100,000 100,000
Subsidiary 10 1/8% Senior notes due 2005 (k) 100,000 100,000
Subsidiary revolving credit and term loan (l) 53,500 53,500
Subsidiary credit facility (m) 74,000 --
Subsidiary credit facility (n) 5,000 --
Subsidiary credit facility (o) -- --
Other, including Australian operations 15,111 15,233
---------- ----------
2,201,992 2,096,695
Current maturities 15,011 15,084
---------- ----------
$2,186,981 $2,081,611
========== ==========
</TABLE>
(a) On August 4, 1995, as amended August 12, 1996, CCC-I, Inc. ("CCC-I"), a
subsidiary of the Company, entered into a three year, $525,000 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
($148,000 at May 31, 1995) 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. During fiscal 1996, the Company
incurred a non cash charge of $2,647 reflecting the write off of debt issuance
costs associated with the replaced credit agreement. The interest rates payable
on borrowings under the amended 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
0.625% per annum based upon certain conditions, or (b) the London Interbank
Offering Rate plus 0.75% to 1.625% per annum based upon certain conditions. At
May 31, 1997, CCC-I's weighted average interest rate was 7.2%. This credit
facility restricts the incurrence of certain additional debt by CCC-I, limits
the ability of CCC-I 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.
F-17
<PAGE>
<PAGE>
The agreement expires on August 31, 2004 and provides for mandatory principal
repayments, among other possible reductions, in the following percentages:
<TABLE>
<CAPTION>
LAST DAY LAST DAY LAST DAY LAST DAY
YEAR OF FEBRUARY OF MAY OF AUGUST OF NOVEMBER
- ---- ----------- ------ --------- -----------
<S> <C> <C> <C> <C>
1999 -- -- -- 4.00%
2000 4.00% 4.00% 4.00% 4.50%
2001 4.50% 4.50% 4.50% 5.25%
2002 5.25% 5.25% 5.25% 5.75%
2003 5.75% 5.75% 5.75% 5.50%
2004 5.50% 5.50% 5.50% --
</TABLE>
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.
(b) On June 30, 1994, as amended August 12, 1996, CCC-II, Inc. ("CCC-II"), a
subsidiary of the Company 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 amended credit
facility are based on, at the election of CCC-II, (a) the base rate of interest
announced by Citibank, N.A. plus 0% to 0.5% per annum based upon certain
conditions, or (b) the London Interbank Offering Rate plus 0.75% to 1.375% per
annum based upon certain conditions. At May 31, 1997, CCC-II's weighted average
effective interest rate was 7.9%. 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 August 31, 2004 and provides for mandatory principal
repayments, among other possible reductions, in the following percentages:
<TABLE>
<CAPTION>
LAST DAY LAST DAY LAST DAY LAST DAY
YEAR OF FEBRUARY OF MAY OF AUGUST OF NOVEMBER
- ---- ----------- ------ --------- -----------
<S> <C> <C> <C> <C>
1999 -- -- -- 2.50%
2000 2.50% 2.50% 2.50% 5.00%
2001 5.00% 5.00% 5.00% 5.00%
2002 5.00% 5.00% 5.00% 6.25%
2003 6.25% 6.25% 6.25% 6.25%
2004 6.25% 6.25% 6.25% --
</TABLE>
During the year ended May 31, 1996, all of the Company's obligations with
respect to Hedge Agreements expired. Based upon current market conditions and
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.
(c) On August 21, 1992, the Company issued Senior Notes Due 2000 ("9 1/2%
Notes") in the principal amount of $150,000 which mature on August 15, 2000. The
9 1/2% Notes bear interest at 9 1/2%
F-18
<PAGE>
<PAGE>
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, 1997 and 1996, the 9 1/2% Notes were trading at 103.3% and
100.4% of par or $154,905 and $150,615, 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 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, 1997 and 1996, the 9 3/4% Notes were trading at 104.2% and
100.5% of par or $208,400 and $200,920, respectively.
(e) On October 17, 1991, the Company redeemed all of its $200,000 12 3/4% Senior
Subordinated Reset Debentures Due 2000 and concurrently sold $204,000 11 7/8%
Senior Subordinated Debentures Due 2003 (the "Debentures"). The Debentures were
called by the Company on April 15, 1997 at a redemption price of 105% of the
principal amount. Accordingly, the amount required to retire the 11 7/8%
Debentures at April 15, 1997 was $214,200 plus accrued interest of $12,113. As a
result of the early redemption, the Company recorded a $7,582 net loss on early
retirement of debt as an extraordinary item, net of income taxes of $5,379.
(f) On April 1, 1993, the Company issued Senior Discount Notes Due 2003 ("the
Discount Notes") in the discounted amount of $183,678 yielding 8.875% annually
to maturity. The Discount Notes mature on March 15, 2003 at $444,000. 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, 1997 and 1996,
approximately $22,419 and $20,526 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.
F-19
<PAGE>
<PAGE>
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 Discount
Notes. At May 31, 1997 and 1996, the Notes were trading at 58.1% and 50.0% of
par or $258,097 and $221,867, 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 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, 1997 and 1996, the Notes were trading at 102.8% and 98.9% of
par or $257,075 and $247,200, respectively.
(h) On January 17, 1997, the Company issued Senior Notes Due 2007 ("8 7/8%
Notes") in the principal amount of $250,000 which mature on January 15, 2007.
The 8 7/8% Notes were issued pursuant to a prior $500,000 shelf registration of
the Company's securities filed with the SEC on October 26, 1993. The 8 7/8%
Notes bear interest at 8 7/8% payable semiannually on January 15 and July 15 of
each year commencing July 15, 1997. The 8 7/8% Notes may not be redeemed prior
to maturity.
The 8 7/8% Notes will rank pari pasu with all existing and future Senior
Indebtedness (as that term is used in the Prospectus) of the company, including
the 9 3/4% Senior Notes Due 2002, the 9 1/2% Senior Notes Due 2000, the Senior
Discount Notes due 2003 and the 9 1/2% Senior Notes due 2005 and will be senior
in right of payment to all existing and future subordinated indebtedness of the
Company.
The 8 7/8% Notes provide that the holders will have the right to require the
Company to purchase the 8 7/8% 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 reduction in ratings of the 8 7/8%
Notes. At May 31, 1997 the Notes were trading at 97.11% of par or $242,775.
The net proceeds received by the Company from the sale of the 8 7/8% Notes, of
approximately $244,607, were used to temporarily repay a portion of the
long-term debt outstanding under two credit agreements executed by subsidiaries
of the Company. The net proceeds were used to retire $204,000 aggregate
principal amount of 11 7/8% Senior Subordinated Debentures due 2003 issued by
the Company in October 1991 (the "11 7/8% Debentures"). The 11 7/8% Debentures
were called by the Company on April 15, 1997 at a redemption price of 105% of
the principal amount thereof. Accordingly, the amount required to retire the 11
7/8% Debentures at such time was $214,200 plus accrued interest of $12,113. The
effect of the redemption resulted in an extraordinary loss of
F-20
<PAGE>
<PAGE>
approximately $7,582, net of income taxes, reflecting the call premium and
write-off of deferred financing costs. The balance of the net proceeds may be
used by the Company for general corporate purposes, including but not limited to
the financing of capital expenditures, investments, purchases of the Company's
securities and acquisitions. Pending any specific application, the net proceeds
will be added to working capital and invested in short-term interest bearing
obligations.
(i) On November 15, 1993, Centennial issued $250,000 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. 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, 1997 and 1996, the 8 7/8% Notes were
trading at 99.47% and 93.74% of par or $248,675 and $234,350, respectively.
(j) 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 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 $100,000 aggregate principal amount
of its 10-year 9.47% Senior Secured Notes Due 2002. Interest on the Notes is
payable semiannually and principal will be payable in installments of 20% of the
original principal amount beginning on September 30, 1998, with final maturity
at September 30, 2002. 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.
Proceeds from the issuance of the Notes were used to repay all principal and
interest outstanding on CML's credit facility. Concurrent with issuance of the
Notes, CML amended and restated its existing credit facility effective December
31, 1992 ("the Second Restated Credit Agreement"). The Second Restated Credit
Agreement provided for a committed credit line of $20,000 which reduced to
$12,650 on May 31, 1996. This facility was canceled on May 31, 1997. At May 31,
1996, no amounts were
F-21
<PAGE>
<PAGE>
outstanding on this facility.
(k) On May 11, 1995, Centennial issued $100,000 of ten year unsecured Senior
Notes ("the 10 1/8% Notes"). The interest 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, 1997 and 1996, the 10 1/8% Notes were trading
at 104.25% and 98.72% of par or $104,250 and $98,720, respectively.
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, 1997, Centennial was in compliance with all covenants of the Notes.
(l) On July 31, 1995, a subsidiary of the Company, Century Venture Corp. ("CVC")
entered into a three year, $80,000 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 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:
<TABLE>
<CAPTION>
LAST DAY LAST DAY LAST DAY LAST DAY
YEAR OF FEBRUARY OF MAY OF AUGUST OF NOVEMBER
- ---- ----------- -------- --------- -----------
<S> <C> <C> <C> <C>
1998 $ -- $ -- $1,875 $1,875
1999 1,875 1,875 2,500 2,500
2000 2,500 2,500 3,125 3,125
2001 3,125 3,125 3,750 3,750
2002 3,750 3,750 3,750 3,750
2003 3,750 3,750 6,667 6,667
2004 6,666
</TABLE>
The credit facility restricts the incurrence of certain additional debt of CVC,
limits the ability of CVC to pay dividends to the Company and requires that
certain operating tests be met.
(m) On April 25, 1997, Centennial Puerto Rico Wireless Corporation ("CPRW")
entered into a $130,000 revolving credit Facility with Citibank, N.A. which
converts to a four-year term loan on April 25, 2001 (the "Puerto Rico Credit
Facility"). The proceeds of the Puerto Rico Credit Facility will be used
primarily to finance the construction and operation of PCS, competitive access
and telecommunications networks in Puerto Rico and the United States Virgin
Islands. The proceeds will also be used for working capital and general
corporate purposes and were used to pay certain cash dividends to Centennial as
permitted by the Puerto Rico Credit Facility. The interest rate payable on
borrowings under the new credit facility are based on, at the election of CPRW,
(a) the "Base Rate", as
F-22
<PAGE>
<PAGE>
defined, plus a margin of 1.50% or (b) the "Eurodollar Rate", as defined, plus a
margin of 2.50%, adjusted for the maintenance of certain specified leverage
ratios, as applicable. The Puerto Rico Credit Facility is non-recourse to
Centennial and the Company. The Puerto Rico Credit Facility is secured by
substantially all of the assets of CPRW and its direct and indirect
subsidiaries. The Puerto Rico Credit Facility restricts the incurrence of
certain additional debt and requires that certain operating tests be met. At May
31, 1997, $74,000 was outstanding under the Puerto Rico Credit Facility.
(n) On September 12, 1996, Centennial entered into a $50,000 credit facility
with Citibank, N.A., which was amended April 22, 1997 (the "Amended Credit
Facility"). The commitment of the lenders under such Amended Credit Facility may
be increased to $90,000 at the election of the lenders. As of July 30, 1997, the
commitment was increased to $75,000. The Amended Credit Facility terminates on
January 31, 2001. Approximately $35,000 of the facility was used to fund the
Benton Harbor, Michigan wireless telephone system acquisition (see Acquisitions
- - Centennial), and has since been repaid. The remainder will be used for working
capital and general corporate purposes. The interest rate payable on borrowings
under the Amended Credit Facility is based at the election of Centennial, on (a)
the "Base Rate", as defined, plus a margin of 2% or (b) the "Eurodollar Rate",
as defined, plus a margin of 3%. The Amended Credit Facility is secured by the
pledge of stock of certain of Centennial's subsidiaries not otherwise subject to
restrictions under its Senior Note Indentures, including the subsidiary which
operates the Benton Harbor system. The Amended Credit Facility is further
guaranteed by certain of Centennial's subsidiaries holding Investment Interests.
The Amended Credit Facility restricts the incurrence of certain additional debt,
limits Centennial's ability to pay dividends and requires that certain operating
tests be met. At May 31, 1997, $5,000 was outstanding under the Amended Credit
Facility.
(o) On April 15, 1997, Citizens Century Cable Television Venture ("CCCTV")
entered into an agreement for the provision of a three-year revolving credit
facility in the principal amount of $200,000 with Bank of America and Societe
General, which converts into a five-year term loan. The facility is secured by
the assets of CCCTV. The loan is non-recourse to both Citizens and the Company.
Borrowings under the facility are to be repaid in semi-annual installments
commencing June 30, 2000 and expiring on March 31, 2005. The agreement provides
for mandatory principal repayments, among other possible reductions, in the
following percentages:
<TABLE>
<CAPTION>
Last Day of Last day of Last day of Last day of
Year March June September December
---- ----- ---- --------- --------
<S> <C> <C> <C> <C>
2000 - 2.33% 2.33% 2.33%
2001 4.00% 4.00% 4.00% 4.00%
2002 5.00% 5.00% 5.00% 5.00%
2003 5.25% 5.25% 5.25% 5.25%
2004 7.13% 7.13% 7.13% 7.13%
2005 7.50% -- -- --
</TABLE>
The facility requires mandatory prepayments of principal refinancing to the
extent that the loan balance exceeds the refinancing on the working capital
commitment (as defined in the facility). Borrowings under the facility bear
interest, at the option of CCCTV, at either the base rate, certificate of
deposit rate, or the Eurodollar rate, plus the applicable margin (as defined in
the facility). The principal use of proceeds will be to fund acquisitions as
well as general corporate purposes. No amounts were outstanding under the
facility at May 31, 1997.
F-23
<PAGE>
<PAGE>
The aggregate annual principal payments for the next five years and thereafter
are summarized as follows (amounts in thousands):
1998 $ 15,011
1999 27,550
2000 81,305
2001 275,295
2002 599,520
2003 and thereafter 1,203,311
----------
$2,201,992
==========
At May 31, 1997, the Company and its subsidiaries were in compliance with all
covenants of the above noted agreements.
NOTE 7. COMMITMENTS AND CONTINGENCIES
PENDING ACQUISITIONS
On August 16, 1996, the Company entered into agreements to acquire two cable
television systems which serve an aggregate of approximately 35,000 primary
basic subscribers, which agreements were subsequently assigned to a joint
venture in which each of the Company and Citizens Utilities Company ("Citizens
Utilities" or "Citizens") have a 50% interest (the "Century/Citizens Joint
Venture"). These systems are primarily located in Yorba Linda, Orange County and
Diamond Bar, California. Pursuant to the agreements, the aggregate purchase
price for these systems was approximately $69,500. The Company currently expects
to fund the acquisitions using available credit facilities. The purchase of
these systems by the Company is subject to regulatory approvals. There is no
assurance that the Company will obtain such approvals or that such acquisitions
will be consummated.
STOCK REPURCHASE
In October 1992, the Company's Board of Directors authorized the purchase of up
to 2,000,000 shares of its Class A Common Stock in the open market and in
privately negotiated transactions, depending on prevailing market conditions.
During August, 1997, the Company announced that its Board of Directors
authorized the repurchase in the open market and in privately negotiated
transactions, from time to time, of up to 5,000,000 additional shares of Class A
Common Stock, depending on prevailing market conditions. The Company purchased
171,500 shares of its own Class A Common Stock in the open market for a purchase
price of $660 during the fourth quarter of fiscal 1997. Subsequent to May 31,
1997, the Company purchased 736,000 of such shares in the open market for a
purchase price of $3,990. These shares purchased in fiscal 1997 and 1998 have
been accounted for as Treasury Shares during the respective fiscal years.
On December 21, 1994, Centennial announced that its Board of Directors
authorized the repurchase in the open market and in privately negotiated
transactions, from time to time, of up to 1,000,000, shares of Centennial's
Class A Common Stock, depending on prevailing market conditions. Subsequent to
May 31, 1997 Centennial purchased 244,000 shares of its own Class A Common Stock
in the open market for a purchase price of $3,902. Subsequent to May 31, 1997,
Centennial announced that its Board of Directors authorized the repurchase in
the open market and in privately negotiated transactions of up to an additional
3,000,000 shares of its Class A Common Stock, depending on prevailing market
F-24
<PAGE>
<PAGE>
conditions.
EQUITY INVESTMENTS IN WIRELESS TELEPHONE SYSTEMS
Centennial has determined to pursue a strategy to sell or otherwise dispose of
its minority equity investments in wireless telephone systems representing
approximately 1,100,000 net pops. Centennial has not yet made a final
determination as to the estimated sale proceeds or the timing of such
disposition and believes that the fair market value of its minority equity
investments exceeds the net book value of the recorded assets at May 31, 1997.
LEASES
At May 31, 1997, the Company's approximate annual lease obligations and expenses
(under operating leases) were as follows:
Pole rentals $ 3,676
Vehicles and equipment 428
Antenna site and property access 2,856
Warehouse, studio and office 5,342
-------
$12,302
=======
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 in the fourth quarter of fiscal
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
a write-off of the Company's assets.
LETTERS OF CREDIT
The Company is a party to several letters of credit totaling $7,803. 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 individually, or in the aggregate, in the opinion of
management, is expected to have a materially adverse effect on the Company's
consolidated financial position or results of operations.
F-25
<PAGE>
<PAGE>
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).
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 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.
During the fourth quarter of fiscal 1997 and the first quarter of fiscal 1998,
the Company purchased 171,500 and 736,000 shares of the Company's Class A Common
Stock in the open market. These shares were accounted for as treasury shares in
the respective fiscal years (See Note 7).
At May 31, 1997 and 1996, the Company held 31,726,838 and 31,354,622 Class A
Common Shares, respectively, in its treasury.
F-26
<PAGE>
<PAGE>
The following table presents changes in the Company's stockholders' equity for
the years ended May 31, 1997, 1996 and 1995.
<TABLE>
<CAPTION>
Common Stock
--------------------------------------------------
Class A Class B
--------------------- -------------------------
Shares Dollars Shares Dollars
------ ------- ------ -------
<S> <C> <C> <C> <C>
Balance at June 1, 1994 34,687,013 $347 66,177,130 $ 662
Shares issued in connection
with employee incentive plans 445,025 4
Class A shares purchased by the
Company
Unrealized appreciation of
marketable securities
Class A shares issued in conjunction
with acquisitions 3,581,632 36
Class B shares converted to
Class A shares 20,771,015 208 (20,771,015) (208)
Net paid in capital contributed by
minority interests
Accretion in liquidation value of
subsidiary preferred stock
Vesting of subsidiary stock options
Net loss
---------- ----- ---------- -----
Balance at May 31, 1995 59,484,685 $595 45,406,115 $ 454
Shares issued and acquired in connection
with employee incentive plans 461,595 4
Net paid in capital contributed by
minority interests
Accretion in liquidation value of
subsidiary preferred stock
Foreign currency translation adjustment
Unrealized appreciation of marketable
securities
Vesting of subsidiary stock options
Net loss
---------- ----- ---------- -----
Balance at May 31, 1996 59,946,280 $599 45,406,115 $ 454
Shares issued in connection
with employee incentive plans 711,490 7 25,000
Class A shares purchased by the
Company
Class B shares converted to Class A
shares 305,000 3 (305,000) (3)
Class A shares issued in connection
with acquisitions 1,732,357 18
Subsidiary preferred stock dividends
Foreign currency translation adjustment
Change in unrealized appreciation of
marketable securities
Income tax benefit-subsidiary
stock options exercised
Net loss
---------- ----- ---------- -----
Balance at May 31, 1997 62,695,127 $627 45,126,115 $ 451
---------- ----- ---------- -----
---------- ----- ---------- -----
<CAPTION>
Additional
Paid-in Accumulated
Capital Deficit Other Total
--------- ----------- ---------- --------
<S> <C> <C> <C> <C>
Balance at June 1, 1994 $105,301 $(322,426) $ (27,512) $(243,628)
Shares issued in connection
with employee incentive plans 1,219 1,223
Class A shares purchased by the
Company (110,092) (110,092)
Unrealized appreciation of
marketable securities 14,416 14,416
Class A shares issued in conjunction
with acquisitions 43,839 43,875
Class B shares converted to
Class A shares
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 subsidiary stock options 342 342
Net loss (82,625) (82,625)
---------- --------- ---------- ----------
Balance at May 31, 1995 $175,545 $(405,051) $(123,188) $(351,645)
Shares issued and acquired in connection
with employee incentive plans 2,971 (158) 2,817
Net paid in capital contributed by
minority interests 1,238 1,238
Accretion in liquidation value of
subsidiary preferred stock (4,256) (4,256)
Foreign currency translation adjustment (753) (753)
Unrealized appreciation of marketable
securities 6,397 6,397
Vesting of subsidiary stock options 306 306
Net loss (102,117) (102,117)
---------- --------- ---------- ----------
Balance at May 31, 1996 $175,804 $(507,168) $(117,702) $(448,013)
Shares issued in connection
with employee incentive plans 3,948 3,955
Class A shares purchased by the
Company (2,359) (2,359)
Class B shares converted to Class A
shares --
Class A shares issued in connection
with acquisitions (18) --
Subsidiary preferred stock dividends (4,850) (4,850)
Foreign currency translation adjustment 462 462
Change in unrealized appreciation of
marketable securities (7,950) (7,950)
Income tax benefit-subsidiary
stock options exercised 1,987 1,987
Net loss (141,875) (141,875)
---------- --------- ---------- ----------
Balance at May 31, 1997 $176,871 $(649,043) $(127,549) $(598,643)
---------- --------- ---------- ----------
---------- --------- ---------- ----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
May 31,
---------------------------------------
Other stockholders' deficiency items: 1997 1996 1995
- ------------------------------------- ------ ------ -------
<S> <C> <C> <C>
Treasury stock, at cost $(140,121) $(137,762) $(137,604)
Unrealized appreciation of marketable
securities 12,863 20,813 14,416
Foreign currency translation adjustment (291) (753) -
---------- --------- ----------
$(127,549) $(117,702) $(123,188)
---------- --------- ----------
---------- --------- ----------
</TABLE>
F-27
<PAGE>
<PAGE>
NOTE 9. INCOME TAXES
The Company and its consolidated subsidiaries, except for Century Venture
Corporation and Subsidiaries, Century-ML Cable Venture and Subsidiary, Citizens
Century Cable Television Venture, East Coast Pay Television Pty, Ltd., and
Centennial Cellular Corp. and Subsidiaries (collectively the "Unconsolidated Tax
Group"), file a consolidated federal income tax return. The provision (benefit)
for income taxes are summarized as follows:
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
----------------------------------------------
1997 1996 1995
--------- ------- ------
<S> <C> <C> <C>
Current $ 7,486 $ 2,844 $ 3,457
Deferred (38,144) (37,170) (11,518)
--------- -------- --------
$(30,658) $(34,326) $ (8,061)
========= ========= =========
</TABLE>
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:
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
------------------------------------------------
1997 1996 1995
---------- -------- ------
<S> <C> <C> <C>
Computed tax benefit at federal
statutory rate on loss before
income taxes and minority
interest $ (63,141) $ (50,701) $ (40,059)
Computed tax benefit of
Unconsolidated Tax Group 10,553 11,842 15,186
Recognized tax benefit of
Unconsolidated Tax Group (5,139) (12,386) (15,518)
Nondeductible amortization
resulting from acquired
subsidiaries 1,131 2,433 2,600
State and local income taxes,
net of federal income tax
effect (3,782) (2,760) (1,832)
Tax benefits related to net operating
and capital loss carryforwards
not recognized and changes in
valuation allowance 29,685 17,246 30,722
Other 35 -- 840
----------- -------- -----------
$ (30,658) $ (34,326) $ (8,061)
============ ========= ============
</TABLE>
F-28
<PAGE>
<PAGE>
Temporary differences and carryforwards which give rise to a significant portion
of deferred tax assets and (liabilities) are as follows:
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
------------------------------
1997 1996
----------- -------
<S> <C> <C>
Deferred Tax Assets:
Tax loss carryforward $ 200,974 $ 167,936
Valuation allowance (99,778) (89,463)
--------- ---------
$ 101,196 $ 78,473
========= =========
Deferred Tax Liabilities:
Amortization of intangible assets $ 86,575 $ 105,817
Depreciation of fixed assets 68,580 72,130
--------- ---------
$ 155,155 $ 177,947
========= =========
Net deferred tax liabilities $ 53,959 $ 99,474
========= =========
</TABLE>
The valuation allowance recorded at May 31, 1997 and 1996 represents the portion
of recorded tax loss carryforwards for which it is more likely than not that
such carryforwards will not be realized.
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 $11,428 and net operating loss
carryforwards for federal income tax purposes of approximately $489,340 expiring
through 2002 and 2012, respectively.
Century Venture Corporation and Subsidiaries have an investment tax credit
carryover of approximately $2,032 and net operating loss carryforwards of
approximately $11,224 which will expire through 2002 and 2012, respectively.
Centennial Cellular Corp. and Subsidiaries have approximately $105,372 of net
operating loss carryforwards for federal income tax purposes, expiring through
2012 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.
F-29
<PAGE>
<PAGE>
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 Citizens Century Cable Television Venture included in
the consolidated balances of the Company are as follows:
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
---------------------------
1997 1996
----------- ---------
<S> <C> <C>
Combined Statement of Earnings
Revenues $110,811 $ 97,558
Costs and expenses:
Costs of services 32,072 26,917
Selling, general and administrative 18,681 15,831
Depreciation and amortization 36,660 33,738
-------- --------
87,413 76,486
-------- --------
Operating Income 23,398 21,072
Other expense -- 550
Interest 13,114 13,881
-------- --------
Income before taxes 10,284 6,641
Income tax provision 1,957 1,240
-------- --------
Net Income $ 8,327 $ 5,401
======== ========
Combined Balance Sheet Data
Property, plant and equipment - net $102,572 $ 98,763
Total assets 311,766 291,013
Long-term debt 153,500 153,500
Total liabilities 195,875 183,447
</TABLE>
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,
F-30
<PAGE>
<PAGE>
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,
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.
As of May 31, 1997, approximately 250 employees were participating in the Option
Plans.
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
F-31
<PAGE>
<PAGE>
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. All of these options were exercised as of May 31, 1996.
Under the 1993 Directors' Option Plan, options to purchase 3,000 shares of Class
A Common Stock were granted during both fiscal 1997 and 1996 at an exercise
price of $7.00 and $8.63 per share, respectively. 1,800 of these options were
vested at May 31, 1997.
SUBSIDIARY EMPLOYEE STOCK OPTION PLANS
Since December 27, 1991, Centennial has awarded options to purchase
approximately 1,722,782 shares of Centennial's Class A Common Stock to
approximately 59 employees of Centennial, including executive officers and
directors. During the fiscal years ended May 31, 1997, 1996 and 1995, the number
of such options awarded were approximately 925,782, 0 and 452,000, respectively.
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.
At May 31, 1997, 364,274 options were exercisable.
SUBSIDIARY DIRECTOR OPTION PLAN
The Centennial Director Option Plan, adopted on October 27, 1993, provides for
the grant of non-qualified options to purchase up to 50,000 shares of
Centennial's Class A Common Stock to non-employee/officer directors of
Centennial. Options for 1,000 shares of Centennial's Class A Common Stock shall
be automatically granted under the Centennial Director Option Plan on the date
of the annual meeting of shareholders of Centennial in each of years 1993
through 2002. Options become exercisable at the rate of 20% per year beginning
with the first anniversary of the date of the grant. As of May 31, 1997, 14,200
options were awarded. No options had been exercised as of May 31, 1997.
F-32
<PAGE>
<PAGE>
A summary of the status of the Company's and Centennial's stock options as of
May 31, 1995, 1996 and 1997 and changes during the years then ended is presented
below:
The Company's Stock Options:
<TABLE>
<CAPTION>
Weighted
Average
Exercise
Number Price
--------- ---------
<S> <C> <C>
1995 Outstanding at June 1, 1994 2,273,669 $6.78
Granted 954,750 7.94
Exercised (222,025) 3.27
Canceled (45,353) 7.61
----------
Outstanding at May 31, 1995 2,961,041 $7.16
1996 Granted 186,000 $8.86
Exercised (338,109) 3.53
Canceled (162,418) 7.43
---------
Outstanding at May 31, 1996 2,646,514 $7.73
1997 Granted 2,915,909 $6.70
Exercised (401,440) 5.46
Canceled (1,703,933) $8.69
----------
Options outstanding as of
May 31, 1997 3,457,050 $6.66
=========
</TABLE>
The number of the Company's options which were exercisable at May 31, 1997,
1996 and 1995 were 1,566,966, 1,568,965 and 1,330,709, respectively. The
weighted average exercise prices of such options were $6.55, $7.60 and $6.74
at May 31, 1997, 1996 and 1995, respectively.
Of the Company's options granted during fiscal 1997, 1996 and 1995, 1,175,072,
27,500 and 185,000 options, respectively, had exercise prices that were at
least equal to 110% of the fair market value of the Company's Class A Common
Stock at the date of grant.
F-33
<PAGE>
<PAGE>
Centennial's Stock Options:
<TABLE>
<CAPTION>
Weighted
Average
Exercise
Number Price
--------- --------
<S> <C> <C>
1995 Outstanding at June 1, 1994 933,947 $ 4.76
Granted December 9, 1994 455,000 15.76
Exercised (79,609) 2.02
Canceled (12,386) 12.78
----------
Outstanding at May 31, 1995 1,296,952 $ 8.71
1996 Granted 4,000 $18.25
Exercised (423,665) 1.00
Canceled (155,715) 5.35
--------
Outstanding at May 31, 1996 721,572 $13.98
1997 Granted 1,362,282 $11.57
Exercised (1,704) 9.75
Canceled (929,296) 14.40
---------
Options outstanding as of
May 31, 1997 1,152,854 $10.80
========= ======
</TABLE>
The number of Centennial's options which were exercisable at May 31, 1997,
1996 and 1995 were 485,473, 327,574 and 540,795, respectively. The weighted
average exercise prices of such options were $10.47, $12.94 and $4.03 at May
31, 1997, 1996 and 1995, respectively.
Of the company's options granted during fiscal 1997, 1996 and 1995, 143,282,
1,000 and 25,000 options, respectively, had exercise prices that were at least
equal to 110% of the fair market value of Centennial's Class A Common Stock at
the date of grant.
F-34
<PAGE>
<PAGE>
The following table summarizes information about the Company's and Centennial's
options outstanding at May 31, 1997:
<TABLE>
<CAPTION>
Range of Number Weighted Average Weighted Number Weighted
Exercise Outstanding Remaining Average Exercisable Average
Prices at 5/31/97 Contractual Life Exercise Price at 5/31/97 Exercise Price
- ------ ---------- ---------------- -------------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
The Company' Stock Options:
$4.00-$8.69 3,457,050 8.24 years $ 6.66 1,566,966 $ 6.55
========== ========= ========== ======== ========= =======
Centennial's Stock Options:
$9.75-$13.50 1,142,656 8.23 years $10.73 481,556 $10.40
$17-$20 10,198 2.50 years 18.43 3,917 18.72
--------- ---------- ----- ------- ------
1,152,854 8.17 years $10.80 485,473 $10.47
========= ========== ===== ======= ======
</TABLE>
The estimated fair value of the Company's and Centennial's options granted
during fiscal 1997 and 1996 were as follows:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
The Company $2.29 per share $3.04 per share
Centennial $3.49 per share $5.81 per share
</TABLE>
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, 1997, approximately
141,609 shares of Class A Common Stock were subscribed for under the Amended
Purchase 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
F-35
<PAGE>
<PAGE>
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.
Through May 31, 1997, the Company had granted 798,036 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, 1997, 315,909 shares
were available for awards under the Equity Plan.
CENTENNIAL'S EMPLOYEE STOCK PURCHASE PLAN
Centennial has reserved 200,000 shares of Class A Common Stock for issuance
under the 1991 Employee Stock Purchase Plan (the "Purchase Plan"). Under the
Purchase Plan, eligible employees (which generally includes all full-time
employees of Centennial) are able to subscribe for shares of Class A Common
Stock of Centennial at a purchase price of 85% of the average market price (as
defined) of the Class A Common Stock of Centennial on the first day or last day
of the payroll deduction period relating to an offering under the Purchase Plan.
Payment of the purchase price of the shares is to be made in installments
through payroll deductions, with no right of prepayment. The Purchase Plan is
administered by the Compensation Committee of Centennial's Board of Directors.
Rights to purchase shares of Centennial Class A Common Stock under the Purchase
Plan may not be transferred by the recipient and may be forfeited in the event
of the recipient's termination of employment. As of May 31, 1997, approximately
1,100 employees and officers of Centennial were eligible to participate in the
Purchase Plan. As of May 31, 1997, approximately 31,120 shares were subscribed
for under the Purchase Plan.
CENTENNIAL'S EQUITY INCENTIVE PLAN
Centennial's 1993 Equity Incentive Plan (the "Centennial Equity Plan") was
adopted by the Board of Directors of Centennial and approved by their
stockholders on October 27, 1993. The plan permits the issuance of up to 100,000
shares of Centennial's Class A Common Stock for high levels of performance and
productivity by officers and other management employees of Centennial. The
Centennial Equity Plan is administered by the Compensation Committee of
Centennial'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 Centennial Equity Plan, including the
grant price, term and number of shares subject to grant.
Generally, any employee of Centennial will realize compensation taxable as
ordinary income, and Centennial 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 of Centennial
received by the employee. As of May 31, 1997, 85,500 shares were issued for
awards under the Centennial Equity Plan.
The Company and Centennial apply APB Opinion No. 25 and related interpretations
in accounting for their plans. Accordingly, no compensation cost has been
recognized with respect to their stock option, and stock purchase plans. Had
compensation cost for the Company's and Centennial's stock option and stock
purchase plans been determined based on the fair value of the awards on the
grant dates in
F-36
<PAGE>
<PAGE>
accordance with the accounting provisions of Statement of Financial Accounting
Standards No. 123 "Accounting for Stock-Based Compensation" ("SFAS 123"), the
Company's Consolidated net loss and Consolidated net loss per common share for
the years ended May 31, 1997 and 1996 would have been increased to the pro forma
amounts indicated below:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Consolidated loss applicable to common shares:
As reported:
Loss before extraordinary item $ (139,143) $ (106,373)
Extraordinary item (7,582) --
----------- -----------
Loss $ (146,725) $ (106,373)
=========== ===========
Pro forma:
Loss before extraordinary item $ (139,852) $ (106,542)
Extraordinary item (7,582) --
----------- -----------
Loss $ (147,434) $ (106,542)
=========== ===========
Consolidated loss per common share:
As reported:
Loss before extraordinary item $ (1.86) $ (1.44)
Extraordinary item (0.10) --
----------- -----------
Loss per common share $ (1.96) $ (1.44)
=========== ===========
Pro forma:
Loss before extraordinary item $ (1.87) $ (1.44)
Extraordinary item (0.10) --
----------- -----------
Loss per common share $ (1.97) $ (1.44)
=========== ===========
</TABLE>
The fair value of options granted under the Company's and Centennial's stock
option plans during fiscal 1997 and 1996 was estimated on the dates of grant
using the Black-Scholes options-pricing model with the following weighted
average assumptions used: expected volatility of 40.82% (the Company) and 36.78%
(Centennial), risk free interest rate of 6%, and expected lives of option grants
of 3 years. Proforma compensation cost related to shares purchased under the
Company's and Centennial's Employee Stock Purchase Plans is measured based on
the discount from market value. No proforma compensation cost was included in
the proforma amounts above related to 82,500 shares of restricted stock granted
and purchased under Centennial's Equity Incentive Plan for the year ended May
31, 1996. Those restricted shares vest 5 years after the date of grant.
Compensation costs related to the Company's Equity Incentive plan which were
recorded in the Company's Consolidated Statements of Operations for the years
ended May 31, 1997,1996 and 1995 were immaterial.
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
F-37
<PAGE>
<PAGE>
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.
At May 31, 1997, no grants were outstanding.
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, 1997, no units have been granted under the Equivalent Plan.
RETIREMENT PLANS
Effective April 1, 1992, the Company adopted a 401(k) 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 401(k) 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 $1,389, $989, and
$755 for the years ended May 31, 1997, 1996 and 1995, respectively.
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 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 carried no cash dividend requirement through August 31, 1996,
the shares accreted
F-38
<PAGE>
<PAGE>
liquidation preference and redemption value at the rate of 7.5% per annum,
compounded quarterly, until then. The accretion for the years ended May 31,
1997, 1996, and 1995 totaled approximately $3,475, $13,080, and $12,161,
respectively. Of this amount, $1,098, $4,256, and $4,419 was charged against
paid-in-capital in the years ended May 31, 1997, 1996 and 1995, respectively,
with the remainder of $2,377, $8,824, and $7,742 charged to minority interests.
The fully accreted liquidation preference and redemption value of such preferred
stock at August 31, 1996 was $186,287. Beginning September 1, 1996, the holders
of the Convertible Redeemable Preferred Stock were entitled to receive cash
dividends at the rate of 8.5% per annum. The Convertible Redeemable Preferred
Stock is subject to mandatory redemption in fiscal 2007. Any unpaid dividends
continue to accumulate without additional cost to Centennial.
Assuming no change in the number of shares of such class outstanding, the annual
dividend payments, commencing in fiscal 1997, to be made with respect to the
preferred stock, if and when declared by Centennial's Board of Directors, will
be $15,834. On December 19, 1996 and May 8, 1997 Centennial paid quarterly cash
dividends to Citizens of $3,959. Centennial will determine, from time to time,
the timing, amount, or distribution (if any) of additional preferred stock
dividends.
The following summarizes the assets, partners' capital, and results of
operations of the six Wireless Partnerships contributed in the Merger that the
Company accounts for by the equity method. All amounts have been derived from
the individual Wireless Partnerships' financial statements through December 31,
1997 and 1996 and adjusted for interim financial activity from the Wireless
Partnerships' calendar year end to the Company's fiscal year end (unaudited):
<TABLE>
<CAPTION>
MAY 31,
-------------------------
1997 1996
---- ----
<S> <C> <C>
Assets $598,370 $507,715
Partners' Capital 536,775 438,451
Net Income 134,596 124,174
</TABLE>
NOTE 13. SUBSIDIARY COMMON STOCK 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 over-subscription privilege and
were distributed pro rata among the holders of Rights who requested an aggregate
of 235,746 additional shares pursuant to the over-subscription privilege.
Centennial also distributed to Century 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
F-39
<PAGE>
<PAGE>
Class B Common Stock. Century 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.
NOTE 14. REGISTRATION STATEMENTS
THE COMPANY
On April 4, 1997, the Company filed a registration statement with the SEC
relating to the shelf registration of an additional $500,000 of the Company's
debt securities, augmenting the remaining $2,000 available under the July 1994
registration statement. The registration became effective July 15, 1997. 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 13,
1997, there was $502,000 available for issuance under this registration
statement
CENTENNIAL
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 13, 1997,
there were 4,239,231 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 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 13, 1997,
$400,000 remained available for issuance.
NOTE 15. REGULATORY MATTERS
On October 5, 1992, Congress enacted the Cable Television Consumer Protection
and Competition Act of 1992 ("1992 Cable Act"). The 1992 Act substantially
reregulated the cable television industry and imposed 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.
On February 8, 1996, "The Telecommunications Act of 1996" ("Act"), was signed
into law. The new law alters federal, state and local laws and regulations
regarding telecommunications providers and services, including the cable
television industry. The Act deregulates (except for basic service) cable
service rates over a three year period. Implementing regulations of the Act are
currently being written. The effect that the Act will have on the Company's
cable television business cannot be determined at this time.
F-40
<PAGE>
<PAGE>
Note 16. BUSINESS SEGMENTS
The Company's consolidated financial statements include three distinct business
segments. Century Communications owns, operates and develops domestic cable
television systems. Centennial Cellular Corp. a 31.8%, 31.8% and 32.7% owned
subsidary in 1997, 1996 and 1995 owns, operates and invests in wireless
telephone systems. The Company has determined to pursue a strategy to sell its
investments in the Australian operations.
Information about the Company's operations in its three business segments for
the year ended May 31, 1997, 1996 and 1995 is as follows:
<TABLE>
<CAPTION>
Year ended May 31,
-----------------------------------------------
1997 1996 1995
------------- ----------- -------------
<S> <C> <C> <C>
Revenue:
Cable television $ 459,646 $ 368,669 $ 331,439
Wireless telephone 151,023 112,197 85,419
Australian operations 33,248 14,571 -
Eliminations (427) (163) (171)
------------- ------------- ---------------
$ 643,490 $ 495,274 $ 416,687
------------- ------------- ---------------
------------- ------------- ---------------
Operating income (loss):
Cable television $ 87,843 $ 76,368 $ 55,303
Wireless telephone (26,057) (19,109) (28,430)
Australian operations (55,825) (40,848) -
Eliminations (190) (163) (171)
------------- ------------- ---------------
$ 5,771 $ 16,248 $ 26,702
------------- ------------- ---------------
------------- ------------- ---------------
Net (loss):
Cable television $ (61,447) $ (47,183) $ (70,622)
Wireless telephone (33,295) (16,631) (32,730)
Australian operations (69,717) (49,273) -
Eliminations 22,584 10,970 20,727
------------- ------------- ---------------
$ (141,875) $ (102,117) $ (82,625)
------------- ------------- ---------------
------------- ------------- ---------------
Assets, at end of period:
Cable television $ 1,535,940 $ 1,588,190 $ 1,291,748
Wireless telephone 844,850 785,812 844,384
Australian operations 60,858 127,155 -
Eliminations (287,417) (266,248) (131,715)
------------- ------------- ---------------
$ 2,154,231 $ 2,234,909 $ 2,004,417
------------- ------------- ---------------
------------- ------------- ---------------
Depreciation and amortization:
Cable television $ 159,547 $ 124,436 $ 106,289
Wireless telephone 83,720 70,989 65,642
Australian operations 18,511 21,352 -
------------- ------------- ---------------
$ 261,778 $ 216,777 $ 171,931
------------- ------------- ---------------
------------- ------------- ---------------
Capital expenditures:
Cable television $ 79,555 $ 62,205 $ 92,199
Wireless telephone 88,990 38,082 17,538
Australian operations (1) 2,222 - -
------------- ------------- ---------------
$ 170,767 $ 100,287 $ 109,737
------------- ------------- ---------------
------------- ------------- ---------------
</TABLE>
Intersegment sales are not significant. No single customer accounted for more
than 10% of revenues.
(1) The Australian operations had capital expenditures of $15,317 during the
year ended May 31, 1996. Such amount was reported in the Investing section
of the Consolidated Statement of Cash Flows on the line "Australian
activities".
The financial information which follows is that of Century Communications before
the consolidation of Centennial Cellular Corp. and the Australian operations;
Centennial Cellular Corp., which comprises the Company's wireless telephone
business segment, the Company's Australian operations, as well as consolidated
information.
F-41
<PAGE>
<PAGE>
Note 16. Segment Information (continued)
BALANCE SHEET FINANCIAL DATA
May 31, 1997
<TABLE>
<CAPTION>
Century
Communications
Corp. before
consolidation of Reclassifications
Centennial Centennial Australian and
and Australia Cellular Corp. Operations Eliminations Consolidated
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and short-term investments $ 103,201 $ 43,415 $ 5,331 $ - $ 151,947
Accounts receivable - net 20,850 29,991 4,822 (6,705) 48,958
Prepaid expenses and other
current assets 8,858 4,836 955 - 14,649
---------- ----------- ---------- ----------- ------------
Total current assets 132,909 78,242 11,108 (6,705) 215,554
Property, plant and equipment - net 522,023 177,292 16,103 - 715,418
Investment in marketable equity securities 45,118 - - - 45,118
Investment in Centennial Cellular
Corp. at cost 139,685 - - (139,685) -
Equity investments in cable television and
wireless telephone systems - net 145,628 94,153 (118) (137,566) 102,097
Debt issuance cost - net 21,872 9,863 - - 31,735
Cable television franchise - net 368,010 - 33,765 - 401,775
Wireless telephone licenses - net - 347,206 - - 347,206
Excess of purchase price over value of
net assets acquired - net 150,578 130,065 - - 280,643
Other assets 10,117 8,029 - (3,461) 14,685
---------- ----------- ---------- ----------- ------------
$ 1,535,940 $ 844,850 $ 60,858 $ (287,417) $ 2,154,231
---------- ----------- ---------- ----------- ------------
---------- ----------- ---------- ----------- ------------
</TABLE>
F-42
<PAGE>
<PAGE>
Note 16. Segment Information (continued)
BALANCE SHEET FINANCIAL DATA
May 31, 1997
<TABLE>
<CAPTION>
Century
Communications
Corp. before
consolidation of Centennial Reclassifications
Centennial Cellular Australian and
and Australia Corp. Operations Eliminations Consolidated
<S> <C> <C> <C> <C> <C>
LIABILITIES AND COMMON STOCKHOLDERS'
EQUITY (DEFICIENCY)
Current Liabilities:
Current maturities of long-term
debt $ 50 $ - $ 14,961 $ - $ 15,011
Accounts payable and accrued
expenses 85,179 55,525 21,949 (6,705) 155,948
Customers' deposits and
prepayments 19,333 7,727 - (5,890) 21,170
------------ --------- -------- --------- ---------
Total current liabilities 104,562 63,252 36,910 (12,595) 192,129
Long-term debt 1,757,981 429,000 - - 2,186,981
Deferred liability 5,000 2,200 - (7,200) -
Deferred income taxes 9,982 43,977 - - 53,959
Minority interest in subsidiaries 58,198 - - 75,320 133,518
Due to parent - - 145,629 (145,629) -
Convertible redeemable preferred stock - 186,287 - - 186,287
Second series convertible redeemable
preferred stock - 7,252 - (7,252) -
Common stockholders' equity (deficiency):
Common stock, par value $.01 per share:
Class A 627 165 - (165) 627
Class B 451 105 - (105) 451
Additional paid-in capital 88,187 369,704 - (281,020) 176,871
Other (127,258) (4,801) (291) 4,801 (127,549)
Accumulated deficit (361,790) (252,291) (121,390) 86,428 (649,043)
----------- --------- -------- ------ -----------
Total common stockholders' equity
(deficiency) (399,783) 112,882 (121,681) (190,061) (598,643)
----------- --------- -------- ------ -----------
$ 1,535,940 $ 844,850 $ 60,858 $ (287,417) $ 2,154,231
----------- --------- -------- ------ -----------
----------- --------- -------- ------ -----------
</TABLE>
F-43
<PAGE>
<PAGE>
Note 16. Segment Information (continued)
STATEMENT OF OPERATIONS FINANCIAL DATA
Year Ended May 31, 1997
<TABLE>
<CAPTION>
Century
Communications
Corp. before
consolidation of Reclassifications
Centennial Centennial Australian and
and Australia Cellular Corp. Operations Eliminations Consolidated
<S> <C> <C> <C> <C> <C>
Revenues:
Service income $ 459,646 $ 151,023 $ 33,248 $ (427) $ 643,490
------------ ------------- ---------- --------------- -------------
Costs and expenses:
Cost of services 100,789 38,228 - - 139,017
Selling, general and administrative 111,467 55,132 - (237) 166,362
Depreciation and amortization 159,547 83,720 18,511 - 261,778
Write down of Australian assets - - 40,000 - 40,000
Australian operations - - 30,562 - 30,562
------------ ------------- ---------- --------------- -------------
371,803 177,080 89,073 (237) 637,719
------------ ------------- ---------- --------------- -------------
Operating income (loss) 87,843 (26,057) (55,825) (190) 5,771
Income from equity investments - 15,180 - (15,180) -
Interest 157,730 33,379 9,634 - 200,743
Gain on sale of assets - 3,819 - (3,819) -
Other loss/(income) 171 - 4,258 (18,999) (14,570)
------------ ------------- ---------- --------------- -------------
Loss before income tax benefit,
minority interest and extraordinary item (70,058) (40,437) (69,717) (190) (180,402)
Income tax (benefit) (23,363) (7,295) - - (30,658)
------------ ------------- ---------- --------------- -------------
Loss before minority interest and
extraordinary item (46,695) (33,142) (69,717) (190) (149,744)
Minority interest in loss of subsidiaries (7,170) (153) - 22,774 15,451
Loss before extraordinary item (53,865) (33,295) (69,717) 22,584 (134,293)
Extraordinary item, net (7,582) - - - (7,582)
------------ ------------- ---------- --------------- -------------
Net Loss $ (61,447) $ (33,295) $ (69,717) $ 22,584 $ (141,875)
------------ ------------- ---------- --------------- -------------
------------ ------------- ---------- --------------- -------------
</TABLE>
F-44
<PAGE>
<PAGE>
NOTE 17. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
Three months ended
--------------------------------------------------------------------
August 31, November 30, February 28, May 31,
1994 1994 1995 1995
---------------- -------------- ---------------- -----------
<S> <C> <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)
Three months ended
--------------------------------------------------------------------
August 31, November 30, February 29, May 31,
1995 1995 1996 1996
---------------- -------------- ---------------- -----------
Revenues $ 116,627 $ 121,039 $ 122,054 $ 135,554
Operating income 13,789 9,295 1,747 1,417
Net loss (21,917) (21,148) (23,623) (35,429)
Net loss per common share (1) (.31) (.30) (.33) (.49)
Three months ended
--------------------------------------------------------------------
August 31, November 30, February 28, May 31,
1996 1996 1997 1997
---------------- -------------- ---------------- -----------
Revenues $ 153,004 $ 158,996 $ 160,965 $ 170,525
Operating income (loss) (24,314) 15,115 13,339 1,631
Loss before extraordinary item (61,212) (17,257) (23,368) (32,456)
Net loss (61,212) (17,257) (23,368) (40,038)
Loss before extraordinary item per
Common share (.84) (.25) (.33) (.44)
Net loss per common share (1) (.84) (.25) (.33) (.54)
</TABLE>
(1) See Note 1 Loss per common share.
F-45
<PAGE>
<PAGE>
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, 1997 to be signed on its behalf
by the undersigned, thereunto duly authorized, on the 25th day of August, 1997.
CENTURY COMMUNICATIONS CORP.
By: /s/ Leonard Tow
------------------------------
LEONARD TOW
Chief Executive 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, 1997
has been signed below by the following persons in the capacities indicated on
the 25th day of August, 1997.
/s/ Leonard Tow Chief Executive Officer (principal executive
- -------------------------- officer), Chairman and Director
LEONARD TOW
/s/ Scott N. Schneider Senior Vice President, Chief Financial
- -------------------------- Officer, Treasurer (principal financial
SCOTT N. SCHNEIDER officer and principal accounting
officer) and Director
/s/ Bernard P. Gallagher Director
- --------------------------
BERNARD P. GALLAGHER
/s/ William Kraus Director
- --------------------------
WILLIAM KRAUS
/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
II-1
<PAGE>
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER EXHIBIT
- ------- -------
3.1 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 fiscal quarter
ended November 30, 1990 and incorporated herein by reference).
3.2 By-laws of the Company, as amended (filed as Exhibit 3(b) to the
Company's Annual Report on Form 10-K for the fiscal year ended
May 31, 1995, and incorporated herein by reference).
4.1 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 fiscal year ended May 31, 1992 and
incorporated herein by reference).
4.2 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).
4.3 Indenture, dated as of October 15, 1991, by 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).
4.4 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).
4.5 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).
II-2
<PAGE>
<PAGE>
4.6 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 fiscal year
ended May 31, 1992 and incorporated herein by reference).
4.7 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 fiscal year ended
May 31, 1992 and incorporated herein by reference).
4.8 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 fiscal year ended
May 31, 1993 and incorporated herein by reference).
4.9 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 (filed as Exhibit 4(w) to the
Company's Annual Report on Form 10-K for the fiscal year ended
May 31, 1995, and incorporated herein by reference).
'D'4.10 Fifth Supplemental Indenture, dated as of January 23, 1997, by
and between the Company and First Trust of California, National
Association, successor trustee to Bank of America National Trust
and Savings Association, as Trustee.
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.
*10.1 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 fiscal year ended
May 31, 1992 and incorporated herein by reference).
*10.2 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
fiscal year ended May 31, 1992 and incorporated herein by
reference).
*10.3 Employment Agreement, dated as of January 1, 1995, between the
Company and Daniel E. Gold (filed as Exhibit 10(a)(7) to the
Company's Annual Report on Form 10-K for the fiscal year ended
May 31, 1996 and incorporated herein by reference).
'D'*10.4 Employment Agreement, dated as of January 1, 1997, between the
Company and Scott N. Schneider.
II-3
<PAGE>
<PAGE>
'D'*10.5 Employment Agreement, dated as of January 1, 1997, between the
Company and Michael G. Harris.
'D'*10.6 Employment Agreement, dated as of January 1, 1997, between the
Company and Frank Tow.
'D'*10.7 Employment Agreement, dated as of January 1, 1997, between the
Company and Clifford A. Bail.
10.8 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).
10.9 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).
10.10 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).
'D'10.11 Agreement for lease dated as of January 1, 1997 by and between
Locust Avenue Associates Limited Partnership and Century-Texas.
10.12 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).
10.13 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).
*10.14 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).
*10.15 Incentive Award Plan of the Company (filed as Annex A to the
Company's Registration Statement on Form S-8 (File No. 33-23718)
under the Securities Act of 1933, as amended, filed with the
Commission on August 11, 1988 and incorporated herein by
reference).
*10.16 1985 Employee Stock Purchase Plan of the Company, as amended
(filed as Exhibit 10(r) to the Company's Annual Report on Form
10-K for the year ended May 31, 1995, and
II-4
<PAGE>
<PAGE>
incorporated herein by reference).
*10.17 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.
*10.18 1985 Stock Equivalent Plan (filed as Exhibit 10(m) to the 1986
Form S-1 and incorporated herein by reference).
*10.19 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).
*10.20 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).
*10.21 1993 Non-Employee Directors' Stock Option Plan of the Company
(filed as Exhibit 10(v)(2) to the Company's Annual Report on
Form 10-K for the fiscal year ended May 31, 1995, and
incorporated herein by reference).
*10.22 1994 Stock Option Plan of the Company (filed as Exhibit 10(v)(3)
to the Company's Annual Report on Form 10-K for the fiscal year
ended May 31, 1995, and incorporated herein by reference).
10.23 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).
10.24 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 fiscal year ended May 31,
1989 and incorporated herein by reference).
10.25 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 fiscal year ended May 31, 1989 and
incorporated herein by reference).
10.26 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 fiscal year ended May 31, 1991 and
incorporated herein by reference).
II-5
<PAGE>
<PAGE>
10.27 Credit Agreement, dated as of August 4, 1995, among CCC-I,
Inc., Pullman TV Cable Co., Inc., Kootenai Cable, Inc., Citibank
N.A., as agent, and each of the banks and parties thereto,
(filed as Exhibit 10(FF) to the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1996 and incorporated
herein by reference).
10.28 Credit Agreement, dated as of June 30, 1994, among CCC-II, Inc.,
Citibank N.A. as managing agent, and each of the banks and
parties thereto, (filed as Exhibit 10 to the Company's report
on Form 8-K dated July 25, 1994 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.)
10.29 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).
10.30 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 fiscal quarter ended
November 30, 1991, and incorporated herein by reference).
10.31 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 fiscal quarter ended
November 30, 1991, and incorporated herein by reference).
10.32 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 fiscal
year ended May 31, 1990 and incorporated herein by reference).
10.33 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 fiscal year ended
May 31, 1990 and incorporated herein by reference).
II-6
<PAGE>
<PAGE>
10.34 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 fiscal year ended
May 31, 1990 and incorporated herein by reference).
10.35 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 fiscal year ended
May 31, 1990 and incorporated herein by reference).
10.36 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
quarterly ended November 30, 1990 and incorporated herein by
reference).
10.37 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 quarterly period ended November 30,
1990 and incorporated herein by reference).
10.38 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 quarterly period ended
November 30, 1990 and incorporated herein by reference).
'D'10.39 Amendment No. 1 dated as of August 9, 1996 among CCC-I, Inc.,
Pullman TV Cable Co., Inc. and Kootenai Cable, Inc., Citibank,
N.A., as agent, and each of the bank parties thereto.
'D'10.40 Amendment No. 1 dated as of August 9, 1996 among CCC-II, Inc.,
Citibank, N.A., as managing agent, and each of the bank
parties thereto.
'D'10.41 Credit Agreement dated as of April 15, 1997 among Citizens
Century Cable Television Venture, Bank of America, National
Trust and Savings Association, as Syndication Agent, and
Societe General, as Agent, Corestates Bank, N.A., The First
National Bank of Boston, LTCB Trust Company, and PNC Bank,
National Association, as Co-Agents, and each of the
bank parties thereto.
'D'11 Computation of loss per common share.
'D'12 Computation of ratios.
'D'21 List of subsidiaries of the Company.
'D'23.1 Consent of Deloitte & Touche LLP.
'D'27 Financial Data Schedule.
- --------------------------
* Constitutes a management contract or compensatory plan or arrangement.
'D' Filed herewith.
II-7
STATEMENT OF DIFFERENCES
The dagger symbol shall be expressed as.............'D'
The section symbol shall be expressed as .......... 'SS'
<PAGE>
<PAGE>
EXECUTION COPY
================================================================================
CENTURY COMMUNICATIONS CORP.
and
FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION,
successor-in-interest to
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Trustee
-------------------------------
Fifth Supplemental Indenture
Dated as of January 23, 1997
-------------------------------
8 7/8% Senior Notes Due 2007
================================================================================
<PAGE>
<PAGE>
FIFTH SUPPLEMENTAL INDENTURE, dated as of January 23, 1997 (the
"Fifth 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 FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION,
successor-in-interest to BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
a national banking association organized and existing under the laws of the
United States, as Trustee (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 Fifth Supplemental Indenture in
order to establish and provide for the issuance by the Company of a series of
Securities designated as its 8 7/8% Senior Notes Due 2007 in the aggregate
principal amount of $250,000,000, a form of which is attached hereto as Exhibit
A (the "8 7/8% 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 Fifth Supplemental Indenture have been complied
with; and
WHEREAS, all things necessary to make this Fifth 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 8 7/8% 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 8 7/8% Notes, that the Indenture is supplemented and amended,
-2-
<PAGE>
<PAGE>
to the extent and for the purposes expressed herein, as follows:
PARAGRAPH A. SCOPE OF THIS FIFTH
SUPPLEMENTAL INDENTURE
The changes, modifications and supplements to the Indenture
effected by this Fifth Supplemental Indenture in Paragraphs B and C hereof shall
only be applicable with respect to, and govern the terms of, the 8 7/8% 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 Fifth 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
-3-
<PAGE>
<PAGE>
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.
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"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
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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.
"Depository" means The Depository Trust Company, its nominees and
their respective successors.
"Designated Downgrading" shall mean (i) in the event that the
rating of the 8 7/8% 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 8 7/8% 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.
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"Discharged" shall have the meaning assigned to such term in
Section 5.02 hereof.
"8 7/8% Notes" shall mean the Company's 8 7/8% Senior Notes Due
2007 originally issued in the aggregate principal amount of $250,000,000
pursuant to this Indenture.
"Global Note" has the meaning set forth in Section 2.03.
"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
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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.
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"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 January 15,
2007 and the date upon which the 8 7/8% 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.
"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.
"Physical Note" has the meaning set forth in Section 2.04.
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"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.
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"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
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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 Fifth Supplemental Indenture, is numbered to conform
with the format of the Indenture:
SECTION 2.03. Securities in Global Form.
The 8 7/8% Notes shall be issued initially in the form of one or
more permanent global Notes, representing and denominated in an amount equal to
the aggregate principal amount of all of the Securities of such series, each
such Note containing the legend relating to global securities set forth in
Section 2.05 hereto (a "Global Note"), deposited with, or on behalf of the
Depository or with the Trustee, as custodian for the Depository. The aggregate
principal amount of the Global Note(s) may from time to time be increased or
decreased by adjustments made on the records, in the form of Schedule A to the
Global Note(s), of the Depository or its nominee, or of the Trustee, as
custodian for the Depository or its nominee, as hereinafter provided.
Any Holder of the Global Note(s) shall, by acceptance of such
Global Note(s), agree that transfers of beneficial interests in such Global
Note(s) may be effected only through a book-entry system maintained by the
Holder of such Global Note(s) (or its agent), and that ownership of a beneficial
interest in the 8 7/8% Notes shall be required to be reflected in a book entry.
SECTION 2.04. Book-Entry Provisions for Global Note(s).
(a) Each Global Note initially shall (i) be registered in the name of the
Depository for such Global Notes or the nominee of such Depository, (ii) be
deposited with, or on behalf of, the Depository or with the Trustee, as
custodian for such Depository, and (iii) bear the legends set forth in Section
2.05. Members of, or participants in, the
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Depository ("Agent Members") shall have no rights under this Indenture with
respect to any Global Note(s) held on their behalf by the Depository, or the
Trustee as its custodian, or under the Global Note(s), and the Depository may be
treated by the Company, the Trustee and any agent of the Company or the Trustee
as the absolute owner of such Global Note(s) for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving any effect to any
written certification, proxy or other authorization furnished by the Depository
or shall impair, as between the Depository and its Agent Members, the operation
of customary practices governing the exercise of the rights of a Holder of any
8 7/8% Notes.
(b) Transfers of each Global Note shall be limited to transfers
of such Global Note in whole, but not in part, to the Depository, its successors
or their respective nominees. Interests of beneficial owners in each Global Note
may be transferred in accordance with the rules and procedures of the
Depository. In addition, permanent certificate Notes in registered form
("Physical Notes") shall be issued to all beneficial owners in exchange for
their beneficial interests in a Global Note if (i) the Company notifies the
Trustee in writing that the Depository is at any time unwilling or unable to
continue as a depository for such Global Note and a successor depository is not
appointed by the Company within 90 days, (ii) the Company, at its option,
notifies the Trustee in writing that it elects to cause the issuance of Notes in
definitive form under the Indenture, or (iii) there is continuing an Event of
Default as set forth in the Indenture and a Holder so requests.
(c) In connection with any transfer of a portion of the
beneficial interest in a Global Note pursuant to Section 2.04(b) to beneficial
owners who are required to hold Physical Notes, the Security Registrar shall
reflect on its books and records the date and a decrease in the principal amount
of such Global Note in an amount equal to the principal amount of the beneficial
interest in such Global Note to be transferred, and the Company shall execute,
and the Trustee shall authenticate and deliver, one or more Physical Notes of
like tenor and amount.
(d) In connection with the transfer in its entirety of a Global
Note to beneficial owners pursuant to Section 2.04(b), such Global Note shall be
surrendered to the Trustee for cancellation, and the Company shall execute, and
the Trustee shall authenticate and deliver, to each beneficial owner identified
by the Depository in exchange for its beneficial interest in such Global Note an
equal principal amount of Physical Notes of authorized denominations.
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(e) The Holder of the Global Note(s) may grant proxies and
otherwise authorize any person, including Agent Members and persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the 8 7/8% Notes.
SECTION 2.05. Legends.
Each Global Note shall bear a legend substantially to the following
effect on the face thereof:
UNLESS THIS GLOBAL NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY GLOBAL NOTE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN
PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE
AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE
IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE HEREINAFTER
REFERRED TO.
SECTION 3.11 Establishment of Terms.
The 8 7/8% Notes shall have such terms as are set forth in the
8 7/8% 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. Restrictions 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
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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),
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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.
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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 8 7/8% 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 8 7/8% Notes
and which has an average life to maturity longer than that of the 8 7/8% 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 January 17, 1997, 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 January 17, 1997, 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
8 7/8% Notes.
(a) In the event of the occurrence of a Triggering Event, each
holder of 8 7/8% 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 8 7/8% Notes on the date (the "Repurchase Date")
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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 8 7/8%
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 8 7/8% 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 8 7/8%
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 8
7/8% Notes its "Repurchase Notice") to the Trustee of the holder's exercise of
such right, together with the 8 7/8% Note or 8 7/8% 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 8 7/8% 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 8 7/8% 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 8 7/8% Notes or portions thereof.
The Company shall not be required pursuant to Section 3.05 to exchange or
register the transfer of any 8 7/8% 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 8 7/8% 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:
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"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 8 7/8%
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 8 7/8% Notes
shall be in substantially the following form:
This is one of the 8 7/8% Senior Notes Due 2007 referred to in
the Indenture dated as of February 15, 1992, as supplemented by the Fifth
Supplemental Indenture, dated as of January 23, 1997, between Century
Communications Corp.
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and First Trust of California, National Association, successor-in-interest to
Bank of America National Trust and Savings Association, as Trustee.
FIRST TRUST OF CALIFORNIA,
NATIONAL ASSOCIATION,
SUCCESSOR-IN-INTEREST TO BANK
OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as
Trustee
By:____________________
Authentication Date: Authorized Officer
SECTION 5.02. Defeasance.
Section 5.02 of the Indenture, which shall apply to the 8 7/8%
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 8 7/8% 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 8 7/8%
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 8 7/8% Notes on the date such payment of principal is due in
accordance with the terms of the 8 7/8% Notes;
(2) if the 8 7/8% 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
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obligations with respect to the 8 7/8% 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 8 7/8% 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 8 7/8% 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 8 7/8% Notes and to have satisfied
all the obligations under this Indenture relating to the 8 7/8% 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 depository 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 8 7/8% Notes are no longer
outstanding.
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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
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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
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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.
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IN WITNESS WHEREOF, the parties hereto have caused this Fifth
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: /s/ Scott N. Schneider
_________________________________
Senior Vice President, CFO
[CORPORATE SEAL]
ATTEST:
/s/ Clifford A. Bail
__________________________________
FIRST TRUST OF CALIFORNIA,
NATIONAL ASSOCIATION,
successor-in-interest to BANK
OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as
Trustee
By:/s/ Robert Schneider
_________________________________
Title: Assistant Vice
President
[CORPORATE SEAL]
ATTEST:
__________________________________
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STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the _____ day of January, 1997, before me personally came
_________________________________, to me known, who, being by me duly sworn, did
depose and say that he is ___________________________________________ 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
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<PAGE>
STATE OF CALIFORNIA )
: ss.:
COUNTY OF LOS ANGELES )
On the _____ day of January, 1997, before me personally came
________________________________________, to me known, who, being by me duly
sworn, did depose and say that he is ________________________________________ of
FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION, successor-in-interest to BANK
OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Trustee, 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
<PAGE>
<PAGE>
EXHIBIT A
FORM OF 8 7/8% NOTE
<PAGE>
<PAGE>
EMPLOYMENT AGREEMENT
AGREEMENT made this lst day of January, 1997, by and between CENTURY
COMMUMICATIONS 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 SCOTT N. SCHNEIDER, an
individual, residing at 75 Marshal Road, Ridgefield, CT 06877 ("Employee").
W I T N E S S E T H:
WHEREAS:
A. The Employee is presently employed by the Company in charge of
its accounting and financial functions other than those which are the
responsibility of the chief financial officer of the company.
B. The Company desires that it continue to employ the Employee as
its chief financial officer in charge of its accounting, fiscal and financial
functions and in 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.
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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 financial officer of the Company and in charge of its
fiscal, accounting and financial affairs. In such capacity, Employee shall
supervise and be responsible for administering the fiscal, accounting and
financial 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 the 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 of the Company may determine. Without
limitation of the foregoing, Employee agrees to act as chief financial officer
of Centennial Cellular Corp.
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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 an officer of the Company and 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 acts as a Director and as senior Vice President of
Centennial Cellular Corp. Employee agrees to adhere to all fiduciary duties and
responsibilities inherent in any such office 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, that Employee's base of
operations shall be the greater Fairfield County, Connecticut and/or Westchester
County, New York areas and that Employee shall not be required to render his
services on a permanent basis outside of said areas. In conformance with the
foregoing and not in limitation thereof, Employee agrees to take such trips
outside said areas 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, 1997 and expiring on December 31, 1999.
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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 $250,000 per year for each year
of the Term on such days as the Company normally pays its employees and subject
to such 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
first calendar month in such Applicable Year over and above such Consumer Price
Index for the first 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
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time to time, from awarding a bonus or bonuses to Employee for his service 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, 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.
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6.2 The Company agrees that it will cause Employee to be insured
under such group life, medical, 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 chargeable
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
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with any and all interest, actual and 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, 1999) 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 businesses 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
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<PAGE>
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 to 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 the 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
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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
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<PAGE>
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, (ii) 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. In the event any of said hospitals is merged with or into, or is
acquired by another of said hospitals, the surviving hospital in such merger or
acquisition shall be deemed to be one of the designated hospitals.
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 for 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
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<PAGE>
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 other
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, (iii) a
cash bonus payable 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 (i) he is not elected a Senior Vice President of the Company during the
term, and is not designated a
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<PAGE>
Company's Chief Financial Officer, (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 a Senior Vice President and Chief Financial
Officer.
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 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 the 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.
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<PAGE>
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 conflicts 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
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Leavy, Rosensweig & Hyman, 11 East 44th Street, New York, NY 10017 10036
(Attention: David Z. Rosensweig, Esqs.). 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.
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<PAGE>
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, or 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/ Scott N. Schneider
--------------------------------
SCOTT N. SCHNEIDER
<PAGE>
<PAGE>
EMPLOYMENT AGREEMENT
AGREEMENT made as of this lst day of January, 1997 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 MICHAEL G. HARRIS, an
individual, residing at Beech Hill Lane, Pound Ridge, N.Y. 10576 ("Employee").
W I T N E S S E T H:
WHEREAS:
A. The Employee is presently employed by the Company as its chief
engineering officer in charge of engineering matters.
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:
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<PAGE>
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 engineering officer of the Company. In such capacity
Employee shall supervise and be responsible for the engineering operations and
for administration of the engineering and technical activities of the Company,
all subject to the direction and control of the chief operating officer, the
chief executive officer and/or the Board of Directors of the Company. At the
direction of the chief operating officer, the chief executive officer and/or the
Board of Directors of the Company, Employee shall also serve in such other
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 operating officer or the chief executive officer
of the Company may determine. Without limitation of the foregoing, Employee
agrees to act as chief engineering 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 an officer of the Company and of all applicable
Subsidiaries and, if duly elected, agrees further to serve and act as a director
of the Company and all applicable Subsidiaries. Employee also agrees to adhere
<PAGE>
<PAGE>
to all fiduciary duties and responsibilities inherent in (i) his office(s), (ii)
as an officer of any of the Subsidiaries to which he may be elected and (iii) 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, that Employee's base of
operations shall be the Greater Fairfield County, Connecticut and/or Westchester
County, New York areas and that Employee shall not be required to render his
services on a permanent basis outside of said areas. In conformance with the
foregoing and not in limitation thereof, Employee agrees to take such trips
outside said areas 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, 1997 and expiring on December 31, 1999.
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
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<PAGE>
herein, the Company shall pay Employee a base salary (the "Base Salary") at the
rate of $225,000 per year for each year of the Term on such days as the Company
normally pays its employees and subject to such withholdings as may be required
by law. The Base Salary for each of the second and third years of the Term (an
"Applicable Year"), as the case may be, 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 the year immediately preceding such Applicable Year (the
"Preceding Year") over and above such Consumer Price Index for the corresponding
month of the year immediately preceding the "Preceding Years".
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, from awarding 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, 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.
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<PAGE>
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, as well as 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, 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
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<PAGE>
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 and
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, 1999) except as same relates to any of Employee's obligations
pursuant to Section 9.1 and 10.1 hereof.
<PAGE>
<PAGE>
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 businesses 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
expiration or 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 to 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 the 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 that both during and
after the term hereof to execute any and all
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<PAGE>
documents which the Company may deem necessary or appropriate to effectuate the
provisions of this Section 10.1 and, further, that the provisions of this
Section shall survive the expiration or 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
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<PAGE>
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 or
medical centers located in New York City and selected by the Company: (i) New
York Hospital, (ii) Columbia Presbyterian Hospital, (ii) 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. In the event any of said hospitals is merged or consolidated
with or into, or is acquired by another of said hospitals, the surviving
hospital in such merger, consolidation or acquisition shall be deemed to be one
of the designated hospitals.
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) convictcomply within a periodving moral turpitude,
(iii) failure to of ten business days with a reasonable directive of the
chief executive or chief operating 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
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<PAGE>
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 and 1994 Employee Stock Option
Plans, the Company's 1992 Management Equity Incentive Plan and other applicable
Plans: (i) the right to exercise any stock option in full, whether or not then
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 payable 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) he is not elected a Senior
Vice-President (or office of equal or greater rank), (ii) his Base Salary is
reduced, (iii) he 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 Chief Engineering
Officer of the Company.
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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 determined by the Company), and Employee
agrees to cooperate fully in the applying and securing of same, including,
without limitation, the submission to various physical and other examinations
and the 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.
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<PAGE>
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 conflicts 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 first page hereof or at such other
address as Employee may have notified the Company sent by registered or
certified mail, return receipt requested, or if sent by telecopier or overnight
express delivery service, or (b) if to the Company, at its address set forth on
the first 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 10036 (Attention: David Z. Rosensweig, Esqs.).
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
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<PAGE>
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/ BERNARD P. GALLAGHER
---------------------------------
Its President
/s/ MICHAEL G. HARRIS
---------------------------------
Michael G. Harris
<PAGE>
<PAGE>
EMPLOYMENT AGREEMENT
AGREEMENT made as of this lst day of January, 1997 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 FRANK TOW, an
individual, residing at 25 Llanberris Road, Bala Cynwyd, PA 19004 ("Employee").
W I T N E S S E T H:
WHEREAS:
A. The Employee is presently employed by the Company as President
of Century Advertising, a division of the Company, in charge of the Company's
advertising marketing and sales and is presently a Vice-President of the
Company.
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:
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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 President of Century Advertising, a division of the Company, in
charge of the Company's advertising, marketing and sales. As such Employee shall
supervise and be responsible for the activities of the Company pertaining to
advertising, marketing and sales of its products and services including but not
limited to preparation and dissemination of advertisng (via print, television
and other media, and whether consisting of commercials and other forms of
advertising) and marketing and promotional materials and the personnel related
thereto, and shall also include preparation of advertising, marketing and
promotional materials for third parties, all subject to the direction and
control of the chief executive officer, the chief operating officer and/or the
Board of Directors of the Company. At the direction of the chief operating
officer, chief executive officer and/or Board of Directors of the Company,
Employee shall also serve in such other 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
operating officer or the chief executive officer of the Company may determine.
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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 an officer of the Company and of all applicable
Subsidiaries and, if duly elected, agrees further to serve and act as a director
of the Company and all applicable Subsidiaries. Employee also agrees to adhere
to all fiduciary duties and responsibilities inherent in (i) his office(s), (ii)
as an officer of any of the Subsidiaries to which he may be elected and (iii) 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, that Employee's base of
operations shall be the Greater Philadelphia, PA area 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, 1997 and expiring on December 31, 1999.
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.
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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 $162,500 per year for each year
of the Term on such days as the Company normally pays its employees and subject
to such withholdings as may be required by law. The Base Salary for each of the
second and third years of the Term (an "Applicable Year"), as the case may be,
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 the year immediately preceding
such Applicable Year (the "Preceding Year") over and above such Consumer Price
Index for the corresponding month of the year immediately preceding the
"Preceding Years". Additionally, the Company may (but shall not be required to)
adjust upward the Base Salary based on the performance of Century Advertising.
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, from awarding 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, cash flow and
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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.
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, as well as 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, 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
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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 and 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
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expiration date set forth in Section 4.1 (December 31, 1999) 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 businesses 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
expiration or 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 to 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 the 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
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right, title or interest of any kind or nature therein or thereto, or in any
results and proceeds therefrom. Employee agrees that both during and after the
term hereof to execute any and all documents which the Company may deem
necessary on appropriate to effectuate the provisions of this Section 10.1 and,
further, that the provisions of this Section shall survive the expiration or 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
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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 or medical centers located in New York City and selected
by the Company: (i) New York Hospital, (ii) Columbia Presbyterian Hospital, (ii)
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. In the event any of said hospitals is
merged or consolidated with or into, or is acquired by another of said
hospitals, the surviving hospital in such merger, consolidation or acquisition
shall be deemed to be one of the designated hospitals.
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) convictcomply within a periodving moral turpitude,
(iii) failure to of ten business days with a reasonable directive of the
chief executive or chief operating 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
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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 and 1994 Employee Stock Option
Plans, the Company's 1992 Management Equity Incentive Plan and other applicable
Plans: (i) the right to exercise any stock option in full, whether or not then
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 payable 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) he is not elected a
Vice-President (or office of equal or greater rank) of the Company, (ii) his
Base Salary is reduced, (iii) he 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
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the Employee's ability to function as President of Century Advertising and in
charge of the Company's advertising, marketing and sales.
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 determined by the Company), and Employee
agrees to cooperate fully in the applying and securing of same, including,
without limitation, the submission to various physical and other examinations
and the 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.
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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 conflicts 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 first page hereof or at such other
address as Employee may have notified the Company sent by registered or
certified mail, return receipt requested, or if sent by telecopier or overnight
express delivery service, or (b) if to the Company, at its address set forth on
the first 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 10036 (Attention: David Z. Rosensweig, Esqs.).
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
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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/ BERNARD P. GALLAGHER
---------------------------------
Its President
By: /s/ FRANK TOW
---------------------------------
FRANK TOW
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<PAGE>
EMPLOYMENT AGREEMENT
AGREEMENT made as of this 6th day of January, 1997 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 CLIFFORD A. BAIL, an
individual, residing at 320 Harding Drive, South Orange, New Jersey 07079
("Employee").
W I T N E S S E T H:
WHEREAS:
A. The Employee desires to be employed by the Company in the
capacity of corporate counsel.
B. The Company desires 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 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:
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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 internal corporate counsel of the Company. In such capacity
Employee shall supervise and be responsible for the internal corporate legal
affairs of the Company, all subject to the direction and control of the chief
operating officer, the chief executive officer and/or the Board of Directors of
the Company. At the direction of the chief operating officer, the chief
executive officer and/or the Board of Directors of the Company, Employee shall
also serve in such other 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 operating officer or
the chief executive officer of the Company may determine. Without limitation of
the foregoing, Employee agrees to act as internal corporate legal counsel 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 an officer of the Company and of all applicable
Subsidiaries and, if duly elected, agrees further to serve and act as a director
of the Company and all applicable Subsidiaries. Employee also agrees to adhere
to all fiduciary duties and responsibilities inherent in (i) his office(s), (ii)
as an officer of any of
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the Subsidiaries to which he may be elected and (iii) 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, that Employee's base of
operations shall be the Greater Fairfield County, Connecticut and/or Westchester
County, New York areas and that Employee shall not be required to render his
services on a permanent basis outside of said areas. In conformance with the
foregoing and not in limitation thereof, Employee agrees to take such trips
outside said areas 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 the period
commencing January 6, 1997 and expiring on December 31, 1999. The period from
January 6, 1997 to December 31, 1997 shall be considered period of one year for
the purposes of determining a "Preceding Year" and an "Applicable Year" under
Section 5.1.
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
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herein, the Company shall pay Employee a base salary (the "Base Salary") at the
rate of $200,000 per year for each year of the Term on such days as the Company
normally pays its employees and subject to such withholdings as may be required
by law. The Base Salary for each of the second and third years of the Term (an
"Applicable Year"), as the case may be, 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 the year immediately preceding such Applicable Year (the
"Preceding Year") over and above such Consumer Price Index for the corresponding
month of the year immediately preceding the "Preceding Years".
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, from awarding 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, 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.
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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. While the Company is not providing Employee
with an automobile for his use in the performance of his duties, nothing herein
shall prohibit the chief operating officer, or the chief executive officer, or
the Board of Directors, in his or its respective sole discretion, from hereafter
providing Employee with the use of an automobile for such purpose.
6.2 The Company agrees that it will cause Employee to be insured
under such group life, medical, 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
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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 and
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, 1999) 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
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pertaining to the businesses 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 expiration or 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 to 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 the 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 that both during and
after the term hereof to execute any and all documents which the Company may
deem necessary or appropriate to effectuate the provisions of this Section 10.1
and, further, that the provisions of this Section shall survive the expiration
or the termination, for any reason, of this Agreement or Employee's employment.
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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 or medical
centers located in New York City and selected by the Company: (i) New York
Hospital, (ii) Columbia Presbyterian Hospital,
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(ii) 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. In the event any of said hospitals is
merged or consolidated with or into, or is acquired by another of said
hospitals, the surviving hospital in such merger, consolidation or acquisition
shall be deemed to be one of the designated hospitals.
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 for a felony involving moral turpitude,
(iii) failure to comply within a period of ten business days with a
reasonable directive of the chief executive or chief operating 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.
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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 1994 Employee Stock Option Plans, the
Company's 1992 Management Equity Incentive Plan and other applicable Plans: (i)
the right to exercise any stock option in full, whether or not then 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 payable 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) his Base Salary is reduced,
(ii) he is relocated in violation of Section 3.1 or (iii) 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 internal corporate legal counsel 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
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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 determined by the Company), and Employee
agrees to cooperate fully in the applying and securing of same, including,
without limitation, the submission to various physical and other examinations
and the 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 conflicts 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
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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 first page hereof or at such other address as Employee may have notified
the Company sent by registered or certified mail, return receipt requested, or
if sent by telecopier or overnight express delivery service, or (b) if to the
Company, at its address set forth on the first 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 10036 (Attention:
David Z. Rosensweig, Esqs.). 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
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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/ BERNARD P. GALLAGHER
--------------------------------------
Its President
/s/ CLIFFORD A. BAIL
--------------------------------------
Clifford A. Bail
<PAGE>
<PAGE>
EXHIBIT 10.11
AGREEMENT OF LEASE
by and between
LOCUST AVENUE ASSOCIATES LIMITED PARTNERSHIP,
as Landlord,
and
CENTURY COMMUNICATIONS CORP.,
as Tenant
50 Locust Avenue
New Canaan, Connecticut
Dated as of January 1, 1997
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TABLE OF CONTENTS
Page
----
1. LEASED PREMISES................................................ 1
A. Premises and Building................................. 1
B. Parking............................................... 3
2. TERM POSSESSION AND USE........................................ 4
A. Term.................................................. 4
B. Option to Extend Term................................. 4
C. Use of Premises....................................... 6
3. RENT........................................................... 6
A. Base Rent............................................. 7
B. Additional Rent....................................... 7
C. Estimate of Additional Rent.......................... 12
D. Audit Rights......................................... 13
E. Disputed Amounts..................................... 13
F. Late Charges......................................... 13
G. Covenant to Pay Rent/Operating Expenses/Real
Estate Taxes......................................... 14
4. IMPROVEMENTS AND SERVICES..................................... 14
A. Improvements......................................... 14
B. Customary Services................................... 18
C. Additional Services.................................. 18
5. QUIET ENJOYMENT............................................... 19
6. LEASE SUBJECT TO SUPERIOR RIGHTS.............................. 19
A. Subject to Superior Rights........................... 19
B. Non-Disturbance Agreement............................ 20
7. ESTOPPEL CERTIFICATE BY TENANT................................ 20
8. RIGHTS RESERVED TO LANDLORD AND TENANT........................ 20
A. Landlord............................................. 20
B. To Tenant............................................ 22
9. TENANT'S AND LANDLORD'S ADDITIONAL COVENANTS.................. 22
A. Landlord Covenants................................... 22
B. Tenant Covenants..................................... 23
10. WAIVER OF PROPERTY AND LIABILITY CLAIMS....................... 25
A. Damage from Other Causes............................. 25
B. Loss of Business, Etc................................ 26
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C. Indemnification...................................... 26
11. INSURANCE..................................................... 27
A. By Tenant............................................ 27
B. By Landlord.......................................... 28
C. Additional Insurance Provisions...................... 28
12. ASSIGNMENT AND SUBLETTING..................................... 28
A. Consent.............................................. 28
B. Excess Rent.......................................... 30
C. Tenant Not Released.................................. 30
D. Assignment or Sublet to Affiliate.................... 31
13. CONDITION OF PREMISES......................................... 31
14. OBLIGATION TO REPAIR.......................................... 31
A. Tenant's Obligation.................................. 31
B. Landlord's Obligation................................ 32
15. LIABILITY..................................................... 32
16. DAMAGE TO LEASED PREMISES..................................... 33
A. Casualty Damage...................................... 33
B. Damage Termination................................... 33
C. Landlord Will Not Insure............................. 33
17. CONDEMNATION.................................................. 34
A. Entire Award......................................... 34
B. More Than 25% Taking................................. 34
C. Less than 25% Taking................................. 34
D. Rights to Condemnation Award......................... 35
E. Landlord to Repair................................... 35
18. NOTICES....................................................... 35
19. DEFAULT AND REMEDIES.......................................... 36
A. Default.............................................. 36
B. Remedies............................................. 37
C. Specific Performance................................. 38
20. BANKRUPTCY.................................................... 38
21. LANDLORD AND TENANT DEFINED................................... 39
A. Definition........................................... 39
B. Limitations of Assets Liable for Collection of
Judgment: No Personal Liability..................... 39
22. RECORDING LEASE PROHIBITED.................................... 39
23. PREVAILING PARTY IN LEGAL PROCEEDINGS......................... 40
24. SEVERABILITY.................................................. 40
25. HOLDING OVER.................................................. 40
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26. RE-ENTRY BY LANDLORD.......................................... 40
27. NO WAIVER..................................................... 40
28. OTHER REMEDIES................................................ 41
A. No Obligation to Cure................................ 41
B. Judgment Offset...................................... 41
29. NOTICE OF MORTGAGEES.......................................... 42
30. ENVIRONMENTAL LAWS............................................ 42
A. Compliance........................................... 42
B. Indemnity............................................ 43
31. MISCELLANEOUS................................................. 43
A. Taxes................................................ 43
B. Accord and Satisfaction.............................. 43
C. Representations by Landlord.......................... 44
D. Intentionally Omitted................................ 44
E. Waiver of Jury Trial and Right to Counterclaim/
Prejudgment Remedy Waiver.............................44
F. Intentionally Omitted................................ 44
G. Unavoidable Delays................................... 44
H. Brokerage............................................ 45
I. Successors and Assigns............................... 45
J. Consents and Approvals............................... 45
K. Interpretation....................................... 46
L. Complete Agreement................................... 46
M. Time of Essence...................................... 46
N. Authority............................................ 46
O. Attorney's Fee....................................... 46
P. Building Hours of Operation.......................... 46
Q. HVAC................................................. 47
R. Compliance with Applicable Laws...................... 47
32. ADDITIONAL SPACE.............................................. 47
33. STATUS OF LEASE............................................... 48
34. SECURITY SYSTEM............................................... 48
36. ARBITRATION................................................... 48
A. Disputed Defaults.................................... 48
B. Disputed Amount...................................... 48
C. Arbitrators; Award................................... 49
D. Failure to Appear.................................... 49
E. Reimbursement........................................ 49
<PAGE>
<PAGE>
LEASE
THIS AGREEMENT OF LEASE (hereinafter referred to as the
"Lease"), made as of the 1st day of January, 1997, by and between LOCUST AVENUE
ASSOCIATES LIMITED PARTNERSHIP, acting herein by STEPHEN GULICK JR., of the Town
of New Canaan, County of Fairfield and State of Connecticut, its General
Partner, duly authorized (hereinafter referred to as "Landlord") and CENTURY
COMMUNICATIONS CORP., a Texas corporation with a place of business in the Town
of New Canaan, County of Fairfield and State of Connecticut, acting herein by
SCOTT N. SCHNEIDER, its Senior Vice President and Treasurer, duly authorized
(hereinafter referred to as "Tenant").
W I T N E S S E T H :
1. LEASED PREMISES
A. Premises and Building
(i) Landlord does hereby lease to Tenant and
Tenant does hereby lease from Landlord those certain premises which the parties
deem to contain approximately 31,740 rentable square feet (hereinafter called
the "Premises"). The Premises presently exist as designated on the Plan attached
hereto as EXHIBIT 1.A(i)-1 and made a part hereof, and are located on the first
and second floors in that certain building located at 50 Locust Avenue, New
Canaan, Connecticut 06840 (hereinafter called the "Building"). The legal
description of the property on which the Building is situated (hereinafter
referred to as the "Property") is set forth on EXHIBIT 1.A(i)-2 attached hereto
and made a part hereof. Landlord hereby reserves and Tenant shall have no right,
except as may be otherwise set forth herein (or as may be reasonably necessary
for Tenant to conveniently and efficiently operate its business in the Demised
Premises), in and to (a) the use of the exterior faces of all perimeter walls;
(b) the use of the roof; and (c) the use of the land, improvements and space
below the bottom of the lower floor slabs and above the interior surface of the
ceiling of the Premises. In addition to the aforementioned and described
Premises, Tenant shall have the right to use approximately 400 square feet of
storage space located in the lower parking area of the Building during the term
of this Lease and any extension periods for the additional consideration set
forth in this Lease. Said letting and renting is upon and subject to the terms,
covenants, and conditions set forth herein, and Tenant covenants as a material
part of the consideration for this Lease to keep and perform each and all of the
said terms, covenants, and conditions by it to be kept and performed. This Lease
is made upon the conditions of such performance.
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(ii) This Lease replaces all existing Leases
between the parties or otherwise covering all or any part of the
Building.
(iii) In consideration of the parties entering
into this replacement Lease, Landlord has agreed to expand the space occupied by
the Tenant on the second floor by incorporating into the space occupied by
Tenant on the second floor the so-called "Lee Shepard Space," which space is
approximately 3,720 square feet, and the so-called "Dana Space," which space is
approximately 935 square feet; said spaces are shown on EXHIBIT 1.A(iii)
attached hereto. Landlord hereby represents, warrants and covenants to Tenant
that (i) the lease for the Lee Shepard Space has expired and that no party has a
valid claim of right thereto, (ii) Landlord has entered into a stipulated
judgment of eviction with the occupant of such space, and pursuant to such
stipulation the latest date by which such occupant shall vacate such space shall
be September 1, 1997, and (iii) Landlord shall use its best efforts to deliver
the Lee Shepard Space to Tenant as soon as possible and shall cause the Lee
Shepard Commencement Date (as hereinafter defined) to occur as soon as possible,
but in any event no later than September 15, 1997. The Lee Shepard Space shall
become part of the Premises (the "Lee Shepard Commencement Date") thirty (30)
days following the first date all of the following shall have occurred: (a)
Landlord shall have obtained sole possession of the Lee Shepard Space free and
clear of all tenants, occupants and any claims of right of any individual or
entity, (b) the Lee Shepard Space shall be in its "as-is" condition on the date
hereof, reasonable wear and tear excluded, and (c) Landlord has delivered to
Tenant written notice of those matters set forth in clause (a). Notwithstanding
clause (c), Landlord may in good faith send the thirty (30) day notice in
anticipation that Landlord will be able to deliver space in compliance with
clause (a), in which event the Lee Shepard Commencement Date (assuming
compliance with clause (a) and clause (b) above) shall be the later of (i) the
thirtieth (30th) day following Tenant's receipt of such notice, or (ii) three
(3) Business Days following the date upon which the terms of clause (a) and
clause (b) hereof shall have been satisfied.
As of the Lee Shepard Commencement Date, the Lee Shepard Space
shall be deemed to be part of the Premises for all purposes, including but not
limited to the payment of Rent, except, that Base Rent payable for the Lee
Shepard Space shall be equal to Twenty-Three and 25/100 ($23.25) Dollars per
square foot per annum, or Eighty-Six Thousand Four Hundred Ninety and 00/100
($86,490.00) Dollars per annum payable monthly at the rate of Seven Thousand Two
Hundred Seven and 50/100 ($7,207.50) Dollars. All representations and warranties
of Landlord regarding the Premises shall be deemed to include the Lee Shepard
Space as of the Lee Shepard Commencement Date. As of the Lee Shepard
Commencement Date, Tenant's Proportionate Share shall be increased accordingly.
Further as of the Lee Shepard
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<PAGE>
Commencement Date, Tenant shall be entitled to additional exclusive parking at
the rate of 3 parking spaces per 1,000 square feet rounded up to the next
highest full parking space, such parking spaces shall, to the extent practical,
be contiguous to all other parking spaces of Tenant.
The Dana Space shall become a part of the Premises (the "Dana
Commencement Date") as of February 1, 1997. On such date: (a) Landlord shall
have obtained sole possession of the Dana Space free and clear of all tenants,
occupants and any claims of right of any individual or entity, and (b) the Dana
Space shall be in its "as-is" condition on the date hereof, reasonable wear and
tear excluded.
As of the Dana Commencement Date, the Dana Space shall be
deemed to be part of the Premises for all purposes, including but not limited to
the payment of Rent, except that Base Rent payable for the Dana Space shall be
equal to Twenty-Three and 25/100 ($23.25) Dollars per square foot per annum, or
Twenty-One Thousand Seven Hundred Thirty-Eight and 75/100 ($21,738.75) Dollars
per annum payable monthly at the rate of One Thousand Eight Hundred Eleven and
00/100 ($1,811.00) Dollars. All representations and warranties of Landlord
regarding the Premises shall be deemed to include the Dana Space as of the Dana
Commencement Date. As of the Dana Commencement Date, Tenant's Proportionate
Share shall be increased accordingly. Further as of the Dana Commencement Date,
Tenant shall be entitled to ninety-nine (99) parking spaces as opposed to the
original ninety-five (95) parking spaces.
Notwithstanding anything in this Lease to the contrary (and in
particular, notwithstanding any provision of this Lease regarding Landlord's
control over Common Areas), throughout the Term of this Lease, Tenant shall have
the right to maintain reception and/or secretarial stations in the lobby areas
of the Building. In addition thereto, Tenant shall have the right, subject to
Section 4 of this Lease, to make such improvements and utility hookups as may be
desired by Tenant in connection with maintenance of such reception and/or
secretarial stations.
B. Parking. Landlord covenants and agrees that throughout the
Term, Landlord shall provide no fewer than ninety-five (95) parking spaces for
the exclusive use of Tenant, which shall be marked, and lighted in a manner
acceptable to Tenant and pursuant to EXHIBIT 1.B hereto, in the Building parking
area, and the same is to be kept by the Landlord in a well-maintained condition
throughout the term of this Lease. "Well maintained condition" shall be defined
to include being in a first class condition (although Landlord shall not be
required to pave same, unless same is paved as of the date hereof, or same is
subsequently paved), with freshly painted lines and numbers, well lighted and
free of debris. In the event that the number of square feet rented by Tenant
during the Term or any Extension Period hereof shall increase (including without
limitation
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addition of the Lee Shepard Space and the Dana Space), Landlord shall provide
additional exclusive use parking spaces in the Building parking area such that
Tenant shall have at least three (3) parking spaces for every 1,000 rentable
square feet then rented by Tenant. It should be noted that Exhibit 1-B shows 109
parking spaces for Tenant; Tenant shall only receive three (3) parking spaces
per 1,000 rentable square feet, rounded up to the next highest full parking
space based upon the size of the Demised Premises at a given time (i.e., as of
the date hereof, 95 parking spaces; as of the Dana Commencement Date, 99 parking
spaces; as of the Lee Shepard Commencement Date, 109 parking spaces).
2. TERM POSSESSION AND USE
A. Term. This Lease shall commence as of January 1, 1997, the
"Commencement Date", and shall terminate on December 31, 2004, the "Initial
Term".
B. Option to Extend Term. So long as Tenant shall not be in
default beyond applicable notice and grace periods hereunder, Tenant shall have
the right, at its election, to extend the Term for two (2) additional five (5)
year periods (each respectively referred to herein as an "Extension Period").
The first five-year option shall be from January 1, 2005 through December 31,
2009, and the second five-year option shall be from January 1, 2010 through
December 31, 2014. The Base Rent to be paid during each Extension Period shall
be the then fair market rental value for renewal rentals in the "market" (as
defined below), taking into consideration, without limitation, the condition of
the Premises, the amount of Rent being paid during the initial term of other
leases used as comparables (i.e., to determine if extension rents paid in
comparables reflect discounts attributable to an above market initial term
rent), any free rent provided, work letter obligations, the base year for
escalations and other tenant inducements, such amount to be mutually agreed to
by the parties. The market shall be defined as the commercial office leasing
areas of New Canaan, Westport and Darien, Connecticut. In addition to the Base
Rent in any Extension Period, Tenant shall pay the Additional Rent as required
under this Lease; however, the base year shall be adjusted as provided for in
Section 3.B (i.e., the base year for Taxes and Operating Expenses (as each such
term is hereinafter defined) shall be the first year of each respective
Extension Period). The Tenant shall notify the Landlord of its intention to
exercise its options to extend (such notice shall be in writing and provided in
a manner required by this Lease), if at all, not earlier than twelve (12) months
prior (except in the case of an exercise of such option pursuant to Section 32
below, in which event the exercise of said option may occur prior to said twelve
(12) month period) to the termination of the Initial Term or first Extension
Period, as the case may be, nor later than 8 months prior thereto. Prior to the
exercise by Tenant of an election to extend the Term, the expression "Term" or
"term"
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<PAGE>
or any equivalent expression shall mean the Term or Extension Period then in
effect; after the exercise by Tenant of any such election, the expression "Term"
or any equivalent expression shall mean the Term as it may have been then
extended. All agreements and conditions in this Lease contained shall apply to
the Extension Period to which the Term shall be extended as aforesaid excepting
such provisions of this Lease which by their terms are only applicable to the
Initial Term, excluding any further right of extension. If Tenant shall give
notice of the exercise of an election in the manner and within the time provided
aforesaid, the Term shall be extended upon the giving of notice without the
requirement of any action on the part of Landlord. If Tenant shall exercise its
renewal option in conjunction with Section 32, at Tenant's option to be
exercised simultaneously with the exercise of the renewal option, the "market"
Base Rent for the Premises for the Extension Period shall be fixed either (i) at
the time of the exercise of the renewal option, or (ii) at a time which is six
(6) months prior to the commencement of the renewal term; if Tenant shall fail
to elect either option (i) or (ii), then Tenant shall be deemed to have elected
option (ii).
If Tenant shall have exercised its renewal option as aforesaid
and Landlord and Tenant cannot agree upon the "market" Base Rent for the
Premises under the terms of this Lease during the Extension Period, then the
dispute as to the "market" Base Rent for the Premises shall be submitted to
arbitration in accordance with the provisions of Section 36 of this Lease. The
arbitrators shall select either Landlord's estimate or Tenant's estimate of the
"market" Base Rent of the Premises.
Notwithstanding anything in this Lease to the contrary, in no
event shall the Base Rent for any Extension Period be reduced below the Base
Rent payable during the Initial Term.
If upon the commencement of the Extension Period the Base Rent
to be paid by Tenant during such Extension Period shall not have been
determined, Tenant shall, effective as of the commencement of such Extension
Period, pay as Base Rent the sum of (i) the amount estimated by Landlord as the
appropriate Base Rent for the Premises during such Extension Period in
accordance with the terms of this Lease, plus (ii) all other amounts due and
payable pursuant to this Lease. Upon the determination of such Base Rent, in the
event of any overpayment of such Base Rent by Tenant since the beginning of such
Extension Period, Landlord shall pay to Tenant the amount of such overpayment.
If Landlord shall not pay same to Tenant within ten (10) days of such
determination, in addition to any other rights and remedies of Tenant, upon
fifteen (15) days prior written notice to Landlord, Tenant shall have the right
to offset any amounts due to Tenant plus interest thereon at the Interest Rate
from the date such overpayment was made.
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C. Use of Premises. Tenant covenants and agrees to occupy the
Premises for general office and related use. Tenant shall use the Premises in a
careful, safe, and proper manner and, subject to the provisions of Sections 9,
11 and 16 hereof, Tenant agrees to pay promptly on demand for any damage to the
Building or the Premises caused by misuse or abuse by Tenant, its agents or
employees, or by any other person entering upon the Building and/or the Premises
under the express or implied invitation of Tenant. Subject to Section 31.C
below, Tenant shall not conduct any activity or perform any act prohibited by
the laws of the United States of America or the State of Connecticut or the
ordinances of the Town of New Canaan and shall not commit waste nor suffer waste
to be committed, not permit any nuisance on or in the Premises. Tenant
understands that all common elements of the Building are to be shared in common
with all other tenants and that they shall be subject to the exclusive control
and management of the Landlord. Tenant shall have the right to the non-exclusive
use, in common with other tenants, of driveways, walks, loading and other
facilities as may be provided for use of the tenants (hereinafter called "Common
Areas"). Landlord may not at any time increase, decrease or change in any manner
the Common Areas without Tenant's prior written consent, which consent shall not
be unreasonably withheld or delayed if such changes shall not materially
adversely affect Tenant's use of the Premises as contemplated herein. Landlord
may at any time temporarily close the Common Areas to make repairs or changes or
to effect construction, repairs or changes within the Building, provided,
however, that the same shall not materially adversely affect Tenant's use of the
Premises as contemplated herein. No such action (provided such closure shall be
limited to the minimum time required for such repair and/or permissible change)
of Landlord, unless due to Landlord's negligence, shall be deemed to be an
eviction of Tenant, or breach of this Lease, nor give rise to any claim for
damages or for a reduction of any Base or Additional Rent; provided, however, no
action shall be taken by Landlord which would eliminate or substantially reduce
access to the Premises, and provided further that Landlord shall use due
diligence to complete any such work in a reasonable time and with minimum
interference with Tenant's business.
3. RENT. Tenant shall pay to Landlord, at Landlord's office, or such
other location as directed from time to time by Landlord's notice, as rent
during each year of the Term hereof, without prior notice, demand, recoupment or
offset whatsoever, except as may be otherwise set forth herein, rent as provided
in this Section 3. As used in this Lease, the following terms shall have the
following meanings:
(i) "Rent" shall mean Base Rent, Additional Rent, and other
amounts payable hereunder.
(ii) "Base Rent" shall have the meaning given in Section 3.A
below.
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(iii) "Lease Year" shall mean (i) the twelve (12) month period
commencing on the first day of the month immediately succeeding the month in
which the Commencement Date occurs, unless the Commencement Date occurs on the
first day of the month, in which event such twelve (12) month period shall
commence on the Commencement Date, and (ii) each twelve (12) month period
commencing on each Anniversary Date. The first "Lease Year" of this Lease shall,
if the Commencement Date shall not occur on the first day of the month, in
addition to the aforesaid twelve (12) month period, also include the period from
the Commencement Date until the first day of the month immediately succeeding
the month in which the Commencement Date occurs.
(iv) "Anniversary Date" shall mean the month and day of the
Tenant's Commencement Date, or if the Tenant's Commencement Date shall not occur
on the first day of the month, the first day of the month immediately succeeding
the Tenant's Commencement Date, in each succeeding year of the Term hereof.
(v) "Additional Rent" shall have the meaning given in
Section 3.B below.
(vi) For purposes of this Lease, unless otherwise stated
herein, Tenant's proportionate share of any amount due hereunder shall be
determined by multiplying such amount applicable to all of the Property and/or
the Building by the percentage determined by dividing the number of square feet
in the Premises by the total number of rentable square feet in the Building
(hereinafter referred to as "Tenant's Proportionate Share"). The parties hereby
agree that, at the time of the Commencement Date of this Lease, Tenant's
Proportionate Share shall be seventy-seven and 41/100 (77.41%) percent (as of
February 1, 1997, the Dana Commencement Date, Tenant's Proportionate Share shall
be seventy-nine and 70/100 (79.70%) percent).
A. Base Rent
(i) Tenant shall pay annualized "Base Rent" of
Six Hundred Eighty-Two Thousand Four Hundred Ten and 00/100 ($682,410.00)
Dollars in monthly installments of Fifty-Six Thousand Eight Hundred Sixty-Seven
and 50/100 ($56,867.50) Dollars. Said installments shall be paid at the office
of the Landlord at 50 Locust Avenue, New Canaan, CT 06840, or at such other
location as directed by Landlord's notice pursuant hereto.
(ii) All Base Rent shall be payable in advance on
or before the first day of each and every calendar month during
the Term hereof.
B. Additional Rent. With respect to the Initial
Term, Tenant's Additional Rent shall include (i) its
Proportionate Share of any increases of Operating Expenses (as
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hereinafter defined) above the actual "Base Year Operating Expenses" of calendar
year 1996 (if the Building is not 100% occupied during calendar year 1996, the
Operating Expenses shall be "grossed up" as reasonably agreed to by the parties
in order to reflect 100% occupancy), exclusive of Taxes; (ii) its Proportionate
Share of any increases in Taxes above those Taxes incurred upon the Grand List
of October 1995 (the "Base Tax Year"), payable in July 1996 and January 1997;
(iii) $200.00 per month, each and every month, during the Term of this Lease and
any Extension Periods for the 400 square feet of storage space located in the
lower parking area, as set forth in Section 1.A of this Lease; and (iv) $1.60
per square foot of space in the Premises per annum (the "ERIF") for electric
use, payable in twelve (12) equal monthly installments each and every month of
this Lease Term and any Extension Periods. With respect to the Extension
Periods, the "Base Tax Year" and "Base Year Operating Expenses" for the purpose
of calculating that portion of Additional Rent relating to Operating Expenses
and Taxes shall be the twelve (12) month period during the first full year of
each five-year Extension Period (Operating Expenses shall be "grossed up" as
provided above to provide for 100% occupancy).
(i) Operating Expenses. Tenant covenants and
agrees to pay during each Lease Year as Additional Rent an amount equal to
Tenant's Proportionate Share of the amount by which Operating Expenses for such
Lease Year exceed "Base Year Operating Expenses." It is intended that Tenant pay
its Proportionate Share of only the increases above the Base Year Operating
Expenses and not a Proportionate Share of all Operating Expenses. "Operating
Expenses" shall mean such usual and customary, actual and reasonable
out-of-pocket costs or expenses as may reasonably be incurred by Landlord in its
operation and maintenance of the building, including, but not limited to, labor
(not to exceed one building superintendent), water rates, sewer rents,
assessments, reasonable attorneys' fees incurred in connection with reduction of
the foregoing (but only to the extent of said reduction), fuel, gas, light and
power used in the public portions of the building (expressly excluding any fuel,
gas, light or power supplied to the Premises and/or other tenanted (or
tenantable) space in the Building), insurance, window cleaning and janitorial
services (whether or not furnished by contract), reasonable and
market-competitive management fees or expenses (the cost of management services
shall be comparable to a market rate management fee charged by a recognized
skilled manager of commercial office property in the "market" as defined in
Section 2.B above but shall not exceed the percentage paid during the Base Year
Operating Expenses for management fees), ordinary repairs but not replacements
(CAPITAL COSTS SHALL NOT BE INCLUDED IN OPERATING EXPENSES), supplies, uniforms
and sundries. "Operating Expenses" shall not include:
a) the "ERIF";
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b) leasing commissions and legal fees in
connection with the leasing of space in the Building;
c) alaries of executives above the grade of
building manager;
d) ANY EXPENDITURES FOR CAPITAL COSTS;
e) cost of repairs or replacements incurred by reason
of fire or other casualty or by the exercise of the right of eminent
domain, to the extent to which Landlord is compensated therefor through
proceeds of insurance (or would have been compensated had Landlord
maintained the insurance coverage that Landlord is required to maintain
pursuant to this Lease) or a condemnation award;
f) advertising expenditures;
g) legal fees incurred in disputes with tenants and
legal and auditing fees, other than legal and auditing fees reasonably
incurred (a) in connection with the day-to-day maintenance and
operation of the Building, or (b) in connection with the preparation of
statements required pursuant to Additional Rent or lease escalation
provisions;
h) costs incurred in performing work or furnishing
specialized services to or for individual tenants, including Tenant
(other than work or services of a kind and scope which Landlord would
be obligated to furnish Tenant without charge if such work were
required in the Premises), such as any special cleaning or excess
rubbish removal performed for any individual tenant, which shall be
separately billed to such tenant;
i) debt service, fines and penalties on any
superior mortgage or other mortgage encumbering the
Premises, Building or the Property;
j) Rent payable under any ground lease or
superior lease;
k) The cost of initial tenant "fit-up" of space
(including, without limitation, architect's fees or space
planner's fees) in the Building in connection with the
leasing of space to tenants in the Building;
l) the portion of wages (as reasonably allocated
by Landlord) of any employee of Landlord to the extent such
employee does not do work relating to the operation of the
Building;
m) the costs (as reasonably determined by
Landlord) of the operation of the business entity which
constitutes Landlord, which costs are not related to the
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operation of the Building, including accounting and legal matters,
costs of defending any lawsuits with any mortgagee (except to the
extent actions of Tenant may be in issue), costs of selling,
syndicating, financing, mortgaging or hypothecating any of Landlord's
interest in the Building, costs of any disputes between Landlord and
its employees not engaged in the operation of the Building, or fees or
costs paid in connection with disputes with other tenants of the
Building;
n) costs paid by Landlord as the insurance policy
deductible in connection with repairs associated with a
casualty loss;
o) any Operating Expenses or portion thereof for
which Landlord has been reimbursed;
p) any bad debt loss, rent loss or reserves for
bad debts or rent loss; or
q) any casualty damage or loss resulting from
Landlord's failure to maintain the insurance coverage for
which Landlord has covenanted pursuant to Section 11.
If Landlord shall not furnish any particular
item(s) of work or service (which would constitute an Operating Expense
hereunder) to portions of the Building due to the fact that construction of the
Building is not completed or such portions are not occupied or leased, or
because such item(s) of work or service are not required or desired by the
tenant of such portion, or such tenant is itself obtaining and providing such
item(s) of work or service, or for other reasons, then for the purposes of
computing the Additional Rent payable hereunder, the amount of such item(s)
included in Operating Expenses for such period shall be increased by an amount
equal to the additional operating and maintenance expenses which would
reasonably have been incurred during such period by Landlord if Landlord had at
its own expense furnished such item(s) of work or service to such portion of the
Building. If the Building is not at least one hundred (100%) percent occupied
during any Lease Year, the Operating Expenses for such Lease Year, shall be
adjusted by the parties to reasonably reflect one hundred (100%) percent
occupancy of the Building (i.e., as is the Base Year Operating Expenses).
(ii) Taxes for each Lease Year. Tenant covenants
and agrees to pay as Additional Rent an amount equal to Tenant's Proportionate
Share of any increases in Taxes over the Base Tax Year. Tenant shall pay
Tenant's Proportionate Share on the later of (i) ten (10) days after receipt of
a bill therefor by Landlord (which bill shall be accompanied by the tax
statement provided to Landlord by the municipality) or (ii) ten (10) days before
such Taxes are due (i.e., prior to the date interest and penalties commencing to
accrue) to the applicable taxing authority.
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The term "ad valorem taxes" or "Taxes" for
purposes of this Lease shall mean with respect to the Property, the Building or
the Premises any and all real estate taxes and assessments or other similar
charges, whether general or special, for improvements or other charges assessed,
levied, imposed or becoming a lien upon the Property, the Buildings, the
Premises and appurtenances thereto and any taxes, assessment or governmental
charges of every sort whatsoever (except income taxes of Landlord), including
real estate taxes which are levied or charged against the Property, the Building
and/or the Premises, or rents or the privilege of leasing real property or
collecting rents therefor, imposed by the State of Connecticut, Town of New
Canaan, or any local government or political subdivision thereof, provided, that
any such tax is in substitution of other real property taxes. All such Taxes
shall be computed as if Landlord owned no other property. If Landlord shall
receive a refund or credit for said ad valorem taxes for which Tenant may have
paid its Proportionate Share to Landlord under this provision, then Landlord
shall promptly repay to Tenant Tenant's Proportionate Share of such refund or
credit after deducting therefrom all reasonable costs and expenses of obtaining
such refund or credit, whether or not the Term shall have expired prior to
payment thereof. If this Lease should terminate on a date other than the last
day of a calendar year, the amount of any such increase payable by Tenant during
the calendar year in which this Lease terminates shall be prorated on the basis
which the number of days which have elapsed from the beginning of said calendar
year to and including said date on which this Lease terminates bears to 365. If
the actual Taxes for the year of termination have not been determined at the
time the proration is made hereunder, then such proration shall be made upon the
basis of the most recent assessments and mill levy. If Tenant desires to
initiate and prosecute any proceedings permitted by law for the purpose of
obtaining abatement or reduction of any Taxes assessed against the Premises, the
Building and/or the Property and notifies Landlord in writing of such intent,
then unless Landlord shall notify Tenant in writing within five (5) days
following Tenant's notice to Landlord that Landlord will initiate such a tax
review, Tenant shall have the right to initiate and prosecute such a proceeding,
and Landlord agrees to render to Tenant all assistance reasonably possible in
connection therewith, including the joining in and signing of any protest or
pleading which Tenant may deem it advisable to file. If Landlord elects to
initiate the proceeding, Landlord agrees to use reasonable efforts to obtain a
reduction in real estate taxes, and Landlord shall keep Tenant informed of the
status of its tax review and not terminate or withdraw the same without Tenant's
prior written consent, which consent shall not be unreasonably withheld or
delayed. Landlord shall additionally, in connection with any tax review that
Landlord may conduct, permit Tenant to present to the taxing authority such
information as Tenant may desire to present pertaining to the basis for
establishing the assessed valuation of the Premises. If Tenant initiates such a
proceeding, Tenant agrees to use reasonable
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efforts to obtain a reduction in real estate taxes, to keep Landlord informed of
the status of its tax review, and to not terminate or withdraw the same without
Landlord's prior written consent, which consent shall not be unreasonably
withheld or delayed. Tenant shall be reimbursed for all of its reasonable costs
and expenses, including but not limited to reasonable legal fees and costs from
any tax refunds or credits achieved in connection with such proceeding; such
amounts shall first accrue to Tenant prior to any savings accruing to Landlord
or any other party.
If Landlord shall not timely pay Taxes as same
shall become due and payable and if as a result thereof a tax lien is filed
against the Property, in addition to all other remedies of Tenant pursuant to
this Lease, upon sixty (60) days prior written notice to Landlord, Tenant may
without obligation commence to pay any or all of such past due Taxes directly to
the applicable taxing authorities, and upon such payment Tenant may deduct from
the Rent next becoming due and payable all such payments made by Tenant plus
interest at the Interest Rate from the date such amounts are paid by Tenant.
C. Estimate of Additional Rent. At least thirty (30) days in
advance of each Lease Year during the Term, Landlord shall furnish Tenant with a
reasonable prospective written estimate ("Estimate") of Operating Expenses and
Tenant's Proportionate Share of any increases thereof above the Base Year
Operating Expenses for calendar year 1996 for the ensuing Lease Year (said
estimate may equal the Operating Expenses actually incurred for the prior Lease
Year). In addition, Landlord may, from time to time after providing to Tenant
each such Estimate, review such Estimate in light of Operating Expenses actually
incurred. In the event that the Operating Expenses actually incurred shall
exceed by more than five percent (5%) those set forth in the Estimate for such
period, Landlord at such time shall revise such Estimate and subsequent monthly
payments of Additional Rent to be made by Tenant pursuant thereto, all in accord
with such expenses actually incurred. Commencing with the first monthly Base
Rent payment due and thereafter during the Term of this Lease, the Tenant shall
pay, together with the Base Rent hereinbefore provided, as Additional Rent,
one-twelfth (1/12th) of Tenant's Proportionate Share of any increases in such
Operating Expenses above the Base Year Operating Expenses for calendar year
1996. In addition to the foregoing Estimates, within ninety (90) days after the
close of each Lease Year commencing with the First Lease Year, Landlord agrees
to furnish to Tenant a statement of actual Operating Expenses during the
preceding Lease Year, including a summary of Tenant's Proportionate Share of the
increases, together with a statement of all payments made by Tenant during such
year. If Tenant has overpaid, then Landlord shall furnish Tenant with a credit
statement to be applied to the next monthly Rent payment due; and if Tenant has
underpaid, Tenant shall pay the full amount of the underpayment as Additional
Rent together with the next monthly
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Rent payment due. Any such adjustment shall survive the expiration or earlier
termination of this Lease. Upon the written request of Tenant, Landlord shall
provide reasonable additional documentation with respect to the determination or
calculation of any such underpayment or overpayment.
D. Audit Rights. Tenant shall have the right within two (2)
years after receipt of Landlord's statement of Operating Expenses and/or Taxes
for any Lease Year, to audit all of the books of account, documents, records and
files of Landlord regarding such amounts for such Lease Year. On written request
of Tenant, Landlord shall make all of such records available for examination by
Tenant or any designated representative of Tenant at the office to which notices
to Landlord are to be addressed not later than thirty (30) days after such
request by Tenant. If Tenant shall have an audit made for any Lease Year and if
Tenant's Proportionate Share of Operating Expenses and/or Taxes shown by
Landlord's statement for such year shall be found to be overstated, Landlord
shall be obligated to repay to Tenant any amount owing as a result of an
overstatement of the amounts owed plus interest at the Interest Rate from the
date of the overpayment. If any amount payable under this Section 3.D is not
paid by Landlord within ten (10) days after invoice therefor and Tenant obtains
a judgment therefor or a determination is made pursuant to Section 36, then
Tenant may offset the amount thereof against the next Rent payments due from
Tenant to Landlord hereunder, together with (i) interest at the Interest Rate
accruing from the first date Tenant made such overpayments, and (ii) all
reasonable attorneys' fees and costs incurred by Tenant in obtaining such
judgment and/or determination and in connection with enforcing this Section.
E. Disputed Amounts. If Tenant should dispute any item or
items included in Operating Expenses and/or Taxes and such dispute is not
resolved by the parties within one hundred eighty (180) days after the date
Tenant notifies Landlord of such dispute, then either party may request that
such dispute be submitted to arbitration, in which case the provisions of
Section 36 shall apply. Pending resolution of the dispute as set forth in this
Section 3.E, failure to pay any such disputed amounts, whether or not the one
hundred eighty (180) days have expired, shall not be deemed an event of default
by Tenant or give rise to any Late Charge (as hereinafter defined) or penalty.
The party who loses the arbitration shall pay to the prevailing party the amount
owed within fifteen (15) days after receipt of the arbitrator's decision,
together with interest at the Interest Rate (as hereinafter defined) from the
date such payment was due and payable.
F. Late Charges. Subject to Section 3.E above, if Rent or
other payments due the Landlord hereunder are paid later than the tenth (10th)
day of the month when due or if any payment due to Landlord hereunder on demand
is not paid promptly upon demand, a late fee of five percent (5%) of the amount
due shall
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be due and payable by the Tenant as Additional Rent ("Late Charge"). The parties
agree that calculation of the exact costs which the Landlord will incur if the
Tenant makes late payments would be difficult to determine but would include,
without limitation, processing and accounting charges and Late Charges which may
be imposed upon the Landlord by the terms of any mortgage constituting a lien
upon the Building. The parties agree that the Late Charge provided herein is a
fair and reasonable estimate of the costs the Landlord will incur. This
provision, or payment by Tenant hereunder, or action taken by Landlord hereunder
shall not diminish or abrogate Tenant's duty to pay Rent when due, or Landlord's
rights to declare default for late payment as provided elsewhere in this Lease.
G. Covenant to Pay Rent/Operating Expenses/Real Estate Taxes.
(i) All Rent payments provided for herein shall
be due at the time stipulated and shall be due and payable in full without
off-set, recoupment or deduction of any kind, except as may be otherwise
provided herein. Tenant's covenant to pay Rent shall at all times exist as an
independent covenant.
(ii) Landlord shall timely pay all Taxes,
Operating Expenses and utility costs and, upon request by Tenant, shall deliver
to Tenant evidence of payment thereof.
4. IMPROVEMENTS AND SERVICES
A. Improvements. Landlord shall, at its sole cost and expense,
perform the work and install the material in accordance with EXHIBIT 4.A-1
attached hereto ("Landlord's Work"). All Landlord's Work shall be completed with
first quality materials and in an expeditious manner. Subject to the "punch
list" as described below, Landlord's Work shall be substantially completed no
later than June 1, 1997. Upon substantial completion of Landlord's Work, the
parties shall agree upon a mutually agreeable punch list as to items not
substantially completed by such time. The punch list work is to be completed no
later than July 1, 1997. If Landlord's Work shall not be proceeding with due
diligence or if same shall not be substantially completed on or before June 1,
1997 or if such punch list work is not completed by July 1, 1997, then Tenant
shall upon not less than five (5) days prior written notice have the right to
complete such work at a reasonable cost for the account of Landlord, for which
sum Landlord shall reimburse Tenant upon Tenant rendering a bill therefor. If
the aggregate of all such costs incurred by Tenant shall exceed Ten Thousand and
00/100 ($10,000.00) Dollars, Tenant shall have the right to offset any amounts
incurred by Tenant (including the first Ten Thousand and 00/100 ($10,000.00)
Dollars) against any Rent becoming due and payable under this Lease. If the
aggregate of all such costs incurred by Tenant shall be less than Ten Thousand
and 00/100 ($10,000.00) Dollars, Tenant shall not have the right
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to offset against Rent unless Tenant first obtains a judgment or a determination
pursuant to Section 36, whereupon Tenant shall have the right to offset against
Rent (i) the amount of such judgment or determination plus interest at the
Interest Rate from the date Tenant paid such costs, plus (ii) reasonable
attorneys' fees and costs incurred by Tenant in connection with collecting such
amounts and in connection with enforcing this Section and such judgment or
determination. Any disputes regarding the adequacy of Landlord's completion of
Landlord's Work shall be resolved by method of arbitration pursuant to Section
36. The taking of occupancy by Tenant shall not waive Tenant's right to raise
issues regarding the conformance of Landlord's Work to the agreed upon plans.
All of Landlord's Work shall be completed lien free and in a manner so as to
minimize interference with Tenant's business operations.
Tenant shall have the right, without the consent of Landlord,
to make any and all non-structural and/or decorative improvements, alterations,
replacements and/or additions (herein the "Minor Work"). Tenant covenants and
agrees that Tenant shall not make or erect any structural improvements,
alterations, replacements, additions or accessions without the prior written
consent of the Landlord, which consent shall not be unreasonably withheld or
delayed. For the purposes of this Lease, "Tenant Improvements" shall include and
be defined to mean all work required to be done in preparing the Premises so
that it may be operated for business (other than Landlord's Work), as well as
all alterations, interior design work, installations, additions or improvements
to the Premises occurring thereafter, including Minor Work. Tenant covenants and
agrees that all Tenant Improvements shall be done at Tenant's full cost and
expense, shall comply with all applicable governmental regulations, shall be
done only by contractors, subcontractors and mechanics with respect to whom
Landlord has consented, such consent not to be unreasonably withheld or delayed
(other than in connection with Minor Work where consent shall not be required),
shall be done in a manner which will assure labor harmony at the site and shall
be done in a manner which will not unreasonably interfere with Landlord's Work,
any other work to be performed by Landlord on or about the Building, or any
other tenant of Landlord's Building. Except in the case of Minor Work (in which
event none of the following shall be required), Tenant agrees to provide
Landlord copies of all plans and specifications for such Tenant Improvements,
the name of the general contractor and, if known, names of any material
subcontractors and mechanics who are to perform such work, at least fifteen (15)
days in advance of the commencement of any such work. Landlord shall, within
five (5) Business Days (as hereinafter defined) of receipt of such copies from
Tenant, notify Tenant as to whether Landlord consents to such plans,
specifications, contractors, subcontractors, which consent shall not be
unreasonably withheld or delayed, or if consent is to be withheld, Landlord
shall specifically detail the reasons for such rejection and the alternatives
which would be acceptable to Landlord. Landlord's failure to notify Tenant
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within such five (5) days time period shall be deemed approval by Landlord.
Except in connection with Minor Work where consent shall not be required, all
electrical and/or mechanical contractors must be specifically approved by
Landlord, which approval shall not be unreasonably withheld or delayed. Any
electrical and/or mechanical contractors approved by Landlord shall be
professional, reputable, and licensed in the State of Connecticut.
Notwithstanding the aforesaid, Landlord's consent to Tenant's plans,
specifications, contractors, subcontractors, etc. shall not be construed as
Landlord's consent to Tenant causing work to be done in the Premises in a manner
or under conditions which entitle the person doing the work or furnishing the
materials to a mechanic's or materialmen's lien. Tenant agrees to complete all
Tenant Improvements in a lien free manner. Following completion of any project,
Tenant agrees to obtain and deliver to Landlord written and unconditional
waivers of mechanic's liens upon the real property in which the Premises are
located, for all work, labor and services to be performed and materials to be
furnished in connection with such work, signed by all contractors,
subcontractors, material men and laborers who contract for or intend to perform
such work. Notwithstanding the foregoing, if any mechanic's lien or other lien
is filed against the Premises or the Landlord's Building for work claimed to
have been done for, or materials claimed to have been furnished to Tenant, it
shall be discharged by Tenant within thirty (30) days of notice thereof, at
Tenant's expense, by filing the bond required by law, or by payment or
otherwise. If any such mechanics' or other liens be filed against the Property,
the Building, or the Premises and Tenant fails to discharge same within thirty
(30) days after such filing, then in addition to any other right or remedy of
the Landlord, the Landlord may, but without obligation to do so, discharge the
same by bonding or by paying the amount claimed to be due. Any amount paid by
the Landlord for the satisfaction of any such lien and all reasonable legal and
other costs incurred by Landlord in procuring such discharge shall be payable by
the Tenant to Landlord as Additional Rent promptly on demand. Tenant covenants
and agrees to indemnify Landlord and hold Landlord harmless of and from any and
all final and unappealable judgment or settled claims, costs, suits, damages and
liability whatsoever arising out of or as a result of any Tenant Improvements
done by Tenant or Tenant's contractors, subcontractors, agents or employees,
including reasonable attorney's fees for the defense thereof. Tenant shall have
the right to participate in such defense at its expense. Landlord agrees to
cooperate with Tenant in such defense and each party agrees to coordinate their
respective efforts. In the event Tenant shall not promptly correct same,
Landlord may make such correction and charge Tenant for the reasonable cost
thereof. Such sum due Landlord shall be deemed Additional Rent and shall be paid
by Tenant promptly upon being billed therefor.
Prior to commencing any work, except in connection with Minor
Work, in which case the following deliveries shall not be required, Tenant shall
additionally furnish to Landlord at
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Landlord's request: (i) copies of all governmental permits and authorizations
which may be required in connection with such work; (ii) a certificate
evidencing that Tenant (or Tenant's agents or contractors) has procured workers'
compensation insurance covering all persons employed in connection with the work
who might assert claims for death or bodily injury against Landlord, Tenant or
the Building; (iii) such additional personal injury and property damage
insurance as Landlord may reasonably require because of the nature of the work
to be done by Tenant; and (iv) the estimate of cost for said Tenant
Improvements. At its option, Landlord shall have the opportunity to perform said
Tenant Improvements (other than Minor Work) at a cost equal to the cost estimate
obtained from a third party. If Landlord agrees to perform said work at the
third party cost and in accordance with the same terms and conditions as said
third party (said third party shall be a reputable and licensed contractor),
then Tenant shall permit Landlord to build out Tenant Improvements. In order for
Landlord to exercise this right, Tenant shall provide Landlord with notice of
its cost estimate for such Tenant Improvements as well as other material terms
and conditions upon which said third party contractor shall offer to complete
such Tenant Improvements. Landlord shall have a period of five (5) Business Days
to accept in writing such Tenant's notice. If Landlord shall not accept Tenant's
notice in writing (without qualification and within said five (5) days),
Landlord shall be deemed to have waived its right to perform the Tenant
Improvements. If Landlord shall agree to perform such Tenant Improvements,
Landlord shall be irrevocably bound to complete such Tenant Improvements in
accordance with the terms and conditions of Tenant's notice.
All Tenant Improvements upon the Premises and any replacements
therefor, including all paneling, interior design, partitions, railings affixed
to the Premises, except furniture or movable trade fixtures (e.g., bull pen
office dividers, generators, etc.) installed at the expense of Tenant, shall
become the property of the Landlord and shall remain upon, and be surrendered
with, the Premises as a part thereof at the termination of this Lease, without
compensation to Tenant. Tenant shall have no obligation to restore the Premises
to the condition that it was in prior to the Commencement Date of either this
Lease or any prior lease between the parties or to the condition it was in prior
to any Tenant Improvements or Alterations made during the Term.
Notwithstanding anything to the contrary stated in this
Section 4.A or elsewhere in this Lease, with respect to the Initial Term and
with respect to any Extension Period as and when applicable, in addition to the
Minor Work, Tenant shall further have the right, subject to the Landlord's
approval, such approval not to be unreasonably withheld or delayed, to install,
at Tenant's expense, (i) a 10,000-watt diesel or propane powered generator as a
back-up to the electrical power being provided to the Premises, with a diesel or
propane fuel tank, in an area in
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the northeast corner of the upper parking area or other mutually agreed location
on the Property; (ii) a fence around the any such generator and fuel tank; and
(iii) a number (reasonably agreed to by the parties) of satellite dishes on the
roof of the Building in locations reasonably designated by Tenant. Tenant shall
obtain all approvals and permits regarding any of the foregoing, and Tenant
shall be responsible for removing same at the end of the Term and for restoring
any damage caused by such removal. If as a condition of Landlord's reasonable
approval Landlord shall require that Tenant use Landlord's
contractors/installers, then Landlord agrees that any such
contractors/installers shall be professional, reputable contractors/installers
licensed in the State of Connecticut.
B. Customary Services. Landlord shall provide the services
described on EXHIBIT 4.B in a prompt and workmanlike manner, all of which,
subject to Section 3.B, shall be included among Operating Expenses. In addition
to the provisions of Section 9.A(i) below, Landlord will clean the Common Areas,
maintain and landscape the Property and remove snow and ice from the parking
area and sidewalks, all of which shall be considered Operating Expenses, all of
which, subject to Section 3.B, shall be completed in a manner consistent with a
first class office building in New Canaan, Connecticut.
Provided that Landlord is given at least twenty-four (24)
hours prior notice, Landlord shall provide heating, ventilation and air
conditioning services for hours additional to the normal hours of operation as
defined herein; such services will be provided at the actual cost to Landlord
therefor, without markup, profit or surcharge.
Landlord represents, warrants and agrees that, subject to
Section 31.R, any person or entity employed by it to perform services in or to
the Building and/or the Premises shall be obligated to observe and be in strict
compliance with all Applicable Laws ("Applicable Laws" shall mean any federal,
state or local law, rule, regulation or ordinance relating to or affecting the
Property, the Building or the Premises), and Landlord further agrees to
indemnify and hold and save harmless Tenant from any liability, costs or
expenses that Tenant may otherwise incur if such representation, warranty and
agreement is violated.
C. Additional Services. Should Tenant require any additional
work or service, including, but not limited to, service of the nature described
above, including service furnished outside the normal operating hours, as
defined herein, Landlord may on terms to be agreed, upon reasonable advance
notice by Tenant, furnish such service at charges as may be agreed on, but in no
event at a charge less than Landlord's actual cost plus reasonable and customary
(in the "market") overhead for the additional services provided. It is
understood that Landlord does not warrant that any of the services referred
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to above, or any other services which Landlord may supply, will be free from
interruption. Tenant acknowledges that any one or more such services may be
suspended by reason of accident or of repairs, alterations or improvements
necessary to be made (in which event Landlord will, however, use all reasonable
efforts to cure or correct any deficiency in same), or by strikes or lockouts or
by reason of operation of law, or causes beyond the reasonable control of
Landlord. Any such interruption or discontinuance of service shall never be
deemed an eviction or disturbance of Tenant's use and possession of the
Premises, or any part thereof, or render Landlord liable to Tenant for damages,
unless due to Landlord's negligence or willful conduct, or relieve Tenant from
performance of Tenant's obligations under this Lease; however, if such
interruption or discontinuance (unless and to the extent caused by Tenant's
negligence or willful conduct) shall continue for three (3) consecutive Business
Days (as defined below) or for more than eight (8) Business Days in any Lease
Year, and if the Premises shall be rendered untenantable in whole or in part,
all Rent shall abate to the extent the Premises is untenantable during the
pendency of such discontinuance or interruption. If Landlord shall in good faith
dispute Tenant's right to abate Rent, Landlord may commence an arbitration
proceeding pursuant to Section 36 to settle the dispute. Pending the
determination of the arbitrators (provided that Landlord is actively and
diligently prosecuting same to completion), the Rent shall not be abated. Upon
such determination, if Tenant is found to have had the right to abatement, then
Tenant shall have the right to offset against Rent (i) the amount of any such
abatement plus interest at the Interest Rate from the date of the interruption
or discontinuance of service, plus (ii) all reasonable attorneys' fees and costs
incurred by Tenant in connection with such arbitration and in connection with
enforcing this Section and in obtaining and enforcing any determination and/or
judgment.
5. QUIET ENJOYMENT. So long as the Tenant shall observe and perform the
covenants and agreements binding on it hereunder, the Tenant shall at all times
during the Term herein granted, peacefully and quietly have and enjoy possession
of the Premises without any encumbrance or hindrance by, from or through
Landlord or any other party claiming through Landlord.
6. LEASE SUBJECT TO SUPERIOR RIGHTS
A. Subject to Superior Rights. Subject to Section 6.B below,
this Lease, including the covenant of quiet enjoyment, is subject and
subordinate to all present mortgages affecting the Property or the Building, to
all renewals, modifications, consolidations, replacements and extensions
thereof, and to any mortgage which may hereafter be executed affecting the
Property or the Building. Tenant hereby agrees to execute, if the same is
required or requested, in a form agreed to by Tenant, any and all instruments in
writing to subordinate Tenant's rights acquired by this Lease to the Lien of any
such mortgage. Tenant agrees that
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foreclosure of any mortgage encumbering the Property or the Building shall not,
except at the option of the foreclosing party, be a constructive eviction of
Tenant and Tenant shall not have the right to appear in any such foreclosure
action unless named therein as a defendant. Subject to Section 6.B below,
notwithstanding the foregoing, Tenant agrees to attorn to any purchaser at
foreclosure sale, to any transferee of the Property who obtains title through a
judgment of strict foreclosure, to any grantee or transferee designated in any
deed given in lieu of foreclosure, or any mortgagee in possession, and this
Lease shall thereafter continue in full force and effect, or at the request of
such purchaser, grantee or transferee or mortgagee in possession shall enter
into a new lease on the same terms and conditions as this Lease.
B. Non-Disturbance Agreement. As a condition to Tenant's
covenants in this Section 6, Tenant shall be provided with a non-disturbance
agreement in a form reasonably approved by Tenant from each current mortgagee
prior to the Commencement Date and prior to the date any individual or entity
becomes a mortgagee of the Premises during the term of this Lease. Attornment
and subordination to all future mortgagees shall be conditioned upon delivery of
non-disturbance agreements reasonably satisfactory to Tenant. Any such
non-disturbance agreement shall expressly permit Tenant to exercise any offsets
permitted by this Lease and shall require any successor to complete Landlord's
Work and otherwise assume all obligations and duties of Landlord under this
Lease.
7. ESTOPPEL CERTIFICATE BY TENANT. Landlord and Tenant shall at any
time and from time to time, upon not less than fourteen (14) days after receipt
by the other, execute, acknowledge, and deliver to the other a statement in
writing as prepared and/or provided by Landlord or Tenant, as the case may be,
in a form reasonably acceptable to the parties certifying that this Lease is
unmodified and in full force and effect (or, if modified, stating the nature of
such modification and certifying that this Lease, as so modified, is in full
force and effect) and the dates to which the rental, the security deposit, if
any, and other charges are paid in advance, if any, and acknowledging that, to
the best of such parties' knowledge, there are no offsets, defenses or
counterclaims with respect to the payment of Rent and that there are no uncured
defaults hereunder or specifying such defaults, events, or conditions if any are
claimed. It is expressly understood and agreed that any such statement may be
relied upon by Landlord or Tenant, as the case may be, or any prospective
purchaser or encumbrancer of all or any portion of the Building or the Property
or the Lease.
8. RIGHTS RESERVED TO LANDLORD AND TENANT
A. Landlord. In addition to any other rights of Landlord under
this Lease and/or at law or in equity, Landlord reserves the following rights:
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(i) To install and maintain a sign or signs on
the exterior or interior of the Building subject to Landlord not interfering
with Tenant's signage as provided in Section 8.B hereof in Tenant's reasonable
judgment.
(ii) To designate all sources furnishing sign
painting and lettering.
(iii) Constantly to have pass keys to the
Premises. Said keys shall only be for use in the event of emergency or for
cleaning and maintenance; provided, however, Landlord shall upon at least
twenty-four (24) hours prior notice to Tenant and during Tenant's regular
Business Hours (as hereinafter defined), be entitled to inspect the Premises
during the Term of this Lease, provided that Landlord complies with Tenant's
reasonable requirements regarding confidentiality.
(iv) On at least twenty-four (24) hours prior
notice to Tenant, to exhibit the Premises during Tenant's regular Business Hours
to prospective tenants during the last twelve (12) months of the Initial Term,
and during the last six (6) months of any Extension Periods, and to exhibit the
Premises during the Term, upon at least twenty-four (24) hours prior notice and
during Tenant's regular Business Hours, to any prospective purchaser, mortgagee,
or assignee of any mortgage on the Property and to others having a legitimate
interest, provided that Landlord complies with Tenant's reasonable requirements
regarding confidentiality.
(v) At any time, upon at least twenty-four (24)
hours prior notice (or such other notice as may be practicable in event of
emergency), during Tenant's regular Business Hours, and in a manner which does
not unreasonably or materially interfere with Tenant's business, to enter the
Premises to examine and inspect the same or make such repairs, additions or
alterations as Landlord may deem reasonably necessary or proper for the safety,
improvement or preservation thereof. Landlord shall be reasonably diligent with
respect to said work and shall perform such work, except in case of emergency,
at all times reasonably convenient to Tenant and otherwise in such a manner and
to the extent practical so as not to unreasonably interfere with Tenant's use
and occupancy of the Premises. Landlord shall at all times have the right at its
reasonable election to make such alterations or changes in other portions of the
Building as it may from time to time deem necessary or desirable, provided that
the same shall not materially adversely affect Tenant's use of the Premises as
contemplated herein. Landlord shall not be liable to Tenant for any damage or
inconvenience thereby suffered by Tenant, unless due to Landlord's negligence.
(vi) To install in the lower level of the
building vending machines of all kinds, and to provide mobile vending service
therefor, and to receive all of the revenue derived therefrom.
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(vii) To install, maintain, use, repair and
replace all pipes, ducts, wires, motors, utility lines and other equipment which
now or hereafter may be required to serve the Landlord or any other tenant in
the Building and which may be contained within or run through the Premises,
provided the same does not unreasonably interfere with Tenant's use of the
Premises or unreasonably and detrimentally affect the aesthetic appearance of
the Premises.
B. To Tenant. Subject to the provisions of Section 9.B(vi)
below, Tenant shall have the right to have signage installed and maintained at
Landlord's expense at all building standard locations and directories in a style
and to the extent as requested by Tenant subject to Landlord's approval, such
approval not to be unreasonably withheld or delayed. Landlord hereby
acknowledges and agrees that it has approved all of Tenant's signage as it
exists on the Commencement Date of this Lease. At all times that Tenant is
occupying at least 50% of the building, Tenant may install exterior signage at
its expense subject to Landlord's approval, such approval not to be unreasonably
withheld or delayed. Landlord agrees that any signage installed on its behalf
shall not interfere with Tenant's signage. Tenant's determination of whether
such interference exists shall be in Tenant's reasonable judgment; Tenant shall
not unreasonably capricious in its review. Landlord also agrees that no tenant
who occupies less than 50% of the building may install any signage without
Tenant's prior written approval. In no event shall Landlord make any use of
Tenant's name or any of Tenant's trade names, service names or service marks or
logos in any signage or promotional material without Tenant's prior approval. It
is understood and agreed that Tenant is the major tenant of the Building and as
such shall have reasonable approval rights over any changes to the exterior and
interior appearance of the Building and Property (not including tenanted space),
including without limitation grade and quality of Common Area improvements,
signage, landscaping and all matters visible to the public.
9. TENANT'S AND LANDLORD'S ADDITIONAL COVENANTS
A. Landlord Covenants. (i) In amplification of the
provisions of EXHIBIT 4.B and in addition to the services being provided with
respect to the Premises, Landlord, with regard to the Property, the Building and
the Common Areas, covenants that at all times during the Term and any Extension
Periods, Landlord shall maintain same in a manner consistent with first class
office buildings in New Canaan, Connecticut, and shall provide daily trash and
refuse disposal and Landlord shall clean and maintain the Property, the Building
and the Premises and maintain same in good working order and, subject to Section
31.R, in compliance with all Applicable Laws, expressly including without
limitation all Common Areas and the bathrooms, and shall keep all drains, pipes,
utility wires inside or affecting the Premises in good working order. Landlord
shall supply toilet paper, toweling and soap in all bathrooms. In addition to
such daily cleaning
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and maintenance work, the Landlord will periodically wash and wax all floors
and/or clean carpeted areas in the Premises and in the Common Areas, as
applicable, in accordance with EXHIBIT 4.B hereto so that they are maintained in
a first class condition at all times.
(ii) Landlord covenants that it shall observe
faithfully and completely and it shall be in strict compliance with all laws,
rules and regulations as may be applicable to it as a landlord with respect to
the terms, conditions and provisions of this Lease, including without limitation
maintaining the Building, the Property and Common Areas in compliance with all
Applicable Laws.
B. Tenant Covenants. The Tenant covenants at all
times during the Term and any Extension Periods:
(i) To perform promptly all of the obligations of
the Tenant set forth in this Lease and to pay when due items of Rent and all
charges, rates and other sums which by the terms of this Lease are to be paid by
the Tenant.
(ii) To conduct its business at all times in a
high grade and reputable manner so as to help establish and maintain a high
reputation for the Building.
(iii) To comply with all reasonable "Building
Rules and Regulations" ("Rules"), if any. All current Building Rules and
Regulations are attached as EXHIBIT 9.B(iii) hereto. Landlord may from time to
time hereafter make reasonable Rules or reasonable modifications to the Rules
and establish reasonable additional written Rules for the safety, comfort and
welfare of the occupants of the Building, only with Tenant's prior written
approval, which approval shall not be unreasonably withheld or delayed. Such
Rules, modifications or additions shall be binding upon Tenant when a copy is
delivered to Tenant or Tenant's authorized representative in accordance with the
notice provisions herein. Except as may be otherwise set forth herein, Landlord
hereby covenants and agrees to enforce any Rules in a non-discriminatory manner.
(iv) To keep and maintain receiving doors and
platforms used by the Tenant free and clear of Tenant's refuse.
(v) Subject to Section 31.C, (i) to make all
repairs, alterations, additions or replacements to the Premises required by any
law or ordinance or any order or regulation of any public authority because of a
change in Tenant's use of the Premises from that specified in Section 2.C which
repairs, alterations, additions or replacements are mandated under the
Applicable Laws as the obligation of a tenant; (ii) to keep the Premises
equipped with all safety appliances so required because of such changed use; to
procure any licenses and permits required for any such changed use other than a
certificate of occupancy,
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which is Landlord's responsibility; and (iii) to comply with the orders and
regulations of all governmental authorities, except that the Tenant may defer
compliance so long as the validity of any such law, ordinance, order or
regulation shall be contested by the Tenant in good faith and by appropriate
legal proceedings, if the Tenant first gives the Landlord reasonably appropriate
assurance against any loss, cost or expense on account thereof and if such
deferral shall not adversely affect the operation of any other areas within the
Building.
(vi) Subject to Section 8.B hereof, to not place
signs of any nature or kind whatsoever in or upon the windows of the Premises.
Subject to Section 8.B, Tenant signage will be provided by means of a Building
Standard nameplate located at the main reception area in the Premises. Subject
to Section 8.B, a Building Standard sign acceptable to Tenant will be provided
at Tenant's expense. As provided in EXHIBIT 4.A-1, Landlord shall install new
directories in the main, first and second floor lobbies in the building at
Landlord's expense, which directories shall be subject to Tenant's approval,
such approval not to be unreasonably withheld or delayed. Tenant shall be
allowed pre-approved identification strips in the new directory of the Building
at Tenant's expense. Tenant shall not use any pictures or drawing of the
Building in any advertisement or promotional material without Landlord's prior
written consent. Tenant agrees that it will place no signs, decoration(s),
lettering or advertising of any nature on any window within the Premises which
would be visible outside of the Premises. All window coverings inclusive of
drapes, blinds or shades shall be furnished and installed by Tenant, at Tenant's
sole cost and expense.
(vii) To not make any use of the Premises other
than the permitted use set forth in Section 2.C.
(viii) To not injure, overload (Landlord has
noted to Tenant that although Tenant is not in violation thereof, Tenant has
certain identified areas of the Premises where Tenant is using heavy floor
loads; Tenant shall endeavor to coordinate with Landlord to not overload the
floors of the Premises; however, in no event shall Tenant have any liability
whatsoever for any damage to the Building by reason of Tenant's past, present or
future use of the Premises, provided that such use is consistent with the
current use of the Premises), deface or otherwise harm the Premises; nor commit
any nuisance; nor permit the emission of any objectionable noise or odor; nor
burn any trash or refuse within the Building; nor subject to Section 31.C make
any use of the Premises which is improper, offensive or contrary to any law or
ordinance; nor use any advertising medium that may constitute a nuisance, such
as loudspeakers, sound amplifiers, phonographs or radio or television broadcasts
in a manner to be heard outside the Premises; nor do any act tending to injure
the reputation of the Building; nor park trucks or delivery vehicles outside the
Premises so as to interfere
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unreasonably with the use of any driveways, walks or parking areas.
(ix) Subject to those matters stated below, not
permit or suffer to be done any act, matter, thing or failure to act in respect
of the Premises or use or occupy the Premises or conduct or operate Tenant's
business in any manner objectionable to any insurance company or companies
whereby the fire insurance or any other insurance then in effect in respect of
the Premises or the Building or any part thereof shall become void or suspended
or whereby any premiums in respect of insurance maintained by Landlord shall be
higher than those which would normally have been in effect for the occupancy
contemplated within the Building. Notwithstanding the foregoing, Landlord hereby
represents and warrants that Tenant's use of the Premises as contemplated herein
shall not constitute a breach of the preceding sentence. In case of a breach of
this covenant, in addition to all other rights and remedies of Landlord
hereunder, Tenant shall (a) indemnify Landlord and the Lessor(s) of any ground
or underlying lease(s) and hold Landlord and the Lessor(s) of any ground or
underlying lease(s) harmless from and against any actual (as opposed to
consequential or punitive) loss which would have been covered by insurance which
shall have become void or suspended because of such breach by Tenant, and (b)
pay to Landlord, as Additional Rent, any and all increases or premiums on any
insurance, including, without limitation, fire insurance and rent insurance,
resulting from any such breach.
10. WAIVER OF PROPERTY AND LIABILITY CLAIMS
A. Damage from Other Causes. Tenant waives all claims it may
have against Landlord and against Landlord's agents and employees for injury or
damage to property sustained by Tenant or by any occupant of the Premises or by
any invitee of Tenant resulting from any accident in or about the Building to
the extent same is directly or indirectly attributable to any negligent act or
omission of Tenant or occupant of the Premises, except and to the extent such
claim for injury or damage is attributable directly or indirectly to the
negligent act or omission or intentional misconduct of Landlord or its agents,
servants or employees. If any damage results from any negligent act or omission
of Tenant, Landlord may, at Landlord's option, repair such damage and Tenant
shall thereupon pay to Landlord promptly upon demand the total reasonable cost
of such repair. All personal property belonging to Tenant or any occupant of the
Premises that is in or on any part of the Building shall be there at the risk of
Tenant or of such other person only, and Landlord, its agents and employees
shall not be liable for any damage thereto or for the theft or misappropriation
thereof unless such damage, theft, or misappropriation is a result of the
negligent act or omission or intentional misconduct of Landlord or Landlord's
agents or employees.
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B. Loss of Business, Etc.. Landlord shall not in any event be
liable for loss of business of Tenant nor salaries paid to Tenant's employees,
agents, or contractors, nor for any latent defect in the Premises or the
Building. Tenant shall give prompt written notice to Landlord in case of theft,
fire, or accidents in the Premises or in the Building or of defects therein or
in the fixtures or equipment.
C. Indemnification. Except for Landlord's negligent act or
omission or intentional misconduct or those of Landlord's agents, contractors
and employees, Tenant covenants and agrees that Tenant will have sole liability
for any claims, demands, penalties, or liabilities to the extent that same may
arise out of or be connected with Tenant's occupation, use or enjoyment of the
Premises or the Building and, unless Tenant's insurers require otherwise except
as set forth below, Tenant will release, discharge, indemnify and hold Landlord
harmless, from and against all finally adjudicated or settled claims, demands,
penalties and liabilities for any damage or injury to persons, firms,
corporations or property suffered, sustained or incurred as a result of or in
connection with or arising out of and to the extent of any negligent act or
omission of Tenant or its agents, employees, contractors, licensees and business
invitees, in connection with the occupation, use, or enjoyment of the Premises
or the Building by the Tenant, including the reasonable cost of defending
against such claims or demands. Tenant shall indemnify and save harmless
Landlord from and against any and all liability and damages, and from and
against any and all suits, claims, and demands of every kind and nature,
including reasonable counsel fees, by or on behalf of any person, firm,
association or corporation arising out of or based upon any accident, injury or
damage to the extent same is caused by the negligent or willful act or omission
of Tenant, however occurring, which shall or may happen during the Term hereof,
on or about the Premises, and from and against any matter or thing growing out
of the condition, maintenance, repair, alteration, use, occupation or operation
of the Premises by Tenant; the foregoing indemnity shall not include punitive or
consequential damages. Notwithstanding anything contained herein to the
contrary, Tenant does not agree to indemnify or hold harmless Landlord from, and
Landlord hereby agrees to indemnify and hold harmless Tenant from, claims,
demands, penalties or liabilities to the extent they are the result of acts or
omissions of Landlord, its agents, servants, contractors or employees, other
tenants or occupants of the Building which constitute negligence or willful
misconduct, or which constitute a breach of Landlord's obligations hereunder. In
case of any action or proceeding on any such claim or demand being brought
against Landlord or Tenant, as the case may be, Landlord or Tenant, as the case
may be, upon notice from the other, covenants to resist and defend such action
or proceeding (except and to the extent that such is the result of the negligent
act, omission or intentional conduct of the other party or that such is the
result of a breach by the other of its obligations hereunder). Either party may
also resist and defend
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such action in the event the other party fails or refuses to do so, and in such
event, the failing or refusing party shall reimburse the other party promptly on
demand for all reasonable costs which the other party may incur in so doing.
11. INSURANCE
A. By Tenant. During the Term of this Lease, Tenant,
at its sole cost and expense, shall carry and maintain the
following types of insurance, in insurance companies which are
authorized to do business in the State of Connecticut and which
are reasonably satisfactory to Landlord.
(i) Property Insurance. Property insurance
covering Tenant's personal property kept on the Premises and on all improvements
which may have been made by Tenant to the Premises and owned by Tenant.
(ii) Liability Insurance. Comprehensive general
liability insurance and personal injury liability insurance, insuring Tenant and
Landlord, as an additional insured, against liability for injury to persons
(including death) or damage to property occurring in or about the Premises or
arising out of the ownership, maintenance, use, or occupancy thereof. Said
Policy shall insure against any claim up to $1,000,000.00, in the case of death
or bodily injury to one person and up to $2,000,000.00 in the case of any one
accident involving death or bodily injury to more than one person, and shall
insure against any claim for property damage up to $1,000,000.00 with a
contractual obligation endorsement.
(iii) Worker's Compensation. Workers
compensation insurance insuring Tenant from all claims for personal injury,
disease, and/or death under the worker's compensation law of the State of
Connecticut, as required by law.
(iv) Tenant To Furnish Certificates. Tenant
shall furnish Landlord certificates evidencing said insurance policies within
ten (10) days after the execution of this Lease and thereafter upon Landlord's
request. Such policies shall provide that coverage may not be canceled or
reduced without at least thirty (30) days' written notice first given to
Landlord. Tenant shall have the privilege of procuring and obtaining all such
insurance through its own sources; provided, however, that Tenant's failure to
produce and maintain said insurance may be declared a default hereunder.
(v) Waiver of Subrogation. Landlord and Tenant
hereby mutually waive their respective rights of recovery against each other for
any loss insured or required to be insured against pursuant to this Lease, but
only to the extent that this provision does not invalidate or make it impossible
to secure insurance coverage. Each party shall obtain any special endorsements,
if required by its insurer, to evidence compliance
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with this waiver. Each party shall use its best efforts to cause each insurance
policy it obtains to provide that the insurer thereunder waives all right of
recovery by way of subrogation as required herein in connection with any injury
or damage covered by the policy. If such waiver of subrogation is only available
at additional cost, and the party for whose benefit the Waiver is obtained does
not pay such additional cost, then such party shall waive the benefit of this
waiver of subrogation. In any event of loss wherein there exists a duplication
in the insurance coverage of Landlord and Tenant, Tenant agrees that its
coverage shall first be applied to such losses. In the further event that such
losses are covered by more than one of Tenant's insurance policies, no dispute
or claim of subrogation between or among any such carriers shall cause or allow
Tenant to unreasonably defer or delay any payment hereunder to be made by
Tenant.
B. By Landlord. Landlord shall maintain during the term of
this Lease a policy of "all risk" extended coverage, fire and property damage
insurance covering loss or damage to the Building of which the Premises is a
part in the amount of 100% of the full replacement value thereof, including
rental interruption insurance for a period of at least twelve (12) months.
Landlord shall provide to Tenant reasonably satisfactory certificates evidencing
such insurance prior to commencement of this Lease and thereafter upon request
of Tenant. All such insurance shall name Tenant as an additional insured and
shall provide that such insurance shall not be terminated without at least
thirty (30) days prior written notice to Tenant.
C. Additional Insurance Provisions. All insurance provided for
in this Section 11 shall be effected under standard form policies issued by
insurers of recognized responsibility, licensed and authorized to do business in
the state in which the Premises are located, and having a Best's Financial
rating of A-VII or better or an equivalent rating from a recognized insurance
rating service. Notwithstanding anything to the contrary hereinabove contained,
Landlord or Tenant may, at its option, include any of the insurance coverage
hereinabove set forth in general or blanket policies of insurance provided that
the coverage afforded will not be reduced or diminished by reason of the use of
such general or blanket policies and may be effected by any combination of
basic, excess or umbrella coverage.
12. ASSIGNMENT AND SUBLETTING
A. Consent. Tenant may sublet the Premises or any part
thereof or transfer possession or occupancy thereof to any person, firm or
corporation, or transfer or assign this Lease, pursuant to the provisions of
this Section 12, during the term hereof including any Extension Periods,
subject to Landlord's prior approval, which shall not be unreasonably withheld
or delayed. Landlord must notify Tenant in writing within (i) fourteen (14) days
after Tenant's notification to Landlord of its
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intent to sublet the Premises, and (ii) thirty (30) days after Tenant's
notification to Landlord of its intent to assign the Lease whether Landlord is
withholding its consent and the reasons for same. If Landlord's consent to any
proposed assignment or subletting is required and is not given or withheld
within fourteen (14) days or thirty (30) days, as the case may be, following
Tenant's request therefor, such consent shall be deemed given.
No assignment, subletting, occupancy or other transfer,
whether or not permitted hereunder with or without the Landlord's express
written consent shall relieve Century Communications Corp. (herein the "Original
Tenant") of any of its liabilities and obligations pursuant to this Lease;
however, in the event of an assignment of this Lease to any person or entity,
which at the time of the assignment, has a net worth in accordance with
generally accepted principles of accounting equal to or greater than the
consolidated net worth of the Original Tenant (such comparison shall take into
account and include as part of the assignee's net worth, the net worth of any
affiliate of the assignee who executes a guaranty of the tenant's obligations
under this Lease) on the date hereof, then subject to the terms and conditions
of this Section 12 from and after the date of such assignment, Tenant named
herein shall be relieved of all obligations of Tenant under this Lease other
than those accruing prior to the date of such assignment. If Tenant desires to
assign the Lease in accordance with this Section 12, Tenant shall give written
notice to Landlord at least sixty (60) days prior to the proposed commencement
date of the assignment. The notice shall set forth the following: (i) the name
of the proposed assignee, (ii) the current balance sheet and profit and loss
statements for the proposed transferee or any other person or entity to be
liable for Tenant's obligations under this Lease covering the prior three years
(or for such shorter period as the proposed transferee or other person may have
been in existence), all certified as true and correct by the proposed
transferee, other person or an authorized officer thereof, (iii) audited
statements of net worth prepared by a nationally recognized certified public
accountant for both the Original Tenant (such statement shall show the Original
Tenant's net worth as of the date hereof) and the proposed assignee prepared in
accordance with generally accepted accounting principles, (iv) a full
description of the terms and conditions of the proposed assignment, including
copies of any and all documents and instruments, any purchase and sale
agreements, assignment agreements and all other writings concerning the proposed
transfer, and (v) a description of the proposed use of the Demised Premises by
the proposed transferee, including any required or desired Tenant Improvements
that may be undertaken by such transferee in order to facilitate its proposed
use. Landlord shall within thirty (30) days after receipt of all of the above
either grant its approval or disapproval of said assignment, any disagreements
shall be submitted to arbitration in accordance with Section 36. If Landlord
shall approve such
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assignment, as a precondition to such assignment, the proposed assignee shall
assume, pursuant to an assignment form reasonably approved by Landlord, all
liability and obligations of whatsoever nature pursuant to the Lease.
Notwithstanding the foregoing, the deliveries provided for in clauses (i)
through (v) above shall not be required if the Original Tenant shall not seek a
release of liability in connection with said assignment.
B. Excess Rent. In the event Landlord has granted its written
consent to Tenant to sublet the Premises or assign this Lease, Tenant may sublet
all or a portion of the Premises or assign this Lease.
From and after the effective date of the subletting, Tenant
shall pay to Landlord as Additional Rent monthly, fifty percent (50%) of that
portion of any Rent accruing to Tenant, if any, as the result of such sublease
to the extent that such amount is in excess of the Proportionate Share of Rent
then being paid by Tenant for the portion of the Premises being sublet after
deduction of the reasonable costs of doing same. Reasonable costs shall include
the costs customarily incurred in subletting in the commercial office rental
"market" as defined in Section 2.B hereof, including without limitation
advertising, legal fees, brokerage, Rent abatement, work letter obligations, and
other matters. Upon assignment of this Lease, Tenant shall pay to Landlord as
Additional Rent an amount equal to fifty (50%) percent of all sums paid to and
received by Tenant from an assignee for such assignment less any and all Rent
payable hereunder (to the extent that any sums paid to Tenant include any Rent
payable by Tenant to Landlord) and the reasonable costs and expenses incurred by
Tenant in connection with such assignment. Reasonable costs shall include the
costs customarily incurred in connection with an assignment in the commercial
office rental "market" as defined in Section 2.B hereof, including without
limitation advertising, legal fees, brokerage, Rent abatement, work letter
obligations, and other matters.
All sums payable hereunder by Tenant shall be paid to Landlord
as Additional Rent immediately upon receipt thereof by Tenant or by any
subtenant or other person claiming through or under Tenant.
C. Tenant Not Released. Subject to those matters set forth in
Section 12.A above, in the event of any subletting of all or any portion of the
Premises, Tenant shall remain jointly and severally liable to Landlord for
payment of all Rent stipulated herein and/or payment and performance of all
other covenants and conditions contained herein. Rent due from Tenant shall not
be diminished or abated during any remodeling or redecoration period. Landlord
may collect Rent from any sublessee and apply the net amounts collected to the
Base Rent and Additional Rent, but no such collection shall be deemed to be a
waiver of the provisions of this Section. Subject to those matters set forth in
Section 12.A above, in the event of
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assignment of this Lease, Tenant will not be relieved of any further obligations
and liability hereunder unless (i) the proposed assignee (and any proposed
guarantors of this Lease) has an equal or greater net worth to that of Tenant on
the date hereof, and (ii) the proposed assignee assumes all of Tenant's
liability and obligations hereunder.
D. Assignment or Sublet to Affiliate. Notwithstanding anything
to the contrary in this Section 12, Tenant may, without Landlord's prior written
consent and without any participation by Landlord in assignment and subletting
proceeds (or Excess Rents), sublet the Premises or assign this Lease to: (i) a
subsidiary, affiliate, division or corporation controlled or under common
control with Tenant; or (ii) a successor corporation related to Tenant by merger
or consolidation. For the purpose of this Lease, sale of Tenant's capital stock
through any public exchange shall not be deemed an assignment, subletting, or
any other transfer of this Lease or the Premises.
13. CONDITION OF PREMISES. At the termination of this Lease, Tenant
shall return the Premises with all Tenant's personal property removed therefrom,
broom clean and in as good condition as of the Commencement Date (as modified by
any Tenant Improvements), ordinary wear and tear, casualty and condemnation
excepted, failing which Landlord may restore the Premises to such condition and
Tenant shall pay the reasonable cost thereof promptly on demand, provided,
however, that Tenant shall have no obligation to restore the Premises to the
physical condition that existed prior to the commencement of either this Lease
or any prior lease between the parties.
14. OBLIGATION TO REPAIR
A. Tenant's Obligation. Tenant agrees and covenants to keep the
Premises in as good order, condition, and repair as when the same were entered
upon, ordinary wear and tear, casualty and condemnation excepted. Tenant
shall have no obligation whatsoever to make any repairs which are other than
ordinary and non-capital, except that all damage or injury to the Building or to
the Premises, fixtures, appurtenances and/or equipment to the extent caused by
Tenant's negligence and/or willful misuse shall be repaired, restored, or
replaced promptly by Tenant at its sole cost and expense. Tenant shall be
granted access to all parts of the Building and the Property for said purpose.
All repairs, restorations, and replacements shall be in quality and class equal
to the original work or installations and shall be done to Landlord's reasonable
satisfaction. If Tenant fails to keep the Premises in such good order,
condition, and repair as required hereunder after notice by Landlord, latent
defects excepted, Landlord may restore the Premises to such good order and
condition and make such repairs.
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B. Landlord's Obligation. Landlord shall, except as expressly
provided for in Section 14.A above, be responsible to repair and maintain the
Building, the Property and the Common Areas and to maintain same in a manner
consistent with first class office buildings in New Canaan, Connecticut. Such
obligation shall include ordinary and extraordinary expenses as well as capital
repairs and replacements, expressly including without limitation the structural
portions of the Building, the basic plumbing, air conditioning, heating, and
electrical systems, unless and to the extent that the condition requiring such
maintenance is caused in part or in whole by the act, neglect, fault or omission
of any duty by Tenant, its agents, servants, employees or invitees, in which
case Tenant shall pay Landlord the reasonable cost of such maintenance or
repairs arising through Tenant's fault. There shall be no abatement of Rent and
no liability of Landlord by reason of any injury or interference with Tenant's
business arising from the making of any repairs, alterations or improvements in
or to any portion of the Building or the Premises or in or to fixtures,
appurtenances and equipment therein. However, if such interruption or
discontinuance (unless and to the extent caused by Tenant's negligence or
willful conduct) shall continue for three (3) consecutive Business Days (as
defined below) or for more than eight (8) Business Days in any Lease Year, and
if the Premises shall be rendered untenantable in whole or in part, all Rent
shall abate to the extent the Premises is untenantable during the pendency of
such discontinuance or interruption. Except as may otherwise be provided
hereunder, Tenant waives the right to make repairs at Landlord's expense under
any law, statute or ordinance now or hereafter in effect. If Landlord shall in
good faith dispute Tenant's right to abate Rent, Landlord may commence an
arbitration proceeding pursuant to Section 36 to settle the dispute. Pending the
determination of the arbitrators (provided that Landlord is actively and
diligently prosecuting same to completion), the Rent shall not be abated. Upon
such determination, if Tenant is found to have had the right to abatement, then
Tenant shall have the right to offset against Rent (i) the amount of any such
abatement plus interest at the Interest Rate from the date of the interruption
or discontinuance of service, plus (ii) all reasonable attorneys' fees and costs
incurred by Tenant in connection with such arbitration and in connection with
enforcing this Section and in obtaining and enforcing any determination and/or
judgment.
15. LIABILITY. Landlord assumes no liability or responsibility whatever
with respect to the conduct and operation of the business to be conducted in the
Premises by Tenant nor for any loss or damage, of whatsoever kind or by
whomsoever caused, to personal property, documents, records, monies, or goods of
Tenant or to anyone in or about the Building unless said loss or damage is
caused by Landlord's negligent act, omission or intentional conduct.
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16. DAMAGE TO LEASED PREMISES
A. Casualty Damage. If the Premises or any part thereof shall
be damaged by fire or other casualty, Tenant shall give immediate notice thereof
to Landlord; however, this Lease shall continue in full force and effect except
as hereinafter set forth. If the Premises are partially unusable, the damage
thereto shall be repaired by Landlord with reasonable dispatch after Landlord is
provided with a reasonable opportunity to collect the insurance proceeds
attributable to such damage, but in no event longer than two hundred ten (210)
days from the date upon which such damage occurred, subject to delays due to
causes beyond Landlord's control; and Rent, until such repairs shall be
substantially completed, shall be apportioned from the date of the casualty
according to the part of the Premises which is unusable. Landlord, however,
shall have no obligation to repair any damage to Tenant's Property or any other
property or effects of Tenant. If the Premises are totally damaged or rendered
wholly unusable by fire or other casualty, then the Rent shall be
proportionately paid up to the time of the casualty and thenceforth shall cease
until the date when the Premises shall have been repaired and restored by
Landlord, subject to Landlord's right to elect not to restore the same as
hereinafter provided.
B. Damage Termination. If the Premises are rendered wholly
unusable (whether or not the Premises are damaged in whole or in part) or if the
Building shall be so damaged that Landlord shall decide to demolish it or not to
rebuild it, then in either of such events, Landlord may elect to terminate this
Lease by written notice to Tenant given within sixty (60) days after such fire
or casualty. Such notice shall specify a date for the expiration of this Lease,
and upon the date specified the Term shall expire as fully and completely as if
such date were the date set forth above for the termination of this Lease, and
Tenant shall forthwith quit, surrender and vacate the Premises without
prejudice, however, to Landlord's rights and remedies against Tenant under the
Lease provisions in effect prior to such termination. Any Rent owing shall be
paid up to the date of the casualty, and any payments of Rent made by Tenant
which were on account of any period subsequent to such date shall be returned to
Tenant. Unless Landlord shall serve a termination notice as provided for herein,
Landlord shall make repairs and restoration as herein set forth with reasonable
dispatch after a reasonable period of time has been allowed to provide for
collection of the insurance proceeds awarded to Landlord as provided in Section
11, but in no event longer than two hundred ten (210) days from the date upon
which such damage occurred. If restoration is not completed within said two
hundred ten (210) days, Tenant may terminate this Lease within ten (10) Business
Days after such expiration, on written notice to Landlord.
C. Landlord Will Not Insure. Tenant acknowledges that,
Landlord will not carry insurance on Tenant's Property or
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on Tenant's business records or other property of Tenant or Tenant's agents, and
Tenant agrees that Landlord will not be obligated to repair any damage thereto
or to replace the same, except as specifically provided in Section 16 hereof.
17. CONDEMNATION
A. Entire Award. In the event that the Property, Building,
or any part thereof, or the Premises or any part thereof, shall be taken in
condemnation proceedings or by the exercise of any right of eminent domain or
by agreement between the Landlord on the one hand and any governmental authority
authorized to exercise such right on the other hand, the Landlord shall be
entitled to collect from any condemnor the entire award or awards that may be
made in any such proceeding.
B. More Than 25% Taking. At any time during the Term, if title
to a portion greater than twenty-five (25%) percent of the Property, Building
and/or Premises shall be taken in condemnation proceedings or by the exercise of
any right of eminent domain or by agreement between Landlord on the one hand and
any governmental authority authorized to exercise such right on the other hand,
this Lease shall terminate and expire on the date of such taking, and the Rent
provided to be paid by Tenant shall be apportioned and paid to the date of such
taking.
C. Less than 25% Taking. However, if less than twenty-five
percent (25%) of the Property, Building and/or the Premises shall be so taken,
this Lease nevertheless shall continue in full force and effect, except that
Tenant may elect to terminate this Lease if (i) that portion of the Premises
then occupied by Tenant shall be reduced by five percent (5%) or more, (ii) five
(5%) percent or more of the Premises shall become untenantable, or (iii)
tenant's parking rights shall be reduced by five (5%) percent or more, by notice
of such election to the Landlord not later than thirty (30) days after (x)
notice of such taking is given by the condemning authority, or (y) the date of
such taking, whichever occurs later. Upon the giving of such notice this Lease
shall terminate on the date of service of such notice and the Rent due and to
become due shall be prorated and adjusted as of the date of the taking. If a
condemnation or taking shall not give rise to a termination right of Tenant
pursuant to this Section 17 or should Tenant fail to give such notice upon such
partial taking and this Lease continues in force as to any part of the Premises
not taken, the Rent apportioned to the part taken shall be prorated and adjusted
as of the date of taking. From such date, the Rent shall be reduced to the
amount apportioned to the remainder of the Premises, and the Tenant's
Proportionate Share shall be recomputed to reflect the number of square feet
remaining in the Premises in relation to the number of square feet of Building
remaining in the Building. Tenant shall receive a reasonable abatement of Rent
to account for any lost parking or Common Area usage.
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D. Rights to Condemnation Award. Tenant shall not be entitled
to any portion of any condemnation award or private purchase price. Tenant
hereby expressly assigns to Landlord all of its rights in and to every such
award and agrees to execute any and all documents required to facilitate
collection thereof by Landlord. Notwithstanding the foregoing provisions of this
Section, Tenant shall be entitled to appear, claim, prove and receive in the
proceedings relating to any taking mentioned in the preceding Sections of this
Section such portion of each award made therein as represents (a) Tenant's
moving expenses, (b) the then value of Tenant's personal property, and (c) the
unamortized value over the Term of the Tenant Improvements to the Premises,
depreciated from the date of installation thereof to the date of taking,
provided the same shall have been installed by or at the Tenant's expense but
regardless of whether the Tenant Improvements might be considered a part of the
Premises or shall be or become the property of the Landlord under the terms of
this Lease.
E. Landlord to Repair. In the event of any taking of less than
the whole of the Building which does not result in a termination of this Lease,
or in the event of a taking of any part of the Premises which does not result in
a termination of this Lease, Landlord at its expense shall proceed with due
diligence to repair, alter and restore the remaining part of the Building and
the Premises to substantially the same condition as it was in immediately prior
to such taking to the extent that the same may be feasible so as to constitute a
tenantable Building and Premises, provided that Landlord's liability under this
Section shall be limited to the amount received by Landlord as an award arising
out of such taking. If such award is less than adequate (and Landlord does not
supplement the award) to repair and restore to the foregoing standard, Tenant
may upon ninety (90) days notice to the Landlord cancel and terminate this Lease
unless within such period repair and restoration to such standard has been
accomplished.
18. NOTICES. All notices which may be or are required to be given by
either party to the other shall be in writing and mailed, postage prepaid, by
United States Postal Service, certified or registered mail, or sent prepaid by
private, reputable overnight delivery service such as Federal Express, and shall
be deemed effective three (3) days after deposit with the United States Postal
Service or one (1) day after deposit with an overnight delivery service to the
following addresses or such other addresses as the parties shall designate in
writing:
If to Landlord:
Stephen Gulick Jr.
50 Locust Avenue
New Canaan, CT 06840
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with a copy to:
Gerald T. Weiner, Esq.
P.O. Box 9177
350 Fairfield Avenue
Bridgeport, CT 06601
If to Tenant:
Scott N. Schneider
Senior Vice President and Treasurer
Century Communications Corp.
50 Locust Avenue
New Canaan, CT 06840
with a copy to:
Legal Department
Century Communications Corp.
50 Locust Avenue
New Canaan, CT 06840
19. DEFAULT AND REMEDIES
A. Default. The occurrence of any one or more of the
following events shall constitute a default and breach of this Lease by Tenant:
(i) The failure by Tenant to make any payment of
Rent or other monetary payment required to be made by Tenant hereunder, as and
when due, where such failure shall continue for a period of ten (10) days after
written notice from Landlord.
(ii) The failure by Tenant to observe or perform
any of the covenants, conditions, or provisions of this Lease to be observed or
performed by Tenant, or other than to make payments as required by this Lease,
where such failure shall continue for a period of thirty (30) days after written
notice thereof by Landlord to Tenant; provided, however, that if the nature of
Tenant's failure is such that more than thirty (30) days are reasonably required
for its cure, then Tenant shall not be in default if Tenant commences such cure
within said thirty (30) day period and thereafter diligently prosecutes such
cure to completion.
(iii) The making by Tenant of any general
assignment or general arrangement for the benefit of creditors; or the filing by
or against Tenant of a petition to have Tenant declared bankrupt, or a petition
of reorganization or arrangement under any law relating to bankruptcy unless, in
the case of a petition filed against Tenant, the same is dismissed within thirty
(30) days; or the appointment of a trustee or a receiver to take possession of
substantially all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease
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where possession is not restored to Tenant within thirty (30) days; or the
attachment, execution, or other judicial seizure of substantially all of
Tenant's assets located at the Premises or of Tenant's interest in this Lease,
where such seizure is not discharged within thirty (30) days after the levy
thereof.
B. Remedies. In the event of any material default or
material breach by Tenant beyond applicable notice and grace provisions,
Landlord may at any time thereafter, after notice and demand but without
limiting Landlord in the exercise of any right which Landlord may have pursuant
to the terms and conditions of this Lease by reason of such default or breach,
terminate this Lease pursuant to this express stipulation, in which event this
Lease shall expire and terminate and Landlord shall be entitled to recover
possession of the Premises in the manner prescribed by the statute relating to
summary process; and Landlord shall have the right to proceed as follows:
(i) Re-enter and take possession of the Premises
or any part thereof and repossess the same as of Landlord's former estate and
expel Tenant and those claiming through or under Tenant, and remove the effects
of both or either without being deemed guilty in trespass or of a forcible entry
or detainer and without prejudice to any remedies for arrears of Rent or
preceding breach or covenants. In such event, Landlord shall be entitled to
recover from Tenant all actual damages (as opposed to consequential or punitive)
incurred by Landlord by reason of Tenant's default, including, but not limited
to, the reasonable cost of recovering possession of the Premises, expenses of
reletting, including reasonably necessary renovation and alteration of the
Premises, reasonable attorneys' fees and any real estate commission actually
paid. Such damages shall bear interest from the date due at the Interest Rate.
(ii) Tenant, until the end of the Term or what
would have been such Term in the absence of any such event (expressly excluding
any unexercised Extension Periods), shall be liable to Landlord as damages for
Tenant's default, the equivalent of the amount of the Base Rent and the
Additional Rent and charges which would be payable under this Lease by Tenant if
this Lease were still in effect, less the net proceeds of any reletting after
deducting all Landlord's reasonable expenses in connection with such reletting,
including, without limitation, all reasonable repossession costs, brokerage and
management commissions, legal expenses, reasonable attorney's fees, reasonable
and customary alteration costs, the cost of which shall be amortized, and only
that portion attributable to the remainder of this Lease Term shall be included
in this calculation, and reasonable expenses of preparation for such reletting.
Tenant shall pay such current damages (herein called "deficiency") to Landlord
monthly on the days on which the Rent would have been payable under this Lease
if this Lease were still in effect, and Landlord shall be entitled to recover
from Tenant each monthly deficiency as the same shall arise. Landlord shall
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use reasonable efforts in order to relet the Premises. Landlord
shall use reasonable efforts in order to relet the Premises.
(iii) In the event of termination of the Term by
the happening of any such event, Landlord shall forthwith, upon such
termination, any other provisions of this Lease to the contrary notwithstanding,
become entitled to recover as and for liquidated damages caused by such breach
of the provisions of this Lease an amount equal to the difference between (a)
the then present cash value of the future Rent reserved hereunder for the
unexpired portion of the Term, and (b) the then present cash rental value of the
Premises for the balance of the Term, unless the statute which governs shall
limit the amount of such claim capable of being so proved, in which case
Landlord shall be entitled to prove as and for liquidated damages an amount
equal to that allowed by or under such statute. All present value calculations
shall assume a discount rate equal to twelve (12%) percent per annum. Upon
collection of such liquidated damages, Landlord shall not have the right to
collect any other sums. Further, it is not the intention of the parties that
Landlord shall collect any sums that shall be duplicative of any other damages
collected in accordance with this Lease.
Except as may be provided in section (iii) above, the
foregoing remedies may be pursued severally or jointly. However, unless a remedy
is expressly reserved to Landlord pursuant to this Section 19 or otherwise
provided for in this Lease such remedy shall not be available to Landlord. The
remedies provided in this Section 19 and in this Lease shall be the sole and
exclusive remedies of Landlord. Subject to the terms and conditions of this
Section 19, no exercise by Landlord of the foregoing remedies, and no expiration
or termination of this Lease, or summary proceedings, abandonment or vacancy
effected pursuant to this Section 19, shall relieve Tenant of its liability and
obligation under this Lease, whether or not the Premises shall be relet. In any
such event Tenant shall pay Landlord the Base Rent, Additional Rent, and other
charges required to be paid by Tenant up to the time of such event.
C. Specific Performance. In the event of any breach
or threatened breach by Tenant of any of the agreements, terms,
covenants or conditions contained in this Lease, Landlord shall
be entitled to enjoin such breach or threatened breach.
20. BANKRUPTCY. If at any time during the Term of this Lease, a
petition shall be filed, either by or against Tenant, in any court or pursuant
to any federal, state or municipal statute, whether in bankruptcy, insolvency,
for the appointment of a receiver, involving Tenant's business or property or
because of any general assignment made by Tenant of Tenant's property for the
benefit of Tenant's creditors, then immediately upon the happening of any such
event, in addition to any other remedy available to Landlord hereunder and
without any entry or other act by Landlord, this Lease, at Landlord's option,
shall cease
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and come to an end with the same force and effect as if the date of the
happening of any such event were the date herein fixed for the expiration of the
Term. Nonetheless, in the event of an involuntary bankruptcy petition against
Tenant, Tenant shall have sixty (60) days in which to obtain a final dismissal
of said petition.
21. LANDLORD AND TENANT DEFINED
A. Definition. The term "Landlord" as used in this Lease
insofar as covenants or obligations on the part of Landlord are concerned, shall
be limited to mean and include only the entity signing below as such or any
owner or owners at the time in question of the fee of the Premises who have
derived title through or under the undersigned. In the event of any transfer of
title to such fee, Landlord herein named (and in the case of any subsequent
transfers or conveyances, the then grantor) shall automatically be freed and
relieved from and after the date of such transfer or conveyance of all liability
as respects the performance of any covenants or obligations on the part of
Landlord contained in this Lease thereafter to be performed, provided that the
transferee shall assume in writing the obligations and liability of the Landlord
as hereunder provided and further provided that any funds in the hands of such
Landlord, or the then grantor, at the time of such transfer in which Tenant has
an interest, shall be turned over to the grantee, and any amount then due and
payable to Tenant by Landlord, or the then grantor under any provisions of this
Lease, shall be paid to Tenant.
The term "Tenant" shall mean the Tenant named herein or any
assignee or sublessee described in Section 12 hereof.
B. Limitations of Assets Liable for Collection of Judgment: No
Personal Liability. Tenant shall look solely to the estate and property of such
Landlord in the Building of which the Premises are a part for the satisfaction
of Tenant's remedies for the collection of a judgment (or other judicial
process) requiring the payment of money by Landlord in the event of any default
or breach by Landlord with respect to any of the terms covenants, and conditions
of this Lease to be observed and/or performed by Landlord, and no other property
or assets of such Landlord, or of any shareholder, officer, director or partner
of Landlord, shall be subject to levy, execution, or other enforcement procedure
for the satisfaction of Tenant's remedies. Notwithstanding the above, Landlord
covenants that it shall maintain sufficient insurance to provide coverage of the
scope of its duties relative to this Lease, and the limitations stated in this
provision should not extend to such insurance. Failure of Landlord to maintain
insurance upon the Building shall void this provision.
22. RECORDING LEASE PROHIBITED. Tenant shall not record
this Lease but may record a statutory short form memorandum
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hereof in form reasonably acceptable to Landlord. All recording costs for the
memorandum shall be paid by Tenant. Landlord shall promptly execute any such
memorandum of lease in recordable form and shall fully cooperate with Tenant in
order to assure that such memorandum shall be recorded of record.
23. PREVAILING PARTY IN LEGAL PROCEEDINGS. In the event any action is
commenced for any breach of any covenant, condition, or agreement herein
contained, the prevailing party in such action shall be entitled to receive from
the non-prevailing party all reasonable costs incurred in such action,
including, without limitation, all reasonable attorneys' fees.
24. SEVERABILITY. If any clause or provision of this Lease is or
becomes illegal, invalid, or unenforceable, the intention of the parties hereto
is that the remaining parts of this Lease shall not be affected thereby, and a
suitable and equitable provision shall be substituted for the illegal, invalid
or unenforceable provision in order to carry out, as far as may be legal, valid
and enforceable, the intent and purpose of such illegal, invalid or
unenforceable provision.
25. HOLDING OVER. If after the expiration of this Lease, Tenant shall
remain in possession of the Premises and continue to pay Rent, without any
written agreement as to such holding, then such holding shall be deemed and
taken to be a holding upon a tenancy from month to month, subject to all the
terms and conditions hereof on the part of Tenant to be observed and performed
and at a monthly rental equivalent to one hundred fifty (150%) percent of the
monthly installments of Base Rent hereinabove provided for during the year
immediately preceding together with the Additional Rent, all of which shall be
payable in advance on the first day of each calendar month.
26. RE-ENTRY BY LANDLORD. Tenant waives any and all right of
redemption, re-entry or repossession in case Tenant shall be dispossessed by
judgment or by warrant of any court or judge or in case of re-entry or
repossession by Landlord or in case of any expiration or termination of this
Lease. The terms "enter", "re-enter," "entry" and "re-entry" as used in this
Lease are not restricted to their technical legal meanings.
27. NO WAIVER. No failure by either party to insist upon the strict
performance of any agreement, term, covenant or condition hereof or to exercise
any right or remedy consequent upon a breach thereof, and no acceptance of full
or partial Rent during the continuance of any such breach, shall constitute a
waiver of any such breach or of such agreement, term, covenant or condition. No
agreement, term, covenant or condition hereof to be performed or complied with
by either party, and no breach thereof, shall be waived, altered or modified
except by a written instrument executed by the other party. No waiver of any
breach shall affect or alter this Lease, but each and every agreement, term,
covenant and condition hereof shall continue in force and
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effect with respect to any other then existing or subsequent breach thereof. In
the event of any breach or threatened breach by Tenant of any of the agreements,
terms, covenants or conditions contained in this Lease, the other party shall be
entitled to enjoin such breach or threatened breach and shall have the right to
invoke any right and remedy allowed at law or in equity or by statute or
otherwise as though re-entry, summary proceedings, and other remedies were not
provided for in this Lease.
28. OTHER REMEDIES
A. No Obligation to Cure. Landlord or Tenant, as the case may
be, may, but shall not be obligated to, cure, at any time upon ten (10) days'
notice or without notice in case of emergencies, any default(s) by Tenant or
Landlord, as the case may be, under this Lease, and Tenant or Landlord, as the
case may be, shall pay to Landlord or Tenant, as the case may be, promptly on
demand, all reasonable costs and expenses incurred by Landlord or Tenant, as the
case may be, in curing such default(s), including, without limitation, court
costs and reasonable attorneys fees and disbursements in connection therewith,
together with interest on the amount of costs and expenses so incurred from the
date of demand at the rate (herein the "Interest Rate") of the lesser of (i)
twelve percent (12%) per annum or (ii) the maximum rate then permissible under
Connecticut law, until paid.
B. Judgment Offset. Landlord acknowledges that if Tenant
obtains a judgment (or a determination by the arbitrators pursuant to Section
36) against Landlord for an amount due the Tenant by Landlord, Tenant may offset
the amount thereof against the next Rent payments due from Tenant to Landlord
hereunder, together with (i) interest at the Interest Rate accruing from the
first date such payments were due and payable to Tenant by Landlord pursuant to
this Section 28 or otherwise pursuant to this Lease, and (ii) all reasonable
attorneys' fees and costs incurred in obtaining such judgment and/or
determination and in connection with enforcing this Section and enforcing any
determination and/or judgment.
Each right and remedy provided for in this Lease shall be
cumulative and shall be in addition to every other right or remedy provided for
in this Lease or now or hereafter existing at law or in equity or by statute or
otherwise (except that Landlord's remedies shall be limited as provided for in
Section 19 of this Lease), and except as otherwise provided for in this Lease
the exercise by Landlord or Tenant of any one or more of the rights or remedies
provided for in this Lease or now or hereafter existing at law or in equity or
by statute or otherwise shall not preclude the simultaneous or later exercise by
the party in question of any or all other rights or remedies provided for in
this Lease or now or hereafter existing at law or in equity or by statute or
otherwise.
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29. NOTICE OF MORTGAGEES. Tenant agrees that in the event Tenant shall
claim any event of default or non-performance hereunder on the part of Landlord
or shall claim that there exist any circumstances whatsoever which give rise (or
with the passage of time would give rise) to a right of termination on the part
of Tenant hereunder, Tenant shall give immediate written notice of such event or
such circumstances to all mortgagees of Landlord of record who have made written
request to Tenant to be provided such notice, in addition to and separate from
any notice required to be given to Landlord hereunder. Provided that such
mortgagee shall indemnify and hold Tenant harmless from any loss, cost or
expense (including without limitation reasonable legal fees and expenses) by
reason of such delay. Notwithstanding anything to the contrary contained
elsewhere herein, any such mortgagee shall be given a period of fifteen (15)
days after receipt of such notice in which to cure any such event or
circumstances, the doing of which by any such mortgagee shall be deemed to
constitute a cure of such event or circumstances under this Lease,
notwithstanding that such cure shall not have been performed by Landlord
hereunder.
30. ENVIRONMENTAL LAWS
A. Compliance. Landlord represents and warrants to Tenant that as
of the date hereof to the best of Landlord's knowledge, the Building and
Property are in full compliance with Environmental Laws (as defined below).
Subject to the foregoing representation, Landlord and Tenant each covenant on
behalf of themselves, their agents, employees and assigns at all times during
the Term and any Extension Periods, to comply with all federal, state and local
environmental laws, rules and regulations with respect to the Premises, the
Building and the Property, including without limitation the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. Sec. 6901 et. seq., as amended
("RCRA"), or any similar federal, state or local laws or regulations, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. Sec. 9601, et. seq., as amended ("CERCLA") or the Toxic Substances
Control Act, 15 U.S.C. Sec. 2601 et. seq., as amended ("TSCA"), or any similar
federal, state or local laws and regulations, the Federal Water Pollution
Control Act, 33 U.S.C. Sec. 1251 et. seq., as amended ("FWPCA"), or the Clean
Air Act, 42 U.S.C. Sec. 7401, et. seq., as amended ("CAA"), respectively, or any
similar federal, state or local laws or regulations, Sections 22a-448 through
22a-457 of the Connecticut General Statutes, as amended, and as the same may
be further amended from time to time (the "Superlien Statute"), or any similar
applicable federal or state laws, regulations or ordinances (collectively, the
"Environmental Laws"). The parties further represents and warrants (i) that
neither shall undertake any activity at the Premises which would render the
Premises a hazardous waste treatment, storage or disposal facility, and (ii)
that neither will cause any discharge, spill, uncontrolled loss, seepage,
filtration of oil or petroleum or chemical liquids or solid, liquid or gaseous
products or hazardous waste (a "Spill"),
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as those terms are used in Sections 22a-448 through 22a-457 of the Connecticut
General Statutes, as amended, and as the same may be further amended from time
to time (the "Superlien Statute"). Without limiting the generality of any other
provision hereof and notwithstanding anything to the contrary, Landlord and
Tenant each covenant and agree to comply strictly and in all respects with the
requirements of the Environmental Laws, and to notify each other promptly upon
learning of any violation thereof upon the Premises or the Property, and to
forward to each other promptly copies of all notices, orders, reports, permits,
applications and other communications received or issued by Landlord or Tenant
in connection with any matters relating to the Environmental Laws as they may
affect the Premises or the Property.
In the event Landlord or Tenant, their agents, employees or
assigns fail to comply with the requirements of the Environmental Laws, the
noncomplying party shall undertake an environmental site assessment and cause
any remedial work to be performed at the Premises or on the Building or
Property, or take any and all other actions as required by law, as shall cure
said failure of compliance, and any amounts paid as a result thereof.
B. Indemnity. Notwithstanding and in addition to all other
remedies of Landlord or Tenant contained in this Lease, Landlord and Tenant each
further covenant and agree to indemnify the other and hold the other harmless
from and against all loss, liability, damage and expense, including reasonable
attorneys' fees, suffered or incurred by the other, arising out of or resulting
from a breach by the other, its agents, employees or assigns of Section 30.A
hereof, including the assertion of any lien thereunder arising because of any
violation of the Environmental Laws on or after the date hereof or any loss of
value of the Premises as a result of such spill (but excluding consequential and
punitive damages). It is expressly agreed that this indemnification provided for
herein shall survive the Term of this Lease, if necessary, as a consequence of
any violation of the Environmental Laws by Landlord or Tenant or either of their
agents, employees or assigns.
31. MISCELLANEOUS
A. Taxes. Tenant, at all times, shall be responsible
for and shall pay, before delinquency, all municipal, county, state, or federal
taxes which may be levied, imposed or assessed against Tenant's personal
property, its leasehold interest, its right to occupy the Premises, or the Rent,
except to the extent any such tax constitutes an income tax assessed against
Landlord or are typically taxes paid by landlords.
B. Accord and Satisfaction. No payment by Tenant or
receipt by Landlord of any lesser amount than the amount stipulated to be paid
hereunder shall be deemed other than on account of the earliest stipulated Rent;
nor shall any
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endorsement or statement on any check or letter be deemed an accord and
satisfaction, and Landlord may accept any check or payment without prejudice to
Landlord's right to recover the balance due or to pursue any other remedy
available to Landlord.
C. Representations by Landlord
(i) Landlord represents to Tenant that as of the
date hereof and throughout the Term of the Lease:
(a) to the best of Landlord's knowledge
after due inquiry, the Property, the Building and the
Premises are in compliance of all applicable laws and there
is a valid certificate of occupancy for the Premises,
(b) to the best of Landlord's knowledge
after due inquiry, the uses permitted to Tenant in this
Lease are permitted by all applicable laws,
(c) to the best of Landlord's knowledge
after due inquiry, the Premises, Building and the Property
are in good working order and free of latent defects,
(d) any consents and approvals required in
connection with the Landlord's execution of this Lease have
been obtained,
(e) Landlord and each person executing this
Lease on behalf of Landlord (or in any representative capacity) have
full right and lawful authority to execute this Lease.
(ii) Neither Landlord nor any agent or employee
of Landlord has made any warranties, representations or promises with respect to
the Building or the Premises except as herein expressly set forth.
D. Intentionally Omitted.
E. Waiver of Jury Trial and Right to Counterclaim/ Prejudgment
Remedy Waiver. Landlord and Tenant shall and they hereby do waive trial by jury
in any action, proceeding or counterclaim brought by either of the parties
hereto against the other on any matters arising out of or in any way connected
with this Lease, the relationship of Landlord and Tenant, Tenant's use or
occupancy of the Premises, and any emergency or other statutory remedy.
F. Intentionally Omitted.
G. Unavoidable Delays. Except for Tenant's obligations to pay
Rent, the time of Landlord or Tenant, as the case may be, to perform any of
their respective obligations hereunder shall be extended if and to the extent
that the
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performance thereof shall be prevented due to any strikes, lockouts, civil
commotions, warlike operations, invasions, rebellions, hostilities, military or
usurped power, governmental regulations or controls, inability to obtain labor
or materials despite due diligence, acts of God, or other causes beyond the
control of the party whose performance is required. Notwithstanding the
foregoing, any offset or abatement rights of Tenant provided for in this Lease
shall not be limited by the foregoing.
H. Brokerage
(i) Tenant represents that it has dealt with
Albert B. Ashforth, Inc. in connection with this Lease and covenants to pay all
compensation, commissions and charges in connection therewith. Tenant shall hold
harmless and indemnify Landlord from and against any and all costs, expenses and
liabilities, including reasonable attorneys' fees for any judicially proven
compensation, commissions and charges claimed by any broker or agent in respect
of this Lease or the negotiation hereof with whom Tenant is claimed to have had
dealings. The Tenant further represents that there is no other broker it has
dealt with and who is entitled to any fees or commissions in connection with
this transaction.
(ii) Landlord represents that it has not entered
into any listing agreement covering the Premises or this Lease and that it has
not dealt with any broker other than Tenant's broker, Albert B. Ashforth, Inc.
in connection with this Lease. Subject to Section H(i) above, Landlord further
represents that there is no other broker it has dealt with and who is entitled
to any fees or commissions in connection with this transaction. Landlord
covenants to save and hold harmless and indemnify Tenant from and against any
and all costs, expenses and liabilities, including reasonable attorneys' fees
for any compensation, commissions and charges claimed by any other broker or
agent in respect of this Lease or the negotiation hereof with whom Landlord is
claimed to have had dealings or an agreement. This provision shall survive the
termination of this Lease.
I. Successors and Assigns. The provisions of this Lease,
except as herein otherwise specifically provided shall extend to, bind and inure
to the benefit of the parties hereto and their respective personal
representatives, heirs, successors and permitted assigns, including without
limitation subsequent purchasers of the Property, the Building or any portion
thereof.
J. Consents and Approvals. Unless another time period is
provided, all such consents or approvals shall be given or withheld within ten
(10) days. Unless otherwise expressly provided herein, Landlord shall not
have the right to unreasonably withhold or delay any requested consent.
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K. Interpretation. Irrespective of the place of execution or
performance, this Lease shall be governed by and construed in accordance with
the law of the State of Connecticut. The table of contents, captions, headings
and titles in this Lease are solely for convenience of reference and shall not
affect its interpretation. If any words or phrases in this Lease shall have been
stricken out or otherwise eliminated, whether or not any other words or phrases
have been added, this Lease shall be construed as if the words or phrases so
stricken out or otherwise eliminated, were never included in this Lease and no
implication or inference shall be drawn from the fact that said words or phrases
were so stricken out or otherwise eliminated. Each covenant, agreement,
obligation or other provision of this Lease shall be deemed and construed as a
separate and independent covenant of the party bound by undertaking or making
same, not dependent on any other provision of this Lease unless otherwise
expressly provided. All terms and words used in this Lease, regardless of the
number or gender in which they are used, shall be deemed to include any other
number and any other gender as the context may require.
L. Complete Agreement. There are no representations,
agreements, arrangements or understandings, oral or written,
between the parties relating to the subject matter of this Lease
which are not fully expressed in this Lease. This Lease shall
not be modified or terminated orally or in any manner other than
by a written agreement executed by both parties.
M. Time of Essence. Whenever this Lease provides for
payments to be made, notices to be given or actions to be taken
within a specified time period, the parties agree that time is of
the essence with respect to all of such matters.
N. Authority. The person executing this Lease on behalf of
Tenant warrants to Landlord that Tenant is a corporation validly existing under
the laws of the State of Texas and duly authorized and qualified to conduct
business in the State of Connecticut, that Tenant has the full right and
authority to enter into this Lease, and that the person signing on behalf of
Tenant is authorized to do so. Landlord hereby represents and warrants that
Landlord owns the Property, the Building and the Premises in fee and has full
right, power and authority to execute this Lease.
O. Attorney's Fee. In the event either party fails
to observe any provision of this Lease, and the other party
elects to enforce this Lease by way of collection of Rent or any
other proceeding or by court action, then the party against whom
this Lease is enforced shall be obligated to pay to the other
reasonable attorney's fees and costs incurred in connection with
the enforcement of this Lease.
P. Building Hours of Operation. Tenant shall have
twenty-four (24) hour access to the Premises. "Business Days"
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shall mean any day which is not a Saturday or Sunday or a State of Connecticut
or federal legal holiday. The official hours (the "Business Hours") of operation
are as follows:
Monday-Friday 8:00 a.m. - 6:00 p.m.
Q. HVAC. Landlord shall provide heating, ventilation
and air conditioning services after the official hours of operation as set
forth in Section 31.P above, the same to be provided at the expense of Tenant
but in an amount equal to the Landlord's actual cost for same, based on actual
use.
R. Compliance with Applicable Laws. As to each
reference regarding a party's compliance with Applicable Laws,
said party shall be deemed to be in compliance notwithstanding
the fact that a condition or violation exists if same has become
legally non-conforming.
32. ADDITIONAL SPACE. During the original Term of this Lease, and
provided that (i) Tenant is not in default beyond applicable notice and grace
provisions provided herein, and (ii) the Term of this Lease shall have
thirty-six (36) or more months remaining (if this Lease shall have a shorter
period of time to run on the Term (but Tenant has unexecuted extension options
pursuant to Section 2.B), Landlord shall give to Tenant not less than fifteen
(15) days prior written notice of Landlord's intention to offer additional space
and shall provide to Tenant the right to execute Tenant's option to extend in
order to benefit from this Section 32), Landlord agrees to give Tenant the Right
of First Option for additional space in the Building as it becomes available.
The Tenant shall be given prior written notice of the availability of the
additional space which shall be upon the same terms, conditions, covenants and
provisions as are contained in this Lease, except for Rent which shall be at the
then fair market lease value for additional space in the "market" as defined
herein. The Tenant shall have an exclusive thirty (30) day period after receipt
of said notice (said thirty (30) day period shall include the aforesaid fifteen
(15) days if Landlord has notified Tenant that Tenant must exercise its
extension right in order to benefit from this Section 32) to notify Landlord, in
writing, of its intention to lease said space. If Tenant accepts said space, but
the parties are unable to agree on the fair market Rent for the additional space
within thirty (30) days after Tenant's notice to Landlord of its intent to lease
said space, then the issue shall be submitted for determination in accordance
with the procedure and provisions set forth in Section 2.B and Section 36
hereof. The decision made in accordance with Section 36 shall be final and
binding on Landlord and Tenant. The proposed term for the lease of such
additional space shall be co-terminous with the balance of the term remaining
under this Lease. In the event Tenant leases such additional space as provided
in this Section, all other terms of this Lease shall remain in effect, including
Tenant's options to
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extend the term and obligation to pay Additional Rent based on
the additional space leased.
If Tenant declines said space or fails to notify Landlord of its
intention to lease said additional space within the aforementioned thirty (30)
day period, then subject to Tenant's "Second Bite" option as herein provided,
Landlord may lease said additional space to a third party, but on terms no more
favorable (considering all rental payments) than those offered to Tenant. If
Landlord desires to lease the additional space to a third party on terms more
favorable than those offered to Tenant, then Tenant shall have the right (Tenant
shall not have this right if Tenant shall not either (i) have at least
thirty-six (36) months remaining on the Term, or (ii) have exercised a renewal
option in order to achieve said thirty-six (36) month condition, as provided
hereinabove) to accept the terms being offered to such third party and otherwise
acceptable to such third party (except, that the term shall be co-terminous with
this Lease); and Tenant may exercise such right by providing notice of such
exercise to Landlord within fifteen (15) days after Tenant's receipt of written
notice of (i) such third party offer, and (ii) documentation of the third
party's willingness to accept such terms. The rights provided in this Section 33
shall be applicable to any space in the Building at any time same becomes
vacant.
33. STATUS OF LEASE. Upon the full execution of this Lease the same
will supersede any prior Lease heretofore entered into between the parties, the
Landlord and Tenant acknowledging that there is no money due or obligation owed
by either party to the other under the superseded Lease other than as identified
on Exhibit 33.
34. SECURITY SYSTEM. Landlord agrees at its expense to install a
"card security" system for the Building as identified on Exhibit 4.A-1.
Landlord covenants that such system will be operational no later than
June 1, 1997.
35. SECURITY DEPOSIT. Notwithstanding anything to the contrary herein,
the parties acknowledge that no cash security has been deposited or will be
required to be deposited under this Lease or any extension or renewal of same.
36. ARBITRATION
A. Disputed Defaults. The parties hereby agree to arbitrate
disputes only as to the specific matters provided for in Section 2.B, Section
3.E, Section 4.A, Section 4.C, Section 14.B, and Section 32 of this Lease. No
other matter shall be arbitrable without the express authorization and consent
of Landlord and Tenant.
B. Disputed Amount. Subject to Section 36.A above, in the event
Landlord or Tenant disputes any payment,
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reimbursement, refund or abatement, either party may serve a notice on the other
that such party is submitting the matter to binding arbitration, as set forth
below.
C. Arbitrators; Award. Any disagreement or controversy
described in Section 36.A and Section 36.B or elsewhere as expressly provided
for in this Lease where dispute resolution by arbitration is expressly provided
or reference is made to this Section 36 shall be settled by binding arbitration
to be held, and the award made, in the county where the Premises are located,
pursuant to the then-applicable rules of the American Arbitration Association.
In any such arbitration, the arbitrator shall be: (a) any person selected by the
parties to the dispute if they are able to so agree within ten (10) days after
any party requests the other to so agree, or (b) if the parties are unable to so
agree, the arbitrator shall be a three-member arbitration panel which shall act
by majority vote and which shall consist of one member selected by each party to
the dispute and one member selected by the two members so selected, who shall
act as chairmen of the arbitration panel. If the first two arbitrators are
unable to agree on the selection of the third arbitrator within twenty (20) days
after their appointment, the third arbitrator shall be selected by the American
Arbitration Association. If one party requests the other to agree on a single
arbitrator and the parties have failed to agree on such a single arbitrator, and
one of the parties thereafter shall fail or refuse to appoint a person to the
arbitration panel under clause (b) above within twenty (20) days after the
original request for agreement on a single arbitrator was made, the arbitration
panel shall consist solely of the single arbitrator selected by the other party.
The arbitrator(s) shall apply the substantive law of the state in which the
Premises are located. Any award of the arbitrator(s) shall state the reasoning
on which the award is based. Each arbitrator appointed pursuant to this Section
shall be a member of the American Institute of Real Estate Appraisers or any
successor organization or shall have at least ten (10) years' experience in the
"market" in real property management, brokerage or appraising.
D. Failure to Appear. If one of the parties shall fail or
refuse to appear or to present evidence at the arbitration hearing, the
arbitrator(s) shall be authorized to accept the evidence presented by the party
in attendance at the hearing and to enter an award based on the evidence
presented. Any costs of arbitration shall be borne by the party against whom the
award is made, including but not limited to the fees of the arbitrators.
E. Reimbursement. If any amount awarded Tenant in the
arbitration is not paid by Landlord within fifteen (15) days from the date of
award, Tenant shall be entitled to offset any such amounts against the next
succeeding Base Rent and other charges, together with interest at the Interest
Rate from the date of the award (however as provided for in this Lease, the
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award may include interest from an earlier date if the award is based upon an
overpayment, reimbursement, abatement or other matter) plus attorneys' fees and
costs incurred by Tenant in obtaining such award and in enforcing this Section
and in obtaining and enforcing any judgment in connection therewith. If any
amount awarded Landlord in the arbitration is not paid by Tenant within fifteen
(15) days after the date of the award, with interest at the Interest Rate,
Landlord may resort to the remedies set forth in this Lease without further
notice, as if no grace period ever existed.
[INTENTIONALLY LEFT BLANK TO END OF PAGE]
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EXECUTED this _________ day of February, 1997.
LANDLORD:
LOCUST AVENUE ASSOCIATES
By_______________________
Stephen Gulick Jr.
A Partner, duly authorized
TENANT:
CENTURY COMMUNICATIONS CORP.
By_______________________
Robert J. Larson
Its duly authorized
Vice President and Controller
EXHIBIT 1.A(i)-1 - Floor Plan
EXHIBIT 1.A(i)-2 - Property Legal Description
EXHIBIT 1.A(iii) - Lee Shepard Space/Dana Space
EXHIBIT 1.B - Parking Area
EXHIBIT 4.A-1 - Landlord's Work
EXHIBIT 4.B - Customary Services
EXHIBIT 9.B(iii) - Building Rules and Regulations
EXHIBIT 33 - Status of Lease
STATE OF CONNECTICUT)
) ss.
COUNTY OF FAIRFIELD )
Personally appeared Stephen Gulick Jr., General Partner of Locust
Avenue Associates, who acknowledged the same to be his free act and deed and the
free act and deed of Locust Avenue Associates.
------------------------
STATE OF CONNECTICUT)
) ss.
COUNTY OF FAIRFIELD )
Personally appeared Robert J. Larson, Vice President and Controller of
Century Communications Corp., who acknowledged the same to be his free act and
deed and the free act and deed of Century Communications Corp.
------------------------
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Exhibit 10.39
[CONFORMED COPY]
AMENDMENT NO. 1
AMENDMENT NO. 1 dated as of August 9, 1996 among:
(1) CCC - I, INC., a Delaware corporation ("CCC-I"), PULLMAN TV
CABLE CO., INC., a Washington corporation ("Pullman") and KOOTENAI
CABLE, INC., a Delaware corporation ("Kootenai"; CCC-I, Pullman and
Kootenai are, individually, each a "Borrower" and, collectively, the
"Borrowers");
(2) the lenders (the "Lenders") listed on the
signature pages hereof under the caption "EXISTING LENDERS";
(3) the lenders (the "Retiring Lenders") listed on the
signature pages hereof under the caption "RETIRING LENDERS";
and
(4) CITIBANK, N.A. ("Citibank"), as agent (the
"Agent") for the Lenders.
The Borrowers, certain of the Lenders, the Retiring Lenders, the
Agent and the Managing Agents are parties to a Credit Agreement dated as of
August 4, 1995 (as heretofore modified and supplemented and in effect on the
date hereof, the "Credit Agreement"), providing, subject to the terms and
conditions thereof, for loans to be made by said Lenders to the Borrowers in an
aggregate principal amount not exceeding $525,000,000 at any one time
outstanding. The Retiring Lenders wish to resign as "Lenders" under the Credit
Agreement and the Borrowers, the Lenders and the Agent wish to amend the Credit
Agreement in certain respects. Accordingly, the parties hereto hereby agree as
follows:
Section 1. Definitions. Except as otherwise defined
in this Amendment No. 1, terms defined in the Credit Agreement
are used herein as defined therein.
Section 2. Amendments. Subject to the satisfaction of
the conditions precedent specified in Section 4 below, but
effective as of the date hereof, the Credit Agreement shall be
amended as follows:
A. General. References in the Credit Agreement to
"this Agreement" (and indirect references such as "hereunder",
CCC - I -- Amendment No. 1
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"hereby", "herein" and "hereof") shall be deemed to be references to the Credit
Agreement as amended hereby. References in the Credit Agreement to "the A Notes"
and "the Notes" shall be deemed to include reference to the New Notes under and
as defined in Section 4(B) hereof.
B. Definitions. Section 1.01 of the Credit Agreement shall be
amended by adding the following new definitions (to the extent such definitions
are not presently set forth in said Section 1.01) and amending in their entirety
the following definitions (to the extent such definitions are presently set
forth in said Section 1.01), as follows:
"Amendment Effective Date" means the earliest date as
of which all of the conditions precedent set forth in
Section 4 of Amendment No. 1 shall have been satisfied.
"Amendment No. 1" means Amendment No. 1 hereto dated as
of August 9, 1996.
"Lenders" means the lenders listed on Schedule II hereto under
the caption "EXISTING LENDERS" and each Eligible Assignee that shall
become a party hereto after the Amendment Effective Date pursuant to
Section 9.07.
"Termination Date" means August 31, 1999 or the earlier date of
termination in whole of the Commitments pursuant to Section 2.05 or
6.01.
C. A Advances. Section 2.01 of the Credit Agreement shall be
amended by amending the first sentence thereof to read as follows:
"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 Schedule
II hereto or, if such Lender has entered into any Assignment and
Acceptance after the Amendment Effective Date, 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'), provided that the aggregate amount of the Commitments of
the
CCC - I -- Amendment No. 1
<PAGE>
<PAGE>
- 3 -
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')."
D. Commitment Fee. Section 2.04(a) of the Credit Agreement shall
be amended to read as follows:
"(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 Amendment Effective
Date (or, in the case of each Eligible Assignee that becomes a Lender
after the Amendment Effective Date, from the effective date specified in
the Assignment and Acceptance pursuant to which it became a Lender)
until the Termination Date at the rate of (i) 3/8 of 1% per annum during
each period in which the applicable Rate Ratio is greater than or equal
to 5.0:1, and (ii) 1/4 of 1% per annum during each period in which the
applicable Rate Ratio is less than 5.0:1, payable on the last day of
each November, February, May and August during the term of such Lender's
Commitment, commencing on the first such day after the Amendment
Effective Date, and on the Termination Date. Each retroactive change in
the Rate Ratio pursuant to Section 2.07(d) shall be given retroactive
effect in determining the applicable commitment fee rate pursuant to
this Section 2.04(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 commitment fee rate payable for a period for which a
Borrower has already paid commitment fees, then any overpayment of
commitment fees by such Borrower resulting therefrom shall be credited
to future commitment fee or other payment obligations of such Borrower
and any underpayment of commitment fees by such Borrower resulting
therefrom shall be paid by such Borrower to the Agent for the account of
the Lenders upon demand by the Agent."
CCC - I -- Amendment No. 1
<PAGE>
<PAGE>
- 4 -
E. Repayment of A Advances. Section 2.06 of the Credit Agreement
shall be amended to read as follows:
"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
November 30, 1999 and ending August 31, 2004 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:
<TABLE>
<CAPTION>
Last day of Last day of Last day of Last day of
Year February May August November
---- -------- --- ------ --------
<S> <C> <C> <C> <C>
1999 XXX XXX XXX 4.000%
2000 4.000% 4.000% 4.000% 4.500%
2001 4.500% 4.500% 4.500% 5.250%
2002 5.250% 5.250% 5.250% 5.750%
2003 5.750% 5.750% 5.750% 5.500%
2004 5.500% 5.500% 5.500% XXX
</TABLE>
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."
F. Interest on A Advances. Sections 2.07(a)(i) and (ii) of the
Credit Agreement shall be amended to read respectively as follows:
"(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) 5/8 of 1% per annum during each period in which the
applicable Rate Ratio is greater than or equal to 6.0:1,
CCC - I -- Amendment No. 1
<PAGE>
<PAGE>
- 5 -
(B) 1/2 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) 1/8 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, and
(D) 0% per annum during each period in which the
applicable Rate Ratio is less than 5.0:1,
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 5/8% per annum during each period in which the
applicable Rate Ratio is greater than or equal to 6.0:1,
(B) 1 and 3/8% 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 1/8% 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) 7/8 of 1% 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, and
(E) 3/4 of 1% per annum during each period in which the
applicable Rate Ratio is less than 4.5:1,
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."
CCC - I -- Amendment No. 1
<PAGE>
<PAGE>
- 6 -
G. Adjusted CD Rate Option. Section 2.07(a) of the Credit
Agreement shall be amended by adding the following new paragraph (iv) thereto:
"(iv) Discontinuation of Adjusted CD Rate Option. Notwithstanding
anything herein or in the other Loan Documents to the contrary, after
the Amendment Effective Date A Advances bearing interest at rates based
upon the Adjusted CD Rate will no longer be available hereunder. In such
connection, after the Amendment Effective Date the Borrower shall not
(1) borrow (or request any A Borrowing of) any Adjusted CD Rate
Advances, (2) continue any Adjusted CD Rate Advances outstanding on the
Amendment Effective Date for subsequent Interest Periods or (3) Convert
any other Type of A Advances into Adjusted CD Rate Advances. Each
Adjusted CD Rate Advance outstanding on the Amendment Effective Date
shall, subject to the terms and conditions hereof, Convert to another
Type of Advance on the last day of the then-current Interest Period
therefor."
H. Mandatory Prepayments. Section 2.10(b) of the Credit Agreement
shall be amended by amending paragraph (i) thereof to read as follows:
"(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 (each, a
"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)(iv)), 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. Notwithstanding the foregoing, the Borrowers shall not be
required to make a prepayment pursuant to this paragraph (b)(i) with
respect to the Net Cash Proceeds from any Disposition (a "Relevant
Disposition") if (1) the applicable Rate Ratio is less than or equal to
5.0:1 on the date of receipt of such Net Cash Proceeds, (2) such
Borrower advises the Agent at the time the Net Cash Proceeds from such
Relevant Disposition are
CCC - I -- Amendment No. 1
<PAGE>
<PAGE>
- 7 -
received that it intends to reinvest such Net Cash Proceeds in
replacement assets pursuant to a transaction permitted under Section
5.02(f) hereof, (3) such Net Cash Proceeds are in fact committed to be
reinvested by such Borrower pursuant to a purchase contract providing
for the acquisition of such replacement assets that is executed by such
Borrower (or any of its Subsidiaries) and the related seller within 180
days from the date of such Relevant Disposition and (4) the acquisition
of such replacement assets occurs within 180 days from the date on which
such purchase contract is so executed and delivered. If at any time
after the occurrence of a Relevant Disposition and prior to the
acquisition of the related replacement assets the 180-day period
provided in clause (3) or (4) of the preceding sentence shall elapse
without execution of the related purchase contract (in the case of said
clause (3)) or the occurrence of the related acquisition (in the case of
said clause (4)), then such Borrower shall immediately prepay the A
Advances in the amount described in the first sentence of this Section
2.10(b)(i)."
I. Representations. Section 4.01(e) of the Credit Agreement shall
be amended by substituting "May 31, 1995" for each reference therein to "May 31,
1994" and by substituting "February 29, 1996" for each reference therein to
"February 28, 1994".
J. Financial Covenants. Sections 5.01(h), (i) and (j) of the
Credit Agreement shall be amended to read as follows:
"(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 August
31, 1999 and a Pro-Forma Debt Service Ratio for such Borrower of at
least 1.15:1 as of each such day that occurs thereafter.
CCC - I -- Amendment No. 1
<PAGE>
<PAGE>
- 8 -
(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:
Period Ratio
------ -----
from the date hereof
through 8/31/97 6.25:1
thereafter through 8/31/98 6.00:1
thereafter through 8/31/99 5.50:1
thereafter through 8/31/00 5.00:1
thereafter through 8/31/01 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,
1998, at least 1.75:1 for each Fiscal Period ending after May 31, 1998
and on or before May 31, 1999, and at least 2.00:1 for each Fiscal
Period ending thereafter."
K. Debt Covenant. Section 5.02(b) of the Credit Agreement shall
be amended by substituting "prior to August 31, 2004" for "prior to August 31,
2003" in clause (B) of paragraph (viii) thereof.
L. Sales, Etc., of Assets. Section 5.02(e) of the Credit
Agreement shall be amended to read as follows:
"(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
CCC - I -- Amendment No. 1
<PAGE>
<PAGE>
- 9 -
limitation) substantially all assets constituting the business of a
division, branch or other unit operation, except:
(i) for sales of assets for cash 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 or
(iv) for sales of fixed assets for cash or in exchange
(by way of trade or the like) for like operating assets; provided
that: (A) the aggregate Asset EBIDT of all such assets so sold or
exchanged by the Borrowers and their Subsidiaries, on a Combined
basis, during, and for, the Fiscal Period then most recently
ended does not exceed 15% of EBIDT for such Fiscal Period; (B)
the sum of the Asset EBIDT Percentages for all such assets so
sold or exchanged by the Borrowers and their Subsidiaries, on a
Combined basis, during the period of five years ending on the
date of the relevant sale or exchange does not exceed 25%; and
(C) 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 sale or exchange together with
sufficient information with a copy to the Agent for delivery to
each Lender to enable the Agent to determine the respective Asset
EBIDT of the assets involved in such sale or exchange. For
purposes of this paragraph (iv):
'Asset EBIDT' means, for any asset for any period, the net
income (or loss) attributable to the operation of such asset for
such period 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).
'Asset EBIDT Percentage' means, for any asset sold or
exchanged, the ratio (expressed as a percentage) of (1) the Asset
EBIDT of such asset for the Fiscal Period
CCC - I -- Amendment No. 1
<PAGE>
<PAGE>
- 10 -
ending on or most recently ended prior to the sale or exchange of
such asset to (2) EBIDT for such Fiscal Period (determined,
however, without giving effect to paragraph (ii) of the
definition of EBIDT with respect to the assets so sold or
exchanged)."
M. Investments. Section 5.02(f) of the Credit Agreement shall
be amended:
(1) by substituting "$50,000,000" for "$40,000,000" in
paragraph (i) thereof; and
(2) by amending paragraph (vi) thereof to read as follows:
"(vi) advances by the Borrowers to their respective Parent
Companies in an aggregate amount not to exceed, for any Fiscal
Quarter, the excess, if any, 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 over
(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);".
N. Dividends. Section 5.02(g) of the Credit Agreement
shall be amended by adding the following paragraph to the end thereof:
"Notwithstanding anything in this Section 5.02(g) or in Section
5.02(f) to the contrary, amounts available in any Fiscal Quarter for
cash dividends pursuant to Section 5.02(g)(iii)(x) and advances pursuant
to Section 5.02(f)(vi) that are not so used in such Fiscal Quarter shall
be available (subject to the proviso to Section 5.02(g)(iii)) for such
cash dividends and advances until the end of the first Fiscal Quarter of
the following Fiscal Year."
O. Schedule II. The Credit Agreement shall be amended
by adding Schedule II hereto as Schedule II thereto.
CCC - I -- Amendment No. 1
<PAGE>
<PAGE>
- 11 -
P. Exhibit K. The Credit Agreement shall be amended by amending
Exhibit K thereto to read as set forth on Exhibit K hereto.
Section 3. Representations and Warranties. The Borrowers
represent and warrant to the Lenders that:
(a) the representations and warranties set forth in Section 4.01
of the Credit Agreement (as amended hereby), other than Section 4.01(f)
are correct on the date hereof as if made on and as of the date hereof
(or, if any such representation or warranty is expressly stated in said
Section 4.01 (as so amended) to have been made as of a specific date, as
of such specific date) and as if each reference in said Section 4.01 to
"this Agreement", "the A Notes" and "the Notes" included reference to
this Amendment No. 1 and to the New Notes; and
(b) no event has occurred and is continuing 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.
Section 4. Conditions Precedent. As provided in Section 2 above,
the amendments to the Credit Agreement set forth in said Section 2 shall become
effective, as of the date hereof, upon the satisfaction of the following
conditions precedent:
A. Execution by All Parties. This Amendment No. 1 shall have
been executed and delivered by each of the parties hereto.
B. Notes and Advances. Each Borrower shall have delivered to the
Agent for each of the Lenders a promissory note of such Borrower in
substantially the form of Exhibit A-1 to the Credit Agreement, dated the
date of the A Notes delivered pursuant to Section 3.01(a) of the Credit
Agreement, payable to the order of such Lender in a principal amount
equal to its Commitment and otherwise duly completed, and each of such
promissory notes (a "New Note") delivered to the Lenders shall
constitute an "A Note" under the Credit Agreement as amended hereby. In
addition, the Borrowers shall have borrowed from, and each of the
Lenders shall have made A Advances to, the Borrowers and
(notwithstanding the provisions of Section 2.10(a) of the
CCC - I -- Amendment No. 1
<PAGE>
<PAGE>
- 12 -
Credit Agreement requiring that prepayments be made ratably in
accordance with the principal amounts of the A Advances held by the
Lenders) the Borrowers shall have prepaid A Advances made by the other
Lenders and shall have prepaid the A Advances and B Advances made by the
Retiring Lenders in such amounts as shall be necessary, together with
accrued interest and any amounts payable under Section 9.04(b) of the
Credit Agreement, so that after giving effect to such A Advances and
prepayments, the A Advances (including, without limitation, the Types
and Interest Periods thereof) shall be held by the Lenders pro rata in
accordance with the respective amounts of their Commitments.
C. Documents. The Agent shall have received the
following documents, each of which shall be satisfactory to
the Agent in form and substance:
(1) Corporate Documents. Certified copies of the charter
and by-laws (or equivalent documents) of each of the Borrowers
and their respective Subsidiaries (or, in the alternative, a
certification to the effect that none of such documents has been
modified since delivery thereof pursuant to the Credit Agreement)
and of all corporate authority for the Borrowers (including,
without limitation, board of director resolutions and evidence of
the incumbency of officers for the Borrowers) with respect to the
execution, delivery and performance of this Amendment No. 1 and
the Credit Agreement as amended hereby and the loans under the
Credit Agreement as amended hereby, the New Notes and each other
document to be delivered by the Borrowers from time to time in
connection with the Credit Agreement as amended hereby (and the
Agent and each Lender may conclusively rely on such certificate
until it receives notice in writing from the Borrowers to the
contrary).
(2) Opinions. A favorable opinion of Leavy Rosensweig &
Hyman, counsel for the Borrowers, as to such matters as any
Lender through the Agent may reasonably request; and a favorable
opinion of Milbank, Tweed, Hadley & McCloy, special New York
counsel to the Agent.
CCC - I -- Amendment No. 1
<PAGE>
<PAGE>
- 13 -
(3) Other Documents. Such other documents as the
Agent or any Lender or special New York counsel to the
Agent may reasonably request.
D. Amendment Fees, Etc. The Borrowers shall have paid to the
Agent all fees agreed to be paid by the Borrowers in connection with
this Amendment No. 1 and the transactions contemplated hereby.
E. Interest; Commitment Fee, Etc. The Borrowers shall have paid:
(1) all interest and other amounts owing in respect of the Advances
owing to the Retiring Lenders, (2) all interest accrued on the A
Advances owing to the Existing Lenders and (3) all commitment fee
payable under Section 2.04(a) of the Credit Agreement, in each case to
the extent accrued to the Amendment Effective Date.
F. Expenses. The Borrowers shall have paid all
accrued fees and expenses of the Agent and CSI (including
the accrued fees and disbursements of counsel to the Agent
and CSI).
Section 5. Retiring Lenders. On the Amendment Effective Date,
upon the repayment of each Retiring Lender's Advances as provided in Section
4(B) hereof and all other amounts owing to such Retiring Lender as provided in
Section 4(E) hereof, each Retiring Lender shall cease to be a Lender (and if
such Retiring Lender is also a Managing Agent, such Retiring Lender shall cease
to be a Managing Agent) for all purposes of the Credit Agreement and the other
Loan Documents.
Section 6. Miscellaneous. Except as herein provided, the Credit
Agreement shall remain unchanged and in full force and effect. This Amendment
No. 1 may be executed in any number of counterparts, all of which taken together
shall constitute one and the same amendatory instrument and any of the parties
hereto may execute this Amendment No. 1 by signing any such counterpart. This
Amendment No. 1 shall be governed by, and construed in accordance with, the law
of the State of New York.
CCC - I -- Amendment No. 1
<PAGE>
<PAGE>
- 14 -
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
No. 1 to be duly executed and delivered as of the day and year first above
written.
BORROWERS
----------
CCC-I, INC.
By /s/ Scott N. Schneider
---------------------------------
Name: Scott N. Schneider
Title: Senior Vice President
and Treasurer
PULLMAN TV CABLE CO., INC.
By /s/ Scott N. Schneider
---------------------------------
Name: Scott N. Schneider
Title: Senior Vice President
and Treasurer
KOOTENAI CABLE, INC.
By /s/ Scott N. Schneider
---------------------------------
Name: Scott N. Schneider
Title: Senior Vice President
and Treasurer
AGENT
-----
CITIBANK, N.A.,
as Agent
By /s/ Mary E. Thomas
---------------------------------
Name: Mary E. Thomas
Title: Attorney-in-Fact
CCC - I -- Amendment No. 1
<PAGE>
<PAGE>
- 15 -
EXISTING LENDERS
----------------
CITIBANK, N.A.
By /s/ Mary E. Thomas
---------------------------------
Name: Mary E. Thomas
Title: Attorney-in-Fact
BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION
By /s/ Shannon T. Ward
---------------------------------
Name: Shannon T. Ward
Title: Vice President
THE CHASE MANHATTAN BANK (formerly
named Chemical Bank)
By /s/ John J. Huber
---------------------------------
Title: Managing Director
CIBC INC.
By /s/ Susan E. Hanna
---------------------------------
Name: Susan E. Hanna
Title: Director
LTCB TRUST COMPANY
By /s/ John J. Sullivan
---------------------------------
Name: John J. Sullivan
Title: Executive Vice President
SOCIETE GENERALE
By /s/ Mark Vigil
---------------------------------
Name: Mark Vigil
Title: Vice President
CCC - I -- Amendment No. 1
<PAGE>
<PAGE>
- 16 -
THE SUMITOMO BANK, LIMITED -
CHICAGO BRANCH
By /s/ Hiroyuki Iwami
---------------------------------
Name: Hiroyuki Iwami
Title: Joint General Manager
THE SUMITOMO BANK, LIMITED -
U.S. COMMERCIAL BANKING
DEPARTMENT (as successor by
assignment from the Daiwa Bank
Limited)
By /s/ Brian M. Smith
---------------------------------
Name: Brian M. Smith
Title: Senior Vice President and
Regional Manager (East)
By /s/ William N. Paty
---------------------------------
Name: William N. Paty
Title: Vice President and
Manager
THE TORONTO-DOMINION BANK
By /s/ Jorge A. Garcia
---------------------------------
Name: Jorge A. Garcia
Title: Manager Credit
Administration
THE FIRST NATIONAL BANK OF BOSTON
By /s/ Mark S. Denomme
---------------------------------
Name: Mark S. Denomme
Title: Director
CREDIT LYONNAIS
CAYMAN ISLANDS BRANCH
By /s/ Mark A. Campellone
---------------------------------
Name: Mark A. Campellone
Title: Vice President
CCC - I -- Amendment No. 1
<PAGE>
<PAGE>
- 17 -
THE NIPPON CREDIT BANK, LTD.
By /s/ David C. Carrington
---------------------------------
Name: David C. Carrington
Title: Vice President and
Manager
THE BANK OF TOKYO - MITSUBISHI
TRUST COMPANY
By /s/ Augustine Okwu, Jr.
--------------------------------
Name: Augustine Okwu, Jr.
Title: Vice President
CORESTATES BANK, N.A.
By /s/ Chris Kalmbach
---------------------------------
Name: Chris Kalmbach
Title: Vice President
THE DAI-ICHI KANGYO BANK, LTD.,
NEW YORK BRANCH
By /s/ Seiji Imai
---------------------------------
Name: Seiji Imai
Title: Vice President
THE SUMITOMO TRUST & BANKING CO.
LTD.
By /s/ Suraj P. Bhatia
---------------------------------
Name: Suraj P. Bhatia
Title: Senior Vice President
Manager, Corporate
Finance Department
BANK OF HAWAII
By /s/ J. Bryan Scearce
---------------------------------
Name: J. Bryan Scearce
Title: Vice President
CCC - I -- Amendment No. 1
<PAGE>
<PAGE>
- 18 -
BANQUE NATIONALE DE PARIS
By /s/ Serge Desrayaud
---------------------------------
Name: Serge Desrayaud
Title: Vice President
Team Leader
By /s/ Pamela Lucash
---------------------------------
Name: Pamela Lucash
Title: Assistant Treasurer
THE INDUSTRIAL BANK OF JAPAN,
LIMITED
By /s/ Jeffrey Cole
---------------------------------
Name: Jeffrey Cole
Title: Senior Vice President
MELLON BANK, N.A.
By /s/ John T. Kranefuss
---------------------------------
Name: John T. Kranefuss
Title: Assistant Vice President
NATIONAL BANK OF CANADA
By /s/ Teresa Carrasco
---------------------------------
Name: Teresa Carrasco
Title: Vice President
By /s/ Theresa White
---------------------------------
Name: Theresa White
Title: Assistant Vice President
CCC - I -- Amendment No. 1
<PAGE>
<PAGE>
- 19 -
RETIRING LENDERS
MEESPIERSON N.V.
By /s/ John O'Connor
---------------------------------
Name: John O'Connor
Title: Senior Vice President
FLEET NATIONAL BANK
By /s/ Alexander G. Ivanov
---------------------------------
Name: Alexander G. Ivanov
Title: Assistant Vice President
CCC - I -- Amendment No. 1
<PAGE>
<PAGE>
SCHEDULE II
EXISTING LENDERS Commitment
- ---------------- -----------
Citibank, N.A. $28,000,000
Bank of America National
Trust & Savings Association $38,000,000
The Chase Manhattan Bank $23,000,000
CIBC Inc. $38,000,000
LTCB Trust Company $38,000,000
Societe Generale $38,000,000
The Sumitomo Bank, Limited -
Chicago Branch $28,000,000
The Sumitomo Bank, Limited -
U.S. Commercial Banking Department $15,000,000
The Toronto-Dominion Bank $25,000,000
The First National Bank of Boston $15,000,000
Credit Lyonnais
Cayman Islands Branch $33,000,000
The Nippon Credit Bank, Ltd. $33,000,000
The Bank of Tokyo -
Mitsubishi Trust Company $40,000,000
Corestates Bank, N.A. $15,000,000
The Dai-ichi Kangyo Bank, Ltd.,
New York Branch $15,000,000
The Sumitomo Trust & Banking Co. Ltd. $15,000,000
Bank of Hawaii $10,000,000
Banque Nationale de Paris $25,000,000
The Industrial Bank of Japan, Limited $15,000,000
Mellon Bank, N.A. $23,000,000
National Bank of Canada $15,000,000
Total of Commitments: $525,000,000
<PAGE>
<PAGE>
EXHIBIT K
CCC-I, INC.
PULLMAN TV CABLE CO., INC.
KOOTENAI CABLE, INC.
COMPLIANCE CERTIFICATE
(Pursuant to Section 5.03 of the
Credit Agreement referred to below)
----------------------
("Preparation Date")
To Each of the Lenders and For Fiscal Quarter
Managing Agents parties ended ____________*
to the Credit Agreement For Fiscal Year
referred to below ended ____________*
and to Citibank, N.A., as
Agent
I, (Insert name) ,
----------------------------------
(Insert title) of CCC-I, Inc., a Delaware
- ----------------------------------------
corporation ("CCC-I"), (Insert name) ,
----------------------------------
(Insert title) , of Pullman TV Cable Co.,
- -------------------------------------
Inc., a Washington corporation ("Pullman"), and
(Insert name) , (Insert
- --------------------------------- -----------------
title) , of Kootenai Cable, Inc., a Delaware corporation ("Kootenai" and,
collectively with CCC-I and Pullman, the "Borrowers"), DO HEREBY CERTIFY,
pursuant to Section [5.03(b)] [5.03(d)]** of the Credit Agreement dated as of
August 4, 1995, among the Borrowers, Kootenai Cable, Inc., the Lenders parties
thereto, Citibank, N.A. as agent for the Lenders, and Bank of America, Chemical
Bank, CIBC Inc., LTCB Trust Company, Societe Generale, The Sumitomo Bank,
Limited - Chicago Branch and The Toronto-Dominion Bank, as Managing Agents (said
Agreement, as it has been or may hereafter be amended or otherwise modified from
time to time, being the "Credit Agreement", the terms defined therein being used
herein as therein defined), that we are Financial Officers of the Borrowers
- ----------------------
* Insert only one date, as applicable, depending on whether the report is
for one of the first three Fiscal Quarters (5.03(b)) or for the Fiscal
Year (5.03(c)).
** Delete as appropriate; ss. 5.03(b) applies where this Certificate is
delivered for one of the first three Fiscal Quarters, and ss. 5.03(d)
applies where this Certificate is delivered for a Fiscal Year.
<PAGE>
<PAGE>
- 2 -
and that each of the statements set forth below is true and correct:
A. Financial Statement Date: This Certificate is prepared as of
the Preparation Date first above written and is delivered in respect of the
Fiscal Quarter or Fiscal Year ended on the date indicated above (the "Financial
Statement Date") immediately below the Preparation Date.
B. Financial Statements: Enclosed herewith are true and correct
copies of the financial statements for the Financial Statement Date which are
required under and prepared in accordance with Section [5.03(b)][5.03(d)]* of
the Credit Agreement. [Also enclosed herewith is a certificate duly certified by
Deloitte Touche, or other independent certified public accountants of recognized
standing reasonably acceptable to the Majority Lenders, addressed to the Agent
as required under and prepared in accordance with Section 5.03(c) of the Credit
Agreement.]**
C. Subscribers: Enclosed herewith is a true and correct report
updating as at the Preparation Date the information regarding Subscribers
previously furnished to the Lenders as required under and prepared in accordance
with Section 5.03(h) of the Credit Agreement.
D. Work Sheets: Enclosed herewith are true and correct work
sheets detailing the method and setting out the basis and calculations used to
determine the ratios referred to in Section F below.
E. Rate Ratio: Enclosed herewith is a true and correct Rate Ratio
Certificate, prepared in accordance with Section 2.07(c) of the Credit
Agreement.
F. Covenants: The Borrowers hereby represent and warrant that as
of the Financial Statement Date:
1. EBIDT: EBIDT is $______________________.
2. Total Debt: Total Debt is $______________________.
----------
- ----------------------
* Delete as appropriate; ss. 5.03(b) applies where this Certificate is
delivered for one of the first three Fiscal Quarters, and ss. 5.03(d)
applies where this Certificate is delivered for a Fiscal Year.
** Delete as appropriate; a certificate from the auditor is only required
if this Certificate is delivered for a Fiscal Year.
<PAGE>
<PAGE>
- 3 -
3. Debt Service: The Debt Service for Total Debt for the most
recently completed Fiscal Period is $_______________.
4. Interest Expense: The sum of all amounts payable for the most
recently completed Fiscal Period for 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
is $___.
5. Ratio of EBIDT to Debt Service for Total Debt/Pro-Forma Debt
Service Ratio: The ratio referred to in Section 5.01(h) of the Credit Agreement
is as set out below under the heading "Actual". Such ratio is at least as set
out below under the heading "Covenant".
Actual Covenant
------ --------
1.15:1
The basis of the calculation of the ratio of EBIDT to Debt Service for
Total Debt referred to above under the heading "Actual" is as follows:
(a) EBIDT for the applicable Fiscal Period
($_________________); to
(b) the aggregate Debt Service for Total Debt during
such Fiscal Period ($____________________).
The basis of the calculation of the Pro-Forma Debt Service Ratio
referred to above under the heading "Actual" is as follows:
(a) EBIDT for the applicable four consecutive Fiscal Quarters
just ended ($_______) less the aggregate amount of taxes paid during
such four Fiscal Quarters ($________); to
(b) projected interest expense of all Debt for the succeeding
four Fiscal Quarters ($_______) plus the aggregate principal amounts of
all Debt required to be paid during such four Fiscal Quarters
($________).
6. Ratio of Total Debt to EBIDT: The ratio referred to in Section
5.01(i) of the Credit Agreement is as set out below next to the period
during which such Financial Statement Date occurs under the heading
"Actual". Such ratio is not greater than as is set out below next to the
period during which such Financial Statement Date occurs under the
heading "Covenant".
<PAGE>
<PAGE>
- 4 -
Period Actual Covenant
------ ------ ---------
From the date hereof
through 8/31/97 6.25:1
thereafter through 8/31/98 6.00:1
thereafter through 8/31/99 5.50:1
thereafter through 8/31/00 5.00:1
thereafter through 8/31/01 4.50:1
thereafter 4.00:1
The basis of the calculation of the ratio referred to above under the
heading "Actual" is as follows:
(a) Total Debt as at the last day of the applicable Fiscal
Period ($___________); to
(b) EBIDT for such Fiscal Period ($___________).
7. EBIDT to Interest Expense: The ratio referred to in Section
5.01(j) of the Credit Agreement is as set out below next to the period
during which such Financial Statement Date occurs under the heading
"Actual". Such ratio is at least as set out below under the heading
"Covenant".
Period Actual Covenant
------ ------ --------
On and before 5/31/98 1.50:1
thereafter through 5/31/99 1.75:1
thereafter 2:00:1
The basis of the calculation of the ratio referred to above under the
heading "Actual" is as follows:
(a) EBIDT for the applicable Fiscal Period ($___________);
to
(b) the sum of all amounts payable during such Fiscal Period 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.
8. Liens: The aggregate principal amount of Debt secured by the
Liens arising in connection with Capital Leases and purchase money
Liens, as referred to in clauses (v) and (vi), respectively, of Section
5.02(a) of the Credit Agreement is as set out below under the heading
"Actual". Such amount is not in excess of the maximum amount referred to
in such Section 5.02(a) as set out below under the heading "Covenant".
Actual Covenant
------ --------
$10,000,000
<PAGE>
<PAGE>
- 5 -
9. Debt: The aggregate principal amount of Debt referred
to in clauses (iv), (v)(B), (vi) and (vii) of Section 5.02(b) of
the Credit Agreement is as set out below under the heading
"Actual". Such amount is not in excess of the maximum amount
referred to in the proviso to Section 5.02(b).
Actual Covenant
------ --------
$10,000,000
10. Lease Obligations: The aggregate amount of lease obligations
payable in any period of 12 consecutive calendar months, as referred to
in Section 5.02(c) of the Credit Agreement is as set out below under the
heading "Actual". Such amount is not in excess of the maximum amount
referred to in such Section 5.02(c) as set out below under the heading
"Covenant".
Actual Covenant
------ --------
$5,000,000
11. Sale of Assets:
(i) The Asset EBIDT of all fixed assets sold for cash or
exchanged (by way of trade or the like) for like operating assets
pursuant to Section 5.02(e)(iv) of the Credit Agreement during, and for,
the Fiscal Period then most recently ended is as set out below under the
heading "Actual". Such amount is not in excess of the maximum amount
referred to in such Section 5.02(e)(iv) as set out below under the
heading "Covenant".
Actual Covenant
------ --------
The Asset EBIDT of all assets so
sold or exchanged by the Borrowers
and their Subsidiaries, on a
Combined basis, during, and for, the
Fiscal Period then most recently
ended shall not exceed 15% of EBIDT
for such Fiscal Period.
The basis of the calculation of the amount referred to above under the
heading "Actual" is as follows:
(a) Asset EBIDTs of each asset so sold or exchanged:
Asset sold or exchanged Asset EBIDT
----------------------- -----------
No. 1 (describe: _____________) $_____________
No. 2 (describe: _____________) $_____________
No. 3 (describe: _____________) $_____________
[list others sold or exchanged]
<PAGE>
<PAGE>
- 6 -
(b) EBIDT for such Fiscal Period ($___________) times 0.15
($___________).
(ii) The sum of the Asset EBIDT Percentages for all fixed assets
sold for cash or exchanged (by way of trade or the like) for like
operating assets pursuant to Section 5.02(e)(iv) of the Credit Agreement
during the period of five years ending on the last day of the Fiscal
Quarter then most recently ended is as set out below under the heading
"Actual". Such amount is not in excess of the maximum amount referred to
in such Section 5.02(e)(iv) as set out below under the heading
"Covenant".
Actual Covenant
------ --------
The sum of the Asset EBIDT
Percentages for all such assets so
sold or exchanged by the Borrowers
and their Subsidiaries, on a
Combined basis, during such five
year period does not exceed 25%.
The basis of the calculation of the amount referred to above under the
heading "Actual" is as follows:
(a) Asset EBIDT Percentages of each asset so sold or
exchanged:
Asset sold or exchanged Asset EBIDT Percentage
----------------------- ----------------------
No. 1 (describe: _____________) _____________%
No. 2 (describe: _____________) _____________%
No. 3 (describe: _____________) _____________%
[list others sold or exchanged]
(b) Sum of Asset EBIDT Percentages (___________%).
"Asset EBIDT" means, for any asset for any period, the net income
(or loss) attributable to the operation of such asset for such period
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).
"Asset EBIDT Percentage" means, for any asset sold or exchanged,
the ratio (expressed as a percentage) of (1) the Asset EBIDT of such
asset for the Fiscal Period ending on or most recently ended prior to
the sale or exchange of such asset to (2) EBIDT for such Fiscal Period
(determined, however, without giving effect to paragraph (ii) of the
definition of EBIDT with respect to the assets so sold or exchanged).
<PAGE>
<PAGE>
- 7 -
12. Investments in Other Persons:
(i) The aggregate cost (including cash paid, securities issued
and obligations assumed) with respect to the acquisition by any Borrower
or any of its Subsidiaries from any Person not an Affiliate of such
Borrower or any of its Subsidiaries (other than the ML Media Acquisition
or the Rock Acquisition) 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) 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 is as set out below under the heading "Actual". Such
amount is not in excess of the maximum amount referred to in Section
5.02(f)(i) of the Credit Agreement as set out below under the heading
"Covenant".
Actual Covenant
------ --------
$50,000,000
(ii) The aggregate cost (including cash paid, securities issued and
obligations assumed) with respect to the acquisition by the Borrower or
their Subsidiaries from any Person not an Affiliate of the Borrowers or
their Subsidiaries of capital stock representing less than a majority of
the Voting Rights of one or more corporations and capital contributions
by the Borrowers or their Subsidiaries to Minority Entities in which
such Person has an ownership interest is as set out below under the
heading "Actual". Such amount is not in excess of the maximum amount
referred to in Section 5.02(f)(ii) of the Credit Agreement as set out
below under the heading "Covenant".
Actual Covenant
------ --------
$15,000,000
(iii) The amount of advances by the Borrowers to their respective
Parent Companies is as set out below under the heading "Actual". Such amount is
not in excess of the maximum amount referred to in Section 5.02(f)(vi) of the
Credit Agreement as set out below under the heading "Covenant".
Actual Covenant
------ --------
The excess, if any, of (i) the
amount permitted to be dividended by
the Borrowers to their respective
Parent Companies pursuant to Section
5.02(g)(iii) for such Fiscal Quarter
over (ii) (A) the aggregate amount
of dividends actually distributed
<PAGE>
<PAGE>
- 8 -
by the Borrowers to their respective
Parent Companies for such Fiscal
Quarter pursuant to such Section
5.02(g)(iii) plus (B) the aggregate
amount actually used to redeem the
CCC-I Preferred Stock described in
Section 3.01(e) for such Fiscal
Quarter pursuant to Section
5.02(g)(iv).
The basis of the calculation of the amount referred to above under the
heading "Actual" is as follows:
(a) the amount permitted to be dividended by the Borrowers to
their respective Parent Companies pursuant to Section 5.02(g)(iii) for
the Fiscal Quarter then most recently ended ($_____________) minus
(b) the sum ($_____________) of (A) the aggregate amount of
dividends actually distributed by the Borrowers to their respective
Parent Companies for such Fiscal Quarter pursuant to such Section
5.02(g)(iii) ($_____________) 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)
($_____________).
13. Dividends, Etc. The amount of cash dividends paid by
the Borrowers to their respective Parent Companies is as set out
below under the heading "Actual". Such amount is not in excess
of the maximum amount referred to in Section 5.02(g)(iii) of the
Credit Agreement as set out below under the heading "Covenant".
(i) For any Fiscal Quarter of the Borrowers ending on
or prior to the Termination Date:
Actual Covenant
------ --------
75% of Excess Cash Flow for
the Borrowers for the
preceding Fiscal Quarters in
the then-current Fiscal Year
or (if such Fiscal Quarter is
the first Fiscal Quarter of a
Fiscal Year) the preceding
Fiscal Year
minus
-----
aggregate amount used for
cash dividends, redemptions
of outstanding CCC-I
Preferred Stock described in
Section 3.01(e) ("Initial
Preferred Stock") and
advances pursuant to
<PAGE>
<PAGE>
- 9 -
Sections 5.02(g)(iii)(x),
5.02(g)(iv) and 5.02(f)(vi)
during such preceding Fiscal
Quarters or Fiscal Year, as
the case may be.
The basis of the calculation of the amount available for the Fiscal
Quarter then most-recently ended (the "Relevant Fiscal Quarter")
referred to above under the heading "Actual" is as follows:
(1) If the Relevant Fiscal Quarter is the first Fiscal Quarter
of then-current Fiscal Year:
Excess Cash Flow for the immediately preceding Fiscal
Year ($_____________) times 0.75 ($______________)
minus
-----
the sum ($_____________) of (A) cash dividends paid in
such Fiscal Year ($_____________), (B) redemptions of
outstanding Initial Preferred Stock made in such Fiscal
Year and (C) advances made in such Fiscal Year
($_____________):
$_____________.
(2) If the Relevant Fiscal Quarter is not the first Fiscal Quarter of
the then-current Fiscal Year:
Excess Cash Flow for the Fiscal Quarters in the then-
current Fiscal Year preceding the Relevant Fiscal
Quarter ($_____________) times 0.75: ($_____________)
minus
-----
the sum ($_____________) of (A) cash dividends paid in
such preceding Fiscal Quarters ($_____________), (B)
redemptions of outstanding Initial Preferred Stock made in
such preceding Fiscal Quarters ($_____________) and (C)
advances made in such Fiscal Quarters
($_____________):
$________________.
(ii) For any Fiscal Quarter of the Borrowers ending
after the Termination Date:
Actual Covenant
------ --------
Excess Cash Flow Surplus for the
Borrowers for the preceding Fiscal
Quarters in the then-current Fiscal
<PAGE>
<PAGE>
- 10 -
Year or (if such Fiscal
Quarter is the first Fiscal
Quarter of a Fiscal Year) the
preceding Fiscal Year
minus
-----
aggregate amount used for
cash dividends, redemptions
of outstanding Initial
Preferred Stock and advances
pursuant to Sections
5.02(g)(iii)(x), 5.02(g)(iv)
and 5.02(f)(vi) during such
preceding Fiscal Quarters or
Fiscal Year, as the case may
be.
The basis of the calculation of the amount available for the Fiscal
Quarter then most-recently ended (the "Relevant Fiscal Quarter")
referred to above under the heading "Actual" is as follows:
(1) If the Relevant Fiscal Quarter is the first Fiscal Quarter
of then-current Fiscal Year:
Excess Cash Flow Surplus for the immediately preceding
Fiscal Year: $_____________
minus
the sum ($_____________) of (A) cash dividends paid in
such Fiscal Year ($_____________), (B) redemptions of
outstanding Initial Preferred Stock made in such Fiscal
Year ($_____________) and (C) advances made in such Fiscal
Year ($_____________):
$_____________.
(2) If the Relevant Fiscal Quarter is not the first Fiscal Quarter of
the then-current Fiscal Year:
Excess Cash Flow Surplus for the Fiscal Quarters in the
then-current Fiscal Year preceding the Relevant Fiscal
Quarter: $_____________
minus
-----
the sum ($_____________) of (A) cash dividends paid in
such preceding Fiscal Quarters ($_____________), (B)
redemptions of outstanding Initial Preferred Stock made in
such preceding Fiscal Quarters ($_____________) and
<PAGE>
<PAGE>
- 11 -
(C) advances made in such Fiscal Quarters
($_____________):
$________________.
14. Representations and Warranties: The representations and
warranties made by the Borrowers, Century/Holding and Century/Texas contained in
Section 4.01 of the Credit Agreement and in each other Loan Document are true
and correct as though made on and as of such Financial Statement Date.
15. Events of Default: No event has occurred and is
continuing 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.
IN WITNESS WHEREOF, I have signed this Certificate this _______
day of ____________________________, _____.
CCC-I, INC.
-----------------------------
Title:
(Financial Officer)
PULLMAN TV CABLE CO., INC.
-----------------------------
Title:
(Financial Officer)
KOOTENAI CABLE, INC.
-----------------------------
Title:
(Financial Officer)
<PAGE>
<PAGE>
EXHIBIT 10.40
[CONFORMED COPY]
AMENDMENT NO. 1
AMENDMENT NO. 1 dated as of August 9, 1996 among:
(1) CCC - II, INC., a Delaware corporation (the
"Borrower");
(2) the lenders (the "Lenders") listed on the
signature pages hereof under the caption "EXISTING LENDERS";
(3) the lenders (the "Retiring Lenders") listed on the
signature pages hereof under the caption "RETIRING LENDERS";
and
(4) CITIBANK, N.A. ("Citibank"), as managing agent
(the "Managing Agent").
The Borrower, certain of the Lenders, the Retiring Lenders, the
Co-Agents and the Managing Agent are parties to a Credit Agreement dated as of
June 30, 1994 (as heretofore modified and supplemented and in effect on the date
hereof, the "Credit Agreement"), providing, subject to the terms and conditions
thereof, for loans to be made by said Lenders to the Borrower in an aggregate
principal amount not exceeding $350,000,000 at any one time outstanding. The
Retiring Lenders wish to resign as "Lenders" under the Credit Agreement and the
Borrower, the Lenders and the Managing Agent wish to amend the Credit Agreement
in certain respects. Accordingly, the parties hereto hereby agree as follows:
Section 1. Definitions. Except as otherwise defined
in this Amendment No. 1, terms defined in the Credit Agreement
are used herein as defined therein.
Section 2. Amendments. Subject to the satisfaction of
the conditions precedent specified in Section 4 below, but
effective as of the date hereof, the Credit Agreement shall be
amended as follows:
A. General. References in the Credit Agreement to "this
Agreement" (and indirect references such as "hereunder", "hereby", "herein" and
"hereof") shall be deemed to be references to the Credit Agreement as amended
hereby. References in the Credit Agreement to "the A Notes" and "the Notes"
shall be deemed to include reference to the New Notes under and as defined in
Section 4(B) hereof.
CCC - II -- Amendment No. 1
<PAGE>
<PAGE>
- 2 -
B. Definitions. Section 1.01 of the Credit Agreement
shall be amended by adding the following new definitions (to the
extent such definitions are not presently set forth in said
Section 1.01) and amending in their entirety the following
definitions (to the extent such definitions are presently set
forth in said Section 1.01), as follows:
"Amendment Effective Date" means the earliest date as
of which all of the conditions precedent set forth in
Section 4 of Amendment No. 1 shall have been satisfied.
"Amendment No. 1" means Amendment No. 1 hereto dated as
of August 9, 1996.
"Lenders" means the lenders listed on Schedule II hereto under
the caption "EXISTING LENDERS" and each Eligible Assignee that shall
become a party hereto after the Amendment Effective Date pursuant to
Section 8.07.
"Pro-Forma Debt Service Ratio" means, as of the last day of any
Fiscal Quarter, the ratio of (i) EBIDT of the Borrower and its
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 Borrower and its 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 Borrower and its Subsidiaries.
"Termination Date" means August 31, 1999 or the earlier date of
termination in whole of the Commitments pursuant to Section 2.05 or
6.01.
C. A Advances. Section 2.01 of the Credit Agreement
shall be amended by amending the first sentence thereof to read
as follows:
"Each Lender severally agrees, on the terms and conditions
hereinafter set forth, to make A Advances to the Borrower 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 Schedule
II
CCC - II -- Amendment No. 1
<PAGE>
<PAGE>
- 3 -
hereto or, if such Lender has entered into any Assignment and Acceptance
after the Amendment Effective Date, set forth for such Lender in the
Register maintained by the Managing Agent pursuant to Section 8.07(c),
as such amount may be reduced pursuant to Section 2.05 (such Lender's
'Commitment'), provided that the aggregate amount of the Commitments of
the Lenders shall be 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')."
D. Commitment Fee. Section 2.04(a) of the Credit
Agreement shall be amended to read as follows:
"(a) Commitment Fee. The Borrower agrees to pay to the Managing
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 Amendment Effective Date (or,
in the case of each Eligible Assignee that becomes a Lender after the
Amendment Effective Date, from the effective date specified in the
Assignment and Acceptance pursuant to which it became a Lender) until
the Termination Date at the rate of (i) 3/8 of 1% per annum during each
period in which the applicable Rate Ratio is greater than or equal to
5.0:1, and (ii) 1/4 of 1% per annum during each period in which the
applicable Rate Ratio is less than 5.0:1, payable on the last day of
each November, February, May and August during the term of such Lender's
Commitment, commencing on the first such day after the Amendment
Effective Date, and on the Termination Date. Each retroactive change in
the Rate Ratio pursuant to Section 2.07(d) shall be given retroactive
effect in determining the applicable commitment fee rate pursuant to
this Section 2.04(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 commitment fee rate payable for a period for which the
Borrower has already paid commitment fees, then any overpayment of
commitment fees by the Borrower resulting therefrom shall be credited to
future commitment fee or other payment obligations of the Borrower and
any underpayment of commitment fees by the Borrower resulting therefrom
shall be paid by the Borrower to the Managing Agent for the account of
the Lenders upon demand by the Managing Agent."
CCC - II -- Amendment No. 1
<PAGE>
<PAGE>
- 4 -
E. Repayment of A Advances. Section 2.06 of the
Credit Agreement shall be amended to read as follows:
"SECTION 2.06. Repayment of A Advances. The 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
November 30, 1999 and ending August 31, 2004 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:
<TABLE>
<CAPTION>
Last day of Last day of Last day of Last day of
Year February May August November
---- -------- --- ------ --------
<S> <C> <C> <C> <C>
1999 XXX XXX XXX 2.500%
2000 2.500% 2.500% 2.500% 5.000%
2001 5.000% 5.000% 5.000% 5.000%
2002 5.000% 5.000% 5.000% 6.250%
2003 6.250% 6.250% 6.250% 6.250%
2004 6.250% 6.250% 6.250% XXX
</TABLE>
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."
F. Interest on A Advances. Sections 2.07(a)(i) and (ii) of the
Credit Agreement shall be amended to read respectively as follows:
"(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) 1/2 of 1% per annum during each period in which the
applicable Rate Ratio is greater than or equal to 5.5:1,
(B) 1/8 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, and
CCC - II -- Amendment No. 1
<PAGE>
<PAGE>
- 5 -
(C) 0% per annum during each period in which the
applicable Rate Ratio is less than 5.0:1,
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 3/8% per annum during each period in which the
applicable Rate Ratio is greater than or equal to 5.5:1,
(B) 1 and 1/8% 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,
(C) 7/8 of 1% 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, and
(D) 3/4 of 1% per annum during each period in which the
applicable Rate Ratio is less than 4.5:1,
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."
G. Adjusted CD Rate Option. Section 2.07(a) of the Credit
Agreement shall be amended by adding the following new paragraph (iv) thereto:
"(iv) Discontinuation of Adjusted CD Rate Option. Notwithstanding
anything herein or in the other Loan Documents to the contrary, after
the Amendment Effective Date A Advances bearing interest at rates based
upon the Adjusted CD Rate will no longer be available hereunder. In such
connection, after the Amendment Effective Date the Borrower shall not
(1) borrow (or request any A Borrowing of) any Adjusted CD Rate
Advances, (2) continue any Adjusted CD Rate Advances outstanding on the
Amendment Effective Date for subsequent Interest Periods or (3) Convert
any other Type of A Advances into Adjusted CD Rate Advances. Each
Adjusted CD Rate Advance outstanding on the Amendment
CCC - II -- Amendment No. 1
<PAGE>
<PAGE>
- 6 -
Effective Date shall, subject to the terms and conditions hereof,
Convert to another Type of Advance on the last day of the then-current
Interest Period therefor."
H. Mandatory Prepayments. Section 2.10(b) of the Credit
Agreement shall be amended by amending paragraph (i) thereof to read as follows:
"(i) Sales of Assets. The Borrower shall, on each date on which
it or any of its Subsidiaries receives any Net Cash Proceeds from the
sale, lease, transfer or other disposition (each, a "Disposition") of
any asset of the 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)(iv)), 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 8.04(b) in respect of such prepayment. Notwithstanding the
foregoing, the Borrower shall not be required to make a prepayment
pursuant to this paragraph (b)(i) with respect to the Net Cash Proceeds
from any Disposition (a "Relevant Disposition") if (1) the applicable
Rate Ratio is less than or equal to 5.0:1 on the date of receipt of such
Net Cash Proceeds, (2) the Borrower advises the Managing Agent at the
time the Net Cash Proceeds from such Relevant Disposition are received
that it intends to reinvest such Net Cash Proceeds in replacement assets
pursuant to a transaction permitted under Section 5.02(f) hereof, (3)
such Net Cash Proceeds are in fact committed to be reinvested by the
Borrower pursuant to a purchase contract providing for the acquisition
of such replacement assets that is executed by the Borrower (or any of
its Subsidiaries) and the related seller within 180 days from the date
of such Relevant Disposition and (4) the acquisition of such replacement
assets occurs within 180 days from the date on which such purchase
contract is so executed and delivered. If at any time after the
occurrence of a Relevant Disposition and prior to the acquisition of the
related replacement assets the 180-day period provided in clause (3) or
(4) of the preceding sentence shall elapse without execution of the
related purchase contract (in the case of said clause (3)) or the
occurrence of the related acquisition (in the case of said clause (4)),
then the Borrower shall immediately prepay the A Advances in the amount
described in the first sentence of this Section 2.10(b)(i)."
CCC - II -- Amendment No. 1
<PAGE>
<PAGE>
- 7 -
I. Representations. Section 4.01(e) of the Credit
Agreement shall be amended to read as follows:
"(e) The Consolidated and consolidating balance sheet of the
Borrower and its Subsidiaries as at May 31, 1995, and the related
Consolidated and consolidating statements of income and cash flows of
the Borrower and its Subsidiaries for the Fiscal Year then ended,
accompanied by an opinion of Deloitte & Touche, independent public
accountants, and the Consolidated and consolidating balance sheet of the
Borrower and its Subsidiaries as at February 28, 1996, and the related
Consolidated and consolidating statements of income and cash flows of
the Borrower and its Subsidiaries for the nine months then ended, duly
certified by the chief financial officer of the Borrower, copies of
which have been furnished to each Lender, fairly present, subject, in
the case of said balance sheet as at February 28, 1996, and said
statements of income and cash flows for the nine months then ended, to
year-end audit adjustments, the Consolidated and consolidating financial
condition of the Borrower and its Subsidiaries as at such date and the
Consolidated and consolidating results of the operations of the Borrower
and its Subsidiaries for the period ended on such date, all in
accordance with generally accepted accounting principles consistently
applied, and since May 31, 1995 there has been no Material Adverse
Change."
J. Financial Covenants. Sections 5.01(h), (i) and (j)
of the Credit Agreement shall be amended to read as follows:
"(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 August
31, 1999 and a Pro-Forma Debt Service Ratio for the 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:
CCC - II -- Amendment No. 1
<PAGE>
<PAGE>
- 8 -
Period Ratio
------ -----
from the date hereof
through 5/31/98 6.00:1
thereafter through 5/31/99 5.75:1
thereafter through 5/31/00 5.50:1
thereafter through 5/31/01 5.25:1
thereafter through 5/31/02 5.00:1
thereafter 4.50:1
(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 Borrower and its 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,
1998, at least 1.75:1 for each Fiscal Period ending after May 31, 1998
and on or before May 31, 1999, and at least 2.00:1 for each Fiscal
Period ending thereafter."
K. Debt Covenant. Section 5.02(b) of the Credit Agreement shall
be amended by substituting "prior to August 31, 2004" for "prior to May 31,
2002" in clause (B) of paragraph (viii) thereof.
L. Sales, Etc., of Assets. Section 5.02(e) of the
Credit Agreement shall be amended to read as follows:
"(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 for cash in the ordinary course of
its business,
(ii) for disposition of obsolete equipment no
longer needed in the conduct of the Borrower's or such
Subsidiary's business,
CCC - II -- Amendment No. 1
<PAGE>
<PAGE>
- 9 -
(iii) in a transaction authorized by
subsection (d) of this Section 5.02 or
(iv) for sales of fixed assets for cash or in exchange
(by way of trade or the like) for like operating assets; provided
that: (A) the aggregate Asset EBIDT of all such assets so sold or
exchanged by the Borrower and its Subsidiaries, on a Consolidated
basis, during, and for, the Fiscal Period then most recently
ended does not exceed 15% of EBIDT for such Fiscal Period; (B)
the sum of the Asset EBIDT Percentages for all such assets so
sold or exchanged by the Borrower and its Subsidiaries, on a
Consolidated basis, during the period of five years ending on the
date of the relevant sale or exchange (excluding, however, the
exchange of the Borrower's cable television systems in Brunswick,
Georgia, Owensboro, Kentucky and Wauwatosa, Wisconsin for the
cable television system in Colorado Springs, Colorado) does not
exceed 25%; and (C) the Borrower shall have given the Managing
Agent at least 30 days' prior written notice with a copy to the
Managing Agent for delivery to each Lender of each such sale or
exchange together with sufficient information with a copy to the
Managing Agent for delivery to each Lender to enable the Managing
Agent to determine the respective Asset EBIDT of the assets
involved in such sale or exchange. For purposes of this paragraph
(iv):
'Asset EBIDT' means, for any asset for any period, the net
income (or loss) attributable to the operation of such asset for
such period 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).
'Asset EBIDT Percentage' means, for any asset sold or
exchanged, the ratio (expressed as a percentage) of (1) the Asset
EBIDT of such asset for the Fiscal Period ending on or most
recently ended prior to the sale or exchange of such asset to (2)
EBIDT for such Fiscal Period (determined, however, without giving
effect to paragraph (ii) of the definition of EBIDT with respect
to the assets so sold or exchanged)."
M. Investments. Section 5.02(f) of the Credit Agreement shall be
amended by amending paragraph (vi) thereof to read as follows:
CCC - II -- Amendment No. 1
<PAGE>
<PAGE>
- 10 -
"(vi) advances by the Borrower to Century/Holding in an
amount not to exceed, for any Fiscal Quarter, the excess, if any,
of (i) the amount permitted to be dividended by the Borrower to
Century/Holding pursuant to Section 5.02(g)(iii) for such Fiscal
Quarter over (ii) the aggregate amount of dividends actually
distributed by the Borrower to Century/Holding for such Fiscal
Quarter pursuant to such Section 5.02(g)(iii); and".
N. Dividends, Etc. Section 5.02(g) of the Credit Agreement shall
be amended:
(1) by substituting "May 31, 1998" for "May 31, 1996"
in paragraph (iii)(x) thereof; and
(2) by adding the following paragraph to the end
thereof:
"Notwithstanding anything in this Section 5.02(g) or in
Section 5.02(f) to the contrary, amounts available in any Fiscal
Quarter for cash dividends pursuant to Section 5.02(g)(iii)(y)
and advances pursuant to Section 5.02(f)(vi) that are not so used
in such Fiscal Quarter shall be available (subject to the proviso
to Section 5.02(g)(iii)) for such cash dividends and advances
until the end of the first Fiscal Quarter of the following Fiscal
Year."
O. Schedule II. The Credit Agreement shall be amended
by adding Schedule II hereto as Schedule II thereto.
P. Exhibit K. The Credit Agreement shall be amended
by amending Exhibit K thereto to read as set forth on Exhibit K
hereto.
Section 3. Representations and Warranties. The
Borrower represents and warrants to the Lenders that:
(a) the representations and warranties set forth in Section 4.01
of the Credit Agreement (as amended hereby), other than Section 4.01(f)
are correct on the date hereof as if made on and as of the date hereof
(or, if any such representation or warranty is expressly stated in said
Section 4.01 (as so amended) to have been made as of a specific date, as
of such specific date) and as if each reference in said Section 4.01 to
"this Agreement", "the A Notes" and "the Notes" included reference to
this Amendment No. 1 and to the New Notes;
CCC - II -- Amendment No. 1
<PAGE>
<PAGE>
- 11 -
(b) no event has occurred and is continuing 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.
Section 4. Conditions Precedent. As provided in Section 2 above,
the amendments to the Credit Agreement set forth in said Section 2 shall become
effective, as of the date hereof, upon the satisfaction of the following
conditions precedent:
A. Execution by All Parties. This Amendment No. 1 shall have
been executed and delivered by each of the parties hereto.
B. Notes and Advances. The Borrower shall have delivered to the
Managing Agent for each of the Lenders a promissory note of the Borrower
in substantially the form of Exhibit A-1 to the Credit Agreement, dated
the date of the A Notes delivered pursuant to Section 3.01(a) of the
Credit Agreement, payable to the order of such Lender in a principal
amount equal to its Commitment and otherwise duly completed, and each of
such promissory notes (a "New Note") delivered to the Lenders shall
constitute an "A Note" under the Credit Agreement as amended hereby. In
addition, the Borrower shall have borrowed from, and each of the Lenders
shall have made A Advances to, the Borrower and (notwithstanding the
provisions of Section 2.10(a) of the Credit Agreement requiring that
prepayments be made ratably in accordance with the principal amounts of
the A Advances held by the Lenders) the Borrower shall have prepaid A
Advances made by the other Lenders and shall have prepaid the A Advances
and B Advances made by the Retiring Lenders in such amounts as shall be
necessary, together with accrued interest and any amounts payable under
Section 8.04(b) of the Credit Agreement, so that after giving effect to
such A Advances and prepayments, the A Advances (including, without
limitation, the Types and Interest Periods thereof) shall be held by the
Lenders pro rata in accordance with the respective amounts of their
Commitments.
C. Documents. The Managing Agent shall have received
the following documents, each of which shall be satisfactory
to the Managing Agent in form and substance:
(1) Corporate Documents. Certified copies of the
charter and by-laws (or equivalent documents) of each
of the Borrower and its Subsidiaries (or, in the
alternative, a certification to the effect that none of
such documents has been modified since delivery thereof
CCC - II -- Amendment No. 1
<PAGE>
<PAGE>
- 12 -
pursuant to the Credit Agreement) and of all corporate authority
for the Borrower (including, without limitation, board of
director resolutions and evidence of the incumbency of officers
for the Borrower) with respect to the execution, delivery and
performance of this Amendment No. 1 and the Credit Agreement as
amended hereby and the loans under the Credit Agreement as
amended hereby, the New Notes and each other document to be
delivered by the Borrower from time to time in connection with
the Credit Agreement as amended hereby (and the Managing Agent
and each Lender may conclusively rely on such certificate until
it receives notice in writing from the Borrower to the contrary).
(2) Opinions. A favorable opinion of Leavy Rosensweig &
Hyman, counsel for the Borrower, as to such matters as any Lender
through the Managing Agent may reasonably request; and a
favorable opinion of Milbank, Tweed, Hadley & McCloy, special New
York counsel to the Managing Agent.
(3) Other Documents. Such other documents as the
Managing Agent or any Lender or special New York
counsel to the Managing Agent may reasonably request.
D. Amendment Fees, Etc. The Borrower shall have paid to the
Managing Agent all fees agreed to be paid by the Borrower in connection
with this Amendment No. 1 and the transactions contemplated hereby.
E. Interest; Commitment Fee, Etc. The Borrower shall have paid:
(1) all interest and other amounts owing in respect of the Advances
owing to the Retiring Lenders, (2) all interest accrued on the A
Advances owing to the Existing Lenders and (3) all commitment fee
payable under Section 2.04(a) of the Credit Agreement, in each case to
the extent accrued to the Amendment Effective Date.
F. Expenses. The Borrower shall have paid all accrued fees and
expenses of the Managing Agent and CSI (including the accrued fees and
disbursements of counsel to the Managing Agent and CSI).
Section 5. Retiring Lenders. On the Amendment Effective Date,
upon the repayment of each Retiring Lender's Advances as provided in Section
4(B) hereof and all other amounts owing to such Retiring Lender as provided in
Section 4(E) hereof, each Retiring Lender shall cease to be a Lender (and if
such Retiring Lender is also a Co-Agent, such Retiring Lender shall
CCC - II -- Amendment No. 1
<PAGE>
<PAGE>
- 13 -
cease to be a Co-Agent) for all purposes of the Credit Agreement
and the other Loan Documents.
Section 6. Miscellaneous. Except as herein provided,
the Credit Agreement shall remain unchanged and in full force and
effect. This Amendment No. 1 may be executed in any number of
counterparts, all of which taken together shall constitute one
and the same amendatory instrument and any of the parties hereto
may execute this Amendment No. 1 by signing any such counterpart.
This Amendment No. 1 shall be governed by, and construed in
accordance with, the law of the State of New York.
CCC - II -- Amendment No. 1
<PAGE>
<PAGE>
- 14 -
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
No. 1 to be duly executed and delivered as of the day and year first above
written.
THE BORROWER
CCC - II, INC.
By /s/ Scott N. Schneider
---------------------------------
Name: Scott N. Schneider
Title: Senior Vice President
and Treasurer
MANAGING AGENT
CITIBANK, N.A.,
as Managing Agent
By /s/ Mary E. Thomas
---------------------------------
Name: Mary E. Thomas
Title: Attorney-in-Fact
CCC - II -- Amendment No. 1
<PAGE>
<PAGE>
- 15 -
EXISTING LENDERS
CITIBANK, N.A.
By /s/ Mary E. Thomas
---------------------------------
Name: Mary E. Thomas
Title: Attorney-in-Fact
BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION
By /s/ Shannon T. Ward
---------------------------------
Name: Shannon T. Ward
Title: Vice President
THE CHASE MANHATTAN BANK (formerly
named Chemical Bank)
By /s/ John J. Huber
---------------------------------
Title: Managing Director
CIBC INC.
By /s/ Susan E. Hanna
---------------------------------
Name: Susan E. Hanna
Title: Director
LTCB TRUST COMPANY
By /s/ John J. Sullivan
---------------------------------
Name: John J. Sullivan
Title: Executive Vice President
SOCIETE GENERALE
By /s/ Mark Vigil
---------------------------------
Name: Mark Vigil
Title: Vice President
CCC - II -- Amendment No. 1
<PAGE>
<PAGE>
- 16 -
THE SUMITOMO BANK, LIMITED -
CHICAGO BRANCH
By /s/ Hiroyuki Iwami
---------------------------------
Name: Hiroyuki Iwami
Title: Joint General Manager
THE SUMITOMO BANK, LIMITED -
U.S. COMMERCIAL BANKING
DEPARTMENT (as successor by
assignment from the Daiwa Bank
Limited)
By /s/ Brian M. Smith
---------------------------------
Name: Brian M. Smith
Title: Senior Vice President and
Regional Manager (East)
By /s/ William N. Paty
---------------------------------
Name: William N. Paty
Title: Vice President
and Manager
THE TORONTO-DOMINION BANK
By /s/ Jorge A. Garcia
---------------------------------
Name: Jorge A. Garcia
Title: Manager Credit
Administration
THE FIRST NATIONAL BANK OF BOSTON
By /s/ Mark S. Denomme
---------------------------------
Name: Mark S. Denomme
Title: Director
CREDIT LYONNAIS
CAYMAN ISLANDS BRANCH
By /s/ Mark A. Campellone
---------------------------------
Name: Mark A. Campellone
Title: Vice President
CCC - II -- Amendment No. 1
<PAGE>
<PAGE>
- 17 -
PNC BANK, NATIONAL ASSOCIATION
By /s/ Scott C. Meves
---------------------------------
Name: Scott C. Meves
Title: Senior Vice President
THE BANK OF TOKYO - MITSUBISHI
TRUST COMPANY
By /s/ Augustine Okwu, Jr.
---------------------------------
Name: Augustine Okwu, Jr.
Title: Vice President
THE SUMITOMO TRUST & BANKING CO.
LTD.
By /s/ Suraj P. Bhatia
---------------------------------
Name: Suraj P. Bhatia
Title: Senior Vice President and
Manager, Corporate
Finance Department
BANK OF HAWAII
By /s/ J. Bryan Scearce
---------------------------------
Name: J. Bryan Scearce
Title: Vice President
MELLON BANK, N.A.
By /s/ John T. Kranefuss
---------------------------------
Name: John T. Kranefuss
Title: Assistant Vice President
RETIRING LENDERS
NATIONSBANK, N.A.
By /s/ David G. James
---------------------------------
Name: David G. James
Title: Vice President
CCC - II -- Amendment No. 1
<PAGE>
<PAGE>
SCHEDULE II
EXISTING LENDERS Commitment
- ---------------- ----------
Citibank, N.A. $57,000,000
Bank of America National
Trust & Savings Association $23,000,000
The Chase Manhattan Bank $23,000,000
CIBC Inc. $23,000,000
LTCB Trust Company $23,000,000
Societe Generale $23,000,000
The Sumitomo Bank, Limited -
Chicago Branch $23,000,000
The Sumitomo Bank, Limited -
U.S. Commercial Banking Department $15,000,000
The Toronto-Dominion Bank $23,000,000
The First National Bank of Boston $13,000,000
Credit Lyonnais
Cayman Islands Branch $23,000,000
PNC Bank, National Association $23,000,000
The Bank of Tokyo -
Mitsubishi Trust Company $23,000,000
The Sumitomo Trust & Banking Co. Ltd. $15,000,000
Bank of Hawaii $10,000,000
Mellon Bank, N.A. $10,000,000
Total of Commitments: $350,000,000
<PAGE>
<PAGE>
EXHIBIT K
CCC - II, INC.
COMPLIANCE CERTIFICATE
(Pursuant to Section 5.03 of the
Credit Agreement referred to below)
______________________
("Preparation Date")
To Each of the Lenders For Fiscal Quarter
parties to the Credit ended____________*
Agreement referred to For Fiscal Year
below, Bank of America National ended_____________*
Trust and Savings Association, Chemical Bank,
CIBC Inc., Credit Lyonnais Cayman Island
Branch, The First National Bank of Boston, LTCB
Trust Company, The Mitsubishi Bank, Limited
(acting through its New York Branch), PNC Bank,
National Association, Societe Generale, The
Sumitomo Bank, Limited - Chicago Branch and The
Toronto-Dominion Bank, as Co-Agents, and to
Citibank, N.A., as Managing Agent
I, (Insert name) ,
----------------------------------
(Insert title) of CCC - II, Inc., a
- -------------------------------------
Delaware corporation (the "Borrower"), DO HEREBY CERTIFY, pursuant to Section
[5.03(b)] [5.03(d)]** of the Credit Agreement dated as of June 30, 1994, among
the Borrower, the Lenders parties thereto, Bank of America National Trust and
Savings Association, Chemical Bank, CIBC Inc., Credit Lyonnais Cayman Island
Branch, The First National Bank of Boston, LTCB Trust Company, The Mitsubishi
Bank, Limited (acting through its New York Branch), PNC Bank, National
Association, Societe Generale, The Sumitomo Bank, Limited - Chicago Branch and
The Toronto- Dominion Bank, as Co-Agents, and Citibank, N.A., as Managing Agent
for the Lenders (said Agreement, as it has been or may hereafter be amended or
otherwise modified from time to time, being the "Credit Agreement", the terms
defined therein being
- --------
* Insert only one date, as applicable, depending on whether the report is for
one of the first three Fiscal Quarters 5.03(b) or for the Fiscal Year
5.03(c).
** Delete as appropriate; ss. 5.03(b) applies where this Certificate is
delivered for one of the first three Fiscal Quarters, and ss. 5.03(c)
applies where this Certificate is delivered for a Fiscal Year.
<PAGE>
<PAGE>
- 2 -
used herein as therein defined), that I am a Financial Officer of the Borrower
and that each of the statements set forth below is true and correct:
A. Financial Statement Date: This Certificate is prepared as of
the Preparation Date first above written and is delivered in respect of the
Fiscal Quarter or Fiscal Year ended on the date indicated above (the "Financial
Statement Date") immediately below the Preparation Date.
B. Financial Statements: Enclosed herewith are true and correct
copies of the financial statements for the Financial Statement Date which are
required under and prepared in accordance with Section [5.03(b)][5.03(c)]* of
the Credit Agreement. [Also enclosed herewith is a certificate duly certified by
Deloitte Touche, or other independent certified public accountants of recognized
standing reasonably acceptable to the Majority Lenders, addressed to the
Managing Agent as required under and prepared in accordance with Section 5.03(c)
of the Credit Agreement.]**
C. Subscribers: Enclosed herewith is a true and correct report
updating as at the Preparation Date the information regarding Subscribers
previously furnished to the Lenders as required under and prepared in accordance
with Section 5.03(h) of the Credit Agreement.
D. Work Sheets: Enclosed herewith are true and correct work
sheets detailing the method and setting out the basis and calculations used to
determine the ratios referred to in Section F below.
E. Rate Ratio: Enclosed herewith is a true and correct Rate Ratio
Certificate, prepared in accordance with Section 2.06(c) of the Credit
Agreement.
F. Covenants: The Borrower hereby represents and warrants that as
of the Financial Statement Date:
1. EBIDT: EBIDT is $______________________.
2. Total Debt: Total Debt is $_____________________.
- --------
* Delete as appropriate; ss. 5.03(b) applies where this Certificate is
delivered for one of the first three Fiscal Quarters, and ss. 5.03(c)
applies where this Certificate is delivered for a Fiscal Year.
** Delete as appropriate; a certificate from the auditor is only required if
this Certificate is delivered for a Fiscal Year.
<PAGE>
<PAGE>
- 3 -
3. Debt Service: The Debt Service for Total Debt for the period
of the most recently completed four consecutive Fiscal Quarters is
$____________________.
4. Interest Expense: The sum of all amounts payable for the
period of the most recently completed four consecutive Fiscal Quarters
for the Borrower and its 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 is $___.
5. Ratio of EBIDT to Debt Service for Total Debt/Pro-Forma Debt
Service Ratio: The ratio referred to in Section 5.01(h) of the Credit
Agreement is as set out below under the heading "Actual". Such ratio is
at least as set out below under the heading "Covenant".
Actual Covenant
------ -------
1.15:1
The basis of the calculation of the ratio of EBIDT to Debt Service for
Total Debt referred to above under the heading "Actual" is as follows:
(a) EBIDT for the applicable Fiscal Period
($______________); to
(b) the aggregate Debt Service for Total Debt during
such Fiscal Period ($___________________).
The basis of the calculation of the Pro-Forma Debt Service Ratio
referred to above under the heading "Actual" is as follows:
(a) EBIDT for the applicable four consecutive Fiscal Quarters
just ended ($_______) less the aggregate amount of taxes paid during
such four Fiscal Quarters ($________); to
(b) projected interest expense of all Debt for the succeeding
four Fiscal Quarters ($_______) plus the aggregate principal amounts of
all Debt required to be paid during such four Fiscal Quarters
($________).
6. Ratio of Total Debt to EBIDT: The ratio referred to in Section
5.01(i) of the Credit Agreement is as set out below next to the period
during which such Financial Statement Date occurs under the heading
"Actual". Such ratio is not greater than as is set out below next to the
period during which such Financial Statement Date occurs under the
heading "Covenant".
<PAGE>
<PAGE>
- 4 -
Period Actual Covenant
------ ------ --------
From the date hereof
through 5/31/98 6.00:1
thereafter through 5/31/99 5.75:1
thereafter through 5/31/00 5.50:1
thereafter through 5/31/01 5.25:1
thereafter through 5/31/02 5.00:1
thereafter 4.50:1
The basis of the calculation of the ratio referred to above under the
heading "Actual" is as follows:
(a) Total Debt as at such date ($___________); to
(b) EBIDT as at such date ($_______________).
7. EBIDT to Interest Expense: The ratio referred to in Section
5.01(j) of the Credit Agreement is as set out below next to the period
during which such Financial Statement Date occurs under the heading
"Actual". Such ratio is at least as set out below under the heading
"Covenant".
Period Actual Covenant
------ ------ --------
On and before 5/31/98 1.50:1
thereafter through 5/31/99 1.75:1
thereafter 2:00:1
8. Liens: The aggregate principal amount of Debt secured by the
Liens arising in connection with Capital Leases and purchase money
Liens, as referred to in clauses (v) and (vi), respectively, of Section
5.02(a) of the Credit Agreement is as set out below under the heading
"Actual". Such amount is not in excess of the maximum amount referred to
in such Section 5.02(a)(vii) as set out below under the heading
"Covenant".
Actual Covenant
------ --------
$10,000,000
9. Debt: The aggregate principal amount of Debt
referred to in clauses (iv), (v)(B), (vi) and (vii) of
Section 5.02(b) of the Credit Agreement is as set out below
under the heading "Actual". Such amount is not in excess of
the maximum amount referred to in the proviso to
Section 5.02(b).
Actual Covenant
------ --------
$10,000,000
<PAGE>
<PAGE>
- 5 -
10. Lease Obligations: The aggregate amount of lease obligations
payable in any period of 12 consecutive calendar months, as referred to
in Section 5.02(c) of the Credit Agreement is as set out below under the
heading "Actual". Such amount is not in excess of the maximum amount
referred to in such Section 5.02(c) as set out below under the heading
"Covenant".
Actual Covenant
------ --------
$5,000,000
11. Sale of Assets:
(i) The Asset EBIDT of all fixed assets sold for cash or
exchanged (by way of trade or the like) for like operating assets
pursuant to Section 5.02(e)(iv) of the Credit Agreement during, and for,
the Fiscal Period then most recently ended is as set out below under the
heading "Actual". Such amount is not in excess of the maximum amount
referred to in such Section 5.02(e)(iv) as set out below under the
heading "Covenant".
Actual Covenant
------ --------
The Asset EBIDT of all assets so
sold or exchanged by the Borrower
and its Subsidiaries, on a
Consolidated basis, during, and for,
the Fiscal Period then most recently
ended shall not exceed 15% of EBIDT
for such Fiscal Period.
The basis of the calculation of the amount referred to above under the
heading "Actual" is as follows:
(a) Asset EBIDTs of each asset so sold or exchanged:
Asset sold or exchanged Asset EBIDT
----------------------- -----------
No. 1 (describe: _____________) $_____________
No. 2 (describe: _____________) $_____________
No. 3 (describe: _____________) $_____________
[list others sold or exchanged]
(b) EBIDT for such Fiscal Period ($___________) times 0.15
($___________).
(ii) The sum of the Asset EBIDT Percentages for all fixed assets
sold for cash or exchanged (by way of trade or the like) for like
operating assets pursuant to Section 5.02(e)(iv) of the Credit Agreement
during the period of five years ending on the
<PAGE>
<PAGE>
- 6 -
last day of the Fiscal Quarter then most recently ended is as set out
below under the heading "Actual". Such amount is not in excess of the
maximum amount referred to in such Section 5.02(e)(iv) as set out below
under the heading "Covenant".
Actual Covenant
------ --------
The sum of the Asset EBIDT
Percentages for all such assets so
sold or exchanged by the Borrower
and its Subsidiaries, on a
Consolidated basis, during such five
year period (excluding, however, the
exchange of the Borrower's cable
television systems in Brunswick,
Georgia, Owensboro, Kentucky and
Wauwatosa, Wisconsin for the cable
television system in Colorado
Springs, Colorado) does not exceed
25%.
The basis of the calculation of the amount referred to above under the
heading "Actual" is as follows:
(a) Asset EBIDT Percentages of each asset so sold or
exchanged:
Asset sold or exchanged Asset EBIDT Percentage
----------------------- ----------------------
No. 1 (describe: _____________) _____________%
No. 2 (describe: _____________) _____________%
No. 3 (describe: _____________) _____________%
[list others sold or exchanged]
(b) Sum of Asset EBIDT Percentages (___________%).
"Asset EBIDT" means, for any asset for any period, the net income
(or loss) attributable to the operation of such asset for such period
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).
"Asset EBIDT Percentage" means, for any asset sold or exchanged,
the ratio (expressed as a percentage) of (1) the Asset EBIDT of such
asset for the Fiscal Period ending on or most recently ended prior to
the sale or exchange of such asset to (2) EBIDT for such Fiscal Period
(determined, however, without giving effect to paragraph (ii) of the
definition of EBIDT with respect to the assets so sold or exchanged).
<PAGE>
<PAGE>
- 7 -
12. Investments in Other Persons:
(i) The aggregate cost (including cash paid, securities issued
and obligations assumed with respect to the acquisition by the Borrower
or any Subsidiary from any Person not an Affiliate of the Borrower or
any Subsidiary 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)
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 is as set out below under the heading "Actual".
Actual
------
(ii) The aggregate cost (including cash paid, securities issued and
obligations assumed with respect to the acquisition by the Borrower or
any Subsidiary from any Person not an Affiliate of the Borrower or any
Subsidiary of capital stock representing less than a majority of the
Voting Rights of one or more corporations and capital contributions by
the Borrower or any Subsidiary to Minority Entities in which such Person
has an ownership interest is as set out below under the heading
"Actual". Such amount is not in excess of the maximum amount referred to
in Section 5.02(f)(ii) of the Credit Agreement as set out below under
the heading "Covenant".
Actual Covenant
------ --------
$15,000,000
(iii) The amount of advances by the Borrower to Century/Holding is as
set out below under the heading "Actual". Such amount is not in excess
of the maximum amount referred to in Section 5.02(f)(vi) of the Credit
Agreement as set out below under the heading "Covenant".
Actual Covenant
------ --------
The excess, if any, of (i) the
amount permitted to be dividended by
the Borrower to Century/Holding
pursuant to Section 5.02(g)(iii) for
such Fiscal Quarter over (ii) the
aggregate amount of dividends
actually distributed by the Borrower
to Century/Holding for such Fiscal
Quarter pursuant to such Section
5.02(g)(iii).
The basis of the calculation of the amount referred to above under the
heading "Actual" is as follows:
<PAGE>
<PAGE>
- 8 -
(a) the amount permitted to be dividended by the Borrower to
Century/Holding pursuant to Section 5.02(g)(iii) for the Fiscal Quarter
then most recently ended ($_____________) minus
(b) the aggregate amount of dividends actually distributed by the
Borrower to Century/Holding for such Fiscal Quarter pursuant to such
Section 5.02(g)(iii) ($_____________).
13. Dividends, Etc. The amount of cash dividends paid by
the Borrower to Century/Holding is as set out below under the
heading "Actual". Such amount is not in excess of the maximum
amount referred to in Section 5.02(g)(iii) of the Credit
Agreement as set out below under the heading "Covenant".
(i) The aggregate amount of cash dividends paid during the
period commencing on the date hereof and ending on May 31, 1998,
$250,000,000 (not including any cash dividends declared and paid
during such period to the extent permitted under Section
5.02(g)(iii)(y)):
Actual Covenant
------ --------
$250,000,000
(ii) For any Fiscal Quarter of the Borrower ending on
or prior to the Termination Date:
Actual Covenant
------ --------
75% of Excess Cash Flow for
the Borrower for the
preceding Fiscal Quarters in
the then-current Fiscal Year
or (if such Fiscal Quarter is
the first Fiscal Quarter of a
Fiscal Year) the preceding
Fiscal Year
minus
-----
aggregate amount used for
cash dividends and advances
pursuant to Sections
5.02(g)(iii)(y) and
5.02(f)(vi) during such
preceding Fiscal Quarters or
Fiscal Year, as the case may
be.
The basis of the calculation of the amount available for the Fiscal
Quarter then most-recently ended (the "Relevant Fiscal Quarter")
referred to above under the heading "Actual" is as follows:
<PAGE>
<PAGE>
- 9 -
(1) If the Relevant Fiscal Quarter is the first Fiscal Quarter
of then-current Fiscal Year:
Excess Cash Flow for the immediately preceding Fiscal
Year ($_____________) times 0.75 ($______________)
minus
the sum ($_____________) of (A) cash dividends paid in
such Fiscal Year ($_____________) and (B) advances made in
such Fiscal Year ($_____________):
$-------------.
(2) If the Relevant Fiscal Quarter is not the first Fiscal Quarter of
the then-current Fiscal Year:
Excess Cash Flow for the Fiscal Quarters in the then-
current Fiscal Year preceding the Relevant Fiscal
Quarter ($_____________) times 0.75: ($_____________)
minus
the sum ($_____________) of (A) cash dividends paid in
such preceding Fiscal Quarters ($_____________) and (B)
advances made in such Fiscal Quarters
($-------------):
$----------------.
(iii) For any Fiscal Quarter of the Borrower ending
after the Termination Date:
Actual Covenant
------ --------
Excess Cash Flow Surplus for
the Borrower for the
preceding Fiscal Quarters in
the then-current Fiscal Year
or (if such Fiscal Quarter is
the first Fiscal Quarter of a
Fiscal Year) the preceding
Fiscal Year
minus
-----
aggregate amount used for
cash dividends and advances
pursuant to Sections
5.02(g)(iii)(y) and
5.02(f)(vi) during such
preceding Fiscal Quarters or
Fiscal Year, as the case may
be.
<PAGE>
<PAGE>
- 10 -
The basis of the calculation of the amount available for the Fiscal
Quarter then most-recently ended (the "Relevant Fiscal Quarter")
referred to above under the heading "Actual" is as follows:
(1) If the Relevant Fiscal Quarter is the first Fiscal Quarter
of then-current Fiscal Year:
Excess Cash Flow Surplus for the immediately preceding
Fiscal Year: $_____________
minus
the sum ($_____________) of (A) cash dividends paid in
such Fiscal Year ($_____________) and (B) advances made in
such Fiscal Year ($_____________):
$-------------.
(2) If the Relevant Fiscal Quarter is not the first Fiscal Quarter of
the then-current Fiscal Year:
Excess Cash Flow Surplus for the Fiscal Quarters in the
then-current Fiscal Year preceding the Relevant Fiscal
Quarter: $_____________
minus
the sum ($_____________) of (A) cash dividends paid in
such preceding Fiscal Quarters ($_____________) and (B)
advances made in such Fiscal Quarters
($-------------):
$----------------.
13. Representations and Warranties: The representations and
warranties made by any Loan Party contained in Section 4.01 of the Credit
Agreement and in each other Loan Document are true and correct as though made on
and as of such Financial Statement Date.
14. Events of Default: No event has occurred and is
continuing 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.
<PAGE>
<PAGE>
- 11 -
IN WITNESS WHEREOF, I have signed this Certificate this _____ day
of____________________, [19__] [20__].
CCC - II, INC.
-----------------------------
Title:
(Financial Officer)
<PAGE>
<PAGE>
Exhibit 10.41
CONFORMED COPY
- -------------------------------------------------------------------------------
U.S. $200,000,000
CREDIT AGREEMENT
Dated as of April 15, 1997
Among
CITIZENS CENTURY CABLE TELEVISION VENTURE,
as Borrower,
SOCIETE GENERALE,
as Agent,
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Syndication Agent,
CORESTATES BANK, N.A.,
THE FIRST NATIONAL BANK OF BOSTON,
LTCB TRUST COMPANY,
and
PNC BANK, NATIONAL ASSOCIATION,
as Co-Agents,
and
THE FINANCIAL INSTITUTIONS NAMED HEREIN,
as Lenders
Arranged by
SOCIETE GENERALE
and
BANCAMERICA SECURITIES, INC.
- -------------------------------------------------------------------------------
<PAGE>
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS 1
SECTION 1.01. Certain Defined Terms 1
SECTION 1.02. Computation of Time Periods;
Interpretation 19
SECTION 1.03. Accounting Terms 20
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES 20
SECTION 2.01. The A Advances 20
SECTION 2.02. Making the A Advances 21
SECTION 2.03. The B Advances 22
SECTION 2.04. Fees 25
SECTION 2.05. Reduction of the Commitments 26
SECTION 2.06. Repayment of A Advances 26
SECTION 2.07. Interest on the A Advances 27
SECTION 2.08. Interest Rate Determination and
Protection 30
SECTION 2.09. Voluntary Conversion of A Advances 31
SECTION 2.10. Prepayments of A Advances 32
SECTION 2.11. Increased Costs, Etc. 34
SECTION 2.12. Illegality 36
SECTION 2.13. Payments and Computations 36
SECTION 2.14. Taxes 38
SECTION 2.15. Sharing of Payments, Etc. 40
SECTION 2.16. Additional Interest on Eurodollar Rate
Advances 40
SECTION 2.17. Use of Proceeds 40
ARTICLE III
CONDITIONS OF LENDING 41
SECTION 3.01. Conditions Precedent to Initial
Advances 41
SECTION 3.02. Conditions Precedent to Each A
Borrowing 43
SECTION 3.03. Conditions Precedent to Each B
Borrowing 44
SECTION 3.04. Conditions Precedent to Borrowings for
the Jones Acquisitions 44
SECTION 3.05. Conditions Precedent to Borrowings for
an Approved Acquisition 45
SECTION 3.06. Determinations Under Section 3.01 46
<PAGE>
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES 46
SECTION 4.01. Representations and Warranties of the
Borrower 46
ARTICLE V
COVENANTS OF THE BORROWER 52
SECTION 5.01. Affirmative Covenants 52
SECTION 5.02. Negative Covenants 55
SECTION 5.03. Reporting Requirements 63
ARTICLE VI
EVENTS OF DEFAULT 66
SECTION 6.01. Events of Default 66
ARTICLE VII
THE LENDER AGENTS 71
SECTION 7.01. Authorization and Action 71
SECTION 7.02. Lender Agents' Reliance, Etc. 71
SECTION 7.03. The Lender Agents and their Affiliates 72
SECTION 7.04. Lender Credit Decision 72
SECTION 7.05. Indemnification by Lenders 73
SECTION 7.06. Successor Agent, Etc. 73
ARTICLE VIII
MISCELLANEOUS 74
SECTION 8.01. Amendments, Etc. 74
SECTION 8.02. Notices, Etc. 75
SECTION 8.03. No Waiver; Remedies 75
SECTION 8.04. Costs, Expenses and Taxes 75
SECTION 8.05. Right of Set-off 76
SECTION 8.06. Binding Effect 76
SECTION 8.07. Assignments and Participations 76
SECTION 8.08. Indemnification by the Borrower 80
SECTION 8.09. Confidentiality 80
SECTION 8.10. Governing Law 81
SECTION 8.11. Execution in Counterparts 81
SECTION 8.12. WAIVER OF JURY TRIAL 81
SECTION 8.13. Submission to Jurisdiction; Waivers 82
SECTION 8.14. Acknowledgments 82
<PAGE>
<PAGE>
SCHEDULE I - Applicable Lending Offices
SCHEDULE II - Lenders and Commitments
SCHEDULE 4.01(l) - Subsidiaries
SCHEDULE 4.01(m) - Franchises
SCHEDULE 4.01(r) - Debt and Leases
SCHEDULE 4.01(w) - Subscribers
SCHEDULE 6.01(c) - Permitted Cable Systems
EXHIBIT A-1 - Form of A Note
EXHIBIT A-2 - Form of B Note
EXHIBIT B-1 - Form of Notice of A Borrowing
EXHIBIT B-2 - Form of Notice of B Borrowing
EXHIBIT C - Form of Guarantee Agreement
EXHIBIT D - Form of Negative Pledge Agreement
EXHIBIT E - Form of Rate Ratio Certificate
EXHIBIT F - Form of Compliance Certificate
EXHIBIT G - Form of Solvency Certificate
EXHIBIT H - Form of Assignment and Acceptance
EXHIBIT I-1 - Form of Opinion of Counsel to the Borrower
EXHIBIT I-2 - Form of Opinion of Counsel to Citizens Utilities and
Citizens Cable
EXHIBIT J - Form of Opinion of Special Communications Counsel to
the Borrower
<PAGE>
<PAGE>
Exibit 10.42
CREDIT AGREEMENT
Dated as of April 15, 1997
CITIZENS CENTURY CABLE TELEVISION VENTURE, a joint venture organized
under the laws of Delaware ("Borrower"), SOCIETE GENERALE, NEW YORK BRANCH, as
agent (the "Agent") for the financial institutions (the "Lenders") listed on the
signature pages hereof, BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
(the "Syndication Agent"), CORESTATES BANK, N.A., THE FIRST NATIONAL BANK OF
BOSTON, LTCB TRUST COMPANY and PNC BANK, NATIONAL ASSOCIATION, as co-agents (the
"Co-Agents"), and the Lenders 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:
"A Advance" means an advance by a Lender to the Borrower as part of an
A Borrowing and refers to 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 the Borrower payable to the order
of any Lender, in substantially the form of Exhibit A-1, evidencing the
aggregate indebtedness of the 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).
"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.
<PAGE>
<PAGE>
"Agent" has the meaning specified in the recital of parties to this
Agreement.
"Agreement" means this Credit Agreement.
"Applicable Lending Office" means, with respect to each Lender, such
Lender's Domestic Lending Office in the case of a Base 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 Majority
Lenders, of cable television assets or 100% of the ownership interests of a
company or other Person that owns, directly or through one or more other wholly
owned companies or other Persons, all or substantially all of such assets.
"Approved Company" means a company or other Person 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 Agreements" means the Jones Oxnard Asset Purchase
Agreement, the Jones Walnut Asset Purchase Agreement and the Jones Yorba Linda
Asset Purchase Agreement.
"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 H.
"B Advance" means an advance by a Lender to the 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 the Borrower under the auction bidding
procedure described in Section 2.03.
"B Note" means a promissory note of the Borrower payable to the order
of any Lender, in substantially the form of Exhibit A-2, evidencing the
indebtedness of the Borrower to such Lender resulting from a B Advance made by
such Lender.
"B Reduction" has the meaning specified in Section 2.01.
"Base Rate" means, for any period, a fluctuating interest rate per
annum as shall be in effect from time to time,
<PAGE>
<PAGE>
which rate per annum shall at all times be equal to the higher of:
(a) the rate of interest from time to time announced by
Societe Generale in New York, New York, as its prime rate (which
announced rate is not necessarily the lowest rate offered by Societe
Generale, and any other extension of credit by Societe Generale may be
at rates above, below or at such announced rate); and
(b) 1/2 of 1% 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.
"Borrower" has the meaning specified in the recital of parties to this
Agreement.
"Borrowing" means an A Borrowing or a B Borrowing.
"Business Day" means a day of the year on which commercial 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.
"Century Communications" means Century Communications Corp., a New
Jersey corporation.
"Century Telecommunications" means Century Telecommunications Venture
Corp., a Delaware corporation.
"Century/Texas" means Century Communications Corp., a Texas
corporation.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended from time to time.
<PAGE>
<PAGE>
"Citizens Cable" means Citizens Cable Company, a Delaware corporation.
"Citizens Utilities" means Citizens Utilities Co., a Delaware
corporation.
"Commercial Paper" means one or more unsecured instruments of
indebtedness issued from time to time by the Borrower having a maturity of 270
days or less and denominated in Dollars (including 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 the 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
Borrower.
"Converts", "Conversion" and "Converted" each refers to a conversion
of A Advances of one Type into A Advances of another Type pursuant to Section
2.08, 2.09, 2.11 or 2.12.
"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 or Synthetic 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 (x) trade accounts payable unless
payment thereof has been deferred by agreement beyond the customary period in
the industry or (y) obligations under Hedging Agreements or guaranties of such
obligations.
"Debt Service" means, for any period and for any Debt, the sum of all
amounts payable (whether or not actually paid) during such period by the
Borrower and its Subsidiaries to any other Person on account of (a) principal of
such Debt (including the principal component of Capital Lease and Synthetic
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 Borrower has a right to reborrow at the time such amount is
payable under this Agreement
<PAGE>
<PAGE>
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).
"Dollars" and "$" means lawful money of the
United States of America.
"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 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 Borrower and the Agent.
"EBIDT" means, for any period, the sum of the Consolidated net income
or loss for such period, excluding gains or losses from extraordinary items, of
the 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 the Borrower or any of its Subsidiaries and (ii)
interest income and interest expense in respect of any advance made by the
Borrower to any such Subsidiary, by any such Subsidiary to the Borrower, by any
such Subsidiary to any other Subsidiary of the Borrower or by the Borrower to
the Parent Companies). 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. In computing EBIDT for any period, the following
conventions shall be applied:
(i) If the 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 the 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
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(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 the
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 the Borrower for systems it has then
been operating for at least one Fiscal Period.
(ii) If the 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 the
Borrower or such Subsidiary during any part of such Fiscal Quarter or Fiscal
Period, as the case may be.
"Effective Date" means the earliest date on which all of the
conditions precedent set forth in Section 3.01 shall have been satisfied.
"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 Borrower, the Agent and the Lenders (each
of which approvals shall not be unreasonably withheld).
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"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 (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
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 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 the Borrower's controlled group, or under common control
with the Borrower, within the meaning of Section 414 of the Internal Revenue
Code of 1986 and the regulations promulgated and rulings issued thereunder.
"ERISA Event" means, with respect to any Person, (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
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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 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 Borrower 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 rates per annum at
which deposits in Dollars are offered by the principal office of the 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 the 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 the 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 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
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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 sum of
(A) the Consolidated amount of all interest expense paid to
third parties by the Borrower and its Subsidiaries during such Fiscal
Quarter on account of Debt,
(B) the Consolidated amount of all income taxes paid by the
Borrower and its Subsidiaries during such Fiscal Quarter,
(C) the Consolidated amount of all principal amounts
required to be paid by the Borrower and its Subsidiaries during such
Fiscal Quarter with respect to Debt of the Borrower and its
Subsidiaries, and
(D) the amount equal to the capital expenditures made by the
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 Borrower has 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 Borrower's obligation to make
such prepayment has been deferred, reserved amounts equal to the prepayment the
Borrower would otherwise have made in respect of Excess Cash Flow for such
immediately preceding Fiscal Quarter pursuant to such Section 2.10(b)(ii).
"FCC" means the Federal Communications Commission.
"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
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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 March, June, September or December, as the case may be.
"Fiscal Quarter" means the period of three calendar months ending on
the last day of March, June, September or December, as the case may be.
"Fiscal Year" means the period from and including January 1 of any
calendar year to and including December 31 of such calendar year (made up of
four Fiscal Quarters), and when followed by the designation of a year shall mean
such period ending on December 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 the 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 Person.
"Governmental Approvals" means any authorization, consent, approval,
license, franchise, lease, ruling, permit, waiver, exemption, filing,
registration or notice by or with any Governmental Person.
"Governmental Person" means any national (Federal or foreign), state
or local government, any political subdivision or any governmental,
quasi-governmental, judicial, public or statutory instrumentality, authority,
agency, body or entity, including the PBGC, Federal Deposit Insurance
Corporation, the
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Comptroller of the Currency, the Board of Governors of the Federal Reserve
System, any central bank or any comparable authority.
"Governmental Rules" means any law, rule, regulation, ordinance,
order, code, judgment, decree, directive, guideline, policy, or any similar form
of decision of, or any interpretation or administration of any of the foregoing
by, any Governmental Person.
"Guarantee Agreement" means that certain Guarantee Agreement made by
each of the Borrower's Subsidiaries in favor of the Agent in substantially the
form of Exhibit C.
"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.
"Hedging Agreement" means any interest rate protection agreement,
interest rate future, interest rate option, interest rate swap, interest rate
cap or other interest rate hedge or arrangement.
"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 the
Borrower to the Borrower or to any other Subsidiaries of the Borrower and (ii)
by the Borrower to a Subsidiary of the Borrower.
"Interest Period" means, for each 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 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
the Borrower pursuant to the provisions below. The duration of each such
Interest Period shall be one, two, three, six or, if offered by all Lenders,
nine or twelve months, in each case as the 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) the Borrower may not select any Interest Period
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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
vendors 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
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.
"Jones Acquisitions" means the Jones Oxnard Acquisition, the Jones
Walnut Acquisition and the Jones Yorba Linda Acquisition.
"Jones Acquisition Price" means (a) in the case of the Jones Oxnard
Acquisition, $70,507,314, (b) in the case of the Jones Walnut Acquisition,
$33,492,686 and (c) in the case of the Jones Yorba Linda Acquisition,
$36,000,000, subject, in each case, to the adjustments provided for in the Asset
Purchase Agreements.
"Jones Growth" means Jones Growth Partners II L.P., a Colorado limited
partnership.
"Jones Intercable" means Jones Intercable, Inc., a Colorado
corporation.
"Jones Oxnard Acquisition" means the acquisition of
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certain cable television assets of Jones Intercable in Oxnard, California and
certain surrounding areas pursuant to the terms of the Jones Oxnard Asset
Purchase Agreement.
"Jones Oxnard Asset Purchase Agreement" means that certain Asset
Purchase Agreement dated August 16, 1996 between Jones Intercable and the
Borrower (by assignment from Century Communications dated September 1, 1996)
with respect to the Jones Oxnard Acquisition.
"Jones Properties" means the cable television assets to be purchased
by the Borrower pursuant to the Asset Purchase Agreements.
"Jones Walnut Acquisition" means the acquisition of certain cable
television assets of Jones Intercable in Walnut, California and certain
surrounding areas pursuant to the terms of the Jones Walnut Asset Purchase
Agreement.
"Jones Walnut Asset Purchase Agreement" means that certain Asset
Purchase Agreement dated August 16, 1996 between Jones Intercable and the
Borrower (by assignment from Century Communications dated September 1, 1996)
with respect to the Jones Walnut Acquisition.
"Jones Yorba Linda Acquisition" means the acquisition of certain cable
television assets of Jones Growth in Yorba Linda, California and certain
surrounding areas pursuant to the terms of the Jones Yorba Linda Asset Purchase
Agreement.
"Jones Yorba Linda Asset Purchase Agreement" means that certain Asset
Purchase Agreement dated August 16, 1996 between Jones Intercable, Jones Growth
and the Borrower (by assignment from Century Communications dated September 1,
1996) with respect to the Jones Yorba Linda Acquisition.
"Lender Agents" means the Agent, the Syndication Agent and each of the
Co-Agents.
"Lenders" means the lenders listed on Schedule II under the caption
"LENDERS" and each Eligible Assignee that shall become a party hereto after the
Effective Date pursuant to Section 8.07.
"Lien" means any lien, security interest or other charge or
encumbrance of any kind, or any other type of preferential arrangement,
including 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 Guarantee
Agreement and the Negative Pledge Agreements.
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"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.
"Management Agreement" means the Management Agreement dated as of
September 22, 1994 between Century/Texas and the Borrower.
"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 the Borrower and its 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 the Borrower and its Subsidiaries taken as a whole, (b) the rights
and remedies of the Agent or any Lender under any Loan Document or (c) the
ability of the Borrower or any Guarantor to perform its obligations under any
Loan Document to which it is 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 the
Borrower, by the Borrower and one or more of its Subsidiaries, or by one or more
other Subsidiaries.
"Multiemployer Plan" means a multiemployer plan, as defined in Section
4001(a)(3) of ERISA, to which the 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 the
Borrower or an ERISA Affiliate and at least one Person other than the Borrower
and its ERISA Affiliates or (ii) was so maintained and in respect of which the
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.
"Negative Pledge Agreements" means those certain Negative Pledge
Agreements made by each of the Venturers, Century/Texas and the Parent Companies
in favor of the Agent in substantially the form of Exhibit D.
"Net Cash Proceeds" means, with respect to any sale,
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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, (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(a).
"Notice of B Borrowing" has the meaning specified in Section
2.03(a)(i).
"Obligation" means, with respect to any Person, any payment,
performance or other obligation of such Person of any kind, including 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
Borrower 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 the Borrower under the Loan Documents
and (b) the obligation of the 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 the Borrower.
"Obligors" means, collectively, the Borrower, the Subsidiaries of the
Borrower, the Venturers, Century/Texas and the Parent Companies.
"Parent Companies" means Century Communications and
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Citizens Utilities.
"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 the 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 the Borrower or a Subsidiary
of the 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, (ii) has suffered no material adverse change in its
business, condition (financial or otherwise), operations, performance or
properties since the Effective Date and (iii) prior to such contribution is
owned by one or more Persons other than the Borrower or any of its Subsidiaries;
and provided further that prior to the contribution of any such system or
capital stock to the Borrower, the 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 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,
partnership, limited liability company 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 Borrower and its 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
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interest expense of the Borrower and its 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 Borrower and
its Subsidiaries.
"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 Bank" means Societe Generale.
"Register" has the meaning specified in Section 8.07(c).
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System.
"Reserve Amount" means (a) if all of the Jones Acquisitions have been
consummated, $0 or (b) if fewer than all of the Jones Acquisitions have been
consummated, $140,000,000 less the sum of (i) the amount that has been paid to
consummate the Jones Acquisitions that have been so consummated, and (ii) the
amount that has been paid to consummate each Approved Acquisition.
"Single Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, which (i) is maintained for employees of the
Borrower or an ERISA Affiliate and no Person other than the Borrower and its
ERISA Affiliates or (ii) was so maintained and in respect of which the 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 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
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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) the Borrower or (ii) any Subsidiary of the 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 any corporation 50% or more of the Voting Rights of
which corporation are at the time directly or indirectly owned by the Borrower,
by the Borrower and one or more other Subsidiaries, or by one or more other
Subsidiaries of the Borrower.
"Synthetic Lease" means each arrangement, however described, under
which the obligor accounts for its interest in the property covered thereby
under generally accepted accounting principles as lessee of a lease which is not
a Capital Lease and accounts for its interest in the property covered thereby
for federal income tax purposes as the owner.
"Termination Date" means April 15, 2000 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 Consolidated Debt of the
Borrower and its Subsidiaries, including Capital Leases and Synthetic 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
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agreements pursuant to which the 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
the 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.
"Venturers" means Century Telecommunications and Citizens Cable.
"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 any corporation of which 100% of the
Voting Rights are at the time directly or indirectly owned by the Borrower, by
the 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; Interpretation. 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." In this Agreement, unless otherwise
indicated, the singular includes the plural and plural the singular; words
importing any gender include the other gender; references to statutes or
regulations are to be construed as including all statutory or regulatory
provisions consolidating, amending or replacing the statute or regulation
referred to; references to "writing" include printing, typing, lithography and
other means of reproducing words in a tangible visible form; the words
"including," "includes" and "include" shall be deemed to be followed by the
words "without limitation"; references to articles, sections (or subdivisions of
sections), exhibits, annexes or schedules are to this Agreement; references to
agreements and other contractual instruments shall be deemed
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to include all subsequent amendments, extensions and other modifications to such
instruments (without, however, limiting any prohibition on any such amendments,
extensions and other modifications by the terms of this Agreement); and
references to Persons include their respective permitted successors and assigns
and, in the case of Governmental Persons, Persons succeeding to their respective
functions and capacities.
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 Borrower
in Dollars 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 Schedule II
or, if such Lender has entered into any Assignment and Acceptance after the
Effective Date, set forth for such Lender in the Register maintained by the
Agent pursuant to Section 8.07(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 aggregate of the Jones Acquisition Prices, if all of
the Jones Acquisitions have been consummated, or (ii) $140,000,000 (less the
Jones Acquisition Price for each of the Jones Acquisitions that have been
consummated) if all of the Jones Acquisitions 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 the Borrower and the aggregate amount of B Advances
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offered to be made by the Lenders and accepted by the 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 Borrower 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 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, 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 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
8.02, 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 Borrower at the Agent's aforesaid address.
(b) Anything in subsection (a) above to the contrary notwithstanding,
the Borrower may not select 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. In the case of any A Borrowing which the related Notice of A Borrowing
specifies is to be comprised of Eurodollar Rate Advances, the Borrower 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 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
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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 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 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 the Borrower until
the date such amount is repaid to the Agent, at (i) in the case of the 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 Borrower may make B Borrowings in Dollars 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 $20,000,000 and (y) 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) The 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, 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 the Borrower shall specify in the Notice of B
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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 the 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 the 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 the
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 the 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 the 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) The 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
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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 the 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 the 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 the 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
the 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 8.02 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
the 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, the
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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, the 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 shall repay to the Agent for the account of each
Lender which has made a B Advance to the Borrower, on the maturity date of each
such B Advance (such maturity date being that specified by the 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. The Borrower shall
have no right to prepay any principal amount of any B Advance unless, at the
time of such prepayment, no Event of Default (or event which would constitute an
Event of Default but for the requirement that notice be given or time elapse or
both) has occurred and is continuing, and unless, and then only on the terms,
specified by the 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 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 the 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 the Borrower resulting from each B Advance
made to the Borrower as part of a B Borrowing shall be evidenced by a separate B
Note payable to the order of the Lender making such B Advance.
SECTION 2.04. Fees. (a) Commitment Fee. The Borrower agrees 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 Effective Date (or, in the case of each Eligible
Assignee that becomes a Lender after the Effective Date, from the effective date
specified in the Assignment and Acceptance pursuant to which it became a Lender)
until the
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Termination Date at the rate of (i) 3/8 of 1% per annum during each period in
which the applicable Rate Ratio is greater than or equal to 5.0:1, and (ii) 1/4
of 1% per annum during each period in which the applicable Rate Ratio is less
than 5.0:1, payable on the last day of each March, June, September and December
during the term of such Lender's Commitment, commencing on the first such day
after the Effective Date, and on the Termination Date. Each retroactive change
in the Rate Ratio pursuant to Section 2.07(d) shall be given retroactive effect
in determining the applicable commitment fee rate pursuant to this Section
2.04(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 commitment fee rate
payable for a period for which the Borrower has already paid commitment fees,
then any overpayment of commitment fees by the Borrower resulting therefrom
shall be credited to future commitment fees or other payment obligations of the
Borrower and any underpayment of commitment fees by the Borrower resulting
therefrom shall be paid by the Borrower to the Agent for the account of the
Lenders upon demand by the Agent.
(b) Agent Fee. The Borrower agrees to pay to the Agent, for its own
account, the fees set forth in the letter agreement between the Agent and the
Borrower dated as of 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 (assuming, solely for purposes of
this Section 2.05(a), that the then outstanding amount of such A Advances equals
or exceeds the amount of such prepayment).
(b) Optional. The Borrower shall have the right, upon at least five
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. The Borrower shall repay the
principal amount of each A Advance made to the Borrower owing to each Lender on
each of the principal installment dates listed below commencing June 30, 2000
and ending March 31, 2005 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:
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<TABLE>
<CAPTION>
Last day of Last day of Last day of Last day of
Year March June September December
- ----- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
2000 XXX 2.33334% 2.33333% 2.33333%
2001 4.00000% 4.00000% 4.00000% 4.00000%
2002 5.00000% 5.00000% 5.00000% 5.00000%
2003 5.25000% 5.25000% 5.25000% 5.25000%
2004 7.12500% 7.12500% 7.12500% 7.12500%
2005 7.50000% XXX XXX XXX
</TABLE>
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. The
Borrower shall pay interest on the unpaid principal amount of each A Advance
made to the Borrower owing to each Lender in accordance with the A Note 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) 5/8 of 1% per annum during each period in which the
applicable Rate Ratio is greater than or equal to 6.0:1,
(B) 3/8 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) 1/8 of 1% 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, and
(D) 0% per annum during each period in which the
applicable Rate Ratio is less than 5.0:1,
payable in arrears on the last day of each March, June, September and December
during such period 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 5/8% per annum during each period in which
the applicable Rate Ratio is greater than or equal to 6.0:1,
(B) 1 and 3/8% per annum during each period in which
the applicable Rate Ratio is less than 6.0:1
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and greater than or equal to 5.5:1,
(C) 1 and 1/8% 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% 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) 7/8 of 1% per annum during each period in which the
applicable Rate Ratio is less than 4.5:1 and greater than or
equal to 4.0:1, and
(F) 5/8 of 1% per annum during each period in which the
applicable Rate Ratio is less than 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.
(b) Default Interest. The Borrower shall pay interest, to the maximum
extent permitted by law, on the unpaid principal amount of each A Advance made
to the Borrower that is not paid when due and on the unpaid amount of all
interest, fees and other amounts payable hereunder by the 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, 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 (provided that, if any principal of a Eurodollar Rate
Advance is in default and the due date for such principal is a day other than
the last day of the Interest Period for such Advance, such Advance shall bear
interest (x) for the period from and including such due date to but excluding
the last day of such Interest Period at the rate provided for above in this
clause (i) and (y) thereafter at a rate per annum equal to 2% per annum above
the rate per annum required to be paid on Base Rate Advances from time to time
to Section 2.07(a)(i)) and (ii) in the case of all other amounts payable by the
Borrower, 2% per annum above the Base Rate in effect from time to time.
(c) Rate Ratio Certificates. The Borrower shall deliver a certificate,
in substantially the form of Exhibit E, 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").
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(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 the Borrower on the date on which such certificate is
delivered as the then most currently available financial statements of the
Borrower and its 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
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Certificate or Interim Certificate is delivered and (ii) if the Borrower fails
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 deemed to be greater than or equal to 6.0 to 1.0 for each
day during the period beginning 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 the Borrower has
already paid interest, then any overpayment of interest by the Borrower
resulting therefrom shall be credited to future interest or other payment
obligations of the Borrower with respect to that Advance and any underpayment of
interest by the Borrower resulting therefrom shall be paid by the 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) The
Reference Bank agrees to furnish to the Agent timely information for the purpose
of determining each Eurodollar Rate.
(b) The Agent shall give prompt notice to the Borrower and the Lenders
of the applicable interest rate determined by the Agent for purposes of Section
2.07(a)(i) or (ii), and the applicable rate, if any, furnished by the Reference
Bank for the purpose of determining the applicable interest rate under Section
2.07(a)(ii).
(c) If the Reference Bank does not furnish timely information to the
Agent for determining the Eurodollar Rate for any Eurodollar Rate Advances,
(i) the Agent shall forthwith notify the Borrower and the
Lenders that the interest rate cannot be determined for such
Eurodollar Rate Advances,
(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, Eurodollar Rate Advances shall be suspended until the
Agent shall notify the Borrower and the
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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 Borrower 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 Borrower and the Lenders that the circumstances
causing such suspension no longer exist.
(e) If the Borrower shall fail to select the duration of any Interest
Period for 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 the Borrower and the Lenders and the Borrower will be deemed
to have selected, for the Interest Period immediately succeeding the then
existing Interest Period therefor, an Interest Period for such Advance of three
months' 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
Eurodollar Rate Advances, automatically Convert into Base Rate Advances, and on
and after such date the right of the Borrower to Convert such Advances into
Eurodollar Rate Advances shall terminate; provided, however, that, if and so
long as each such A Advance shall have the same Interest Period as Eurodollar
Rate 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, the Borrower shall have the right to continue all such A Advances as
Eurodollar Rate Advances having such Interest Period.
SECTION 2.09. Voluntary Conversion of A Advances. The 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 into Advances
of another Type; provided, however, that any Conversion of any Eurodollar Rate
Advances into Advances of another Type shall be made on, and only on, the last
day of an
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Interest Period for such 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 Eurodollar Rate Advances, the duration of the Interest Period
for each such A Advance.
SECTION 2.10. Prepayments of A Advances. (a) Optional. The 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 the Borrower shall, prepay (without premium or penalty but subject to the
obligation of the Borrower to reimburse the Lenders as set forth in the proviso
below) the outstanding principal amount of the A Advances comprising part of the
same A Borrowing 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 or an integral multiple of $1,000,000 in excess thereof
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 a Eurodollar Rate Advance, the Borrower shall be
obligated to reimburse the Lenders in respect thereof pursuant to Section
8.04(b).
(b) Mandatory. (i) Sales of Assets. The Borrower shall, on each date
on which the Borrower or any of its Subsidiaries receives any Net Cash Proceeds
from the sale, lease, transfer or other disposition (each, a "Disposition") of
any asset of the 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)(iv)), 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, if any, then owing under Section 8.04(b) in respect of such prepayment.
Notwithstanding the foregoing, the Borrower shall not be required to make a
prepayment pursuant to this paragraph (b)(i) with respect to the Net Cash
Proceeds from any Disposition (a "Relevant Disposition") if (1) the applicable
Rate Ratio is less than or equal to 5.0:1 on the date of receipt of such Net
Cash Proceeds, (2) the Borrower advises the Agent at the time the Net Cash
Proceeds from such Relevant Disposition are received that it intends to reinvest
such Net Cash Proceeds in replacement assets pursuant to a transaction permitted
under Section 5.02(f) hereof, (3) such Net Cash Proceeds are in fact committed
to be reinvested by the Borrower pursuant to a purchase contract providing for
the acquisition of such replacement assets that is executed by the Borrower (or
any of its Subsidiaries) and the related seller within 180 days from the date of
such Relevant Disposition and
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(4) the acquisition of such replacement assets occurs within 180 days from the
date on which such purchase contract is so executed and delivered. If at any
time after the occurrence of a Relevant Disposition and prior to the acquisition
of the related replacement assets the 180-day period provided in clause (3) or
(4) of the preceding sentence shall elapse without execution of the related
purchase contract (in the case of said clause (3)) or the occurrence of the
related acquisition (in the case of said clause (4)), then the Borrower shall
immediately prepay the A Advances in the amount described in the first sentence
of this Section 2.10(b)(i).
(ii) Excess Cash Flow. On the last day of each Fiscal
Quarter commencing after the Termination Date, the Borrower shall
prepay the outstanding principal amount of the A Advances in an
aggregate amount equal to the sum of (A) 50% of Excess Cash Flow for
the Borrower 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,
if any, under Section 8.04(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 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. The Borrower shall, on each date on which the Borrower or any of
its Subsidiaries 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, if any, under Section
8.04(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 the Borrower or any of its
Subsidiaries shall voluntarily prepay, redeem, purchase, defease or
otherwise acquire all or any portion of the Additional Unsecured Debt
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in a transaction permitted by Section 5.02(m), the 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, if any, under Section
8.04(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 the Borrower then
outstanding times a fraction the numerator of which shall be the
principal amount of the Additional Unsecured Debt of the 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. The 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 the Borrower to give any notice shall not relieve the
Borrower of its obligation to make such prepayment.
(c) Application of Prepayment Proceeds. Each prepayment by the
Borrower under Section 2.10(b) made before the Termination Date shall be applied
ratably to all A Advances then outstanding. Each prepayment by the Borrower
under Section 2.10(b) made after the Termination Date shall be applied ratably
to the respective principal repayment installments of the A Advances being
prepaid.
SECTION 2.11. Increased Costs, Etc. (a) If, due to either (i) the
introduction of or any change 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 Eurodollar Rate Advances, then, if such costs are
or will be charged to customers of such Lender generally, the Borrower 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 the 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,
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the date on which such Lender gives to the Borrower a notice that an event has
occurred as a result of which such increased costs will arise or a notice that
the 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, any Lender
determines in the exercise of its reasonable judgment 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, then, upon demand
by such Lender (with a copy of such demand to the Agent), the Borrower 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
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 (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 Borrower a notice that an event has occurred as a
result of which such additional amounts will arise or a notice that the Borrower
is 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) or 2.11(b) shall, upon request from the Borrower delivered to
such Lender and the Agent specifying an Eligible Assignee willing and able to
assume and accept all of such Lender's rights and obligations under this
Agreement and the other Loan Documents, assign, in accordance with the
provisions of Section 8.07, 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
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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 8.07(a) shall be paid by the Borrower
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 Borrower through the Agent (which notice shall identify in reasonable
detail the relevant law or regulation or other basis upon which such
unlawfulness is asserted), (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 Borrower that such Lender has
determined that the circumstances causing such suspension no longer exist.
SECTION 2.13. Payments and Computations. (a) The Borrower 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 8.02 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 Borrower 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 8.07(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
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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 Borrower hereby authorizes each Lender, if and to the extent
payment owed to such Lender in 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
Borrower's accounts with such Lender any amount so due.
(c) All computations of interest based on the Base Rate (except to the
extent calculated by reference to the 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 Eurodollar Rate and
the Federal Funds Rate (including in connection with calculations of the Base
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 fees, 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 the Borrower
prior to the date on which any payment is due to the Lenders hereunder that the
Borrower will not make such payment in full, the Agent may assume that the
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 the 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 Borrower
hereunder or under the A Notes shall be made, in
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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 the 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) the Borrower shall make such
deductions and (iii) the Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law.
(b) In addition, the Borrower 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) The Borrower agrees to indemnify each Lender and the Agent for the
full amount of Taxes or Other Taxes (including 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
Borrower will furnish to the Agent, at its address referred to in Section 8.02,
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
Borrower 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.
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(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 Borrower
(but only so long as such Lender remains lawfully able to do so), shall provide
the Borrower 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 Borrower 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 Borrower 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 the
Borrower hereunder, the agreements and Obligations of the 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
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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. The 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 the
Borrower in the amount of such participation.
SECTION 2.16. Additional Interest on Eurodollar Rate Advances. The
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 the 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 Lender and
notified to the Borrower through the Agent.
SECTION 2.17. Use of Proceeds. The proceeds of each Advance shall be
used by the Borrower solely for one or more of the following: (a) to finance
working capital requirements of the Borrower and its Subsidiaries, (b) 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), (c) to make capital expenditures and (d) in the case of a Borrowing
described in Section 3.04 or 3.05, solely to finance the Jones Acquisitions or
an Approved Acquisition, as the case may be.
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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 the Borrower A Notes payable to
the order of each of the Lenders, respectively, duly executed by the Borrower.
(b) The Lenders shall be reasonably satisfied with the corporate and
legal structure and capitalization of the Borrower and each Subsidiary of the
Borrower, including the terms and conditions of, as the case may be, the joint
venture agreement, charter, bylaws and each class of capital stock or other
equity interest of the Borrower and each such 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 the Borrower and each such
Subsidiary.
(c) The Borrower shall have paid all accrued fees and expenses of the
Lender Agents (including the accrued fees and disbursements of counsel to the
Agent).
(d) The Lenders shall be reasonably satisfied with the insurance
maintained by the Borrower and each of its Subsidiaries.
(e) 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 the Borrower and each of its
Subsidiaries, (A) a certificate of the Secretary of the Borrower
certifying (I) that attached thereto is a true and complete copy of
the joint venture agreement of the Borrower and all amendments thereto
as in effect on the date of such certificate, (II) that attached
thereto is a true and complete copy of the bylaws of each Subsidiary
of the Borrower as in effect on the date of such certificate and such
bylaws of such Subsidiaries as in effect at all times since a date
prior to the date of the resolutions described in item (III) below,
(III) that attached thereto is a true and complete copy of the
resolutions adopted by the management board of the Borrower and by the
board of directors of each Subsidiary of the Borrower authorizing, as
the case may be, the execution, delivery and performance of this
Agreement, the Notes, the Guarantee Agreement and each other document
or instrument which is to be delivered by it in connection with this
Agreement after the date hereof and
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authorizing the Borrowings hereunder or otherwise, and that such
resolutions have not been modified, rescinded or amended and are in
full force and effect, (IV) that the certificate or articles of
incorporation of the Subsidiaries of the Borrower have not been
amended since the date of the last amendment thereto shown on the
certificate furnished pursuant to clause (B) below and (V) as to the
incumbency and specimen signature of each of the officers of the
Borrower and its Subsidiaries executing, as the case may be, this
Agreement, the Notes and the Guarantee Agreement, or any other
document or instrument delivered in connection herewith or therewith;
(B) a copy of the certificate or articles of incorporation, as
amended, of each of the Borrower's 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; and
(C) all documents evidencing other necessary corporate action and
governmental and third party consents and approvals (including good
standing certificates), if any, reasonably requested by the Agent or
any Lender through the Agent.
(ii) With respect to each of the Venturers, Century/Texas
and the Parent Companies, (A) a certificate of the Secretary or an
Assistant Secretary of such Person certifying (I) that attached
thereto is a true and complete copy of the resolutions of the Board of
Directors of such Person (x) approving its Negative Pledge Agreement
and (y) authorizing the execution and delivery of its Negative Pledge
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 such Person executing its Negative Pledge Agreement or
any other document or instrument delivered in connection herewith or
therewith and (B) all documents evidencing other necessary corporate
action and governmental and third party consents and approvals, if
any, with respect to such Persons and the Negative Pledge Agreements
(including good standing certificates).
(iii) The Guarantee Agreement, duly executed by each of the
Borrower's Subsidiaries (if any).
(iv) The Negative Pledge Agreements, duly executed by each
of the Venturers, Century/Texas and the Parent Companies.
(v) A certificate of the Secretary of the Borrower
certifying that attached thereto is a true and complete copy of the
Management Agreement as in effect on the date of such certificate.
(vi) A certificate of the Secretary of the
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Borrower certifying that attached thereto is a true and complete copy
of the Asset Purchase Agreements as in effect on the date of such
certificate, together with copies of the assignments by which all
right, title and interest of Century Communications in such Asset
Purchase Agreements have been assigned to the Borrower.
(vii) A certificate of the Chief Financial Officer of the
Borrower, in substantially the form of Exhibit G, attesting to the
Solvency of the Borrower and the Borrower and its Subsidiaries taken
as whole after giving effect to the transactions contemplated hereby.
(viii) A certificate as to the Rate Ratio substantially in
the form of Exhibit E.
(ix) A favorable opinion of (A) Leavy Rosensweig & Hyman,
counsel for the Borrower, substantially in the form of Exhibit I-1 and
(B) internal counsel to Citizens Utilities and Citizens Cable,
substantially in the form of Exhibit I-2.
(x) A favorable opinion of Cole, Raywid & Braverman, special
communications counsel for the Borrower, substantially in the form of
Exhibit J.
(xi) A favorable opinion of Orrick, Herrington & Sutcliffe
LLP, counsel for the Agent, in form and substance satisfactory to the
Agent.
(xii) Such other documents as the Agent or any Lender
through the Agent may reasonably request.
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 the Borrower of the proceeds of such A Borrowing shall
constitute a representation and warranty by the 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
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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 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 the Borrower of
the proceeds of such B Borrowing shall constitute a representation and warranty
by the 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 the Borrower that has been provided to the
Agent and each Lender by the 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 Jones
Acquisitions. The obligation of each Lender to make an Advance any proceeds of
which are to be used to finance the Jones Oxnard Acquisition, the Jones Walnut
Acquisition or the Jones Yorba Linda Acquisition shall be subject to the
conditions precedent that (a) coincident with the making of such Advance, the
Borrower shall own directly or through one or more Wholly-Owned Subsidiaries all
of the Jones Properties sold in such Jones Acquisition, (b) there shall exist no
action, suit, investigation, litigation or proceeding that purports to affect
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the legality, validity or enforceability of such Jones Acquisition or the
agreements and other documents to be entered into in connection with such Jones
Acquisition or consummation of such Jones Acquisition or that purports to
restrict the Borrower's control or operation of the Jones Properties being
acquired, (c) since December 31, 1996 there shall have been no material adverse
change in the Jones Properties subject to such Jones Acquisition or their
financial condition, taken as a whole, other than changes relating to matters or
circumstances described in clauses (A), (B) and (C) of Section 8.1(j)(i) of the
Asset Purchase Agreements, and (d) the Agent shall have received evidence in
form and substance reasonably satisfactory to the Agent and in sufficient copies
for each Lender, coincident with the making of such Advance, as to the
consummation of such Jones Acquisition on terms substantially the same as those
contained in the Asset Purchase Agreement relating to such Jones Acquisition (as
such Asset Purchase Agreement may have been amended with the consent of the
Majority Lenders).
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) one or more of the Asset Purchase Agreements shall
have been terminated in accordance with its terms pursuant to Section 10.1 or
10.2 thereof, (b) the Borrower 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) the purchase price of the assets
proposed to be acquired in such acquisition shall not exceed the purchase price
for the assets that were to be acquired pursuant to the Asset Purchase Agreement
or Asset Purchase Agreements referred to in clause (a) above, (d) 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 Borrower's control or operation of the cable television assets or ownership
interests being acquired from the Approved Company, and (e) the Agent shall have
received evidence, in form and substance reasonably 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 Majority
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
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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 Borrower. The
Borrower represents and warrants as follows:
(a) The Borrower is a joint venture that would be treated as a general
partnership under the laws of the State of Delaware and each of the Subsidiaries
of the Borrower is a corporation, in each case duly organized, validly existing
and (in the case of each Subsidiary) in good standing under the laws of the
jurisdiction of its organization; each such Person (i) is duly qualified to do
business and (in the case of each Subsidiary) in good standing 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 (ii) has all
requisite corporate or other 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 joint venture interests in the Borrower are directly owned
by the Venturers in equal shares free and clear of all Liens; all of the
outstanding capital stock of Century Telecommunications has been validly issued,
is fully paid and non-assessable and is owned by Century/Texas free and clear of
all Liens; all of the outstanding capital stock of Century/Texas has been
validly issued, is fully paid and non-assessable and is owned by Century
Communications free and clear of all Liens; and all of the outstanding capital
stock of Citizens Cable has been validly issued, is fully paid and
non-assessable and is owned by Citizens Utilities free and clear of all Liens.
(b) The execution, delivery and performance by the Borrower and each
other Obligor 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 the
Borrower of any Subsidiary and the acquisition by any Subsidiary of any other
Subsidiary and the other transactions contemplated hereby, are within the
corporate or other powers of the Borrower, such Subsidiaries and such other
Obligors, as the case may be, have been duly authorized by all necessary
corporate or other action, and do not (i) contravene the joint venture agreement
of the Borrower or the charter or bylaws of any other Obligors, as the case may
be, (ii) violate any Governmental Rules (including
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Regulation X of the Board of Governors of the Federal Reserve System), (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 Obligor, 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 any such Obligor or
any of its Subsidiaries. No Obligor is in violation of any such Governmental
Rules 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 Person or any other third party (including the
FCC) is required for the due execution, delivery and performance by any Obligor
of this Agreement, the Notes or the other Loan Documents to which such Obligor
is a party or any Borrowing hereunder or for the ownership or control by the
Borrower 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 any Obligor is a party when delivered hereunder will be, legal, valid and
binding obligations of such Obligor enforceable against such Obligor 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 concepts of materiality,
reasonableness, good faith and fair dealing (regardless of whether considered in
a proceeding in equity or at law).
(e) The Consolidated and combining balance sheet of the Borrower and
its Subsidiaries as at December 31, 1996, and the related Consolidated and
combining statements of income and cash flows of the Borrower and its
Subsidiaries for the Fiscal Year then ended, accompanied by (in the case of the
Consolidated balance sheet and statements of income and cash flows) an opinion
of Deloitte & Touche, independent public accountants, duly certified by the
chief financial officer of the Borrower, copies of which have been furnished to
each Lender, fairly present the Consolidated and combining financial condition
of the Borrower and its Subsidiaries as at such date and the Consolidated and
combining results of the operations of the Borrower and its Subsidiaries for the
period ended on such date, all in accordance with generally accepted accounting
principles consistently applied, and since December 31, 1996 there has been no
Material Adverse Change.
(f) The Consolidated pro forma balance sheet of the Borrower and its
Subsidiaries as at December 31, 1996 (which
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balance sheet (x) gives effect to the Jones Acquisitions as if the same had
occurred as of such date and (y) assumes that such acquisitions were funded with
Debt of the Borrower as of such date), copies of which have been furnished to
each Lender, fairly present the Consolidated pro forma financial condition of
the Borrower and its Subsidiaries as at such date in accordance with generally
accepted accounting principles consistently applied, and since December 31, 1996
there has been no Material Adverse Change.
(g) The Consolidated and consolidating forecasted statements of income
and cash flows of the Borrower and its Subsidiaries for each Fiscal Year ending
December 31, 1996, through December 31, 2005, 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 Borrower's best estimate of its 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 the Borrower or any other Obligor 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 the Borrower or any officer of the
Borrower which the Borrower has not disclosed to the Lenders in writing which in
the reasonable judgment of the Borrower and such officers would have a Material
Adverse Effect.
(i) There is no pending or (to the knowledge of the Borrower)
threatened action, suit, investigation or proceeding against any Obligor before
any Governmental Person 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, any Note or any other Loan Document or the
consummation of the transactions contemplated hereby.
(j) None of the Obligors 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.
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(k) Following application of the proceeds of each Advance, not more
than 25 percent of the value of the assets (either of the Borrower only or of
the 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 the Borrower and any Lender or
any Affiliate of any Lender relating to Debt, will be Margin Stock.
(l) Set forth on Schedule 4.01(1), 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 the 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 the
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 the Borrower and its Subsidiaries is free and clear of
all Liens, except those permitted by Section 5.02(a).
(m) Set forth in Schedule 4.01(m) is a complete and correct list for
the Borrower of all of the Franchises granted to and held by, as of the date of
the execution and delivery of this Agreement, the Borrower and/or its
Subsidiaries, or for which application has been made or is planned to be made by
the 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 the 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 Borrower or any of its Subsidiaries has
received any notice from the granting body or any other Governmental Person 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 the 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 the Borrower and its
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Subsidiaries, the 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 the 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. 'SS' 6991, are located on any property of the Borrower or any of
its Subsidiaries or, to the best of its knowledge, on any adjoining property.
(p) None of the Borrower or any of its Subsidiaries is (i) 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, (ii) a "holding company," or an "affiliate" of a
"holding company" or a "subsidiary company" of a "holding company," within the
meaning of the Public Utility Holding Company Act of 1935 or (iii) subject to
any other Governmental Rule restricting its or their ability to incur debt.
Neither the making of any Advances, nor the application of the proceeds or
repayment thereof by the Borrower, nor the consummation of the other
transactions contemplated hereby, will violate any provision of any such
Governmental Rule or any Governmental Approval.
(q) The Borrower is, individually and together with its Subsidiaries,
Solvent.
(r) Set forth in Schedule 4.01(r) 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 providing for,
evidencing, securing or otherwise relating to any Debt of the 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) Each of the Borrower and its Subsidiaries owns and has good title
to the properties shown to be owned by it in the
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financial statements referred to in Section 4.01(e) (other than properties
permitted to be disposed of pursuant to Section 5.02(e)). There are no Liens of
any nature whatsoever on any properties of the Borrower nor any Subsidiary of
the 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 Borrower 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) The 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) the Borrower and each of its Subsidiaries
have timely filed all reports and applications required by the FCC or any other
Governmental Person which has issued a Franchise to the 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) The Borrower and each of its Subsidiaries is in compliance with
the requirements of all applicable Governmental Rules of all Governmental
Persons the violation of which could have a Material Adverse Effect; and none of
the Borrower or any of its 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 the
Borrower or any Subsidiary, is contemplated by the FCC or any such Governmental
Persons.
(w) Set forth in Schedule 4.01(w) is a true and correct summary as of
February 28, 1997 of Subscribers with respect to the cable television systems of
the 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 the Borrower and its
Subsidiaries.
(x) None of the Borrower 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.
(y) The 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.
<PAGE>
<PAGE>
ARTICLE V
COVENANTS OF THE BORROWER
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, the 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
Governmental Rules (including ERISA) and licensing requirements, such compliance
to include 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 the Borrower or such Subsidiary operates.
(c) Existence and Approvals. Obtain, preserve and maintain, and cause
each of its Subsidiaries to obtain, preserve and maintain (i) its existence,
rights, franchises (including Franchises) and privileges in the jurisdiction of
its organization, and qualify and remain qualified, and cause each such
Subsidiary to qualify and remain qualified, to do business 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) and (ii) all Governmental Approvals (including Franchises) and other
permissions of all Governmental Persons necessary to enable the Borrower and
each such Subsidiary to operate and maintain its property, business and
operations as the same is currently 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, the Borrower and
any of its Subsidiaries, and to discuss the affairs, finances and accounts of
the Borrower and any of its Subsidiaries with any of their officers or directors
and with their independent certified accountants.
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(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 the
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 the 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 the Borrower in its reasonable business judgment deems such
maintenance and preservation necessary or reasonably useful in the proper
conduct of the business of the 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 Governmental Approvals (including Franchises) and all patents,
copyrights, trademarks, service marker or trade names material to the conduct of
its businesses.
(g) Maintenance of Separateness. Conduct its business and operations
and the business and operations of each Subsidiary of the Borrower separately
from that of the Venturers, Century/Texas, the Parent Companies, each Minority
Entity and each other Affiliate of the Borrower (other than any Subsidiary of
the Borrower), including (i) not commingling funds or other assets of the
Borrower or any such Subsidiary with the funds or other assets of the Venturers,
Century/Texas, the Parent Companies, a Minority Entity or any other Affiliate of
the Borrower; (ii) maintaining separate records (financial and otherwise) and
observing all corporate or other appropriate procedures and formalities for the
Borrower and each such Subsidiary, including (as applicable) the holding of
meetings of shareholders, boards of directors and persons performing similar
functions, 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 the Borrower or another Subsidiary of the 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) Pro-Forma Debt Service Ratio. Maintain, as of the last day of each
Fiscal Quarter ending on and after the Termination Date, a Pro-Forma Debt
Service Ratio of at least 1.10:1.
(i) Ratio of Total Debt to EBIDT. Maintain, as of the last day of each
Fiscal Period whose last day occurs during any
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<PAGE>
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:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
from the date hereof 6.25:1
through 6/30/98
thereafter through 6.00:1
6/30/99
thereafter through 5.50:1
3/31/00
thereafter through 5.00:1
3/31/01
thereafter through 4.50:1
3/31/02
thereafter 4.00:1
</TABLE>
(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 Borrower and its 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
1.75:1 for each Fiscal Period ending before December 31, 1998 and at
least 2.00:1 for each Fiscal Period ending on December 31, 1998 and
thereafter.
(k) Pari Passu. Cause the obligations of the 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 the 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.
(l) Interest Rate Protection. (i) No later than 90 days following the
Effective Date, enter into and maintain one or more Hedging Agreements that
shall provide interest rate protection at all times (A) in respect of at least
25% of the highest principal amount of Debt outstanding under this Agreement
during such 90-day period, (B) having an original term of at least three years
and (C) that is otherwise in form and substance reasonably satisfactory to the
Agent and (ii) no later than 180 days following the Effective Date, enter into
and maintain one or more Hedging Agreements that, together with all Hedging
Agreements entered into pursuant to clause (i) above, shall provide interest
rate protection at all times (A) in respect of at least 50% of the highest
principal amount of Debt outstanding under this Agreement during such 180-day
period, (B) having an original term of at least three years and (C) that is
otherwise in form and substance reasonably satisfactory to the Agent.
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<PAGE>
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, the 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 the 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 the 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 and Synthetic
Leases permitted by Section 5.02(c) and encumbering only the assets
covered by such Capital Leases or Synthetic Leases; or
(vi) constituting purchase money Liens on or in property acquired
or held by the 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
<PAGE>
<PAGE>
secured by the Liens referred to in clauses (v) and (vi) shall not exceed
$5,000,000 at any one time outstanding for the Borrower and its Subsidiaries, on
a Consolidated 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) unsecured Intercompany Debt permitted by Section 5.02(f)(v);
provided that such Debt (A) is subordinated in right of payment to the
Debt of the Borrower under this Agreement and its Notes and (B) 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 the Borrower or any Subsidiary of the 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
the Borrower from time to time after the date hereof ranking pari
passu with or subordinated in right of payment to the Debt of the
Borrower under this Agreement and its Notes (the "Additional Unsecured
Debt" of the 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 20 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
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<PAGE>
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
December 31, 2005), (C) the Borrower 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 the Borrower and its Subsidiaries, on a Consolidated 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 and Synthetic Leases)
having a term of one year or more which would cause the aggregate, direct or
contingent, liabilities of the Borrower and its Subsidiaries, on a Consolidated
basis, in respect of all such obligations (under clause (i) and under clause
(ii) above taken together) payable in
<PAGE>
<PAGE>
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, the 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 the Borrower is a party, the
Borrower is the surviving Person.
(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 any sale or discounting of
receivables), including substantially all assets constituting the business of a
division, branch or other unit operation, except:
(i) for sales of assets (excluding receivables) for cash in the
ordinary course of its business,
(ii) for dispositions of obsolete equipment no longer needed in
the conduct of the Borrower's or such Subsidiary's business for cash,
(iii) in a transaction authorized by subsection (d) of this
Section 5.02 or
(iv) for sales of fixed assets for cash or in exchange (by way of
trade or the like) for like operating assets; provided that: (A) the
aggregate Asset EBIDT of all such assets so sold or exchanged by the
Borrower and its Subsidiaries, on a Consolidated basis, during, and
for, the Fiscal Period then most recently ended does not exceed 15% of
EBIDT for such Fiscal Period; (B) the sum of the Asset EBIDT
Percentages for all such assets so sold or exchanged by the Borrower
and its Subsidiaries, on a Consolidated basis, during the period of
five years ending on the date of the relevant sale or exchange does
not exceed 25%; and (C) the 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 sale or exchange together with
sufficient information with a copy to the Agent for delivery to each
Lender to enable the Agent to determine the
<PAGE>
<PAGE>
respective Asset EBIDT of the assets involved in such sale or
exchange. For purposes of this paragraph (iv):
"Asset EBIDT" means, for any asset for any period, the net income
(or loss) attributable to the operation of such asset for such period
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).
"Asset EBIDT Percentage" means, for any asset sold or exchanged,
the ratio (expressed as a percentage) of (1) the Asset EBIDT of such
asset for the Fiscal Period ending on or most recently ended prior to
the sale or exchange of such asset to (2) EBIDT for such Fiscal Period
(determined, however, without giving effect to paragraph (ii) of the
definition of EBIDT with respect to the assets so sold or exchanged).
(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
its officers and employees) other than:
(i) the acquisition by the Borrower or any of its Subsidiaries
from any Person not an Affiliate of the 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;
(ii) the acquisition by the 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
the 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
$10,000,000; 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);
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<PAGE>
(iii) the acquisition by the Borrower or any of its Subsidiaries
as a capital contribution to it of one or more Permitted Cable Systems
for the purpose of curing a breach of the covenants contained in
Section 5.01(h), (i) or (j), as permitted pursuant to Section 6.01(c);
(iv) purchases by the Borrower or any 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 the Borrower to any Subsidiary, advances by any
such Subsidiary to the Borrower and advances by any such Subsidiary to
any other such Subsidiary;
(vi) advances by the Borrower to the Venturers, Century/Texas or
the Parent Companies in an aggregate amount not to exceed, for any
Fiscal Quarter, the excess, if any, of (i) the amount permitted to be
distributed by the Borrower to the Venturers pursuant to Section
5.02(g)(iii) for such Fiscal Quarter over (ii) (A) the aggregate
amount of distributions actually made by the Borrower to the Venturers
for such Fiscal Quarter pursuant to such Section 5.02(g)(iii);
(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 Jones Acquisitions; and
(ix) 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 (and, in the case of any Investment
proposed to be made pursuant to clause (i) or (ii), the Borrower shall, not
later than five Business Days prior to the consummation of such Investment,
deliver to the Agent a certificate, in form and detail reasonably satisfactory
to the Agent, demonstrating pro forma compliance with the covenants set forth in
Sections 5.01(h), (i) and (j)). The Borrower shall promptly cause each Person
that becomes a direct or indirect Subsidiary of the Borrower after the date
hereof to become a guarantor under the Guarantee Agreement pursuant to an
assumption agreement in the
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form annexed to the Guarantee Agreement or otherwise pursuant to such
documentation which is in form and substance satisfactory to the Agent.
(g) Restricted Payments, Etc. Declare or make any distributions,
purchase, redeem, retire, defease or otherwise acquire for value any of its
joint venture interests or any warrants, rights or options to acquire such joint
venture interests, now or hereafter outstanding, return any capital to its joint
venturers as such, make any distribution of assets, joint venture units,
warrants, rights, options, obligations or securities to its joint venturers as
such, or issue or sell any joint venture units or any warrants, rights or
options to acquire such joint venture units, or permit any of its Subsidiaries
to do any of the foregoing with respect to its capital stock, except that, after
the Termination Date upon compliance with all applicable requirements of law,
(i) any Subsidiary may declare and make payment of cash and stock dividends,
return capital and make distributions of assets to the Borrower or to other
Subsidiaries of the Borrower, (ii) the Borrower may declare and deliver
distributions payable only in joint venture units of the Borrower, (iii) the
Borrower may declare and make cash distributions to the Venturers in an amount
not to exceed in the aggregate, for any Fiscal Quarter of the Borrower ending
after the Termination Date, the Excess Cash Flow Surplus for the Borrower for
such Fiscal Quarter less the aggregate amount of advances made by the Borrower
to the Venturers, Century/Texas and the 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.
(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 its
joint venture agreement, 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 the Borrower) on terms less favorable to the
Borrower or such Subsidiary than would be obtainable at the time in comparable
transactions of the Borrower or such Subsidiary with Persons not Affiliates; and
without limiting the foregoing, the 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.
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(j) Termination of Franchise. Terminate, permit any of its
Subsidiaries to terminate or authorize the termination by any other Person of
any Franchise of the 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 the
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 the 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, the Borrower prepays the outstanding
principal amount of the A Advances to the extent required by Section
2.10(b)(iv).
(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 the Borrower
thereunder, (ii) accelerates any date fixed for any payment by the Borrower
thereunder or (iii) otherwise materially impairs the value of the interest or
rights of the 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 the Borrower).
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(o) Issuance of Stock. Suffer or permit any of its Subsidiaries,
directly or indirectly, to issue any stock of such Subsidiary, except (i) to the
Borrower, (ii) to a Wholly-Owned Subsidiary of the Borrower, (iii) to qualified
directors if and to the minimum extent required by applicable law, or (iv) as
otherwise required by applicable law in the case of Foreign Subsidiaries of the
Borrower; provided that such transaction complies with all other provisions of
this Agreement.
(p) Amendments to Management Agreement. Amend, modify, change or waive
or agree to any amendment, modification, change or waiver of any material term
or condition of the Management Agreement in any manner adverse to the interests
of the Lenders or that would otherwise have a Material Adverse Effect.
(q) Management Fees. Pay or obligate itself to pay any management or
similar fee to any Affiliate of the Borrower or any other Person, or permit any
of its Subsidiaries to do so, except that the Borrower may reimburse
Century/Texas for certain of its expenses as provided in Section 5 of the
Management Agreement.
SECTION 5.03. Reporting Requirements. So long as any amount hereunder
shall remain unpaid or any Lender shall have any Commitment hereunder, the
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
the Borrower setting forth details of such Event of Default or event and the
action which the 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 Borrower,
Consolidated and consolidating balance sheets of the Borrower and its
Subsidiaries as of the end of such quarter and the related Consolidated and
consolidating 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 the 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 Officer dated the date of delivery of such statements stating
that such Financial
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Officer 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 the Borrower has taken or proposes to take with respect thereto, and (ii)
a certificate in the form of Exhibit F, 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 Borrower, a copy of the annual audit report for such
year for the Borrower and its Subsidiaries (including therein Consolidated and
consolidating balance sheets of such Persons as a group in each case as at the
end of such Fiscal Year and the related Consolidated and consolidating
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 Borrower and its 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 F, appropriately
completed, of a Financial Officer of the 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
Governmental Person;
(g) promptly after the sending or filing thereof, copies of all proxy
statements, financial statements and reports which the Borrower or any
Subsidiary of the Borrower sends to its stockholders, and copies of all regular,
periodic and special reports, and all registration statements, which the
Borrower or any Subsidiary of the Borrower files with the Securities and
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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 the Borrower or any
Subsidiary of the 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 the Borrower
and within 90 days of the end of each Fiscal Year of the Borrower a report
updating the information regarding Subscribers to the cable television systems
of the 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 F 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 the Borrower or any Subsidiary of the Borrower files
under ERISA with the PBGC or the U.S. Department of Labor or which the Borrower
or any Subsidiary of the Borrower receives from such Governmental Person;
(j) promptly after the receipt thereof, notice of any lapse,
termination or relinquishment of any material Governmental Approval (including
any Franchise) from the FCC held by the Borrower or any Subsidiary of the
Borrower or any failure of the FCC to renew or extend any such Governmental
Approval (including any Franchise) for the usual period thereof and of any
complaint or other matter filed with or communicated to the FCC, of which the
Borrower or any Subsidiary of the Borrower has knowledge and which could have a
material adverse effect upon the renewal or extension of any Governmental
Approval (including any Franchise) held by the Borrower or any Subsidiary of the
Borrower;
(k) within 15 days after any change occurs with respect to any
information regarding any Subsidiary of the 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(1), a schedule, in substantially the form of
Schedule 4.01(1), setting forth as of the date such schedule is furnished the
information described in the first sentence of Section 4.01(1);
(l) promptly upon the Borrower's obtaining knowledge thereof, notice
of any issuance of a rating of any of the Borrower's long term Debt (including
borrowings under this Agreement and the Unsecured Debt Documents) or a change in
any such rating; and
(m) such other information respecting the business or properties or
the condition or operations, financial or otherwise, of the Borrower or any of
its Subsidiaries, as the Agent or any Lender may from time to time reasonably
request.
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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) The Borrower shall fail to pay (i) any principal of any Note when
the same becomes due and payable, or (ii) any interest on any Note or any fees
payable under this Agreement within 2 Business Days after the same becomes due
and payable; or
(b) Any representation or warranty made or deemed made by any Obligor
in or in connection with any Loan Document shall prove to have been incorrect in
any material respect when made; or
(c) (i) The Borrower shall fail to perform or observe any term,
covenant or agreement contained in Section 5.02 (other than Section 5.02(h) or
(1)) or 5.03(a); or
(ii) The 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 the Borrower by the Agent or any Lender and (B) the Borrower's
knowledge of such failure; provided that a breach by the 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, the Borrower shall have received from the Venturers capital
contributions in the form of cash or Permitted Cable Systems (whether
or not in connection with the issuance by the Borrower to the
Venturers of additional joint venture units) which, if such capital
contributions had been received by the Borrower prior to the last day
of the Fiscal Period with respect to which the Borrower has breached
any such financial covenants, would have resulted in the 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 the Venturers to be an addition to the net
income component of EBIDT of the 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
the 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
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financial covenant occurring as of the last day of the immediately
preceding Fiscal Period; or
(d) The Venturers, Century/Texas or the Parent Companies shall fail to
perform or observe (i) any term, covenant or agreement contained in Section 2 or
5 of any Negative Pledge Agreement or (ii) any other term, covenant or agreement
contained in any Negative Pledge 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 Borrower
by the Agent or any Lender and (B) the Borrower's, or any Venturer's or
Century/Texas' or any Parent Company's, as applicable, knowledge of such
failure; or
(e) The 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), or in the payment when due of any amount under any Hedging
Agreement, of the 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 or in such Hedging Agreement, and the aggregate
amount of all such Debt and notional amount of obligations under Hedging
Agreements 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 or under any such Hedging Agreement 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, in the case of a Hedging Agreement, to permit the
payments owing under such Hedging Agreement to be liquidated; or any such Debt
or any such obligations under Hedging Agreements shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled required
prepayment), redeemed, purchased, defeased or liquidated, or an offer to prepay,
redeem, purchase, defease or liquidate such Debt shall be required to be made,
in each case prior to the stated maturity thereof; or
(f) Any Affiliates of the Borrower (other than a Subsidiary of the
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 the
Borrower or any such Subsidiary should be consolidated substantively with the
assets and liabilities of any such Affiliate or shall assert or claim that the
Borrower is liable for any or all of such
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Affiliate's liabilities; or
(g) The Borrower, any Subsidiary of the Borrower, either Venturer or
Century/Texas 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 the Borrower, any such Subsidiary, either Venturer or
Century/Texas 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 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 the Borrower, any such
Subsidiary, either Venturer or Century/Texas shall take any corporate or other
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 Obligor party thereto, or any
such Obligor 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 the Borrower to be
prepaid (other than by a regularly scheduled or permitted prepayment) prior to
the stated maturity thereof; or
(j) Any judgment (including any arbitration award) or order for the
payment of money in excess of $10,000,000 shall be rendered against the 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 the
Parent Companies and Century/Texas, or his estate, and/or members of his
immediate family (which include his grandchildren), and/or trusts wholly for
their benefit, shall fail to own in the aggregate, beneficially and of record,
stock
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of Century Communications 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 Communications 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 Telecommunications; or Citizens Utilities shall fail to
own 100% of the outstanding capital stock of Citizens Cable; or neither one of
the Venturers shall own at least 50% of the outstanding joint venture interests
in the Borrower; 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) The 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 the Borrower and its ERISA
Affiliates as Withdrawal Liability, exceeds $10,000,000 or requires payments
exceeding $10,000,000 per annum; or
(o) The 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 the 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 the Borrower or any Subsidiary of
the 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
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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; or
(q) Century/Texas shall for any reason cease to manage the Borrower's
or any of its Subsidiaries' cable television system operations pursuant to the
Management Agreement, or either of Century/Texas or the Borrower shall default
in the performance of any of its material obligations under the Management
Agreement;
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 Borrower, 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 Borrower, 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 the Borrower;
provided, however, in the case of the occurrence of an Event of Default referred
to in subsection (g) of this Section 6.01 with respect to the Borrower, (A) the
obligation of each Lender to make Advances to the Borrower shall automatically
be terminated and (B) all of the Borrower's 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 the 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 enforcement or collection
of the Notes), the Agent
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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 8.07; (ii) may consult with legal counsel
(including counsel for the 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 the
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 the
Borrower or any other Person or to inspect the property (including the books and
records) of the 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
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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, the Borrower, any of its
Subsidiaries and any Person who may do business with or own securities of the
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 the 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
Borrower), 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 much Lender Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or
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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 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
Borrower.
SECTION 7.06. Successor Agent, Etc. (a) The Agent may resign at any
time by giving written notice thereof to the Lenders and the Borrower 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) The Syndication Agent and any Co-Agent may resign at any time by
giving written notice thereof to the other Lender Agents, the Lenders and the
Borrower and may be removed at any time with or without cause by the Majority
Lenders.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments, Etc. No amendment or waiver of any provision
of this Agreement or the A Notes, nor consent to any departure by the Borrower
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
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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 or extend 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
Agreement (other than to join a Subsidiary of the Borrower as a party thereto as
provided in Section 5.02(f)) or release any Subsidiary of the Borrower from its
obligations under the Guarantee Agreement or (g) amend this Section 8.01; 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 Borrower therefrom shall in any event be effective after an
Event of Default has occurred and is continuing 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 8.02. 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 the Borrower, at its address at c/o Century
Communications Corp., 50 Locust Avenue, New Canaan, Connecticut 06840,
Attention: Treasurer; if to any Lender, at its Domestic Lending Office specified
opposite its name on Schedule I; 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 1221 Avenue of the Americas, New
York, New York 10020, Attention: Media & Communications; 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 8.03. 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.
<PAGE>
<PAGE>
SECTION 8.04. Costs, Expenses and Taxes. (a) The Borrower agrees to
pay on demand all reasonable costs and expenses of the Agent and the Syndication
Agent 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 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. The Borrower further agrees to pay on
demand all costs and expenses, if any (including 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 in the nature of a workout or
insolvency or bankruptcy proceedings, including reasonable counsel fees and
expenses in connection with the enforcement of rights under this Section
8.04(a).
(b) If any payment of principal of, or Conversion of, any Eurodollar
Rate Advance is made by the Borrower to or for the account of a Lender other
than on the last day of the Interest Period for such Eurodollar Rate Advance, as
a result of a payment or Conversion pursuant to Section 2.08(f) or acceleration
of the maturity of the Notes pursuant to Section 6.01 or for any other reason,
the Borrower shall, upon demand by such Lender (with a copy of much 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 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
Eurodollar Rate Advance. A certificate as to such amounts, submitted to the
Borrower and the Agent by such Lender, shall be conclusive and binding for all
purposes, absent manifest error.
SECTION 8.05. 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
<PAGE>
<PAGE>
of the Borrower or its Subsidiaries against any and all of the Obligations of
the Borrower and such Subsidiaries now or hereafter existing under this
Agreement, any Note held by such Lender and any other Loan Document, whether or
not such Lender shall have made any demand under this Agreement or such Note or
other Loan Documents and although such obligations may be unmatured. Each Lender
agrees promptly to notify the Borrower 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 8.05 are in addition to other rights and remedies (including
other rights of set-off) which such Lender may have.
SECTION 8.06. Binding Effect. This Agreement shall become effective
when it shall have been executed by the Borrower and the Agent and when the
Agent shall have been notified by each Lender that such Lender has executed it,
and thereafter this Agreement shall be binding upon and inure to the benefit of
the Borrower, each Lender Agent and each Lender and their respective successors
and assigns, except that the Borrower shall not have the right to assign its
rights hereunder or any interest herein without the prior written consent of the
Lenders. Any attempted or purported assignment in contravention of the preceding
sentence shall be null and void.
SECTION 8.07. Assignments and Participations. (a) Each Lender may and,
if demanded by the Borrower (following a demand by the Lender pursuant to
Section 2.11(a) and 2.11(b)) upon at least five 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 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 Borrower shall be arranged by the Borrower 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 Borrower unless and until such Lender shall have received one or more
payments from either the Borrower or one or more
<PAGE>
<PAGE>
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 $3,000. 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 five 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 any Obligor or the performance or observance by any
Obligor of any of its obligations under this Agreement, the other Loan Documents
or any other instrument or document furnished pursuant hereto or thereto; (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
<PAGE>
<PAGE>
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
8.02 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
Borrower, 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 Borrower 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 H, (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register and (iii) give prompt notice
thereof to the Borrower. Within five Business Days after its receipt of such
notice, the Borrower, at its 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.
(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 all or a portion of its Commitment and the Advances owing
to it); provided, however, (i) such Lender's obligations under this Agreement
(including its Commitment to the Borrower hereunder and the Advances owing to it
and the Note or Notes held by it) shall remain unchanged, (ii) such Lender shall
remain solely
<PAGE>
<PAGE>
responsible to the other parties hereto for the performance of such obligations,
(iii) the Borrower, the Agent and the other Lenders shall continue to deal,
solely and directly with such Lender in connection with such Lender's rights and
obligation 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 Obligor
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 8.07, disclose
to the assignee or participant or proposed assignee or participant, any
information relating to the Borrower or any other Obligor furnished to such
Lender by or on behalf of the Borrower or such Obligor; 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 Borrower or such Obligor 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 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 8.08. Indemnification by the Borrower. The Borrower agrees to
indemnify and hold harmless each Lender Agent, each Lender 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 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 the Borrower, or by any Subsidiary or
Affiliate of the 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 the Borrower or any of its Affiliates, in each case whether
or not such investigation, litigation or proceeding is brought by the Borrower
or any of its
<PAGE>
<PAGE>
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 or any of their
respective Affiliates, the gross negligence or willful misconduct of such
Indemnified Party's officers, directors, employees, agent, 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 8.09. Confidentiality. In connection with the negotiation and
administration of this Agreement and the other Loan Documents, the Borrower has
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 Borrower, 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 Person, (iv) as may be required or appropriate in any
report, statement or testimony submitted to any municipal, state or Federal
regulatory
<PAGE>
<PAGE>
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 Borrower as promptly as practicable. The
obligations of each Lender under this Section 8.09 shall supersede and replace
the obligations of such Lender under any confidentiality agreement in respect of
this financing signed and delivered or accepted by such Lender prior to the
Effective Date.
SECTION 8.10. 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 8.11. 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 8.12. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, 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 8.13. Submission to Jurisdiction; Waivers. The Borrower hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which it
is 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) consents that any such action or proceeding may be brought in such
courts and waives any objection that it 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) agrees 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 Borrower at the address set forth in subsection 8.02 or at such other
address of which the Agent shall have been notified
<PAGE>
<PAGE>
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) agrees 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 8.14. Acknowledgments. The Borrower hereby acknowledges that:
(a) it has 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 Borrower, and the relationship between the Lender Agents and
the Lenders, on one hand, and the Borrower, on the other hand, is solely that of
debtor and creditor; and
(c) no joint venture exists among the Borrower and the Lenders.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers hereunto duly authorized, as of the
date first above written.
Borrower
--------
CITIZENS CENTURY CABLE TELEVISION
VENTURE
BY: CENTURY TELECOMMUNICATIONS
VENTURE CORP., as a Venturer
By: Scott Schneider
Title: Chief Financial Officer
BY: CITIZENS CABLE COMPANY, as a
Venturer
By: Charles Weiss
Title: Secretary
AGENT
-----
SOCIETE GENERALE, NEW YORK BRANCH,
as Agent
By: Elaine Khalil
Title: Vice President
SYNDICATION AGENT
-----------------
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Syndication
Agent
By: Shannon Ward
Title: Vice President
<PAGE>
<PAGE>
CO-AGENTS
---------
CORESTATES BANK, N.A., as Co-Agent
By: Edward L. Kittrell
Title: Vice President
THE FIRST NATIONAL BANK OF BOSTON,
as Co-Agent
By: Todd M. Dahlstrom
Title: Vice President
LTCB TRUST COMPANY, as Co-Agent
By: Shuichi Tajima
Title: Senior Vice President
PNC BANK, NATIONAL ASSOCIATION, as
Co-Agent
By: Tom Partridge
Title: Assistant Vice President
LENDERS
-------
SOCIETE GENERALE, NEW YORK BRANCH
By: Elaine Khalil
Title: Vice President
<PAGE>
<PAGE>
BANK OF AMERICA ILLINOIS
By: Shannon Ward
Title: Vice President
CORESTATES BANK, N.A.
By: Edward L. Kittrell
Title: Vice President
THE FIRST NATIONAL BANK OF BOSTON
By: Todd M. Dahlstrom
Title: Vice President
LTCB TRUST COMPANY
By: Shuichi Tajima
Title: Senior Vice President
PNC BANK, NATIONAL ASSOCIATION
By: Tom Partridge
Title: Assistant Vice President
BANK OF HAWAII
By: J. Bryan Scearce
Title: Vice President
<PAGE>
<PAGE>
CIBC INC.
By: Susan Hanna
Title: Director
FLEET NATIONAL BANK
By: Alexander G. Ivanov
Title: Assistant Vice President
MELLON BANK, N.A.
By: John T. Kranefuss
Title: Assistant Vice President
<PAGE>
<PAGE>
SCHEDULE I
Applicable Lending Offices
U.S. $200,000,000 Credit Agreement dated as of April 15, 1997
================================================================================
NAME OF LENDER DOMESTIC LENDING EURODOLLAR LENDING
OFFICE OFFICE
- --------------------------------------------------------------------------------
Societe Generale, New 1221 Avenue of the 1221 Avenue of the
York Branch Americas Americas
New York, NY 10020 New York, NY 10020
Attn: Elaine Khalil Attn: Elaine Khalil
- --------------------------------------------------------------------------------
Bank of America Illinois 1850 Gateway Blvd. 1850 Gateway Blvd.
Concord, CA 94520 Concord, CA 94520
Attn: Cynthia Weinthaler Attn: Cynthia Weinthaler
- --------------------------------------------------------------------------------
The First National Bank Commercial Loan Services Commercial Loan Services
of Boston 100 Federal Street 100 Federal Street
MS 01-09-02 MS 01-09-02
Boston, MA 02110 Boston, MA 02110
Attn: Angie Karayiannis Attn: Angie Karayiannis
- --------------------------------------------------------------------------------
CoreStates Bank, N.A. 1339 Chestnut Street 1339 Chestnut Street
FC-1-8-11-28 FC-1-8-11-28
Philadelphia, PA 19101 Philadelphia, PA 19101
Attn: Mary Lockhart Attn: Mary Lockhart
- --------------------------------------------------------------------------------
LTCB Trust Company 165 Broadway 165 Broadway
48th Floor 48th Floor
New York, NY 10006 New York, NY 10006
Attn: Winston Brown Attn: Winston Brown
- --------------------------------------------------------------------------------
PNC Bank, National 1600 Market Street 1600 Market Street
Association Mail Stop F2-F070-21-1 Mail Stop F2-F070-21-1
Philadelphia, PA 19103 Philadelphia, PA 19103
Attn: Pat Marchisello Attn: Pat Marchisello
- --------------------------------------------------------------------------------
Bank of Hawaii P.O. Box 2900 P.O. Box 2900
Honolulu, HI 96846 Honolulu, HI 96846
Attn: Donna Arakawa Attn: Donna Arakawa
- --------------------------------------------------------------------------------
CIBC Inc. 2 Paces West 2 Paces West
2727 Paces Ferry Road, 2727 Paces Ferry Road,
Suite 1200 Suite 1200
Atlanta, GA 30338 Atlanta, GA 30338
Attn: Susan Hanna Attn: Susan Hanna
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
Fleet National Bank 1 Federal Street 1 Federal Street
3rd Floor 3rd Floor
MA-OF-0030 MA-OF-0030
Boston, MA 02110 Boston, MA 02110
Attn: Alexander Iumov Attn: Alexander Iumov
- --------------------------------------------------------------------------------
Mellon Bank, N.A. Rm 4440, 1 Mellon Bank Rm 4440, 1 Mellon Bank
Center Center
500 Grant Street 500 Grant Street
Pittsburgh, PA Pittsburgh, PA
15258-0001 15258-0001
Attn: Genie McCreary Attn: Genie McCreary
================================================================================
<PAGE>
<PAGE>
SCHEDULE II
Lenders and Commitments
U.S. $200,000,000 Credit Agreement dated as of April 15, 1997
================================================================================
LENDER COMMITMENT
- --------------------------------------------------------------------------------
Societe Generale, New York Branch $30,000,000
- --------------------------------------------------------------------------------
Bank of America Illinois $30,000,000
- --------------------------------------------------------------------------------
The First National Bank of Boston $20,000,000
- --------------------------------------------------------------------------------
CoreStates Bank, N.A. $20,000,000
- --------------------------------------------------------------------------------
LTCB Trust Company $20,000,000
- --------------------------------------------------------------------------------
PNC Bank, National Association $20,000,000
- --------------------------------------------------------------------------------
Bank of Hawaii $15,000,000
- --------------------------------------------------------------------------------
CIBC Inc. $15,000,000
- --------------------------------------------------------------------------------
Fleet National Bank $15,000,000
- --------------------------------------------------------------------------------
Mellon Bank, N.A. $15,000,000
- --------------------------------------------------------------------------------
TOTAL $200,000,000
===============================================================================
<PAGE>
<PAGE>
SCHEDULE 4.01(l)
Subsidiaries
------------
<PAGE>
<PAGE>
SCHEDULE 4.01(m)
Franchises
----------
<PAGE>
<PAGE>
SCHEDULE 4.01(r)
Debt and Leases
---------------
<PAGE>
<PAGE>
SCHEDULE 4.01(w)
Subscribers
-----------
<PAGE>
<PAGE>
SCHEDULE 6.01(c)
Permitted Cable Systems
-----------------------
<PAGE>
<PAGE>
EXHIBIT 11
CENTURY COMMUNICATIONS CORP. AND SUBSIDIARIES
EXHIBIT TO FORM 10-K ANNUAL REPORT
For the Three Years Ended May 31, 1997
COMPUTATION OF LOSS PER COMMON SHARE
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
(In thousands, except per share data)
<S> <C> <C> <C>
Primary and fully diluted:
Net loss $ (141,875) $ (102,117) $ (82,625)
Dividend requirement on subsidiary convertible
redeemable preferred stock 4,850 4,256 4,419
---------- ---------- ----------
Loss applicable to common shares $ (146,725) $ (106,373) $ (87,044)
---------- ---------- ----------
---------- ---------- ----------
Average number of common shares and
common share equivalents outstanding:
Average number of common shares
outstanding during the year 74,675 73,748 86,277
Add common share equivalents - Options
to purchase common stock - net 19 519 607
---------- ---------- ----------
Average number of common shares and common
shares equivalents outstanding 74,694 (A) 74,267 (A) 86,884 (A)
---------- ---------- ----------
---------- ---------- ----------
Loss per common share $ (1.96)(A) $ (1.43)(A) $ (1.00)(A)
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
(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, 1997 do not include common share equivalents as
their effect is antidilutive.
<PAGE>
<PAGE>
Exhibit 12
Computation of Ratio of Earnings to Fixed Charges (amounts in thousands)
<TABLE>
<CAPTION>
Year Ended May 31,
-----------------------------------------------------
1993 1994 1995 1996 1997
----- ----- ----- ---- ----
<S> <C> <C> <C> <C> <C>
Loss before income tax benefit $(62,670) $(60,250) $(110,029) $(144,860) $(180,402)
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Fixed Charges:
Interest, including amortization of debt issuance costs 113,866 124,105 142,323 172,390 200,914
Interest capitalized -- -- -- 5,200 2,752
Interest portion of rent expense 1,638 1,843 2,135 3,001 4,101
Preferred stock dividends on subsidiary preferred stock 5,883 5,838 4,419 4,256 4,850
-------- -------- -------- -------- --------
Total fixed charges 121,387 131,786 148,877 184,847 212,617
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Adjustments to fixed charges as defined:
Capitalized interest -- -- -- (5,200) (2,752)
Preferred stock dividends on subsidiary preferred stock (5,883) (5,838) (4,419) (4,256) (4,850)
-------- -------- -------- -------- --------
Total adjustments to fixed charges (5,883) (5,838) (4,419) (9,456) (7,602)
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Earnings, as defined $ 52,834 $ 65,698 $ 34,429 $ 30,531 $ 24,613
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Ratio of earnings to fixed charges(1) -- -- -- -- --
-------- -------- -------- -------- --------
Amount by which earnings are less than fixed charges $(68,553) $(66,088) $(114,448) $(154,316) $(188,004)
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
</TABLE>
(1) The ratio of earnings to fixed charges is less than one-to-one and,
therefore, earnings are inadequate to cover fixed charges.
<PAGE>
<PAGE>
SUBSIDIARIES OF CENTURY COMMUNICATIONS CORP., A NEW JERSEY CORPORATION
STATE OF
NAME ORGANIZATION
Badger Holding Corp. Delaware
CCC-I, Inc. Delaware
CCC-II, Inc. Delaware
CCC-III, Inc. Delaware
CDA Cable, Inc. Idaho
Century Advertising, Inc. Delaware
Century Advertising Sales Corp. Delaware
Century Alabama Corp. Delaware
Century Alabama Holding Corp. Delaware
Century Australia Communications Corp. Nevada
Century Australia Telecommunications Corp. Delaware
Century Bay Area Cable Corp. Delaware
Century Beauregard Holding Corp. Delaware
Century Berkshire Cable Corp. Delaware
Century Cable of Northern California CA
Century Cable of Southern California CA
Century Cable Holding Corp. New York
Century Cable Management Corp. Conn.
Century Carolina Corp. Delaware
Century Cellular Holding Corp. New York
Century Colorado Springs Corp. Delaware
Century Communications Corp. Texas
Century Cullman Corp. Delaware
Century Enterprise Cable Corp. Delaware
Century Federal, Inc. CA
Century Granite Cable Television Corp. Delaware
Century Huntington Company Delaware
Century Indiana Corp. Wyoming
Century International Holding Corp. Nevada
Century Investment Holding Corp. Delaware
Century International Investment Corp. Nevada
Century Investors, Inc. Delaware
Century Island Associates, Inc. Delaware
Century Island Cable Television Corp. Delaware
Century Kansas Cable Television Corp. Delaware
Century Lykens Cable Corp. Delaware
Century Mendocino Cable Television Inc. Delaware
Century Microwave Corp. Delaware
Century Mississippi Corp. Delaware
Century-ML Cable Corporation Delaware
Century Mountain Corp. Delaware
<PAGE>
<PAGE>
State of
Name Organization
Century New Mexico Cable Television Corp. Delaware
Century Norwich Corp. Conn.
Century OCN Programming, Inc. Delaware
Century Ohio Cable Television Corp. Delaware
Century Oregon Cable Corp. Delaware
Century Pacific Cable TV Inc. Delaware
Century Programming, Inc. Delaware
Century Programming Ventures Corp. Nevada
Century Programming Ventures Holding Corp. Nevada
Century Pullman Cable Television Corp. Washington
Century Radio Corp. Delaware
Century Realty Corp. Delaware
Century Shasta Cable Television Corp. Delaware
Century Shenango Cable Television, Inc. Delaware
Century Southwest Cable Television, Inc. Delaware
Century Southwest Colorado Cable Television Corp. Delaware
Century Telecommunications, Inc. CA
Century Telecommunications Venture Corp. Delaware
Century Trinidad Cable Television Corp. Delaware
Century Valley Cable Corp. Delaware
Century Venture Corporation Delaware
Century Virginia Corp. Delaware
Century Voice and Data Communications, Inc. Nevada
Century Warrick Cable Corp. Delaware
Century Washington Cable Television Inc. Delaware
Century Western Cable Corp. Nevada
Century Wyoming Cable Television Corp. Delaware
COG Creations Holding Corp. Nevada
COG Creations Corp. Nevada
Cowlitz Cablevision Inc. Washington
CT Investment Corp. Delaware
E.& E. Cable Service, Inc. W. Virginia
Enchanted Cable Corporation New Mexico
FAE Cable Management Corp. Delaware
Grafton Cable Company W. Virginia
Huntington CATV, Inc. Indiana
Imperial Valley Cablevision, Inc. Texas
Kootenai Cable, Inc. Delaware
Mickelson Media of Florida, Inc. FL
Mickelson Media, Inc. Minnesota
Owensboro on the Air, Inc. Kentucky
Paragon Cable Television, Inc. Wisconsin
Paragon Cablevision Construction Corp. Wisconsin
Paragon Cablevision Management Corp. Wisconsin
Pullman TV Cable Co., Inc. Washington
-2-
<PAGE>
<PAGE>
State of
Name Organization
Rentavision of Brunswick Inc. Georgia
S/T Cable Corp. Delaware
Sentinel Communications of Muncie, Indiana, Inc. Indiana
Southwest Colorado Cable, Inc. Delaware
Star Cablevision, Inc. Georgia
Star Cable Inc. W. Virginia
Valley Video Inc. New York
Warrick Cablevision Inc. Indiana
Westover T.V. Cable Co., Incorporated W. Virginia
Wilderness Cable Company W. Virginia
Yuma Cablevision, Inc. Texas
Alexandria Cellular Corp. Delaware
Alexandria Cellular License Corp. Delaware
Bauce Communications, Inc. Oregon
Bauce Communications of Beaumont, Inc. Oregon
Centennial Asia Pacific Cellular Holding Corp. Nevada
Centennial Ashe Cellular Corp. Delaware
Centennial Beauregard Cellular LLC Delaware
Centennial Beauregard Holding Corp. Delaware
Centennial Benton Harbor Cellular Corp. Delaware
Centennial Benton Harbor Holding Corp. Delaware
Centennial Caldwell Cellular Corp. Delaware
Centennial Cellular Corp. Delaware
Centennial Cellular Telephone Company of Coconino Delaware
Centennial Cellular Telephone Company of Del Norte Delaware
Centennial Cellular Telephone Company of Lawrence Delaware
Centennial Cellular Telephone Company of Modoc Delaware
Centennial Cellular Telephone Company of Sacramento Valley Delaware
Centennial Cellular Telephone Company of San Francisco Delaware
Centennial Cellular Wireless Holding Corp. New Jersey
Centennial Claiborne Cellular Corp. Delaware
Centennial Clinton Cellular Corp. Delaware
Centennial DeSoto Cellular Corp. Delaware
Centennial Hammond Cellular LLC Delaware
Centennial Iberia Holding Corp. Delaware
Centennial Jackson Cellular Corp. Delaware
Centennial Lafayette Cellular Corp. Louisiana
Centennial Lake Charles Cellular Corp. Delaware
Centennial Louisiana Holding Corp. Delaware
Centennial Michigan RSA 6 Cellular Corp. Delaware
Centemnial Michigan RSA 7 Cellular Corp. Delaware
Centennial Microwave Corp. Delaware
Centennial Morehouse Cellular LLC Delaware
Centennial Puerto Rico Realty Corporation Puerto Rico
Centennial Puerto Rico Wireless Corporation Delaware
-3-
<PAGE>
<PAGE>
State of
Name Organization
Centennial Randolph Cellular Corp. Delaware
Centennial Wireless PCS License Corp. Delaware
Centennial Wireless PCS Operations Corp. Delaware
Century Beaumont Cellular Corp. Delaware
Century Cellular Realty Corp. Delaware
Century Charlottesville Cellular Corp. Virginia
Century Charlottesville Cellular Corp. Delaware
Century El Centro Cellular Corp. California
Century Elkhart Cellular Corp. Delaware
Century Indiana Cellular Corp.
Century Lynchburg Cellular Corp. Delaware
Century Lynchburg Cellular Corp. Virginia
Century Michiana Cellular Corp. Delaware
Century Michigan Cellular Corp. Delaware
Century Montgomery Cellular Corp. Delaware
Century Roanoke Cellular Corp. Virginia
Century Roanoke Cellular Corp. Delaware
Centure Rural Cellular Corp. Delaware
Century South Bend Cellular Corp. Delaware
Century Yuma Paging Corp. Delaware
Centure Yuma Cellular Corp. Delaware
El Centro Cellular Corporation Delaware
Elkhart Metronet, Inc. Indiana
Hendrix Electronics, Inc. California
Hendrix Radio Communications, Inc. California
Iberia Cellular Telephone Compnay LLC Delaware
Lafayette Communications, Inc. Delaware
Lambda Communications, Incorporated (Incorporado) Puerto Rico
Lambda Operations Corp. Delaware
Lambda PCS Corp. Nevada
Lambda Realty Corp. Delaware
Mega Comm, Inc. Delaware
Michiana Metronet, Inc. Indiana
South Bend Metronet, Inc. Indiana
Century Colorado Springs Partnership Delaware
Century-ML Cable Venture New York
Citizens Century Cable Television Venture Delaware
Centennial Tri-State Operating Partnership Delaware
-4-
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' CONSENT
Board of Directors and Stockholders
Century Communications Corp.
We consent to the incorporation by reference in Century Communications Corp.'s
Registration Statement No. 333-24617 on Form S-3 and Registration Statements
Nos. 33-50769, 33-56375, 33-56383, 33-10947, 33-23718, 33-23690 and 33-34388 on
Form S-8 of our report dated August 4, 1997, appearing in the Annual Report on
Form 10-K for the year ended May 31, 1997.
Deloitte & Touche LLP
Stamford, Connecticut
August 26, 1997
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-END> MAY-31-1997
<CASH> 151,947
<SECURITIES> 0
<RECEIVABLES> 48,958
<ALLOWANCES> 3,592
<INVENTORY> 0
<CURRENT-ASSETS> 215,554
<PP&E> 715,418
<DEPRECIATION> 429,343
<TOTAL-ASSETS> 2,154,231
<CURRENT-LIABILITIES> 192,129
<BONDS> 2,186,981
<COMMON> 1,078
0
186,287
<OTHER-SE> (599,721)
<TOTAL-LIABILITY-AND-EQUITY> 2,154,231
<SALES> 643,490
<TOTAL-REVENUES> 643,490
<CGS> 139,017
<TOTAL-COSTS> 637,719
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 200,743
<INCOME-PRETAX> (180,402)
<INCOME-TAX> (30,658)
<INCOME-CONTINUING> (134,293)
<DISCONTINUED> 0
<EXTRAORDINARY> (7,582)
<CHANGES> 0
<NET-INCOME> (141,875)
<EPS-PRIMARY> (1.96)
<EPS-DILUTED> 0
</TABLE>
