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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
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Commission file number: 0-14206
CABLE TV FUND 12-D, LTD.
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(Exact name of registrant as specified in its charter)
Colorado 84-1010423
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(State of Organization) (IRS Employer Identification No.)
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P.O. Box 3309, Englewood, Colorado 80155-3309 (303) 792-3111
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(Address of principal executive office and Zip Code) (Registrant's telephone no. including area code)
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Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Limited Partnership
Interests
Indicate by check mark whether the registrants, (1) have 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
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days:
Yes x No
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Aggregate market value of the voting stock held by non-affiliates of the
registrant: N/A
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405) 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.
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DOCUMENTS INCORPORATED BY REFERENCE: None
(21509)
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PART I.
ITEM 1. BUSINESS
THE PARTNERSHIP. Cable TV Fund 12-D, Ltd. (the "Partnership") is a
Colorado limited partnership that was formed pursuant to the public offering of
limited partnership interests in the Cable TV Fund 12 Limited Partnership
Program (the "Program"), which was sponsored by Jones Intercable, Inc. (the
"General Partner"). Cable TV Fund 12-A, Ltd. ("Fund 12-A"), Cable TV Fund 12-B,
Ltd. ("Fund 12-C") and Cable TV Fund 12-C, Ltd. ("Fund 12-C") are the other
partnerships that were formed pursuant to that Program. In 1986, the
Partnership, Fund 12-B and Fund 12-C formed a general partnership known as Cable
TV Fund 12-BCD Venture (the "Venture"), in which the Partnership owns a 76
percent interest, Fund 12-B owns a 9 percent interest and Fund 12-C owns a 15
percent interest. The Partnership and the Venture were formed for the purpose of
acquiring and operating cable television systems.
The Partnership does not directly own any cable television systems. The
Partnership's sole asset is its 76 percent interest in the Venture. The Venture
recently sold one of its cable television systems as described below and now
owns the cable television systems serving Palmdale, Lancaster and Rancho Vista
and the military installation of Edwards Air Force Base, all in California (the
"Palmdale/Lancaster System") and Albuquerque, New Mexico (the "Albuquerque
System"). See Item 2. The Palmdale/Lancaster System and the Albuquerque System
may collectively be referred to as the "Systems."
DISPOSITIONS OF CABLE TELEVISION SYSTEMS. On February 28, 1996, the
Venture sold the cable television system serving areas in and around Tampa,
Florida (the "Tampa System") to Jones Cable Holdings, Inc. ("JCH"), a wholly
owned subsidiary of the General Partner, for a sales price of $110,395,667,
subject to normal working capital closing adjustments. This price represented
the average of three separate, independent appraisals of the fair market value
of the Tampa System. Because the Venture's debt arrangements did not allow the
Venture to make distributions on the sale of Venture assets, in February 1996
the Venture's existing debt arrangements were amended to permit a $55,000,000
distribution to the Venture's partners from the sale proceeds, and the balance
of the sale proceeds were used to reduce Venture indebtedness. The Partnership's
portion of this distribution is approximately $41,547,000. Because the limited
partners have not yet received distributions in an amount equal to 100 percent
of the capital initially contributed to the Partnership by them, the entire
portion of the Partnership's distribution will be distributed to the limited
partners in April 1996. This distribution will give the Partnership's limited
partners an approximate return of $350 for each $1,000 invested in the
Partnership. Because the Tampa System did not constitute all or substantially
all of the Venture's assets, no vote of the limited partners of the Partnership
was required in connection with this transaction.
On February 29, 1996, JCH consummated an agreement with Time Warner
Entertainment-Advance/Newhouse Partnership ("TWEAN"), an unaffiliated cable
television system operator, pursuant to which JCH conveyed the Tampa System,
along with certain other cable television systems owned by JCH, and cash in the
amount of $3,500,000, subject to normal closing adjustments, to TWEAN in
exchange for the cable television systems serving Andrews Air Force Base,
Capitol Heights, Cheltenham, District Heights, Fairmount Heights, Forest
Heights, Morningside, Seat Pleasant, Upper Marlboro, and portions of Prince
George's County, all in Maryland, and a portion of Fairfax County, Virginia.
CABLE TELEVISION SERVICES. The Systems offer to their subscribers
various types of programming, which include basic service, tier service, premium
service, pay-per-view programs and packages including several of these services
at combined rates.
Basic cable television service usually consists of signals of all four
national television networks, various independent and educational television
stations (both VHF and UHF) and certain signals received from satellites. Basic
service also usually includes programs originated locally by the system, which
may consist of music, news, weather reports, stock market and financial
information and live or videotaped programs of a public service or entertainment
nature. FM radio signals are also frequently distributed to subscribers as part
of the basic service.
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The Systems offer tier services on an optional basis to their
subscribers. A tier generally includes most of the cable networks such as
Entertainment and Sports Programming Network (ESPN), Cable News Network (CNN),
Turner Network Television (TNT), Family Channel, Discovery and others, and the
cable television operators buy tier programming from these networks. The Systems
also offer a package that includes the basic service channels and the tier
services.
The Systems also offer premium services to their subscribers, which
consist of feature films, sporting events and other special features that are
presented without commercial interruption. The cable television operators buy
premium programming from suppliers such as HBO, Showtime, Cinemax or others at a
cost based on the number of subscribers the cable operator serves. Premium
service programming usually is significantly more expensive than the basic
service or tier service programming, and consequently cable operators price
premium service separately when sold to subscribers.
The Systems also offer to subscribers pay-per-view programming.
Pay-per-view is a service that allows subscribers to receive single programs,
frequently consisting of motion pictures that have recently completed their
theatrical exhibitions and major sporting events, and to pay for such service on
a program-by-program basis.
REVENUES. Monthly service fees for basic, tier and premium services
constitute the major source of revenue for the Systems. At December 31, 1995,
the Systems' monthly basic service rates ranged from $7.95 to $14.50, monthly
basic and tier ("basic plus") service rates ranged from $15.00 to $23.27 and
monthly premium services ranged from $2.75 to $12.95 per premium service. In
addition, the Venture earns revenues from the Systems' pay-per-view programs and
advertising fees. Related charges may include a nonrecurring installation fee
that ranges from $1.99 to $50.00; however, from time to time the Systems have
followed the common industry practice of reducing or waiving the installation
fee during promotional periods. Commercial subscribers such as hotels, motels
and hospitals are charged a nonrecurring connection fee that usually covers the
cost of installation. Except under the terms of certain contracts with
commercial subscribers and residential apartment and condominium complexes, the
subscribers are free to discontinue the service at any time without penalty. For
the year ended December 31, 1995, of the total fees received by the Systems,
basic service and tier service fees accounted for approximately 63% of total
revenues, premium service fees accounted for approximately 15% of total
revenues, pay-per-view fees were approximately 8% of total revenues, advertising
fees were approximately 3% of total revenues and the remaining 11% of total
revenues came principally from equipment rentals, installation fees and program
guide sales. The Venture is dependent upon the timely receipt of service fees to
provide for maintenance and replacement of plant and equipment, current
operating expenses and other costs of the Systems.
FRANCHISES. The Systems are constructed and operated under
non-exclusive, fixed-term franchises or other types of operating authorities
(referred to collectively herein as "franchises") granted by local governmental
authorities. These franchises typically contain many conditions, such as time
limitations on commencement and completion of construction, conditions of
service, including the number of channels, types of programming and the
provision of free service to schools and certain other public institutions, and
the maintenance of insurance and indemnity bonds. The provisions of local
franchises are subject to federal regulation.
The Venture holds 15 franchises relating to the Palmdale/Lancaster
System and the Albuquerque System. These franchises provide for the payment of
fees to the issuing authorities and generally range from 3% to 5% of the gross
revenues of a cable television system. The 1984 Cable Act prohibits franchising
authorities from imposing annual franchise fees in excess of 5% of gross
revenues and also permits the cable television system operator to seek
renegotiation and modification of franchise requirements if warranted by changed
circumstances.
The Venture has never had a franchise revoked. The Venture's franchise
expiration dates range from January 1999 to February 2007. It is anticipated
that the Venture's remaining cable television systems will be sold before any
franchises need to be renewed.
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COMPETITION. Cable television systems currently experience competition
from several sources. A potential source of significant competition is Direct
Broadcast Satellite ("DBS") services that use video compression technology to
increase channel capacity and provide packages of movies, network and other
program services that are competitive with those of cable television systems.
Two companies offering DBS services began operations in 1994, and two other
companies offering DBS service recently began operations. In addition, a joint
venture has won the right to provide a DBS service through a FCC spectrum
auction. Not all subscribers terminate cable television service upon acquiring a
DBS system. The General Partner has observed that a number of DBS subscribers
also elect to subscribe to cable television service in order to obtain the
greatest variety of programming on multiple television sets, including local
video services programming not available through DBS service.
Although neither the Venture nor the General Partner has yet
encountered competition from a telephone company providing video services as a
cable operator or video dialtone operator, it is anticipated that the cable
television systems owned or managed by the General Partner will face such
competition in the near future. Legislation recently enacted into law will make
it possible for companies with considerable resources to enter the business. For
example, in February 1996, one of the regional Bell operating companies entered
into an agreement to acquire the nation's third largest cable television
company. In addition, several telephone companies have begun seeking cable
television franchises from local governmental authorities as a consequence of
litigation that successfully challenged the constitutionality of the cable
television/telephone company cross-ownership rules. The General Partner cannot
predict at this time when and to what extent telephone companies will provide
cable television service within service areas in competition with cable
television systems owned or managed by the General Partner. The General Partner
is aware of the following imminent competition from telephone companies:
Ameritech, one of the seven regional Bell operating companies, which provides
telephone service in a multi-state region including Illinois, has just obtained
a franchise that will allow it to provide cable television service in
Naperville, Illinois, a community currently served by a cable system owned by
another one of the public limited partnerships managed by the General Partner.
Chesapeake and Potomac Telephone Company of Virginia and Bell Atlantic Video
Service Company, both subsidiaries of Bell Atlantic, another of the regional
Bell operating companies, have announced their intention to build a cable
television system in Alexandria, Virginia in competition with a cable television
system owned by the General Partner. Bell Atlantic is preparing for the
operation of a telecommunications and video business in northern Virginia,
including the Alexandria metropolitan area. The FCC has granted GTE Virginia's
application for authority to construct, operate, own and maintain video dialtone
facilities in northern Virginia, including in the service area of a cable
television system owned by the General Partner. To date, GTE has not begun
construction of a video distribution system. The entry of telephone companies as
direct competitors could adversely affect the profitability and market value of
the General Partner's owned and managed systems.
Additional competition is present from several sources, including the
following: Master Antenna Television and Satellite Master Antenna Television
systems that serve multi-unit dwellings such as condominiums, apartment
complexes, motels, hotels and private residential communities; private cable
television/telephonic companies that have secured exclusive contracts to provide
video and telephony services to multi-unit dwellings and similar complexes; and
multichannel, multipoint distribution service ("MMDS") systems, commonly called
wireless cable which generally focus on providing service to residents of rural
areas. In addition, the FCC has established a new wireless telecommunications
service known as Personal Communications Service ("PCS") that would provide
portable non-vehicular mobile communications services similar to that available
from cellular telephone companies, but at a lower cost. Several cable television
multiple system operators hold or have requested experimental licenses from the
FCC to test PCS technology.
REGULATION AND LEGISLATION. The cable industry is regulated under the
Telecommunications Act of 1996 (the "1996 Act"), the Cable Television Consumer
Protection and Competition Act of 1992 (the "1992 Cable Act") and the Cable
Communications Policy Act of 1984 (the "1984 Cable Act") and the regulations
implementing these statutes. The Federal Communications Commission (the "FCC")
has promulgated regulations covering such areas as the registration of cable
television systems and other communications businesses, carriage of television
broadcast programming, consumer education and lockbox enforcement, origination
cablecasting and sponsorship
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identification, children's programming, the regulation of basic cable and cable
programming service rates in areas where cable television systems are not
subject to effective competition, signal leakage and frequency use, technical
performance, maintenance of various records, equal employment opportunity, and
antenna structure notification, marking and lighting. In addition, cable
operators periodically are required to file various informational reports with
the FCC. 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 administrative sanctions, such as the revocation of FCC
licenses needed to operate certain transmission facilities often used in
connection with cable operations. State or local franchising authorities, as
applicable, also have the right to enforce various regulations, impose fines or
sanctions, issue orders or seek revocation subject to the limitations imposed
upon such franchising authorities by federal, state and local laws and
regulations. Several states have assumed regulatory jurisdiction of the cable
television industry, and it is anticipated that other states will do so in the
future. To the extent the cable television industry begins providing telephone
service, additional state regulations will be applied to the cable television
industry. Cable television operations are subject to local regulation insofar as
systems operate under franchises granted by local authorities.
The following is a summary of federal laws and regulations materially
affecting the cable television industry, and a description of state and local
laws with which the cable industry must comply.
Telecommunications Act of 1996. The 1996 Act, which became law on
February 28, 1996, substantially revised the Communications Act of 1934, as
amended, including the 1984 Cable Act and the 1992 Cable Act, and has been
described as one of the most significant changes in communications regulation
since the original Communications Act of 1934. The 1996 Act is intended, in
part, to promote substantial competition in the telephone local exchange and in
the delivery of video and other services. As a result of the 1996 Act, local
telephone companies (also known as local exchange carriers or "LECs") and other
service providers are permitted to provide video programming, and cable
television operators are permitted entry into the telephone local exchange
market. The FCC is required to conduct rulemaking proceedings over the next
several months to implement various provisions of the 1996 Act.
Among other provisions, the 1996 Act modified the 1992 Cable Act by
deregulating the cable programming service tier of large cable operators
effective March 31, 1999 and the cable programming service tier of small cable
operators (those that provide service to 50,000 or fewer subscribers) effective
immediately. The 1996 Act also revised the procedures for filing a cable
programming service tier rate complaint and adds a new effective competition
test.
The most far-reaching changes in the communications business will
result from the telephony provisions of the 1996 Act. The statute expressly
preempts any legal barriers to competition in the local telephone business that
previously existed in state and local laws and regulations. Many of these
barriers had been lifted by state actions over the last few years, but the 1996
Act completes the task. The 1996 Act also establishes new requirements for
maintaining and enhancing universal telephone service and new obligations for
telecommunications providers to maintain privacy of customer information. The
1996 Act establishes uniform requirements and standards for entry, competitive
carrier interconnection and unbundling of LEC monopoly services.
The 1996 Act repealed the cable television/telephone cross-ownership
ban adopted in the 1984 Cable Act. The federal cross-ownership ban was
particularly important to the cable industry because telephone companies already
own certain facilities such as poles, ducts and associated rights of way. While
this ban had been overturned by several courts, formal removal of the ban ended
the last legal constraints on telephone company plans to enter the cable market.
Under the 1996 Act, telephone companies in their capacity as common carriers now
may lease capacity to others to provide cable television service. Telephone
companies have the option of providing video service as cable operators or
through "open video systems" ("OVS"), a regulatory regime that may provide more
flexibility than traditional cable service. The 1996 Act exempts OVS operators
from many of the regulatory obligations that currently apply to cable operators,
such as rate regulation and franchise fees,
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although other requirements are still applicable. OVS operators, although not
subject to franchise fees as defined by the 1992 Cable Act, are subject to fees
charged by local franchising authorities or other governmental entities in lieu
of franchise fees. (Under certain circumstances, cable operators also will be
able to offer service through open video systems.) In addition, the 1996 Act
eliminated the requirement that telephone companies file Section 214
applications (applications to provide video dialtone services) with the FCC
before providing video service. This limits the opportunity of cable operators
to mount challenges at the FCC regarding telephone company entry into the video
market. The 1996 Act also contains restrictions on buying out incumbent cable
operators in a telephone company's service area, especially in suburban and
urban markets.
Other parts of the 1996 Act also will affect cable operators. Under the
1996 Act, the FCC is required to revise the current pole attachment rate
formula. This revision will result in an increase in the rates paid by entities,
including cable operators, that provide telecommunication services. The rates
will be phased in after a five-year period. (Cable operators that provide only
cable services will be unaffected.) Under the V-chip provisions of the 1996 Act,
cable operators and other video providers are required to pass along any program
rating information that programmers include in video signals. Cable operators
also are subject to new scrambling requirements for sexually explicit
programming, and cable operators that provide Internet access or other online
services are subject to the new indecency limitations for computer services. In
addition, cable operators that provide Internet access or other online services
are subject to the new indecency limitations for computer services, although
these provisions already have been challenged in court, and the courts have
preliminarily enjoined the enforcement of these content-based provisions.
Under the 1996 Act, a franchising authority may not require a cable
operator to provide telecommunications services or facilities, other than an
institutional network, as a condition to a grant, renewal or transfer of a cable
franchise, and franchising authorities are preempted from regulating
telecommunications services provided by cable operators and from requiring cable
operators to obtain a franchise to provide such services. The 1996 Act also
repealed the 1992 Cable Act's anti-trafficking provision, which generally
required the holding of cable television systems for three years.
It is premature to predict the specific effects of the 1996 Act on the
cable industry in general or the Partnership in particular. The FCC shortly will
be undertaking numerous rulemaking proceedings to interpret and implement the
1996 Act. It is not possible at this time to predict the outcome of those
proceedings or their effect on the Partnership.
Cable Television Consumer Protection and Competition Act of 1992. The
1992 Cable Act, which became effective on December 4, 1992, caused significant
changes to the regulatory environment in which the cable television industry
operates. The 1992 Cable Act generally mandated a greater degree of regulation
of the cable television industry. Under the 1992 Cable Act's definition of
effective competition, nearly all cable television systems in the United States,
including those owned and managed by the General Partner, became subject to rate
regulation of basic cable services. In addition, the 1992 Cable Act allowed the
FCC to regulate rates for non-basic service tiers other than premium services in
response to complaints filed by franchising authorities and/or cable
subscribers. In April 1993, the FCC adopted regulations governing rates for
basic and non-basic services. The FCC's rules became effective on September 1,
1993.
In compliance with these rules, the General Partner on behalf of the
Partnership reduced rates charged for certain regulated services in the
Partnership's cable systems effective September 1, 1993. These reductions
resulted in some decrease in Partnership revenues and operating income before
depreciation and amortization; however, the decrease was not as severe as
originally anticipated. The General Partner has undertaken actions to mitigate a
portion of these reductions primarily through (a) new service offerings in some
systems, (b) product re-marketing and re-packaging and (c) marketing efforts
directed at non-subscribers.
On February 22, 1994, however, the FCC adopted several additional rate
orders including an order which revised its earlier-announced regulatory scheme
with respect to rates. The FCC's new regulations generally required rate
reductions, absent a successful cost-of-service showing, of 17 percent of
September 30, 1992 rates, adjusted for inflation, channel modifications,
equipment costs, and increases in programming costs.
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Further rate reductions for cable systems whose rates are below the revised
benchmark levels, as well as reductions that would require operators to reduce
rates below benchmark levels in order to achieve a 17 percent rate reduction,
were held in abeyance pending completion of cable system cost studies. The FCC
recently requested some of these "low price" systems to complete cost study
questionnaires. After review of these questionnaires, the FCC could decide to
permanently defer any further rate reductions, or require the additional 7
percent rate roll back for some or all of these systems. The FCC has also
adopted its proposed upgrade methodology by which operators would be permitted
to recover the costs of upgrading their plant.
After analyzing the effects of the two methods of rate regulation, the
Venture elected to file cost-of-service showings in all of its systems. The
General Partner anticipates no further reduction in revenues or operating income
before depreciation and amortization resulting from the FCC's rate regulations.
At this time, the regulatory authorities have not approved the cost-of-service
showings.
On November 10, 1994, the FCC also announced a revision to its
regulations governing the manner in which cable operators may charge subscribers
for new cable programming services. In addition to the present formula for
calculating the permissible rate for new services, the FCC instituted a
three-year flat fee mark-up plan for charges relating to new channels of cable
programming services. Commencing on January 1, 1995, cable system operators may
charge for new channels of cable programming services added after May 14, 1994
at a rate of up to 20 cents per channel, but may not make adjustments to monthly
rates totaling more than $1.20 plus an additional 30 cents for programming
license fees per subscriber over the first two years of the three-year period
for these new services. Operators may charge an additional 20 cents in the third
year only for channels added in that year plus the costs for the programming.
Operators electing to use the 20 cent per channel adjustment may not also take a
7.5 percent mark-up on programming cost increases, which is permitted under the
FCC's current rate regulations. The FCC has requested further comment as to
whether cable operators should continue to receive the 7.5 percent mark-up on
increases in license fees on existing programming services.
The FCC also announced that it will permit operators to offer a "new
product tier" ("NPT"). Operators will be able to price the NPT as they elect so
long as, among other conditions, other channels that are subject to rate
regulation are priced in conformity with applicable regulations and operators do
not remove programming services from existing tiers and offer them on the NPT.
In September 1995, the FCC authorized a new, alternative method of
implementing rate adjustments which will allow cable operators to increase rates
for programming annually on the basis of projected increases in external costs
(inflation, costs for programming, franchise-related obligations and changes in
the number of regulated channels) rather than on the basis of cost increases
incurred in the preceding calendar quarter. Operators that elect not to recover
all of their accrued external costs and inflation pass-throughs each year may
recover them (with interest) in subsequent years.
In December 1995, the FCC adopted final cost-of-service rate
regulations requiring, among other things, cable operators to exclude 34 percent
of system acquisition costs related to intangible and tangible assets used to
provide regulated services. The FCC also reaffirmed the industry-wide 11.25
percent after tax rate of return on an operator's allowable rate base, but
initiated a further rulemaking in which it proposes to use an operator's actual
debt cost and capital structure to determine an operator's cost of capital or
rate of return. After a rate has been set pursuant to a cost-of-service showing,
rate increases for regulated services are indexed for inflation, and operators
are permitted to increase rates in response to increases in costs beyond their
control, such as taxes and increased programming costs.
The United States Court of Appeals for the District of Columbia Circuit
recently upheld the FCC's rate regulations implemented pursuant to the 1992
Cable Act, but ruled that the FCC impermissibly failed to permit cable operators
to adjust rates for certain cost increases incurred during the period between
the date the 1992 Cable Act was passed through the initial date of rate
regulation. The FCC has not yet implemented the court's ruling.
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There have been several lawsuits filed by cable operators and
programmers in federal court challenging various aspects of the 1992 Cable Act
including its provisions relating to mandatory broadcast signal carriage,
retransmission consent, access to cable programming, rate regulations,
commercial leased channels and public access channels. On April 8, 1993, a
three-judge federal district court panel issued a decision upholding the
constitutionality of the mandatory signal carriage requirements of the 1992
Cable Act. That decision was appealed directly to the United States Supreme
Court. The United States Supreme Court vacated the lower court decision on June
27, 1994 and remanded the case to the district court for further development of
a factual record. On December 12, 1995, the three-judge federal district court
again upheld the must-carry rules' validity. This decision has been appealed to
the United States Supreme Court.
In 1993, a federal district court upheld provisions of the 1992 Cable
Act concerning rate regulation, retransmission consent, restrictions on
vertically integrated cable television operators and programmers, mandatory
carriage of programming on commercial leased channels and public, educational
and governmental access channels and the exemption for municipalities from civil
damage liability arising out of local regulation of cable services. The 1992
Cable Act's provisions providing for multiple ownership limits for cable
operators and advance notice of free previews for certain programming services
have been found unconstitutional and these decisions have been appealed. The
FCC's regulations relating to the carriage of indecent programming, which were
recently upheld by the United States Court of Appeals for the District of
Columbia, have been appealed to the United States Supreme Court.
Franchising. The responsibility for franchising or other authorization
of cable television systems is left to state and local authorities. There are,
however, several provisions in the 1984 Cable Act that govern the terms and
conditions under which cable television systems provide service. These include
uniform standards and policies that are applicable to cable television operators
seeking renewal of a cable television franchise. The procedures established
provide for a formal renewal process should the franchising authority and the
cable television operator decline to use an informal procedure. A franchising
authority unable to make a preliminary determination to renew a franchise is
required to hold a hearing in which the operator has the right to participate.
In the event a determination is made not to renew the franchise at the
conclusion of the hearing, the franchising authority must provide the operator
with a written decision stating the specific reasons for non-renewal. Generally,
the franchising authority can finally decide not to renew a franchise only if it
finds that the cable operator has not substantially complied with the material
terms of the present franchise, has not provided reasonable service in light of
the community's needs, does not have the financial, legal or technical ability
to provide the services being proposed for the future, or has not presented a
reasonable proposal for future service. A final decision of non-renewal by the
franchising authority is appealable in court.
A provision of the 1996 Act preempts franchising authorities from
regulating telecommunications services provided by cable operators and from
requiring cable operators to obtain a franchise to provide such services. A
franchising authority may not require a cable operator to provide
telecommunications services or facilities, other than an institutional network,
as a condition to a grant, renewal or transfer of a cable franchise.
GENERAL. The Venture's business consists of providing cable television
services to a large number of customers, the loss of any one of which would have
no material effect on the Venture's business. Each of the Systems has had some
subscribers who later terminated the service. Terminations occur primarily
because people move to another home or to another city. In other cases, people
terminate on a seasonal basis or because they no longer can afford or are
dissatisfied with the service. The amount of past due accounts in the Systems is
not significant. The General Partner's policy with regard to past due accounts
is basically one of disconnecting service before a past due account becomes
material.
The Venture does not depend to any material extent on the availability
of raw materials; it carries no significant amounts of inventory and it has no
material backlog of customer orders. The Partnership has no employees because
all properties are managed by employees of the General Partner. The General
Partner has engaged in research and development activities relating to the
provision of new services but the amount of the Venture's funds expended for
such research and development has never been material.
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Compliance with federal, state and local provisions that have been
enacted or adopted regulating the discharge of materials into the environment or
otherwise relating to the protection of the environment has had no material
effect upon the capital expenditures, earnings or competitive position of the
Venture.
ITEM 2. PROPERTIES
The cable television systems owned by the Venture are described below:
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Ownership SYSTEM ACQUISITION DATE
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Cable TV Fund 12-B, Ltd., Cable TV Palmdale/Lancaster System April 1986
Fund 12-C, Ltd. and Cable TV Fund Albuquerque System August 1986
12-D, Ltd. own a 9%, 15% and 76%
interest, respectively, through
their interest in Cable TV Fund
12-BCD Venture
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The following sets forth (i) the monthly basic plus service rates
charged to subscribers and (ii) the number of basic subscribers and pay units
for the Systems. The monthly basic service rates set forth herein represent,
with respect to systems with multiple headends, the basic service rate charged
to the majority of the subscribers within the system. In cable television
systems, basic subscribers can subscribe to more than one pay TV service. Thus,
the total number of pay services subscribed to by basic subscribers are called
pay units. As of December 31, 1995, the Palmdale/Lancaster System operated cable
plant passing approximately 90,800 homes, representing an approximate 68%
penetration rate, and the Albuquerque System operated cable plant passing
approximately 223,800 homes, representing an approximate 49% penetration rate.
Figures for numbers of subscribers and homes passed are compiled from the
General Partner's records and may be subject to adjustments.
<TABLE>
<CAPTION>
At December 31,
--------------------------------------------------
PALMDALE/LANCASTER SYSTEM 1995 1994 1993
- ------------------------- ---- ---- ----
<S> <C> <C> <C>
Monthly basic plus service rate $23.27 $21.77 $21.77
Basic subscribers 61,993 59,702 56,372
Pay units 46,699 46,214 39,928
<CAPTION>
At December 31,
--------------------------------------------------
ALBUQUERQUE SYSTEM 1995 1994 1993
- ------------------ ---- ---- ----
<S> <C> <C> <C>
Monthly basic plus service rate $22.85 $21.35 $21.00
Basic subscribers 109,911 106,835 98,555
Pay units* 57,189 58,838 67,462
</TABLE>
* The decrease in pay units between 1993 and 1994 was primarily due to
the conversion of The Disney Channel from a premium service to a basic
plus service.
ITEM 3. LEGAL PROCEEDINGS
On September 20, 1995, a civil action entitled David Hirsch, on behalf
of himself and all others similarly situated, Plaintiff, vs. Jones Intercable,
Inc., Defendant, was filed in the District Court, County of Arapahoe, State of
Colorado (Case No. 95-CV-1800). The plaintiff has brought the action as a
purported class action on behalf of himself and all other limited partners of
Fund 12-D against the General Partner seeking to recover damages caused by the
General Partner's alleged breaches of its fiduciary duties to the limited
partners of Fund 12-D in
9
<PAGE> 10
connection with the sale of the Tampa System and the subsequent exchange of the
Tampa System with an unaffiliated cable television system operator in return for
systems owned by that operator. The plaintiff also seeks certain equitable and
injunctive relief. On January 25, 1996, the plaintiff filed an amended complaint
and request for a jury trial. On February 20, 1996, the General Partner filed a
Motion to Dismiss the Amended Complaint on the ground that it fails to state a
claim upon which relief can be granted as a matter of law. The General Partner
believes that it has meritorious defenses, and the General Partner intends to
defend this lawsuit vigorously.
On November 17, 1995, a civil action entitled Martin Ury, derivatively
on behalf of Cable TV Fund 12-B, Ltd., Cable TV Fund 12-C, Ltd. and Cable TV
Fund 12-D, Ltd., Plaintiff vs. Jones Intercable, Inc., Defendant and Cable TV
Fund 12-BCD Venture, Cable TV Fund 12-B, Ltd., Cable TV Fund 12-C, Ltd. and
Cable TV Fund 12-D, Ltd., Nominal Defendants, was filed in the District Court,
County of Arapahoe, State of Colorado (Case No. 95-CV-2212). The plaintiff, a
limited partner of Fund 12-D, has brought the action as a derivative action on
behalf of the three partnerships that comprise the Venture against the General
Partner seeking to recover damages caused by the General Partner's alleged
breaches of its fiduciary duties to the Venture and to the three partnerships
that comprise the Venture (and their respective limited partners) in connection
with the sale of the Tampa System and the subsequent exchange of the Tampa
System with an unaffiliated cable television system operator in return for
systems owned by that operator. On February 1, 1996, the General Partner filed a
Motion to Dismiss the Complaint on the ground that it fails to state a claim
upon which relief can be granted as a matter of law. The Motion also asserts
that the plaintiff does not have standing to bring a claim on behalf of Fund
12-B and Fund 12-C and their respective limited partners. The General Partner
believes that it has meritorious defenses, and the General Partner intends to
defend this lawsuit vigorously.
Pursuant to the indemnification provisions of Section 9.6 of the
Partnership's limited partnership agreement, the General Partner may be entitled
to indemnification from the Partnership for its legal fees and expenses, and for
any amounts paid in settlement, in defending the above-described lawsuits. The
General Partner cannot determine at this time whether such amounts will be
material.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK
AND RELATED SECURITY HOLDER MATTERS
While the Partnership is publicly held, there is no public market for
the limited partnership interests, and it is not expected that a market will
develop in the future. As of February 15, 1996, the number of equity security
holders in the Partnership was 18,195.
10
<PAGE> 11
Item 6. Selected Financial Data
<TABLE>
<CAPTION>
For the Year Ended December 31,
------------------------------------------------------------------------------
Cable TV Fund 12-D, Ltd.** 1995 1994 1993 1992 1991
- -------------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenues $101,399,697 $ 92,823,076 $ 89,131,530 $83,567,527 $ 78,049,505
Depreciation & Amortization 26,666,735 24,809,654 25,772,299 26,764,820 30,793,053
Operating Income (Loss) 4,127,622 289,904 779,887 (1,087,963) (4,930,588)
Minority Interest in Consolidated Loss 2,720,847 3,149,271 2,833,316 3,640,418 4,360,519
Net Loss (8,403,720) (9,726,971) (8,751,100) (11,243,947) (13,468,081)
Net Loss per Limited
Partnership Unit (35.05) (40.57) (36.50) (46.90) (56.18)
Weighted Average Number of Limited
Partnership Units Outstanding 237,339 237,339 237,339 237,339 237,339
General Partner's Deficit (1,244,562) (1,160,525) (1,063,255) (975,744) (863,305)
Limited Partners' Capital (Deficit) (20,958,295) (12,638,612) (3,008,911) 5,654,678 16,786,188
Total Assets 163,486,029 170,675,914 169,670,552 175,554,620 185,834,366
Debt 180,770,267 180,402,748 167,698,697 160,440,488 156,131,618
General Partner Advances 4,198,739 616,810 188,430 511,646 4,606,840
</TABLE>
** The above financial information represents the consolidated operations of
Cable TV Fund 12-BCD Venture, in which Cable TV Fund 12-D, Ltd . has a 76
percent equity interest.
11
<PAGE> 12
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
CABLE TV FUND 12-D, LTD.
RESULTS OF OPERATIONS
All of Cable TV Fund 12-D, Ltd.'s ("Fund 12-D's") operations are
represented by its 76 percent interest in Cable TV Fund 12-BCD Venture (the
"Venture"). Thus, Management's Discussion and Analysis of the Venture should
be consulted for pertinent comments regarding Fund 12-D's performance.
FINANCIAL CONDITION
Fund 12-D's investment in the Venture has decreased by $8,403,720 when
compared to the December 31, 1994 balance representing a deficit of
$22,202,857. This deficit is due to Fund 12-D's share of Venture losses, which
are principally the result of depreciation and amortization charges being
greater than equity invested. These losses are expected to be recovered upon
liquidation of the Venture.
On February 28, 1996, the Venture sold the cable television system
serving areas in and around Tampa, Florida (the "Tampa System") to Jones Cable
Holdings, Inc., a wholly owned subsidiary of the General Partner, for a sales
price of $110,395,667, subject to normal working capital closing adjustments.
This price represented the average of three separate, independent appraisals of
the fair market value of the Tampa System. Because the Venture's debt
arrangements did not allow the Venture to make distributions on the sale of
Venture assets, in February 1996 the Venture's debt arrangements were amended
to permit a $55,000,000 distribution to the Venture's partners from the sale
proceeds, and the balance of the sale proceeds were used to reduce Venture
indebtedness. The Partnership's portion of this distribution is approximately
$41,547,000. Because the limited partners of the Partnership have not yet
received distributions in an amount equal to 100 percent of the capital
initially contributed to the Partnership by them, the entire portion of the
Partnership's distribution will be distributed to the limited partners in April
1996. This distribution will give the Partnership's limited partners an
approximate return of $350 for each $1,000 invested in the Partnership.
Because the Tampa System did not constitute all or substantially all of the
Venture's assets, no vote of the limited partners of the Partnership was
required in connection with this transaction.
12
<PAGE> 13
CABLE TV FUND 12-BCD VENTURE
RESULTS OF OPERATIONS
1995 compared to 1994
Revenues of Cable TV Fund 12-BCD Venture (the "Venture") increased
$8,576,621, or approximately 9 percent, to $101,399,697 in 1995 from
$92,823,076 in 1994. At December 31, 1995, the Venture's systems had 236,866
basic subscribers compared to 227,950 basic subscribers at December 31, 1994,
an increase of approximately 4 percent. This increase in basic service
subscribers accounted for approximately 39 percent of the increase in revenues.
Basic service rate increases accounted for approximately 37 percent of the
increase in revenues. No other single factor significantly affected the
increase in revenues.
Operating expenses consist primarily of costs associated with the
administration of the Venture's cable television systems. The principal cost
components are salaries paid to system personnel, programming expenses,
professional fees, subscriber billing costs, rent for leased facilities, cable
system maintenance expenses and consumer marketing expenses.
Operating expenses in the Venture's systems increased $2,220,438, or
approximately 4 percent, to $58,351,692 in 1995 from $56,131,254 in 1994.
Operating expenses represented approximately 58 percent and approximately 60
percent of revenues in 1995 and in 1994, respectively. The increase in
operating expenses was due to increases in subscriber related costs,
programming fees, property tax expenses and advertising related costs, which
were partially offset by decreases in personnel related costs. No other single
factor significantly affected the increase in operating expenses.
Management fees and allocated overhead from Jones Intercable, Inc.
increased $661,384, or approximately 6 percent, to $12,253,648 in 1995 from
$11,592,264 in 1994 due to the increase in revenues, upon which such fees and
allocations are based.
Depreciation and amortization expense increased $1,857,081, or
approximately 7 percent, to $26,666,735 in 1995 from $24,809,654 in 1994. This
increase was due to the increase in the Venture's depreciable asset base.
The Venture's operating income increased $3,837,718 to $4,127,622 in
1995 from $289,904 in 1994. This increase was the result of increases in
revenues exceeding the increases in operating expenses, management fees and
allocated overhead from Jones Intercable, Inc. and depreciation and
amortization expenses.
The cable television industry generally measures the financial
performance of a cable television system in terms of cash flow or operating
income before depreciation and amortization. The value of a cable television
system is often determined using multiples of cash flow. This measure is not
intended to be a substitute or improvement upon the items disclosed on the
financial statements, rather it is included because it is an industry standard.
Operating income before depreciation and amortization increased $5,694,799, or
approximately 23 percent, to $30,794,357 in 1995 from $25,099,558 in 1994.
This increase was due to the increase in revenues exceeding the increase in
operating expenses and management fees and allocated overhead from Jones
Intercable, Inc.
Interest expense increased $2,190,557, or approximately 17 percent, to
$15,347,250 in 1995 from $13,156,693 in 1994 due to higher interest rates and
higher outstanding balances on interest bearing obligations in 1995.
Net loss decreased $1,751,675, or approximately 14 percent, to
$11,124,567 in 1995 from $12,876,242 in 1994 due to the factors discussed
above.
1994 compared to 1993
Revenues of the Venture increased $3,691,546, or approximately 4
percent, to $92,823,076 in 1994 from $89,131,530 in 1993. At December 31, 1994,
the Venture's systems had 227,950 basic service subscribers compared to 213,072
basic subscribers at December 31, 1993, an increase of approximately 7 percent.
This increase in basic subscribers accounted for approximately 37 percent of
the increase in revenues. Increases in advertising sales activity accounted
for approximately 28 percent of the increase in revenues. Increases in premium
service and pay-per-view revenues accounted for approximately 27 percent of the
increase. The increase in revenues would have been greater but
13
<PAGE> 14
for the reduction in basic rates due to new basic rate regulations issued by
the FCC in May 1993 with which the Venture complied effective September 1,
1993. No other single factor significantly affected the increase in revenues.
Operating expenses in the Venture's systems increased $4,057,270, or
approximately 8 percent, to $56,131,254 in 1994 from $52,073,984 in 1993.
Operating expenses represented approximately 60 percent and approximately 58
percent of revenues in 1994 and in 1993, respectively. The increase in
operating expenses was due to increases in subscriber related costs,
programming fees and marketing related costs. No other single factor
significantly affected the increase in operating expenses.
Management fees and allocated overhead from Jones Intercable, Inc.
increased $1,086,904, or approximately 10 percent, to $11,592,264 in 1994 from
$10,505,360 in 1993 due to the increase in revenues, upon which such fees and
allocations are based, and an increase in allocated expenses from Jones
Intercable, Inc. Jones Intercable, Inc. experienced increases in expenses in
1994.
Depreciation and amortization expense decreased $962,645, or
approximately 4 percent, to $24,809,654 in 1994 from $25,772,299 in 1993. This
decrease was due to the maturation of the Venture's asset base.
The Venture's operating income decreased $489,983, or approximately 63
percent, to $289,904 in 1994 from $779,887 in 1993. This decrease was the
result of increases in operating expenses and management fees and allocated
overhead from Jones Intercable, Inc. exceeding the increases in revenues and
was offset by the decreases in depreciation and amortization expenses.
Operating income before depreciation and amortization decreased
$1,452,628, or approximately 5 percent, to $25,099,558 in 1994 from $26,552,186
in 1993. This decrease was due to the increase in operating expenses and
management fees and allocated overhead from Jones Intercable, Inc. exceeding
the increase in revenues.
Interest expense increased $1,288,625, or approximately 11 percent, to
$13,156,693 in 1994 from $11,868,068 in 1993 due to higher interest rates and
higher outstanding balances on interest bearing obligations in 1994.
Net loss increased $1,291,826, or approximately 11 percent, to
$12,876,242 in 1994 from $11,584,416 in 1993 due to the factors discussed
above.
FINANCIAL CONDITION
For the twelve months ended December 31, 1995, the Venture generated
net cash from operating activities totaling approximately $18,100,250, which
was available to fund capital expenditures and non-operating costs. Capital
expenditures for the Venture totaled approximately $21,500,000 during 1995.
Service drops to homes accounted for approximately 41 percent of the capital
expenditures. New plant construction accounted for approximately 19 percent of
the capital expenditures. Approximately 10 percent of capital expenditures was
for converters. The remaining expenditures related to various system
enhancements. These capital expenditures were funded primarily from cash
generated from operations and borrowings from the General Partner. Expected
capital expenditures for 1996 are approximately $15,200,000. Service drops to
homes are anticipated to account for approximately 43 percent. Approximately
31 percent of budgeted capital expenditures is for new plant construction. The
remainder of the expenditures are for various system enhancements in all of the
Venture's systems. Funding for these expenditures is expected to be provided
by cash on hand, cash generated from operations and borrowings from the
Venture's amended credit facility. The Venture has sufficient sources of
capital available in its ability to generate cash from operations and to borrow
under its credit facility to meet its presently anticipated needs.
On August 11, 1995, the Venture entered into a purchase and sale
agreement pursuant to which it agreed to sell its Tampa, Florida system (the
"Tampa System") to the General Partner for a sales price of $110,395,667,
subject to working capital adjustments. The General Partner assigned its
rights and obligations under the purchase and sale agreement to Jones Cable
Holdings, Inc., a wholly owned subsidiary of the General Partner. Closing of
this sale occurred on February 28, 1996. The sales price represented the
average of three separate, independent appraisals of the fair market value of
the Tampa System. The net sales proceeds were used to make a $55,000,000
distribution to the Venture's partners, with the remainder of the proceeds used
to reduce the Venture's debt. The net sales proceeds were distributed as
follows: Fund 12-B received $5,049,000; Fund 12-C received $8,404,000 and Fund
12-D received $41,547,000.
14
<PAGE> 15
The Venture's debt arrangements at December 31, 1995 consisted of
$93,000,000 of Senior Notes placed with a group of institutional lenders and an
$87,000,000 credit facility with a group of commercial bank lenders.
The Senior Notes have a fixed interest rate of 8.64 percent and a
final maturity date of March 31, 2000. The Senior Notes call for payments of
interest only through March 1996, with interest and accelerating amortization
of principal payments required for the four years thereafter. In February
1996, the Venture was required to make a principal repayment of approximately
$33,650,000 from proceeds received from the sale of the Tampa System. The
Senior Notes carry a "make-whole" payment, which is a prepayment penalty, in
the event the notes are prepaid prior to maturity. The make-whole payment
protects the lenders in the event that prepaid funds are reinvested at a rate
below 8.64 percent. The Venture was required to pay a make-whole payment in
February 1996 of approximately $2,217,000. Principal and interest payments due
in 1996 are expected to be funded from cash on hand, cash generated from
operations and borrowings under the Venture's new credit facility, as discussed
below. Installments due on the Senior Notes, subsequent to the February 1996
repayment, each year for the five year period ended December 31, 2000 are:
$3,956,656, $7,913,313, $11,869,968, $15,826,624 and $19,783,282, respectively.
The balance outstanding on the Venture's credit agreement at
December 31, 1995 was $87,000,000. However, upon the sale of the Tampa System
and, as required under the Venture's credit facility, $22,000,000 of the sale
proceeds were used to reduce amounts outstanding under its credit facility,
leaving $65,000,000 outstanding. In February 1996, the Venture increased the
amount available to $120,000,000 to meet the Venture's long-term financing
requirements. The amended credit facility matures on December 31, 1999 or, at
the Venture's option, on December 31, 2004. In the event the Venture elects
the latter maturity date, the credit facility shall amortize in consecutive
quarterly amounts. Interest on the amended credit facility is at the Venture's
option of the London Interbank Offered Rate plus .625 percent to 1.375 percent,
the Base Rate plus 0 percent to .375 percent or the Certificate of Deposit Rate
plus .75 percent to 1.50 percent.
Both lending facilities are equal in standing with the other, and both
are equally secured by the assets of the Venture.
At December 31, 1995, amounts payable to the General Partner totaled
$4,198,739. By February 1996, this balance had increased to approximately
$5,100,000, which amount was repaid to the General Partner with borrowings from
the Venture's amended credit facility.
The General Partner believes that cash generated from operations and
borrowings from the Venture's amended credit facility will be sufficient to
fund capital expenditures and other liquidity needs of the Venture.
REGULATION AND LEGISLATION
The Venture has filed cost-of-service showings in response to
rulemakings concerning the 1992 Cable Act for its systems and thus anticipates
no further reductions in rates in these systems. The cost-of-service showings
have not yet received final approvals from regulatory authorities, however, and
there can be no assurance that the Venture's cost-of- service showings will
prevent further rate reductions in these systems until such final approvals are
received.
The Telecommunications Act of 1996 (the "1996 Act"), which became law
on February 8, 1996, substantially revised the Communications Act of 1934, as
amended, including the 1984 Cable Act and the 1992 Cable Act, and has been
described as one of the most significant changes in communications regulation
since the original Communications Act of 1934. The 1996 Act is intended, in
part, to promote substantial competition in the telephone local exchange and in
the delivery of video and other services. As a result of the 1996 Act, local
telephone companies (also known as local exchange carriers or "LECs") and other
service providers are permitted to provide video programming, and cable
television operators are permitted entry into the telephone local exchange
market. The FCC is required to conduct rulemaking proceedings over the next
several months to implement various provisions of the 1996 Act.
Among other provisions, the 1996 Act modified the 1992 Cable Act by
deregulating the cable programming service tier of large cable operators
including the Venture effective March 31, 1999 and the cable programming
service tier of "small" cable operators in systems providing service to 50,000
or fewer subscribers effective immediately. The 1996 Act also revised the
procedures for filing cable programming service tier rate complaints and adds a
new effective competition test.
15
<PAGE> 16
It is premature to predict the specific effects of the 1996 Act on the
cable industry in general or the Venture in particular. The FCC will be
undertaking numerous rulemaking proceedings to interpret and implement the 1996
Act. It is not possible at this time to predict the outcome of those
proceedings or their effect on the Venture. See Item 1.
16
<PAGE> 17
Item 8. Financial Statements
CABLE TV FUND 12-D, LTD.
CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1995 AND 1994
INDEX
<TABLE>
<CAPTION>
Page
--------
<S> <C>
Report of Independent Public Accountants 18
Consolidated Balance Sheets 19
Consolidated Statements of Operations 21
Consolidated Statements of Partners' Deficit 22
Consolidated Statements of Cash Flows 23
Notes to Consolidated Financial Statements 24
</TABLE>
17
<PAGE> 18
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of Cable TV Fund 12-D, Ltd.:
We have audited the accompanying consolidated balance sheets of CABLE
TV FUND 12-D, LTD. (a Colorado limited partnership) and subsidiary as of
December 31, 1995 and 1994, and the related consolidated statements of
operations, partners' deficit and cash flows for each of the three years in the
period ended December 31, 1995. These financial statements are the
responsibility of the General Partner's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Cable TV Fund 12-D,
Ltd. and subsidiary as of December 31, 1995 and 1994, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted accounting principles.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Denver, Colorado,
March 8, 1996.
18
<PAGE> 19
CABLE TV FUND 12-D, LTD.
(A Limited Partnership)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
----------------------------------------
ASSETS 1995 1994
------ ---------------- ----------------
<S> <C> <C>
CASH AND CASH EQUIVALENTS $ 1,384,794 $ 4,391,602
RECEIVABLES:
Trade receivables, less allowance for doubtful receivables of $486,392
and $339,139 at December 31, 1995 and 1994, respectively 4,464,773 3,807,271
Affiliated entity 159,137 159,137
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 294,472,892 272,998,315
Less- accumulated depreciation (155,826,572) (135,711,082)
------------ ------------
138,646,320 137,287,233
Franchise costs, net of accumulated amortization of $54,815,515 and
$48,828,848 at December 31, 1995 and 1994, respectively 12,233,128 18,219,795
Costs in excess of interests in net assets purchased, net of accumulated
amortization of $1,433,228 and $1,280,756 at December 31, 1995
and 1994, respectively 4,623,200 4,775,672
------------ -------------
Total investment in cable television properties 155,502,648 160,282,700
DEPOSITS, PREPAID EXPENSES AND DEFERRED
CHARGES 1,974,677 2,035,204
------------ -------------
Total assets $ 163,486,029 $ 170,675,914
============ ============
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these consolidated balance sheets.
19
<PAGE> 20
CABLE TV FUND 12-D, LTD.
(A Limited Partnership)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
----------------------------------------
LIABILITIES AND PARTNERS' DEFICIT 1995 1994
--------------------------------- ---------------- ----------------
<S> <C> <C>
LIABILITIES:
Debt $ 180,770,267 $ 180,402,748
Accounts payable-
Trade 301,619 491,846
General Partner 4,198,739 616,810
Accrued liabilities 7,427,814 7,125,482
Subscriber prepayments 517,908 644,779
-------------- -------------
Total liabilities 193,216,347 189,281,665
------------ -------------
COMMITMENTS AND CONTINGENCIES (Note 7)
MINORITY INTEREST IN JOINT VENTURE (7,527,461) (4,806,614)
------------- -------------
PARTNERS' DEFICIT:
General Partner-
Contributed capital 1,000 1,000
Accumulated deficit (1,245,562) (1,161,525)
------------- -------------
(1,244,562) (1,160,525)
------------- -------------
Limited Partners-
Net contributed capital (237,339 units outstanding
at December 31, 1995 and 1994) 102,198,175 102,198,175
Accumulated deficit (123,156,470) (114,836,787)
------------- -------------
(20,958,295) (12,638,612)
------------- -------------
Total liabilities and partners' deficit $ 163,486,029 $ 170,675,914
============= =============
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these consolidated balance sheets.
20
<PAGE> 21
CABLE TV FUND 12-D, LTD.
(A Limited Partnership)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Year Ended December 31,
--------------------------------------------------------
1995 1994 1993
--------------- -------------- -------------
<S> <C> <C> <C>
REVENUES $ 101,399,697 $ 92,823,076 $ 89,131,530
COSTS AND EXPENSES:
Operating expenses 58,351,692 56,131,254 52,073,984
Management fees and allocated overhead from
Jones Intercable, Inc. 12,253,648 11,592,264 10,505,360
Depreciation and amortization 26,666,735 24,809,654 25,772,299
------------- ------------- -------------
OPERATING INCOME 4,127,622 289,904 779,887
------------- ------------- -------------
OTHER INCOME (EXPENSE):
Interest expense (15,347,250) (13,156,693) (11,868,068)
Other, net 95,061 (9,453) (496,235)
------------- ------------- -------------
Total other income (expense), net (15,252,189) (13,166,146) (12,364,303)
------------- ------------- -------------
CONSOLIDATED NET LOSS (11,124,567) (12,876,242) (11,584,416)
MINORITY INTEREST IN CONSOLIDATED NET
LOSS 2,720,847 3,149,271 2,833,316
------------- ------------- ------------
NET LOSS $ (8,403,720) $ (9,726,971) $ (8,751,100)
============= ============ ============
ALLOCATION OF NET LOSS:
General Partner $ (84,037) $ (97,270) $ (87,511)
============= ============ =============
Limited Partners $ (8,319,683) $ (9,629,701) $ (8,663,589)
============= ============ =============
NET LOSS PER LIMITED PARTNERSHIP UNIT $ (35.05) $ (40.57) $ (36.50)
============= ============ =============
WEIGHTED AVERAGE NUMBER OF LIMITED
PARTNERSHIP UNITS OUTSTANDING 237,339 237,339 237,339
============= ============ =============
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements.
21
<PAGE> 22
CABLE TV FUND 12-D, LTD.
(A Limited Partnership)
CONSOLIDATED STATEMENTS OF PARTNERS' DEFICIT
<TABLE>
<CAPTION>
For the Year Ended December 31,
---------------------------------------------------------
1995 1994 1993
-------------- ------------- -------------
<S> <C> <C> <C>
GENERAL PARTNER:
Balance, beginning of year $ (1,160,525) $ (1,063,255) $ (975,744)
Net loss for year (84,037) (97,270) (87,511)
------------ ------------ ------------
Balance, end of year $ (1,244,562) $ (1,160,525) $ (1,063,255)
============ ============ ============
LIMITED PARTNERS:
Balance, beginning of year $(12,638,612) $ (3,008,911) $ 5,654,678
Net loss for year (8,319,683) (9,629,701) (8,663,589)
------------ ------------ -----------
Balance, end of year $(20,958,295) $(12,638,612) $ (3,008,911)
============ ============ ============
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements.
22
<PAGE> 23
CABLE TV FUND 12-D, LTD.
(A Limited Partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Year Ended December 31,
---------------------------------------------------------
1995 1994 1993
---------------- ---------------- ---------------
- -
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (8,403,720) $ (9,726,971) $ (8,751,100)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation and amortization 26,666,735 24,809,654 25,772,299
Minority interest in consolidated loss (2,720,847) (3,149,271) (2,833,316)
Increase in trade receivables (657,502) (852,784) (147,286)
Increase in deposits, prepaid expenses and
deferred charges (351,579) (694,816) (434,700)
Increase (decrease) in trade accounts payable,
accrued liabilities and subscriber prepayments (14,766) 749,173 (1,234,645)
Increase (decrease) in amount due General Partner 3,581,929 428,380 (323,216)
----------- ------------ ------------
Net cash provided by operating activities 18,100,250 11,563,365 12,048,036
----------- ----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (21,474,577) (21,338,471) (18,711,639)
Franchise costs - (500,000) -
----------- ------------ ------------
Net cash used in investing activities (21,474,577) (21,838,471) (18,711,639)
----------- ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 882,431 16,268,610 11,954,437
Repayment of debt (514,912) (3,564,559) (4,696,228)
------------ ------------ ------------
Net cash provided by financing activities 367,519 12,704,051 7,258,209
------------ ------------ ------------
Increase (decrease) in cash and cash equivalents (3,006,808) 2,428,945 594,606
Cash and cash equivalents, beginning of year 4,391,602 1,962,657 1,368,051
------------ ------------ ------------
Cash and cash equivalents, end of year $ 1,384,794 $ 4,391,602 $ 1,962,657
============ ============ =============
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 15,331,071 $ 12,450,869 $ 12,141,838
============ ============ =============
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements.
23
<PAGE> 24
CABLE TV FUND 12-D, LTD.
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) ORGANIZATION AND PARTNERS' INTERESTS
Formation and Business
Cable TV Fund 12-D, Ltd. ("Fund 12-D"), a Colorado limited
partnership, was formed on February 5, 1986, under a public program sponsored
by Jones Intercable, Inc. Fund 12-D was formed to acquire, construct, develop
and operate cable television systems. Jones Intercable, Inc. ("Intercable"),
is the "General Partner" and manager of Fund 12-D. The General Partner and its
subsidiaries also own and operate cable television systems. In addition, the
General Partner manages cable television systems for other limited partnerships
for which it is general partner and, also, for affiliated entities.
Contributed Capital
The capitalization of Fund 12-D is set forth in the accompanying
consolidated statements of partners' deficit. No limited partner is obligated
to make any additional contributions to partnership capital. The General
Partner purchased its interest in Fund 12-D by contributing $1,000 to
partnership capital.
All profits and losses of Fund 12-D are allocated 99 percent to the
limited partners and 1 percent to the General Partner, except for income or
gain from the sale or disposition of cable television properties, which will be
allocated to the partners based upon the formula set forth in the Partnership
Agreement, and interest income earned prior to the first acquisition by Fund
12-D of a cable television system, which was allocated 100 percent to the
limited partners.
Formation of Joint Venture and Venture Sale of Cable Television
Systems
On March 17, 1986, Cable TV Fund 12-B, Ltd. ("Fund 12-B"), Cable TV
Fund 12-C, Ltd. ("Fund 12-C") and Fund 12-D formed Cable TV Fund 12-BCD Venture
(the "Venture"). The Venture was formed for the purpose of acquiring certain
cable television systems. At December 31, 1995, the Venture owned and operated
the cable television systems serving certain areas in and around Tampa,
Florida, Albuquerque, New Mexico and Palmdale, California.
On February 28, 1996, the Venture sold the cable television system
serving areas in and around Tampa, Florida (the "Tampa System") to Jones Cable
Holdings, Inc., a wholly owned subsidiary of the General Partner, for a sales
price of $110,395,667, subject to normal working capital closing adjustments.
This price represented the average of three separate, independent appraisals of
the fair market value of the Tampa System. Because the Venture's debt
arrangements did not allow the Venture to make distributions on the sale of
Venture assets, in February 1996 the Venture's debt arrangements were amended
to permit a $55,000,000 distribution to the Venture's partners from the sale
proceeds, and the balance of the sale proceeds were used to reduce Venture
indebtedness. Of this total distribution, Fund 12-B received approximately
$5,049,000, Fund 12-C received approximately $8,404,000 and Fund 12-D received
approximately $41,457,000. Because the limited partners of the Partnership
have not yet received distributions in an amount equal to 100 percent of the
capital initially contributed to the Partnership by them, the entire portion of
the Partnership's distribution will be distributed to the limited partners in
April 1996. This distribution will give the Partnership's limited partners an
approximate return of $350 for each $1,000 invested in the Partnership.
Because the Tampa System did not constitute all or substantially all of the
Venture's assets, no vote of the limited partners of the Partnership was
required in connection with this transaction.
24
<PAGE> 25
The pro forma effect of the sale of the Tampa System on the results of
the Venture's operations for the years ended December 31, 1995 and 1994,
assuming the transaction had occurred at the beginning of the years, is
presented in the following unaudited tabulation:
<TABLE>
<CAPTION>
For the Year Ended December 31, 1995
-----------------------------------------------
Pro Forma
As Reported Adjustments Pro Forma
----------- ----------- ---------
<S> <C> <C> <C>
Revenues $101,399,697 $(28,700,128) $ 72,699,569
============ ============ ============
Operating Income $ 4,127,622 $ (1,090,628) $ 3,036,994
============ ============ ============
Net Loss $(11,124,567) $ 2,899,019 $ (8,225,548)
============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
For the Year Ended December 31, 1994
---------------------------------------------
Pro Forma
As Reported Adjustments Pro Forma
----------- ----------- ---------
<S> <C> <C> <C>
Revenues $ 92,823,076 $(26,122,731) $ 66,700,345
============ ============ ============
Operating Income $ 289,904 $ 48,392 $ 338,296
============ ============= ============
Net Loss $(12,876,242) $ 4,102,399 $ (8,773,843)
============ ============ ============
</TABLE>
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Records
The accompanying consolidated financial statements have been prepared
on the accrual basis of accounting in accordance with generally accepted
accounting principles. Fund 12-D's tax returns are also prepared on the
accrual basis.
The preparation of financial statements in conformity with generally
accepted accounting principles requires the General Partner's management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Principles of Consolidation
The accompanying consolidated financial statements include 100 percent
of the accounts of Fund 12-D and those of the Venture reduced by the
approximate 24 percent minority interest in the Venture. All inter-partnership
accounts and transactions have been eliminated.
Property, Plant and Equipment
Depreciation is provided using the straight-line method over the
following estimated service lives:
<TABLE>
<S> <C>
Cable distribution systems 5 -15 years
Equipment and tools 3 - 5 years
Office furniture and equipment 5 years
Buildings 20 years
Vehicles 3 years
</TABLE>
25
<PAGE> 26
Replacements, renewals and improvements are capitalized and
maintenance and repairs are charged to expense as incurred.
Intangible Assets
Costs assigned to franchises and costs in excess of interests in net
assets purchased are amortized using the straight-line method over the
following remaining estimated useful lives:
<TABLE>
<S> <C>
Franchise costs 2 - 5 years
Costs in excess of interests in net assets purchased 30 - 31 years
</TABLE>
Revenue Recognition
Subscriber prepayments are initially deferred and recognized as
revenue when earned.
Cash and Cash Equivalents
For purposes of the Statements of Cash Flows, the Venture considers
all highly liquid investments purchased with an original maturity of three
months or less to be cash equivalents.
Reclassifications
Certain prior year amounts have been reclassified to conform with the
1995 presentation.
(3) TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES
Management Fees, Distribution Ratios and Reimbursements
The General Partner manages Fund 12-D and the Venture and receives a
fee for its services equal to 5 percent of the gross revenues of the Venture,
excluding revenues from the sale of cable television systems or franchises.
Management fees paid to the General Partner by the Venture were $5,069,985,
$4,641,154 and $4,456,577 during 1995, 1994 and 1993, respectively.
Any partnership distributions made from cash flow (defined as cash
receipts derived from routine operations, less debt principal and interest
payments and cash expenses) are allocated 99 percent to the limited partners
and 1 percent to the General Partner. Any distributions other than interest
income on limited partnership subscriptions earned prior to the acquisition of
Fund 12-D's first cable television system or from cash flow, such as from the
sale or refinancing of a system or upon dissolution of the Partnership, will be
made as follows: first, to the limited partners in an amount which, together
with all prior distributions, will equal the amount initially contributed by
the limited partners; the balance, 75 percent to the limited partners and 25
percent to the General Partner.
The Venture reimburses the General Partner for certain allocated
overhead and administrative expenses. These expenses represent the salaries
and related benefits paid to corporate personnel, rent, data processing
services and other corporate facilities costs. Such personnel provide
engineering, marketing, administrative, accounting, legal and investor
relations services to the Venture. Allocations of personnel costs are based
primarily on actual time spent by employees of the General Partner with respect
to each entity managed. Remaining expenses are allocated based on the pro rata
relationship of the Venture's revenues to the total revenues of all systems
owned or managed by the General Partner and certain of its subsidiaries.
Systems owned by the General Partner and all other systems owned by
partnerships for which Intercable is the general partner are also allocated a
proportionate share of these expenses. The General Partner believes that the
methodology used in allocating overhead and administrative expenses is
reasonable. Overhead and administrative expenses allocated to the Venture by
the General Partner were $7,183,663, $6,951,110 and $6,048,783 in 1995, 1994
and 1993, respectively.
The Venture was charged interest during 1995 at an average interest
rate of 10.51 percent on the amounts due the General Partner, which
approximated the General Partner's weighted average cost of borrowing. Total
interest charged to the Venture by the General Partner was $220,743, $33,627
and $15,477 in 1995, 1994 and 1993, respectively.
26
<PAGE> 27
Payments to/from Affiliates for Programming Services
The Venture receives programming from Superaudio, Mind Extension
University, Jones Computer Network and Product Information Network, all of
which are affiliates of the General Partner.
Payments to Superaudio totaled $135,861, $135,346 and $134,179 in
1995, 1994 and 1993, respectively. Payments to Mind Extension University
totaled $145,598, $124,043 and $79,002 in 1995, 1994 and 1993, respectively.
Payments to Jones Computer Network, which initiated service in 1994, totaled
$283,339 and $71,961 in 1995 and 1994, respectively.
The Venture receives a commission from Product Information Network
based on a percentage of advertising sales and number of subscribers. Product
Information Network, which initiated service in 1994, paid commissions to the
Venture totaling $212,844 and $81,592 in 1995 and 1994, respectively.
(4) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment as of December 31, 1995 and 1994,
consisted of the following:
<TABLE>
<CAPTION>
December 31,
----------------------------------------
1995 1994
------------------ ------------------
<S> <C> <C>
Cable distribution system $ 267,586,574 $ 248,337,681
Equipment and tools 8,630,758 7,721,861
Office furniture and equipment 3,402,683 3,014,125
Buildings 8,262,351 7,695,925
Vehicles 5,639,556 5,277,753
Land 950,970 950,970
-------------- --------------
294,472,892 272,998,315
Less-accumulated depreciation (155,826,572) (135,711,082)
-------------- --------------
$ 138,646,320 $ 137,287,233
============== ==============
</TABLE>
(5) DEBT
Debt consists of the following:
<TABLE>
<CAPTION>
December 31,
----------------------------------------
1995 1994
------------------ ------------------
<S> <C> <C>
Lending institutions-
Revolving credit and term loan $ 87,000,000 $ 86,541,300
Senior secured notes 93,000,000 93,000,000
Capital lease obligations 770,267 861,448
------------ ------------
$180,770,267 $180,402,748
============ ============
</TABLE>
The Venture's debt arrangements at December 31, 1995 consisted of
$93,000,000 of Senior Notes placed with a group of institutional lenders and an
$87,000,000 credit facility with a group of commercial bank lenders.
The Senior Notes have a fixed interest rate of 8.64 percent and a
final maturity date of March 31, 2000. The Senior Notes call for payments of
interest only through March 1996, with interest and accelerating amortization
of principal payments required for the four years thereafter. In February
1996, the Venture was required to make a principal repayment of approximately
$33,650,000 from proceeds received from the sale of the Tampa System. The
Senior Notes carry a "make-whole" payment, which is a prepayment penalty, in
the event the notes are prepaid prior to maturity. The make-whole payment
protects the lenders in the event that prepaid funds are reinvested at a rate
below 8.64 percent. The Venture was required to pay a make-whole payment in
February 1996 of approximately $2,217,000. Principal and interest
27
<PAGE> 28
payments due in 1996 are expected to be funded from cash on hand, cash
generated from operations and borrowings under the Venture's new credit
facility, as discussed below. Installments due on the Senior Notes, subsequent
to the February 1996 repayment, each year for the five year period ended
December 31, 2000 are: $3,956,656, $7,913,313, $11,869,968, $15,826,624 and
$19,783,282, respectively.
The balance outstanding on the Venture's credit agreement at
December 31, 1995 was $87,000,000. However, upon the sale of the Tampa System
and, as required under the Venture's credit facility, $22,000,000 of the sale
proceeds were used to reduce amounts outstanding under its credit facility,
leaving $65,000,000 outstanding. In February 1996, the Venture increased the
amount available to $120,000,000 to meet the Venture's long-term financing
requirements. The amended credit facility matures on December 31, 1999 or, at
the Venture's option, on December 31, 2004. In the event the Venture elects
the latter maturity date, the credit facility shall amortize in consecutive
quarterly amounts. Interest on the amended credit facility is at the Venture's
option of the London Interbank Offered Rate plus .625 percent to 1.375 percent,
the Base Rate plus 0 percent to .375 percent or the Certificate of Deposit Rate
plus .75 percent to 1.50 percent.
Both lending facilities are equal in standing with the other, and both
are equally secured by the assets of the Venture.
During 1992 and 1994, the Venture incurred costs associated with
renegotiating its debt arrangements. These costs were capitalized and are
being amortized using the straight-line method over the life of the debt
agreements.
Installments due on debt principal for each of the five years in the
period ending December 31, 2000 and thereafter, respectively, are:
$14,261,080, $18,721,080, $25,356,080, $31,837,027, $90,595,000 and $-0-,
respectively.
At December 31, 1995, the carrying amount of the Venture's long-term
debt did not differ significantly from the estimated fair value of the
financial instruments. The fair value of the Venture's long-term debt is
estimated based on the discounted amount of future debt service payments using
rates of borrowing for a liability of similar risk.
(6) INCOME TAXES
Income taxes have not been recorded in the accompanying consolidated
financial statements because they accrue directly to the partners. The federal
and state income tax returns of Fund 12-D are prepared and filed by the General
Partner.
Fund 12-D's tax returns, the qualification of the Partnership as such
for tax purposes, and the amount of distributable income or loss are subject to
examination by federal and state taxing authorities. If such examinations
result in changes with respect to Fund 12-D's qualification as such, or in
changes with respect to Fund 12-D's recorded income or loss, the tax liability
of the general and limited partners would likely be changed accordingly.
Taxable losses reported to the partners is different from that
reported in the consolidated statements of operations due to the difference in
depreciation allowed under generally accepted accounting principles and the
expense allowed for tax purposes under the Modified Accelerated Cost Recovery
System (MACRS). There are no other significant differences between taxable
income or losses and the losses reported in the consolidated statements of
operations.
(7) COMMITMENTS AND CONTINGENCIES
On September 20, 1995, a civil action entitled David Hirsch, on behalf
of himself and all others similarly situated, Plaintiff vs. Jones Intercable,
Inc., Defendant, was filed in the District Court, County of Arapahoe, State of
Colorado (Case No. 95-CV-1800). The plaintiff has brought the action as a
purported class action on behalf of himself and all other limited partners of
Cable TV Fund 12-D, Ltd. against the General Partner seeking to recover damages
caused by the General Partner's alleged breaches of its fiduciary duties to the
limited partners of Cable TV Fund 12-D, Ltd. in connection with the sale of the
Tampa System and the subsequent exchange of the Tampa System with an
unaffiliated cable television system operator in return for systems owned by
that operator. The plaintiff also seeks certain equitable and injunctive
relief. On January 25, 1996, the Plaintiff filed an amended complaint and
request for a jury trial. On February 20, 1996, the General Partner filed a
Motion to Dismiss the Amended Complaint on the ground that it fails to state a
claim upon which relief can be granted as a matter of law. The General Partner
believes that it has meritorious defenses, and the General Partner intends to
defend this lawsuit vigorously.
28
<PAGE> 29
On November 17, 1995, a civil action entitled Martin Ury, derivatively
on behalf of Cable TV Fund 12-B, Ltd., Cable TV Fund 12-C, Ltd. and Cable TV
Fund 12-D, Ltd., Plaintiff vs. Jones Intercable, Inc., Defendant and Cable TV
Fund 12-BCD Venture, Cable TV Fund 12-B, Ltd., Cable TV Fund 12-C, Ltd. and
Cable TV Fund 12-D, Ltd. Nominal Defendants, was filed in the District Court,
County of Arapahoe, State of Colorado (Case No. 95-CV-2212). The plaintiff, a
limited partner of Cable TV Fund 12-D, Ltd., has brought the action as a
derivative action on behalf of the three partnerships that comprise the Venture
against the General Partner seeking to recover damages caused by the General
Partner's alleged breaches of its fiduciary duties to the Venture and to the
three partnerships that comprise the Venture (and their respective limited
partners) in connection with the sale to the General Partner of the Tampa
System and the subsequent exchange of the Tampa System with an unaffiliated
cable television system operator in return for systems owned by that operator.
On February 1, 1996, the General Partner filed a Motion to Dismiss the
Complaint on the ground that it fails to state a claim upon which relief can be
granted as a matter of law. The Motion also asserts that the plaintiff does
not have standing to bring a claim on behalf of Cable TV Fund 12-B, Ltd. and
Cable TV Fund 12-C, Ltd. and their respective limited partners. The General
Partner believes that it has meritorious defenses, and the General Partner
intends to defend this lawsuit vigorously.
Pursuant to the indemnification provisions of Section 9.6 of the
limited partnership agreements of each of the three partnerships that comprise
the Venture, the General Partner may be entitled to indemnification from the
partnerships for its legal fees and expenses, and for any amounts paid in
settlement, in defending the above-described lawsuits. The General Partner
cannot determine at this time whether such amounts will be material.
The Venture has filed cost-of-service showings in response to
rulemakings concerning the 1992 Cable Act for its cable television systems and
thus anticipates no further reductions in rates in these systems. The
cost-of-service showings have not yet received final approvals from regulatory
authorities, however, and there can be no assurance that the Venture's
cost-of-service showings will prevent further rate reductions in these systems
until such final approvals are received.
Office and other facilities are rented under various long-term lease
arrangements. Rent paid under such lease arrangements totaled $331,963,
$345,531 and $454,229, respectively, for the years ended December 31, 1995,
1994 and 1993. Minimum commitments under operating leases for the five years
in the period ending December 31, 2000 and thereafter are as follows:
1996 $ 405,576
1997 408,017
1998 430,962
1999 343,783
2000 343,783
Thereafter 1,249,808
-----------
$ 3,181,929
===========
29
<PAGE> 30
(8) SUPPLEMENTARY PROFIT AND LOSS INFORMATION
Supplementary profit and loss information is presented below:
<TABLE>
<CAPTION>
For the Year Ended December 31,
-------------------------------------------------
1995 1994 1993
----------- ---------- ----------
<S> <C> <C> <C>
Maintenance and repairs $ 1,182,963 $ 1,214,978 $ 1,119,086
=========== =========== ===========
Taxes, other than income
and payroll taxes $ 1,286,357 $ 1,380,350 $ 1,470,476
========== =========== ===========
Advertising $ 1,298,497 $ 1,275,772 $ 1,022,289
========== ========== ==========
Depreciation of property,
plant and equipment $20,285,166 $18,362,998 $18,772,872
=========== =========== ===========
Amortization of intangible
assets $ 6,381,569 $ 6,446,656 $ 6,999,427
=========== =========== ===========
</TABLE>
30
<PAGE> 31
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Partnership itself has no officers or directors. Certain
information concerning the directors and executive officers of the General
Partner is set forth below.
<TABLE>
<S> <C> <C>
Glenn R. Jones 66 Chairman of the Board and Chief Executive Officer
Derek H. Burney 56 Vice Chairman of the Board
James B. O'Brien 46 President and Director
Ruth E. Warren 46 Group Vice President/Operations
Kevin P. Coyle 44 Group Vice President/Finance
Christopher J. Bowick 40 Group Vice President/Technology
George H. Newton 61 Group Vice President/Telecommunications
Timothy J. Burke 45 Group Vice President/Taxation/Administration
Raymond L. Vigil 49 Group Vice President/Human Resources and Director
Cynthia A. Winning 44 Group Vice President/Marketing
Elizabeth M. Steele 44 Vice President/General Counsel/Secretary
Larry W. Kaschinske 36 Controller
Robert E. Cole 63 Director
William E. Frenzel 67 Director
Donald L. Jacobs 57 Director
James J. Krejci 54 Director
John A. MacDonald 42 Director
Raphael M. Solot 62 Director
Daniel E. Somers 48 Director
Howard O. Thrall 48 Director
Robert B. Zoellick 42 Director
</TABLE>
Mr. Glenn R. Jones has served as Chairman of the Board of Directors and
Chief Executive Officer of the General Partner since its formation in 1970, and
he was President from June 1984 until April 1988. Mr. Jones is the sole
shareholder, President and Chairman of the Board of Directors of Jones
International, Ltd. He is also Chairman of the Board of Directors of the
subsidiaries of the General Partner and of certain other affiliates of the
General Partner. Mr. Jones has been involved in the cable television business in
various capacities since 1961, is a past and present member of the Board of
Directors and the Executive Committee of the National Cable Television
Association. He also is on the Executive Committee of Cable in the Classroom, an
organization dedicated to education via cable. Additionally, in March 1991, Mr.
Jones was appointed to the Board of Governors for the American Society for
Training and Development, and in November 1992 to the Board of Education Council
of the National Alliance of Business. Mr. Jones is also a founding member of the
James Madison Council of the Library of Congress. Mr. Jones is a past director
and member of the Executive Committee of C-Span. Mr. Jones has been the
recipient of several awards including the Grand Tam Award in 1989, the highest
award from the Cable Television Administration and Marketing Society; the
Chairman's Award from the Investment Partnership Association, which is an
association of sponsors of public syndications; the cable television industry's
Public Affairs Association President's Award in 1990, the Donald G. McGannon
award for the advancement of minorities and women in cable; the STAR Award from
American Women in Radio and Television, Inc. for exhibition of a commitment to
the issues and concerns of women in television and radio; the Women in Cable
Accolade in 1990 in recognition of support of this organization; the Most
Outstanding Corporate Individual Achievement award from the International
Distance Learning Conference; the Golden Plate Award
31
<PAGE> 32
from the American Academy of Achievement for his advances in distance education;
the Man of the Year named by the Denver chapter of the Achievement Rewards for
College Scientists; and in 1994 Mr. Jones was inducted into Broadcasting and
Cable's Hall of Fame.
Mr. Derek H. Burney was appointed a Director of the General Partner on
December 20, 1994 and Vice Chairman of the Board of Directors on January 31,
1995. Mr. Burney joined BCE Inc., Canada's largest telecommunications company,
in January 1993 as Executive Vice President, International. He has been the
Chairman of Bell Canada International Inc., a subsidiary of BCE, since January
1993 and, in addition, has been Chief Executive Officer of BCI since July 1993.
Prior to joining BCE, Mr. Burney served as Canada's ambassador to the United
States from 1989 to 1992. Mr. Burney also served as chief of staff to the Prime
Minister of Canada from March 1987 to January 1989 where he was directly
involved with the negotiation of the U.S. - Canada Free Trade Agreement. In July
1993, he was named an Officer of the Order of Canada. Mr. Burney is chairman of
Bell Cablemedia plc. He is a director of Mercury Communications Limited,
Videotron Holdings plc, Tele-Direct (Publications) Inc., Teleglobe Inc., Bimcor
Inc., Maritime Telegraph and Telephone Company, Limited, Moore Corporation
Limited and Northbridge Programming Inc.
Mr. James B. O'Brien, the General Partner's President, joined the
General Partner in January 1982. Prior to being elected President and a Director
of the General Partner in December 1989, Mr. O'Brien served as a Division
Manager, Director of Operations Planning/Assistant to the CEO, Fund Vice
President and Group Vice President/Operations. Mr. O'Brien was appointed to the
General Partner's Executive Committee in August 1993. As President, he is
responsible for the day-to-day operations of the cable television systems
managed and owned by the General Partner. Mr. O'Brien is a board member of Cable
Labs, Inc., the research arm of the U.S. cable television industry. He also
serves as a director of the Cable Television Administration and Marketing
Association and as a director of the Walter Kaitz Foundation, a foundation that
places people of ethnic minority groups in positions with cable television
systems, networks and vendor companies.
Ms. Ruth E. Warren joined the General Partner in August 1980 and has
served in various operational capacities, including system manager and Fund Vice
President, since then. Ms. Warren was elected Group Vice President/Operations of
the General Partner in September 1990.
Mr. Kevin P. Coyle joined The Jones Group, Ltd. in July 1981 as Vice
President/Financial Services. In September 1985, he was appointed Senior Vice
President/Financial Services. He was elected Treasurer of the General Partner in
August 1987, Vice President/Treasurer in April 1988 and Group Vice
President/Finance and Chief Financial Officer in October 1990.
Mr. Christopher J. Bowick joined the General Partner in September 1991
as Group Vice President/Technology and Chief Technical Officer. Previous to
joining the General Partner, Mr. Bowick worked for Scientific Atlanta's
Transmission Systems Business Division in various technical management
capacities since 1981, and as Vice President of Engineering since 1989.
Mr. George H. Newton joined the General Partner in January 1996 as
Group Vice President/Telecommunications. Prior to joining the General Partner,
Mr. Newton was President of his own consulting business, Clear Solutions, and
since 1994 Mr. Newton has served as a Senior Advisor to Bell Canada
International. From 1990 to 1993, Mr. Newton served as the founding Chief
Executive Officer and Managing Director of Clear Communications, New Zealand,
where he established an alternative telephone company in New Zealand. From 1964
to 1990, Mr. Newton held a wide variety of operational and business assignments
with Bell Canada International.
Mr. Timothy J. Burke joined the General Partner in August 1982 as
corporate tax manager, was elected Vice President/Taxation in November 1986 and
Group Vice President/Taxation/Administration in October 1990.
Mr. Raymond L. Vigil joined the General Partner in June 1993 as Group
Vice President/Human Resources. Previous to joining the General Partner, Mr.
Vigil served as Executive Director of Learning with
32
<PAGE> 33
USWest. Prior to USWest, Mr. Vigil worked in various human resources posts over
a 14-year term with the IBM Corporation.
Ms. Cynthia A. Winning joined the General Partner as Group Vice
President/Marketing in December 1994. Previous to joining the General Partner,
Ms. Winning served since 1994 as the President of PRS Inc., Denver, Colorado, a
sports and event marketing company. From 1979 to 1981 and from 1986 to 1994, Ms.
Winning served as the Vice President and Director of Marketing for Citicorp
Retail Services, Inc., a provider of private-label credit cards for ten national
retail department store chains. From 1981 to 1986, Ms. Winning was the Director
of Marketing Services for Daniels & Associates cable television operations, as
well as the Western Division Marketing Director for Capital Cities Cable. Ms.
Winning also serves as a board member of Cities in Schools, a dropout
intervention/prevention program.
Ms. Elizabeth M. Steele joined the General Partner in August 1987 as
Vice President/General Counsel and Secretary. From August 1980 until joining the
General Partner, Ms. Steele was an associate and then a partner at the Denver
law firm of Davis, Graham & Stubbs, which serves as counsel to the General
Partner.
Mr. Larry Kaschinske joined the General Partner in 1984 as a staff
accountant in the General Partner's former Wisconsin Division, was promoted to
Assistant Controller in 1990 and named Controller in August 1994.
Mr. Robert E. Cole was appointed a Director of the General Partner in
March 1996. Mr. Cole is currently self-employed as a partner of First Variable
Insurance Marketing and is responsible for marketing to National Association of
Securities Dealers, Inc. firms in northern California, Oregon, Washington and
Alaska. From 1993 to 1995, Mr. Cole was the Director of Marketing for Lamar Life
Insurance Company; from 1992 to 1993, Mr. Cole was Senior Vice President of PMI
Inc., a third party lender serving the special needs of Corporate Owned Life
Insurance (COLI) and from 1988 to 1992, Mr. Cole was the principal and
co-founder of a specialty investment banking firm that provided services to
finance the ownership and growth of emerging companies, productive assets and
real property. Mr. Cole is a Certified Financial Planner and a former United
States Naval Aviator.
Mr. William E. Frenzel was appointed a Director of the General Partner
on April 11, 1995. Mr. Frenzel has been a Guest Scholar since 1991 with the
Brookings Institution, a research organization located in Washington D. C. Until
his retirement in January 1991, Mr. Frenzel served for twenty years in the
United States House of Representatives, representing the State of Minnesota,
where he was a member of the House Ways and Means Committee and its Trade
Subcommittee, the Congressional Representative to the General Agreement on
Tariffs and Trade (GATT), the Ranking Minority Member on the House Budget
Committee and a member of the National Economic Commission. Mr. Frenzel also
served in the Minnesota Legislature for eight years. He is a Distinguished
Fellow of the Tax Foundation, Vice Chairman of the Eurasia Foundation, a Board
Member of the U.S.-Japan Foundation, the Close-Up Foundation, Sit Mutual Funds
and Chairman of the Japan-America Society of Washington.
Mr. Donald L. Jacobs was appointed a Director of the General Partner on
April 11, 1995. Mr. Jacobs is a retired executive officer of TRW. Prior to his
retirement, he was Vice President and Deputy Manager of the Space and Defense
Sector; prior to that appointment, he was the Vice President and General Manager
of the Defense Systems Group and prior to his appointment as Group General
Manager, he was President of ESL, Inc., a wholly owned subsidiary of TRW. During
his career, Mr. Jacobs served on several corporate, professional and civic
boards.
Mr. James J. Krejci was President of the International Division of
International Gaming Technology, International headquartered in Reno, Nevada,
until March 1995. Prior to joining IGT in May 1994, Mr. Krejci was Group Vice
President of Jones International, Ltd. and was Group Vice President of the
General Partner. He also served as an officer of Jones Futurex, Inc., a
subsidiary of the General Partner engaged in manufacturing and marketing data
encryption devices, Jones Interactive, Inc., a subsidiary of Jones
International, Ltd. providing computer data and billing processing facilities
and Jones Lightwave, Ltd., a company owned by Jones International, Ltd. and Mr.
Jones, and several of its subsidiaries engaged in the provision of
telecommunications
33
<PAGE> 34
services until leaving the General Partner in May 1994. Mr. Krejci has been a
Director of the General Partner since August 1987.
Mr. John A. MacDonald was appointed a Director of the General Partner
on November 8, 1995. Mr. MacDonald is Executive Vice President of Business
Development and Chief Technology Officer of Bell Canada International Inc. Prior
to joining Bell Canada in November 1994, Mr. MacDonald was President and Chief
Executive Officer of The New Brunswick Telephone Company, Limited, a post he had
held since March of that year. Prior to March 1994, Mr. MacDonald was with NBTel
for 17 years serving in various capacities, including Market Planning Manager,
Corporate Planning Manager, Manager of Systems Planning and Development and
General Manager, Chief Engineer and General Manager of Engineering and
Information Systems and Vice President of Planning. Mr. MacDonald was the former
Chairman of the New Brunswick section of the Institute of Electrical and
Electronic Engineers and also served on the Federal Government's Information
Highway Advisory Council. Mr. MacDonald is Chairman of MediaLinx Interactive
Inc. and Stentor Canadian Network Management and is presently a Governor of the
Montreal Exchange. He also serves on the Board of Directors of Tele-Direct
(Publications) Inc., Bell-Northern Research, Ltd., SRCI, Bell Sygma, Canarie
Inc., and is a member of the University of New Brunswick Venture Campaign
Cabinet.
Mr. Raphael M. Solot was appointed a Director of the General Partner in
March 1996. Mr. Solot is an attorney licensed to practice law in the State of
Colorado. Mr. Solot has practiced law in the State of Colorado as a sole
practitioner since obtaining his Juris Doctor degree from the University of
Colorado in 1964.
Mr. Daniel E. Somers was initially appointed a Director of the General
Partner on December 20, 1994. Mr. Somers resigned as a Director on December 31,
1995, at the time he was elected Chief Executive Officer of Bell Cablemedia. Mr.
Somers was reinstated as a Director of the General Partner on February 2, 1996.
From January 1992 to January 1995, Mr. Somers worked as senior Vice President
and Chief Financial Officer of Bell Canada International Inc. and was appointed
Executive Vice President and Chief Financial Officer on February 1, 1995. He is
also a Director of certain of its affiliates. Mr. Somers currently serves as
Chief Executive Officer of Bell Cablemedia. Prior to joining Bell Canada
International Inc. and since January 1989, Mr. Somers was the President and
Chief Executive Officer of Radio Atlantic Holdings Limited. Mr. Somers is a
member of the North American Society of Corporate Planning, the Financial
Executives Institution and the Financial Analysts Federation.
Mr. Howard O. Thrall was appointed a Director of the General Partner on
March 6, 1996. Mr. Thrall had previously served as a Director of the General
Partner from December 1988 to December 1994. Since September 1993, Mr. Thrall
has served as Vice President of Sales, Asian Region, for World Airways, Inc.
From 1984 until August 1993, Mr. Thrall was with the McDonnell Douglas
Corporation, where he concluded as a Regional Vice President, Commercial
Marketing with the Douglas Aircraft Company subsidiary. Mr. Thrall is also a
management and international marketing consultant, having completed assignments
with First National Net, Inc., Cheong Kang Associated (Korea), Aero Investment
Alliance, Inc. and Western Real Estate Partners.
Mr. Robert B. Zoellick was appointed a Director of the General Partner
on April 11, 1995. Mr. Zoellick is Executive Vice President, General Counsel and
Corporate Secretary of Fannie Mae, a federally chartered and stockholder-owned
corporation that is the largest housing finance investor in the United States.
From August 1992 to January 1993, Mr. Zoellick served as Deputy Chief of Staff
of the White House and Assistant to the President. From May 1991 to August 1992,
Mr. Zoellick served concurrently as the Under Secretary of State for Economic
and Agricultural Affairs and as Counselor of the Department of State, a post he
assumed in March 1989. From 1985 to 1988, Mr. Zoellick served at the Department
of Treasury in a number of capacities, including Counselor to the Secretary. Mr.
Zoellick received the Alexander Hamilton and Distinguished Service Awards,
highest honors of the Departments of Treasury and State, respectively. The
German Government awarded him the Knight Commanders Cross for his work on
Germany unification. Mr. Zoellick currently serves on the boards of the Council
on Foreign Relations, the Congressional Institute, the German Marshall Fund of
the U.S., the European Institute, the National Bureau of Asian Research, the
American Council on Germany and the Overseas Development Council.
34
<PAGE> 35
Christopher J. Bowick, Cynthia A. Winning and Larry W. Kaschinske are
executive officers of the General Partner; Raymond L. Vigil is an executive
officer and a director of the General Partner; and Derek H. Burney, John A.
MacDonald and Daniel E. Somers are directors of the General Partner. Reports by
these persons with respect to the ownership of limited partnership interests in
the Partnership required by Section 16(a) of the Securities Exchange Act of
1934, as amended, were not filed within the required time. None of these
individuals own any limited partnership interests in the Partnership.
ITEM 11. EXECUTIVE COMPENSATION
The Partnership has no employees; however, various personnel are
required to operate the cable television systems owned by the Venture. Such
personnel are employed by the General Partner and, the cost of such employment
is charged by the General Partner to the Venture as a direct reimbursement item.
See Item 13.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGERS
No person or entity owns more than 5 percent of the limited partnership
interests of the Partnership.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The General Partner and its affiliates engage in certain transactions
with the Venture. The General Partner believes that the terms of such
transactions are generally as favorable as could be obtained by the Venture from
unaffiliated parties. This determination has been made by the General Partner in
good faith, but none of the terms were or will be negotiated at arm's-length and
there can be no assurance that the terms of such transactions have been or will
be as favorable as those that could have been obtained by the Venture from
unaffiliated parties.
The General Partner charges a management fee, and the General Partner
is reimbursed for certain allocated overhead and administrative expenses. These
expenses represent the salaries and benefits paid to corporate personnel, rent,
data processing services and other corporate facilities costs. Such personnel
provide engineering, marketing, administrative, accounting, legal and investor
relations services to the Venture. Allocations of personnel costs are based
primarily on actual time spent by employees of the General Partner with respect
to each partnership managed. Remaining expenses are allocated based on the pro
rata relationship of the Partnership's revenues to the total revenues of all
systems owned or managed by the General Partner and certain of its subsidiaries.
Systems owned by the General Partner and all other systems owned by partnerships
for which Jones Intercable, Inc. is the general partner, are also allocated a
proportionate share of these expenses.
The General Partner also advances funds and charges interest on the
balance payable. The interest rate charged approximates the General Partner's
weighted average cost of borrowing.
The Systems receives stereo audio programming from Superaudio, a joint
venture owned 50% by an affiliate of the General Partner and 50% by an
unaffiliated party, educational video programming from Mind Extension
University, Inc., an affiliate of the General Partner, and computer video
programming from Jones Computer Network, Ltd., an affiliate of the General
Partner, for fees based upon the number of subscribers receiving the
programming.
Product Information Network ("PIN"), an affiliate of the General
Partner, provides advertising time for third parties on the Systems. In
consideration, the revenues generated from the third parties are shared between
PIN and the Venture. During the year ended December 31, 1995, the Venture
received revenues from PIN of $212,844.
35
<PAGE> 36
The charges to the Venture for related party transactions are as
follows for the periods indicated:
<TABLE>
<CAPTION>
At December 31,
------------------------------------
Cable TV Fund 12-BCD 1995 1994 1993
- -------------------- ---- ---- ----
<S> <C> <C> <C>
Management fees $5,069,985 $4,461,154 $4,456,577
Allocation of expenses 7,183,663 6,951,110 6,048,783
Interest expense 220,743 33,627 15,477
Amount of advances outstanding 4,198,739 616,810 188,430
Highest amount of advances outstanding 4,574,572 929,508 511,646
Programming fees:
Superaudio 135,861 135,346 134,179
Mind Extension University 145,598 124,043 79,002
Jones Computer Network 283,339 71,961 -0-
</TABLE>
36
<PAGE> 37
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K
(a)1. See index to financial statements for list of financial
statements and exhibits thereto filed as a part of this
report.
3. The following exhibits are filed herewith.
4.1 Limited Partnership Agreement for Cable TV Fund 12-D, Ltd.
(1)
4.2 Joint Venture Agreement of Cable TV Fund 12-BCD Venture
dated as of March 17, 1986, among Cable TV Fund 12-B, Ltd.,
Cable TV Fund 12-C, Ltd. and Cable TV Fund 12-D, Ltd. (2)
10.1.1 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for Edwards
Air Force Base, California (Fund 12-BCD). (3)
10.1.2 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the City
of Lancaster, California (Fund 12-BCD). (4)
10.1.3 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for
Unincorporated portions of Los Angeles County, California
(Fund 12-BCD). (4)
10.1.4 Copy of Los Angeles County Code regarding cable tv system
franchises (Fund 12-BCD). (5)
10.1.5 Copy of Ordinance 90-0118F dated 10/29/90 granting a cable
television franchise to Fund 12-BCD (Fund 12-BCD). (5)
10.1.6 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the Green
Valley/Elizabeth Lake/Leona Valley unincorporated areas of
Los Angeles County, California (Fund 12-BCD). (2)
10.1.7 Ordinance 88-0166F dated 10/4/88 amending the franchise
described in 10.1.5 (Fund 12-BCD). (5)
10.1.8 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the City
of Palmdale, California (Fund 12-BCD). (5)
10.1.9 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the City
of Albuquerque, New Mexico (Fund 12-BCD). (4)
10.1.10 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the County
of Bernalillo, New Mexico (Fund 12-BCD). (4)
37
<PAGE> 38
10.1.11 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the Town
of Bernalillo, New Mexico (Fund 12-BCD). (4)
10.1.12 Resolution No. 12-14-87 dated 12/14/87 authorizing the
assignment of the franchise to Fund 12-BCD. (5)
10.1.13 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Village of Bosque Farms, New Mexico (Fund 12-BCD). (4)
10.1.14 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Village of Corrales, New Mexico (Fund 12-BCD). (4)
10.1.15 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Kirtland Air Force Base, New Mexico (Fund 12-BCD). (5)
10.1.16 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Village of Los Ranchos, New Mexico (Fund 12-BCD). (4)
10.1.17 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the County
of Sandoval, New Mexico (Fund 12-BCD). (4)
10.1.18 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the County
of Valencia, New Mexico (Fund 12-BCD). (4)
10.1.19 Resolution No. 88-23 dated 2/14/88 authorizing assignment of
the franchise to Fund 12-BCD. (5)
10.2.1 Note Purchase Agreement dated as of March 31, 1992 between
Cable TV Fund 12-BCD Venture and the Noteholders
10.2.2 Amendment No. 1 dated as of March 31, 1994 to the Note
Purchase Agreement dated as of March 31, 1992 between Cable
TV Fund 12-BCD Venture and the Noteholders
10.2.3 Amendment No. 2 dated as of September 30, 1994 to the Note
Purchase Agreement dated as of March 31, 1992 between Cable
TV Fund 12-BCD Venture and the Noteholders
10.2.4 Amendment No. 3 dated as of February 12, 1996 to the Note
Purchase Agreement dated as of March 31, 1992 between Cable
TV Fund 12-BCD Venture and the Noteholders
10.2.5 Second Amended and Restated Credit Agreement by and among
Cable TV Fund 12-BCD Venture, various banks, Corestates
Bank, N.A. and Societe Generale, as Managing Agents and
Corestates Bank, N.A., as Administrative Agent dated
February 12, 1996.
38
<PAGE> 39
10.3.1 Purchase and Sale Agreement dated as of March 29, 1988 by
and between Cable TV Fund 12-BCD Venture as Buyer and Video
Company as Seller. (6)
10.3.2 Purchase and Sale Agreement dated 9/20/91 and amendments
thereto between Cable TV Fund 12-BCD Venture as Seller and
Falcon Classic Cable Income Properties, L.P. (Fund 12-BCD).
(7)
10.3.3 Purchase and Sale Agreement dated as of August 11, 1995
between Cable TV Fund 12-BCD Venture and Jones Intercable,
Inc. (9)
10.3.4 Assignment and Assumption Agreement dated as of October 20,
1995 between Jones Intercable, Inc. and Jones Cable
Holdings, Inc. (10)
27 Financial Data Schedule
- ----------
(1) Incorporated by reference from Registrant's Report on Form
10-K for the fiscal year ended December 31, 1985 (Commission
File Nos. 0-13193, 0-13807, 0-13964 and 0-14206).
(2) Incorporated by reference from Registrant's Report on Form
10-K for the fiscal year ended December 31, 1987 (Commission
File Nos. 0-13193, 0-13807, 0-13964 and 0-14206).
(3) Incorporated by reference from Registrant's Report on Form
10-K for the fiscal year ended December 31, 1994 (Commission
File No. 0-13193).
(4) Incorporated by reference from Registrant's Report on Form
10-K for the fiscal year ended December 31, 1986 (Commission
File Nos. 0-13193, 0-13807, 0-13964 and 0-14206).
(5) Incorporated by reference from Registrant's Report on Form
10-K for the fiscal year ended December 31, 1992 (Commission
File Nos. 0-13193, 0-13807, 0-13964 and 0-14206).
(6) Incorporated by reference from Registrant's Report on Form
10-K for the fiscal year ended December 31, 1988 (Commission
File Nos. 0-13193, 0-13807, 0-13964 and 0-14206).
(7) Incorporated by reference from the Forms 8-K of Fund 12-B,
Fund 12-C and Fund 12-D dated 4/6/92 (Commission File Nos.
0-13193, 0-13964 and 0-14206, respectively).
(8) Incorporated by reference from the Form 8-K of Cable TV Fund
12-B, Ltd. dated 3/10/95 (Commission File No. 0-13193).
(9) Incorporated by reference from the Annual Report on Form
10-K for fiscal year ended May 31, 1995 of Jones Intercable,
Inc. (Commission File No. 1-9953)
(10) Incorporated by reference from the Form 8-K of Cable TV Fund
12-B, Ltd. dated 11/1/95 (Commission File No. 0-13193).
39
<PAGE> 40
(b) Reports on Form 8-K.
A Current Report on Form 8-K (Commission File No. 0-13193),
dated December 4, 1995, describing certain litigation
regarding the proposed sale of the Tampa System was filed
with the Securities and Exchange Commission on December 5,
1995.
A Current Report on Form 8-K (Commission File No. 0-13193),
dated March 13. 1996. describing the sale of the Tampa
System was filed with the Securities and Exchange Commission
on March 14, 1996.
40
<PAGE> 41
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
CABLE TV FUND 12-D, LTD.
a Colorado limited partnership
By: Jones Intercable, Inc.
By: /s/ Glenn R. Jones
-------------------------------
Glenn R. Jones
Chairman of the Board and Chief
Dated: March 25, 1996 Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<S> <C>
By: /s/ Glenn R. Jones
-------------------------------
Glenn R. Jones
Chairman of the Board and Chief
Executive Officer
Dated: March 25, 1996 (Principal Executive Officer)
By: /s/ Kevin P. Coyle
-------------------------------
Kevin P. Coyle
Group Vice President/Finance
Dated: March 25, 1996 (Principal Financial Officer)
By: /s/ Larry Kaschinske
-------------------------------
Larry Kaschinske
Controller
Dated: March 25, 1996 (Principal Accounting Officer)
By: /s/ James B. O'Brien
-------------------------------
James B. O'Brien
Dated: March 25, 1996 President and Director
By: /s/ Raymond L. Vigil
-------------------------------
Raymond L. Vigil
Dated: March 25, 1996 Group Vice President and Director
By: /s/ Derek H. Burney
-------------------------------
Derek H. Burney
Dated: March 25, 1996 Director
</TABLE>
41
<PAGE> 42
<TABLE>
<S> <C>
By:
-------------------------------
Robert E. Cole
Dated: Director
By: /s/ William E. Frenzel
-------------------------------
William E. Frenzel
Dated: March 25, 1996 Director
By: /s/ Donald L. Jacobs
-------------------------------
Donald L. Jacobs
Dated: March 25, 1996 Director
By: /s/ James J. Krejci
-------------------------------
James J. Krejci
Dated: March 25, 1996 Director
By: /s/ John A. MacDonald
-------------------------------
John A. MacDonald
Dated: March 25, 1996 Director
By:
-------------------------------
Raphael M. Solot
Dated: Director
By: /s/ Daniel E. Somers
-------------------------------
Daniel E. Somers
Dated: March 25, 1996 Director
By: /s/ Howard O. Thrall
-------------------------------
Howard O. Thrall
Dated: March 25, 1996 Director
By: /s/ Robert B. Zoellick
-------------------------------
Robert B. Zoellick
Dated: March 25, 1996 Director
</TABLE>
(21507)
42
<PAGE> 43
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION PAGE
- ------ ------------------- ----
<S> <C> <C>
4.1 Limited Partnership Agreement for Cable TV Fund 12-D, Ltd.
(1)
4.2 Joint Venture Agreement of Cable TV Fund 12-BCD Venture
dated as of March 17, 1986, among Cable TV Fund 12-B, Ltd.,
Cable TV Fund 12-C, Ltd. and Cable TV Fund 12-D, Ltd. (2)
10.1.1 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for Edwards
Air Force Base, California (Fund 12-BCD). (3)
10.1.2 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the City
of Lancaster, California (Fund 12-BCD). (4)
10.1.3 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for
Unincorporated portions of Los Angeles County, California
(Fund 12-BCD). (4)
10.1.4 Copy of Los Angeles County Code regarding cable tv system
franchises (Fund 12-BCD). (5)
10.1.5 Copy of Ordinance 90-0118F dated 10/29/90 granting a cable
television franchise to Fund 12-BCD (Fund 12-BCD). (5)
10.1.6 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the Green
Valley/Elizabeth Lake/Leona Valley unincorporated areas of
Los Angeles County, California (Fund 12-BCD). (2)
10.1.7 Ordinance 88-0166F dated 10/4/88 amending the franchise
described in 10.1.5 (Fund 12-BCD). (5)
10.1.8 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the City
of Palmdale, California (Fund 12-BCD). (5)
10.1.9 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the City
of Albuquerque, New Mexico (Fund 12-BCD). (4)
10.1.10 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the County
of Bernalillo, New Mexico (Fund 12-BCD). (4)
</TABLE>
<PAGE> 44
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION PAGE
- ------ ------------------- ----
<S> <C> <C>
10.1.11 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the Town
of Bernalillo, New Mexico (Fund 12-BCD). (4)
10.1.12 Resolution No. 12-14-87 dated 12/14/87 authorizing the
assignment of the franchise to Fund 12-BCD. (5)
10.1.13 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Village of Bosque Farms, New Mexico (Fund 12-BCD). (4)
10.1.14 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Village of Corrales, New Mexico (Fund 12-BCD). (4)
10.1.15 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Kirtland Air Force Base, New Mexico (Fund 12-BCD). (5)
10.1.16 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Village of Los Ranchos, New Mexico (Fund 12-BCD). (4)
10.1.17 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the County
of Sandoval, New Mexico (Fund 12-BCD). (4)
10.1.18 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the County
of Valencia, New Mexico (Fund 12-BCD). (4)
10.1.19 Resolution No. 88-23 dated 2/14/88 authorizing assignment of
the franchise to Fund 12-BCD. (5)
10.2.1 Note Purchase Agreement dated as of March 31, 1992 between
Cable TV Fund 12-BCD Venture and the Noteholders
10.2.2 Amendment No. 1 dated as of March 31, 1994 to the Note
Purchase Agreement dated as of March 31, 1992 between Cable
TV Fund 12-BCD Venture and the Noteholders
10.2.3 Amendment No. 2 dated as of September 30, 1994 to the Note
Purchase Agreement dated as of March 31, 1992 between Cable
TV Fund 12-BCD Venture and the Noteholders
10.2.4 Amendment No. 3 dated as of February 12, 1996 to the Note
Purchase Agreement dated as of March 31, 1992 between Cable
TV Fund 12-BCD Venture and the Noteholders
10.2.5 Second Amended and Restated Credit Agreement by and among
Cable TV Fund 12-BCD Venture, various banks, Corestates
Bank, N.A. and Societe Generale, as Managing Agents and
Corestates Bank, N.A., as Administrative Agent dated
February 12, 1996.
</TABLE>
<PAGE> 45
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION PAGE
- ------ ------------------- ----
<S> <C> <C>
10.3.1 Purchase and Sale Agreement dated as of March 29, 1988 by
and between Cable TV Fund 12-BCD Venture as Buyer and Video
Company as Seller. (6)
10.3.2 Purchase and Sale Agreement dated 9/20/91 and amendments
thereto between Cable TV Fund 12-BCD Venture as Seller and
Falcon Classic Cable Income Properties, L.P. (Fund 12-BCD).
(7)
10.3.3 Purchase and Sale Agreement dated as of August 11, 1995
between Cable TV Fund 12-BCD Venture and Jones Intercable,
Inc. (9)
10.3.4 Assignment and Assumption Agreement dated as of October 20,
1995 between Jones Intercable, Inc. and Jones Cable
Holdings, Inc. (10)
27 Financial Data Schedule
- ----------
(1) Incorporated by reference from Registrant's Report on Form
10-K for the fiscal year ended December 31, 1985 (Commission
File Nos. 0-13193, 0-13807, 0-13964 and 0-14206).
(2) Incorporated by reference from Registrant's Report on Form
10-K for the fiscal year ended December 31, 1987 (Commission
File Nos. 0-13193, 0-13807, 0-13964 and 0-14206).
(3) Incorporated by reference from Registrant's Report on Form
10-K for the fiscal year ended December 31, 1994 (Commission
File No. 0-13193).
(4) Incorporated by reference from Registrant's Report on Form
10-K for the fiscal year ended December 31, 1986 (Commission
File Nos. 0-13193, 0-13807, 0-13964 and 0-14206).
(5) Incorporated by reference from Registrant's Report on Form
10-K for the fiscal year ended December 31, 1992 (Commission
File Nos. 0-13193, 0-13807, 0-13964 and 0-14206).
(6) Incorporated by reference from Registrant's Report on Form
10-K for the fiscal year ended December 31, 1988 (Commission
File Nos. 0-13193, 0-13807, 0-13964 and 0-14206).
(7) Incorporated by reference from the Forms 8-K of Fund 12-B,
Fund 12-C and Fund 12-D dated 4/6/92 (Commission File Nos.
0-13193, 0-13964 and 0-14206, respectively).
(8) Incorporated by reference from the Form 8-K of Cable TV Fund
12-B, Ltd. dated 3/10/95 (Commission File No. 0-13193).
(9) Incorporated by reference from the Annual Report on Form
10-K for fiscal year ended May 31, 1995 of Jones Intercable,
Inc. (Commission File No. 1-9953)
(10) Incorporated by reference from the Form 8-K of Cable TV Fund
12-B, Ltd. dated 11/1/95 (Commission File No. 0-13193).
</TABLE>
<PAGE> 1
- -------------------------------------------------------------------------------
CABLE TV FUND 12-BCD VENTURE
$93,000,000 IN AGGREGATE PRINCIPAL AMOUNT
OF
8.64% SENIOR SECURED NOTES DUE MARCH 31, 2000
- -------------------------------------------------------------------------------
-----------------------
NOTE PURCHASE AGREEMENT
-----------------------
Dated as of March 31, 1992
<PAGE> 2
<TABLE>
<S> <C>
SECTION 1. THE NOTES
Section 1.1 Authorization of Notes . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Purchase and Sale of Notes; Closing . . . . . . . . . . . . . 2
Section 1.3 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.4 Security Documents; Intercreditor Agreement . . . . . . . . . 2
Section 1.5 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2. GENERAL REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 2.1 Organization and Authority . . . . . . . . . . . . . . . . . 4
Section 2.2 Financial Statements and Other Information; Financial
Condition . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.3 Business . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.4 No Material Adverse Change . . . . . . . . . . . . . . . . . 9
Section 2.5 Intellectual Property, etc . . . . . . . . . . . . . . . . . 9
Section 2.6 Title to Properties; Leases; Financing Statements . . . . . . 9
Section 2.7 Compliance with Other Instruments, etc . . . . . . . . . . . 10
Section 2.8 Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.9 No Materially Adverse Contracts, etc . . . . . . . . . . . . 11
Section 2.10 Compliance with Law . . . . . . . . . . . . . . . . . . . . . 11
Section 2.11 Compliance with ERISA; Multiemployer Plans . . . . . . . . . 11
Section 2.12 Compliance with Environmental Laws . . . . . . . . . . . . . 12
Section 2.13 Pending Litigation, etc . . . . . . . . . . . . . . . . . . . 14
Section 2.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 2.15 Regulation and Status under Holding Company Act, etc . . . . . 15
Section 2.16 No Foreign Assets Control Regulations Violation . . . . . . . 15
Section 2.17 No Margin Regulation Violation . . . . . . . . . . . . . . . 15
Section 2.18 Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.19 No Event of Default . . . . . . . . . . . . . . . . . . . . . 16
Section 2.20 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.21 Validity of Agreement, Security Documents,
Subordination Agreement and Notes . . . . . . . . . . . . . . 16
Section 2.22 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.23 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.24 Broker's or Finder's Commissions . . . . . . . . . . . . . . 17
Section 2.25 Representations and Warranties in Related Documents . . . . . 17
Section 2.26 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.27 Partnership Interests . . . . . . . . . . . . . . . . . . . . 18
Section 2.28 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3. OTHER AGREEMENTS; SECURITIES ACT; ERISA REPRESENTATIONS
Section 3.1 Other Agreements . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.2 Offerees . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
Section 3.3 No Intent to Distribute . . . . . . . . . . . . . . . . . . . 19
Section 3.4 ERISA Representations . . . . . . . . . . . . . . . . . . . . 20
SECTION 4. CONDITIONS OF OBLIGATION TO PURCHASE NOTES
Section 4.1 Opinion of Special Counsel for You . . . . . . . . . . . . . 21
Section 4.2 Opinions of Counsel for the Company . . . . . . . . . . . . . 22
Section 4.3 Performance of Obligations . . . . . . . . . . . . . . . . . 22
Section 4.4 Representations True; No Event of Default . . . . . . . . . . 22
Section 4.5 Legality . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 4.6 Assignment of Private Placement Number . . . . . . . . . . . 23
Section 4.7 Security Documents; Financing Statements . . . . . . . . . . 23
Section 4.8 Other Purchasers of Notes . . . . . . . . . . . . . . . . . . 23
Section 4.9 Amendment of Existing Loan Agreement . . . . . . . . . . . . 23
Section 4.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.11 Dissolution; No Merger or Change in Control . . . . . . . . . 23
Section 4.12 Fees and Disbursements of Special Counsel for You . . . . . . 23
Section 4.13 Searches . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.14 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.15 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.16 Intercreditor Agreement; Subordination Agreement . . . . . . 24
Section 4.17 Title Reports . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.18 Change of Law . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.19 Proceedings, Instruments, etc . . . . . . . . . . . . . . . . 24
SECTION 5. EXPENSES
SECTION 6. CERTAIN SPECIAL RIGHTS
Section 6.1 Home Office Payment . . . . . . . . . . . . . . . . . . . . . 26
Section 6.2 Delivery Expenses . . . . . . . . . . . . . . . . . . . . . . 26
Section 6.3 Issuance Taxes . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.4 Substitution of Purchaser . . . . . . . . . . . . . . . . . . 27
SECTION 7. NOTE PREPAYMENTS
Section 7.1 Required Prepayments . . . . . . . . . . . . . . . . . . . . 27
Section 7.2 Optional Prepayments . . . . . . . . . . . . . . . . . . . . 28
Section 7.3 Notice of Prepayment . . . . . . . . . . . . . . . . . . . . 28
Section 7.4 Partial Prepayment Pro Rata . . . . . . . . . . . . . . . . . 29
Section 7.5 Mandatory Offer to Prepay Notes Upon a Partner Withdrawal . . 29
Section 7.6 Required Prepayment of Notes Following a Sale of a System . . 30
</TABLE>
ii
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<TABLE>
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SECTION 8. REGISTRATION, EXCHANGE AND REPLACEMENT OF NOTES
Section 8.1 Registration . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 8.2 Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 8.3 Replacement . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 9. CERTAIN COVENANTS OF THE COMPANY
Section 9.1 Maintenance of Office . . . . . . . . . . . . . . . . . . . . 32
Section 9.2 Existence and Good Standing . . . . . . . . . . . . . . . . . 32
Section 9.3 General Maintenance of Properties and Business, Etc . . . . . 32
Section 9.4 Notice of Certain Events and Conditions . . . . . . . . . . . 33
Section 9.5 Inspection . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 9.6 Compliance with Law, etc . . . . . . . . . . . . . . . . . . 34
Section 9.7 Payment of Taxes and Claims . . . . . . . . . . . . . . . . . 34
Section 9.8 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 9.9 Transactions with Affiliates . . . . . . . . . . . . . . . . 35
Section 9.10 Limitations on Indebtedness . . . . . . . . . . . . . . . . . 35
Section 9.11 Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 9.12 Funded Debt to Annualized Operating Cash Flow Ratio . . . . . 36
Section 9.13 Debt Service Coverage . . . . . . . . . . . . . . . . . . . . 36
Section 9.14 Operating Cash Flow to Interest Expense Ratio . . . . . . . . 36
Section 9.15 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 9.16 No Additional Negative Pledge . . . . . . . . . . . . . . . . 37
Section 9.17 Restricted Payments . . . . . . . . . . . . . . . . . . . . . 37
Section 9.18 Transfer of Assets; Liquidation . . . . . . . . . . . . . . . 37
Section 9.19 Acquisitions and Investments . . . . . . . . . . . . . . . . 37
Section 9.20 Nature of Business . . . . . . . . . . . . . . . . . . . . . 38
Section 9.21 Partnership Documents . . . . . . . . . . . . . . . . . . . . 38
Section 9.22 Loan Agreement . . . . . . . . . . . . . . . . . . . . . . . 38
Section 9.23 Repurchase of Notes . . . . . . . . . . . . . . . . . . . . . 39
Section 9.24 Additional Collateral . . . . . . . . . . . . . . . . . . . . 39
Section 9.25 Management Fees . . . . . . . . . . . . . . . . . . . . . . . 39
Section 9.26 Extension of Franchises; Consents . . . . . . . . . . . . . . 39
Section 9.27 Environmental Audit Report . . . . . . . . . . . . . . . . . 39
SECTION 10. INFORMATION TO BE FURNISHED TO HOLDERS OF NOTES
Section 10.1 Financial Statements of the Company . . . . . . . . . . . . . 40
Section 10.2 Other Information . . . . . . . . . . . . . . . . . . . . . . 41
Section 10.3 Officer's Certificates . . . . . . . . . . . . . . . . . . . 44
SECTION 11. DEFAULTS AND REMEDIES
Section 11.1 Events of Default; Acceleration of Notes . . . . . . . . . . 44
Section 11.2 Default Remedies . . . . . . . . . . . . . . . . . . . . . . 48
Section 11.3 Notice of Default . . . . . . . . . . . . . . . . . . . . . . 49
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
Section 11.4 Annulment of Acceleration of Notes . . . . . . . . . . . . . 49
SECTION 12. INTERPRETATION OF AGREEMENT AND NOTES
Section 12.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 12.2 Directly or Indirectly . . . . . . . . . . . . . . . . . . . 66
Section 12.3 Accounting Terms . . . . . . . . . . . . . . . . . . . . . . 66
Section 12.4 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 12.5 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 12.6 Independence of Covenants . . . . . . . . . . . . . . . . . . 66
SECTION 13. MISCELLANEOUS
Section 13.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 13.2 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 13.3 Successors and Assigns . . . . . . . . . . . . . . . . . . . 67
Section 13.4 Amendment and Waiver . . . . . . . . . . . . . . . . . . . . 68
Section 13.5 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 13.6 Reproduction of Documents . . . . . . . . . . . . . . . . . . 69
Section 13.7 Consent to Jurisdiction and Venue . . . . . . . . . . . . . . 69
Section 13.8 Non-Recourse . . . . . . . . . . . . . . . . . . . . . . . . 70
</TABLE>
SCHEDULES AND EXHIBITS
SCHEDULE I Purchasers
SCHEDULE II Information Furnished to the Purchasers
SCHEDULE III-A Form of Opinion of Special Counsel for the Purchasers
SCHEDULE III-B Forms of Opinions of Counsel for the Company
EXHIBIT A Form of Note
EXHIBIT B Form of Security Agreement
EXHIBIT C Form of Deed of Trust and Assignment of Rents (California)
EXHIBIT D Form of Mortgage (New Mexico)
EXHIBIT E Form of Mortgage (Florida)
EXHIBIT F Form of Leasehold Assignment
EXHIBIT G Form of Intercreditor Agreement
EXHIBIT H Form of Subordination Agreement
iv
<PAGE> 6
CABLE TV FUND 12-BCD VENTURE
9697 East Mineral Avenue
Englewood, Colorado 80112
-----------------------
NOTE PURCHASE AGREEMENT
-----------------------
As of March 31, 1992
To each of the Purchasers
named in Schedule I hereto
Dear Sirs:
The undersigned Cable TV Fund 12-BCD Venture, a Colorado
general partnership having its principal office at the address set forth above
(said general partnership, together with its permitted successors and assigns,
being hereinafter called the "Company"), hereby agrees with you as follows:
SECTION 1. THE NOTES.
SECTION 1.1 AUTHORIZATION OF NOTES. The Company has authorized
the issuance and sale of $93,000,000 in aggregate principal amount of its 8.64%
Senior Secured Notes due March 31, 2000 (such notes, together with all notes in
the form annexed hereto as Exhibit A issued in exchange or replacement for, or
on registration or transfer of, such notes are hereinafter called the "Notes").
Each Note shall bear interest from the date thereof until such Note shall
become due and payable in accordance with the terms thereof and hereof (whether
at maturity, by acceleration or otherwise) at the rate of 8.64% per annum,
payable semiannually on each September 30 and March 31 (an "Interest Payment
Date"), commencing September 30, 1992, and shall have a stated maturity of
March 31, 2000. Interest shall be computed on the basis of a 360-day year of
twelve 30-day months. Any overdue portion of the principal amount of any Note
and premium, if any, and (to the extent permitted by applicable law) any
overdue installment of interest shall bear interest at a rate equal to 10.64%
per annum.
<PAGE> 7
SECTION 1.2 PURCHASE AND SALE OF NOTES; CLOSING. The Company
agrees to sell to you, and upon and subject to the terms and conditions hereof
and in reliance upon the representations and warranties of the Company
contained herein, you agree to purchase from the Company, Notes in the
aggregate principal amount specified opposite your name in Schedule I hereto at
a purchase price equal to 100% of such principal amount (the "Purchase Price").
The Notes are to be sold and delivered at one closing to be held on March 31,
1992 at 12:00 noon, New York City time (the "Closing Date"), at the offices of
Orrick, Herrington & Sutcliffe, 599 Lexington Avenue, 29th Floor, New York, New
York 10022. On the Closing Date, the Company will deliver to you a Note or
Notes dated the Closing Date, in the principal amount or amounts specified
therefor opposite your name in Schedule I hereto and registered in your name,
or in the name of such nominee as may be set forth under your name in Schedule
I hereto or you shall have designated by notice to the Company at least two
Business Days prior to the Closing Date. The delivery of such Note or Notes to
you shall be made against payment by wire transfer of immediately available
funds to the Company's account at Mellon Bank,, N.A., Pittsburgh, Pennsylvania
(ABA # 043 000 261), Account # 107-2680 in the amount of the Purchase Price of
such Note or Notes.
SECTION 1.3 USE OF PROCEEDS. The proceeds of the sale of the
Notes (net of expenses and costs) will be used to repay $93,000,000 in
principal amount of existing Indebtedness of the Company under the Existing
Loan Agreement.
SECTION 1.4 SECURITY DOCUMENTS; INTERCREDITOR AGREEMENT.
(a) The Notes are to be secured by:
(i) an Amended and Restated Security Agreement, dated
March 31, 1992, between the Company and CoreStates Bank, N.A., as
collateral agent (in its capacity as collateral agent under the
Security Documents, the "Collateral Agent"), substantially in the form
annexed hereto as Exhibit B (which, together with all supplements
thereto and amendments thereof, is referred to herein as the "Security
Agreement"), granting to the Collateral Agent for the benefit of the
Noteholders and the Banks a first-priority security interest in the
Collateral (as defined in the Security Agreement), subject only to
Permitted Liens;
(ii) 2 Amended and Restated Revolving Credit Deed of Trust
and Security Agreement with Assignment of Rents, dated March 31, 1992,
between the Company, as trustor, in favor of the trustee thereunder,
for the benefit of the Collateral Agent, as beneficiary, substantially
in the form annexed hereto as Exhibit C (which, together with all
supplements thereto and amendments thereof, are referred to
collectively herein as the
2
<PAGE> 8
"Deed of Trust (California)"), granting to the Collateral Agent for
the benefit of the Noteholders and the Banks a first-priority security
interest in the Premises (as defined in the Deed of Trust
(California));
(iii) Amended and Restated Line of Credit Mortgage, dated
March 31, 1992, between the Company and the Collateral Agent, as
mortgagee, substantially in the form annexed hereto as Exhibit D
(which, together with all supplements thereto and amendments thereof,
is referred to herein as the "Mortgage (New Mexico)"), granting to the
Collateral Agent for the benefit of the Noteholders and the Banks a
first-priority security interest in the Mortgaged Property (as defined
in the Mortgage (New Mexico));
(iv) Assignment of Mortgages and Fourth Mortgages
Modification Agreement, dated March 31, 1992, between the Company and
the Collateral Agent, as trustee, substantially in the form annexed
hereto as Exhibit E (which, together with all supplements thereto and
amendments thereof, is referred to herein as the "Mortgage
(Florida)"), granting to the Collateral Agent for the benefit of the
Noteholders and the Banks a first-priority security interest in the
Mortgaged Property (as defined in the Mortgage (Florida)); and
(v) 6 leasehold assignments, each dated March 31, 1992,
between the Company and the Collateral Agent and substantially in the
form annexed hereto as Exhibit F-1, F-2, F-3, F-4, F-5 and F-6,
respectively (which, together with all supplements thereto and
amendments thereof, are referred to collectively herein as the
"Leasehold Assignment"), assigning to the Collateral Agent for the
benefit of the Noteholders all of the Company's rights under the
Leases (as defined in the Leasehold Assignment).
(b) The Deed of Trust (California), Mortgage (New Mexico), and
Mortgage (Florida) are referred to collectively herein as the "Mortgage". The
Security Agreement, the Mortgages and Leasehold Assignment are referred to
collectively herein as the "Security Documents." The security interests and
rights created under the Security Documents are referred to as the "Security."
The Collateral, Leases, Premises and Mortgaged Property (as each such term may
be defined in any of the Security Documents) are referred to collectively as
the "Collateral." The rights of the holders of the Notes and the Banks under
the Security Documents and in the property subject thereto will be subject to
the provisions of an Intercreditor Agreement, substantially in the form annexed
hereto as Exhibit G (the "Intercreditor Agreement").
3
<PAGE> 9
(c) Contemporaneously with the issuance of the Notes, the Company
will enter into an Amended and Restated Credit Agreement, dated as of March 31,
1992, with CoreStates Bank, N.A., for itself and as agent for the Banks (as
such agreement may be amended, modified or supplemented from time to time in
compliance with the provisions of this Agreement, the "Loan Agreement"). The
obligations of the Company under the Loan Agreement will also be secured by the
Security Documents.
SECTION 1.5 DEFINITIONS. Certain capitalized terms used in
this Agreement are defined in Section 12.1 hereof. References to a "Schedule"
or "Exhibit" are, unless otherwise specified, to the appropriate Schedule or
Exhibit annexed to this Agreement, each of which is deemed to be a part hereof.
SECTION 2. GENERAL REPRESENTATIONS AND WARRANTIES OR THE COMPANY.
The Company represents and warrants to you as follows:
Section 2.1 ORGANIZATION AND AUTHORITY. (a) The Company:
(i) is a general partnership duly formed and validly
existing under the laws of the State of Colorado;
(ii) has all requisite partnership power and authority to
own (or hold under lease) and operate its properties, to conduct its
business as currently conducted and as currently proposed to be
conducted;
(iii) has all requisite partnership power and authority
necessary to enter into this Agreement and the Security Documents, to
offer, issue, sell and deliver the Notes and to perform its
obligations under this Agreement, the Security Documents and the
Notes;
(iv) has made all filings and holds all franchises,
licenses, permits and registrations which are required under the laws
of each jurisdiction in which the properties owned (or held under
lease) by it or the nature of its activities makes such filings,
franchises, licenses, permits or registrations necessary; and
(v) has no Subsidiaries.
(b) Each of the Partners:
(i) is a limited partnership duly formed and validly
existing under the laws of the State of Colorado;
4
<PAGE> 10
(ii) has all requisite partnership power and authority to
own (or hold under lease) and operate its properties, to conduct its
business as currently conducted; and
(iii) has made all filings and holds all franchises,
licenses, permits and registrations which are required under the laws
of each jurisdiction in which the properties owned (or held under
lease) by it or the nature of its activities makes such filings,
franchises, licenses, permits or registrations necessary other than
such filings, franchises, licenses, permits or registrations as would
not, individually or in the aggregate, have a material adverse effect
on the business, earnings, properties or condition (financial or
other) of such Partner.
(c) Jones:
(i) is a corporation duly organized, validly existing and
in good standing under the laws of the State of Colorado;
(ii) has all requisite corporate power and authority to
own (or hold under lease) and operate its properties, to conduct its
business as currently conducted and as currently proposed to be
conducted; and
(iii) has qualified to do business in each jurisdiction in
which the properties owned (or held under lease) by it or the nature
of its activities makes such qualification necessary other than such
qualifications as would not, individually or in the aggregate, have a
material adverse effect on the business, earnings, properties or
condition (financial or other) of Jones.
SECTION 2.2 FINANCIAL STATEMENTS AND OTHER INFORMATION;
FINANCIAL CONDITION. (a) The Company has heretofore furnished to you copies of:
(i) the Annual Report on Form 10-K of Cable TV Fund 12
for the Fiscal Year ended December 31, 1990 (the "1990 Cable TV Fund
12 Form 10-K"), containing audited balance sheets of the Company as at
the end of such Fiscal Year and the prior Fiscal Year, and audited
statements of operations, statements of partners' capital and
statements of cash flows for such Fiscal Year and the prior Fiscal
Year, together in each case with the auditor's report thereon of
Arthur Andersen & Co., independent certified public accountants, and
supplementary schedules containing certain condensed financial
statements of the
5
<PAGE> 11
Company and certain statements of accumulated depreciation of
property, plant and equipment;
(ii) the Annual Report on Form 10-K of Jones for the
Fiscal Year ended May 31, 1991 (the "Jones Form 10-K", and together
with the Cable TV Fund 12 Forms 10-K, the "Forms 10-K"), containing
audited consolidated balance sheets of Jones as at the end of such
Fiscal Year and the prior Fiscal Year, and audited consolidated
statements of operations, statements of shareholders' investment and
statements of cash flows for such Fiscal Year and the two prior Fiscal
Years, together in each case with the auditor's report thereon of
Arthur Andersen & Co., independent certified public accountants;
(iii) the Quarterly Report on Form 10-Q of Jones for the
Fiscal Quarter ended November 30, 1991, containing unaudited condensed
consolidated balance sheets of Jones as at November 30, 1991 and
November 30, 1990 and unaudited condensed consolidated statements of
operations and statements of cash flows of Jones for the Fiscal
Quarters ended November 30, 1991 and November 30, 1990;
(iv) the Quarterly Report on Form 10-Q of Cable TV Fund
12-B for the Fiscal Quarter ended March 31, 1991, containing unaudited
balance sheets of the Company as at March 31, 1991 and December 31,
1990 and unaudited statements of operations of the Company for the
Fiscal Quarters ended March 31, 1991 and March 31, 1990;
(v) the Quarterly Report on Form 10-Q of Cable TV Fund
12-B for the Fiscal Quarter ended June 30, 1991, containing unaudited
balance sheets of the Company as at June 30, 1991 and December 31,
1990 and unaudited statements of operations of the Company for the
Fiscal Quarters ended June 30, 1991 and June 30, 1990 and for the six
months ended June 30, 1991 and June 30, 1990;
(vi) the Quarterly Report on Form 10-Q of Cable TV Fund
12-B for the Fiscal Quarter ended September 30, 1991, containing
unaudited balance sheets of the Company as at September 30, 1991 and
December 31, 1990 and unaudited statements of operations of the
Company for the Fiscal Quarters ended September 30, 1991 and September
30, 1990 and for the nine months ended September 30, 1991 and
September 30, 1990;
(vii) the Quarterly Report on Form 10-Q of Cable TV Fund
12-C for the Fiscal Quarter ended March 31, 1991, containing unaudited
balance sheets of the Company as at March 31, 1991 and December 31,
1990 and unaudited statements of operations of
6
<PAGE> 12
the Company for the Fiscal Quarters ended March 31, 1991 and March 31,
1990;
(viii) the Quarterly Report on Form 10-Q of Cable TV Fund
12-C for the Fiscal Quarter ended June 30, 1991, containing unaudited
balance sheets of the Company as at June 30, 1991 and December 31,
1990 and unaudited statements of operations of the Company for the
Fiscal Quarters ended June 30, 1991 and June 30, 1990 and for the six
months ended June 30, 1991 and June 30, 1990;
(ix) the Quarterly Report on Form 10-Q of Cable TV Fund
12-C for the Fiscal Quarter ended September 30, 1991, containing
unaudited condensed consolidated balance sheets of the Company as at
September 30, 1991 and December 31, 1990 and unaudited condensed
consolidated statements of operations of the Company for the Fiscal
Quarters ended September 30, 1991 and September 30, 1990 and for the
nine months ended September 30, 1991 and September 30, 1990;
(x) the Quarterly Report on Form 10-Q of Cable TV Fund
12-D for the Fiscal Quarter ended March 31, 1991, containing unaudited
balance sheets of the Company as at March 31, 1991 and December 31,
1990 and unaudited statements of operations of the Company for the
Fiscal Quarters ended March 31, 1991 and March 31, 1990;
(xi) the Quarterly Report on Form 10-Q of Cable TV Fund
12-D for the Fiscal Quarter ended June 30, 1991, containing unaudited
balance sheets of the Company as at June 30, 1991 and December 31,
1990 and unaudited statements of operations of the Company for the
Fiscal Quarters ended June 30, 1991 and June 30, 1990 and for the six
months ended June 30, 1991 and June 30, 1990;
(xii) the Quarterly Report on Form 10-Q of Cable TV Fund
12-D for the Fiscal Quarter ended September 30, 1991, containing
unaudited balance sheets of the Company as at September 30, 1991 and
December 31, 1990 and unaudited statements of operations of the
Company for the Fiscal Quarters ended September 30, 1991 and September
30, 1990 and for the nine months ended September 30, 1991 and
September 30, 1990; (the Quarterly Reports described in the foregoing
clauses (iv) to (xi) and this clause (xii), collectively, the "Forms
10-Q"); the Forms 10-Q together with the Forms 10-K being referred to
herein as the "Disclosure Reports"; and the financial statements of
the Company, the Partners and Jones referred to, or contained in any
document referred to, in the foregoing clauses (i) through (xi) and
this clause (xii) being hereinafter called the "Financial
Statements"); and
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(xiii) the Private Placement Memorandum furnished through
Canadian Imperial Bank of Commerce Capital Markets, USA (the "Agent"),
in connection with the offering of the Notes (the "Offering
Memorandum").
(b) The Financial Statements have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis during the respective periods covered thereby (in the case of
any quarterly Financial Statements, subject to any year-end adjustments
required by the Company's independent certified public accountants). The
Financial Statements are correct and complete and present fairly in all
material respects, the respective financial positions of the Company, each
Partner and Jones as of the respective dates of the balance sheets included
therein and the results of operations and cash flows of the Company, each
Partner and Jones for the respective periods covered by the statements of
operations and cash flows included therein. Neither the Company, any Partner
nor Jones have any material obligation or liability of any nature whatsoever
(whether absolute, accrued, contingent or otherwise and whether due or not due)
which, either individually or in the aggregate, would be material to the
Company, any Partner or Jones that is not disclosed by the Financial Statements
or the Offering Memorandum. Neither the Company, any Partner nor Jones knows of
any basis for the assertion against the Company, any Partner or Jones of any
liability or obligation of any nature whatsoever that is not reflected in the
Financial Statements which, either individually or in the aggregate, would be
material to the Company, any Partner or Jones. The principal amounts of all
other Indebtedness of the Company outstanding on the date hereof are accurately
described in Item 2.2(b) of Schedule II hereto.
(c) The forward-looking financial information contained
in the Offering Memorandum (the "Projections") has been prepared in good faith
by the Company, based upon assumptions that the Company believes to be
reasonable. At the dates of the Projections there were, and on the date hereof
there are, no facts known to the Company which are inconsistent in any
materially adverse respect with the Projections or such assumptions.
SECTION 2.3 BUSINESS. (a) The Offering Memorandum contains
accurate descriptions of the general nature of the business of the Company as
presently conducted, and the major properties owned or leased by the Company.
The Company is not presently engaged in any material line of business not
disclosed in the Offering Memorandum, and it does not own or lease any
significant properties not so disclosed. The Company presently does not
contemplate conducting a business other than the business presently conducted
by it.
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(b) The address of the principal place of business and
chief executive office of the Company is accurately set forth at the head of
this Agreement.
(c) The businesses conducted by the Company are not
conducted under any corporate, trade or fictitious name other than Jones
Intercable, Inc.
SECTION 2.4 NO MATERIAL ADVERSE CHANGE. Since December 31,
1990, there has been no material adverse change in the business, earnings,
prospects, properties or condition (financial or other) of the Company. Since
May 31, 1991, there has been no material adverse change in the business,
earnings, prospects, properties or condition (financial or other) of Jones.
SECTION 2.5 INTELLECTUAL PROPERTY, ETC. The Company owns or
possesses the rights to use, and holds free from burdensome restrictions or
known conflicts with the rights of others, all copyrights, trademarks, service
marks, trade names, patents and intellectual property licenses, and all rights
with respect to the foregoing, necessary for the conduct of its business as now
conducted and as proposed to be conducted, and is in full compliance with the
terms and conditions, if any, of all such copyrights, trademarks, service
marks, trade names, patents and intellectual property licenses and the terms
and conditions of any agreements relating thereto, except for such conflicts or
noncompliance which, either individually or in the aggregate, do not materially
and adversely affect, and in the future will not materially and adversely
affect, the business, earnings, properties or condition (financial or other) of
the Company.
SECTION 2.6 TITLE TO PROPERTIES; LEASES; FINANCING STATEMENTS.
(a) The Company has good and valid title (or, with respect to interests as
lessee or otherwise, its equivalent under applicable law) to the properties and
other assets purported to be owned (or leased) by it, including, without
limitation, all assets in the Systems. Such properties and assets of the
Company are subject to no Liens other than the Liens securing Indebtedness of
the Company under the Existing Loan Agreement, which Liens are identified in
Part 1 of Item 2.6(a) of Schedule II hereto (the "Existing Bank Liens") and
other Permitted Liens. Part 1 of Item 2.6(a) of Schedule II hereto accurately
lists (i) each financing statement, deed, agreement or other instrument which
has been filed, recorded or registered pursuant to any United States federal,
state or local law or regulation that names the Company as debtor or lessee or
as the grantor or the transferor of the interest created thereby, and (ii) as
to each such financing statement, deed, agreement or other instrument, the
names of the debtor, lessee, grantor or transferor and the secured party,
lessor, grantee or transferee and the name of the jurisdiction in which such
financing statement, deed, agreement
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<PAGE> 15
or other instrument has been filed, recorded or registered. Except as
contemplated hereby, the Company has not signed any agreement or instrument
authorizing any secured party thereunder to file any such financing statement,
deed, agreement or other instrument. The documents set forth in Part 2 of Item
2.6(a) of Schedule II hereto have each been or will on or prior to the Closing
Date be duly filed, recorded or registered with the officials of the
jurisdictions and on the dates set forth therein.
(b) The Company has the right to, and does, enjoy
peaceful and undisturbed possession under all leases under which it is leasing
property. All such leases are identified in Item 2.6(b) of Schedule II hereto
and are valid, subsisting and in full force and effect, subject only to
Permitted Liens, and the Company is not in default in the performance,
observance or fulfillment of any obligation under any provision of any such
lease, other than defaults which do not, individually or in the aggregate, have
a material adverse effect on the business, earnings, properties or condition
(financial or other) of the Company. The Company has no knowledge that any
other party to any such lease is in default under any such lease.
SECTION 2.7 COMPLIANCE WITH OTHER INSTRUMENTS, ETC. Neither
the Company, any Partner nor Jones is (a) in violation of any term of its
organizational documents or (b) in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in,
and is not otherwise in default under, (i) any evidence of Indebtedness or any
instrument or agreement under or pursuant to which any evidence of Indebtedness
has been issued or (ii) in the case of the Company, any other instrument or
agreement to which it is a party or by which it is bound or any of its
properties is affected, other than the defaults described in Part 1 of Item 2.7
of Schedule II hereto and defaults which do not, individually or in the
aggregate, have a material adverse effect on the business, earnings, properties
or condition (financial or other) of the Company, any Partner or Jones. The
Company has not defaulted in, or failed to make at the time contemplated,
payment of any principal of, or premium or interest on, any Indebtedness.
Neither the execution, delivery or performance of this Agreement or the
Security Documents nor the offer, issuance, sale, delivery or performance of
the Notes nor the execution, delivery or performance of the Security Documents
does or will (A) conflict with or violate any of the organizational documents
of the Company, any Partner or Jones; (B) conflict with or result in a breach
of any of the terms, conditions or provisions of, or constitute a default
under, or result in the creation of any Lien on any of the properties or assets
of the Company pursuant to the terms of, any evidence of Indebtedness of the
Company, or any instrument or agreement under or pursuant to which any evidence
of Indebtedness of the Company has been issued, or any other instrument
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<PAGE> 16
or agreement to which the Company is a party or by which it is bound, or (C)
other than as described in Part 2 of Item 2.7 of Schedule II hereto, require
any consent of or other action by any trustee or any creditor of, any lessor to
or any investor in the Company, any Partner or Jones.
SECTION 2.8 SYSTEMS AND FRANCHISES. (a) The Company owns the
Systems described in Item 2.8(a) of Schedule II hereto. Item 2.8(a) of Schedule
II sets forth a description of the franchises, agreements, locations and
subscriber counts of the Systems, a general description of the property and
assets comprising the Systems, including any property leased from others and
including the locations of all such property and assets, including without
limitation, tower, headend and office facilities, and the record owners and
legal descriptions of such locations and descriptions of any leases covering
the Company's lease of any of such property, assets or locations from others.
(b) The Company is in compliance in all material respects
with the terms and conditions governing each of its cable television franchises
and the Company has not received any notice of default in respect of any such
cable television franchise. There exist no conditions, nor is the Company a
party to any agreement, which would restrict the ability of the Company to seek
the renewal or extension of any such franchise under the Cable Act. To the
Company's knowledge, no franchiser of any franchise intends to revoke,
terminate or not to extend or renew the franchise granted by such franchisor.
SECTION 2.9 NO MATERIALLY ADVERSE CONTRACTS,.etc. Except as
set forth generally in Schedule II hereto, the Company is not a party to or
bound by (nor is any of its respective properties affected by) any contract or
agreement, or subject to any order, writ, injunction or decree or other action
of any court or any governmental department, commission, bureau, board or other
administrative agency or official, or any charter or other partnership or
contractual restriction, which materially adversely affects, or in the future
will materially adversely affect, the business, earnings, properties or
condition (financial or other) of the Company.
SECTION 2.10 COMPLIANCE WITH LAW. The Company is in compliance
with all statutes, laws and ordinances and all governmental rules and
regulations to which it is subject, the violation of which, either individually
or in the aggregate, could materially affect the business, earnings, properties
or condition (financial or other) of the Company. Neither the execution,
delivery or performance of this Agreement or the Security Documents nor the
offer, issuance, sale, delivery or performance of the Notes will cause the
Company to be in violation of any law or ordinance, or any order, rule or
regulation,
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<PAGE> 17
of any federal, state, municipal or other governmental or public authority or
agency.
SECTION 2.11 COMPLIANCE WITH ERISA; MULTIEMPLOYER PLANS. (a)
Neither the execution and delivery of this Agreement by the Company, the offer,
issuance, sale and delivery of the Notes by the Company, the acquisition of the
Notes by you or the Other Purchasers, the application by the Company of the
proceeds of the sale of the Notes, nor the consummation of any of the other
transactions contemplated by this Agreement, constitutes or will constitute a
"prohibited transaction" (within the meaning of Section 4975 of the Code or
Section 406 of ERISA). The representation by the Company in the preceding
sentence is made in reliance upon and subject to the accuracy of the
representations made by you and the Other Purchasers in Section 3.4 hereof. The
Company has delivered to you a complete and correct list of all Plans with
respect to which the Company or any ERISA Affiliate is a "party in interest"
(within the meaning of Section 3(14) of ERISA) or with respect to which its
securities are "employer securities" (within the meaning of Section 407(d)(1)
of ERISA).
(b) Each Plan is in compliance in all material respects
with applicable provisions of ERISA and the Code. The Company has made all
contributions to the Plans required to be made by it.
(c) Except for liabilities to make contributions and to
pay PBGC premiums and administrative costs, neither the Company nor any ERISA
Affiliate has incurred any material liability to or on account of any Plan or
Pension Plan under applicable provisions of ERISA or the Code and no condition
exists which presents a material risk to the Company or any ERISA Affiliate of
incurring any such liability. No Pension Plan has an "accumulated funding
deficiency" (within the meaning of Section 412 of the Code), whether or not
waived. Neither the Company, any ERISA Affiliate, the PBGC nor any other Person
has instituted any proceedings or taken any other action to terminate any
Pension Plan.
(d) The actuarial present value of all accrued benefit
liabilities under each Pension Plan (based on the assumptions used in the
funding of such Pension Plan, which assumptions are reasonable, and determined
as of the last day of the most recent plan year of such Pension Plan for which
an annual report has been filed with the Internal Revenue Service) did not
exceed the current fair market value of the assets of such Pension Plan as of
such last day.
(e) None of the Plans is a Multiemployer Plan, and
neither the Company nor any ERISA Affiliate has contributed or been obligated
to contribute to any Multiemployer Plan at any time within the preceding six
years.
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SECTION 2.12 COMPLIANCE WITH ENVIRONMENTAL LAWS. (a) The
Company is, and will continue to be, in full compliance with all applicable
federal, state and local environmental laws, regulations and ordinances
governing its business, products, properties or assets with respect to all
discharges into the ground and surface water, emissions into the ambient air
and generation, accumulation, storage, treatment, transportation, labeling or
disposal of waste materials or process by-products the violation of which could
materially affect the business, earnings, properties or condition (financial or
other) of the Company and the Company is not liable for any penalties, fines or
forfeitures for failure to comply with any of the foregoing. All licenses,
permits or registrations required for the business of the Company, as presently
conducted and proposed to be conducted, under any federal, state or local
environmental laws, regulations or ordinances have been obtained or made, other
than any such licenses, permits or registrations the failure to obtain or make
which, either individually or in the aggregate, do not materially and adversely
affect, and will not materially and adversely affect, the business, earnings,
properties or condition (financial or other) of the Company; and the Company is
in compliance therewith.
(b) No release, emission or discharge into the
environment of hazardous substances, as defined under the Comprehensive
Environmental Response, Compensation, and Liability Act, as amended, or
hazardous waste, as defined under the Resource Conservation and Recovery Act,
or air pollutants as defined under the Clean Air Act, or pollutants, as defined
under the Clean Water Act, by the Company has occurred or is presently
occurring on or from any property owned or leased by the Company in excess of
federal, state or local permitted releases or reportable quantities, or other
concentrations, standards or limitations under the foregoing laws or any state
or local law governing the protection of health and the environment or under
any other federal, state or local laws or regulations (then or now applicable,
as the case may be) other than any such releases, emissions or discharges
which, either individually or in the aggregate, do not materially affect, and
will not materially affect, the business, earnings, properties or condition
(financial or other) of the Company.
(c) Other than as described in Item 2.12(c) of Schedule
II hereto, the Company has never (i) owned, occupied or operated a site or
structure on or in which any hazardous substance was or is stored, transported
or disposed of, or (ii) transported or arranged for the transportation of any
hazardous substance except, in each case, in full compliance with all
applicable federal, state and local environmental laws, regulations and
ordinances governing its business, products, properties or assets or the
storage, transportation or disposal of hazardous substances. The Company has
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never caused or been held legally responsible for any release or threatened
release of any hazardous substance, or received notification from any federal,
state or other governmental authority of any such release or threatened
release, or that it may be required to pay any costs or expenses incurred or to
be incurred in connection with any efforts to mitigate the environmental impact
of any release or threatened release, of any hazardous substance from any site
or structure owned, occupied or operated by the Company.
SECTION 2.13 PENDING LITIGATION, ETC. Other than as set forth
in Item 2.13 of Section II hereto, there is no action at law, suit in equity or
other proceeding or investigation (whether or not purportedly on behalf of the
Company) in any court, tribunal or by or before any other governmental or
public authority or agency or any arbitrator or arbitration panel, pending or,
to the best knowledge of the Company, threatened against or affecting the
Company, the Partners or Jones or any of their respective properties, that
either individually or in the aggregate (a) would be reasonably likely to
materially and adversely affect the business, earnings, properties or condition
(financial or other) of the Company, the Partners or Jones, or (b) could
question the validity of this Agreement, the Security Documents or the Notes or
the priority or perfection of any Liens created under the Security Documents.
The Company is not in default with respect to any order, writ, injunction,
judgment or decree of any court or other governmental or public authority or
agency or arbitrator or arbitration panel.
SECTION 2.14 TAXES. Except as set forth in Item 2.14 of
Schedule II hereto, the Company and each Person which might have tax
liabilities for which the Company is or may be liable, has filed all tax
returns and paid all taxes required by law to be filed or paid, which have or
may become due pursuant to said returns (or which to the knowledge of the
Company are due and payable) and on all assessments received by the Company, or
such Person, as the case may be, other than taxes being contested in good faith
by appropriate proceedings diligently conducted and for which adequate reserves
have been established in accordance with generally accepted accounting
principles. No extensions of the time for the assessment of deficiencies have
been granted by the Company. There are no material Liens on any properties or
assets of the Company imposed or arising as a result of the delinquent payment
or the nonpayment of any tax, assessment, fee or other governmental charge. The
income tax returns of the Company have never been examined and reported upon by
the relevant tax authorities. Adequate provision has also been made for all
other taxes (whether past, current or deferred, federal, local or foreign, due
or to come due) on such balance sheet, and the Company does not know of any
transaction or matter which might or could result in additional tax assessments
to the Company or any such Person, other than amounts provided for on such
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<PAGE> 20
balance sheet or referred to in the notes thereto or amounts in respect of
business carried on by the Company in the ordinary course since the date of
such balance sheet. There are no applicable taxes, fees or other governmental
charges payable by the Company in connection with the execution and delivery of
this Agreement and the Security Documents or the offer, issuance, sale and
delivery of the Notes by the Company, except for recording fees and documentary
stamp taxes.
SECTION 2.15 REGULATION AND STATUS UNDER HOLDING COMPANY ACT,
ETC. (a) The Company is not a "public utility company" or a "holding company",
or a "subsidiary company" of a "holding company", or an affiliate of a "holding
company" as such terms are defined in the Public Utility Holding Company Act of
1935, as amended, or a "public utility" within the meaning of the Federal Power
Act, as amended.
(b) The Company is not an "investment company", or an
"affiliated person" of an "investment company", or a company "controlled" by an
"investment company" as such terms are defined in the Investment Company Act of
1940, as amended, and the Company is not an "investment adviser" or an
"affiliated person" of an "investment adviser" as such terms are defined in the
Investment Advisers Act of 1940, as amended.
(c) The Company is not subject to regulation under any
state or local public utilities code or any federal, state or local statute or
regulation limiting its ability to incur Indebtedness.
SECTION 2.16 NO FOREIGN ASSETS CONTROL REGULATIONS VIOLATION.
None of the transactions contemplated by this Agreement or the Security
Documents nor the application of any part of the proceeds of the sale of the
Notes will result in a violation of any of the foreign assets control
regulations of the United States Treasury Department, 31 C.F.R., Subtitle B,
Chapter V, as amended (including, without limitation, the Foreign Assets
Control Regulations, the Transaction Control Regulations, the Cuban Assets
Control Regulations, the Foreign Funds Control Regulations, the Iranian Assets
Control Regulations, the Nicaraguan Trade Control Regulations, the South
African Transactions Regulations, the Libyan Sanctions Regulations, the Soviet
Gold Coin Regulations, the Panamanian Transactions Regulations, the Kuwaiti
Assets Control Regulations and the Iraqi Sanctions Regulations contained in
said Chapter V), or any ruling issued thereunder or any enabling legislation or
other Presidential Executive Order granting authority therefor, nor will the
proceeds of the Notes be used by the Company in a manner that would violate any
thereof.
SECTION 2.17 NO MARGIN REGULATION VIOLATION. None of the
transactions contemplated by this Agreement nor the application of
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any part of the proceeds from the sale of the Notes will violate or result in a
violation of Section 7 of the Securities Exchange Act or any regulations issued
pursuant thereto, including, without limitation, Regulation G (12 C.F.R., Part
207), as amended, Regulation T (12 C.F.R., Part 220), as amended, and
Regulation X (12 C.F.R., Part 224), as amended, of the Board of Governors of
the Federal Reserve System. The assets of the Company do not include any
"margin securities" within the meaning of such Regulation G, and the Company
does not have any intention of acquiring any such margin securities.
SECTION 2.18 PROCEEDINGS. The Company, the Partners and Jones
have each taken all partnership and corporate action necessary, as the case may
be, to authorize the execution and delivery of this Agreement and the Security
Documents and the offer, issuance, sale and delivery of the Notes and the
performance of all obligations to be performed by them hereunder and
thereunder.
SECTION 2.19 NO EVENT OF DEFAULT. No event has occurred and is
continuing, and no condition exists, that, if the Notes had been issued and
were outstanding on the date hereof, would constitute a Default or an Event of
Default.
SECTION 2.20 CONSENTS. No prior consent, approval or
authorization of, registration, qualification, designation, declaration or
filing with, or notice to any federal, state or local governmental or public
authority or agency, is, was or will be required for the valid execution,
delivery and performance of this Agreement or the Security Documents or the
valid offer, issuance, sale, delivery and performance of the Notes, other than
the filing, recording or registration of the Security Documents in the
jurisdictions set forth in Part 2 of Item 2.6(a) of Schedule II hereto and
other than as described in Item 2.20 of Schedule II hereto. The Company and the
Partners have each obtained all consents, approvals or authorizations of, made
all declarations or filings with, or given all notices to, all federal, state
or local governmental or public authorities or agencies which are necessary for
the continued conduct by the Company of its business as now conducted, other
than such consents, approvals, authorizations, declarations, filings and
notices which, neither individually nor in the aggregate, materially adversely
affects or in the future will materially adversely affect, the business,
earnings, properties or condition (financial or other) of the Company.
SECTION 2.21 VALIDITY OF AGREEMENT, SECURITY DOCUMENTS,
SUBORDINATION AGREEMENT AND NOTES. This Agreement and the Security Documents
have each been duly executed and delivered by the Company and constitute legal,
valid and binding obligations of the Company, enforceable in accordance with
their respective terms. The Subordination Agreement has been duly executed and
delivered by
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Jones and constitutes the legal, valid and binding obligation of Jones,
enforceable in accordance with its terms. Upon receipt by the Company of
payment for the Notes as provided in this Agreement, the Notes will have been
duly issued and will constitute legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms.
SECTION 2.22 LABOR RELATIONS. The Company is not engaged in
any unfair labor practice which could materially affect the business, earnings,
properties or condition (financial or other) of the Company. There is (a) no
unfair labor practice complaint pending or threatened against the Company
before the National Labor Relations Board or any court or labor board, and no
grievance or arbitration proceedings arising out of or under collective
bargaining agreements is so pending or threatened; (b) no strike, lock-out,
labor dispute, slowdown or work stoppage pending or threatened against the
Company; and (c) no union representation or certification question existing or
pending with respect to the employees of the Company and no union organization
activity taking place, which unfair labor practice complaint, grievance or
arbitration proceedings, strike, lock-out, labor dispute, slowdown or work
stoppage or union representation or certification question would be reasonably
likely to have a material adverse effect on the business, earnings, properties
or condition (financial or other) of the Company.
SECTION 2.23 INSURANCE. The Company has, with respect to the
properties and business of the Company, with financially sound and reputable
insurers, insurance against such casualties and contingencies of such types and
in such amounts as is customary in the case of entities engaged in the same or
a similar business having similar properties similarly situated.
SECTION 2.24 BROKER'S OR FINDER'S COMMISSIONS. Except for fees
payable to the Agent by the Company, no broker's or finder's placement fee or
commission will be payable by the Company with respect to the issuance and
delivery of the Notes or with respect to any of the transactions contemplated
hereby.
SECTION 2.25 REPRESENTATIONS AND WARRANTIES IN RELATED
DOCUMENTS. The representations of the Company contained in the Security
Documents and in any document, certificate or instrument delivered pursuant to
this Agreement or the Security Documents are true and correct in all material
respects and you may rely on such representations and warranties, if not made
directly to you, as if such representations and warranties were made directly
to you.
SECTION 2.26 SOLVENCY. The Company is and, immediately after
giving effect to the issue and sale of the Notes and consummation of
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the other transactions contemplated by this Agreement, will be, Solvent.
For purposes of this Section 2.26, the term "Solvent" shall
mean, with respect to any Person, that:
(a) the assets of such Person, at a fair valuation,
exceed the total liabilities (including contingent, subordinated, unmatured and
unliquidated liabilities) of such Person;
(b) based on current projections, which are based on
underlying assumptions which provide a reasonable basis for the projections and
which reflect such Person's judgment based on present circumstances of the most
likely set of conditions and such Person's most likely course of action for the
period projected, such Person believes it has sufficient cash flow to enable it
to pay its debts as they mature; and
(c) such Person does not have an unreasonably small
capital with which to engage in its anticipated business.
For purposes of this 2.26, the "fair valuation" of the assets
of any Person shall be determined on the basis of the amount which may be
realized within a reasonable time, either through collection or sale of such
assets at the regular market value, conceiving the latter as the amount which
could be obtained for the property in question within such period by a capable
and diligent businessman from an interested buyer who is willing to purchase
under ordinary selling conditions.
SECTION 2.27 PARTNERSHIP INTERESTS. The number and percentage
of partnership interests in the Company and the ownership thereof, and the
percentage of partnership interests in the Partners owned by Jones, are
accurately set forth in Item 2.27 of Schedule II hereto; all such interests are
validly existing and the creation and sale thereof and the creation and sale of
the limited partnership interests in the Partners are in compliance with all
applicable federal and state securities laws and other applicable laws; except
as set forth in Item 2.27 of Schedule II hereto, the Partners' and Jones'
ownership thereof is free and clear of any contractual restrictions except as
set forth in the applicable limited partnership agreement as to each of the
Partners and in the Joint Venture Agreement as to the Company; and Jones is the
sole general partner of each Partner.
SECTION 2.28 FULL DISCLOSURE. This Agreement, the Security
Documents, the Offering Memorandum and any report or financial statement
referred to in Section 2.2 hereof and any certificate, report, statement or
other writing furnished to you by or on behalf of the Company in connection
with the negotiation of this Agreement and the
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Security Documents and the sale of the Notes, do not contain and will not
contain any untrue statement of a material fact or omit or will omit to state a
material fact necessary to make the statements contained herein or therein not
misleading. There is no fact known to the Company that has not been disclosed
to you in writing that (a) materially and adversely affects, or in the future
would be reasonably likely to materially and adversely affect, the business,
earnings, prospects, properties or condition (financial or other) of the
Company or (b) materially and adversely affects, or in the future could
materially and adversely affect, the ability of the Company to perform its
obligations under this Agreement, the Security Documents or the Notes.
SECTION 3. OTHER AGREEMENTS; SECURITIES ACT; ERISA REPRESENTATIONS.
SECTION 3.1 OTHER AGREEMENTS. Simultaneously with the
execution and delivery of this Agreement, the Company is entering into other
note purchase agreements identical in all respects with this Agreement with the
other institutional investors named in Schedule I hereto (the "Other
Purchasers"). The aggregate principal amount of Notes to be purchased by you
and the Other Purchasers is $93,000,000. Such purchases by you and each of the
Other Purchasers (each, a "Purchaser") in each case are to be separate and
several transactions. The obligations of each Purchaser hereunder shall be
several and not joint, and this Agreement shall for all purposes be construed
and deemed to be a separate agreement between the Company and each Purchaser,
acting severally and not jointly, with the same effect as though a separate
agreement with each Purchaser to the effect herein provided were hereby entered
into between the Company and each Purchaser.
SECTION 3.2 OFFEREES. The Company represents that neither it
nor the Agent has, either directly or through any agent, offered any of the
Notes or any similar securities for sale to, or solicited any offers to buy any
thereof from, or otherwise approached or negotiated in respect thereof with,
any Person or Persons other than you and not more than 44 other institutional
investors, each of whom was offered the right to purchase Notes at private sale
for investment. The Company represents that the Agent is the only Person
authorized by it to act as an agent, broker, dealer, or in any similar capacity
in connection with the offering or sale of the Notes and that the Agent acted
solely as agent for the Company and not as agent for you. The Company agrees
that it will not, and that it will use its best efforts to cause any agent on
behalf of it to not, sell or offer any of the Notes or any similar securities
to, or solicit offers to buy any thereof from, or otherwise approach or
negotiate in respect thereof with, any other Person or Persons whomsoever, or
take any other action, so as to bring the issuance
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<PAGE> 25
and sale of the Notes within the provisions of Section 5 of the Securities Act
or the provisions of any state or other securities law requiring registration
of securities, notification of the issuance and sale thereof or confirmation of
the availability of any exemption from registration thereof.
SECTION 3.3 NO INTENT TO DISTRIBUTE. This Agreement is made
with you in reliance upon your representation to the Company, which by your
acceptance hereof you confirm, that you are purchasing the Notes as principal
for your own account and not with a view to the distribution thereof, and that
you have no present intention of distributing any of the same; provided,
however, that the disposition of your property shall be at all times within
your own control and that your right to sell or otherwise dispose of all or any
part of the Notes purchased or acquired by you pursuant to an effective
registration statement under the Securities Act or under an exemption from such
registration available under the Securities Act (including but not limited to
the exemption provided by Rule 144A of the SEC thereunder) and in accordance
with any applicable state securities law shall not be prejudiced; provided
further, that you acknowledge that nothing in this Agreement is intended to
impose an obligation on the Company to register the Notes under the Securities
Act or any state securities law. You hereby represent that you have not engaged
any Person to act as your agent, broker or dealer in connection with the
purchase of the Notes hereunder. The Company and you each acknowledge that the
Notes are securities (as defined in the Securities Act and the Exchange Act).
SECTION 3.4 ERISA REPRESENTATION. You represent that, with
respect to the source of funds to be used by you to purchase the Notes (the
"Source"):
(a) you are an insurance company and either (i) the
source is not a "separate account" (within the meaning of Section
3(17) of ERISA), (ii) in reliance upon the present and continuing
validity and applicability of paragraph (b) of Department of Labor
Interpretive Bulletin 75-2, 29 C.F.R. Section 2509.75-2 (November 13,
1986), the Source is not an "employee benefit plan" (within the
meaning of Section 3(3) of ERISA) or a "plan" (within the meaning of
Section 4975(e)(1) of the Code); (iii) the Source is a "governmental
plan" (within the meaning of Section 3(32) of ERISA); (iv) the Source
is an "insurance company pooled separate account" (within the meaning
of Department of Labor Prohibited Transaction Class Exemption ("PTCE")
90-1) and you have identified in writing to the Company each employee
benefit plan (treating as a single plan all employee benefit plans
maintained by the same employer or employee organization) whose assets
in such pooled separate account exceed ten percent (10%) of the total
assets in that account; (v) the Source is an "investment fund" (within
the
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<PAGE> 26
meaning of Part V(b) of PTCE 84-14) managed by an identified
"qualified professional asset manager" (within the meaning of Part
V(a) of PTCE 84-14) (a "QPAM"); or (vi) the Source is a specific
employee benefit plan or a separate account comprised of such plans
and you have provided in writing to the Company complete and accurate
information as to the identity of such plan(s); or
(b) you are an entity other than an insurance company and
either (i) the Source is not an "employee benefit plan" (within the
meaning of Section 3(3) of ERISA), a "plan" (within the meaning of
Section 4975(e)(1) of the Code) or an entity whose underlying assets
include plan assets by reason of the investment in the entity by such
an "employee benefit plan" or "plan" and the application of the
Department of Labor's "plan asset regulations", 29 C.F.R. Section
2510.3-101 (November 13, 1986); (ii) the Source is a "governmental
plan" (within the meaning of Section 3(32) of ERISA); (iii) the Source
is a "collective investment fund maintained by a bank" (within the
meaning of PTCE 91-38) and you have identified in writing to the
Company each employee benefit plan (treating as a single plan all
employee benefit plans maintained by the same employer or employee
organization) whose assets in such bank collective investment fund
exceed ten percent (10%) of the total assets in that fund; or (iv) the
Source is an "investment fund" (within the meaning of Part V(b) of
PTCE 84-14) managed by a QPAM; or (v) the Source is a specific
employee benefit plan and you have provided in writing to the Company
complete and accurate information as to the identity of that plan.
At your request, the Company shall deliver a certificate to you on the Closing
Date stating that either (i) neither the Company nor any of its Subsidiaries or
ERISA Affiliates is a "party in interest" (within the meaning of Section 3(14)
of ERISA) with respect to any plan identified by you pursuant to clause (iv),
(v) or (vi) of subsection (a) of this Section 3.4 or clause (iii), (iv) or (v)
of subsection (b) of this Section 3.4 or (ii) neither the Company nor any of
its "affiliates" (within the meaning of Part V(c) of PTCE 84-14 has or has
exercised the authority to appoint or terminate the QPAM as manager of the
assets of any plan identified pursuant to clause (v) of subsection (a) of this
Section 3.4 or clause (iv) of subsection (b) of this Section 3.4 or to
negotiate the terms of the management agreement between the QPAM and any such
plan.
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<PAGE> 27
SECTION 4. CONDITIONS OF OBLIGATION TO PURCHASE NOTES.
Your obligation to purchase and pay for the Notes to be
purchased by you hereunder on the Closing Date shall be subject to the
satisfaction, prior to or concurrently with such purchase and payment, of the
following conditions:
SECTION 4.1 OPINION OF SPECIAL COUNSEL FOR YOU. You shall have
received from Orrick, Herrington & Sutcliffe, New York, New York, who are
acting as special counsel for you in connection with the transactions
contemplated by this Agreement ("Special Counsel"), an opinion, dated the
Closing Date, in form and substance satisfactory to you, to the effect
specified in Schedule III-A hereto.
SECTION 4.2 OPINIONS OF COUNSEL FOR THE COMPANY. You and your
Special Counsel shall have received from (i) Elizabeth M. Steele, Esq., general
counsel of the Company, (ii) Quinn, Kully & Morrow, special California counsel
for the Company, (iii) Ruden, Barnett, McCloskey, Smith, Schuster & Russell,
P.A., special Florida counsel to the Company, (iv) Rodey, Dickason, Sloan, Akin
& Robb, P.A., special New Mexico counsel to the Company, and (v) Dow, Lohnes &
Albertson, special FCC counsel to the Company, opinions, each dated the Closing
Date, in form and substance satisfactory to you and your Special Counsel, to
the effect specified in Items 1, 2, 3, 4 and 5, respectively, of Schedule III-B
hereto, and covering such other matters incident to the transactions
contemplated hereby as you and your Special Counsel may reasonably request. The
Company hereby covenants and agrees to instruct such counsel to prepare and
deliver to you pursuant to this Section 4.2 its opinion referred to above and
hereby waives, to the limited extent necessary to permit the preparation and
delivery of such opinion and your reliance thereon, any attorney-client
privilege, right of confidentiality or conflict of interest which might
otherwise render such preparation and delivery improper or unethical or such
reliance unwarranted.
SECTION 4.3 PERFORMANCE OF OBLIGATIONS. The Company shall have
performed all of its obligations to be performed hereunder, prior to or on the
Closing Date, and you shall have received an Officer's Certificate, dated the
Closing Date, to that effect.
SECTION 4.4 REPRESENTATIONS TRUE; NO EVENT OF DEFAULT. The
representations and warranties of the Company contained in Sections 2 and 3
hereof shall be true on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of the
Closing Date. There shall exist on the Closing Date no Default or Event of
Default assuming for this purpose that the Notes had been outstanding at all
times from and after the date hereof and the proceeds of issuance thereof had
been applied in the manner contemplated by Section 1.3 hereof. You shall have
22
<PAGE> 28
received an Officer's Certificate, dated the Closing Date, to the effect of the
foregoing sentences.
SECTION 4.5 LEGALITY. The Notes shall qualify as a legal
investment for you under all applicable laws of any jurisdiction to which you
are subject (without reference to any so-called "basket clause" of any such law
or any clause that imposes limitations on particular investments, whether in
the aggregate or individually), and the Company shall have delivered to you any
evidence thereof which you or your Special Counsel may reasonably request.
SECTION 4.6 ASSIGNMENT OF PRIVATE PLACEMENT NUMBER. A private
placement number shall have been assigned to the Notes by the CUSIP Service
Bureau of Standard & Poor's Corporation, at the Company's expense, and evidence
thereof shall have been delivered to you and your Special Counsel.
SECTION 4.7 SECURITY DOCUMENTS; FINANCING STATEMENTS. The
Security Documents shall have been duly authorized by all necessary corporate
and partnership action of the Company, each Partner and Jones. The Security
Documents shall have been duly executed and delivered by the parties thereto.
The financing statements listed in Part 2 of Item 2.6(a) of Schedule II hereto
shall have been duly executed by the Company and filed with the officials and
in the jurisdictions set forth in Part 2 of Item 2.6(a) of Schedule II hereto.
SECTION 4.8 OTHER PURCHASERS OF NOTES. Each of the Other
Purchasers shall have purchased and made payment for the aggregate principal
amount of Notes to be purchased by it as set forth in Schedule I hereto.
SECTION 4.9 AMENDMENT OF EXISTING LOAN AGREEMENT. The Company
and the other parties to the Existing Loan Agreement and their agents each
shall have entered into such agreements as your Special Counsel shall deem
necessary, in form and substance satisfactory to you and your Special Counsel,
as shall be necessary to amend the Existing Loan Agreement. All of the
conditions to the obligation of the Banks to make advances under the Loan
Agreement specified in Paragraphs 4.01 and 4.02 thereof shall have been
satisfied and such amounts as the Company shall have requested to be advanced
to it by the Banks shall have been so advanced. You shall have received a true
and correct copy of the Loan Agreement, certified as such by an officer of the
Company.
SECTION 4.10 TAXES. Any taxes, fees and other charges due in
connection with the issuance and sale of the Notes shall have been paid in full
by the Company.
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<PAGE> 29
SECTION 4.11 DISSOLUTION; NO MERGER OR CHANGE IN CONTROL. The
Company shall not have dissolved nor shall the Company have consolidated or
merged with, been wound up into or sold, leased or otherwise disposed of its
properties as an entirety or substantially as an entirety to, any Person.
SECTION 4.12 FEES AND DISBURSEMENTS OF SPECIAL COUNSEL FOR
YOU. Your Special Counsel shall have received payment from the Company by check
of its reasonable fees and disbursements to the extent reflected in any invoice
delivered to the Company on or prior to the Closing Date.
SECTION 4.13 SEARCHES. The Company shall have delivered to you
and your Special Counsel such evidence (including without limitation, Uniform
Commercial Code search certificates and termination statements) as you may
request to establish that there are no financing statements filed against the
property of the Company other than with respect to Permitted Liens and the
Existing Bank Liens.
SECTION 4.14 CONSENTS. Except as otherwise described in Item
2.20 of Schedule II, the Company shall have obtained all consents and approvals
of the type referred to in the first sentence of Section 2.20 hereof, and you
shall have received an Officer's Certificate, dated the Closing Date, to the
effect of this sentence.
SECTION 4.15 INSURANCE. The Company shall have obtained or
caused to be obtained the insurance required to be obtained under clause (b) of
Section 9.3 hereof, naming the Collateral Agent as an additional insured or
loss payee, with respect to all insured Collateral, and you shall have received
evidence thereof reasonably satisfactory to you and your Special Counsel.
SECTION 4.16 INTERCREDITOR AGREEMENT; SUBORDINATION AGREEMENT.
(a) The Intercreditor Agreement shall have been duly authorized, executed and
delivered by each of the parties thereto.
(b) The Subordination Agreement shall have been duly
authorized, executed and delivered by each of the parties thereto.
SECTION 4.17 TITLE REPORTS. You shall have received a title
report of a title insurance company satisfactory to the Noteholders with
respect to each portion of real property covered by a Mortgage.
SECTION 4.18 CHANGE OF LAW. There shall have occurred no
change in any law which could materially adversely affect the business,
earnings, properties or condition (financial or other) of the Company.
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<PAGE> 30
SECTION 4.19 PROCEEDINGS, INSTRUMENTS, ETC. All proceedings
and actions taken on or prior to the Closing Date in connection with the
transactions contemplated by this Agreement, the Notes and the Security
Documents, and all instruments incident thereto, shall be in form and substance
satisfactory to you and your Special Counsel, and you and your Special Counsel
shall have received copies of all documents that you or they may reasonably
request in connection with such proceedings, actions and transactions
(including, without limitation, copies of court documents, certifications and
evidence of the correctness of the representations and warranties contained
herein and certifications and evidence of the compliance with the terms and the
fulfillment of the conditions of this Agreement and the Security Documents, in
form and substance satisfactory to you and your Special Counsel).
SECTION 5. EXPENSES.
Whether or not the Notes shall be sold as contemplated herein
or this Agreement shall be terminated, the Company will pay, and will save you
harmless against liability for, all reasonable costs and expenses relating to
this Agreement, the Security Documents, the Intercreditor Agreement, the
Subordination Agreement and the Notes and to any modification, amendment,
alteration or enforcement of this Agreement, the Security Documents, the
Intercreditor Agreement, the Subordination Agreement or the Notes (whether or
not the same shall have come into effect), including, without limitation:
(a) the cost of preparing and reproducing this Agreement,
the Security Documents, the Intercreditor Agreement, the Subordination
Agreement and the Notes and every instrument of modification, amendment or
alteration;
(b) the reasonable fees and disbursements of (i) your
Special Counsel, which fees and disbursements will be paid on the Closing Date
to the extent reflected by an invoice delivered to the Company on the Closing
Date and promptly upon receipt of any invoice delivered to the Company after
the Closing Date; and (ii) all counsel for the Company;
(c) the cost of delivering to your home office, insured
to your reasonable satisfaction, the Notes purchased by you on the Closing
Date;
(d) all costs and expenses (including, without
limitation, reasonable legal fees and disbursements and any applicable taxes
thereon) relating to any modifications, amendments, waivers or consents
involving the provisions hereof or of the Security Documents, the Intercreditor
Agreement, the Subordination
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<PAGE> 31
Agreement or the Notes relating to the enforcement of this Agreement, the
Security Documents, the Intercreditor Agreement, the Subordination Agreement or
the Notes;
(e) the brokers' or finders' fees of the Agent;
(f) all expenses in connection with obtaining a private
placement number as contemplated by Section 4.6 hereof; and
(g) any fees in connection with the filing, recordation
or registration in any jurisdiction of the Security Documents, any financing
statement or any agreement, instrument or other document modifying, amending or
supplementing the Security Documents.
The obligations of the Company under this Section 5 shall survive the payment
of the Notes and the termination of this Agreement, the Security Documents and
the Intercreditor Agreement.
SECTION 6. CERTAIN SPECIAL RIGHTS.
SECTION 6.1 HOME OFFICE PAYMENT. Notwithstanding any
provision to the contrary in this Agreement, the Security Documents or the
Notes, on the dates due the Company will punctually pay in immediately
available funds prior to noon, New York City time, all amounts payable to you
with respect to any Notes held by you or your nominee (without the necessity
for any presentation or surrender thereof or any notation of such payment
thereon) in the manner and at the address for such purpose specified below your
name in Schedule I hereto, or at any other address as you may from time to time
direct in writing; provided, however, that the information set forth with
respect to you in Schedule I hereto shall be deemed notice sufficient to permit
payment in accordance with this Section 6.1. You agree that, as promptly as
practicable after the payment or prepayment in whole of any Note held by you or
your nominee and receipt by you of a written request from the Company to
surrender such Note to the Company for cancellation, you will surrender such
Note at the office of the Company maintained pursuant to Section 9.1 hereof.
The Company will afford the benefits of this Section 6.1 to any Institutional
Investor which is a holder of a Note or Notes, each of which, by its receipt
and acceptance of a Note, will be deemed to have made the same agreement
relating to its Notes as you have made in this Section 6.1. The Company shall
only be obligated to make payments on any Note held by an institutional
investor which becomes a Noteholder in the manner provided in this Section 6.1
from and after the time such Noteholder provides to the Company written notice
of its election to receive payments in such manner and the address to which
payments are to be directed (including the account number of such Noteholder's
bank account to which payments are to be directed and the name, address and ABA
number of the bank in which such account
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<PAGE> 32
is maintained, if payments are to be made to such Noteholder by the wire
transfer of immediately available funds).
SECTION 6.2 DELIVERY EXPENSES. If you shall surrender any Note
to the Company pursuant to this Agreement, or if the Company shall issue any
new Note pursuant to this Agreement, the Company will pay all costs and
expenses of delivery of the surrendered Note and any Note or Notes issued in
exchange or replacement for, or on registration of transfer of, the surrendered
Note or any such new Note, as the case may be, in each case insured to your
reasonable satisfaction. The obligations of the Company under this Section 6.2
shall survive the payment of the Notes and the termination of this Agreement.
SECTION 6.3 ISSUANCE TAXES. The Company will pay all taxes in
connection with the execution and delivery of this Agreement and the Security
Documents, the issuance and sale of the Notes by the Company, and any
modification of this Agreement, the Security Documents or the Notes and will
save you and any subsequent holder of Notes harmless, without limitation as to
time, against any and all liabilities (including, without limitation, any
interest or penalty for nonpayment or delay in payment, or any income taxes
paid by you in connection with any reimbursement by the Company for the payment
by any other Person of any such taxes) with respect to all such taxes. The
obligations of the Company under this Section 6.3 shall survive the payment of
the Notes and the termination of this Agreement and the Security Documents.
SECTION 6.4 SUBSTITUTION OF PURCHASER. You shall have the
right to substitute any of your Affiliates as the Purchaser of all or any
portion of the aggregate principal amount of Notes to be purchased by you, by
written notice delivered to the Company, which notice shall be signed by both
you and such Affiliate, shall contain such Affiliate's agreement to be bound by
this Agreement and shall contain a confirmation by such Affiliate of the
accuracy with respect to it of the representations set forth in Section 3
hereof. The Company agrees that upon receipt of such notice (a) wherever the
word "you" or "your" is used in this Agreement (other than in this Section 6.4)
such word shall be deemed to refer to such Affiliate instead of to you, and (b)
you shall be released from all of your obligations under this Agreement. The
Company also agrees that if you, at any time, acquire from each Affiliate all
of the Notes held by such Affiliate, wherever the word "you" or "your" is used
in this Agreement such word shall thereafter be deemed to refer to you instead
of to such Affiliate and such Affiliate shall be released from all of its
obligations under this Agreement.
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SECTION 7. NOTE PREPAYMENTS.
SECTION 7.1 REQUIRED PREPAYMENTS. The Company will, without
notice, prepay, without premium, on the dates set forth below, Notes in the
aggregate principal amounts set forth below, and will pay at maturity Notes in
an aggregate principal amount of $31,000,000 (or such lesser principal amount
as may then be outstanding), together, in each case, with interest accrued on
the amount to be prepaid or paid to the date of prepayment or payment:
<TABLE>
<CAPTION>
Date Principal Amount
---- ----------------
<S> <C>
March 31, 1996 $ 3,100,000
September 30, 1996 $ 3,100,000
March 31, 1997 $ 6,200,000
September 30, 1997 $ 6,200,000
March 31, 1998 $ 9,300,000
September 30, 1998 $ 9,300,000
March 31, 1999 $12,400,000
September 30, 1999 $12,400,000
</TABLE>
Any amounts prepaid pursuant to Section 7.2 hereof shall be applied in inverse
order of maturity to the prepayments required under this Section 7.1 and the
payment of the Notes at maturity. Any principal amounts prepaid pursuant to
Section 7.5 or Section 7.6 hereof shall be applied pro rata to each of the then
remaining prepayments required under this Section 7.1. Promptly after any
prepayment of Notes pursuant to Section 7.2, Section 7.5 or Section 7.6 hereof,
the Company shall deliver to each Noteholder a notice setting forth the name of
each Noteholder and the principal amount of each Note then outstanding required
to be paid on each date on which the prepayment of Notes is required under this
Section 7.1. Notwithstanding anything contained in this Section 7.1, on the
maturity date of the Notes, the outstanding principal amount of the Notes,
together with accrued interest thereon, shall be due and payable.
SECTION 7.2 OPTIONAL PREPAYMENTS. In addition to the
prepayments required by Sections 7.1, 7.5 and 7.6 hereof, upon the terms and
subject to the conditions hereinafter set forth, the Company, at its option,
upon notice as provided in Section 7.3 hereof, may prepay the Notes in full, or
from time to time in part (in an aggregate principal amount of at least
$1,000,000, or if less than $1,000,000 in aggregate principal amount of Notes
remains outstanding, such lesser amount) at a prepayment price equal to the
aggregate principal amount of the Notes then outstanding, together with accrued
interest thereon to the date of prepayment, plus a premium on the aggregate
principal amount of the Notes to be prepaid equal to the Make-Whole Amount.
SECTION 7.3 NOTICE OF PREPAYMENT. Notice of any prepayment of
Notes pursuant to Section 7.2 hereof shall be given to each Noteholder not
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<PAGE> 34
less than 30 days before the date fixed for prepayment (the "Prepayment Date")
(and if any such notice is given more than 60 days before the Prepayment Date,
an additional copy of such notice shall be given to each Noteholder not less
than 30 and not more than 60 days before the Prepayment Date) and shall be
accompanied by an Officer's Certificate certifying: (a) the Prepayment Date,
(b) the aggregate principal amount of the Notes outstanding, (c) the principal
amount of each Note held by each Noteholder to be prepaid, (d) the aggregate
amount of accrued interest applicable to such prepayment, and (e) the aggregate
amount of the premium that the Company would be required to pay if such
prepayment were made on the date notice is being given under this Section 7.3
(including all calculations made to determine such amount). Any notice of
prepayment pursuant to Section 7.2 hereof having been so given, the aggregate
principal amount of Notes, together with the premium (if any) and accrued
interest thereon, shall become due and payable on such Prepayment Date. An
additional notice shall be given promptly to each Noteholder one Business Day
prior to the Prepayment Date, and shall be accompanied by an Officer's
Certificate certifying the amount of the premium (if any) that the Company is
required to pay in connection with such prepayment (including all calculations
made to determine such amount) and certifying that the amount of such premium
was calculated in accordance with the provisions of Section 7.2 hereof, the
definition of the term "Make-Whole Amount" in Section 12.1 hereof and the other
defined terms used in such definition.
SECTION 7.4 PARTIAL PREPAYMENT PRO RATA. The aggregate
principal amount of each partial prepayment of Notes pursuant to Sections 7.1
and 7.2 hereof shall be allocated among the holders of Notes then outstanding
in proportion, as nearly as practicable, to the respective unpaid principal
amounts of Notes held thereby with adjustments to the extent practicable to
compensate for any prior prepayments not made in exactly such proportion.
SECTION 7.5 MANDATORY OFFER TO PREPAY NOTES UPON A PARTNER
WITHDRAWAL. (a) If a Partner Withdrawal (as hereinafter defined) shall occur,
then each holder of an outstanding Note shall be deemed to have received an
offer by the Company to, and shall have the right to demand that the Company,
prepay all or any portion of the Notes then held by such holder by giving
written notice to such effect to the Company not later than 30 days after the
first to occur of the following: (i) receipt by such holder from the Company of
written notice of the occurrence of such Partner Withdrawal, or (ii) the date
on which such holder, having otherwise obtained actual knowledge of such
Partner Withdrawal, notifies the Company thereof. The Company shall prepay such
Notes or portion thereof on a date specified in a written notice from the
Company to such holder given not less than 15 days prior to the prepayment date
so specified (which date shall be not earlier than 20 nor later than 45 days
after the date demand for prepayment was made by such holder) and
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<PAGE> 35
such prepayment shall be at a price in respect of each Note or portion thereof
to be prepaid equal to the principal amount of such Note or portion thereof to
be prepaid, together with interest accrued thereon to the date of such
prepayment, plus a premium equal to the Make-Whole Amount in respect of such
Note.
(b) Promptly after obtaining knowledge of the occurrence
of any Partner Withdrawal, the Company shall notify each holder of Notes of
such Partner Withdrawal, specifying in reasonable detail the facts and
circumstances surrounding such event and the rights of each holder under this
Section 7.5 to demand prepayment of such holder's Notes. The Company shall
notify each Noteholder of the receipt of any demand for the prepayment of Notes
pursuant to subsection (a) of this Section 7.5 within three (3) Business Days
of its receipt of such demand.
(c) As used in this Section 7.5, a "Partner Withdrawal"
shall be deemed to have occurred at such time as (i) Jones ceases to be a
general partner of any of the Partners or ceases to manage the operations of
the Company pursuant to the Management Agreement or (ii) the Company is
dissolved as a result of a withdrawal, dissolution or bankruptcy of any of the
Partners, provided, however, that a Partner Withdrawal shall not be deemed to
have occurred under clause (ii) hereof if immediately upon any such dissolution
one or more of the remaining general partners elect to continue the Company
pursuant to Section 2 of Article VII of the Joint Venture Agreement and the
Company does remain a partnership comprised of the remaining Partners with
Jones remaining as manager of the Company pursuant to the Management Agreement.
SECTION 7.6 REQUIRED PREPAYMENT OF NOTES FOLLOWING A SALE OF A
SYSTEM. (a) If the Company shall sell a System as permitted under Section 9.18
hereof, then, subject to clause (c) below, the Company shall prepay, at the
time of such sale, an aggregate principal amount of Notes equal to the Note
Proportionate Amount of the Net Cash Proceeds of such sale, together with
interest accrued thereon to the date of such prepayment, plus a premium equal
to the Make-Whole Amount.
(b) For the purposes of this Section 7.6, the term "Note
Proportionate Amount" shall mean, with respect to any Net Cash Proceeds, the
percentage of Net Cash Proceeds allocable to the holders of the Notes that
elect to require prepayment pursuant to subsection (c) of this Section 7.6
hereof based on a pro rata allocation of such Net Cash Proceeds between such
holders of the Notes electing prepayment (based on the aggregate principal
amount of Notes outstanding held by such holders) and the Banks (based upon the
aggregate principal amount of Indebtedness outstanding at such time under the
Loan Agreement).
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<PAGE> 36
(c) Not less than 45 days prior to the date of the
proposed consummation of the sale of any System (for the purposes of this
Section 7.6, a "Consummation Date"), the Company shall notify each Noteholder
of such proposed sale, specifying in reasonable detail the facts and
circumstances surrounding such event (including the Consummation Date, the
estimated Net Cash Proceeds from such sale and Note Proportionate Amount) and
the obligation of the Company under this Section 7.6 to prepay a portion of
such holder's Notes. Each Noteholder shall have a portion of its Notes prepaid
pursuant to this Section 7.6 unless, no less than 15 days prior to the
Consummation Date, such Noteholder provides notice to the Company that such
Noteholder elects not to have any of its Notes prepaid hereunder.
(d) The Note Proportionate Amount to be paid to the
Noteholders pursuant to this Section 7.6 shall be allocated among the holders
of Notes then outstanding in proportion, as nearly as practicable, to the
respective unpaid principal amounts of Notes held thereby.
SECTION 8. REGISTRATION, EXCHANGE AND REPLACEMENT OF NOTES.
SECTION 8.1 REGISTRATION. The Notes issuable pursuant to this
Agreement shall be registered notes. The Company will keep, at the office
required to be maintained pursuant to Section 9.1 hereof, books for the
registration and registration of transfer of Notes. Prior to presentation of
any Note for registration of transfer, the Company shall treat the Person in
whose name such Note is registered as the owner and holder of such Note for all
purposes whatsoever, whether or not such Note shall be overdue, and the Company
shall not be affected by notice to the contrary.
SECTION 8.2 EXCHANGE. The holder of any Note, at its option,
may in person or by duly authorized attorney surrender the same for exchange at
the office maintained pursuant to Section 9.1 hereof, and promptly thereafter
and at the Company's expense, except as provided below, receive in exchange
therefor a new Note or Notes, each in the denomination requested by such holder
(but not less than $100,000, or if such holder shall be a holder of less than
$100,000 in aggregate principal amount of Notes, such lesser amount), dated the
date to which interest shall have been paid on the Note so surrendered or, if
no interest shall have yet been so paid, dated the date of the Note so
surrendered and registered in the name of such Person or Persons as shall have
been designated in writing by such holder or its attorney for the same
principal amount as the then unpaid principal amount of the Note so
surrendered.
SECTION 8.3 REPLACEMENT. Upon receipt by the Company of
evidence reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any Note and (a) in the
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case of loss, theft or destruction, of indemnity reasonably satisfactory to it;
provided, however, that if the holder of such Note is the original Purchaser of
such Note, or any Affiliate or nominee thereof, or any Institutional Investor
or any nominee thereof, its own unsecured agreement of indemnity, upon terms
reasonably satisfactory to the Company, shall be deemed to be satisfactory; or
(b) in the case of mutilation, upon surrender thereof, the Company, at its
expense, will execute and deliver in lieu thereof a new Note executed in the
same manner as the Note being replaced, in the same principal amount as the
unpaid principal amount of such Note and dated the date to which interest shall
have been paid on such Note or, if no interest shall have yet been so paid,
dated the date of such Note.
SECTION 9. CERTAIN COVENANTS OF THE COMPANY.
The Company covenants and agrees that so long as any Notes
shall remain outstanding:
SECTION 9.1 MAINTENANCE OF OFFICE. The Company will maintain
at its office located at its address shown at the head of this Agreement an
office where notices, presentations and demands in respect of this Agreement
and the Notes may be given to and made upon it; provided, however, that it may,
upon fifteen (15) days prior written notice to the Noteholders and the
Collateral Agent, move such office to any other location within the boundaries
of the continental United States of America. The Company hereby agrees that it
will pay, and will save any Noteholder harmless against liability for, any
stamp or other tax or governmental charge imposed in respect of any transfer of
a Note; and such obligation of the Company shall survive the payment or
prepayment of the Notes and the termination of this Agreement.
SECTION 9.2 EXISTENCE AND GOOD STANDING. The Company will take
and fulfill all actions and conditions necessary (a) to preserve and keep in
full force and effect its existence, rights and privileges as a Colorado
general partnership and to not liquidate or dissolve; (b) to qualify, and to
preserve and keep in full force and effect its qualification, to do business as
a foreign partnership in each jurisdiction in which the conduct of its business
or the ownership or leasing of its properties requires such qualification, or
to preserve and keep in full force and effect any such qualification, except to
the extent that any failure to so qualify would not be reasonably likely to
have a material and adverse effect on the business, earnings, properties or
condition (financial or other) of the Company; and (c) to preserve, maintain
the validity of all of its franchises, licenses, trademarks, tradenames,
permits, certificates of compliance and grants of authority required for the
conduct of its business.
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SECTION 9.3 GENERAL MAINTENANCE OF PROPERTIES AND BUSINESS,
ETC. The Company will:
(a) maintain its property in good condition (subject to
ordinary wear and tear) and make all reasonable and necessary renewals,
replacements, additions, betterments and improvements thereof and thereto, so
that the business carried on in connection therewith may be conducted properly
at all times;
(b) maintain or cause to be maintained, with financially
sound insurers of nationally recognized stature and responsibility, insurance
with respect to its property and business of such a nature, with such terms and
in such amounts, as is customary for entities engaged in the business of
providing cable television services; provided, however, that each insurance
policy maintained by the Company shall require the insurer to furnish
reasonable notice to the Collateral Agent and provide a reasonable opportunity
to cure any non-payment of premiums prior to termination of such policy and
shall name the Collateral Agent for the benefit of the Noteholders and the
Banks as an additional insured or loss payee thereof;
(c) keep proper books of record and accounts in which
entries will be made of its business transactions in accordance with and to the
extent required by generally accepted accounting principles; and
(d) set aside on its books from its earnings for each
Fiscal Year, in amounts deemed adequate in the reasonable opinion of the
Company, all proper accruals and reserves that, in accordance with generally
accepted accounting principles, should be set aside from such earnings in
connection with its business including reserves for depreciation, obsolescence
and/or amortization and accruals for taxes based on or measured by income or
profits and for all other taxes.
SECTION 9.4 NOTICE OF CERTAIN EVENTS AND CONDITIONS. The
Company will give prompt written notice to each holder of an outstanding Note
of any event of default (or any event which with notice or lapse of time or
both would constitute an event of default) under any evidence of Indebtedness
of the Company in an aggregate amount of $1,000,000 or more, or under any
indenture, mortgage or other agreement or instrument relating to any such
evidence of Indebtedness, and what action the Company has taken, is taking or
proposes to take and an estimate of the time necessary to cure any such
default.
SECTION 9.5 INSPECTION. The Company will permit upon
reasonable notice any holder of Notes, by its representatives,
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<PAGE> 39
agents or attorneys, (i) to examine all books of account, records, reports and
other papers of the Company, (ii) to make copies and take extracts from any
thereof, (iii) to discuss the affairs, finances and accounts of the Company
with its officers and independent certified public accountants (and by this
provision the Company hereby authorizes said accountants to discuss with any
such Noteholder the finances and accounts of the Company), and (iv) to visit
and inspect, at reasonable times during normal business hours, the properties
of the Company. It is understood and agreed by the Company that all reasonable
expenses in connection with any such inspection or discussion incurred by any
Noteholder or the Company, any officers and employees thereof and the
independent certified public accountants therefor shall be expenses payable by
the Company and shall not be expenses of the Person making the inspection or
discussion; provided, however, that any such expenses incurred by any
Noteholders in connection with any such inspection or discussion with the
Company's independent certified public accountants and any fees of the
Company's independent certified public accountants relating to such discussions
shall be the expenses of such Noteholders, unless such discussion shall occur
during the continuance of a Default or an Event of Default.
SECTION 9.6 COMPLIANCE WITH LAW, ETC. The Company will not
violate any laws, ordinances, governmental rules or regulations to which it is
or may become subject (including without limitation the Environmental Control
Statutes, federal and state securities laws, the Communications Act and all
other laws and regulations of the FCC and the Local Authorities and the
Copyright Act), and the provisions and requirements of all franchises, permits,
certificates of compliance and approval issued by regulatory authorities and
other like grants of authority held by the Company, except to the extent that
any such violation or failure would not be reasonably likely to materially and
adversely affect the business, earnings, properties or condition (financial or
other) of the Company.
SECTION 9.7 PAYMENT OF TAXES AND CLAIMS. The Company will pay
and discharge promptly when due:
(a) all taxes, assessments and governmental charges and
levies imposed upon it, its income or profits or any of its properties; and
(b) all lawful claims of materialmen, mechanics,
carriers, warehousemen, landlords and other similar Persons for labor,
materials, supplies and rentals that, if unpaid, might by law become a Lien
upon any of its property;
provided, however, that none of the foregoing need be paid while the same is
being contested in good faith by appropriate proceedings diligently conducted
so long as:
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(i) adequate reserves shall have been established in
accordance with generally accepted accounting principles with respect thereto;
and
(ii) the right of the Company to use the particular
property shall not be materially and adversely affected thereby.
SECTION 9.8 ERISA. (a) The Company and the ERISA Affiliates
each will take all actions and fulfill all conditions necessary to maintain any
and all Plans in substantial compliance with applicable requirements of ERISA
and the Code until such Plans are terminated, and the liabilities thereof
discharged, in accordance with applicable law.
(b) No Pension Plan will have any "accumulated funding
deficiency' (within the meaning of Section 412 of the Code), which deficiency
or violation would be reasonably likely to materially adversely affect the
business, earnings, properties or condition (financial or other) of the
Company.
SECTION 9.9 TRANSACTIONS WITH AFFILIATES. The Company will not
enter into any transaction (including, without limitation, the purchase, sale
or exchange of any property, the rendering of any services or the payment of
Management Fees) with any Affiliate, except in the ordinary course of the
businesses of the Company, and in good faith and upon commercially reasonable
terms that are no less favorable to the Company than would obtain in a
comparable arm's-length transaction with a Person other than an Affiliate;
provided, however, that (i) so long as no Default or Event of Default shall
exist, in connection with the sale of a System as permitted by Section 9.18
hereof, the Company may make such distributions to the Partners as shall be
necessary to cover each such Partner's tax liability in connection with such
sale; (ii) the Company may (A) repay advances (and accrued interest thereon at
a rate not to exceed Jones' Weighted Average Cost of Borrowing) made by Jones
to the Company and (B) pay Management Fees and Home Office Allocations pursuant
to the provisions of Section 9.25 hereof; provided, however, that if during any
Fiscal Quarter the Company shall have repaid advances or made payments of
Management Fees and Home Office Allocations to Jones at a time when no Event of
Default or Default exists and an Event of Default or Default shall exist as of
the end of the Fiscal Quarter during which such payments was made, Jones shall
repay the same to the Company immediately upon determination of the existence
of an Event of Default or Default and, after such repayment, the same shall be
deemed to have been deferred for purposes of this Agreement; (iii) so long as
no Default or Event of Default shall exist, the Company may make payments to
Affiliates for brokerage services, including such services rendered in
connection with the purchase or sale of a System to a person other than an
Affiliate and
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for the sale of television or other signals, the purchase or lease of
television or other signals or specialized equipment and the licensing of
technology, provided such transactions are at a price and on terms at least as
favorable as those prices and terms being generally offered in the same market
place by unrelated parties for goods or services as nearly identical as
possible in regard to quality, technical advancement and availability; and (iv)
so long as no Default or Event of Default shall exist, the Company may pay
brokerage fees to The Jones Group Ltd. in connection with (y) the sale of a
System to a person other than an Affiliate in an amount not to exceed two and
one-half percent (2-1/2%) of the gross sales price of the System and (z) the
purchase of a System in an amount not to exceed four and one-half percent
(4-1/2%) of the lower of the gross purchase price or appraisal value of such
System.
SECTION 9.10 LIMITATIONS ON INDEBTEDNESS. The Company will not
create, assume, incur, guarantee, issue or in any manner become liable,
contingently or otherwise, in respect of any Indebtedness other than (a)
Indebtedness under the Notes; (b) Indebtedness under the Loan Agreement; (c)
trade Indebtedness incurred in the normal and ordinary course of business for
value received; (d) Indebtedness to Jones for deferred Management Fees and Home
Office Allocations subordinated to Indebtedness owing to the Banks and the
Noteholders pursuant to the Subordination Agreement; (e) Indebtedness to Jones;
provided, however, that such Indebtedness shall be subordinated to the
Indebtedness of the Company to the Noteholders and the Banks pursuant to the
provisions of the Subordination Agreement; (f) Indebtedness incurred to
purchase or lease fixed or capital assets, including pursuant to Capital
Leases; and (g) other Indebtedness; provided, however, that the aggregate
principal amount of Indebtedness outstanding under clauses (f) and (g) of this
Section 9.10 shall not at any time exceed $5,000,000.
SECTION 9.11 GUARANTIES. The Company will not guarantee or
assume or agree to become liable in any way, either directly or indirectly, for
any additional Indebtedness of others except to endorse checks or drafts in the
ordinary course of business.
SECTION 9.12 FUNDED DEBT TO ANNUALIZED OPERATING CASH FLOW
RATIO. The Company will not permit the ratio of Funded Debt to Annualized
Operating Cash Flow at any time during any period set forth below to exceed the
applicable ratio set forth opposite such period below:
<TABLE>
<CAPTION>
Ratio of Funded Debt
to Annualized Operating
Period Cash Flow
------ ---------
<S> <C>
1/1/92 - 6/29/93 5.25:1.00
</TABLE>
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<PAGE> 42
<TABLE>
<S> <C>
6/30/93 - 6/29/94 4.75:1.00
6/30/94 and thereafter 4.25:1.00
</TABLE>
SECTION 9.13 DEBT SERVICE COVERAGE. The Company will not
permit Operating Cash Flow for any Fiscal Quarter to be less than 1.25 times
Debt Service for such Fiscal Quarter.
SECTION 9.14 OPERATING CASH FLOW TO INTEREST EXPENSE RATIO.
The Company will not permit the ratio of Operating Cash Flow for any Fiscal
Quarter ending during any period set forth below to Interest Expense for such
fiscal quarter to be less than the applicable ratio set forth opposite such
period below:
<TABLE>
<CAPTION>
Ratio of
Operating Cash Flow
Period to Interest Expense
------ -------------------
<S> <C> <C>
1/1/92 - 3/31/94 2.00:1.00
4/1/94 and thereafter 2.25:1.00
</TABLE>
SECTION 9.15 LIENS. The Company will not, create, incur or
suffer to exist any Lien upon any of its assets or property now or hereafter
owned, or upon the income or profits thereof, except liens in favor of the
Collateral Agent for the benefit of the Noteholders and the Banks and Permitted
Liens.
SECTION 9.16 NO ADDITIONAL NEGATIVE PLEDGE. The Company will
not agree or covenant with or promise any Person other than the Noteholders
that it will not pledge its assets or properties or otherwise grant any Liens
on its property on terms similar to those set forth in Section 9.15 hereof
except pursuant to Paragraph 6.04 of the Loan Agreement.
SECTION 9.17 RESTRICTED PAYMENTS. The company will not make
any Restricted Payments except as permitted pursuant to Section 9.9 hereof.
SECTION 9.18 TRANSFER OF ASSETS; LIQUIDATION. The Company will
not sell, lease, transfer or otherwise dispose of all or any portion of its
assets, real or personal, other than such transactions in the normal and
ordinary course of business for value received; or discontinue, liquidate, or
change in any material respect any substantial part of its operations or
businesses); provided, however, that (A) the Company may sell its California
City franchise and related assets (part of the Palmdale System) to Falcon Cable
for approximately $2,000,000, which sale shall not constitute the sale of a
"System" for purposes hereof, and (B) the Company may sell any one System
provided that (i) in connection with such sale of a System the Company shall
make a mandatory payment of the Notes as provided in Section 7.6 hereof; (ii)
immediately before, and immediately after and after giving effect to such sale,
no Default or Event of
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<PAGE> 43
Default shall exist; and the Company will deliver to each Noteholder an
Officer's Certificate to such effect and (iii) immediately after the
consummation of such sale and after giving effect thereto, the ratio of Funded
Debt to Pro Forma Annualized Operating Cash Flow shall be no greater than the
ratio of Funded Debt to Annualized Operating Cash Flow immediately prior to the
consummation of such sale. For the purposes of determining whether any Default
or Event of Default shall exist immediately after and after giving effect to
any such sale, Funded Debt, Annualized Operating Cash Flow, Operating Cash
Flow, Debt Service and Interest Expense shall be determined on a pro forma
basis, reducing Operating Cash Flow (and Annualized Operating Cash Flow) by the
portion thereof attributable to the System being sold and reducing Funded Debt,
Debt Service and Interest Expense to the extent, if any, attributable to any
portion of Funded Debt being paid contemporaneously with the consummation of
such sale.
SECTION 9.19 ACQUISITIONS AND INVESTMENTS. The Company will
not (a) purchase or otherwise acquire any Investments in any other Person
except (i) Permitted Investments, (ii) loans to employees and advances to
subcontractors and suppliers in the ordinary course of business not exceeding
$50,000 in aggregate principal amount at any time outstanding and (iii) so long
as no Event of Default or Default has occurred and is then continuing the
Company may make acquisitions of cable systems that are contiguous to and to be
operated together with the Company's existing Systems, provided, however, that
the aggregate amount of consideration for any such acquisitions consummated in
any Fiscal Year shall not exceed $3,000,000; or (b) enter into any new business
activities or ventures not directly related to its present business; or (c)
merge or consolidate with or into any other Person; or (d) create any
Subsidiary.
SECTION 9.20 NATURE OF BUSINESS. The Company will not engage
in any business activities other than providing cable television services,
related fiber communications services, or other telecommunications services in
and around those areas the company presently serves.
SECTION 9.21 PARTNERSHIP DOCUMENTS. The Company will not amend
or permit any amendments to the Joint Venture Agreement.
SECTION 9.22 LOAN AGREEMENTS. Without prior notice to each
Noteholder and the prior written consent of the holders at least 66 2/3% of the
aggregate principal amount of the Notes then outstanding the Company will not
enter into any amendment of the Loan Agreement which:
(a) alters the maturity date of any Indebtedness under
the Loan Agreement to make it earlier than March 31, 2000 or alters
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<PAGE> 44
the repayment schedule set forth in paragraph 2.05 of the Loan Agreement in any
manner which causes requires payments to be made sooner than set forth therein
or increases the aggregate dollar amount due on any given required payment date
(except the maturity date);
(b) adjusts the method or formula by which the interest
due under the Loan Agreement is determined so as to increase the effective
interest rate except for adjustments currently contemplated by the Loan
Agreement;
(c) reduces the Commitment (as defined in the Loan
Agreement) except reductions pursuant to Paragraph 2.05(b), Paragraph 2.08 or
Paragraph 2.09 of the Loan Agreement; and
(d) alters any of the financial covenants set forth in
Paragraphs 5.15, 5.16, 5.17 and Article 6 of the Loan Agreement in a manner
which would make it more difficult for the Company to comply with or remain in
compliance with those covenants, or adds additional financial covenants to the
Loan Agreement.
SECTION 9.23 REPURCHASE OF NOTES. The Company will not permit
any Affiliate directly or indirectly to repurchase or make any offer to
repurchase any Notes unless the Company or such other Person has offered to
repurchase the Notes, pro rata, from all holders of outstanding Notes upon the
same terms. If the Company repurchases any Notes, such Notes shall thereafter
be canceled and no Notes shall be issued in substitution therefor.
SECTION 9.24 ADDITIONAL COLLATERAL. The Company will execute,
deliver and record, at any time upon the Collateral Agent's request and in form
and substance satisfactory to Noteholders, any of the following instruments in
favor of the Collateral Agent as additional Collateral for all of the Company's
obligations hereunder: (i) mortgages on any of the Company's real estate and
certificates of title encumbrances against any of its vehicles, (ii)
assignments of leases of real or personal property leased by the Company from
or to others, (iii) specific assignments by the Company of easements, licenses,
permits, certificates of compliance and certificates of approval issued by
regulatory authorities, pole rental agreements, franchises or like grants of
authority or service agreements, and (iv) any other like assignments or
agreements specifically covering any of the Company's properties or assets.
SECTION 9.25 MANAGEMENT FEES. The Company may pay Management
Fees in any Fiscal Quarter in an amount not to exceed five percent (5%) of
Gross Operating Revenues for such quarter; provided, however, that (i)
immediately before and after giving effect to such payment, no Default or Event
of Default shall exist; (ii) any Management Fees or Home Office Allocations
accrued for any Fiscal
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Quarter but not paid out of Operating Cash Flow for such quarter shall be
deferred and subordinated to the Notes pursuant to the Subordination Agreement;
and (iii) the Company may pay accrued interest on deferred Management Fees and
Home Office Allocations at a rate not to exceed Jones' Weighted Average Cost of
Borrowing.
SECTION 9.26 EXTENSION OF FRANCHISES; CONSENTS. The Company
shall commence the renewal process of each franchise in a System within 30 days
after the earliest date possible under the Cable Act.
SECTION 9.27 ENVIRONMENTAL AUDIT REPORT. The Company shall
obtain and deliver to each Noteholder, no later than 45 days after the Closing
Date, a Phase I environmental audit report prepared by ERM-Rocky Mountain, Inc.
or an Affiliate thereof and addressed to each Noteholder, with respect to the
Company's Lancaster office and Drew Park office sites, satisfactory in form,
scope and substance (including the results and findings expressed therein) to
each Noteholder, as to any environmental hazards or liabilities to which the
Company, any Partner or Jones may be liable. The Company covenants that it will
implement all of the recommendations contained in such environmental audit
report.
SECTION 10. INFORMATION TO BE FURNISHED TO HOLDERS OF NOTES.
SECTION 10.1 FINANCIAL STATEMENTS OF THE COMPANY. The Company
covenants and agrees that it will deliver to each Noteholder two copies of each
of the following:
(a) as soon as practicable and, in any case, within one
hundred five (105) days after the end of each Fiscal Year, financial statements
of the Company, setting forth the balance sheets of the Company as of the end
of such Fiscal Year and the statements of operations, partners' capital and
cash flows of the Company for such Fiscal Year, setting forth in each case, in
comparative form, the figures for the preceding Fiscal Year, all in reasonable
detail and accompanied by an unqualified opinion thereon of independent
certified public accountants selected by the Company of good and recognized
national standing in the United States, relating to such financial statements,
which report and opinion shall be prepared in accordance with generally
accepted accounting standards relating to reporting;
(b) as soon as practicable and, in any case, within sixty
(60) days after the end of each of the first three Fiscal Quarters in each
Fiscal Year, financial statements of the Company setting forth the balance
sheets of the Company at the end of each such Fiscal Quarter and the statements
of operations, partners' capital and cash flows of the Company for each such
Fiscal Quarter and for the year to date, and setting forth in comparative form
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<PAGE> 46
figures as of the corresponding date and for the corresponding periods of the
preceding Fiscal Year, all in reasonable detail and certified by the President,
Group Vice President-Finance or Treasurer of Jones as to the fairness of such
financial statements and that the same have been prepared in accordance with
generally accepted accounting principles consistently applied (except as
specifically set forth therein), subject to changes resulting from normal
year-end audit adjustments;
(c) as soon as practicable and, in any case, within one
hundred five (105) days after the end of each Fiscal Year, financial statements
of each Partner and Jones, each setting forth the balance sheets of such
Partner or Jones, as the case may be, as of the end of such Fiscal Year and the
statements of operations, partners' capital or shareholders' equity, as the
case may be, and cash flows of such Partner or Jones, as the case may be, for
such Fiscal Year, setting forth in each case, in comparative form, the figures
for the preceding Fiscal Year, all in reasonable detail and accompanied by an
unqualified (in the case of any Partner (other than Cable TV Fund 12-B) only)
opinion thereon of independent certified public accountants selected by the
such Partner or Jones, as the case may be, of good and recognized national
standing in the United States, relating to such financial statements, which
report and opinion shall be prepared in accordance with generally accepted
accounting standards relating to reporting; and
(d) as soon as practicable and, in any case, within sixty
(60) days after the end of each of the first three Fiscal Quarters in each
Fiscal Year, financial statements of each Partner and Jones, setting forth the
balance sheets of such Partner or Jones, as the case may be, at the end of each
such Fiscal Quarter and the statements of operations, partners' capital or
shareholders' equity, as the case may be, and cash flows of such Partner or
Jones, as the case may be, for each such Fiscal Quarter and for the year to
date, and setting forth in comparative form figures as of the corresponding
date and for the corresponding periods of the preceding Fiscal Year, all in
reasonable detail and certified by the President, Group Vice President-Finance
or Treasurer of Jones as to the fairness of such financial statements and that
the same have been prepared in accordance with generally accepted accounting
principles consistently applied (except as specifically set forth therein),
subject to changes resulting from normal year-end audit adjustments;
provided, however, that the financial statements required to be delivered under
the subsections (c) and (d) of this Section 10.1 shall be deemed delivered to
the extent that any such financial statements are contained in documents
delivered by the Company pursuant to Section 10.2(b) hereof.
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<PAGE> 47
SECTION 10.2 OTHER INFORMATION. The Company will deliver to
each Noteholder:
(a) promptly upon, and in any event within five (5) days,
after distribution thereof, copies of all annual or quarterly financial or
proxy statements and annual and quarterly reports as the Company, any Partner
or Jones shall send to its stockholders or partners; provided, however, that as
to such proxy statements and reports, Jones and each Partner shall be required
to deliver such information only if it relates to the Company or a Partner;
(b) promptly, and in any event within five (5) days,
after the filing thereof, copies of all periodic reports, current reports and
registration statements which the Company, any Partner or Jones may file with
the SEC or any equivalent governmental agency and, promptly upon written
request therefor, copies of any financial statements which the Company, any
Partner or Jones may file annually with any federal, state or local regulatory
agency or agencies;
(c) promptly, and in any event within ten (10) days,
thereafter, notice of the institution of any suit, action or proceeding, the
happening of any event or the assertion or threat of any claim against the
Company, any Partner or Jones which could, in the reasonable judgment of the
Company, have a materially adverse effect on the business, earnings, prospects,
properties or condition (financial or other) of the Company, any Partner or
Jones;
(d) promptly upon, and in any event within ten (10) days
after, obtaining knowledge thereof, notice of any change in any law which
could, in the reasonable judgment of the Company, have a material adverse
effect on the business, earnings, properties or condition (financial or other)
of the Company, any Partner or Jones;
(e) at any time that the Company is not subject to the
reporting requirements of Section 13 or Section 15(d) of the Exchange Act,
promptly upon the written request of the holder of any Note, (i)(x) a brief
statement of the nature of the business of the Company and the products and
services they offer and (y) the Company's most recent balance sheet and profit
and loss and retained earnings statements, together with similar financial
statements for its two preceding Fiscal Years, in each case audited by an
independent certified public accountant; the most recent balance sheet to be as
of a date less than sixteen months prior to the date of such request and the
profit and loss and retained earnings statements to be for the twelve months
preceding the date of such balance sheet and, if such balance sheet is not as
of a date less than six months before the date of such request, it shall be
accompanied by additional statements of profit and loss and retained earnings
for a period from the date of such balance sheet to a date less than six months
before the date of such request, or (ii) such
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<PAGE> 48
other information as shall then be required to permit a resale of Notes by such
holder pursuant to Rule 144A of the Securities Act (or any superseding rule
providing an exemption from registration under the Securities Act for resales
to Qualified Institutional Buyers); provided, however, that, if such request
shall so indicate, the statement and financial statements or other information
shall be delivered to any named prospective purchaser of a Note as well as to
the requesting holder, so long as the request states that such holder
reasonably believes such prospective purchaser to be a Qualified Institutional
Buyer;
(f) promptly, and in any event within five (5) days,
after the occurrence of any Default or Event of Default, an Officer's
Certificate specifying the nature and period of existence thereof, what action
the Company has taken or is taking or proposes to take with respect thereto,
and an estimate of the time necessary to cure such condition or event;
(g) promptly upon, and in any event within five (5) days
after, becoming aware of the occurrence of any (i) ERISA Termination Event;
(ii) "prohibited transaction" (within the meaning of Section 4975 of the Code
or Section 406 of ERISA), other than one to which an exemption applies; (iii)
failure to make a timely contribution to any Pension Plan, if such failure has
given rise to a Lien under Section 412(n) of the Code; or (iv) actual, asserted
or alleged violation of ERISA or the Code, that, with respect to any of the
events set forth in the foregoing clauses (i) through (iv), could result in a
tax, penalty or other consequence to the Company, or any ERISA Affiliate in
connection with any Plan, which tax, penalty or other consequence, individually
or in the aggregate, would, or would be reasonably likely to, materially
adversely affect, individually or in the aggregate, the business, earnings,
prospects, properties or condition (financial or other) of the Company, a
written notice specifying the nature thereof, what action the Company is taking
or proposes to take with respect thereto, and, when known, any action taken by
the IRS, the DOL, the PBGC or any other Person with respect thereto;
(h) promptly, and in any event within five (5) days,
after, notice that any cable television franchise or license held by the
Company has been revoked, terminated or suspended;
(i) within sixty (60) days after the end of each Fiscal
Quarter, a report, in form and substance satisfactory to the Noteholders,
covering each System and showing (i) the number of Basic Subscribers, Basic
Subscribers excluding commercial buildings and residential subscribers which
have reduced bulk service rates and Pay Units at the beginning and at the end
of such Fiscal Quarter, (ii) the number of residences passed by cable as of the
end
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of such Fiscal Quarter, and (iii) any other information reasonably requested by
the Noteholders;
(j) with respect to the Environmental Control Statutes,
in connection with the conduct of the Company's or any Subsidiary's business(es)
or operations, notice within ten (10) days after any person, or any federal,
state or local agency provides oral or written notification to the Company, the
Partners or Jones with regard to an actual or imminently threatened removal,
spill, release or discharge of hazardous or toxic wastes, substances or
petroleum products relating to the Company; and notify Banks in detail
immediately (i) upon the receipt by the Company of an assertion of liability
under the Environmental Control Statutes, (ii) of any actual or alleged failure
of the Company to comply with or perform, breach, violation or default under
any such Environmental Control Statutes and (iii) of the occurrence or
existence of any facts, events or circumstances which with the passage of time,
the giving of notice, or both, could create such a breach, violation or
default;
(k) within thirty (30) days after the occurrence thereof,
notice of any change of its fund vice president or System Manager responsible
for a System or any other officer senior to any such fund vice president or
System Manager; and
(l) promptly upon request therefor, such other data,
filings and information as any Noteholder may from time to time reasonably
request.
SECTION 10.3 OFFICER'S CERTIFICATES. The Company will deliver
with each set of financial statements delivered pursuant to subsection (a) or
(b) of Section 10.1 hereof an Officer's Certificate (i) stating, in the opinion
of the officer executing such Officer's Certificate and to the best of his
knowledge and belief, that upon the date of such certificate no Default or
Event of Default exists (provided, however, that, in the event that any such
Default or Event of Default exists, such certificate shall so specify and shall
state whether such Default or Event of Default has been cured or is continuing
and, if continuing, what steps the Company has taken or is taking or proposes
to take to cure such Default or Event of Default and an estimate of the time
necessary to cure such Default or Event of Default) and (ii) setting forth in
reasonable detail the calculations made during such period and as of the end of
such period in determining compliance with each of the provisions of Sections
9.12, 9.13, 9.14 and 9.18 hereof.
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SECTION 11. DEFAULTS AND REMEDIES.
SECTION 11.1 EVENTS OF DEFAULT; ACCELERATION OF NOTES. If any
of the following conditions or events ("Events of Default") shall occur and be
continuing:
(a) any payment or prepayment of principal of or premium
on any Note shall not be made when the same becomes due and payable, whether at
maturity, at a date fixed for prepayment, upon acceleration or otherwise; or
(b) any payment of interest on any Note shall not be made
when the same becomes due and payable and such default shall continue for five
days following the date on which such payment was due and payable; or
(c) the Company shall default in the due and punctual
performance of or compliance with any covenant, condition or agreement to be
performed or observed by it under Sections 9.9 through 9.19, 9.23 and 10.2(g)
hereof or shall use the proceeds of sale of the Notes other than as described
in Section 1.3 hereof; or
(d) the Company shall default in the due and punctual
performance of or compliance with any other covenant, condition or agreement to
be performed or observed by it under any provision hereof and any such failure
shall continue unremedied for thirty (30) days after receipt by the Company of
notice thereof from any Noteholder; or
(e) any Lien on any Franchise or on property having an
aggregate fair market value in excess of $250,000 created or intended to be
created by any of the Security Documents shall cease to be a valid and
enforceable Lien, or any such Lien shall cease to be a perfected Lien; or
(f) any representation, warranty, certification or
statement of the Company made or contained in this Agreement, or in any
certificate, statement or other writing furnished in connection herewith or
therewith or pursuant hereto or thereto shall prove to have been false or
inaccurate in any material respect on the date as of which such representation
or warranty was made; or
(g) the Company or any Partner (other than Cable TV Fund
12-B, Ltd.) shall, in respect of any of its Indebtedness under the Loan
Agreement or any other Indebtedness (excluding the Notes) in an amount,
individually or in the aggregate, in excess of $1,000,000 (x) fail to pay any
amount of Indebtedness when due whether at maturity, at a date fixed for
prepayment, upon acceleration or otherwise, or (y) default in the performance
or observance of any other provision contained in any instrument or
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agreement evidencing such Indebtedness, if the effect of such failure to pay or
default is to cause or permit the holder or the requisite holders of such
Indebtedness or a trustee or agent (I) to cause such Indebtedness to become due
and payable prior to its stated maturity, or (II) to take any action to realize
upon any assets or property of the Company or any such Partner under any
agreement or instrument evidencing or securing such Indebtedness; or
(h) the Partners shall agree to terminate or dissolve the
Company or the Company shall be terminated or dissolved and not simultaneously
continued; or
(i) any event or condition shall occur or exist with
respect to any activity or substance regulated under the Environmental Control
Laws and as a result of such event or condition, the Company has incurred a
liability in excess of $500,000 during any consecutive twelve (12) month
period; or
(j) any judgment, writ, warrant or attachment or
execution or similar process which calls for payment or presents liability in
excess of $500,000 (not covered by insurance) shall be rendered, issued or
levied against the Company or a Partner or its respective property and such
process shall not be paid, waived, stayed, vacated, discharged, settled,
satisfied or fully bonded within sixty (60) days after its issuance or levy; or
(k) any judgment, writ, warrant or attachment or
execution or similar process which calls for payment or presents liability in
excess of $2,000,000 (not covered by insurance) shall be rendered, or issued or
levied against Jones or its property and such process shall not be paid,
waived, stayed, vacated, discharged, settled, satisfied or fully bonded within
sixty (60) days after its issuance or levy; or
(l) the Company, any Partner or Jones shall institute
proceedings for liquidation, readjustment, arrangement or composition (or for
any related or similar purpose) under any law relating to financially
distressed debtors, their creditors or property, or shall consent to (or fail
to object to in a timely manner) the institution of any such proceedings
against the Company, as the case may be; or
(m) the Company, any Partner or Jones shall be insolvent
(within the meaning of any applicable law), or shall be unable, or shall admit
in writing its inability, to pay its debts as they become due, or shall make an
assignment for the benefit of creditors or enter into any arrangement for the
adjustment or composition of debts or claims; or
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(n) a court or other governmental authority or agency
having jurisdiction in the premises shall enter a decree or order (i) for the
appointment of a receiver, liquidator, assignee, trustee, custodian or
sequestrator (or other similar official) of the Company, any Partner or Jones
or of any part of their respective properties, or for the winding-up,
dissolution or liquidation of their affairs; and such decree or order shall
remain in force undischarged and unstayed for a period of more than thirty (30)
days, or,(ii) for the sequestration or attachment of any material part of the
property of the Company, any Partner or Jones without its unconditional return
to the possession of the Company, any Partner or Jones, as the case may be, or
its unconditional release from such sequestration or attachment, within thirty
(30) days thereafter; or
(o) a court or other governmental authority or agency
having jurisdiction in the premises shall enter a decree or order approving or
acknowledging as properly filed or commenced against the Company, any Partner
or Jones a petition or proceedings for liquidation, rehabilitation,
readjustment or composition (or for any related or similar purpose) under any
law relating to financially distressed debtors, their creditors or property,
and any such decree or order shall remain in force undischarged and unstayed
for a period of more than thirty (30) days; or
(p) the Company, any Partner or Jones shall take
corporate action for the purpose or with the effect of authorizing or
confirming the taking or existence of any action or condition specified in
clause (l) or (m) above; or
(q) (i) any Pension Plan (other than a Multiemployer
Plan) shall incur an "accumulated funding deficiency" (within the meaning of
Section 412 of the Code) with respect to any plan year; or (ii) any waiver
shall be sought or granted under Section 412(d) of the Code; or (ii) any
Pension Plan shall be, have been or be likely to be terminated or the subject
of termination proceedings under ERISA; or (iii) the Company or any ERISA
Affiliate shall incur or be likely to incur a liability to or on account of a
Pension Plan under Section 4062, 4063, 4064 or 4201 of ERISA, and there shall
result from one or more of the events set forth in the foregoing clauses (i)
through (iv) either a liability or a material risk of incurring a liability to
the PBGC or a Pension Plan, which could have a material and adverse effect on
the business, earnings, prospects, properties or condition (financial or other)
of the Company; or
(r) any franchise held by the Company shall be revoked,
terminated or suspended and such revocation, termination or suspension shall
not have been effectively stayed within ninety (90) days, other than any
termination in connection with the sale of any
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assets pursuant to Section 9.18 hereof and other than revocations, terminations
and suspensions which, individually or in the aggregate, do not result in the
loss of more than 10% of the greater of the number of Basic Subscribers as of
December 31, 1991 and the number of Basic Subscribers as of the end of the most
recently ended Fiscal Quarter
then, subject to the provisions of the Intercreditor Agreement:
(x) upon the occurrence and continuance of any of the
Events of Default set forth in clauses (l) through (p), inclusive, of this
Section 11.1, the unpaid principal amount of the Notes shall automatically
become due and payable, together with interest accrued thereon, plus a premium
equal to the Make-Whole Amount, without presentment, demand, protest or any
notice, all of which are expressly hereby waived;
(y) upon the occurrence and continuance of any Event of
Default set forth in clause (a) or (b) of this Section 11.1 with respect to any
Note, any holder of such Note may, in respect of the Note or Notes then held by
such holder, by written notice to the Company, declare the Note(s) held by such
holder to be due and payable, whereupon the same shall mature and become due
and payable, together with interest accrued thereon, plus a premium equal to
the Make-Whole Amount, without presentment, demand, protest or notice of any
kind, all of which are hereby expressly waived; or
(z) upon the occurrence and continuance of any of the
Events of Default set forth in clauses (a) through (k), inclusive, or in clause
(q) or (r) of this Section 11.1, any holder or holders of a majority of the
aggregate unpaid principal amount of the Notes then outstanding may by written
notice or notices to the Company declare all of the Notes then outstanding to
be due and payable, whereupon the same shall mature and become due and payable,
together with interest accrued thereon, plus a premium equal to the Make-Whole
Amount, without presentment, demand, protest or any other notice, all of which
are hereby waived.
SECTION 11.2 DEFAULT REMEDIES. Subject to the terms of the
Intercreditor Agreement, if an Event of Default shall occur and be continuing,
the holder of any Note then outstanding may exercise any right, power or remedy
permitted to it by law, either by suit in equity or by action at law, or both,
whether for specific performance of any covenant or agreement contained in this
Agreement, the Security Documents or in such Note or for an injunction against
a violation of any of the terms of this Agreement, the Security Documents or
such Note or in aid of any exercise of any power granted in this Agreement, the
Security Documents or in such Note, or may proceed to enforce payment of such
Note or to enforce any other legal or equitable right of the holder
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of such Note. No remedy herein conferred upon any Noteholder is intended to be
exclusive of any other remedy and each and every remedy shall be cumulative and
shall be in addition to every other remedy given hereunder or now or hereafter
existing at law, in equity, by statute or otherwise. No course of dealing on
the part of any Noteholder, or any delay or failure on the part of any
Noteholder to exercise any right or power, shall operate as a waiver of such
right or power or otherwise prejudice the rights, powers and remedies of such
Noteholder or of any other Noteholder. No failure to insist upon strict
compliance with any covenant, term, condition or other provision of this
Agreement, the Security Documents or the Notes shall constitute a waiver by any
Noteholder of any such covenant, term, condition or other provision or of any
Default or Event of Default in connection therewith. To the extent effective
under applicable law, the Company hereby agrees to waive, and does hereby
absolutely and irrevocably waive and relinquish, the benefit and advantage of
any valuation, stay, appraisement, extension or redemption laws now existing or
that may hereafter exist that, but for this provision, might be applicable to
any sale made under any judgment, order or decree of any court, or otherwise,
based on the Notes or on any claim for interest on the Notes. If an Event of
Default shall occur, and be continuing, the Company will pay to the
Noteholders, to the extent not prohibited by applicable law, such further
amount as shall be sufficient to cover the reasonable costs and expenses of
collection and of the taking of remedial actions and the maintenance of
enforcement proceedings, including, without limitation, reasonable attorneys'
fees and disbursements. All sums payable by the Company under the Notes shall
be paid without counterclaim, setoff, deduction or defense and without
abatement, suspension, deferment, diminution or reduction.
SECTION 11.3 NOTICE OF DEFAULT. If the holder of any Note or
the holder of any other evidence of Indebtedness of the Company shall give any
notice or take any other action with respect to a claimed default, the Company
shall forthwith give written notice thereof to all holders of Notes then
outstanding describing the notice or action and the nature of the claimed
default.
SECTION 11.4 ANNULMENT OF ACCELERATION OF NOTES. If notice is
delivered pursuant to clause (z) of Section 11.1 hereof by any Noteholder or
Noteholders, then the holders of at least sixty-six and two-thirds percent
(66-2/3%) of the aggregate unpaid principal amount of Notes then
outstanding may, in respect of all of the Notes, by written instrument filed
with the Company, rescind and annul such declaration and the consequences
thereof or of such Event of Default pursuant to this Agreement; provided,
however, that at the time of any such annulment and rescission:
(a) no judgment or decree shall have been entered for
payment or any monies due pursuant to the Notes or this Agreement
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and no action shall have been taken by any Noteholder or the Collateral Agent
which may not then be waived, rescinded or annulled;
(b) all arrears of principal, premium and interest upon
all the Notes and all other sums payable under the Notes, this Agreement and
the Security Documents (including reasonable costs and expenses of the
Noteholders incurred in connection with such notice under Section 11.1 hereof
or annulment under this Section 11.4, but excluding any principal or interest
on the Notes that shall have become due and payable by reason of such notice
under Section 11.1 hereof or happening of such Event of Default) shall have
been duly paid; and
(c) each and every other default hereunder and Event of
Default shall have been duly waived or cured; and
provided, further, however, that no such rescission and annulment shall extend
to or affect any subsequent default or Event of Default or impair any right or
power consequent thereon.
SECTION 12. INTERPRETATION OF AGREEMENT AND NOTES.
SECTION 12.1 DEFINITIONS. Except as the context shall
otherwise require, the following terms shall have the following meanings for
all purposes of this Agreement (the definitions to be applicable to both the
singular and the plural form of the terms defined, where either such form is
used in this Agreement):
The term "Affiliate," with respect to any Person (hereinafter
"such Person"), shall mean any other Person (i) which directly or
indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such Person or another
Affiliate of such Person, (ii) which beneficially owns or holds 5% or
more of the shares of any class of the Voting Stock of such Person, or
(iii) 5% or more of the shares of any class of Voting Stock of which
is beneficially owned or held of record by such Person or any of its
Subsidiaries or (iv) any officer, director, partner or employee of
such Person. The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of
Voting Stock, by contract or otherwise. The term "Affiliate," when used
herein without reference to any Person, shall mean an Affiliate of the
Company.
The term "Agent" shall have the meaning set forth in Section
2.2(a) hereof.
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The term "Albuquerque System" shall mean the cable franchise,
related contract rights and operating cable television properties and
systems of the Company located in and around the City of Albuquerque,
New Mexico.
The term "Annualized Operating Cash Flow" shall mean as of the
date of determination thereof, four (4) times Operating Cash Flow for
the Fiscal Quarter most recently ended.
The term "Bank" shall mean individually, and "Banks" shall
mean individually and collectively, CoreStates Bank, N.A., a national
banking association which also conducts business as Philadelphia
National Bank and as CoreStates First Pennsylvania Bank, The Royal
Bank of Canada, a Canadian chartered bank, NationsBank of Texas N.A.,
a national banking institution, Connecticut National Bank, a national
banking association, CIBC, Inc., a United States financial
institution, and their successors and assigns.
The term "Basic Rate" shall mean the minimum standard monthly
fees and charges for the minimum level of "basic services" or
"expanded basic services" (as such terms are commonly used with
respect to the Systems).
The term "Basic Subscribers" shall mean the number of
subscribers in the Systems (excluding "second connects" as such term
is commonly understood in the cable television industry) who are (a)
currently receiving cable television signals supplied by the Company;
(b) have commenced payment for such signals at the Basic Rate,
directly or indirectly, under subscriptions with the Company; and (c)
are not sixty (60) or more days delinquent in payments as determined
on a contractual basis. In the case of commercial buildings, such as
hotels or motels, or in the case of multiple residential dwellings,
such as apartment houses and multifamily homes, which do not obtain
reduced bulk service rates, each separate guest unit or dwelling unit
receiving service shall be counted as one subscriber. The number of
subscribers in a commercial building or in a multiple residential
dwelling which does obtain a reduced bulk service rate shall be
obtained by dividing (i) the aggregate dollar amount of monthly
subscribers' fees paid on account of such commercial building or
multiple residential dwelling for basic service and expanded basic
service by (ii) the applicable monthly rate for expanded basic
services for the System in which such building or dwelling is located.
Residential households (other than in a multiple residential dwelling)
paying for services under any form of deferral payment arrangement
shall not be included.
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The term "Board" shall mean, with respect to any Person, its
board of directors or, if it does not have a board of directors, its
governing body which performs the same duties as a board of directors.
The term "Business Day" shall mean any day on which commercial
banks are not authorized or required to close in Englewood, Colorado
or Boston, Massachusetts.
The term "Cable Act" shall mean the Cable Communications
Policy Act of 1984, as amended, and all rules and regulations
promulgated thereunder, as from time to time in effect.
The term "Cable TV Fund 12 Forms 10-K" shall have the meaning
set forth in Section 2.2(a) hereof.
The term "Capital Expenditure" shall mean cash expenditures
or the incurrence of Indebtedness for any fixed assets or
improvements, replacements, substitutions or additions thereto, which
have a useful life of more than one (1) year, including the direct or
indirect acquisition of such assets by way of increased product
service charges, offset items or otherwise.
The term "Capital Lease" shall mean any lease or other
agreement for the use of property which is required to be capitalized
on a balance sheet of the lessee or other user of property in
accordance with generally accepted accounting principles.
The term "Closing Date" shall have the meaning set forth in
Section 1.2 hereof.
The term "Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time and any successor statute, together with
the rules and regulations thereunder.
The term "Collateral" shall have the meaning set forth in
Section 1.4(b) hereof.
The term "Collateral Agent" shall have the meaning set forth
in Section 1.4(a) hereof.
The term "Commitment" shall mean, with respect to any Bank
under the Loan Agreement, the amount of such Bank's "commitment" to
lend or extend credit pursuant to such Loan Agreement as then in
effect.
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The term "Communications Act" shall mean the Federal
Communications Act of 1934, as amended, and all rules and regulations
promulgated thereunder, as from time to time in effect.
The term "Company" shall have the meaning set forth in the
first sentence hereof.
The term "Copyright Act" shall mean title 17 of the United
States Code, as amended, and the rules and regulations promulgated
thereunder, as from time to time in effect.
The term "Deed of Trust (California)" shall have the meaning
set forth in Section 1.4(a) hereof.
The term "Debt Service" shall mean for any Fiscal Quarter, the
payments or accruals of principal, interest and fees due on Funded
Debt in such Fiscal Quarter plus any amounts paid or accrued under
Capital Leases for such Fiscal Quarter, plus any amounts, principal,
interest or fees, actually paid on deferred Management Fees or Home
Office Allocations or advances of Jones to the Company; provided,
however, that for the purposes of determining Debt Service, one-half
(1/2) of each semi-annual principal and interest payment due on the
Notes shall be allocated on an equal basis between the two (2)
quarters in each such semi-annual period.
The term "Default" shall mean any event or condition that
would become an Event of Default after notice or passage of time or
both.
The term "Depreciation" shall mean for any Fiscal Quarter, the
sum of all the Company's depreciation and amortization expenses for
such Fiscal Quarter, determined in accordance with generally accepted
accounting principles.
The term "Disclosure Reports" shall have the meaning set forth
in Section 2.2(a) hereof.
The term "DOL" shall have the meaning set forth in Section
3.4(a) hereof.
The term "Dollars" or "$" shall mean the lawful currency of
the United States of America, and in relation to any payment under
this Agreement, same day or immediately available funds.
The term "Environmental Control Statutes" shall mean all
federal, state or local laws and regulations governing the
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control, removal, spill, release or discharge of hazardous or toxic
wastes or substances, pollutants, contaminants, or petroleum products,
as in effect from time to time, including without limitation as
provided in the provisions and regulations of and the Comprehensive
Environmental Response, Compensation and Liability Act, the Solid
Waste Disposal Act, the Clean Water Act, the Clean Air Act, the
Resource Conservation and Recovery Act of 1976, the Federal Water
Pollution Control Act Amendments of 1972, the Hazardous Materials
Transportation Act, and the Occupational Safety and Health Act, and
all amendments to the foregoing.
The term "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time and any successor
statute, together with the rules and regulations thereunder.
The term "ERISA Affiliate" shall mean any Person which is
under "common control" with the Company or any Subsidiary (within the
meaning of Section 414(b) or (c) of the Code or Section 4001(a)(14) of
ERISA).
The term "ERISA Termination Event" shall mean (a) a
"reportable event" (within the meaning of Section 4043(b) of ERISA)
with respect to a Pension Plan (other than a "reportable event" as to
which the PBGC has by regulation waived the 30-day notice requirement
under Section 4043(a) of ERISA); provided, however, that a failure to
meet the minimum funding standards of Section 412 of the Code shall be
an ERISA Termination Event regardless of the issuance of any waiver
under Section 412(d) of the Code; (b) the withdrawal of the Company or
any ERISA Affiliate from a Pension Plan during a plan year in which it
was, a "substantial employer" (within the meaning of Section 4001(a)(2)
of ERISA); (c) the complete or partial withdrawal of the Company or
any ERISA Affiliate from a Multiemployer Plan under Section 4201 or
4204 or ERISA; (d) the receipt by the Company or any ERISA Affiliate
of notice from a Multiemployer Plan that is in reorganization or
insolvent under Section 4241 or 4245 of ERISA or that it intends to
terminate or has terminated under Section 4041A of ERISA; (e) the
providing of a notice of intent to terminate a Pension Plan pursuant
to Section 4041(a)(2) of ERISA or the treatment of a Pension Plan
amendment as a termination under Section 4041(e) of ERISA; (f) the
institution of proceedings by the PBGC to terminate a Pension Plan or
the appointment of a trustee to administer any Pension Plan under
Section 4042 of ERISA; (g) the receipt by the Company or any ERISA
Affiliate of a notice from any Multiemployer Plan that any action
described in clause (f) has been taken with respect to that
Multiemployer Plan; or (h) any other event or condition which
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might constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any
Pension Plan.
The term "Event of Default" shall have the meaning set forth
in Section 11.1 hereof.
The term "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended from time to time.
The term "Existing Bank Liens" shall have the meaning set
forth in Section 2.6(a) hereof.
The term "Existing Loan Agreement" shall mean the Loan
Agreement by and among the Company and the banks named therein, dated
August 14, 1986, as supplemented by the January 5, 1987 letter
agreement and amended by Amendment No.1 dated May 22, 1987, Amendment
No. 2 dated March 31, 1988, Amendment No. 3 dated September 22, 1988,
Amendment No. 4 dated March 29, 1989 and Amendment No. 5 dated June
29, 1990.
The term "FCC" shall mean the Federal Communications
Commission.
The term "Financial Statements" shall have the meaning set
forth in the Section 2.2(a) hereof.
The term "Fiscal Quarter" shall mean, with respect to the
Company or a Partner, a fiscal quarter of the Company or Partner,
which shall be any quarterly period ending on March 31, June 30,
September 30 or December 31 of any year; and, with respect to Jones, a
fiscal quarter of Jones, which shall be any quarterly period ending on
August 31, November 30, February 28 or May 31 of any year.
The term "Fiscal Year" shall mean, with respect to the Company
or a Partner, a fiscal year of the Company or Partner, which shall be
any calendar year; and, with respect to Jones, a fiscal year of Jones,
which shall be any year ending on May 31.
The term "Forms 10-K" shall have the meaning set forth in
Section 2.2(a) hereof.
The term "Forms 10-Q" shall have the meaning set forth in
Section 2.2(a) hereof.
The term "Funded Debt" shall mean, as of the date of
determination thereof, (i) the aggregate principal amount of all of
the Indebtedness of the Company for (a) borrowed money,
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other than trade Indebtedness incurred in the normal and ordinary
course of business for value received; (b) Capital Leases; (c)
installment purchases of real or personal property; and (d)
obligations under direct or indirect guarantees in respect of, and
obligations (contingent or otherwise) to purchase or otherwise
acquire, or otherwise to assure a creditor against a loss in respect
of, Indebtedness or obligations of persons or entities other than the
Company of the kinds referred to in clauses (a) through (c) above,
less (ii) Indebtedness of the kind referred to in clause (i)(a) of the
Company to Jones subordinated to the Notes pursuant to the
Subordination Agreement.
The term "generally accepted accounting principles" shall
mean, as of the date of determination with respect thereto, generally
accepted accounting principles as understood and applied in the United
States at the time in question.
The term "Gross Operating Revenues" shall mean, for any
period, the sum of all payments made to the Company by subscribers in
the Systems, and all other recurring revenues and receipts realized by
the Company from the operation of its businesses during such period.
The term "guarantee," with respect to any Person, shall mean
all obligations of such Person guaranteeing or in effect guaranteeing
any Indebtedness (including, without limitation, liability in respect
of a joint venture or a partnership), dividend or other obligation or
Investment of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, including obligations incurred through
an agreement, contingent or otherwise, by such Person (a) to purchase
such Indebtedness, obligation or Investment or any property or assets
constituting security therefor, (b) to advance or supply funds (i) for
the purchase or payment of such Indebtedness, obligation or Investment
or (ii) to maintain working capital or equity capital, or otherwise to
advance or make available funds for the purchase or payment of such
Indebtedness, obligation or Investment, (c) to purchase property,
securities or services primarily for the purpose of assuring the owner
of such Indebtedness, obligation or investment of the ability of the
primary obligor to make payment of such Indebtedness, obligation or
Investment, or (d) otherwise to assure the owner of such Indebtedness,
obligation or Investment against loss in respect thereof.
The terms "hereof," "herein," "hereunder" and other words of
similar import shall be construed to refer to this
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Agreement as a whole and not to any particular Section or other
subsection.
The term "holder," with respect to any Note, shall mean the
Person in whose name such Note is registered.
The term "Home Office Allocations" shall mean for any period
for which such sum is being computed the amount of reimbursement
payable by the Company to Jones for general overhead and
administrative expenses pursuant to Section 2 of the Management
Agreement during such period.
The term "Indebtedness" with respect to any Person, shall mean
all items (other than capital stock, capital surplus, retained
earnings and deferred credits and deferred income taxes), which in
accordance with generally accepted accounting principles would be
included in determining total liabilities as shown on the liability
side of a balance sheet as at the date on which Indebtedness is to be
determined. The term "Indebtedness" shall also include, whether or not
so reflected, (a) indebtedness, obligations and liabilities secured by
any Lien on property of such Person whether or not the indebtedness
secured thereby shall have been assumed by such Person, (b) all
obligations of such Person in respect of Capital Leases, and (c) all
guarantees.
The term "Intercreditor Agreement" shall have the meaning set
forth in Section 1.4(c) hereof.
The term "Institutional Investor" shall mean any one or more
of the following Persons: (a) any bank, savings institution, trust
company or national banking association, acting for its own account or
in a fiduciary capacity; (b) any charitable foundation; (c) any
insurance company or Affiliate thereof or fraternal benefit
association; (d) any pension, retirement or profit-sharing trust or
fund; (e) any commercial finance company or leasing company; or (f)
any public employees' pension or retirement system or any other
governmental agency supervising the investment of public funds.
The term "Interest Expense" shall mean for any fiscal period of
the Company the amount required to be paid or accrued by the Company
as interest and fees on Funded Debt and as interest actually paid on
deferred Management Fees and Home Office Allocations during such
period.
The term "Interest Payment Date" shall have the meaning set
forth in Section 1.1 hereof.
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The term "Investment" shall mean any loan, advance, extension
of credit (except for accounts and notes receivable for merchandise
sold or services furnished in the ordinary course of business, and
amounts paid in advance on account of the purchase price of
merchandise to be delivered to the payor within one year of the date
of the advance), or purchase of stock, notes, bonds or other
securities or evidences of Indebtedness of any Person or capital
contribution to any Person, whether in cash or other property. The
amount of an Investment made by the Company shall be its cost (the
amount of cash or the fair market value of other property given in
exchange therefor), less any amount recouped by the Company in cash
from a Person in which the Company had no actual or prospective
financial interest at the time of such payment.
The term "IRS" shall have the meaning set forth in Section
2.11(a) hereof.
The term "Joint Venture Agreement" shall mean the Joint
Venture Agreement dated as of March 17, 1986, by and among the
Partners, as amended from time to time with the consent of the holders
of a majority in aggregate unpaid principal amount of the Notes then
outstanding.
The term "Jones" shall mean Jones Intercable, Inc., a Colorado
corporation, which is the sole general partner of each of the
Partners.
The term "Jones Form 10-K" shall have the meaning set forth in
Section 2.2 (a) hereof.
The term "Jones' Weighted Average Cost of Borrowing" shall
mean, for any period for which it is determined, the ratio of (a) the
total interest expense (including but not limited to fees, original
issue discounts, interest expense, and other similar financing charges
recorded in the financial statements of Jones) on all indebtedness for
money borrowed of Jones to (b) the sum of all indebtedness for money
borrowed of Jones, such ratio to be expressed as a percentage rounded
upward to the nearest 1/100th of a percentage point.
The term "Leasehold Assignment" shall have the meaning set
forth in Section 1.4(a) hereof.
The term "Lien" shall mean any interest in property securing
an obligation owed to, or a claim by, any Person other than the owner
of the property, whether such interest shall be based on the common
law, civil law, statute, civil code or contract, whether or not such
interest shall be recorded or perfected and whether or not such
interest shall
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be contingent upon the occurrence of some future event or events or
the existence of some future circumstance or circumstances, and
including the lien, privilege, security interest or other encumbrance
arising from a mortgage, deed of trust, hypothecation, cession,
transfer, assignment, pledge, adverse claim or charge, conditional
sale or trust receipt, or from a lease, consignment or bailment for
security purposes. The term "Lien" shall also include reservations,
exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases and other title exceptions and
encumbrances affecting property. For the purposes of this Agreement, a
Person shall be deemed to be the owner of any property that such
Person shall have acquired or shall hold subject to a conditional sale
agreement or other arrangement (including a leasing arrangement)
pursuant to which title to the property shall have been retained by or
vested in some other Person for security purposes.
The term "Loan Agreement" shall have the meaning set forth in
Section 1.4(c) hereof.
The term "Local Authorities" shall mean individually and
collectively the state and local governmental authorities which govern
the cable television systems owned by the Company, including but not
limited to the Systems.
The term "Make-Whole Amount," shall mean, (a) in connection
with the prepayment of any Note pursuant to Section 7.2, Section 7.5
or Section 7.6 hereof, an amount equal to the greater of (i) zero or
(ii) the excess of (x) the sum of the present values, as at the
prepayment date, of the amount of each remaining scheduled payment of
interest (excluding any interest accrued to the prepayment date) on
and principal of such Note, which will not be required to be made as a
result of such prepayment (each such amount discounted separately at
the Treasury Rate, determined as at the date one day before the
prepayment date, compounded semiannually, from the date such amount
would be due), over (y) the principal amount of such Note to be
prepaid, and (b) in connection with any Note becoming or being
declared to be due and payable pursuant to Section 11.1 hereof, an
amount equal to the greater of (i) zero or (ii) the excess of (x) the
sum of the present values, as at the date such Note became or was
declared to be due and payable, of the amount of each remaining
payment of interest (excluding any interest accrued to the date such
Note became or was declared to be due and payable) on and principal of
such Note (each such amount discounted separately at the Treasury
Rate, determined as at the date on which such Note became or was
declared to be due and payable, compounded
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semiannually, from the date such amount would have been due), over (y)
the outstanding principal amount of such Note.
The term "Management Agreement" shall mean the Management
Agreement dated as of April 30, 1986, as amended, by and between the
Company and Jones pursuant to which Jones is employed as the manager
of the Systems.
The term "Management Fees" shall mean for any Fiscal Quarter,
the amount of management fees payable by the Company to Jones pursuant
to Section 2 of the Management Agreement during such Fiscal Quarter.
The term "Moody's" shall mean Moody's Investors Service, Inc.
The term "Mortgage" shall have the meaning set forth in
Section 1.4(b) hereof.
The term "Mortgage (Florida)" shall have the meaning set forth
in Section 1.4(a) hereof.
The term "Mortgage (New Mexico)" shall have the meaning set
forth in Section 1.4(a) hereof.
The term "Multiemployer Plan" shall mean any Plan that is a
"multiemployer plan" (within the meaning of Section 4001(a)(3) of
ERISA).
The term "Net Cash Proceeds" shall mean, with respect to any
sale of a System permitted pursuant to Section 9.18 hereof, the cash
proceeds received by the Company in connection with such sale less
related sales expenses and amounts distributed to the Partners on
account of tax liabilities in connection with such sale as permitted
by clause (i) of Section 9.9.
The term "Net Income" shall mean for any fiscal period, the
Company's net income for such period plus, to the extent taken into
account in calculating net profit, taxes accrued but not actually paid
in cash for such period, as determined in accordance with generally
accepted accounting principles, but, in any event, excluding:
(a) any gains or losses on the sale or other
disposition of Investments or fixed or capital assets, and any
tax deductions or credits on account of any such
excluded losses or any tax expense associated with any
excluded gains;
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(b) all items properly classified as
extraordinary in accordance with generally accepted accounting
principles;
(c) net earnings and losses of any Person,
substantially all the assets of which have been acquired by
the Company in any manner, realized by such other Person prior
to the date of such acquisition;
(d) net earnings and losses of any Person which
shall have been merged into or consolidated with the Company
prior to the date of such merger or consolidation;
(e) net earnings of any Person in which the
Company has an ownership interest except to the extent such
net earnings shall have actually been received by the Company
the form of cash distributions;
(f) earnings resulting from any reappraisal,
re-evaluation or write-up of assets on or after January 1,
1992;
(g) any income resulting from any excess of the
equity in any Person at the date of acquisition thereof over
the amount invested in such Person;
(h) any gain arising from the acquisition of any
partnership interest of the Company; and
(i) net income or gain (but not any net loss)
during such period from any change in accounting, from any
discontinued operations or the disposition thereof, from any
extraordinary events or from any prior period adjustments.
The term "1990 Cable TV Fund 12 Form 10-K" shall have the
meaning set forth in Section 2.2(a) hereof.
The term "1991 Cable TV Fund 12 Form 10-K" shall have the
meaning set forth in Section 2.2(a) hereof.
The term "Noteholder", with respect to any Note, shall mean
the Person in whose name such Note is registered.
The term "Notes" shall have the meaning set forth in Section
1.1 hereof.
The term "Offering Memorandum" shall have the meaning set
forth in Section 2.3(a) hereof.
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The term "Officer's Certificate" shall mean a certificate
executed on behalf of the Company by a Partner, on behalf of such
Partner by Jones and on behalf of Jones by the President, Group Vice
President-Finance or Treasurer thereof.
The term "Operating Cash Flow" shall mean for any fiscal
period, the sum of Net Income plus the following items, in each case
to the extent taken into account in calculating Net Income for such
fiscal period: (a) Depreciation, (b) Interest Expense, (c) Management
Fees and (d) Home Office Allocations.
The term "Other Purchasers" shall have the meaning set forth
in Section 3.1 hereof.
The term "outstanding," with respect to the Notes, shall mean,
as of the date of determination, all Notes theretofore delivered
pursuant to this Agreement, except Notes theretofore canceled or
delivered for cancellation and Notes in exchange or replacement for
which other Notes have been delivered pursuant to this Agreement;
provided, however, that, in determining whether the holders of the
requisite aggregate unpaid principal amount of Notes outstanding have
given any notice or taken any action hereunder, Notes held or owned,
directly or indirectly, by the Company, any of its Subsidiaries or any
other Affiliate shall be disregarded and deemed not to be outstanding.
The term "Palmdale System" shall mean the cable television
franchises, related contract rights and operating cable television
properties and systems of the Company in and around Antelope Valley
(Palmdale/Lancaster/California City/Edwards Air Force Base),
California, and in the development of Rancho Vista, Palmdale,
California.
The term "Partners" shall mean, individually and collectively,
the three limited partnerships comprising the Company, namely, Cable
TV Fund 12-B, Ltd., Cable TV Fund 12-C, Ltd., and Cable TV Fund 12-D,
Ltd., each a Colorado limited partnership.
The term "Partner Withdrawal" shall have the meaning set forth
in Section 7.5 hereof.
The term "Pay Units" shall mean the number of pay cable
television services subscribed to by Basic Subscribers in the Systems.
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The term "PBGC" shall mean the Pension Benefit Guaranty
Corporation or any successor thereof.
The term "Pension Plan" shall mean any Plan that is an
"employee pension benefit plan" (within the meaning of Section 3(2) of
ERISA).
The term "Permitted Investment" shall mean (i) investments in
commercial paper maturing in one hundred eighty (180) days or less
from the date of issuance which is rated "A-1" or better by S&P or
"P-1" or better by Moody's; (ii) investments in direct obligations of
the United States of America or obligations of any agency thereof
which are guaranteed by the United States of America, provided that
such obligations mature within twelve (12) months of the date of
acquisition thereof; and (iii) investments in certificates of deposit
maturing within one (1) year from the date of acquisition thereof
issued by a bank or trust company organized under the laws of the
United States or any state thereof, having capital, surplus and
undivided profits aggregating at least $500,000,000 and the long-term
debt of which is rated "A+" or better by S&P or "Al" or better by
Moody's.
The term "Permitted Lien" shall mean (i) Liens arising in
favor of sellers or lessors for Indebtedness incurred to purchase or
lease fixed or capital assets permitted under Section 9.10 hereof;
provided, however, that such Liens secure only the Indebtedness
created thereunder and are limited to the assets purchased or leased
pursuant thereto; (ii) Liens for taxes, assessments or other
governmental charges, federal, state or local, not yet due or the
payment of which is not then required by Section 9.7 hereof; (iii)
pledges or deposits to secure obligations under worker's compensation,
unemployment insurance or social security laws or similar legislation;
(iv) deposits to secure performance or payment bonds, bids, tenders,
contracts, leases, franchises or public and statutory obligations
required in the ordinary course of business; (v) deposits to secure
surety, appeal or custom bonds required in the ordinary course of
business; (vi) Liens to secure mechanic's claims, not yet due or the
payment of which is not then required by Section 9.7 hereof; (vii)
zoning restrictions, easements and similar immaterial restrictions
which do not secure the payment of money and which in the aggregate do
not adversely effect the Company's use and title to such property;
(viii) judgment Liens in existence for not more than sixty (60) days
and in an amount not in excess of $500,000 relating to judgments
currently being contested in good faith by appropriate proceedings and
which are covered by appropriate
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reserves maintained in cash or cash equivalents in accordance with
generally accepted accounting principles; and (ix) Liens which are
granted under pole attachment agreements upon equipment subject to
such agreements in favor of pole lessors to secure the Company's
obligations under such pole attachment agreements.
The term "Person" shall mean any individual, corporation,
partnership, joint venture, association, joint stock company, trust,
estate, unincorporated organization or government (or any agency or
political subsection thereof).
The term "Plan" shall mean any "employee benefit plan" (within
the meaning of Section 3(3) of ERISA) that the Company, any Subsidiary
or any ERISA Affiliate maintains, contributes to or is obligated to
contribute to for the benefit of employees or former employees of the
Company, any Subsidiary or any ERISA Affiliate.
The term "Prepayment Date" shall have the meaning set forth in
Section 7.3 hereof.
The term "Pro Forma Annualized Operating Cash Flow" shall
mean, in connection with any sale of System pursuant to Section 9.18
hereof, (i) Operating Cash Flow for the period of three calendar
months most recently ended determined on a pro forma basis to reflect
the portion of Operating Cash Flow for such period attributable to the
System being sold times (ii) four (4).
The term "Projections" shall have the meaning set forth in
Section 2.3(c) hereof.
The term "Purchaser" shall have the meaning set forth in
Section 3.1 hereof.
The term "Purchase Price" shall have the meaning set forth in
Section 1.2 hereof.
The term "Qualified Institutional Buyer" shall have the
meaning set forth in Rule 144A of the Securities Act.
The term "Restricted Payment" shall mean (a) any dividend or
other distribution, direct or indirect, in respect of any partnership
interests in the Company; or (b) any purchase, redemption, retirement
or other acquisition by the Company of any of its partnership
interests, now or hereafter outstanding, or of any warrants, rights or
options (other than such warrants, options or rights held by the
Company) evidencing a right to purchase or acquire any such
partnership
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interests; or (c) any payment of Management Fees or Home Office
Allocations.
The term "SEC" shall mean the Securities and Exchange
Commission and any successor organization.
The term "Securities Act" shall mean the Securities Act of
1933, as amended from time to time.
The term "Security" shall have the meaning set forth in
Section 1.4(b) hereof.
The term "Security Agreement" shall have the meaning set forth
in Section 1.4(a) hereof.
The term "Security Documents" shall have the meaning set forth
in Section 1.4(b) hereof.
The term "S&P" shall mean Standard & Poor's Corporation.
The Term "Subordination Agreement" shall mean a subordination
agreement in the form annexed hereto as Exhibit H.
The term "Subsidiary" shall mean with respect to any
corporation (the "Parent"), a corporation or partnership of which the
parent, at the time in respect of which such term is used, owns
directly, or controls with power to vote, indirectly through one or
more Subsidiaries, shares of at least fifty percent (50%) of its
Voting Stock. Unless the context clearly indicates the contrary,
"Subsidiary" refers to a Subsidiary of the Company.
The term "System" shall mean individually, and "Systems" shall
mean individually and collectively, the Palmdale System, the Tampa
System and the Albuquerque System.
The term "Tampa System" shall mean the cable television
franchises, related contract rights and operating properties and
systems of the Company in and around the City of Tampa, Florida.
The term "this Agreement" shall mean this Note Purchase
Agreement (including the annexed Exhibits and Schedules), as it may
from time to time be amended, supplemented or modified in accordance
with its terms.
The term "Treasury Rate," as of the date of any determination
thereof in connection with the determination of the Make-Whole Amount,
shall mean the sum of (A) the rate per
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annum (rounded to the nearest one-thousandth of one percent) equal to
the yield on issues of actively traded "On the Run" United States
Treasury Securities having a maturity equal to the Weighted Average
Life to Maturity of the Notes (determined, if necessary, by linear
interpolation of the yields on actively traded "On the Run" United
States Treasury Securities having maturities greater than (but nearest
to) and less than (but nearest to) the Weighted Average Life to
Maturity of the Notes)) as reported by the Telerate Access Services,
page 8003, provided by Telerate Systems Incorporated (or if such data
ceases to be available, such reasonably comparable source for such
data or similar data) as may be designated for such period by the
holder or holders of a majority in aggregate unpaid principal amount
of the Notes then outstanding), plus (B)(i) in connection with any
determination of the Make-Whole Amount payable in connection with any
prepayment of the Notes (other than pursuant to Section 7.6 hereof) 50
basis points or (ii) in connection with any determination of the Make-
Whole Amount payable in connection with any prepayment of the Notes by
the Company pursuant to Section 7.6 hereof, 75 basis points.
The term "Voting Stock," with respect to a corporation, shall
mean the stock of such corporation the holders of which are
ordinarily, in the absence of contingencies, entitled to elect members
of the Board (or other governing body) of such corporation, and with
respect to any partnership, shall mean the partnership interests in
such partnership the owners of which are entitled to manage the
affairs of partnership, or vote in connection with the management of
the affairs of the partnership or the designation of another Person as
the Person entitled to manage the affairs of the partnership (it being
understood that, in the case of any partnership, "shares" of Voting
Stock shall refer to such partnership interests).
The term "Weighted Average Life to Maturity" of any borrowed
funds, as of the date of the determination thereof, shall mean the
number of years obtained by dividing the then Remaining Dollar-years
of such borrowed funds by the then outstanding principal amount
thereof. The term "Remaining Dollar-years" of any borrowed funds shall
mean the amount obtained by (a) multiplying the amount of each then
remaining sinking fund, serial maturity or other required repayment,
including repayment at final maturity, by the number of years
(calculated to the nearest one-twelfth) which will elapse between the
time in question and the date of the repayment and (b) totaling all of
the products obtained in (a).
The term "Wholly-Owned Subsidiary," with respect to any
Person, shall mean any Subsidiary of such Person all of the
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outstanding shares of Voting Stock or similar interests of which are
owned, directly or indirectly, by such Person or another Wholly-Owned
Subsidiary of such Person. The term "Wholly-Owned Subsidiary", when
used herein without reference to any particular Person, shall mean a
Wholly-Owned Subsidiary of the Company.
SECTION 12.2 DIRECTLY OR INDIRECTLY. Any provision in this
Agreement referring to action to be taken by any Person, or that such Person is
prohibited from taking, shall be applicable whether such action is taken
directly or indirectly by such Person.
SECTION 12.3 ACCOUNTING TERMS. All accounting terms used
herein that are not otherwise expressly defined shall have the respective
meanings given to them in accordance with generally accepted accounting
principles at the particular time.
SECTION 12.4 GOVERNING LAW. THIS AGREEMENT AND THE NOTES SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW
YORK.
SECTION 12.5 HEADINGS. The headings of the Sections and other
subsections of this Agreement have been inserted for convenience of reference
only and shall not be deemed to constitute a part hereof.
SECTION 12.6 INDEPENDENCE OF COVENANTS. Each covenant made by
the Company herein is independent of each other covenant so made. The fact that
the operation of any such covenant permits a particular action to be taken or
condition to exist does not mean that such action or condition is not
prohibited, restricted or conditioned by the operation of the provisions of any
other covenant herein.
SECTION 13. MISCELLANEOUS.
SECTION 13.1 NOTICES. (a) All communications under this
Agreement or the Notes shall be in writing and sent by facsimile transmission
and delivered or mailed in writing (i) if to you, to you at your facsimile
number and address set forth in Schedule I hereto, marked for attention as
there indicated, or at such other address as you may have furnished to the
Company in writing, (ii) if to any other Noteholder, to it at its facsimile
number and address listed in the books for the registration and registration of
transfer of Notes, required to be maintained by the Company pursuant to Section
8.1 hereof, or at such other address as such Noteholder shall have furnished to
the Company in writing and (iii) if to the Company, to it at its facsimile
number and address shown at the head of this Agreement or at such other address
or facsimile number as it
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shall have furnished in writing to you and all other holders of the Notes at
the time outstanding.
(b) Any written communication so addressed, sent by
facsimile transmission and mailed by certified or registered mail, return
receipt requested, shall be deemed to have been given when so mailed. All other
written communications shall be deemed to have been given upon receipt thereof.
SECTION 13.2 SURVIVAL. All representations, warranties and
covenants made by the Company herein or by the Company in any certificate or
other instrument delivered under or in connection with this Agreement shall be
considered to have been relied upon by you and shall survive the delivery to
you of the Notes regardless of any investigation made by you or on your behalf.
All statements in any such certificate or other instrument shall constitute
representations and warranties of the Company hereunder.
SECTION 13.3 SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon the parties hereof and their respective successors and assigns,
and shall inure to the benefit of and be enforceable by the parties hereof and
their respective successors and assigns permitted hereunder; provided, however,
that you shall not have any obligation to purchase Notes of any Person other
than Cable TV Fund 12-BCD, a Colorado general partnership. Whether or not
expressly so stated and subject to the restrictions set forth herein, the
provisions of Sections 5 through 13 of this Agreement are intended to be for
your benefit and for the benefit of all holders from time to time of the Notes,
and shall be enforceable by you and any other such Noteholder whether or not an
express assignment to such holder of rights under this Agreement shall have
been made by you or your successors or assigns; and, provided further, that the
provisions of Section 5 and Sections 6.2, 6.3, 9.1 and 9.5 hereof shall also be
for the benefit of, and shall be enforceable by, any Person who shall no longer
be a Noteholder but who shall have incurred any expense or been subjected to
any liability referred to therein while, or on the basis of being, such a
Noteholder.
SECTION 13.4 AMENDMENT AND WAIVER. (a) This Agreement and the
Notes may be amended or supplemented, and the observance of any term hereof or
thereof may be waived, with the written consent of the Company and (i) on or
prior to the Closing Date, you, and (ii) after the Closing Date, the holders of
a majority in aggregate unpaid principal amount of the Notes then outstanding;
provided, however, that no such amendment, supplement or waiver shall, without
the written consent of the holders of all the Notes then outstanding, (a)
change, with respect to the Notes, the amount or time of any required
prepayment or payment of principal or premium or the rate or time of payment of
interest, or change the funds in which any prepayment or payment on the Notes
is required to be made; (b) amend
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or supplement any provision of Section 7.5 hereof; (c) reduce the percentage of
the aggregate principal amount of Notes required for any amendment, consent or
waiver hereunder; or (d) release any Lien of the Noteholders on any of the
Collateral or affect the priority thereof (except to the extent otherwise
permitted under the Intercreditor Agreement). Any amendment or waiver effected
in accordance with this Section 13.4 shall be binding upon each holder of any
Note at the time outstanding, each future holder of any Note and the Company.
Notwithstanding any other provision of this Agreement, no consent to any such
amendment or supplement by any Noteholder and no such waiver by any Noteholder
shall have any effect for the purposes of this Section 13.4 if such consent or
waiver was obtained in connection with or in anticipation of the purchase by
the Company, any Affiliate of the Company or any other Person of any portion of
the Notes held by such Noteholder, unless the holder of each Note at the time
outstanding has executed a consent or waiver, as the case may be, to
substantially the same effect as the consent or waiver obtained from such
Noteholder.
(b) The Company will not solicit, request or negotiate
for or with respect to any proposed waiver or amendment of any of the
provisions of this Agreement, the Notes or the Security Documents unless each
Noteholder (irrespective of the amount of Notes then owned by it) shall be
informed thereof by the Company and shall be afforded the opportunity of
considering the same and shall be supplied by the Company with sufficient
information to enable it to make an informed decision with respect thereto.
Executed or true and correct copies of any waiver effected pursuant to the
provisions of this Section 13.4 shall be delivered by the Company to each
holder of outstanding Notes forthwith following the date on which the same
shall have been executed and delivered by the holder or holders of the
requisite percentage of outstanding Notes. The Company will not, directly or
indirectly, pay or cause to be paid any remuneration, whether by way of
supplemental or additional interest, fee or otherwise, to any Noteholder as
consideration for or as an inducement to the entering into by any Noteholder of
any waiver or amendment of any of the terms and provisions of this Agreement,
the Security Documents or the Notes unless such remuneration is concurrently
paid, on the same terms ratably to the holders of all of the Notes then
outstanding.
SECTION 13.5 COUNTERPARTS. This Agreement may be executed and
delivered to you simultaneously in two or more counterparts, each of which
shall be deemed an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 13.6 REPRODUCTION OF DOCUMENTS. This Agreement and all
documents relating hereto (other than the Notes), including, without
limitations (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by you at the closing
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of your purchase of the Notes, and (c) financial statements, certificates and
other information heretofore or hereafter furnished to you, may be reproduced
by you by any photographic or other similar process and you may destroy any
original document so reproduced. The Company agrees and stipulates that, to the
extent permitted by applicable law and court or agency rules, any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by you in the regular
course of business) and that any enlargement, facsimile or further reproduction
of such reproduction shall be admissible in evidence to the same extent.
SECTION 13.7 CONSENT TO JURISDICTION AND VENUE. The Company
hereby irrevocably (i) agrees that any suit, action or other legal proceeding
arising out of or relating to this Agreement, the Security Documents or any
Note may be brought in a court of record in the State of New York or in the
courts of the United States of America located in such State, (ii) consents to
the jurisdiction of each such court in any such suit, action or proceeding, and
(iii) waives any objection which it may have to the laying of venue of any such
claim that any such suit, action or proceeding has been brought in an
inconvenient forum and covenants that it will not seek to challenge the
jurisdiction of any such court or seek to oust the jurisdiction of any such
court, whether on the basis of inconvenient forum or otherwise. The Company
irrevocably consents to the service of any and all process in any such suit,
action or proceeding by mail copies of such process to the Company at its
address for notices provided in Section 13.1 hereof. The Company agrees that a
final non-appealable judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. All mailings under this Section 13.7
shall be by registered or certified mail, return receipt requested. Nothing in
this Section 13.7 shall affect your right to serve legal process in any other
manner permitted by law or affect your right to bring any suit, action or
proceeding against the Company or any of its properties in the courts of any
other jurisdiction.
SECTION 13.8 NON-RECOURSE. Anything contained in this
Agreement or any Security Document to the contrary notwithstanding (except the
provisions set forth in Paragraph 15 of the Subordination Agreement), in any
action or proceeding brought on the Notes, this Agreement, or any Security
Document or the Indebtedness evidenced or secured thereby, no deficiency
judgment shall be sought or obtained against Jones or any Partner or enforced
against the separate assets of Jones or any Partner, and the liability of Jones
or any Partner for any amounts due under the Notes, this Agreement, or any
Security Document, shall be limited to the interest of Jones and the Partners
in the Collateral and in any other assets of the Borrower. Any Noteholder may
join Jones in its capacity as general
70
<PAGE> 76
partner of the Company as defendant in any legal action it undertakes to
enforce its rights and remedies under the Notes, this Agreement or any Security
Document, but any judgment in any such action may be satisfied by recourse only
to the Collateral and any other assets of the Company, but not by recourse
directly to or by execution on Jones' or any Partners separate assets.
Notwithstanding the foregoing, nothing set forth herein shall be deemed to
limit the liability of Jones or any Partner or its assets or prohibit any
Noteholder from taking any legal action against Jones or any Partner or its
assets (a) for any fraud, intentional misconduct or gross negligence of Jones
or any Partner, or (b) to enforce Jones' obligations under the Subordination
Agreement, or (c) to recoup any amounts or assets paid or transferred directly
or indirectly by the Company to Jones or any Partner in violation of any
provisions of this Agreement.
71
<PAGE> 77
If the foregoing is satisfactory to you, please sign the form
of acceptance on the enclosed counterparts hereof and return the same to the
Company, whereupon this letter, as so accepted, shall become a binding contract
between you and each of the undersigned.
Very truly yours,
CABLE TV FUND 12-BCD VENTURE
By: CABLE TV FUND 12-B, LTD., a
general partner,
By: CABLE TV FUND 12-C, LTD., a
general partner,
By: CABLE TV FUND 12-D, LTD., a
general partner,
By: JONES INTERCABLE, INC.,
their general partner
By: /s/ J. TIMOTHY BRYAN
------------------------------
Name: J. Timothy Bryan
Title: Treasurer
The foregoing Agreement
is hereby accepted.
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
By: /s/ WILLIAM H. DAVIS
------------------------------
Name: William H. Davis
Title: Senior Investment Officer
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
By: /s/ STEPHAN A. MACLEAN
------------------------------
Name: Stephan A. MacLean
Title: Investment Vice President
72
<PAGE> 78
MELLON BANK, N.A. AS TRUSTEE FOR NYNEX
MASTER PENSION TRUST
By: /s/ SUSAN M. HOLLINGSWORTH
------------------------------
Name: Susan M. Hollingsworth
Title: Associate Counsel
AMERICAN GENERAL LIFE INSURANCE COMPANY
OF NEW YORK
By: /s/ JULIA S. TUCKER
------------------------------
Name: Julia S. Tucker
Title: Investment Officer
GULF LIFE INSURANCE COMPANY
By: /s/ JULIA S. TUCKER
------------------------------
Name: Julia S. Tucker
Title: Investment Officer
CONNECTICUT MUTUAL LIFE INSURANCE COMPANY
By: /s/ WILLIAM F. CASE
------------------------------
Name: William F. Case
Title: Senior Investment Officer
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
By: /s/ WAYNE T. HOFFMAN
------------------------------
Name: Wayne T. Hoffman
Title: Vice President
By: /s/ DAVID BULLWINKLE
------------------------------
Name: David Bullwinkle
Title: Vice President
73
<PAGE> 79
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
By: /s/ ILLEGIBLE
------------------------------
Name:
Title:
THE TRAVELERS INSURANCE COMPANY
By: /s/ GILBERT G. CAMPBELL
------------------------------
Name: Gilbert G. Campbell
Title: Second Vice President
74
<PAGE> 1
AMENDMENT NO. 1 TO NOTE PURCHASE AGREEMENT
This AMENDMENT NO. 1 TO NOTE PURCHASE AGREEMENT ("this Amendment") is
entered into as of March 31, 1994 by CABLE TV FUND 12-BCD VENTURE (the
"Company") and the NOTEHOLDERS referred to below.
PRELIMINARY STATEMENT. (1) Reference is made to the Note Purchase
Agreement, dated as of March 31, 1992 (as such Note Purchase Agreement may be
amended from time to time, the "Note Purchase Agreement"), among the Company
and the purchasers of the Notes referred to below. All capitalized terms used
herein and not otherwise defined shall have the respective meanings set forth
in the Note Purchase Agreement.
(2) Pursuant to the Note Purchase Agreement, at a closing held on March
31, 1992, the Company issued and sold and the financial institutions designated
Purchasers therein purchased $93,000,000 in aggregate principal amount of the
Company's 8.64% Senior Secured Notes due March 31, 2000 (the "Notes"), each
Purchaser purchasing Notes in the principal amount indicated opposite its name
in Schedule I to the Note Purchase Agreement. The institutions which are
currently the beneficial holders of the Notes and any nominees which hold Notes
for such institutions and are the record holders thereof are named in Schedule
1 hereto (for the purposes of this Amendment, such institutions and/or such
nominees, as the context requires, are included in the term "Noteholders").
(3) The Company has requested that the Noteholders agree to amend Section
9.12 of the Note Purchase Agreement, which establishes maximum permitted levels
for the periods specified therein for the ratio of Funded Debt to Annualized
Operating Cash Flow, in the manner described herein. on the terms and subject
to the conditions set forth in this Amendment, the Company and the Noteholders
desire to amend the Note Purchase Agreement pursuant to Section 13.4 thereof.
(4) Pursuant to Section 13.4(a) of the Note Purchase Agreement, the
requested amendment shall be effective as of the date hereof, but only when
executed and delivered by the Company and the holders of a majority in
aggregate unpaid principal amount of Notes outstanding.
NOW, THEREFORE, the Company and each of the undersigned Noteholders agree as
follows:
<PAGE> 2
SECTION 1. AMENDMENT TO THE NOTE PURCHASE AGREEMENT.
The Note Purchase Agreement is hereby amended by restating Section 9.12
thereof to read in its entirety as follows:
SECTION 9.12 FUNDED DEBT TO ANNUALIZED OPERATING CASH FLOW
RATIO. The Company will not permit the ratio of Funded Debt to
Annualized Operating Cash Flow at any time during any period set forth
below to exceed the applicable ratio set forth opposite such period
below:
<TABLE>
<CAPTION>
Ratio of Funded Debt
to Annualized Operating
Period Cash Flow
------ -----------------------
<S> <C>
1/l/92 - 6/29/93 5.25:1.00
6/30/93 - 3/30/94 4.75:1.00
3/31/94 - 6/29/94 5.00:1.00
6/30/94 and thereafter 4.25:1.00
</TABLE>
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
In order to induce the Noteholders to execute and deliver this
Amendment, the Company hereby represents and warrants that, giving effect to
the amendment set forth in Section 1 of this Amendment, no event has occurred
and no condition exists which constitutes a Default or an Event of Default.
SECTION 3. MISCELLANEOUS.
SECTION 3.1. EFFECTIVENESS OF AMENDMENT. This Amendment shall be
effective as of the date hereof, but only when counterparts hereof have been
executed and delivered by the Company and the holders of a majority in
aggregate unpaid principal amount of Notes outstanding.
SECTION 3.2. INSTRUMENT PURSUANT TO NOTE PURCHASE AGREEMENT. This
Amendment is executed pursuant to Section 13.4 of the Note Purchase Agreement
and shall (unless otherwise expressly indicated herein) be construed,
administered, and applied in accordance with all of the terms and provisions of
the Note Purchase Agreement. Except as expressly amended hereby, all of the
representations, warranties, terms, covenants and conditions of the Note
Purchase Agreement shall remain unamended and unwaived.
SECTION 3.3. SUCCESSORS AND ASSIGNS. This Amendment shall be binding
upon and inure to the benefit of the Company, the Noteholders and their
respective successors and assigns.
2
<PAGE> 3
SECTION 3.4. COUNTERPARTS. This Amendment may be executed
simultaneously in two or more counterparts, each of which shall be deemed to be
an original but all of which shall constitute together but one and the same
instrument.
SECTION 3.5. GOVERNING LAW. This Amendment shall be governed by and
construed in accordance with the law of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective officers duly authorized thereunto as of the
day and year first above written.
CABLE TV FUND 12-BCD VENTURE
By: Cable TV FUND 12-B, LTD., a
general partner
By: Cable TV FUND 12-C, LTD., a
general partner
By: Cable TV FUND 12-D, LTD., a
general partner
By Jones Intercable, Inc.,
their general partner
By:
---------------------------------------
Name: Kevin P. Coyle
Title: Treasurer
JOHN HANCOCK MUTUAL LIFE INSURANCE
COMPANY
By:
---------------------------------------
Name:
Title:
JOHN HANCOCK VARIABLE LIFE INSURANCE
COMPANY
By:
---------------------------------------
Name:
Title:
3
<PAGE> 4
MELLON BANK, N.A., as Trustee for NYNEX
MASTER PENSION TRUST
By:
---------------------------------------
Name:
Title:
AMERICAN GENERAL LIFE INSURANCE COMPANY
OF NEW YORK
By:
---------------------------------------
Name:
Title:
GULF LIFE INSURANCE COMPANY
By:
---------------------------------------
Name:
Title:
ATWELL & CO., as nominee for CONNECTICUT
MUTUAL LIFE INSURANCE COMPANY
By:
---------------------------------------
Name:
Title:
4
<PAGE> 5
GREAT-WEST LIFE & ANNUITY INSURANCE
COMPANY
By:
---------------------------------------
Name:
Title:
By:
---------------------------------------
Name:
Title:
MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY
By:
---------------------------------------
Name:
Title:
TRAL&CO, as nominee for The Travelers
Insurance Company
By:
---------------------------------------
Name:
Title:
5
<PAGE> 6
SCHEDULE 1
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
MELLON BANK, N.A., as Trustee for NYNEX MASTER PENSION TRUST
AMERICAN GENERAL LIFE INSURANCE COMPANY OF NEW YORK
GULF LIFE INSURANCE COMPANY
ATWELL & CO., as nominee for CONNECTICUT MUTUAL LIFE INSURANCE COMPANY
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
TRAL&CO, as nominee for The Travelers Insurance Company
<PAGE> 1
EXECUTION COPY
AMENDMENT NO. 2 TO NOTE PURCHASE AGREEMENT
This AMENDMENT NO. 2 TO NOTE PURCHASE AGREEMENT ("this Amendment") is
entered into as of September 30, 1994 by CABLE TV FUND 12-BCD VENTURE (the
"Company") and the NOTEHOLDERS referred to below.
PRELIMINARY STATEMENT. (1) Reference is made to the Note Purchase
Agreement, dated as of March 31, 1992 (as such Note Purchase Agreement has been
amended by Amendment No. 1 to Note Purchase Agreement dated as of March 31,
1994 and as such Note Purchase Agreement may be further amended from time to
time, the "Note Purchase Agreement"), among the Company and the purchasers of
the Notes referred to below. All capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the Note
Purchase Agreement.
(2) Pursuant to the Note Purchase Agreement, at a closing held on
March 31, 1992, the Company issued and sold and the financial institutions
designated Purchasers therein purchased $93,000,000 in aggregate principal
amount of the Company's 8.64% Senior Secured Notes due March 31, 2000 (the
"Notes"), each Purchaser purchasing Notes in the principal amount indicated
opposite its name in Schedule I to the Note Purchase Agreement. The
institutions which are currently the beneficial holders of the Notes and any
nominees which hold Notes for such institutions and are the record holders
thereof are named in Schedule 1 hereto (for the purposes of this Amendment,
such institutions and/or such nominees, as the context requires, are included
in the term "Noteholders").
(3) The Company has requested that the Noteholders agree to amend
Section 9.12 of the Note Purchase Agreement, which establishes maximum
permitted levels for the periods specified therein for the ratio of Funded Debt
to Annualized Operating Cash Flow, and Section 9.25 of the Note Purchase
Agreement, which limits the amount of Management Fees payable by the Company,
all in the manner described herein. The Company has further requested that the
Noteholders consent to certain amendments to the Loan Agreement. On the terms
and subject to the conditions set forth in this Amendment, the Company and the
Noteholders desire to amend the Note Purchase Agreement pursuant to Section
13.4 thereof and, the Noteholders desire to consent to certain amendments to
the Loan Agreement pursuant to Section 9.22 of the Note Purchase Agreement.
<PAGE> 2
NOW, THEREFORE,the Company and each of the undersigned Noteholders
agree as follows:
SECTION 1. AMENDMENT TO THE NOTE PURCHASE AGREEMENT.
SECTION 1.1. AMENDMENT TO SECTION 9.9. The Note Purchase Agreement is
hereby amended by restating Section 9.9 thereof to read in its entirety as
follows:
SECTION 9.9. TRANSACTIONS WITH AFFILIATES. The Company will
not enter into any transaction (including, without limitation, the
purchase, sale or exchange of any property, the rendering of any
services or the payment of Management Fees) with any Affiliate, except
in the ordinary course of the businesses of the Company, and in good
faith and upon commercially reasonable terms that are no less
favorable to the Company than would obtain in a comparable
arm's-length transaction with a Person other than an Affiliate;
provided, however, that the Company may make payments to Affiliates to
the extent permitted under the provisions of Section 9.25 hereof.
SECTION 1.2. AMENDMENT TO SECTION 9.12. The Note Purchase Agreement is
hereby amended by restating Section 9.12 thereof to read in its entirety as
follows:
SECTION 9.12. FUNDED DEBT TO ANNUALIZED OPERATING CASH FLOW
RATIO. The Company will not permit the ratio of Funded Debt to
Annualized Operating Cash Flow at any time during any period set forth
below to exceed the applicable ratio set forth opposite such period
below:
<TABLE>
<CAPTION>
Ratio of Funded Debt
to Annualized Operating
Period Cash Flow
------ -----------------------
<S> <C>
1/l/92 - 6/29/93 5.25:1.00
6/30/93 - 3/30/94 4.75:1.00
3/31/94 - 3/30/95 5.00:1.00
3/31/95 - 3/30/96 4.50:1.00
3/31/96 - and thereafter 4.00:1.00
</TABLE>
2
<PAGE> 3
SECTION 1.3. AMENDMENT TO SECTION 9.25. The Note Purchase Agreement is
hereby amended by restating Section 9.25 thereof to read in its entirety as
follows:
SECTION 9.25. PAYMENTS TO AFFILIATES. The Company will not pay
or accrue any salaries or other compensation, fees (including
Management Fees) or other payments (including Home Office Allocations)
to Affiliates, except, in the absence of an Event of Default or
Default hereunder and so long as such payment shall not cause an Event
of Default or Default hereunder: (i) in connection with the sale of a
System as permitted by Section 9.18 hereof, the Company may make such
distributions to the Partners as shall be necessary to cover each such
Partner's tax liability arising in connection with such sale; (ii) if
the Company represents to the Noteholders as of the date of any such
proposed payment that it is not aware of any Refund Liability, the
Company may (A) repay advances (and accrued interest thereon at a rate
not to exceed Jones' Weighted Average Cost of Borrowing for the period
during which any such advance is outstanding) made by Jones to the
Company and (B) prior to March 31, 1996, pay or accrue, as applicable,
(1) Management Fees in an amount which for any Fiscal Quarter of the
Company does not exceed five percent (5%) of the Company's Gross
Operating Revenues for such Fiscal Quarter and (2) Home Office
Allocations; provided, however, that if in any Fiscal Quarter the
Company shall have repaid advances or made payments of Management Fees
and Home Office Allocations to Jones at a time when such payment was
permitted hereunder, but an Event of Default, Default or Refund
Liability shall exist as of the end of the Fiscal Quarter in which
such payment(s) were made, Jones shall repay the same to the Company
immediately upon determination of the existence of such Event of
Default, Default or Refund Liability and, after such repayment, the
same shall be deemed to have been deferred for purposes of this
Agreement; provided, further, that any Management Fees and Home Office
Allocations accrued for any Fiscal Quarter but not paid out of the
Company's Operating Cash Flow for such quarter may, prior to March 31,
1996, be deferred and subordinated to the Notes pursuant to the
Subordination Agreement; and provided, further, that so long as there
exists no Event of Default or Default under this Agreement or Refund
Liability, and the making of such payment does not cause an Event of
Default or Default hereunder, the Company may pay, prior to March 31,
1996, accrued interest on deferred Management Fees and Home Office
Allocations at a rate not to exceed Jones, Weighted Average Cost of
Borrowing for the period during which the payment of such Management
Fees and Home Office Allocations is deferred; and provided, further,
that after March 31, 1996, the Company may accrue and defer (but not
pay until
3
<PAGE> 4
the Notes have been repaid in full) (x) Management Fees in the amounts
described in Subsection Section 9.25(ii)(B)(1) above and (y) Allocated
Expenses; (iii) the Company may make payments to Affiliates for
brokerage services, including in connection with the purchase or sale
of a System, and for the sale of television or other signals, the
purchase or lease of television or other signals or specialized
equipment and the licensing of technology, provided (x) such
transactions are at a price and on terms at least as favorable as
those prices and terms being generally offered in the same market
place by unrelated parties for goods or services as nearly identical
as possible in regard to quality, technical advancement and
availability, provided, however, that so long as no Default or Event
of Default is in existence, the Company may pay brokerage fees to The
Jones Group, Ltd. in connection with (a) the sale of a System to an
entity which is not an Affiliate in an amount not to exceed two and
one-half percent (2-1/2%) of the gross sales price of the System, and
(b) the purchase of a System, in an amount not to exceed four and one
half percent (4-1/2%) of the lower of the gross purchase price or
appraisal value of the System and (y) payments to Jones Programming
Services, Inc. ("Programming") for the purchase of signals or
programming for the Systems shall not exceed the payments made by or
charged to other Affiliates of Programming by Programming for
comparable quantity and quality of signals or programming.
SECTION 1.4. AMENDMENT TO SECTION 12.1. The following definition is
hereby added, in alphabetical order, to Section 12.1 of the Note Purchase
Agreement:
The term "Refund Liability" shall mean a refund liability
relating to the Company's cost of service showing calculation which is
in excess of five million dollars ($5,000,000) and as to which there
has been issued a final order of the FCC.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
In order to induce the Noteholders to execute and deliver this
Amendment, the Company hereby represents and warrants that, giving effect to
the amendment set forth in Section 1 of this Amendment, no event has occurred
and no condition exists which constitutes a Default or an Event of Default.
4
<PAGE> 5
SECTION 3. AMENDMENT FEE.
The Company shall pay to each Noteholder on or prior to the date of
effectiveness of this Amendment an amendment fee in an amount equal to 0.25% of
the aggregate unpaid principal amount of Notes outstanding and held by such
Noteholder (without regard to whether such Noteholder is executing this
Amendment).
SECTION 4. CONDITIONS TO EFFECTIVENESS OF AMENDMENT.
This Amendment shall be effective as of the date hereof, but only upon
satisfaction of the following conditions: (a) counterparts hereof have been
executed and delivered by the Company and the holders of a majority in
aggregate unpaid principal amount of Notes outstanding; (b) the Company has
paid to each Noteholder the amendment fee pursuant to Section 3 hereof; and (c)
the Amendment No. 1 to Credit Agreement, substantially in the form attached
hereto as Exhibit A, has been duly executed and delivered by the Company and
each of the other parties thereto.
SECTION 5. CONSENT TO AMENDMENT TO LOAN AGREEMENT.
Pursuant to Section 9.22 of the Note Purchase Agreement which requires
the Company to obtain the written consent of the holders of at least 66 2/3% of
the aggregate principal amount of Notes outstanding prior to making certain
amendments to the Loan Agreement, the Noteholders hereby approve and consent to
the execution by the Company of Amendment No. 1 to the Credit Agreement
substantially in the form attached hereto as Exhibit A.
SECTION 6. MISCELLANEOUS.
SECTION 6.1. INSTRUMENT PURSUANT TO NOTE PURCHASE AGREEMENT.
This Amendment is executed pursuant to Section 13.4 of the Note Purchase
Agreement and shall (unless otherwise expressly indicated herein) be construed,
administered, and applied in accordance with all of the terms and provisions of
the Note Purchase Agreement. Except as expressly amended hereby, all of the
representations, warranties, terms, covenants and conditions of the Note
Purchase Agreement shall remain unamended and unwaived.
SECTION 6.2. SUCCESSORS AND ASSIGNS. This Amendment shall be
binding upon and inure to the benefit of the Company,the Noteholders and their
respective successors and assigns.
SECTION 6.3. COUNTERPARTS. This Amendment may be executed
simultaneously in two or more counterparts, each of which shall
5
<PAGE> 6
be deemed to be an original but all of which shall constitute together but one
and the same instrument.
SECTION 6.4. GOVERNING LAW. This Amendment shall be governed by and
construed in accordance with the law of the State of New York.
6
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective officers duly authorized thereunto as of the
day and year first above written.
CABLE TV FUND 12-BCD VENTURE
By: Cable TV FUND 12-B, LTD., a
general partner
By: Cable TV FUND 12-C, LTD., a
general partner
By: Cable TV FUND 12-D, LTD., a
general partner
By: JONES INTERCABLE, INC.,
their general partner
By: s/ KEVIN P. COYLE
--------------------------------------
Name: Kevin P. Coyle
Title: Group Vice President/Finance
JOHN HANCOCK MUTUAL LIFE INSURANCE
COMPANY
By: /s/ DANIEL C. BUDDE
-----------------------------------
Name: Daniel C. Budde
Title: Investment Officer
JOHN HANCOCK VARIABLE LIFE INSURANCE
COMPANY
By: s/ STEPHEN A. MACLEAN
-----------------------------------
Name: Stephen A. MacLean
Title: Investment Vice President
MELLON BANK, N.A., as Trustee for NYNEX
MASTER PENSION TRUST, as directed by
JOHN HANCOCK MUTUAL LIFE INSURANCE
COMPANY
By: s/ ALLAN M. SEAMAN
-----------------------------------
Name: ALLAN M. SEAMAN
Title: ASSOCIATE COUNSEL
The decision to particpate in this investment,
and representations made herein by the
participant, and any actions taken hereunder by
the participant has/have been made solely at the
direction of the investment fiduciary who has
sole investment discretion with respect to this
investment.
7
<PAGE> 8
AMERICAN GENERAL LIFE INSURANCE COMPANY
OF NEW YORK
By: /s/ PETER V. TUTERS
---------------------------------------
Name: Peter V. Tuters
Title: Vice President and
Chief Investment Officer
GULF LIFE INSURANCE COMPANY
By: /s/ PETER V. TUTERS
---------------------------------------
Name: Peter V. Tuters
Title: Vice President and
Chief Investment Office
CONNECTICUT MUTUAL LIFE INSURANCE COMPANY
By: /s/ WILLIAM F. CASE
---------------------------------------
Name: WILLIAM F. CASE
Title: Senior Investment Officer
GREAT-WEST LIFE ANNUITY INSURANCE
COMPANY
By: /s/ ERNIE P. FRIESEN
---------------------------------------
Name: Ernie P. Friesen
Title: Manager
Private Placement Investments
By: /s/ JULIE BOCK
---------------------------------------
Name: Julie Bock
Title: Manager
Private Placement Investments
MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY
By: /s/ JOHN B. JORCE
---------------------------------------
Name: JOHN B. JORCE
Title:
8
<PAGE> 9
THE TRAVELERS INSURANCE COMPANY
By: /s/ GILBERT G. CAMPBELL
--------------------------------------
Name: GILBERT G. CAMPBELL
Title: Second Vice President
9
<PAGE> 10
SCHEDULE I
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
MELLON BANK, N.A., as Trustee for NYNEX MASTER PENSION TRUST
AMERICAN GENERAL LIFE INSURANCE COMPANY OF NEW YORK
GULF LIFE INSURANCE COMPANY
CONNECTICUT MUTUAL LIFE INSURANCE COMPANY
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
THE TRAVELERS INSURANCE COMPANY
<PAGE> 1
AMENDMENT NO. 3 TO NOTE PURCHASE AGREEMENT
This AMENDMENT NO. 3 TO NOTE PURCHASE AGREEMENT ("this Amendment") is
entered into as of February 12, 1996 by CABLE TV FUND 12-BCD VENTURE (The
"Company") and the NOTEHOLDERS referred to below.
PRELIMINARY STATEMENT. (1) Reference is made to the Note Purchase
Agreement, dated as of March 31, 1992 (as such Note Purchase Agreement has been
amended by Amendment No. 1 to Note Purchase Agreement dated as of March 31,
1994 and Amendment No. 2 to Note Purchase Agreement dated as of September 30,
1994 and as such Note Purchase Agreement may be further amended form time to
time, the "Note Purchase Agreement"), among the Company and the purchasers of
the Notes referred to below.
(2) Pursuant to the Note Purchase Agreement, at a closing held on
March 31, 1992, the Company issued and sold and the financial institutions
designated Purchasers therein purchased $93,000,000 in aggregate principal
amount of the Company's 8.64% Senior Secured Notes due March 31, 2000 (the
"Notes"), each Purchaser purchasing Notes in the principal amount indicated
opposite its name in Schedule I to the Note Purchase Agreement. The
institutions which are currently the beneficial holders of the Notes and any
nominees which hold Notes for such institutions and are the record holders
thereof are named in Schedule 1 hereto (for the purposes of this Amendment,
such institutions and/or such nominees, as the context requires, are included
in the term "Noteholders").
(3) The Company is a joint venture general partnership formed
pursuant to the Joint Venture Agreement dated as of March 17, 1986 (as amended,
the "Joint Venture Agreement") by and among Cable TV Fund 12-B, Ltd., Cable TV
Fund 12-C, Ltd. and Cable TV Fund 12-D, Ltd., each a Colorado limited
partnership (each individually a "Partner," and individually and collectively,
the "Partners").
(4) The Company is the owner of certain cable television
franchises, related contract rights and operating cable television properties
and systems in and around Antelope Valley (Palmdale/Langcaster/California
City/Edwards Air Force Base), California and the development of Rancho Vista,
Palmdale, California (the "Palmdale System"), Albuquerque, New Mexico (the
"Albuquerque System") and the City of Tampa, Florida (the "Tampa System"). The
Company desires to sell the Tampa System to Jones Cable Holdings, Inc., a
Subsidiary of Jones.
(5) The Company and NationsBank of Texas, N.A., Royal Bank of
Canada, Shawmut Bank Connecticut, N.A., Colorado National Bank, and CoresStates
Bank, N.A. ("Core States") for itself and as agent (the "Existing Banks") are
parties to that certain
<PAGE> 2
Amended and Restated Loan Agreement dated March 31, 1992, as amended by
Amendment No. 1 dated September 30, 1994 (as amended, the "Existing Loan
Agreement"), pursuant to which the Existing Banks agreed to advance to Borrower
up to an aggregate principal amount outstanding at any time of Eighty-Seven
Million Dollars ($87,000,000).
(6) Pursuant to the Second Amended and Restated Credit Agreement
dated as of February 12, 1996 (the "Loan Agreement") by and among the Company
and the banks listed therein (the "Banks"), the Company desires to amend and
restate the commitment under the Existing Loan Agreement and to borrow
thereunder, and Banks on a several basis are willing to lend, on the terms and
conditions set forth therein, up to One Hundred Twenty Million Dollars
($120,000,000) for the purposes set forth therein.
(7) The Company has requested that the Noteholders agree to amend
1.1, 1.4, 9.12, 9.13, 9.17, 9.25 and 11.1 and Exhibit A of the Note Purchase
Agreement, all in the manner described therein. The Company has further
requested that the Noteholders consent to certain amendments set forth in the
Loan Agreement. On the terms and subject to the certain provisions of the Note
Purchase Agreement pursuant to 13.4 thereof, and the Noteholders desire to
consent to certain amendments set forth in the Loan Agreement pursuant to 9.22
of the Note Purchase Agreement.
NOW, THEREFORE, the Company and each of the undersigned Noteholders
agree as follows:
SECTION 1. RELATION TO THE NOTE PURCHASE AGREEMENT; DEFINITIONS
1.1 RELATION TO NOTE PURCHASE AGREEMENT. This Amendment
constitutes an integral part of the Note Purchase Agreement.
1.2 CAPITALIZED TERMS. For all purposes of this Amendment,
capitalized terms used herein without definition shall have the meanings
specified in the Note Purchase Agreement.
SECTION 2 AMENDMENT TO THE NOTE PURCHASE AGREEMENT.
2.1 AMENDMENT TO 1.1. The Note Purchase Agreement is hereby amended by
restating 1.1 thereof in it entirety as follows:
1.1 AUTHORIZATION OF NOTES. The Company has authorized the issuance and sale of
$93,000,000 in aggregate principal amount of its 8.64% Senior Secured Notes due
March 31, 2000 (such notes, together with all notes in the form annexed hereto
as Exhibit A issued in exchange or replacement for, or on registration or
transfer of, such notes are hereinafter called the "Notes"). Each Note shall
bear interest from the
2
<PAGE> 3
date thereof until such Note shall become due and payable in accordance with
the terms thereof and hereof (whether at maturity, by acceleration or
otherwise) at the rate of 8.64% per annum, payable semiannually on each
September 30 and March 31 (an "Interest Payment Date"), commencing September
30, 1992, and shall have a stated maturity of March 31, 2000; provided, that,
if the Company shall not have obtained, within six (6) months after the Third
Amendment Effective Date, the consent of the County of Los Angeles to the grant
of security interests in franchises granted by such County, each Note shall
bear interest from the date thereof until the date on which such consent has
been obtained at the rate of 8.74% per annum, payable semiannually on each
Interest Payment Date. Interest shall be computed on the basis of a 360-day
year of twelve 30-day months. Any overdue portion of the principal amount of
any Note and premium, if any, and (to the extent permitted by applicable law)
any overdue installment of interest shall bear interest at a rate equal to two
percent (2%) above the interest rate applicable to timely payments thereon.
2.2 AMENDMENT TO 1.4 The Note Purchase Agreement is hereby amended by
restating 1.4 thereof in its entirety as follows:
1.4 SECURITY DOCUMENTS; INTERCREDITOR AGREEMENT.
(a) The Notes are to be secured by an Amended and Restated
Security Agreement, dated February 12, 1996, between the Company and CoreStates
Bank, N.A., as collateral agent (in its capacity as collateral agent under the
Security Agreement, the "Collateral Agent"), (which, together, with all
supplements thereto and amendments thereof, is referred to herein as the
"Amended Security Agreement"), granting to the Collateral Agent for the benefit
of the Noteholders and the Banks a first-priority security interest in the
Collateral (as interests and rights created under the Amended Security
Agreement are referred to as the "Security." The rights of the holders of the
Notes and the Banks under the Security Agreement and in the property subject
thereto will be subject to the provisions of an Amended and Restated
Intercreditor Agreement dated as of February 12, 1996 (the "Intercreditor
Agreement").
(b) Contemporaneously with the Third Amendment Effective Date, the
Company will enter into a Second Amended and Restated Credit Agreement, dated
as of February 12, 1996, with CoreStates Bank, N.A., for itself and as agent
for the Banks (as such agreement may be amended, modified or supplemented form
time to time in compliance with the provisions of this Agreement, the "Loan
Agreement"). The obligations of the Company under the Loan Agreement will also
be secured by the Amended Security Agreement.
2.3 AMENDMENT TO 9.12 The Note Purchase Agreement is hereby amended by
restating 9.12 thereof to read in its entirety as follows:
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<PAGE> 4
9.12 FUNDED DEBT TO ANNUALIZED OPERATING CASH FLOW RATIO. The Company
will not permit the ration of Funded Debt to Annualized Operating Cash Flow at
any time during any period set forth below to exceed the applicable ratio set
forth opposite such period below:
<TABLE>
<CAPTION>
Ratio of Funded Debt to Annualized
Period Operating Cash Flow
<S> <C>
Third Amendment Effective Date through
September 30, 1996 4.50:1.00
October 1, 1996 through June 30, 1997 4.00:1.00
July 1, 1997 through June 30, 1998 3.50:1.00
July 1, 1998 and thereafter 3.00:1.00
</TABLE>
2.4 AMENDMENT TO 9.13 The Note Purchase Agreement is hereby amended by
restating 9.13 thereof to read it in its entirety as follows:
9.13 Pro Forma Debt Service Coverage. The Company will not
at any time permit the Pro Forma Debt Service Coverage Ratio to be less than
1.25 to 1.00.
2.5 AMENDMENT TO 9.17. The Note Purchase Agreement is hereby amended
by restating 9.17 thereof to read in its entirety as follows:
9.17 RESTRICTED PAYMENTS. The Company will not make any
Restricted Payments except as permitted pursuant to 9.9 and 9.25 hereof.
2.6 AMENDMENT TO 9.25 The Note Purchase Agreement is hereby amended by
restating 9.25 thereof to read in its entirety as follows:
9.25 PAYMENTS TO AFFILIATES. The Company will not pay
or accrue any salaries or other compensation, fees (including Home Office
Allocations) to Affiliates, except, in the absence of any Refund Liability or
Event of Default or Default hereunder and provided such payments shall not
cause any Event of Default or Default hereunder: (I) in connection solely with
the sale of the Tampa System as permitted by 9.18 hereof, the Company may make
distributions to the Partners in an aggregate amount which does not exceed
fifty percent (%50) of the gross cash proceeds form the sale of the Tampa
System; (ii) the Company may, subject to the terms of the Subordination
Agreement, pay Management Fees and Home Office Allocations in accordance with
the terms of the Management Agreement as in effect on the date hereof;
provided, however, that after December 31, 1999, no payment may be made on
Management Fees or Home Office Allocations that have been deferred pursuant to
the terms hereof; and (iii) the Company may make payments to Affiliates for
brokerage services, including in connection with the purchase or sale of a
System, and for the sale of television or other signals, the purchase or lease
of television or other signals or specialized equipment and the licensing of
technology, provided (x) such transactions are at a
4
<PAGE> 5
price and on terms at least as favorable as those prices and terms being
generally offered in the same market place by unrelated parties for goods or
services as nearly identical as possible in regard top quality, technical
advancement and availability, provided, however, that so long as no Default or
Event of Default is in existence, the Company may pay brokerage fees to The
Jones Group, Ltd. in connection with (a) the sale of a System to an entity
which is not an Affiliate in an amount not to exceed two and one-half percent
(2-1/2%) of the gross sales price of the System, and (b) the purchase of a
System, in an amount not to exceed four and one half percent (4-1/2%) of the
lower of the gross purchase price or appraisal value of the System and (y)
payments to Jones Programming Services, Inc. ("Programming") for the purchase
of signals or programming for the Systems shall not exceed the payments made by
or charged to other Affiliates of Programming by Programming for comparable
quantity and quality of signals or programming.
2.7 amendment to 11.1(g). The Note Purchase Agreement is hereby amended by
restating 11.1(g) thereof to read in its entirety as follows:
(g) the Company or any Partner (other than Cable TV Fund 12-B, Ltd.)
Shall, in respect of any of its Indebtedness under the Loan Agreement or any
other Indebtedness (excluding the Notes) in an amount, individually or in the
aggregate, in excess of $1,000,000 (x) fail to pay any amount of Indebtedness
when due whether at maturity, at a date fixed for prepayment, upon acceleration
or otherwise, or (y) default in the performance or observance of any other
provision contained in any instrument or agreement evidencing such
Indebtedness, if the effect of such failure to pay or default is to cause or
permit the holder of the requisite holders of such Indebtedness or a trustee or
agent (I) to cause such Indebtedness to become due and payable prior to its
stated maturity, or (II) to take any action to realize upon any assets or
property of the Company or any such Partner under any agreement or instrument
evidencing or securing such Indebtedness; provided, that, a default by the
Company under the Loan Agreement resulting from the Company's failure to
obtain, within six (6) months after the Third Amendment Effective Date, the
consent of the County of Los Angeles to the grant of security interests in
franchises granted by such County, shall only constitute an Event of Default
hereunder if the effect of such failure to obtain the consent of the County is
to cause the holder or the requisite holders of the Indebtedness under the Loan
Agreement or a trustee or agent to cause such Indebtedness to become due and
payable prior to its stated maturity;
2.8 AMENDMENT TO 12.1 (a) The following definitions are hereby added, in
alphabetical order, to 12.1 of the Note Purchase Agreement:
The term "Amended Security Agreement" shall have the meaning set forth
in Amendment No. 3 to Note Purchase Agreement dated as of February 12, 1996 by
and among the Company and the Noteholders set forth on Schedule 1 thereto.
The term "Pro Forma Debt Service" shall mean, at any time of
determination, all principal, interest and fees to become due on such Funded
Debt during the period
5
<PAGE> 6
of twelve (12) calendar months beginning with such date of determination
(including all amounts to become due under Capital Leases for such period).
The term "Pro Forma Debt Service Coverage Ratio" shall mean, as of the
date of determination thereof, the ratio of Pro Forma Annualized Operating Cash
Flow to Pro Forma Debt Service.
The term "Third Amendment Effective Date" shall have the meaning set
forth in Amendment No. 3 to Note Purchase Agreement dated as of February 12,
1996 by and among the Company and the Noteholders set forth on Schedule 1
thereto.
(b) The Note Purchase agreement is hereby amended by deleting each of
the definitions of "Bank", "Operating Cash Flow", "Pro Forma Annualized
Operating Cash Flow" and "System" in 12.1 thereof and replacing it with the
following:
The term "Bank" shall mean individually, and "Banks" individually and
collectively, CoreStates Bank, N.A., a national banking association which also
conducts business as Philadelphia National Bank and as Corestates First
Pennsylvania Bank, Societe Generale, a French Bank acting through its New York
Branch, NationsBank of Texas, N.A., a national banking association, NatWest
Bank, N.A., The Royal Bank of Canada, a national banking institution, Colorado
National Bank, a national banking association, and their successors and
assigns.
The term "Operating Cash Flow" shall mean, for any fiscal period of
the Company, (I) the sum of Net Income, plus the following items, in each case
to the extent taken into account in calculating Net Income for such period: (a)
Depreciation, (b) Interest Expense, (c) Management Fees paid or accrued (not
including payments of amounts previously accrued), and (d) Home Office
Allocations paid or accrued (not including payments of amounts previously
accrued), less (ii) any non-cash gains or income of the Company and any
extraordinary income of the Company, determined in accordance with GAAP.
The term "Pro Forma Annualized Operating Cash Flow" shall mean, in
connection with any sale of a System pursuant to 9.18 hereof or any
determination of the Pro Forma Debt Service Coverage Ratio pursuant to 9.13(b)
hereof, (I) four (4) times (ii) Operating Cash Flow for the period of three (3)
calendar months most recently ended, adjusted, in the case of any determination
made in connection with or after the consummation of a sale of a System or
other assets to which a portion of such Operating Cash Flow for such period is
attributable, to reflect Operating Cash Flow for such period on a pro forma
basis excluding the portion of Operating Cash Flow for such period attributable
to the System or other assets so sold or to be sold of additional Indebtedness,
to reflect Operating Cash Flow for such period on a pro forma basis to reflect
any Interest Expense (not otherwise included in the determination of Operating
Cash Flow for such period) that would have been incurred if such Indebtedness
had been incurred prior to such period (but excluding any
6
<PAGE> 7
Interest Expense associated with any Indebtedness which may have been repaid
prior to the date of determination).
The term "System" shall mean individually, and "Systems" shall mean
individually and collectively, the Palmdale System, the Tampa System and the
Albuquerque System, together with any additional cable television systems
acquired by the Company in accordance with 9.19 hereof, but not including any
cable television system which has been sold in accordance with 9.18 hereof.
2.9 AMENDMENT TO EXHIBIT A TO THE NOTE PURCHASE AGREEMENT. Exhibit A
to the Note Purchase Agreement (the form of Note) shall be amended by deleting
it in its entirety and replacing it with Exhibit A to this Amendment.
SECTION 3. CONDITIONS TO EFFECTIVENESS OF CERTAIN PROVISIONS.
3.1 EFFECTIVE DATE. The provisions of Section 2 of this Amendment
shall become effective as of the date on which each of the following conditions
shall have been satisfied or waived by the holders of all of the outstanding
Notes (the "Third Amendment Effective Date"):
(a) Execution of Counterparts. Counterparts of this Amendment
shall have been executed and delivered by the Company and the holders of a
majority in aggregate unpaid principal amount of Notes outstanding.
(b) Representations True; No Event of Default. The representations
and warranties of the Company contained herein shall be true on and as of the
Third Amendment Effective Date. There shall exist no Event of Default, assuming
for this purpose that this Amendment had been effective form and after the date
hereof.
(c) Opinions of Special Counsel for the Company.
(i) The Noteholders and their Special Counsel shall
have received from Elizabeth Steele, general counsel for Jones, an opinion,
dated the Third Amendment Effective Date, in form and substance satisfactory to
the Noteholders and their Special Counsel, to the effect specified in Schedule
2-A hereto, and covering such other matters incident to the transactions
contemplated hereby as the Noteholders and their Special Counsel may reasonably
request;
(ii) The Noteholders and their Special Counsel shall
have received form Quinn, Kully & Morrow, special California counsel for the
Company, an opinion, dated the Third Amendment Effective Date, in form and
substance satisfactory to the Noteholders and their Special Counsel, to the
effect specified in Schedule 2-B hereto, and covering such other matters
incident to
7
<PAGE> 8
the transactions contemplated hereby as the Noteholders and their Special
Counsel may reasonably request;
(iii) The Noteholders and their Special Counsel shall
have received from Ruden, McClosky, Smith, Schuster & Russell, P.A., special
Florida counsel for the Company, an opinion, dated the Third Amendment
Effective Date, in form and substance satisfactory to the Noteholders and their
Special Counsel, to the effect specified in Schedule 2-C hereto, and covering
such other matters incident to the transactions contemplated hereby as the
Noteholders and their Special Counsel may reasonably request;
(iv) The Noteholders and their Special Counsel shall
have received from Keleher & McLeod, special New Mexico counsel for the
Company, an opinion, dated the Third Amendment Effective Date, in form and
substance satisfactory to the Noteholders and their Special Counsel, to the
effect specified in Schedule 2-D hereto, and covering such other matters
incident to the transactions contemplated hereby as the Noteholders and their
Special Counsel may reasonably request; and
(v) The Noteholders and their Special counsel shall
have received form Dow, Lohnes & Albertson, special FCC counsel for the
Company, an opinion, dated the Third Amendment Effective Date, in form and
substance satisfactory to the Noteholders and their Special counsel, to the
effect specified in Schedule 2-E hereto, and covering such other matters
incident to the transactions contemplated hereby as the Noteholders and their
Special Counsel may reasonably request.
(d) Fees and Disbursements of Special Counsel for the Noteholders.
The noteholders' Special Counsel shall have received payment of the invoice
rendered for its fees and disbursements posted through the date of such invoice
(with the understanding that a supplemental statement for fees and
disbursements subsequently posted is to be rendered at a later date) in
connection with the consummation of the transactions contemplated hereunder.
(e) Loan Agreement, etc. The Loan Agreement and all other
agreements, instruments and arrangements between the Banks and the Company
shall have been reduced to writing and furnished to the Noteholders and such
agreements, instruments and arrangements shall be in form and substance
satisfactory to their Special Counsel. The Noteholders shall have received an
Officer's Certificate of the Company attaching copies of the fully executed
Loan Agreement and each of such other agreements and such documents are the
only agreements between such parties relating to the transactions contemplated
by the Loan Agreement, that each such document is in full force and effect
without any term or condition thereof having been amended, modified or waived
or any exercise of rights with respect thereto forborne without the
Noteholders' prior written consent, that there is no default thereunder and
that each of
8
<PAGE> 9
the conditions set forth in the Loan Agreement to be satisfied prior to or on
the Third Amendment Effective Date shall have been satisfied (without any
thereof having been waived).
(f) Amendment to Intercreditor Agreement. The parties to
the Intercreditor Agreement shall have entered into an amendment thereof in the
form of Exhibit B attached hereto, such amendment shall have become effective
in accordance with tits terms and the Noteholders shall have received a fully
executed original of such amendment (or a complete set of executed counterparts
thereof).
(g) Amendment to Security Agreement. The parties to the
Amended Security Agreement shall have entered into an amendment thereof in the
form of Exhibit C attached hereto, such amendment shall have become effective
in accordance with its terms and the Noteholders shall have received a fully
executed original of such amendment (or a complete set of executed counterparts
thereof).
(i) No Material Adverse Change. There shall have been no
material adverse change in the business, earnings, properties or condition
(financial or otherwise) to the Company or any of its Subsidiaries since
September 30, 1995.
(j) Bank Consent. The Noteholders shall have received the
written consent of the Banks to the execution, delivery and performance of this
Amendment.
(k) Consents. The Company shall have delivered to the
Noteholders an Officer's Certificate, dated the Third Amendment Effective Date,
certifying that any necessary consents, waivers, approvals, authorizations,
registrations, filings and notifications in connection with the authorization,
execution and delivery of this Amendment have been obtained or made and are in
full force and effect.
(l) Proceedings, Instruments, etc. All proceedings and
actions taken on or prior to the Third Amendment Effective Date in connection
with the transactions contemplated by this Amendment and all instruments
incident thereto shall be in form and substance satisfactory to the Noteholders
and their Special counsel, and the Noteholders and their Special Counsel shall
have received copies of all documents that it or they may request in connection
with such proceedings, actions and transactions (including, without limitation,
copies of court documents, certifications, and evidence of the correctness of
the representations and warranties contained herein and certifications and
evidence of the compliance with the terms and the fulfillment of the conditions
of this Amendment, in form and substance satisfactory to the Noteholders and
their Special Counsel.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
9
<PAGE> 10
4.1 ORGANIZATION AND AUTHORITY. (a) The Company:
(i) is a general partnership duly formed and validly existing
under the laws of the State of Colorado;
(ii) has all requisite partnership power and authority to own
(or hold under lease) and operate its properties, to conduct its business as
currently conducted and as currently proposed to be conducted;
(iii) has all requisite partnership power and authority
necessary to enter into this Amendment, the Amended Security Agreement and the
Intercreditor Agreement, and to perform its obligations under this Amendment,
the Security Agreement, the Intercreditor Agreement and the Notes;
(iv) has made all filings and holds all franchises, licenses,
permits and registrations which are required under the laws of each
jurisdiction in which the properties owned (or held under lease) by it or the
nature of its activities make such filings, franchises, licenses, permits or
registrations necessary; and
(v) has no Subsidiaries.
(b) Each of the Partners:
(i) is a limited partnership duly formed and validly existing
under the laws of the State of Colorado;
(ii) has all requisite partnership power and authority to own
(or hold under lease) and operate its properties, to conduct its business as
currently conducted; and
(iii) has made all filings and holds all franchises, licenses,
permits and registrations which are required under the laws of each
jurisdiction in which the properties owned (or held under lease) by it or the
nature of its activities makes such filings, franchises, licenses, permits or
registrations necessary other than such filings, franchises, licenses, permits
or registrations as would not, individually or in the aggregate, have a
material adverse effect on the business, earnings, properties or condition
(financial or other) of such Partner.
(c) Jones:
(i) is a corporation duly organized, validly existing and in
good standing under the laws of the State of Colorado;
(ii) has all requisite corporate power and authority to own
(or hold under lease) and operate its properties, to conduct its business as
currently conducted and as currently proposed to be conducted; and
10
<PAGE> 11
(iii) has qualified to do business in each jurisdiction in
which the properties owned (or held under lease) by it or the nature of its
activities makes such qualification necessary other than such qualifications as
would not, individually or in the aggregate, have a material adverse effect on
the business, earnings, properties or condition (financial or other) of Jones.
4.2 CORPORATE PROCEEDINGS; VALIDITY OF THIS AMENDMENT. The Company has
taken all corporate action necessary to be taken by it to authorize the
execution and delivery of this Amendment, the Amendment Security Agreement and
the Intercreditor Agreement. Each of this Amendment, the Amended Security
Agreement and the Intercreditor Agreement has been duly executed and delivered
by the Company and constitutes the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms.
4.3 NO DEFAULT OR EVENT OF DEFAULT. Giving effect to the amendments
set forth in Section 2 of this Amendment, no event has occurred and no
condition exists which constitutes a Default or an Event of Default.
4.4 ALL OTHER REPRESENTATIONS AND WARRANTIES. The representation and
warranties of the Company and its Subsidiaries contained in Section 2 of the
Note Purchase Agreement are true and correct on and as of the date hereof with
the same effect as though made on and as of the Closing Date, as amended by
substituting Schedule II attached hereto for Schedule II attached to the Note
Purchase Agreement.
SECTION 5. AMENDMENT FEE
The Company shall pay to each Noteholder on or prior to the Third
Amendment Effective Date an amendment fee in an amount equal to 0.25% of the
aggregate unpaid principal amount of Notes outstanding and held by such
Noteholder (without regard to whether such Noteholder is executing this
Amendment).
SECTION 6. CONSENT TO AMENDMENT TO LOAN AGREEMENT.
Pursuant to 9.22 of the Note Purchase Agreement which requires the
Company to obtain the written consent of the holders of at least 66 2/3% of the
aggregate principal amount of Notes outstanding prior to making certain
amendments to the Loan Agreement, the Noteholders hereby approve and consent to
the execution by the Company of the Second Amended and Restated Credit
Agreement dated as of February 12, 1996 by and among the Company and the banks
listed therein, substantially in the form attached hereto as Exhibit D.
11
<PAGE> 12
SECTION 7. MISCELLANEOUS.
7.1 CROSS-REFERENCES. References in this Amendment to any Section (or
"?") are, unless otherwise specified, to such Section (or "?") of this
Amendment.
7.2 INSTRUMENT PURSUANT TO EXISTING NOTE PURCHASE AGREEMENT; LIMITED
AMENDMENT. This Amendment is executed pursuant to 13.4 of the Note Purchase
Agreement and shall (unless otherwise expressly indicated herein) be construed,
administered and applied in accordance with all of the terms and provisions of
the Note Purchase Agreement, including 13.4 thereof. Except as expressly
amended, any conditions of the Note Purchase Agreement shall remain unamended
and unwaived. The amendments set forth herein shall be limited precisely as
provided for herein to the provisions expressly amended herein and shall not be
deemed to be a waiver of, amendment of, consent to or modification of any other
term or provision of any other document or of any transaction or further action
on the part of the Company which would require the consent of any Noteholder
under the Note Purchase Agreement.
7.3 SUCCESSORS AND ASSIGNS. This Amendment shall be binding upon and
inure to the benefit of the Company and the Noteholders and their respective
successors and assigns.
7.4 COUNTERPARTS. This Amendment may be executed simultaneously in tow
or more counterparts, each of which shall be deemed to be an original but all
of which shall constitute together but one and the same instrument.
7.5 GOVERNING LAW. THIS AMENDMENT AND THE NOTES SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
12
<PAGE> 13
MELLON BANK, N.A., as Trustee for NYNEX MASTER
PENSION TRUST, as directed by JOHN HANCOCK MUTUAL
LIFE INSURANCE COMPANY
[Seal]
By: /S/ PATRICIA J. VEILLEUX
-----------------------
Name: Patricia J. Veilleux
Title: Associate Counsel
The decision to CONNECTICUT MUTUAL LIFE INSURANCE COMPANY
participate in this By: /S/ WILLIAM F. CASE
investment, any -----------------------
representations made Name: William F. Case
herein by the Title: Senior Investment Officer
participant, and any
actions taken GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
hereunder by the
participant has/have By: /S/ WAYNE T. HOFFMANN
been solely at the -----------------------
direction of the Name: Wayne T. Hoffmann
investment fiduciary Title: Vice President
who has sole investment Private Placement Investments
discretion
with respect to this MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
investment
By: /S/ JOHN B. JOYCE
-----------------------
Name: John B. Joyce
Title: Vice President
13
<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective officers duly authorized thereunto as of the
day and year first above written.
CABLE TV FUND 12-BCD VENTURE
By: Cable TV FUND 12-B, LTD.,
a general partner
By: Cable TV FUND 12-C, LTD.,
a general partner
By: Cable TV FUND 12-D, LTD.,
a general partner
By: JONES INTERCABLE, INC.,
their general partner
By: /S/ J. ROY POTTLE
------------------------
Name: J. Roy Pottle
Title: TREASURER
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
By: /S/ DANIEL C. BUDDE
------------------------
Name: Daniel C. Budde
Title: Investment Officer
THE TRAVELERS INSURANCE COMPANY
By: /S/ PAMELA WESTMORELAND
------------------------
Name: Pamela Westmoreland
Title: Assistant Investment Officer
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
By: /S/ WILMA H. DAVIS
------------------------
Name: Wilma H. Davis
Title: Vice President
14
<PAGE> 1
SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
BY AND AMONG
CABLE TV FUND 12-BCD VENTURE,
THE BANKS IDENTIFIED ON SCHEDULE 1 HERETO,
CORESTATES BANK, N.A.
AND
SOCIETE GENERALE
as Managing Agents
AND
CORESTATES BANK, N.A.
as Administrative Agent
February 12, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION ONE DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.02. Rule of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION TWO - LOAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.01. The Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.02. Promissory Notes.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.03. Banks' Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.04. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.05. Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.06. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.07. Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.08. Reduction and Termination of Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.09. Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.10. Funding Costs and Loss of Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.11. Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.12. Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.13. Administrative Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.14. Regulatory Changes in Capital Requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.15. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION THREE - REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.01. Organization and Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.02. Power and Authority; Validity of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.03. No Violation of Laws of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.04. Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.05. Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.06. Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.07. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
3.08. Title to Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
3.09. Partnership Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
3.10. Accuracy of Information; Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
3.11. Partnership Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.12. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.13. Management Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.14. Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.15. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.16. Fees and Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3.17. No Extension of Credit for Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3.18. Perfection of Security Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3.19. Hazardous Wastes, Substances and Petroleum Products . . . . . . . . . . . . . . . . . . . . . . . . 34
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3.20. Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3.21. Investment Company Act; Public Utility Holding Company Act . . . . . . . . . . . . . . . . . . . . . 35
3.22. Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION FOUR - CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.01. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.02. Each Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION FIVE - AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.01. Existence and Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.02. Quarterly Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.03. Annual Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.04. Public Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.05. Quarterly Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.06. Books and Records; Inspection Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.07. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.08. Litigation; Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.09. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.10. Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.11. Additional Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.12. Compliance; Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.13. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.14. Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.15. Debt Service Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.16. Operating Cash Flow to Interest Expense Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.17. Extensions of Franchises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.18. Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.19. Transactions Among Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.20. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.21. Refund Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION SIX - NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
6.01. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
6.02. Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.03. Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.04. Liens and Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.05. Additional Negative Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.06. Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.07. Transfer of Assets; Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.08. Acquisitions and Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.09. Payments to Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.10. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.11. Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.12. Insurance Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
</TABLE>
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SECTION SEVEN - ADDITIONAL COLLATERAL AND RIGHT OF SET-OFF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.01. Additional Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.02. Right of Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION EIGHT - DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
8.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
8.02. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION NINE - THE BANKS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
9.01. Application of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
9.02. Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
9.03. Modifications and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
9.04. Obligations Several . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
9.05. Banks' Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
9.06. investigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
9.07. Powers of Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
9.08. General Duties of Agent, Immunity and Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . 54
9.09. No Responsibility for Representations or Validity, etc . . . . . . . . . . . . . . . . . . . . . . . 54
9.10. Action on Instruction of Banks; Right to Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . 54
9.11. Employment of Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
9.12. Reliance on Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
9.13. Agent's Rights as a Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
9.14. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
9.15. Resignation of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
9.16. Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
9.17. Collateral Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
9.18. Enforcement by Administrative Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION TEN MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
10.01. Non-Recourse. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
10.02. Indemnification and Release Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
10.03. Participations and Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
10.04. Binding and Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
10.05. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
10.06. No Waiver; Delay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
10.07. Modification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.08. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.09. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.10. Payment on Non-Business Days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.11. Time of Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
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10.12. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.13. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.14. Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
10.15. Acknowledgement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
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<PAGE> 6
LIST OF SCHEDULES AND EXHIBITS
Schedule 1: Banks and Maximum Principal Amounts
Exhibit A: Advance Request Form
Exhibit B: Form of Replacement Note
Exhibit C: Disclosure Pursuant to Representations and Warranties
Exhibit D: Funding Costs and Loss of Earnings Calculation
Exhibit E: Opinions of Counsel
Exhibit E-1: Form of Opinion of Colorado Counsel
Exhibit E-2: Form of Opinion of California Counsel
Exhibit E-3: Form of Opinion of Florida Counsel
Exhibit E-4: Form of Opinion of New Mexico Counsel
Exhibit E-5: Form of Opinion of FCC Counsel
Exhibit F: Parties' Addresses for Notices
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<PAGE> 7
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS AGREEMENT is made this 12th day of February, 1996, by and among
CABLE TV FUND 12-BCD VENTURE, a joint venture general partnership consisting of
three Colorado limited partnerships with offices at 9697 East Mineral Avenue,
Englewood, Colorado 80112 ("Borrower"); CORESTATES BANK, N.A., a national
banking association with offices at 1339 Chestnut Street, Philadelphia, PA
19101-7618 ("CoreStates," and in its capacity as administrative agent
hereunder, "Administrative Agent"); SOCIETE GENERALE, a French bank acting
through its New York branch with offices at 1221 Avenue of the Americas, New
York, New York 10020 ("Societe Generale," and together with CoreStates in their
capacity as managing agents hereunder, "Managing Agents"); and the other banks
identified on Schedule 1 attached hereto (together with CoreStates and Societe
Generale, each individually a "Bank" and individually and collectively,
"Banks").
W I T N E S S E T H:
WHEREAS, Borrower is a joint venture general partnership formed
pursuant to the Joint Venture Agreement dated as of March 17, 1986 (as amended,
the "Joint Venture Agreement") by and among Cable TV Fund 12-B, Ltd., Cable TV
Fund 12-C, Ltd. and Cable TV Fund 12-D, Ltd., each a Colorado limited
partnership (each individually a "Partner," and individually and collectively,
the "Partners"); and
WHEREAS, Borrower is the owner of certain cable television franchises,
related contract rights and operating cable television properties and systems
in and around Antelope Valley (Palmdale/Lancaster/California City/Edwards Air
Force Base), California and the development of Rancho Vista, Palmdale,
California (as further defined below, the "Palmdale System"), Albuquerque, New
Mexico (as further defined below, the "Albuquerque System") and the City of
Tampa, Florida (as further defined below, the "Tampa System"); and
WHEREAS, Borrower and NationsBank of Texas, N.A., Royal Bank of
Canada, Shawmut Bank Connecticut, N.A., Colorado National Bank, and CoreStates
for itself and as agent (the "Existing Banks") are parties to that certain
Amended and Restated Loan Agreement dated March 31, 1992, as amended by
Amendment No. 1 dated September 30, 1994 (as amended, the "Existing Loan
Agreement"), pursuant to which the Existing Banks agreed to advance to Borrower
up to an aggregate principal amount outstanding at any time of Eighty-Seven
Million Dollars ($87,000,000); and
WHEREAS, Borrower desires to amend and restate the commitment under
the Existing Loan Agreement and to borrow hereunder, and Banks on a several
basis are willing to lend, on
<PAGE> 8
the terms and conditions hereinafter set forth, up to One Hundred Twenty
Million Dollars ($120,000,000) for the purposes set forth herein.
NOW, THEREFORE, in consideration of the promises and the agreements
hereinafter set forth, and intending to be legally bound hereby, the parties
hereto agree as follows:
SECTION ONE
DEFINITIONS
1.01. Definitions. When used in this Agreement, the following terms
shall have the meaning set forth below; certain terms relating to interest
rates are defined in Paragraph 2.06 and shall have the meanings set forth
thereunder.
"Administrative Agent" shall mean CoreStates in its capacity as
administrative agent for the Banks hereunder, and its successors and assigns in
such capacity.
"Advance Request Form" shall mean the certificate in the form attached
hereto as Exhibit A to be delivered by Borrower to Administrative Agent as a
condition of each advance of the Loan pursuant to Paragraph 2.07 hereof.
"Affiliate" of any person or entity shall mean (i) any person or
entity directly or indirectly owning, controlling or holding five percent (5%)
or more of the outstanding beneficial interest in such person or entity, (ii)
any person or entity five percent (5%) or more of the outstanding beneficial
interest of which is directly or indirectly owned, controlled, or held by such
person or entity, (iii) any person or entity directly or indirectly
controlling, controlled by, or under common control with such other person or
entity, or (iv) any officer, director, partner or employee of such person or
entity.
"Agent" shall mean individually, and "Agents" shall mean individually
and collectively, Administrative Agent and Managing Agents.
"Agreement" shall mean this Second Amended and Restated Credit
Agreement and all the exhibits and schedules hereto, as amended, modified or
restated from time to time.
"Albuquerque System" shall mean the cable franchises, related contract
rights and operating cable television properties and systems of Borrower
located in and around the City of Albuquerque, New Mexico, as more particularly
described on Exhibit C attached hereto.
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"Annualized Operating Cash Flow" shall mean as of any date of
determination four (4) times Borrower's Operating Cash Flow for the fiscal
quarter of the Borrower most recently ended.
"Bank" shall mean individually, and "Banks" shall mean individually
and collectively, CoreStates, Societe Generale and the other Banks identified
on Schedule 1 attached hereto.
"Basic Rate" shall mean the minimum standard monthly fees and charges
for the minimum level of "basic services" or "expanded basic services" (as such
terms are commonly used with respect to the Systems).
"Basic Subscribers" shall mean the number of subscribers in the
Systems (excluding "second connects" as such term is commonly understood in the
cable television industry) who are (a) currently receiving cable television
signals supplied by Borrower; (b) have commenced payment for such signals at
the Basic Rate, directly or indirectly, under subscriptions with Borrower; and
(c) are not sixty (60) or more days delinquent in payments as determined on a
contractual basis. In the case of commercial buildings, such as hotels or
motels, or in the case of multiple residential dwellings, such as apartment
houses and multifamily homes, which do not obtain reduced bulk service rates,
each separate guest unit or dwelling unit receiving service shall be counted as
one subscriber. The number of subscribers in a commercial building or in a
multiple residential dwelling which does obtain a reduced bulk service rate
shall be obtained by dividing (i) the aggregate dollar amount of monthly
subscribers' fees paid on account of such commercial building or multiple
residential dwelling for basic service and expanded basic service by (ii) the
applicable monthly rate for expanded basic services for the System in which
such building or dwelling is located. Residential households (other than in a
multiple residential dwelling) paying for services under any form of deferral
payment arrangement shall not be included.
"Borrower" shall mean Cable TV Fund 12-BCD Venture, a joint venture
general partnership comprised of three Colorado limited partnerships pursuant
to the Joint Venture Agreement by and among Cable TV Fund 12-B, Ltd., Cable TV
Fund 12-C, Ltd. and Cable TV Fund 12-D, Ltd., owning on the date of this
Agreement the respective percentages of partnership interests in Borrower set
forth on Exhibit C attached hereto.
"Business Day" shall mean any day not a Saturday, Sunday or public
holiday under the laws of the Commonwealth of Pennsylvania, the State of
Colorado or the State of New York.
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<PAGE> 10
"Cable Act" shall mean the Cable Communications Policy Act of 1984, as
amended, and all rules and regulations promulgated thereunder, as from time to
time in effect.
"Capital Expenditures" shall mean cash expenditures or the incurrence
of indebtedness for any fixed assets or improvements, replacements,
substitutions or additions thereto, which have a useful life of more than one
(1) year, including the direct or indirect acquisition of such assets by way of
increased product service charges, offset items or otherwise.
"Capital Leases" shall mean capital leases and subleases, as defined
in the Financial Accounting Standards Board Statement of Financial Accounting
Standards No. 13 dated November 1976, as amended and updated from time to time.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
all rules and regulations promulgated thereunder, as from time to time in
effect.
"Collateral" shall mean the collateral security afforded to CoreStates
as collateral security agent for the Banks and the holders of the Insurance
Notes under the Collateral Security Documents.
"Collateral Security Documents" shall mean collectively, the Security
Agreement and financing statements filed pursuant thereto, and the
Intercreditor Agreement, in each case required to be delivered pursuant to
Paragraph 4.01 hereof, and any additional documents granting or governing
security for the Loan or the Insurance Notes.
"Commitment" shall mean the maximum aggregate principal amount which
Banks have agreed to advance under Section Two hereof, being on the date of
this Agreement One Hundred Twenty Million Dollars ($120,000,000).
"Communications Act" shall mean the Federal Communications Act of
1934, as amended, and all rules and regulations promulgated thereunder, as from
time to time in effect.
"Copyright Act" shall mean title 17 of the United States Code, as
amended, and the rules and regulations promulgated thereunder, as from time to
time in effect.
"CoreStates" shall mean CoreStates Bank, N.A., a national banking
association.
"Debt Service" shall mean, for any fiscal period of Borrower, the
payment or accrual of principal, interest and fees (including without
limitation the commitment fee set forth in
-4-
<PAGE> 11
Paragraph 2.12 hereof) due on Funded Debt in such period plus any amounts paid
or accrued under Capital Leases for such period; provided, however, that for
purposes of determining Debt Service for any fiscal quarter of Borrower,
one-half (1/2) of each semiannual principal and interest payment due on the
Insurance Notes shall be allocated on an equal basis to each of two (2)
quarters in each such semi-annual period.
"Default" shall mean an event or circumstance which with the giving of
notice or the passage of time or both would constitute an Event of Default.
"Depreciation" shall mean for any fiscal quarter of Borrower, the sum
of all Borrower's depreciation and amortization expenses for such quarter, as
determined in accordance with GAAP.
"Environmental Control Statutes" shall mean all federal, state or
local laws and regulations governing the control, removal, spill, release or
discharge of hazardous or toxic wastes or substances, pollutants, contaminants,
or petroleum products, as in effect from time to time, including without
limitation as provided in the provisions of and the regulations under the
Comprehensive Environmental Response, Compensation and Liability Act
("CERCIA"), the Solid Waste Disposal Act, the Clean Water Act, the Clean Air
Act, the Resource Conservation and Recovery Act of 1976, the Federal Water
Pollution Control Act Amendments of 1972, the Hazardous Materials
Transportation Act, and the Occupational Safety and Health Act, and all
amendments to the foregoing.
"EPA" shall mean the United States Environmental Protection Agency, or
any successor thereto.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, and all rules and regulations promulgated thereunder, as from time
to time in effect.
"ERISA Affiliate" shall mean any company, whether or not incorporated,
and any other entity which is considered a single employer or an affiliated
service group with Borrower under Titles I, II or IV of ERISA.
"Event of Default" shall mean each of the events described in
Paragraph 8.01 hereof.
"Existing Banks" shall mean NationsBank of Texas, N.A., Shawmut Bank
Connecticut, N.A., Colorado National Bank, Royal Bank of Canada and CoreStates,
in their capacity as "Banks" (and, in the case of CoreStates, "Agent") under
the Existing Loan Agreement.
-5-
<PAGE> 12
"Existing Loan Agreement" shall mean the Amended and Restated Loan
Agreement by and among Borrower, the Existing Banks and CoreStates as Agent,
dated March 31, 1992, as amended by Amendment No. 1 dated September 30, 1994.
"FCC" shall mean the Federal Communications Commission, or any
successor thereto.
"Funded Debt" shall mean, as of the date of determination, (i) the
aggregate principal amount of all of Borrower's indebtedness for (a) borrowed
money, other than trade indebtedness incurred in the normal and ordinary course
of business for value received; (b) Capital Leases; (c) installment purchases
of real or personal property; and (d) obligations under direct or indirect
guarantees 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 persons or entities other than
Borrower of the kinds referred to in clauses (a) through (c) above, less (ii)
indebtedness of the kind referred to in clause (i)(a) of Borrower to Jones
subordinated to the Loan pursuant to the Subordination Agreement.
"GAAP" shall mean generally accepted accounting principles applied on
a consistent basis, set forth in the Opinions of the Accounting Principles
Board of the American Institute of Certified Public Accountants and/or in
statements of the Financial Accounting Standards Board and/or in such other
statements by such other entity as Administrative Agent may reasonably approve,
which are applicable in the circumstances as of the date in question; and the
requisite that such principles be applied on a consistent basis shall mean that
the accounting principles observed in a current period are comparable in all
material respects to those applied in a preceding period.
"Gross Operating Revenues" shall mean for any fiscal period of
Borrower for which such sum is being computed the sum of all revenues of
Borrower from the operation of its businesses during such period, as determined
in accordance with GAAP.
"Home Office Allocations" shall mean for any fiscal period of Borrower
for which such sum is being computed the amount of reimbursement payable by
Borrower to Jones for general overhead and administrative expenses pursuant to
Section 2 of the Management Agreement during such period.
"Insurance Notes" shall mean those certain 8.64% Senior Secured Notes
issued by Borrower due March 31, 2000 in the aggregate principal amount of
Ninety-Three Million Dollars ($93,000,000).
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<PAGE> 13
"Intercreditor Agreement" shall mean the amended and restated
intercreditor and collateral agency agreement required to be executed and
delivered pursuant to Paragraph 4.01(e) hereof, as amended, modified or
restated from time to time.
"Interest Expense" shall mean for any fiscal period of Borrower the
amount required to be paid or accrued by Borrower as interest and fees on
Funded Debt.
"Joint Venture Agreement" shall mean the Joint Venture Agreement dated
as of March 17, 1986, by and among the Partners, as amended from time to time
with the consent of Required Banks.
"Jones" shall mean Jones Intercable, Inc., a Colorado corporation
which is the sole general partner of each of the Partners.
"Leverage Ratio" shall mean, as of any date of determination, the
ratio of Funded Debt to Annualized Operating Cash Flow.
"Loan" shall mean the outstanding principal balance of indebtedness
advanced under the Commitment, together with interest accrued thereon and fees
and expenses incurred in connection therewith.
"Local Authorities" shall mean individually and collectively the state
and local governmental authorities which govern the cable television systems
owned by Borrower, including but not limited to the Systems.
"Managing Agents" shall mean CoreStates and Societe Generale, in their
capacity as managing agents hereunder, and their successors and assigns in such
capacity.
"Management Agreement" shall mean the Management Agreement dated as of
April 30, 1986, as amended, by and between Borrower and Jones pursuant to which
Jones is employed as the manager of the Systems, as amended, modified or
restated from time to time, as permitted by this Agreement.
"Management Fees" shall mean for any fiscal quarter of Borrower the
amount of management fees payable by Borrower to Jones pursuant to Section 2 of
the Management Agreement during such fiscal quarter.
"Maximum Principal Amount" shall mean the maximum principal amount of
the Commitment which each Bank has agreed to lend as set forth in Paragraph
2.03 hereof.
"Net Cash Proceeds" shall mean, with respect to any sale of a System
permitted pursuant to Paragraph 6.07 hereof, the
-7-
<PAGE> 14
cash proceeds received by Borrower in connection with such sale less related
sales expenses and amounts distributed to the Partners on account of tax
liabilities in connection with such sale as permitted by Paragraph 6.09(i)(A)
hereof.
"Net Income" shall mean, for any period, Borrower's net income plus,
to the extent taken into account in calculating net profit, taxes accrued but
not actually paid in cash for such period as determined in accordance with
GAAP.
"Note" shall mean individually, and "Notes" shall mean individually
and collectively, the amended and restated promissory notes of Borrower in the
form of Exhibit B attached hereto in favor of each Bank required to be executed
and delivered by Borrower to Banks pursuant to Paragraph 4.01(a) hereof, as
amended, modified, extended, consolidated or restated from time to time.
"Note Agreements" shall mean the Note Purchase Agreements dated March
31, 1992 by and between Borrower and each of the Purchasers listed on Schedule
1 thereto pursuant to which Borrower issued the Insurance Notes, as amended by
Amendment No.1 to Note Purchase Agreement dated as of March 31, 1994, Amendment
No. 2 dated as of September 30, 1994 and Amendment No. 3 dated of even date
herewith, and as may be further amended, modified or restated in accordance
with the terms hereof and thereof.
"Operating Cash Flow" shall mean, for any fiscal period of Borrower,
(i) the sum of Net Income, plus the following items, in each case to the extent
taken into account in calculating Net Income for such period: (a) Depreciation,
(b) Interest Expense, (c) Management Fees paid or accrued (not including
payments of amounts previously accrued), and (d) Home Office Allocations paid
or accrued (not including payments of amounts previously accrued), less (ii)
any non-cash gains or income of Borrower and any extraordinary income of
Borrower, determined in accordance with GAAP.
"Palmdale System" shall mean the cable television franchises, related
contract rights and operating cable television properties and systems of
Borrower in and around Antelope Valley (Palmdale/Lancaster/California
City/Edwards Air Force Base), California, and in the development of Rancho
Vista, Palmdale, California, as more particularly described on Exhibit C
attached hereto.
"Partners" shall mean, individually and collectively, the three
limited partnerships comprising Borrower, namely, Cable TV Fund 12-B, Ltd.,
Cable TV Fund 12-C, Ltd., and Cable TV Fund 12-D, Ltd., each a Colorado limited
partnership.'
-8-
<PAGE> 15
"Partnership Agreement" shall mean individually, and "Partnership
Agreements" shall mean individually and collectively, the limited partnership
agreements of each of the Partners.
"Pay Units" shall mean the number of pay cable television services
subscribed to by Basic Subscribers in the Systems.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Permitted Investments" shall mean (i) investments in commercial paper
maturing in 180 days or less from the date of issuance which is rated A1 or
better by Standard & Poor's Corporation or P1 or better by Moody's Investors
Services, Inc.; (ii) investments in direct obligations of the United States of
America or obligations of any agency thereof which are guaranteed by the United
States of America, provided that such obligations mature within twelve (12)
months of the date of acquisition thereof; and (iii) investments in
certificates of deposit maturing within one (1) year from the date of
acquisition thereof issued by a Bank or bank or trust company organized under
the laws of the United States or any state thereof, having capital, surplus and
undivided profits aggregating at least $500,000,000 and the long-term
indebtedness of which is rated A+ or better by Moody's Investors Services, Inc.
or equivalent by Standard & Poor's Corporation.
"Plan" shall mean any pension benefit or welfare benefit plan as
defined in Section 3(l), (2) or (3) of ERISA covering employees of Borrower or
any ERISA Affiliate.
"Pro Rata Share" shall mean as to a Bank the ratio which the
outstanding principal balance of its portion of the Loan hereunder bears to the
aggregate outstanding principal balance of the Loan at any time; or if no
indebtedness is outstanding hereunder, the ratio that its Maximum Principal
Amount bears to the Commitment.
"Refund Liability" shall have the meaning set forth in Paragraph 3.22
hereof.
"Required Banks" shall mean those Banks (which may include Agents)
having in the aggregate a Pro Rata Share equal to or in excess of sixty-six and
two-thirds percent (66-2/3%).
"Restricted Payments" shall mean (i) redemptions, repurchases,
dividends and distributions of any kind in respect of partnership interests in
Borrower; (ii) payments of principal and interest on Subordinated Debt; and
(iii) payments of Home Office Allocations and Management Fees.
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<PAGE> 16
"Security Agreement" shall mean the amended and restated security
agreement required to be executed and delivered by Borrower pursuant to
Paragraph 4.01(b) hereof, as amended, modified or restated from time to time.
"Societe Generale" shall mean Societe Generale, a French bank.
"Subordinated Debt" shall mean indebtedness and obligations of
Borrower subordinated to the Loan with subordination provisions in form and
substance satisfactory to Banks, including without limitation any indebtedness
of Borrower to Jones and accrued and unpaid Home Office Allocations and
Management Fees, subject to the Subordination Agreement.
"Subordination Agreement" shall mean the amended and restated
subordination agreement that Jones is required to deliver to Administrative
Agent pursuant to Paragraph 4.01(f) hereof, as amended, modified or restated
from time to time.
"Subsidiary" shall mean any corporation of which the Borrower,
directly or indirectly, owns more than fifty percent (50%) of any class or
classes of securities.
"System" shall mean individually, and "Systems" shall mean
individually and collectively, the Palmdale System, the Tampa System and the
Albuquerque System, together with any additional cable television systems
acquired by Borrower in accordance with Paragraph 6.08 hereof, but not
including any cable television system which has been sold in accordance with
Paragraph 6.07 hereof.
"Tampa System" shall mean the cable television franchises, related
contract rights and operating properties and systems of Borrower in and around
the City of Tampa, Florida, as more particularly described on Exhibit C
attached hereto.
"Termination Date" shall mean the earlier of (i) December 31, 1999 or
(ii) the date on which the Commitment is terminated pursuant to Paragraph 2.08
or 8.02 hereof.
1.02. Rule of Construction. Except as otherwise provided herein,
financial and accounting terms used in the foregoing definitions or elsewhere
in this Agreement shall be defined in accordance with GAAP.
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<PAGE> 17
SECTION TWO
LOAN
2.01. The Commitment.
(a) From time to time prior to the Termination Date and subject to
the terms and conditions hereinafter set forth, each Bank on a several basis up
to its respective maximum Principal Amount will make advances to Borrower, and
Borrower may repay at the offices of Administrative Agent and reborrow under
the Commitment, an aggregate principal amount not to exceed at any time
outstanding the aggregate Commitment as from time to time in effect, being on
the date hereof One Hundred Twenty Million Dollars ($120,000,000).
(b) This Agreement amends and restates the Existing Loan
Agreement, provided, however, that the execution and delivery of this
Agreement, the Collateral Security Documents and the other documents and
agreements executed in connection herewith shall not in any circumstances be
deemed to have terminated, extinguished or discharged Borrower's indebtedness
under the Existing Loan Agreement or the collateral security therefore (except
for the mortgages and leasehold assignments executed and delivered in
connection with the Existing Loan Agreement, which are being released as
provided herein), all of which indebtedness and collateral security shall
continue under and be governed by this Agreement, the Collateral Security
Documents and the other documents and agreements executed and delivered in
connection herewith.
(c) On the effective date of this Agreement:
(i) each Bank shall pay to Administrative Agent immediately
available funds equal to the amount, if any, by which its Pro Rata Share of the
outstanding loan under the Existing Loan Agreement is less than its Pro Rata
Share of the outstanding Loan following the effectiveness of this Agreement (a
Bank that is not an Existing Bank being treated as having a zero Pro Rata Share
under the Existing Loan Agreement), and such amounts shall be allocated to each
Bank and each Existing Bank as appropriate so that each Bank has its
corresponding Pro Rata Share hereunder and each Existing Bank that is not
continuing as a Bank hereunder is repaid the entire principal amount of its Pro
Rata Share of the outstanding loan under the Existing Loan Agreement; and
(ii) Borrower (A) shall pay to Administrative Agent all accrued
and unpaid interest and commitment fees in accordance with the Existing Loan
Agreement, which interest and commitment fees shall be allocated to Existing
Banks in accordance with the Existing Loan Agreement, and (B)
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<PAGE> 18
shall pay to each Existing Bank all funding costs and loss of earnings (except
for loss of the applicable Margin) which may arise in connection with the
payments made pursuant to Paragraph 2.1(c)(i) above, as calculated by each
Existing Bank in accordance with Exhibit D to the Existing Loan Agreement.
2.02. Promissory Notes.
(a) The indebtedness of Borrower to each Bank under the Loan will
be evidenced by a Note executed by Borrower in favor of such Bank in the form
of Exhibit B attached hereto. The original principal amount of each Bank's Note
will be its respective Maximum Principal Amount; provided, however, that
notwithstanding the face amount of any Note, Borrower's liability under each
such Note shall be limited at all times to its actual indebtedness (principal,
interest, fees, premiums and expenses) then outstanding hereunder.
(b) The Notes shall collectively replace and supersede the Second
Amended and Restated Promissory Notes of Borrower in favor of Existing Banks
(the "Prior Notes"); provided, however, that the execution and delivery of the
Notes shall not in any circumstance be deemed to have terminated, extinguished
or discharged Borrower's indebtedness under the Prior Notes, all of which
indebtedness and the collateral security therefor (except as expressly set
forth herein) shall continue under and be governed by the Notes. The Notes are
a replacement, consolidation, amendment and restatement of the Prior Notes and
are NOT A NOVATION. Nothing herein is intended to modify or in any way affect
the priority of the liens which secure the Notes in favor of the Banks.
2.03. Banks' Participation. Banks shall participate in the Loan in
the Maximum Principal Amounts and percentages set forth on Schedule 1 attached
hereto.
2.04. Use of Proceeds. Funds advanced under the Loan shall be used
solely to refinance indebtedness of Borrower under the Existing Loan Agreement,
to fund scheduled payments of principal under the Insurance Notes, to finance
acquisitions permitted by Paragraph 6.08 hereof, to finance Capital
Expenditures permitted hereunder, and for general corporate purposes of
Borrower, including payment of Management Fees and Home Office Allocations
permitted by Paragraph 6.09 hereof.
2.05. Repayment.
(a) Scheduled Repayment. The outstanding principal balance of the
Loan shall be due and payable in full on the Termination Date; provided,
however, that, so long as no Event of Default or Default is then in existence,
Borrower in its sole discretion may elect to convert such outstanding balance
to
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<PAGE> 19
a term loan in accordance with the terms hereof. Borrower shall notify the
Administrative Agent of its election to convert the Loan to a term loan by
delivering a written notice to the Administrative Agent no later than September
1, 1999. If Borrower so elects to convert the Loan to a term loan, then the
aggregate outstanding principal balance under the Loan on the Termination Date
shall be due and payable in consecutive quarterly installments, commencing on
March 31, 2000 and continuing quarterly on the last Business Day of each June,
September, December and March thereafter as set forth below until the Loan has
been repaid in full on or before December 31, 2004. The amount of each
quarterly payment during the period set forth in the left-hand column below
shall be the applicable percentage set forth in the right-hand column below
times the principal balance of the Loan outstanding on the Termination Date:
<TABLE>
<CAPTION>
Percentage of Loan
Outstanding on Termination
Date to be Paid on Each
Quarterly Payment Date
Period During Period
------ --------------------------
<S> <C>
1/l/00 - 12/31/00 2.5%
1/l/01 - 12/31/03 6.25%
1/l/04 - 12/31/04 3.75%
</TABLE>
Notwithstanding the foregoing, the aggregate outstanding balance of the Loan
shall be due and payable on the earlier of December 31, 2004 or the date of
acceleration of the Loan in accordance with Paragraph 8.02 hereof;
(b) Sale of a System. In addition to the payments required by
subparagraph (a) of this Paragraph 2.05, upon the sale of a System as permitted
by Paragraph 6.07 hereof Borrower shall apply the Net Cash Proceeds of such
sale as and when received to the Loan and the Insurance Notes on a pro rata
basis based on the aggregate outstanding principal balance of the Loan and the
Insurance Notes, provided, however, that if any holders of the Insurance Notes
shall elect pursuant to the terms of the Insurance Notes not to receive such
payment, then all such Net Cash Proceeds shall be allocated between the Loan
and the holders of the Insurance Notes electing to be prepaid based on the
aggregate outstanding principal balance of the Loan and the aggregate
outstanding principal balance of the Insurance Notes as to which the holders
have elected to be prepaid. Any payments of the Loan pursuant to the foregoing
sentence shall be made together with all amounts required to be paid pursuant
to Paragraph 2.10 hereof. Any payments made under this Paragraph 2.05(b) shall
be applied first to accrued and unpaid interest hereunder and then to principal
in the inverse order of the maturity of the installments thereof, first to
Portions bearing interest based on the Base Rate and then to Portions
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<PAGE> 20
bearing interest based on the Adjusted CD Rate or Adjusted Libor Rate, as
Borrower may elect. Payments made under this Paragraph 2.05(b) with respect to
the sale of any System other than the Tampa System prior to the Termination
Date shall permanently reduce the Commitment in accordance with Paragraph 2.09
hereof. In the event that the pro rata portion of the Net Cash Proceeds to be
applied to or in repayment of the Loan in accordance herewith exceeds the
outstanding balance of the Loan, then the Commitment shall be reduced by the
full amount of such pro rata portion of the Net Cash Proceeds, and the
outstanding balance of the Loan shall be repaid in its entirety out of the pro
rata portion of the Net Cash Proceeds, with the balance of such pro rata
portion to be retained by the Borrower.
2.06. Interest. Portions of the Loan shall bear interest on the
outstanding principal amount thereof in accordance with the following
provisions:
(a) Definitions. As used in this Paragraph 2.06, the following
words and terms shall have the meanings specified below:
"Adjusted CD Rate" shall mean, for any Interest Period, the rate per
annum (rounded upwards, if necessary, to the next 1/100 of 1%) determined
pursuant to the following formula:
Adjusted = Certificate of Deposit Rate + AR
---------------------------
CD Rate 1 - Reserve Percentage
Where, AR = Assessment Rate
For purposes hereof, the term "Certificate of Deposit Rate" shall mean, as
applied to a Portion, the arithmetic average of the prevailing rates per annum
bid at or about nine o'clock (9:00) a.m. Philadelphia time or as soon
thereafter as practicable on the first day of such Interest Period by two (2)
or more New York certificate of deposit dealers of recognized standing for the
purchase at face value of negotiable certificates of deposit of Administrative
Agent in amounts substantially equal to such Portion of the outstanding
principal amount of the Loan as to which Borrower may elect the Adjusted CD
Rate to be applicable and with a maturity of comparable duration to the
Interest Period selected by Borrower.
"Adjusted Libor Rate" shall mean, for any Interest Period, the rate
per annum (rounded upwards, if necessary to the next 1/16 of 1%) determined
pursuant to the following formula:
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<PAGE> 21
Adjusted Libor Rate = Libor Rate
----------------------
1 - Reserve Percentage
For purposes hereof, the term "Libor Rate" shall mean, as applied to a Portion,
the arithmetic average of the rates of interest per annum (rounded upwards, if
necessary to the next 1/16 of 1%) at which Administrative Agent is offered
deposits of United States dollars in the London Interbank Market at or about
nine o'clock (9:00) a.m. Philadelphia time two (2) London Business Days prior
to the commencement of such Interest Period in amounts substantially equal to
such Portion as to which Borrower may elect the Adjusted Libor Rate to be
applicable with a maturity of comparable duration to the Interest Period
selected by Borrower.
"Applicable Base Rate Margin," "Applicable CD Margin" and "Applicable
Libor Margin" shall mean with respect to each Portion bearing interest based on
the Base Rate, Adjusted CD Rate or Adjusted Libor Rate, respectively, the
percentage per annum set forth in the appropriate column below that corresponds
to the Borrower's Leverage Ratio as of the date of determination set forth in
the left-hand column below, as calculated based on the quarterly compliance
certificate of Borrower most recently delivered pursuant to Paragraph 5.06
hereof:
<TABLE>
<CAPTION>
Applicable Applicable Applicable
Base Rate Libor CD
Leverage Ratio Margin Margin Margin
- -------------- ---------- ---------- ----------
<S> <C> <C> <C>
4.0 or greater 0.375% 1.375% 1.500%
3.5 or greater but
less than 4.0 0.125% 1.125% 1.250%
3.0 or greater
but less than 3.5 0.000% 0.875% 1.000%
Less than 3.0 0.000% 0.625% 0.750%
</TABLE>
The Applicable Base Rate Margin, Applicable CD Margin and Applicable Libor
Margin shall adjust automatically, as appropriate, (i) with respect to Portions
bearing interest based on the Base Rate, on the fifth (5th) Business Day
following delivery to Administrative Agent of a quarterly compliance
certificate of Borrower in accordance with Paragraph 5.06 hereof indicating a
change in the Leverage Ratio to a new Applicable Base Rate Margin, and (ii)
with respect to outstanding Portions bearing interest based on the Adjusted CD
Rate or Adjusted Libor Rate, on the first day of the next Interest Period
following delivery of such compliance certificate.
"Assessment Rate" shall mean for any Interest Period the annual
assessment rate (rounded upwards, if necessary, to the next higher 1/100 of 1%)
incurred by a Bank to the Federal Deposit Insurance Corporation (or any
successor) for such Corporation's (or such successor's) insuring time deposits
made
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<PAGE> 22
in United States Dollars at offices of such Bank in the United States during
the most recent annual period for which such rate has been determined prior to
the commencement of any Interest Period during which the Adjusted CD Rate is
applicable. The Adjusted CD Rate shall be adjusted on and as of the effective
date of any change in the Assessment Rate.
"Base Rate" shall mean the higher of (a) the Federal Funds Rate plus
one half of one percent (1/2%) per annum or (b) the Prime Rate, such rate
changing when and as the Federal Funds Rate or Prime Rate change.
"Federal Funds Rate" shall mean for any day the daily rate of interest
announced from time to time by the Board of Governors of the Federal Reserve
System in publication H.15 (or any successor) as the "Federal Funds
(Effective)" rate for such day, or if no such rate is so announced for such
day, the next preceding day for which such rate is so announced.
"Interest Period" shall mean, with respect to the Adjusted CD Rate, a
period of thirty (30), sixty (60), ninety (90), one hundred eighty (180) or (if
available) three hundred sixty (360) days' duration, as Borrower may elect, and
with respect to the Adjusted Libor Rate, a period of one (1), two (2), three
(3), six (6) or (if available) twelve (12) months' duration, as Borrower may
elect; provided, however, that (a) interest shall accrue from and including the
first day of each Interest Period to, but excluding, the day on which any
Interest Period expires; (b) with respect to any Interest Period for a Portion
bearing interest based on the Adjusted CD Rate, any Interest Period which would
otherwise end on a day which shall not be a Business Day shall be
extended to the next succeeding Business Day; (c) with respect to any Interest
Period for a Portion bearing interest based on the Adjusted Libor Rate, any
Interest Period which would otherwise end on a day which is not a London
Business Day shall be extended to the next succeeding London Business Day
unless such Business Day falls in another calendar month, in which case such
Interest Period shall end on the next preceding London Business Day; and (d)
with respect to an Interest Period for a Portion bearing interest based on the
Adjusted Libor Rate which begins on the last London Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period), the Interest Period shall
end on the last London Business Day of a calendar month.
"London Business Day" shall mean any Business Day on which banks in
London, England are open for business, including dealing in United States
dollars.
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<PAGE> 23
"Portion" shall mean a portion of the Loan as to which a specific
interest rate and, except in the case of a Portion bearing interest based on
the Base Rate, Interest Period has been elected by Borrower.
"Prime Rate" shall mean the rate of interest announced by
Administrative Agent from time to time as its prime rate.
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System, comprising Part 204 of Title 12, Code of
Regulations, as amended, and any successor thereto.
"Reserve" shall mean, for any day, that reserve amount which is in
effect (whether or not actually incurred) with respect to a Bank on such day,
as prescribed by the Board of Governors of the Federal Reserve System (or any
successor or any other banking authority to which a Bank is subject including
any board or governmental or administrative agency of the United States or any
other jurisdiction to which a Bank is subject), for determining the maximum
reserve requirement (including without limitation any basic, supplemental,
marginal or emergency reserves) for (i) such Bank's negotiable non-personal
time deposits in United States Dollars with maturities of comparable duration
to the Interest Period elected by Borrower, or (ii) Eurocurrency liabilities as
defined in Regulation D.
"Reserve Percentage" shall mean, for a Bank on any day, that
percentage (expressed as a decimal) prescribed by the Board of Governors of the
Federal Reserve System (or any successor or any other banking authority to
which a Bank is subject, including any board or governmental or administrative
agency of the United States or any other jurisdiction to which a Bank is
subject), for determining the reserve requirement (including without limitation
any basic, supplemental, marginal or emergency reserves) for: (i) a Bank's
negotiable, non-personal time deposits in United States Dollars with maturities
of comparable duration to the Interest Period selected by Borrower, or (ii)
deposits of United States Dollars in a non-United States or an international
banking office of a Bank used to fund a Portion subject to an Adjusted Libor
Rate or any loan made with the proceeds of such deposit. The Adjusted Libor
Rate and Adjusted CD Rate shall be adjusted on and as of the effective day of
any change in the Reserve Percentage.
(b) Interest on the Loan.
(i) At Borrower's election in accordance with the
provisions of Paragraph 2.06(c) below, in the absence of an Event of Default or
Default hereunder and prior to maturity, any Portion of the Loan shall bear
interest at any one of the following rates:
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<PAGE> 24
(A) Base Rate Plus Applicable Margin. The Base Rate
plus the Applicable Base Rate Margin.
(B) Adjusted Libor Rate Plus Applicable Margin. The
Adjusted Libor Rate plus the Applicable Libor Margin.
(C) Adjusted CD Rate Plus Applicable Margin. The
Adjusted CD Rate plus the Applicable CD Margin.
(ii) Notwithstanding the foregoing, upon (A) the
existence and during the continuation of an Event of Default or Default
hereunder, and (B) written notice by Administrative Agent (upon the direction
of Required Banks) to Borrower of the existence of an Event of Default or
Default hereunder, including after maturity and upon judgment, Borrower hereby
agrees to pay to Banks interest on the outstanding principal balance of the
Loan at the rate of two percent (2%) per annum in excess of the rates then
available to and elected by the Borrower for each Portion then outstanding
through the end of the applicable Interest Periods and, thereafter, at the rate
of two and three-eighths percent (2-3/8%) per annum in excess of the Base Rate.
(c) Procedure for Determining Interest Periods and Rates of
Interest.
(i) If Borrower elects the Base Rate to be applicable to
a Portion, Borrower must notify Administrative Agent of such election prior to
twelve o'clock (12:00) noon Philadelphia time one (1) Business Day prior to the
proposed application of such rate. If Borrower elects the Adjusted Libor Rate
to be applicable to a Portion, Borrower must notify Administrative Agent of
such election and the Interest Period selected prior to twelve o'clock (12:00)
noon Philadelphia time at least three (3) London Business Days prior to such
advance or the commencement of the proposed Interest Period. If Borrower elects
the Adjusted CD Rate to be applicable to a Portion, Borrower must notify
Administrative Agent of such election and the Interest Period selected prior to
twelve o'clock (12:00) noon Philadelphia time at least two (2) Business Days
prior to the commencement of the applicable Interest Period. If Borrower does
not provide the applicable notice for the Adjusted Libor Rate or Adjusted CD
Rate, then Borrower shall be deemed to have requested that the Base Rate shall
apply to any Portion as to which the Interest Period is expiring and to any new
advance of the Loan until Borrower shall have given notice of a change in or
determination of the rate of interest in accordance with this Paragraph
2.06(c).
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<PAGE> 25
(ii) Borrower shall not elect more than five (5)
different Portions (other than Portions bearing interest at the Base Rate) to
be applicable to the Loan at one time. Portions as to which the Adjusted Libor
Rate or the Adjusted CD Rate is to be applicable shall be in the minimum amount
of $5,000,000 and additional multiples of $1,000,000. Portions as to which the
Base Rate is to be applicable shall be in the amount of $1,000,000 and
additional multiples of $250,000.
(d) Payment and Calculation of Interest. Interest shall be due and
payable on the last day of each Interest Period for each Portion; provided,
however, that (i) with respect to Portions which bear interest at (A) the
Adjusted CD Rate having an Interest Period in excess of ninety (90) days, or
(B) the Adjusted Libor Rate having an Interest Period in excess of three (3)
months, the Borrower shall pay interest on the ninetieth (90th), one hundred
eightieth (180th) and two hundred seventieth (270th) days of such Interest
Period and on the expiration of the Interest Period; and (ii) with respect to
Portions which bear interest at the Base Rate, the Borrower shall pay interest
on the last Business Day of each fiscal quarter commencing on the first such
date after the first advance which bears interest based on the Base Rate.
Interest shall be calculated in accordance with the provisions of Paragraph
2.06(b) hereof; interest based on the Prime Rate shall be calculated on the
basis of the actual number of days elapsed over a year of three hundred
sixty-five (365) or three hundred sixty-six (366) days, as the case may be, and
interest based on the Federal Funds Rate, the Adjusted CD Rate, and the
Adjusted Libor Rate shall be calculated on the basis of the actual number of
days elapsed over a year of three hundred sixty (360) days.
(e) Reserves. If at any time the Loan is subject to the Adjusted
Libor Rate, and a Bank is subject to and incurs a Reserve, Borrower hereby
agrees to pay within five (5) Business Days of demand therefor from time to
time, as billed by Administrative Agent on behalf of a Bank, such additional
amount as is necessary to reimburse such Bank for its costs in maintaining such
Reserve. Such amount shall be computed by taking into account the cost incurred
by the Bank in maintaining such Reserve in an amount equal to such Bank's
ratable share of the Portion on which such Reserve is incurred. The
determination by such Bank of such costs incurred and the allocation, if any,
of such costs among Borrower and other customers which have similar
arrangements with such Bank shall be prima facie evidence of the correctness of
the fact and the amount of such additional costs.
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<PAGE> 26
(f) Special Provisions Applicable to Adjusted CD Rate.
(i) Change of CD Rates. The Adjusted CD Rate may be
automatically adjusted by Administrative Agent on a prospective basis to take
into account additional or increased costs incurred by Banks due to changes in
applicable law occurring subsequent to the commencement of the then applicable
Interest Period, including but not limited to changes in tax laws (except
changes of general applicability in corporate income tax laws) and changes in
the reserve requirements imposed by the Board of Governors of the Federal
Reserve System (or any successor), including the Reserve Percentage, and
assessments imposed by the Federal Deposit Insurance Corporation (or any
successor), including the Assessment Rate, that increase the cost to Banks of
funding a Portion bearing interest at the Adjusted CD Rate; provided, however,
that each Bank shall use reasonable efforts to minimize such costs, subject, in
any event, to such Bank's sole discretion. Administrative Agent shall give
Borrower notice of such determination and adjustment, which determination and
adjustment made in good faith shall be prima facie evidence of the correctness
of the fact and the amount of such adjustment. Borrower may, by notice to
Administrative Agent, (A) request Administrative Agent to furnish to Borrower a
statement setting forth the basis for adjusting such Adjusted CD Rate and the
method for determining the amount of such adjustment; and/or (B) repay the
Portion of the Loan with respect to which such adjustment is made pursuant to
the requirements of Paragraphs 2.09 and 2.10 hereof.
(ii) Unavailability of Adjusted CD Rate. In the event that
Borrower shall have requested the Adjusted CD Rate in accordance with Paragraph
2.06(c) hereof and any Bank shall have reasonably determined that the Adjusted
CD Rate will not adequately and fairly reflect the cost of making or
maintaining the principal amount of the Loan or a Portion thereof specified by
Borrower during the Interest Period selected because of the inability of
Administrative Agent to obtain sufficient bids in the amount of a requested
advance in accordance with the terms of the definition of Certificate of
Deposit Rate set forth above, Administrative Agent on behalf of such Bank shall
promptly give notice of such determination to Borrower. A determination by
Administrative Agent hereunder shall be prima facie evidence of the correctness
of such fact. Upon such a determination, (i) the obligation to advance or
maintain Portions at the Adjusted CD Rate shall be suspended until
Administrative Agent shall have notified Borrower and Banks that such
conditions shall have ceased to exist, and (ii) Borrower shall elect the
Adjusted Libor Rate or the Base Rate (plus the then-applicable Margin) to be
applicable to Portions.
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<PAGE> 27
(g) Special Provisions Applicable to Adjusted Libor Rate. The
following special provisions shall apply to the Adjusted Libor Rate:
(i) Change of Adjusted Libor Rate. The Adjusted Libor
Rate may be automatically adjusted by Administrative Agent on a prospective
basis to take into account the additional or increased cost of maintaining any
necessary reserves for Eurodollar deposits (or Eurocurrency Liabilities) or
increased costs due to changes in applicable law occurring subsequent to the
commencement of the then applicable Interest Period, including but not limited
to changes in tax laws (except changes of general applicability in corporate
income tax laws) and changes in the reserve requirements imposed by the Board
of Governors of the Federal Reserve System (or any successor), including the
Reserve Percentage, that increase the cost to Banks of funding the Loan or a
Portion thereof bearing interest at the Adjusted Libor Rate; provided, however,
that each Bank shall use reasonable efforts to minimize such costs, subject, in
any event, to such Bank's sole discretion. Administrative Agent shall give the
Borrower notice of such a determination and adjustment, which determination and
adjustment made in good faith shall be prima facie evidence of the correctness
of the fact and the amount of such adjustment. Borrower may, by notice to
Administrative Agent, (A) request Administrative Agent to furnish to Borrower a
statement setting forth the basis for adjusting such Adjusted Libor Rate and
the method for determining the amount of such adjustment; and/or (B) repay the
Portion of the Loan with respect to which such adjustment is made pursuant to
the requirements of Paragraphs 2.09 and 2.10 hereof.
(ii) Unavailability of Eurodollar Funds. In the event that
Borrower shall have requested the Adjusted Libor Rate in accordance with
Paragraph 2.06(c) hereof and Administrative Agent shall have reasonably
determined that Eurodollar deposits equal to the principal amount of the
Portion and for the Interest Period specified are unavailable or that the,
Adjusted Libor Rate will not adequately and fairly reflect the cost of making
or maintaining the principal amount of the Portion specified by Borrower during
the Interest Period specified or that by reason of circumstances affecting
Eurodollar markets, adequate and reasonable means do not exist for ascertaining
the Adjusted Libor Rate applicable to the specified Interest Period,
Administrative Agent on behalf of Banks shall promptly give notice of such
determination to Borrower that the Adjusted Libor Rate is not available. A
determination by Administrative Agent hereunder shall be prima facie evidence
of the correctness of such fact. Upon such a determination, (i) the obligation
to advance or maintain Portions at the Adjusted Libor Rate shall be suspended
until Administrative Agent shall have notified Borrower and Banks that such
conditions shall have ceased to exist, and
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<PAGE> 28
(ii) Borrower shall elect the Adjusted CD Rate or the Base Rate (plus the
then-applicable Margin) to be applicable to Portions.
(iii) Illegality. In the event that it becomes unlawful for
a Bank to maintain Eurodollar liabilities sufficient to fund any Portion of the
Loan subject to the Adjusted Libor Rate, then such Bank shall immediately
notify Borrower thereof (with a copy to Administrative Agent) and such Bank's
obligations hereunder to advance or maintain Portions at the Adjusted Libor
Rate shall be suspended until such time as such Bank may again cause the
Adjusted Libor Rate to be applicable to its share of any Portion of the
outstanding principal balance of the Loan and such Bank's share of any Portion
shall then be subject to either the Base Rate or Adjusted CD Rate (if
available) (plus the then-applicable Margin), as the Borrower may elect in
accordance with the provisions of this Paragraph 2.06.
2.07. Advances.
(a) At the times and on the dates for the notices set forth in
Paragraph 2.06(c) hereof relating to the election of interest rates, Borrower
shall give Administrative Agent prior written notice of each requested advance
under the Commitment specifying the date and amount thereof. Such notice shall
be in the form of the Advance Request Form attached hereto as Exhibit A, shall
be certified by the President, Group Vice President/Finance or Treasurer of
Jones and shall contain the following information and representations, which
shall be deemed affirmed and true and correct as of the date of the requested
advance:
(i) the aggregate amount of the requested advance, which
in the case of Portions as to which the Adjusted Libor Rate or Adjusted CD Rate
is to be applicable must be in the minimum amount of $5,000,000 and additional
multiples of $1,000,000 and in the case of Portions as to which the Base Rate
is to be applicable must be in the amount of $1,000,000 and additional
multiples of $250,000;
(ii) confirmation of the interest rate(s) (including
Interest Period(s)) Borrower has elected to apply to the advance and, if more
than one interest rate has been elected, the amount of the Portion as to which
each interest rate shall apply;
(iii) statements that the representations and warranties
set forth in Section Three hereof are true and correct as of the date thereof;
that no Event of Default or Default hereunder has occurred and is then
continuing or will be caused by the requested advance; and that there has been
no material adverse change in Borrower's financial condition or business
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<PAGE> 29
since the date of the quarterly or audited annual financial statements most
recently delivered by Borrower to Banks pursuant to Paragraph 3.10, 5.02 or
5.03 hereof.
(b) (i) Upon receiving a request for an advance in accordance
with subparagraph (a) above, Administrative Agent shall promptly request that
each Bank advance funds to Administrative Agent so that each Bank participates
in the requested advance in the same percentage as it participates in the
Commitment. Each Bank shall advance its applicable percentage of the requested
advance to Administrative Agent by delivering immediately available federal
funds at Administrative Agent's offices prior to twelve o'clock (12:00) noon on
the date of the advance. Subject to the satisfaction of the terms and
conditions hereof, Administrative Agent shall make the requested advance
available to Borrower not later than two o'clock (2:00) p.m. on the day of the
requested advance; provided, however, that in the event Administrative Agent
does not receive in a timely fashion a Bank's share of the requested advance as
provided above, Administrative Agent shall not be obligated to advance such
Bank's share.
(ii) Unless Administrative Agent shall have been notified
by a Bank prior to the date such Bank's share of any such advance is to be made
that such Bank does not intend to make its share of such requested advance
available to Administrative Agent, Administrative Agent may assume that such
Bank has made such proceeds available to Administrative Agent on such date, and
Administrative Agent may, in reliance upon such assumption (but shall not be
obligated to), make available to Borrower a corresponding amount. If such
corresponding amount is not in fact made available to Administrative Agent by
such Bank on the date the advance is made, Administrative Agent shall be
entitled to recover such amount on demand from such Bank (or, if such Bank
fails to pay such amount forthwith upon such demand, from Borrower) together
with interest thereon in respect of each day during the period commencing on
the date such amount was made available to Borrower and ending on (but
excluding) the date Administrative Agent recovers such amount at a rate per
annum, equal to the effective rate for overnight federal funds in New York as
reported by the Federal Reserve Bank of New York for such day (or, if such day
is not a Business Day, for the next preceding Business Day).
(c) Each request for an advance pursuant to this Paragraph 2.07
shall be irrevocable and binding on Borrower. In the case of any advance which
is to be based upon the Adjusted CD Rate or Adjusted Libor Rate, Borrower shall
indemnify each Bank against any loss, cost or expense incurred by such Bank as
a result of any failure to fulfill on or before the date specified in such
request for an advance the applicable conditions set forth in Section Four,
including, without limitation, any loss
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<PAGE> 30
(except loss of the applicable Margin), cost or expense incurred by reason of
the liquidation or redeployment of deposits or other funds acquired by such
Bank to fund the advance to be made by such Bank when such advance, as a result
of such failure, is not made on such date, as calculated by each Bank in
accordance with Exhibit-D attached hereto.
2.08. Reduction and Termination of Commitment.
(a) Borrower. Borrower shall have the right at any time and from
time to time, upon three (3) Business Days' prior written notice to
Administrative Agent, to reduce the Commitment in whole or in part pro rata
among the Banks without penalty or premium, provided that (i) any such
reduction in the Commitment shall be in the minimum amount of $5,000,000 or
increments of $1,000,000 in excess thereof, (ii) on the effective date of such
reduction Borrower shall make a prepayment of the Loan in an amount, if any, by
which the aggregate outstanding principal balance of the Loan exceeds the
amount of the Commitment as then so reduced, together with accrued interest on
the amount so prepaid, and (iii) if a Portion is paid prior to the last day of
an Interest Period, Borrower shall pay on the effective date of such reduction
any amounts which may be due pursuant to Paragraph 2.10 hereof.
(b) Banks. Pursuant to Paragraph 8.02 hereof, Required Banks shall
have the right to terminate the Commitment at any time, in their discretion and
upon notice to Borrower, upon the occurrence of any Event of Default hereunder.
Any payment following the occurrence of an Event of Default, acceleration and
demand for payment shall include the payment of any amounts due pursuant to
Paragraph 2.10 hereof. Any termination or reduction of the Commitment pursuant
to subparagraph (a) above or this subparagraph (b) shall be permanent, and the
Commitment cannot thereafter be restored or increased without the written
consent of all Banks.
2.09. Pre-payment. Upon one (1) Business Day's prior written notice
by Borrower to Administrative Agent, Borrower may prepay the outstanding
principal balance under the Loan at any time without premium or penalty,
provided, however, that (i) prepayments prior to the Termination Date (other
than (a) payments pursuant to Paragraph 2.05(b) hereof in connection with the
sale of a System other than the Tampa System and (b) payments made in
connection with the payment of Insurance Notes pursuant to Paragraph 6.12)
shall not reduce the Commitment and may be reborrowed and partial prepayments
after the Termination Date will be applied first to accrued interest and fees
and then to outstanding principal in the inverse order of the maturity of the
installments thereof; (ii) any prepayment (other than (a) payments pursuant to
Paragraph 2.05(b) hereof in connection with the sale of a System and (b)
payments made in connection with the
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<PAGE> 31
payment of Insurance Notes pursuant to Paragraph 6.12) shall be in an amount
equal to $5,000,000 and additional multiples of $1,000,000 for Portions based
on an Adjusted Libor Rate or Adjusted CD Rate and of $1,000,000 and additional
multiples of $250,000 for Portions based on the Base Rate and (iii) such
prepayment shall be made together with any amounts which may be due pursuant to
Paragraph 2.10 hereof.
2.10. Funding Costs and Loss of Earnings. In connection with any
prepayment or repayment of a Portion based on an Adjusted Libor Rate or
Adjusted CD Rate made on other than the last day of the applicable Interest
Period, whether such prepayment or repayment is voluntary, mandatory, by
demand, acceleration or otherwise, Borrower shall pay to Banks all funding
costs and loss of earnings (except for loss of the applicable Margin) which may
arise in connection with such prepayment or repayment, as calculated by each
Bank in accordance with Exhibit D attached hereto.
2.11. Payments. Except as otherwise set forth herein, all payments
of principal, interest, fees and other amounts due hereunder, including any
prepayments thereof, shall be made by Borrower to Administrative Agent in
immediately available funds before twelve o'clock (12:00) noon on any Business
Day at the principal office of Administrative Agent set forth at the beginning
of this Agreement. Borrower hereby authorizes Administrative Agent to charge
Borrower's account with Administrative Agent for all payments of principal,
interest and fees due hereunder.
2.12. Commitment Fee. Borrower shall pay to Administrative Agent
(for the benefit of Banks) a commitment fee at the rate of three-eighths of one
percent (3/8%) per annum on the unborrowed portion of the Commitment from the
date hereof through the Termination Date, which fee shall be payable at the
offices of Administrative Agent quarterly in arrears on the last day of each
March, June, September and December, as billed by Administrative Agent. Banks
shall share in such commitment fee to the extent of their respective Pro Rata
Shares. The commitment fee shall be calculated on the basis of the actual
number of days elapsed over a year of three hundred sixty-five (365) or
three hundred sixty-six (366) days, as the case may be.
2.13. Administrative Fee. Borrower shall pay to Administrative Agent
an annual administrative fee as set forth in the Letter Agreement between
Borrower and Administrative Agent dated the date hereof, required to be
delivered by Borrower pursuant to Paragraph 4.01(g) hereof.
2.14. Regulatory Changes in Capital Requirements. if any Bank shall
have determined in good faith that the adoption or the effectiveness after the
date hereof of any law, rule,
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<PAGE> 32
regulation or guideline regarding capital adequacy, or any change in any of the
foregoing or in the interpretation or administration of any of the foregoing by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by such Bank (or any
lending office of such Bank) or such Bank's holding company with any request or
directive regarding capital adequacy (whether or not having the force of law)
of any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on such Bank's capital or on the capital
of such Bank's holding company if any, as a consequence of this Agreement, the
Commitment, or the portion of the Loan made by such Bank pursuant hereto to a
level below that which such Bank or its holding company could have achieved but
for such adoption, change or compliance (taking into consideration such Bank's
policies and the policies of such Bank's holding company with respect to
capital adequacy) by an amount deemed by such Bank to be material, then from
time to time Borrower shall pay to such Bank on demand such additional amount
or amounts as will compensate such Bank or its holding company for any such
reduction suffered together with interest on each such amount from the date
demanded until payment in full thereof at the rate provided in Paragraph
2.06(b)(ii) hereof with respect to amounts not paid when due. Such Bank will
notify Borrower of any event occurring after the date of this Agreement that
will entitle such Bank to compensation pursuant to this Paragraph 2.14 as
promptly as practicable after it obtains knowledge thereof and determines to
request such compensation.
A certificate of such Bank setting forth such amount or amounts as
shall be necessary to compensate such Bank or its holding company as specified
above shall be delivered to Borrower and shall be conclusive absent manifest
error. Borrower shall pay such Bank the amount shown as due on any such
certificate delivered by such Bank within five (5) Business Days after its
receipt of the same.
Failure on the part of any Bank to demand compensation for increased
costs or reduction in amounts received or receivable or reduction in return on
capital with respect to any period shall not constitute a waiver of such Bank's
right to demand compensation with respect to such period or any other period.
2.15. Taxes.
(a) Any and all payments by Borrower to the Banks hereunder shall
be made 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 Bank, (i) taxes
arising solely from a connection between such Bank and the
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<PAGE> 33
jurisdiction imposing such tax, other than a connection arising from the
activities of such Bank in connection with this Agreement, and (ii) subject in
all cases to Paragraph 2.15(d) hereof, United States withholding tax payable
with respect to payments hereunder or under the Notes under laws (including,
without limitation, any statute, treaty, ruling, determination or regulation)
in effect on the Initial Date (as hereinafter defined) for such Bank, provided
that any United States withholding tax payable as a result of any changes in
such laws occurring after the Initial Date shall not be excluded (all such
non-excluded taxes, levies, imposts, deductions, charges, withholding and
liabilities being hereinafter referred to as "Taxes"). For purposes of this
Paragraph 2.15, the term "Initial Date" shall mean, in the case of each Bank,
the date hereof and, in the case of each assignee (for purposes of this
Paragraph 2.15, "Assignee"), the date of the applicable assignment of the Loan.
If any Taxes shall be required by law to be deducted from or in respect of any
sum payable hereunder or under any Note to any Bank or Assignee, (i) the sum
payable by the Borrower shall be increased as may be necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Paragraph 2.15) such Bank or Assignee (as the case may
be) receives an amount equal to the sum it would have received had no such
deductions been made, but shall be decreased to take into account any credit,
deduction or offset available in any other jurisdiction as a result of such
payment, and (ii) the Borrower shall make such deductions and pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable law. The Borrower shall not, however, be required to
pay any amounts pursuant to clause (i) of the preceding sentence to any Bank
organized under the laws of a jurisdiction outside of the United States, unless
such Bank has provided to the Borrower, within sixty (60) days after the
receipt by such Bank of a written request therefor, either (x) a facially
complete Internal Revenue Service Form 4224 or Form 1001 or other applicable
form, certificate or document prescribed by the Internal Revenue Service of the
United States certifying as to such Bank's entitlement to an exemption from, or
reduction of, United States withholding tax on payments to be made hereunder or
under the Notes or (y) a letter stating that such Bank is unable lawfully to
provide a properly completed and executed Form 4224 or Form 1001 or (z) other
facially complete documents satisfactory to the Administrative Agent and
Borrower indicating that all payments that will be made to such Bank are exempt
from or subject to a reduced rate of United States withholding tax.
(b) Borrower hereby agrees to pay each Bank the full amount of
Taxes (including, without limitation, any Taxes imposed by any jurisdiction on
amounts payable under this Paragraph 2.15) paid by such Bank decreased to take
into account the effect of any credit, deduction or offset, as determined and
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<PAGE> 34
certified by such Bank's tax or accounting department to Borrower in good
faith, available in any other jurisdiction on account of the payment of Taxes,
and any liability (including penalties, interest, additions to tax and
expenses) arising therefrom or with respect thereto. Each Bank subject to Taxes
agrees either, at its option, to contest the payment of Taxes or to pay and
permit Borrower to pay such Taxes when due and payable and before penalties,
interest, additions to tax or expenses are due thereon. Payment under this
provision shall be made within thirty (30) days from the date such Bank makes
written demand therefor.
(c) Within (30) days after the date of any payment by it of Taxes,
Borrower will furnish to the Administrative Agent the original or a certified
copy of a receipt or other documents reasonably acceptable to the
Administrative Agent evidencing payment thereof.
(d) Any Bank or Assignee organized under the laws of a
jurisdiction other than the United States (or any political subdivision
thereof) shall provide on the date of this Agreement, and from time to time
thereafter if requested by Borrower and Administrative Agent or required by the
Internal Revenue Service of the United States, (i) a facially complete Internal
Revenue Service Form 4224 (or any successor form) certifying that all payments
made to such Bank are effectively connected with its conduct of trade or
business in the United States and will be includible in its gross income or
(ii) a facially complete an Internal Revenue Service Form 1001 (or any
successor form) certifying as to its status for purposes of determining the
applicability of a reduced rate of United States withholding taxes with respect
to all payments to be made hereunder to such Bank pursuant to a double tax
treaty obligation of the United States, or (iii) other facially complete
documents satisfactory to Administrative Agent and Borrower indicating that all
payments that will be made to such Bank are exempt from or subject to a reduced
rate of United States withholding tax. Unless Borrower and Administrative
Agent have received such forms or such documents validly indicating that
payments hereunder are not subject to United States withholding tax or are
subject to such tax at a rate reduced by an applicable double tax treaty,
Borrower or Administrative Agent shall withhold taxes from such payments to
such Bank at the applicable statutory rate.
(e) Any Bank that enters into any participation or assignment
permitted by Paragraph 10.03 hereof shall give Borrower and Administrative
Agent immediate notice of such assignment or participation, describing the
terms thereof and indicating the identity and country of residence of each of
the Participants or Assignees. Notwithstanding any other provision contained
herein to the contrary, Borrower and Administrative Agent shall be entitled to
deduct and withhold United States
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<PAGE> 35
withholding taxes with respect to all payments to be made hereunder to or for
such Bank or Assignee as may be required by United States law due to such
assignment or participation and such Bank or Assignee shall indemnify and hold
harmless the Borrower and the Administrative Agent from and against any tax,
interest, penalty or other expense that Borrower and Administrative Agent may
incur as a consequence of any failure to withhold United States taxes
applicable because of any participation arrangement that is not fully disclosed
to them as required hereunder.
SECTION THREE
REPRESENTATIONS AND WARRANTIES,
Borrower represents and warrants as follows:
3.01. Organization and Good Standing. Borrower is a general
partnership duly formed and validly existing under the laws of the State of
Colorado; each of the Partners is a limited partnership duly formed and validly
existing under the laws of the State of Colorado; and Jones is a corporation
duly formed and validly existing under the laws of the State of Colorado; each
of Borrower and the Partners has partnership, and Jones has corporate, power
and authority to carry on its business as now conducted; and each of Borrower,
the Partners and Jones is qualified to do business in the States of California,
Florida, and New Mexico and in all other jurisdictions in which the nature of
its activities or the character of its properties requires such qualification
unless the failure to so qualify would not have a material adverse effect on
the business, operations or financial condition of Borrower, the Partners or
Jones, respectively.
3.02. Power and Authority; Validity of Agreement. Each of Borrower,
the Partners and Jones has the power and authority under Colorado law and under
its respective Joint Venture Agreement, Partnership Agreement or articles of
incorporation and by-laws to enter into and perform, to the extent it is a
party thereto, this Agreement, the Notes, the Collateral Security Documents and
all other agreements, documents and actions required hereunder; and all actions
(corporate or otherwise) necessary or appropriate for the execution and
performance by Borrower, the Partners and Jones, to the extent it is a party
thereto, of this Agreement, the Notes, the Collateral Security Documents and
all other agreements, documents and actions required hereunder have been taken,
and, upon their execution, the same will constitute the valid and binding
obligations of Borrower, the Partners and Jones to the extent each is a party
thereto, enforceable in accordance with their terms.
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<PAGE> 36
3.03. No Violation of Laws or Agreements. The making and performance
of this Agreement, the Notes, the Collateral Security Documents and the other
documents, agreements and actions required of Borrower, the Partners and Jones
hereunder will not violate any provisions of any law or regulation, federal,
state or local (including of the Local Authorities), any court, arbitral or
governmental order, decree or award, or its respective Joint Venture Agreement,
Partnership Agreement (including without limitation Section 2.3(a)(vi) thereof)
or articles of incorporation and by-laws, or result in any breach or violation
of, or constitute a default under, any material agreement or instruments,
including without limitation any satellite master antenna television agreement
and any franchise, license or permit of a Local Authority, by which either
Borrower the Partners or Jones or their respective property may be bound,
except with respect to such consents which are required and have not been
obtained as identified on Exhibit C attached hereto.
3.04. Systems. On the date of this Agreement, Borrower owns the
Systems described in Exhibit C attached hereto, which sets forth a description
of the franchises, agreements, locations and subscriber counts of the Systems,
a general description of the property and assets comprising the Systems,
including any property leased from others and including the locations of all
such property and assets, including without limitation, tower, headend and
office facilities, and the record owners and legal descriptions of such
locations and descriptions of any leases covering Borrower's lease of any of
such property, assets or locations from others.
3.05. Material Contracts. On the date of this Agreement, Borrower is
neither a party to nor in any manner obligated under any contracts material to
its business except the franchises and related agreements identified on Exhibit
C hereto, and except as set forth on Exhibit C attached hereto there exists no
material default under any of such franchises and contracts. As of the date of
this Agreement: (i) neither Jones nor any Partner is in default with respect to
any indebtedness for borrowed money and (ii) Borrower is not aware that the
grantor of any franchise intends to revoke, terminate or not to renew or extend
the applicable franchise.
3.06. Compliance. Borrower is in compliance in all material respects
with all applicable laws and regulations, federal, state and local (including
without limitation those administered by the Local Authorities and the FCC),
material to the conduct of its business and operations; Borrower possesses all
the franchises, permits, licenses, certificates of compliance and approval and
grants of authority necessary or required in the conduct of its business and
except as set forth on Exhibit C attached hereto the same are valid, binding,
enforceable and subsisting without any defaults which are not immaterial
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thereunder and are not subject to any proceedings or claims opposing the
issuance, development or use thereof or contesting the validity thereof; and,
except as set forth on Exhibit C, no approvals, waivers or consents,
governmental (federal, state or local) or non-governmental, under the terms of
contracts or otherwise, are required by reason of or in connection with the
execution and performance of this Agreement, the Notes, the Collateral Security
Documents and all other agreements, documents and actions required hereunder.
3.07. Litigation. Except as set forth on Exhibit C, there are no
actions, suits, proceedings or claims which are pending or, to the best of
Borrower's knowledge or information, threatened against Borrower, the Partners
or Jones which, if adversely resolved, would substantially and materially
affect their respective financial condition, business or operations or which
relate to this Agreement, the Notes or any of the Collateral Security
Documents.
3.08. Title to Assets. Borrower has in its own name good and
marketable title to all of its properties and assets, including without
limitation all assets in the Systems, free and clear of any liens and
encumbrances, except (i) the security interests granted to Banks hereunder and
to the holders of the Insurance Notes, and (ii) as permitted pursuant to
Paragraph 6.04 hereof, and all such assets are in good order and repair and
fully covered by the insurance required under Paragraph 5.08 hereof.
3.09. Partnership Interests. The number and percentage of
partnership interests in Borrower and the ownership thereof, and the percentage
of partnership interests in the Partners owned by Jones, are accurately set
forth on Exhibit C attached hereto; all such interests are validly existing and
the creation and sale thereof and the creation and sale of the limited
partnership interests in the Partners are in compliance with all applicable
federal and state securities laws and other applicable laws; except as set
forth on Exhibit C attached hereto, the Partners' and Jones' ownership thereof
is free and clear of any contractual restrictions except as set forth in the
applicable limited partnership agreement as to each of the Partners and in the
Joint Venture Agreement as to Borrower; and Jones is the sole general partner
of each Partner.
3.10. Accuracy of Information; Full Disclosure.
(a) All information furnished to Banks concerning the financial
condition of Borrower and the Systems, including the annual financial statement
for the period ending December 31, 1994, and the interim financial statements
dated September 30, 1995, copies of which have been furnished to Banks, has
been prepared in accordance with GA (except that quarterly
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statements are not accompanied by those footnotes which would have accompanied
such statements had they been audited) and fairly presents the financial
condition as of the dates and for the periods covered and discloses all
liabilities which are required to be disclosed by GAAP and there has been no
material adverse change in the financial condition or business of Borrower or
the Systems from December 30, 1994 to the date hereof; and
(b) All financial statements and other documents furnished by Borrower
to Banks in connection with this Agreement and the Notes do not and will not
contain any untrue statement of material fact or omit to state a material fact
necessary in order to make the statements contained therein not misleading.
Borrower has disclosed to Banks in writing any and all facts which materially
and adversely affect the business, properties, operations or condition,
financial or otherwise, of Borrower or any of the Systems, or Borrower's
ability to perform its obligations under this Agreement, the Notes and the
Collateral Security Documents.
3.11. Partnership Tax Matters.
(a) Except as set forth on Exhibit C, Borrower has duly and timely
filed all information and tax returns and reports with any federal, state,
local or foreign governmental taxing authority, body or agency, and all taxes,
including without limitation income, gross receipt, sales, use, excise,
withholding and any other taxes, and any governmental charges, penalties,
interest or fines with respect thereto, due and payable by Borrower, have been
paid, withheld or reserved for in accordance with GAAP or, to the extent they
relate to periods on or prior to the date of the financial statements
referenced in Section 3.10 hereof (the "Financial Statements"), are reflected
as a liability on the Financial Statements in accordance with GAAP.
(b) Borrower has properly withheld all amounts required by law to
be withheld for income taxes and unemployment taxes including without
limitation, all amounts required with respect to social security and
unemployment compensation, relating to its employees, and has remitted such
withheld amounts in a timely manner to the appropriate taxing authority, agency
or body.
(c) As of the date of this Agreement, none of Borrower's federal
income tax information returns have been audited. Except as set forth on
Exhibit C, Borrower has not entered into any agreements for the extension of
time for the assessment of any tax or tax delinquency, and Borrower has
received no outstanding and unresolved notices from the Internal Revenue
Service or other state, local or foreign taxing authority, agency or body of
any proposed examination or of any
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proposed change in reported information which may result in a deficiency or
assessment against Borrower or any partner in Borrower and there are no suits,
actions, claims, investigations, inquiries or proceedings now pending against
Borrower in respect of taxes, governmental charges or assessments.
(d) The Borrower's Tax Matters Partner (within the meaning of
Section 6231(a)(7) of the Internal Revenue Code of 1986, as amended, is Cable
TV Fund 12-B, Ltd.
3.12. Indebtedness. On the date of this Agreement, Borrower has no
presently outstanding indebtedness or obligations including contingent
obligations and obligations under leases of property from others, except trade
indebtedness and the indebtedness and obligations described in Exhibit C
attached hereto and in Borrower's financial statements which have been
furnished to Banks.
3.13. Management Agreements. Borrower is a party to no management
agreements for the provision of services to Borrower, except that Jones is the
sole manager of Borrower pursuant to the Management Agreement.
3.14. Investments. Borrower has no Subsidiaries, or investments in
or loans to any other individuals or business entities except as permitted by
Paragraph 6.03 or 6.08 hereof.
3.15. ERISA. Borrower and each ERISA Affiliate are in compliance in
all material respects with all applicable provisions of ERISA; and,
(a) Neither Borrower nor any ERISA Affiliate maintains or
contributes to or has maintained or contributed to any multiemployer plan (as
defined in section 4001 of ERISA) under which Borrower or any ERISA affiliate
could have any withdrawal liability;
(b) Neither Borrower nor any ERISA Affiliate sponsors or maintains
any Plan under which there is an accumulated funding deficiency within the
meaning of Section 412 of the Code, whether or not waived;
(c) The aggregate liability for accrued benefits and other
ancillary benefits under each pension Plan that is or will be sponsored or
maintained by Borrower or any ERISA Affiliate (determined on the basis of the
actuarial assumptions prescribed for valuing benefits under terminating defined
benefit plans under Title IV of ERISA) does not exceed the aggregate fair
market value of the assets under each such defined benefit pension Plan;
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(d) The aggregate liability of Borrower and each ERISA Affiliate
arising out of or relating to a failure of any Plan to comply with the
provisions of ERISA or the Code, will not have a material adverse effect upon
the business, operations or financial condition of Borrower; and
(e) There does not exist any unfunded liability (determined on the
basis of actuarial assumptions utilized by the actuary for the plan in
preparing the most recent Annual Report) of Borrower or any ERISA Affiliate
under any plan, program or arrangement providing post-retirement life or health
benefits.
3.16. Fees and Commissions. Neither Borrower nor Jones owes fees or
commissions of any kind, or knows of any claim for any fees or commissions, in
connection with Borrower's obtaining the Commitment or the Loan from Banks,
except those provided herein.
3.17. No Extension of Credit for Securities. Neither Borrower nor
any of its Partners is now, nor at any time has it been engaged principally, or
as one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying any securities. The proceeds of the Loan
shall be used by Borrower as set forth in Paragraph 2.04 hereof and none of the
proceeds of the Loan will be used, directly or indirectly, to purchase or carry
margin stock within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System.
3.18. Perfection of Security Interests. Upon the filing of the
financing statements or amendments thereto covering all the security interests
created by the Security Agreement, in California, Colorado, Florida, and New
Mexico and all such other places as, in the opinion of counsel for Borrower,
are necessary to perfect said security interests, no further action, including
any filing or recording of any document, is necessary in order to establish,
perfect and maintain the first priority security interests of CoreStates as
collateral security agent in the assets created by the Security Agreement,
except for the periodic filing of continuation statements with respect to
financing statements filed under the Uniform Commercial Code of applicable
jurisdictions.
3.19. Hazardous Wastes, Substances and Petroleum Products. On the
date of this Agreement:
(a) Borrower has received all permits and filed all notifications
necessary to carry on its business(es) under, and is in compliance in all
respects with, all Environmental Control Statutes.
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(b) Borrower has not given any written or oral notice to the
Environmental Protection Agency ("EPA") or any state or local agency with
regard to any actual or imminently threatened removal, spill, release or
discharge of hazardous or toxic wastes, substances or petroleum products on
properties owned or leased by Borrower or in connection with the conduct of its
business and operations.
(c) Borrower has not received notice that it is potentially
responsible for costs of clean-up of any actual or imminently threatened spill,
release or discharge of hazardous or toxic wastes or substances or petroleum
products pursuant to any Environmental Control Statute.
3.20. Solvency. Borrower is, and after receipt and application of
each advance will be, solvent such that (i) the fair value of its assets
(including without limitation the fair salable value of the goodwill and other
intangible property of Borrower) is greater than the total amount of its
liabilities, including without limitation, contingent liabilities, (ii) the
present fair salable value of its assets (including without limitation the fair
salable value of the goodwill and other intangible property of Borrower) is not
less than the amount that will be required to pay the probable liability on its
debts as they become absolute and matured, and (iii) it is able to realize upon
its assets and pay its debts and other liabilities, contingent obligations and
other commitments as they mature in the normal course of business. Borrower (i)
does not intend to, and does not believe that it will, incur debts or
liabilities beyond its ability to pay as such debts and liabilities mature, and
(ii) is not engaged in a business or transaction, or about to engage in a
business or transaction, for which its property would constitute unreasonably
small capital after giving due consideration to the prevailing practice and
industry in which it is engaged. For purposes of this Paragraph 3.20, in
computing the amount of contingent liabilities at any time, it is intended that
such liabilities will be computed at the amount which, in light of all the
facts and circumstances existing at such time, represents the amount that
reasonably can be expected to become an actual matured liability.
3.21. Investment Company Act; Public Utility Holding Company Act.
Borrower is not directly or indirectly controlled by or acting on behalf of any
person or entity which is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, or a "public utility holding
company" within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
3.22. Regulation. Borrower has elected to use the FCC-defined "cost
of service" showing as a method for determining its maximum permitted basic
service rate. Borrower is not aware
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of any refund liability relating to its cost of service showing calculation
which is in excess of Five Million Dollars ($5,000,000) and as to which there
has been issued an order of a Local Authority not appealed within the
applicable appeal period or a final order of the FCC (a "Refund Liability").
SECTION FOUR
CONDITIONS
4.01. Closing. The obligation of Banks to make an advance hereunder
shall be subject to satisfaction of the following conditions and Administrative
Agent's receipt of the following documents, each in form and substance,
satisfactory to Banks:
(a) Promissory Notes. The Notes duly executed by Borrower and
delivered to Administrative Agent for redelivery to each Bank.
(b) Security Agreement. An amended and restated security agreement
executed by Borrower in favor of CoreStates as collateral security agent for
Banks and the holders of the Insurance Notes granting and confirming a first
lien security interest in all of Borrower's assets (now owned or hereafter
acquired) as security for the Loan and the Insurance Notes, together with
financing statements or amendments thereto, landlord waivers with respect to
Borrower's offices at 9697 East Mineral Avenue and 9085 East Mineral Circle,
Englewood, Colorado, and evidence of any other recordations required by
applicable law or by Banks to perfect or to continue the perfected status of
such security interests.
(c) Mortgage Releases. Releases of the mortgages or deeds of trust
given in favor of CoreStates as collateral security agent for Banks and the
holders of the Insurance Notes pursuant to the Existing Loan Agreement.
(d) Releases of Leasehold Assignments. Releases of the leasehold
assignments in favor of CoreStates as collateral security agent for Banks and
the holders of the Insurance Notes pursuant to the Existing Loan Agreement.
(e) Intercreditor Agreement. An amended and restated intercreditor
agreement by and among Banks and the holders of the Insurance Notes consenting
to the increase in the Commitment hereunder and the release of the Mortgages
and the Leasehold Assignments, and providing, inter alia, that CoreStates shall
act as collateral security agent for the Banks and the holders of the Insurance
Notes, and that the collateral security
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interests securing the Loan and the Insurance Notes shall be ranked pari passu.
(f) Subordination Documents. An amended and restated subordination
agreement executed by Jones subordinating all of Borrower's indebtedness to
Jones, including any deferred Management Fees and Home Office Allocations, to
the Loan and the Insurance Notes, together with appropriate certified board
resolutions and legal opinions as required by Banks.
(g) Letter Agreement. A Letter Agreement between Borrower and
Administrative Agent regarding the annual administrative fee to be paid by
Borrower to Administrative Agent.
(h) Amendment or Waiver Under Insurance Notes. An amendment to the
Insurance Notes or waiver of the provision thereof with respect to (i)
prepayments in connection with the sale of the Tampa System, (ii) terms of
subordination of Management Fees and Home Office Allocations, and (iii) any
other matters as required in connection with the amendments contemplated
hereby.
(i) Authorization Documents. A certificate of a secretary or an
assistant secretary of Jones attaching (i) a copy of the Joint Venture
Agreement and all amendments thereto, (ii) a copy of the Partnership Agreements
for each of the Partners, and all amendments thereto, (iii) a copy of the
articles of incorporation, bylaws and resolutions of the Board of Directors of
Jones authorizing (A) Jones', the Partners' and Borrower's execution and full
performance of this Agreement, the Notes, the Collateral Security Documents and
all other documents and actions required hereunder, and (B) the President,
Group Vice President/Finance or Treasurer of Jones to request advances under
the Commitment as representative of Jones, (iv) a certificate of the Partners
of Borrower authorizing the Borrower's execution and full performance of this
Agreement, the Notes, the Collateral Security Documents and all other documents
and actions required hereunder, in substitution of the authority provided in
Article X(3) of the Joint Venture Agreement, and (v) an incumbency certificate
setting forth the names, titles and specimen signatures of the officers of
Jones authorized to act with respect to this Agreement, the Notes, the
Collateral Security Documents and all related documents.
(j) Opinions of Counsel. An opinion letter from Colorado counsel
for Borrower in the form of Exhibit E-1 attached hereto; opinion letters from
counsel for Borrower in California, Florida, and New Mexico in the form of
Exhibits E-2 through E-4, respectively, attached hereto; and an opinion from
FCC Counsel for Borrower in the form of Exhibit E-5 attached hereto.
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(k) Franchises and Approvals. Copies of all franchises,
certificates of compliance and approval and material related contracts,
licenses and permits necessary or required in connection with the Systems, all
of which shall be owned by Borrower and be otherwise satisfactory to Banks.
(l) Insurance. Certificates of insurance and evidence of loss
payee and additional insured endorsements in favor of CoreStates as collateral
security agent for Banks and the holders of the Insurance Notes with respect to
all of Borrower's fire, casualty, liability and other insurance covering its
respective property and business, as described on Exhibit C hereto.
(n) Searches. Uniform Commercial Code, tax and judgment searches
against Borrower in those offices and jurisdictions as Banks shall reasonably
request.
(o) Amendment to Management Agreement. Amendment to the Management
Agreement to conform the reference in Paragraph l(b) thereof to the Banks.
(p) Pay-Off of Certain Existing Banks. A letter from Shawmut Bank
Connecticut, N.A. setting forth its pay-off amounts and that its Commitment
and the Borrower's obligations (except as specifically set forth in the
Existing Credit Agreement) under the Existing Credit Agreement shall be
irrevocably terminated upon receipt of such amounts.
(q) Transitional Payments. Payment of all payments required from
Borrower pursuant to Paragraph 2.01(c)(ii) hereof.
(r) Fees. Payment of all fees required pursuant to the letters
dated November 2, 1995 and December 4, 1995 between Borrower and Agents.
(s) Other Documents. Such additional information and documents as
any Bank reasonably may request through Agents.
4.02. Each Advance. The obligation of Banks to make each advance
hereunder shall be subject to the following conditions:
(a) Advance Request. Receipt by Administrative Agent of the
Advance Request Form required pursuant to Paragraph 2.07(a) hereof.
(b) Fees. All fees required pursuant to Paragraphs 2.12 and 2.13
shall have been paid as and when due.
(c) Absence of Default; Representations and Warranties. There
shall be no Event of Default or Default
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hereunder, nor any default under any Collateral Security Document or other
document or agreement required in connection herewith or therewith, then in
existence or caused by such advance; and each of the representations and
warranties set forth in Article Three hereof and in any Collateral Security
Document or other document or agreement required in connection herewith or
therewith, shall be true and correct as of the date of such advance.
(d) No Material Adverse Change. There shall have been no material
adverse change in the assets, financial condition or business of Borrower since
the date of the quarterly or audited annual financial statements most recently
delivered by Borrower to Banks pursuant to Paragraph 3.10, 5.02 or 5.03 hereof.
(e) Other Documents. Receipt by Administrative Agent of such
additional documents and such additional information regarding the assets,
financial condition or business of Borrower as any Bank may reasonably request
through Agents.
SECTION FIVE
AFFIRMATIVE COVENANTS
Borrower covenants and agrees that so long as the Commitment of Banks
to Borrower or any indebtedness of Borrower to Banks is outstanding:
5.01. Existence and Good Standing. Borrower will preserve and
maintain its existence as a Colorado general partnership, and each of Borrower,
the Partners and Jones will preserve and maintain their respective good
standing in all states in which the nature of its activities or the character
of its properties requires it to qualify to do business and the failure to so
qualify would have a material adverse effect on the business, operations or
financial condition of Borrower, the Partners or Jones, respectively; and
preserve and maintain the validity of all its franchises, licenses, permits,
certificates of compliance or grants of authority required in the conduct of
its business.
5.02. Quarterly Financial Statements. Borrower will furnish to the
Administrative Agent within sixty (60) days after the end of each of the first
three quarterly fiscal periods in each fiscal year of Borrower hereafter with
unaudited quarterly financial statements, in form and substance as required by
Banks, including a balance sheet, a statement of income and a statement of cash
flows prepared in accordance with GAAP (except that the quarterly statements
will not be accompanied by those footnotes which would have accompanied such
statements if they had been audited); together with a certificate executed by
the President, Group Vice President/Finance or Treasurer of Jones stating that
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the financial statements fairly present the financial condition of Borrower as
of the date and for the period covered and that as of the date of such
certificate there has not been any violation of any provision of this Agreement
or the happening of any Event of Default or Default.
5.03. Annual Financial Statements. Borrower will furnish to the
Administrative Agent within one hundred five (105) days after the close of each
fiscal year of Borrower commencing with fiscal 1995 audited annual financial
statements, including the financial statements and information required under
Paragraph 5.02 hereof, which financial statements shall be prepared in
accordance with GAAP and shall be fully certified without qualification by an
independent certified public accounting firm of national recognition.
5.04. Public Information. Borrower, the Partners and Jones will
deliver to the Administrative Agent, promptly upon transmission thereof, copies
of all such financial statements, and all annual, quarterly or other reports
which it files with the Securities and Exchange Commission (or any governmental
body or agency succeeding to the functions of the Securities and Exchange
Commission) and all proxy statements, and material notices and reports as it
shall send to its stockholders or partners and copies of all registration
statements (without exhibits); provided, however, that as to such proxy
statements, notices and reports, Jones and each Partner shall deliver such
information only if it relates to Borrower or a Partner.
5.05. Quarterly Compliance Certificate. Borrower shall deliver to
the Administrative Agent within sixty (60) days after the end of each of the
first three fiscal quarters in each fiscal year of Borrower, and within one
hundred five (105) days after the end of each fiscal year, together with the
information required to be delivered by Paragraphs 5.02 and 5.03 hereof,
respectively, a certificate executed by the President, Group Vice
President/Finance or Treasurer of Jones (i) showing the calculation of the
Leverage Ratio in order to determine the Applicable Margin over the Base Rate,
the Adjusted CD Rate or Adjusted Libor Rate, and (ii) stating that the
financial covenants set forth in Paragraphs 5.14 through 5.16 hereof have been
met and showing the calculation of such covenants.
5.06. Books and Records; Inspection Rights. Borrower will keep and
maintain satisfactory and adequate books and records of account in accordance
with GAAP and make or cause the same to be made available to Banks or their
agents or nominees at any reasonable time upon reasonable notice for inspection
and to make extracts thereof. Borrower hereby authorizes the Banks to discuss
the affairs, finances and accounts of the Borrower with its officers, employees
and independent certified public accountants; and by this provision, authorizes
such accountants to discuss such matters with the Banks.
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5.07. Insurance. Borrower will keep and maintain all of its property
and assets in good order and repair and fully covered by insurance with
reputable and financially sound insurance companies against such hazards and in
such amounts as is customary in the industry, under policies requiring the
insurer to furnish reasonable notice to Banks and opportunity to cure any
non-payment of premiums prior to termination of coverage; and furnish Banks on
an annual basis with certificates of such insurance and cause CoreStates as
collateral security agent for Banks and the holders of the Insurance Notes to
be named as additional insured and the loss payee thereof, as their interests
may appear.
5.08. Litigation; Event of Default. Each of Borrower, the Partners,
and Jones will notify Banks in writing immediately of (i) the institution of
any litigation, the commencement of any administrative proceedings, the
happening of any event or the assertion or threat of any claim which relates to
this Agreement, the Notes or any Collateral Security Document or which would be
reasonably likely to materially and adversely affect its business, operations
or financial condition, (ii) the occurrence of any Event of Default or Default
hereunder or under the Note Agreements, and (iii) with respect to all matters
previously disclosed to Banks under Paragraph 3.19 or 5.12 hereof, no later
than thirty (30) days after the last day of each fiscal quarter of Borrower, a
report describing any material information regarding actual or alleged
liability of Borrower, a Partner or Jones, and the qualification thereof.
5.09. Taxes. Borrower will pay and discharge all taxes, assessments
or other governmental charges or levies imposed on it or any of its property or
assets prior to the date on which any penalty for non-payment or late payment
is incurred, unless the same are currently being contested in good faith by
appropriate proceedings and are covered by appropriate reserves maintained in
cash or cash equivalents in accordance with GAAP.
5.10. Costs and Expenses.
(a) Borrower will pay or reimburse Administrative Agent for all
reasonable out-of-pocket costs and expenses (including but not limited to
reasonable attorneys' fees and expenses) Administrative Agent may pay or incur
in connection with the preparation and review of this Agreement, the Notes, the
Collateral Documents and all waivers, consents and amendments in connection
therewith and all other documentation related thereto, the making of the Loan
hereunder, and the collection or enforcement of the same.
(b) Borrower will pay or reimburse Banks for all reasonable
out-of-pocket costs and expenses (including but not limited to reasonable
attorneys' fees and expenses) Banks may pay or incur in connection with the
preparation and review of all
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waivers, consents and amendments in connection with this Agreement, the Notes,
the Collateral Documents and the collection and enforcement of this Agreement,
the Notes, the Collateral Documents and the Loan made hereunder.
(c) All obligations provided for in this Paragraph 5.10 shall
survive any termination of this Agreement or the Commitment and the repayment
of the Loan.
5.11. Additional Collateral. Borrower will execute, deliver and
record, at any time upon Administrative Agent's request and in form and
substance satisfactory to Banks, any of the following instruments in favor of
Banks as additional collateral for all of Borrower's obligations hereunder: (i)
mortgages on any of Borrower's real estate and certificates of title
encumbrances against any of its vehicles, (ii) assignments of leases of real or
personal property leased by Borrower from or to others, (iii) specific
assignments by Borrower of easements, licenses, permits, certificates of
compliance and certificates of approval issued by regulatory authorities, pole
rental agreements, franchises or like grants of authority or service
agreements, and (iv) any other like assignments or agreements specifically
covering any of Borrower's properties or assets.
5.12. Compliance; Notification.
(a) Borrower, each Partner and Jones (with respect to a System)
will comply in all material respects with all local, state and federal laws and
regulations applicable to its business, including without limitation the Cable
Act, the Environmental Control Statutes, federal and state securities laws, the
Communications Act and all laws and regulations of the FCC and the Local
Authorities, and the provisions and requirements of all franchises, permits,
certificates of compliance and approval issued by regulatory authorities and
other like grants of authority held by Borrower and the Copyright Act; and
Borrower will notify Banks immediately in detail of any actual or alleged
failure to comply with or perform, breach, violation or default under any such
laws or regulations or under the terms of any of such franchises, licenses or
grants of authority, the existence of which would be reasonably likely to have
a material adverse effect on the business, operations or financial condition of
Borrower; or of the occurrence or existence of any facts or circumstances which
with the passage of time, the giving of notice or otherwise would be reasonably
likely to create such a breach, violation or default or would be reasonably
likely to occasion the termination of any of such franchises or grants of
authority.
(b) With respect to the Environmental Control Statutes, Borrower
shall notify Banks when, in connection with the conduct of Borrower's or any
Subsidiary's businesses) or operations, any person or entity, or any federal,
state or local
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agency provides oral or written notification to Borrower, the Partners or Jones
with regard to an actual or imminently threatened removal, spill, release or
discharge of hazardous or toxic wastes, substances or petroleum products; and
notify Banks in detail immediately (i) upon the receipt by Borrower of an
assertion of liability under the Environmental Control Statutes, (ii) of any
actual or alleged failure to comply with or perform, breach, violation or
default under any such Environmental Control Statutes and (iii) of the
occurrence or existence of any facts, events or circumstances which with the
passage of time, the giving of notice, or both, would be reasonably likely to
create such a breach, violation or default.
5.13. ERISA. Borrower, the Partners and Jones will comply in all
material respects with the provisions of ERISA to the extent applicable to any
Plan maintained for the employees of Borrower; not incur any material
accumulated funding deficiency (within the meaning of ERISA and the regulations
promulgated thereunder), or any material liability to the PBGC; not permit any
"reportable event" (as defined in ERISA) or other event to occur which may
indicate that its Plans are not sound or which may be the basis for PBGC to
assert a material liability against it or which may result in the imposition of
a lien on its properties or assets; and notify Banks in writing promptly after
it has come to the attention of senior management of Borrower, the Partners or
Jones of the assertion or threat of any "reportable event," the existence of
any "reportable threat" or other event which may indicate that a Plan is not
sound or may be the basis for the PBGC to assert a material liability against
it or impose a lien on its properties or assets.
5.14. Leverage Ratio. Borrower will maintain the Leverage Ratio at
all times during the periods set forth in the left-hand column below in an
amount not to exceed the ratios set forth in the right-hand column below:
<TABLE>
<CAPTION>
Period Leverage Ratio
------ --------------
<S> <C>
Date hereof to 9/30/96 4.50:1.00
10/l/96 to 6/30/97 4.00:1.00
7/l/97 to 6/30/98 3.50:1.00
7/l/98 and thereafter 3.00:1.00
</TABLE>
5.15. Debt Service Coverage. Borrower will maintain at all times the
ratio of (A) Annualized Operating Cash Flow to (B) Debt Service for the
succeeding four fiscal quarters in an amount in excess of 1.25 to 1.
5.16. Operating Cash Flow to Interest Expense Ratio. Borrower will
maintain at all times the ratio of (A) Operating Cash Flow for the
most-recently ended fiscal quarter to (B) Interest Expense for the
most-recently ended fiscal quarter in an amount in excess of 2.25 to 1.
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5.17. Extensions of Franchises. Borrower shall commence the renewal
process of each franchise in a System which expires by its terms prior to
December 31, 2004 within thirty (30) days after the earliest date possible
under the Cable Act, and in connection with each renewal of a franchise
Borrower shall use its best efforts to obtain the consent of the franchisor to
permit the collateral assignment of the franchise.
5.18. Successor Agent. In the event of the appointment of any
successor Agent pursuant to Paragraph 9.15 hereof, Borrower will execute and
deliver any documents reasonably requested by Banks to effectuate and confirm
the transfer to such successor Agent of all rights, powers, duties, obligations
and property vested in its predecessor Agent hereunder.
5.19. Transactions Among Affiliates. Borrower will cause all
transactions between and among Affiliates to be on an arms-length basis and on
such terms and conditions as are customary in the applicable industry between
and among unrelated entities, provided, however, that transactions permitted
pursuant to Paragraph 6.09(ii) and (iii) hereof shall not be a violation of
this Paragraph 5.19.
5.20. Other Information. Provide Banks with any other documents and
information, financial or otherwise, reasonably requested by Banks from time to
time.
5.21. Refund Liabilities. Borrower will notify Banks in writing immediately
upon becoming aware of any Refund Liability.
SECTION SIX
NEGATIVE COVENANTS
So long as the Commitment or any indebtedness of Borrower to Banks
remains outstanding hereunder, Borrower covenants and agrees that without
Required Banks' prior written consent it will not:
6.01. Indebtedness. Borrow any monies or create any indebtedness,
including without limitation Funded Debt, except (i) borrowings from Banks
hereunder; (ii) indebtedness pursuant to the Insurance Notes in an aggregate
principal amount not to exceed $93,000,000 at any time outstanding; (iii) trade
indebtedness in the normal and ordinary course of business for value received;
(iv) indebtedness to Jones for deferred Management Fees and Home office
Allocations subordinated to the Loan pursuant to the Subordination Agreement;
(v) borrowings from Jones, provided such borrowings are subordinated to
Borrower's indebtedness to Banks hereunder pursuant to the provisions of the
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Subordination Agreement; (vi) indebtedness and obligations incurred to purchase
or lease fixed or capital assets, including pursuant to Capital Leases; and
(vii) unsecured indebtedness; provided, however, that the aggregate principal
amount of indebtedness outstanding under clauses (vi) and (vii) hereof shall
not at any time exceed $5,000,000.
6.02. Guaranties. Guarantee or assume or agree to become liable in
any way, either directly or indirectly, for any additional indebtedness or
liability of others except to endorse checks or drafts for collection in the
ordinary course of business.
6.03. Loans. Make any loans or advances to others except loans to
employees and advances to subcontractors and suppliers in the ordinary course
of business and not to exceed $50,000 aggregate principal amount at any time
outstanding.
6.04. Liens and Encumbrances. Create, permit or suffer the creation
or existence of any liens, security interests, or any other encumbrances on any
of its property, real or personal, except in favor of CoreStates as collateral
security agent for the Banks and the holders of the Insurance Notes and except
(i) liens arising in favor of sellers or lessors for indebtedness and
obligations incurred to purchase or lease fixed or capital assets permitted
under Paragraph 6.01(vi) hereof, provided, however, that such liens secure only
the indebtedness and obligations created thereunder and are limited to the
assets purchased or leased pursuant thereto; (ii) liens for taxes, assessments
or other governmental charges, federal, state or local, which are then being
currently contested in good faith by appropriate proceedings and are covered by
appropriate reserves maintained in cash or cash equivalents and in accordance
with GAAP; (iii) pledges or deposits to secure obligations under workmen's
compensation, unemployment insurance or social security laws or similar
legislation (but not ERISA); (iv) deposits to secure performance or payment
bonds, bids, tenders, contracts (other than contracts for borrowed money),
leases, franchises or public and statutory obligations required in the ordinary
course of business; (v) deposits to secure surety, appeal or custom bonds
required in the ordinary course of business; (vi) liens to secure mechanic's
liens which are then being currently contested in good faith by appropriate
proceedings; (vii) zoning restrictions, easements and similar immaterial
restrictions which do not secure the payment of money and which in the
aggregate do not adversely effect Borrower's use and title to such property;
(viii) judgment liens in existence for not more than sixty (60) days and either
singly or in the aggregate in an amount not in excess of Five Hundred Thousand
Dollars ($500,000) relating to judgments currently being contested in good
faith by appropriate proceedings and which are covered by appropriate reserves
maintained in cash or cash equivalents in accordance with GAAP; and (ix) liens
which are granted under pole attachment agreements
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in favor of pole lessors to secure Borrower's obligations under such pole
attachment agreements limited to the property subject to such agreements.
6.05. Additional Negative Pledge. Agree or covenant with or promise
any person or entity other than the Banks that it will not pledge its assets or
properties or otherwise grant any liens, security interests or encumbrances on
its property on terms similar to those set forth in Paragraph 6.04 hereof
except pursuant to Section 9.16 of the Note Agreements.
6.06. Restricted Payments. Make any Restricted Payments except as
permitted pursuant to Paragraph 6.09 hereof.
6.07. Transfer of Assets; Liquidation. Sell, lease, transfer or
otherwise dispose of all or any portion of its assets, real or personal, other
than such transactions in the normal and ordinary course of business for value
received; or discontinue, liquidate, or change in any material respect any
substantial part of its operations or businesses). Notwithstanding the
foregoing, Banks hereby agree that Borrower may sell any System provided that
in connection with such sale of a System (i) Borrower shall make a mandatory
payment of the Loan as provided in Paragraph 2.05(b) hereof (together with
amounts required by Paragraph 2.10 hereof), (ii) immediately before,
immediately after and after giving effect to such sale, no Event of Default or
Default shall exist, (iii) Borrower certifies to Banks that (A) it is in
compliance with the covenants set forth in Paragraphs 5.14 through 5.16 hereof,
based on a pro forma calculation using the results of the most recently ended
fiscal quarter of Borrower, and reducing Operating Cash Flow (and Annualized
Operating Cash Flow) by the portion thereof attributable to the System being
sold and reducing Funded Debt, Debt Service and Interest Expense to the extent,
if any, attributable to any portion of Total Debt being paid contemporaneously
with the consummation of such sale and (B) immediately after the consummation
of such sale and after giving effect thereto, the Leverage Ratio (based on
operating cash flow for the most recently ended three months determined on a
pro forma basis to reflect the portion of Operating Cash Flow for such period
attributable to the System being sold times four (4)) shall be no greater than
the Leverage Ratio immediately prior to the consummation of such sale, and (iv)
in connection with such sale, Borrower and Banks shall amend Exhibit C hereto
to reflect such sale.
6.08. Acquisitions and Investments. Purchase or otherwise acquire
any part or amount of the capital stock or assets of, or make any investments
in, any other firm or corporation except (i) Permitted Investments and (ii) so
long as no Event of Default or Default has occurred and is then continuing
Borrower may make acquisitions of cable systems that are contiguous to and to
be operated together with Borrower's
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existing Systems, provided, that the aggregate amount of such acquisitions in
any fiscal year of Borrower shall not exceed Three million Dollars
($3,000,000); or enter into any new business activities or ventures not
directly related to its present business; or merge or consolidate with or into
any other firm or corporation; or create any Subsidiary.
6.09. Payments to Affiliates. Pay or accrue any salaries or other
compensation, fees (including Management Fees) or other payments (including
Home office Allocations) to Affiliates, except, in the absence of any Refund
Liability Or Event of Default or Default hereunder and provided such payment
shall not cause an Event of Default or Default hereunder: (i) in connection
with the sale of a System as permitted by Paragraph 6.07 hereof, Borrower may
make (A) such distributions to the Partners as shall be necessary to cover each
such Partner's tax liability arising in connection with such sale, and (B) in
the case of a sale of the Tampa System, an additional distribution in an amount
which, together with the distribution for tax liabilities permitted by clause
(A) above, does not exceed fifty percent (50%) of the cash proceeds from the
sale of the Tampa System; (ii) Borrower may, subject to the terms of the
Subordination Agreement, pay Management Fees and Home office Allocations in
accordance with the terms of the Management Agreement as in effect on the date
hereof, provided, however, that after December 31, 1999, no payment may be made
on Management Fees or Home Office Allocations that have been deferred pursuant
to the terms hereof; and (iii) Borrower may make payments to Affiliates for
brokerage services, including in connection with the purchase or sale of a
System, and for the sale of television or other signals, the purchase or lease
of television or other signals or specialized equipment and the licensing of
technology, provided (x) such transactions are at a price and on terms at least
as favorable as those prices and terms being generally offered in the same
market place by unrelated parties for goods or services as nearly identical as
possible in regard to quality, technical advancement and availability,
provided, however, that so long as no Default or Event of Default is in
existence, Borrower may pay brokerage fees to The Jones Group Ltd. in
connection with (a) the sale of a system to an entity which is not an Affiliate
in an amount not to exceed two and one-half percent (2-1/2%) of the gross sales
price of the system, and (b) the purchase of a System, in an amount not to
exceed four and one half percent (4-1/2%) of the lower of the gross purchase
price or appraisal value of the System and (y) payments to Jones Programming
Services, Inc. ("Programming") for the purchase of signals or programming for
the Systems shall not exceed the payments made by or charged to other
Affiliates of Programming by Programming for comparable quantity and quality of
signals or programming.
6.10. Use of Proceeds. Use any of the proceeds of the Loan, directly
or indirectly, to purchase or carry margin
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<PAGE> 54
securities within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System; or engage as its principal business in the extension of
credit for purchasing or carrying such securities.
6.11. Documents. (a) Amend or permit any amendments to the Joint
Venture Agreement or (b) materially amend the manager's duties under the
Management Agreement.
6.12. Insurance Notes. Unless Borrower shall have provided prior
notice to the Banks and obtained the approval of Required Banks, amend or
permit any amendments to the Insurance Notes or the Note Agreements if the
effect would be to: (a) alter the maturity date of the Insurance Notes to make
it earlier than March 31, 2000, or alter the required payment (or mandatory
prepayment) schedule set forth in Section 7.1 of the Note Agreements in any
manner which causes required payments (or mandatory prepayments) to be made
sooner than set forth therein or increases the aggregate dollar amount due on
any given required payment (or mandatory prepayment) date (except on the final
maturity date); (b) increase the interest rates due on the Insurance Notes as
set forth in Section 1.1 of the Note Agreements or adjust the method or formula
by which the Make-Whole Amount is determined or increase fees or other amounts
due under the Insurance Note; or (c) alter any of the provisions of Sections
9.9 through 9.19, 9.21 and 9.22 of the Note Agreements in a manner which would
make it more difficult for Borrower to comply with or remain in compliance with
those covenants or add additional financial covenants to the Note Agreements
(it being understood that the Insurance Notes and Note Agreements may be
otherwise amended without the approval of Banks if prior notice shall have been
provided by Borrower to Banks); or make any prepayment on or repurchase the
Insurance Notes unless simultaneously with such prepayment or repurchase
Borrower makes a prepayment of that percentage of the Loan equal to the
percentage of the Insurance Notes being prepaid or repurchased.
SECTION SEVEN
ADDITIONAL COLLATERAL AND RIGHT OF SET-OFF
7.01. Additional Collateral. As additional collateral for the
payment of any and all of Borrower's indebtedness and obligations to Banks,
whether matured or unmatured, now existing or hereafter incurred or created
hereunder or otherwise, Borrower hereby grants to Banks a security interest in
and lien upon all funds, balances or other property of any kind of Borrower, or
in which Borrower has an interest, limited to the interest of Borrower therein,
whether now or hereafter in the possession, custody or control of any Bank.
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7.02. Right of Set-off. Upon a Default or an Event of Default, each
Bank is hereby authorized at any time and from time to time, 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 Bank
to or for the credit or the account of the Borrower against any and all of the
obligations of the Borrower now or hereafter existing under this Agreement and
the Note held by such Bank, irrespective of whether such Bank shall have made
any demand under this Agreement or such Note. Each Bank agrees promptly to
notify Borrower and Administrative Agent after any such set-off and application
made by such Bank; provided, however, that the failure to give such notice
shall not affect the validity of such set-off and application. The rights of
each Bank under this Section Seven are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which such Bank may
have.
SECTION EIGHT
DEFAULT
8.01. Events of Default. Each of the following events shall be an
Event of Default hereunder:
(a) If Borrower shall fail to pay when due any installment of
principal or interest or fees or any other sum payable to Banks or Agents
hereunder or otherwise; or
(b) If any representation or warranty made herein or any
Collateral Security Document or in connection herewith or therewith or in any
statement, certificate or other document furnished hereunder or thereunder is
or becomes false or misleading in any material respect; or
(c) Except as otherwise provided in subparagraph (f) below as to
the Insurance Notes, if Borrower or a Partner shall default in the payment of,
or in the performance of any obligation in respect of, indebtedness to another
in excess of $1,000,000, whether now or hereafter incurred and with respect to
defaults relating to other than the payment of money, the effect of such
default is to cause or permit the holder(s) of such indebtedness to cause such
indebtedness to be due and payable prior to its stated maturity or to take any
action to realize upon any assets or property of Borrower under any agreement
or instrument evidencing or securing such indebtedness; or
(d) If Borrower shall default in or fail to observe at any test
date the covenants set forth in Paragraphs 5.14, 5.15 and 5.16 or Article Six;
or
(e) If Borrower, a Partner or Jones shall default in the
performance of any other agreement or covenant contained
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herein (other than as provided in subparagraphs (a), (b) or (d) above) or in
any document executed or delivered in connection herewith (including without
limitation any Collateral Security Document) and such default shall continue
uncured for thirty (30) days after notice thereof to Borrower given by
Administrative Agent pursuant to the direction of Required Banks; or
(f) If there shall be any Event of Default under the Insurance
Notes; or
(g) If the Partners shall agree to terminate or dissolve the
Borrower; if the Borrower is terminated or dissolved and not simultaneously
continued; if more than one Partner shall withdraw as a Partner; if Jones shall
cease to be the general partner of each of the Partners and the manager of
Borrower pursuant to the Management Agreement; or if the sole partners of
Borrower shall cease to be two or more of the Partners; or
(h) If custody or control of any substantial part of the property
of Borrower, a Partner or Jones shall be assumed by any governmental agency or
any court of competent jurisdiction at the request of any governmental agency;
if any franchise of the Borrower shall be suspended, revoked, not renewed or
otherwise terminated (including if Borrower is required by any franchising
authority or by court order or administrative order to halt construction or
operations under any franchise and such action shall continue uncorrected for
thirty (30) days after Borrower has received notice thereof), and such
franchise, together with all other franchises suspended, revoked, not renewed
or otherwise terminated at the time of such suspension, revocation or
termination, represents either singly or in the aggregate in excess of the
greater of ten percent (10%) of the Basic Subscribers covered by all of
Borrower's franchises on (i) the date hereof as set forth in Exhibit C and (ii)
the last day of the most recently ended fiscal quarter of Borrower; or if any
governmental regulatory authority or judicial body shall make any other final
non-appealable determination the effect of which would be to affect materially
and adversely the operations of Borrower as now conducted; or
(i) If Borrower, a Partner or Jones shall become insolvent,
bankrupt or generally fail to pay its debts as such debts become due; or is
adjudicated insolvent or bankrupt; or admits in writing its inability to pay
its debts; or shall suffer a custodian, receiver or trustee for it or
substantially all of its property to be appointed and if appointed without
its.consent, not be discharged within thirty (30) days; or makes an assignment
for the benefit of creditors; or suffers proceedings under any law related to
bankruptcy, insolvency, liquidation or the reorganization, readjustment or the
release of debtors to be instituted against it and if contested by it not
dismissed or stayed within thirty (30) days; or if proceedings under any law
related to bankruptcy, insolvency, liquidation, or the
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reorganization, readjustment or the release of debtors is instituted or
commenced by Borrower, a Partner or Jones; or if any order for relief is
entered relating to any of the foregoing proceedings; or if Borrower or a
Partner shall call a meeting of its creditors with a view to arranging a
composition or adjustment of its debts; or if Borrower or a Partner shall by
any act or failure to act indicate its consent to, approval of or acquiescence
in any of the foregoing; or
(j) If any event or condition shall occur or exist with respect to
any activity or substance regulated under the Environmental Control Statutes
and as a result of such event or condition, Borrower has incurred a liability
in excess of $500,000 during any consecutive twelve (12) month period; or
(k) If any judgment, writ, warrant or attachment or execution or
similar process which calls for payment or presents liability in excess of
$500,000 (not covered by insurance) shall be rendered, issued or levied against
Borrower or a Partner or its respective property and such process shall not be
paid, waived, stayed, vacated, discharged, settled, satisfied or fully bonded
within sixty (60) days after its issuance or levy; or
(l) If any judgment, writ, warrant or attachment or execution or
similar process which calls for payment or presents liability in excess of
$2,000,000 (not covered by insurance) shall be rendered, or issued or levied
against Jones or its property and such process shall not be paid, waived,
stayed, vacated, discharged, settled, satisfied or fully bonded within sixty
(60) days after its issuance or levy.
(m) If Borrower shall not have obtained, within six (6) months
after the date hereof, the consent of the County of Los Angeles to the grant of
security interests in franchises granted by such County.
8.02. Remedies.
(a) Upon the happening of any Event of Default and at any time
thereafter, at the election of Required Banks, and by notice by Administrative
Agent to Borrower (except if an Event of Default described in Paragraph 8.01(i)
shall occur in which case acceleration shall occur automatically without
notice), Required Banks may declare the entire unpaid balance, principal,
interest and fees, of all indebtedness of Borrower to Banks, hereunder or
otherwise, to be immediately due and payable. Upon such declaration, the
Commitment shall immediately and automatically terminate and Banks shall have
no further obligation to make any advances and, subject to the provisions of
the Intercreditor Agreement, shall have the immediate right to, or to cause the
collateral security agent to, enforce or realize on any collateral security
granted therefor in any manner or
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order they deem expedient without regard to any equitable principles of
marshalling or otherwise. In addition to any rights granted hereunder or in any
documents delivered in connection herewith, Banks, Administrative Agent and the
collateral security agent shall have all the rights and remedies granted by any
applicable law, all of which shall be cumulative in nature.
(b) In accordance with the letter dated March 13, 1992 of the
County of Los Angeles, and any similar letter hereinafter received containing
such a requirement, Borrower hereby agrees to notify the County of Los Angeles
within the time periods set forth therein in the event of the acceleration of
indebtedness as set forth in clause (a) above.
(c) Upon the occurrence of an Event of Default, Administrative
Agent or any Bank may send a notice to the Banks indicating its desire to cause
a Statement of Event of Default (as defined in the Intercreditor Agreement) to
be sent to Borrower pursuant to Paragraph 4.1 of the Intercreditor Agreement.
Upon receipt of such a notice, Administrative Agent shall promptly convene a
meeting of the Banks to discuss such course of action. Banks hereby agree that
the decision to send a Statement of Event of Default shall be subject to the
agreement of Required Banks.
SECTION NINE
THE BANKS
Except as set forth in Paragraph 9.03, this Section sets forth the
relative rights and duties of Agents and Banks respecting the Loan and does not
confer any enforceable rights on Borrower against Banks or create on the part
of Agents or Banks any duties or obligations to the Borrower.
9.01. Application of Payments. Except as provided in Paragraph
2.01(c)(ii), Administrative Agent shall apply all payments of principal,
interest, commitment fee or other amounts hereunder made to Administrative
Agent by or on behalf of Borrower, to Banks on the basis of their Pro Rata
Shares except the fee payable under Paragraph 2.13 hereof, which shall be paid
solely to Administrative Agent, and other compensation requested by a Bank,
including increased costs, capital adequacy payments and the like. Such
distribution of payments shall be made promptly in federal funds immediately
available at the office of each Bank set forth above.
9.02. Set-off. In the event a Bank, by exercise of its right of
set-off, or otherwise, receives any payment of the indebtedness owing to it
hereunder in an amount greater than its Pro Rata Share of such payment based
upon the Banks' respective
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shares of principal indebtedness outstanding immediately before such payment,
such Bank shall purchase a portion of the indebtedness hereunder owing to each
other Bank so that after such purchase each Bank shall hold its Pro Rata Share
of all the indebtedness then outstanding hereunder provided that if all or any
portion of such excess payment is thereafter recovered from such Bank, such
purchase shall be rescinded and the purchase price restored to the extent of
any such recovery, but without interest. Notice of the foregoing transactions
shall be given by each Bank to Administrative Agent, and by Administrative
Agent to Borrower.
9.03. Modifications and Waivers. No modification or amendment
hereof, consent hereunder or waiver of a Default or Event of Default hereunder
or under any of the Collateral Security Documents or any other document or
agreement required hereunder, shall be effective except by written consent of
the Required Banks, provided, however, that the written consent of all Banks
shall be required to (i) decrease the rate of interest, (ii) modify, amend,
waive, discharge or terminate the amount of the Commitment or the Banks'
respective shares thereof, (iii) modify, amend, waive, discharge, terminate or
suspend compliance with the dates of payment hereunder, (iv) decrease the
commitment fee(s) payable under Paragraph 2.12 hereof, (v) release or impair in
any respect the value of the Collateral (except as expressly contemplated by
Paragraph 3.2 of the Intercreditor Agreement), or modify, amend, waive,
discharge, terminate or suspend compliance with the Intercreditor Agreement, or
(vi) modify or amend the provisions of Paragraph 9.02, this Paragraph 9.03 or
the definition of Required Banks.
9.04. Obligations Several. The obligations of the Banks hereunder
are several, and each Bank hereunder shall not be responsible for the
obligations of the other Banks hereunder, nor will the failure of one Bank to
perform any of its obligations hereunder relieve the other Banks from the
performance of their respective obligations hereunder.
9.05. Banks' Representations. Each Bank represents and warrants to
the other Banks and the Agents that (i) it has been furnished all information
it has requested for the purpose of evaluating its proposed participation under
this Agreement; (ii) it has decided to enter into this Agreement on the basis
of its independent review and credit analysis of Borrower, this Agreement and
the documentation in connection therewith and has not relied for such analysis
on any information or analysis provided by any other Bank or the Agents; (iii)
it is participating herein for its own account as a commercial transaction and
not with a view to the distribution, disposition or participation of its
interest herein, and it has no present intention of making any such
distribution, disposition or participation.
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9.06. Investigation. No Bank shall have any obligation to the others
to investigate the condition of the Borrower or any of the Collateral or any
other matter concerning the Loan.
9.07. Powers of Agents. Agents shall have and may exercise those
powers specifically delegated to Agents herein, together with such powers as
are reasonably incidental thereto.
9.08. General Duties of Agent, Immunity and Indemnity. In performing
its duties as Agent hereunder, each Agent will take the same care as it takes
in connection with loans in which it alone is interested, subject to the
limitations on liabilities contained herein; provided that Agents shall not be
obligated to ascertain or inquire as to the performance of any of the terms,
covenants or conditions hereof by Borrower, except as to delivery to it of
items required by Section Four and as to any matter or document that is
required to be satisfactory to it. Neither Agent nor any of its respective
directors, officers, agents or employees shall be liable for any action or
omission by any of them hereunder or in connection herewith except for gross
negligence or willful misconduct. Subject to such exception, each of the Banks
hereby indemnifies Agents on the basis of such Bank's Pro Rata Share, against
any such liability, claim, loss or expense.
9.09. No Responsibility for Representations or Validity, etc. Each
Bank agrees that neither Agents nor any other Bank shall be responsible to any
Bank for any representations, statements, or warranties of Borrower herein.
Neither Agents nor any of their directors, officers, employees or agents shall
be responsible for the validity, effectiveness, sufficiency, perfection or
enforceability of this Agreement and any collateral security therefor, or any
documents relating thereto or for the priority of any of Banks' or the
collateral security agent's security interests in any such collateral security.
9.10. Action on Instruction of Banks; Right to Indemnity. Agents
shall, subject to the provisions set forth below, take such actions as are
requested by Required Banks, and Agent shall in all cases be fully protected
in acting or refraining from acting hereunder in accordance with written
instructions to it signed by Required Banks unless the consent of all the Banks
is expressly required hereunder in which case Agents shall be so protected when
acting in accordance with such instructions from all the Banks. Such
instructions and any action taken or failure to act pursuant thereto shall be
binding on all Banks, provided that except as otherwise provided herein, Agents
may act hereunder in their own discretion without requesting such instructions.
Agents shall be fully justified in failing or refusing to take any action
hereunder unless they shall first be specifically indemnified to its
satisfaction by
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the other Banks on the basis of their respective Pro Rata Shares, against any
and all liability and expense which it may incur by reason of taking or
continuing to take any such action.
9.11. Employment of Agents. In connection with its activities
hereunder, each Agent may employ agents and attorneys-in-fact and shall not be
answerable, except as to money or securities received by it or its authorized
agents, for the default or misconduct of agents or attorneys-in-fact selected
with reasonable care.
9.12. Reliance on Documents. Each Agent shall be entitled to rely
upon (a) any paper or document believed by it to be genuine and correct and to
have been signed or sent by the proper person or persons and (b) upon the
opinion of its counsel with respect to legal matters.
9.13. Agent's Rights as a Bank. With respect to its share of the
indebtedness hereunder, Agent shall have the same rights and powers hereunder
as any other Bank and may exercise the same as though it were not an Agent.
Each of the Banks may accept deposits from, lend money to, and generally engage
in any kind of banking or trust business with Borrower as if it were not an
Agent or a Bank hereunder.
9.14. Expenses. Each of the Banks shall reimburse each Agent, from
time to time at the request of such Agent, for its Pro Rata Share of any
expenses incurred by such Agent in connection with the performance of its
functions hereunder, provided however that in the event Banks shall reimburse
an Agent for expenses for which Borrower subsequently reimburses such Agent,
such Agent shall remit to each Bank the respective amount received from such
Bank against such expenses and shall remit to each Bank a pro rata share of any
interest paid by Borrower to Agent on account of such expenses.
9.15. Resignation of Agent. An Agent may at any time resign its
position as Agent, without affecting its position as a Bank, by giving written
notice to Banks and Borrower. Such resignation shall take effect upon the
appointment of a successor agent in accordance with this Paragraph 9.15. In the
event an Agent shall resign, Banks and Borrower shall appoint a Bank as
successor agent. If within thirty (30) days of an Agent's notice of resignation
no successor agent shall have been appointed by Banks and Borrower and accepted
such appointment, then Banks shall appoint a Bank as a successor agent, and if
within thirty (30) days after the end of the initial thirty (30) day period no
successor agent shall have been appointed by Banks and accepted such
appointment, then the resigning Agent, in its discretion, may appoint any other
Bank as a successor agent.
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<PAGE> 62
9.16. Successor Agent. The successor Agent appointed pursuant to
Paragraph 9.15 shall execute and deliver to its predecessor and Banks an
instrument in writing accepting such appointment, and thereupon such successor,
without any further act, deed or conveyance, shall become fully vested with all
the properties, rights, duties and obligations of its predecessor Agent. The
predecessor Agent shall deliver to its successor Agent forthwith all collateral
security, documents and moneys held by it as Agent, if any, whereupon such
predecessor Agent shall be discharged from its duties and obligations as Agent
under this Agreement.
9.17. Collateral Security. CoreStates will hold, administer and
manage any collateral security pledged from time to time hereunder either in
its own name or as Collateral Security Agent pursuant to the Intercreditor
Agreement, but each Bank shall hold a direct, undivided pro rata beneficial
interest therein.
9.18. Enforcement by Administrative Agent. All rights of action
under this Agreement and under the Notes and all rights to the collateral
security hereunder may be enforced by Administrative Agent and any suit or
proceeding instituted by Administrative Agent in furtherance of such
enforcement shall be brought in its name as Administrative Agent without the
necessity of joining as plaintiffs or defendants any other Banks, and the
recovery of any judgment shall be for the benefit of Banks subject to the
expenses of Administrative Agent.
SECTION TEN
MISCELLANEOUS
10.01. Non-Recourse. Anything contained in this Agreement or any
Collateral Security Document to the contrary notwithstanding (except the
provisions set forth in Paragraph 14 of the Subordination Agreement), in any
action or proceeding brought on the Notes, this Agreement, or any Collateral
Security Document or the indebtedness evidenced or secured thereby, no
deficiency judgment shall be sought or obtained against Jones or any Partner or
enforced against the separate assets of Jones or any Partner, and the liability
of Jones or any Partner for any amounts due under the Notes, this Agreement, or
any Collateral Security Document, shall be limited to the interest of Jones and
the Partners in the Collateral and in any other assets of the Borrower. Banks
may join Jones in its capacity as general partner of the Partners or any
Partner in its capacity as a general partner of the Borrower as defendant in
any legal action it undertakes to enforce its rights and remedies under the
Notes, this Agreement, or any Collateral Security Document, but any judgment in
any such action may be satisfied by recourse only to the Collateral and any
other assets of Borrower, but not by
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<PAGE> 63
recourse directly to or by execution on Jones' or any Partner's separate
assets. Notwithstanding the foregoing, nothing set forth herein shall be deemed
to limit the liability of Jones or any Partner or its assets or prohibit Banks
from taking any legal action against Jones or any Partner or its assets for (a)
any fraud, intentional misconduct or gross negligence of Jones or any Partner,
or (b) Jones' undertakings under the Subordination Agreement, or (c) to recoup
any amounts or assets paid or transferred directly or indirectly by the
Borrower to Jones or any Partner in violation of any provision of this
Agreement.
10.02. Indemnification and Release Provisions. Borrower hereby agrees
to defend each Agent and each Bank and its directors, officers, agents and
employees from, and hold each of them harmless against, any and all losses,
liabilities (including without limitation settlement costs and amounts,
transfer taxes, documentary taxes, or assessments or charges made by any
governmental authority), claims, damages, interests, judgments, costs, or
expenses, including without limitation reasonable fees and disbursements of
counsel, incurred by any of them arising out of or in connection with or by
reason of this Agreement, the Commitment, the making of the Loan, or any
Collateral Security Document, including without limitation, any and all losses,
liabilities, claims, damages, interests, judgments, costs or expenses relating
to or arising under any Environmental Control Statute or the application of any
such Statute to any of Borrower's properties or assets except with respect to
such Bank's or Agent's (as the case may be) own gross negligence or willful
misconduct. Borrower hereby releases each Agent and each Bank and its
respective directors, officers, agents and employees from any and all claims
for loss, damages, costs or expenses caused or alleged to be caused by any act
or omission on the part of any of them except with respect to such entity's or
person's (as the case may be) own gross negligence or willful misconduct. All
obligations provided for in this Paragraph 10.02 shall survive any termination
of this Agreement or the Commitment and the repayment of the Loan.
10.03. Participations and Assignments. Borrower hereby acknowledges
and agrees that a Bank may at any time: (a) grant participations in all or a
portion of its Maximum Principal Amount of the Loan or any Note or of its
right, title and interest therein or in or to this Agreement (collectively,
"Participations"), up to but not in excess of forty-nine percent (49%) of such
Bank's Maximum Principal Amount, to any other lending office or to any other
bank, lending institution or other entity which has the requisite
sophistication to evaluate the merits and risks of investments in
Participations ("Participants"), provided, however, that: (i) all amounts
payable by Borrower hereunder shall be determined as if such Bank had not
granted such Participation; and (ii) any agreement pursuant to which any Bank
may grant a Participation: (x) shall provide that such Bank shall retain the
sole right and
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<PAGE> 64
responsibility to enforce the obligations of Borrower hereunder including,
without limitation, the right to approve any amendment, modification or waiver
of any provisions of this Agreement; (y) such participation agreement may
provide that such Bank will not agree to any modification, amendment or waiver
of this Agreement without the consent of the Participant if such amendment,
modification or waiver would reduce the principal of or rate of interest on the
Loan or postpone the date fixed for any payment of principal of or interest on
the Loan; and (z) shall not relieve such Bank from its obligations, which shall
remain absolute, to make advances hereunder, or (b) with the consent of
Borrower and Managing Agents, such consent not to be unreasonably withheld,
assign all or a portion of its rights under the Loan up to but not in excess of
forty-nine percent (49%) in the aggregate of such Bank's Maximum Principal
Amount without taking into account any prior assignments, provided that (i)
any such assignment shall be in a minimum amount of Four Million Nine Hundred
Thousand Dollars ($4,900,000); (ii) in connection with any such assignment the
assigning Bank shall pay to Administrative Agent a fee of Two Thousand Five
Hundred Dollars ($2,500); and (iii) notwithstanding the provisions of clauses
(i) and (ii) of this subsection (b), a Bank may assign its rights hereunder and
under its Note to a Federal Reserve Bank as collateral security for overdrafts
pursuant to Regulation A of the Board of Governors of the Federal Reserve
System, but such assignment shall not relieve such Bank of its obligations
hereunder.
10.04. Binding and Governing Law. This Agreement and all documents
executed hereunder shall be binding upon and shall inure to the benefit of the
parties hereto and their respective permitted successors and assigns and shall
be governed as to their validity, interpretation and effect by the laws of the
Commonwealth of Pennsylvania (except as to certain Collateral Security
Documents, which may be required by mandatory provision of law to be governed
by the laws of another jurisdiction).
10.05. Survival. All agreements, representations, warranties and
covenants of Borrower contained herein or in any documentation required
hereunder shall survive the execution of this Agreement and the making of the
Loan hereunder and except for Paragraphs 5.11 and 10.02 which provide
otherwise, will continue in full force and effect as long as any indebtedness
or other obligation of Borrower to any Bank remains outstanding.
10.06. No Waiver; Delay. If Banks or any of them shall waive any
power, right or remedy arising hereunder or under any applicable law, such
waiver shall not be deemed to be a waiver by any other Bank or upon the later
occurrence or recurrence of any of said events with respect to any Bank. No
delay by Banks or any of them in the exercise of any power, right or remedy
shall, under any circumstances, constitute or be deemed to be a waiver, express
or implied, of the same and no course of
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<PAGE> 65
dealing between the parties hereto shall constitute a waiver of Banks' powers,
rights or remedies. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
10.07. Modification. Except as otherwise provided in this Agreement,
no modification or amendment hereof shall be effective unless made in a writing
signed by appropriate officers of the parties hereto.
10.08. Headings. The various headings in this Agreement are inserted
for convenience only and shall not affect the meaning or interpretation of this
Agreement or any provision hereof.
10.09. Notices. Except as otherwise specifically provided herein, any
notice, request or consent required hereunder or in connection herewith shall
be deemed satisfactorily given if in writing and delivered by hand or mailed
(registered, overnight or certified mail) or by telecopier to the parties at
their respective addresses or telecopier numbers set forth on Exhibit F
attached hereto.
10.10. Payment on Non-Business Days. Whenever any payment to be made
hereunder shall be stated to be due on a day other than a Business Day, such
payment may be made on the next succeeding Business Day (or preceding London
Business Day, as applicable), provided however that such extension of time
shall be included in the computation of interest due in conjunction with such
payment or other fees due hereunder, as the case may be.
10.11. Time of Day. All time of day restrictions imposed herein shall
be calculated using Administrative Agent's local time.
10.12. Severability. If any provision of this Agreement or the
application thereof to any person or entity or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the
application of such provisions to other persons, entities or circumstances
shall not be affected thereby and shall be enforced to the greatest extent
permitted by law.
10.13. Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if all the signatures on such counterparts
appeared on one document, and each such counterpart shall be deemed to be an
original.
-59-
<PAGE> 66
10.14. Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY
KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE NOTES OR ANY COLLATERAL
SECURITY DOCUMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY BANK OR AGENT. THIS PROVISION IS
A MATERIAL INDUCEMENT FOR EACH BANK'S ENTERING INTO THIS AGREEMENT.
10.15. Acknowledgements. BORROWER ACKNOWLEDGES THAT IT HAS HAD THE
ASSISTANCE OF COUNSEL IN THE REVIEW AND EXECUTION OF THIS AGREEMENT AND,
SPECIFICALLY, PARAGRAPH 10.14 HEREOF, AND FURTHER ACKNOWLEDGES THAT THE MEANING
AND EFFECT OF THE FOREGOING WAIVER OF JURY TRIAL HAS BEEN FULLY EXPLAINED TO
BORROWER BY SUCH COUNSEL.
IN WITNESS WHEREOF, the undersigned, by their duly authorized partners
or officers, have executed this Agreement the day and year first above written.
CABLE TV FUND 12-BCD VENTURE
By: CABLE TV FUND 12-B, LTD., a general
partner
By: CABLE TV FUND 12-C, LTD., a general
partner
By: CABLE TV FUND 12-D, LTD., a general
partner
Attest: By: Jones Intercable, Inc.,
their general partner
By: /s/ JACK D. FINLAW JR. By: /s/ J. ROY POTTLE
------------------------------- ----------------------------
Name: Jack D. Finlaw Jr. Name: J. Roy Pottle
Title: Assistant Secretary Title: Treasurer
(CORPORATE SEAL)
(EXECUTIONS CONTINUED]
-60-
<PAGE> 67
CORESTATES BANK, N.A., individually and
in its capacity as Administrative Agent
and a Managing Agent hereunder
By: /s/ PHILIP D. HARRISON
------------------------------------
Name: Philip D. Harrison
Title: Assistant Vice President
SOCIETE GENERALE, acting through its
New York Branch, individually and in
its capacity as a Managing Agent
hereunder
By: /s/ MARK VIGIL
------------------------------------
Name: Mark Vigil
Title: Vice President
NATIONSBANK OF TEXAS, N.A.
By: /s/ DOUGLAS S. STUART
------------------------------------
Name: Douglas S. Stuart
Title: Senior Vice President
ROYAL BANK OF CANADA
By: /s/ CYNTHIA K. WONG
------------------------------------
Name: Cynthia K. Wong
Title: Manager
NATWEST BANK, N.A.
By: /s/ ROSELYN REID
------------------------------------
Name: Roselyn Reid
Title: Vice President
COLORADO NATIONAL BANK
By: /s/ DAVID S. WAZAR
------------------------------------
Name: David S. Wazar
Title: Vice President
-61-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 1,384,794
<SECURITIES> 0
<RECEIVABLES> 4,464,773
<ALLOWANCES> (486,392)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 294,472,892
<DEPRECIATION> (155,826,572)
<TOTAL-ASSETS> 163,486,029
<CURRENT-LIABILITIES> 12,446,080
<BONDS> 180,770,267
<COMMON> 0
0
0
<OTHER-SE> (29,730,318)
<TOTAL-LIABILITY-AND-EQUITY> 163,486,029
<SALES> 0
<TOTAL-REVENUES> 101,399,697
<CGS> 0
<TOTAL-COSTS> 97,272,075
<OTHER-EXPENSES> (95,061)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,347,250
<INCOME-PRETAX> (8,403,720)
<INCOME-TAX> 0
<INCOME-CONTINUING> (8,403,720)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,403,720)
<EPS-PRIMARY> (35.05)
<EPS-DILUTED> (35.05)
</TABLE>
