<PAGE>
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, 1997
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 __________
Commission file number: 0-15378
CABLE TV FUND 14-A, LTD.
------------------------
(Exact name of registrant as specified in its charter)
Colorado 84-1024657
-------- ----------
(State of Organization) (IRS Employer Identification No.)
P.O. Box 3309, Englewood, Colorado 80155-3309 (303) 792-3111
- ---------------------------------------------------- --------------
(Address of principal executive office and Zip Code) (Registrant's telephone
no. including area code)
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
--- ---
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 ((S)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. X
---
DOCUMENTS INCORPORATED BY REFERENCE: None
(33904)
<PAGE>
Certain information contained in this Form 10-K Report contains
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. All statements, other than statements of
historical facts, included in this Form 10-K Report that address activities,
events or developments that the Partnership, the Venture or the General Partner
expects, believes or anticipates will or may occur in the future are forward-
looking statements. These forward-looking statements are based upon certain
assumptions and are subject to a number of risks and uncertainties. Actual
events or results may differ materially from those discussed in the forward-
looking statements as a result of various factors.
PART I.
-------
ITEM 1. BUSINESS
-----------------
THE PARTNERSHIP. Cable TV Fund 14-A, 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 14 Limited Partnership
Program (the "Program"), which was sponsored by Jones Intercable, Inc. (the
"General Partner"). Cable TV Fund 14-B, Ltd. ("Fund 14-B") is the other
partnership that was formed pursuant to the Program. The Partnership and Fund
14-B formed a general partnership known as Cable TV Fund 14-A/B Venture (the
"Venture"), in which the Partnership owns a 27 percent interest and Fund 14-B
owns a 73 percent interest. The Partnership and the Venture were formed for the
purpose of acquiring and operating cable television systems.
The Partnership directly owns cable television systems serving the
areas in and around Buffalo, Minnesota (the "Buffalo System"), Naperville,
Illinois (the "Naperville System") and Calvert County, Maryland (the "Calvert
County System") The Venture owns the cable television system serving certain
areas in Broward County, Florida (the "Broward System"). See Item 2. The
Buffalo System, Naperville System, Calvert County System and Broward System may
collectively be referred to as the "Systems."
It is the General Partner's publicly announced policy that it intends
to liquidate its managed limited partnerships, including the Partnership, as
opportunities for sales of partnership cable television systems arise in the
marketplace. In accordance with this policy, the Partnership sold two of its
cable television systems in 1997, and the Venture expects to sell the Broward
System in March 1998. The General Partner continues to seek opportunities for
the sale of the remaining Systems. There is no assurance as to the timing or
terms of any sales.
DISPOSITIONS OF CABLE TELEVISION SYSTEMS.
Turnersville System. On January 10, 1997, the Partnership sold the
-------------------
cable television system serving the areas in and around Turnersville, New Jersey
(the "Turnersville System") to an unaffiliated party for a sales price of
$84,500,000. The Partnership distributed approximately $25,000,000 (or
approximately $313 per each $1,000 invested in the Partnership) of the sale
proceeds to its limited partners in January 1997, paid The Jones Group, Ltd.
("The Jones Group"), a subsidiary of the General Partner, a brokerage fee of
$2,112,500, representing 2.5 percent of the sales price, for acting as a broker
in this transaction and repaid $57,387,500 of the balance outstanding on its
credit facility (of which $52,500,000 was required to be repaid under the terms
of the Partnership's credit facility). Because the $25,000,000 distribution to
the limited partners did not return 125 percent of the capital initially
contributed to the Partnership by the limited partners, the General Partner did
not receive a general partner distribution from the proceeds of the sale of the
Turnersville System. Because the sale of the Turnersville System did not
represent a sale of all or substantially all of the Partnership's assets, no
vote of the limited partners of the Partnership was required to approve this
sale.
Central Illinois System. On June 30, 1997, the Partnership sold the
-----------------------
cable television system serving certain communities in Central Illinois (the
"Central Illinois System") to an unaffiliated party for a sales price of
$20,005,280. The Partnership distributed $9,547,500 (or approximately $119 per
each $1,000 invested in the Partnership) of the sale proceeds to its limited
partners in July 1997, paid a 2.5 percent brokerage fee of $502,500 to The Jones
Group for acting as a broker in this transaction and repaid $9,800,000 of the
balance outstanding on its credit facility. Because the distributions to the
limited partners from the sales of the Turnersville System and
2
<PAGE>
the Central Illinois System did not return 125 percent of the capital initially
contributed to the Partnership by the limited partners, the General Partner did
not receive a general partner distribution from the proceeds of the sale of the
Central Illinois System. Because the sale of the Central Illinois System did not
represent a sale of all or substantially all of the Partnership's assets, no
vote of the limited partners of the Partnership was required to approve this
sale.
PROPOSED DISPOSITION OF CABLE TELEVISION SYSTEM.
On October 3, 1997, the Venture entered into an agreement to sell the
Broward System to an unaffiliated party for $140,000,000, subject to closing
adjustments discussed below. Closing of this sale is scheduled for March 31,
1998, subject to several conditions, including necessary governmental and other
third-party consents. The General Partner expects that all material consents
will be obtained prior to the scheduled closing date. The closing adjustments
primarily relate to the number of equivalent basic subscribers at closing. If
the equivalent basic subscribers are less than 56,637, the sales price will be
reduced $2,462 multiplied by the number by which the Broward System's equivalent
basic subscribers are less than 56,637, up to a maximum adjustment of
$7,000,000. Because it is estimated that at March 31, 1998, the Broward System
will have 55,274 equivalent basic subscribers, as defined in the agreement,
there will be a sales price reduction at closing of approximately $3,369,000.
The General Partner expects, however, that when final closing adjustments are
done approximately sixty days after closing, additional equivalent basic
subscribers that were not able to be counted at closing because they were
relatively recent subscribers at March 31, 1998, will be counted as equivalent
basic subscribers when final closing adjustments are done and the sales price
will be adjusted accordingly. If the sales price is adjusted upward, the
Venture would make an additional distribution to the two constituent
partnerships of the Venture in proportion to their ownership interests in the
Venture.
Upon closing, the Venture will repay all of its indebtedness, which
totaled $39,597,617 at December 31, 1997, and a brokerage fee of $3,500,000 to
The Jones Group and then the Venture will distribute the remaining net sale
proceeds, or approximately $94,039,000, to the two constituent partnerships of
the Venture in proportion to their ownership interests in the Venture.
Accordingly, the Partnership will receive 27 percent of such proceeds, estimated
to total $25,491,000. The Partnership will distribute this portion of the net
sale proceeds to its limited partners of record as of the closing date of the
sale of the Broward System. Such distribution represents approximately $159 for
each $500 limited partnership interest, or $318 for each $1,000 invested in the
Partnership. Because the distribution to the limited partners from the sales of
the Turnersville System and the Central Illinois System together with the
proposed distribution from the sale of the Broward System will not return 125
percent of the capital initially contributed to the Partnership by the limited
partners, the General Partner will not receive any general partner distribution
from the proceeds of the Broward System's sale. Because the proposed sale of
the Broward System does not constitute the sale of all or substantially all of
the Partnership's assets, no vote of the limited partners of the Partnership was
required to approve this sale. Because the Broward System represents the only
asset of the Venture, the Venture will be liquidated and dissolved upon
completion of the sale of the Broward System.
Taking into account the distributions made in 1997 from the sales of
the Turnersville System and the Central Illinois System and the proposed
distribution to be made from the sale of the Broward System, the limited
partners will have received $375 for each $500 limited partnership interest or
$750 for each $1,000 invested in the Partnership.
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
national television networks broadcast by their local affiliates, 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
3
<PAGE>
programs of a public service or entertainment nature. FM radio signals are also
frequently distributed to subscribers as part of the basic service.
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 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, Encore and others at
a cost based on the number of subscribers served by the cable operator. The per
service cost of 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, 1997,
the Systems' monthly basic service rates ranged from $10.35 to $15.52, monthly
basic and tier ("basic plus") service rates ranged from $22.67 to $28.29. and
monthly premium services ranged from $3.00 to $10.95 per premium service. In
addition, the Partnership and the Venture earn revenues from the Systems' pay-
per-view programs and advertising fees. Related charges may include a
nonrecurring installation fee that ranges from $1.90 to $49.21; 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, 1997, of the total
fees received by the Systems, basic service and tier service fees accounted for
approximately 67 percent of total revenues, premium service fees accounted for
approximately 14 percent of total revenues, pay-per-view fees were approximately
2 percent of total revenues, advertising fees were approximately 6 percent of
total revenues and the remaining 11 percent of total revenues came principally
from equipment rentals, installation fees and program guide sales. The
Partnership and the Venture are 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 Partnership directly holds 38 franchises, and the Venture holds 9
franchises. These franchises provide for the payment of fees to the issuing
authorities and generally range from 3 percent to 5 percent 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 percent of gross
revenues and also permits the cable television system operator to seek
renegotiation and modification of franchise requirements if warranted by changed
circumstances.
Neither the Partnership nor the Venture has ever had a franchise
revoked. The Partnership is currently negotiating the renewal of one franchise
that is operating under an extension, and the Venture has no franchises
4
<PAGE>
that will expire prior to December 31, 1998. The General Partner has no reason
to believe that such franchise will not be renewed in due course. The General
Partner has recently experienced lengthy negotiations with some franchising
authorities for the granting of franchise renewals. Some of the issues involved
in recent renewal negotiations include rate regulation, customer service
standards, cable plant upgrade or replacement and shorter terms of franchise
agreements.
COMPETITION. Cable television systems currently experience
competition from several sources.
Broadcast Television. Cable television systems have traditionally
---------------------
competed with broadcast television, which consists of television signals that
the viewer is able to receive directly on his television without charge using an
"off-air" antenna. The extent of such competition is dependent in part upon the
quality and quantity of signals available by such antenna reception as compared
to the services provided by the local cable system. Accordingly, it has
generally been less difficult for cable operators to obtain higher penetration
rates in rural areas where signals available off-air are limited, than in
metropolitan areas where numerous, high quality off-air signals are often
available without the aid of cable television systems.
Traditional Overbuild. Cable television franchises are not exclusive,
---------------------
so that more than one cable television system may be built in the same area
(known as an "overbuild"), with potential loss of revenues to the operator of
the original cable television system. The General Partner has experienced
overbuilds in connection with certain systems that it has owned or managed for
limited partnerships, and currently there are overbuilds in certain of the
systems owned or managed by the General Partner. Ameritech has overbuilt and is
in competition with the Partnership in the Naperville System. See Telephone and
Utilities below. Constructing and developing a cable television system is a
capital intensive process, and it is often difficult for a new cable system
operator to create a marketing edge over the existing system. Generally, an
overbuilder would be required to obtain franchises from the local governmental
authorities, although in some instances, the overbuilder could be the local
government itself. In any case, an overbuilder would be required to obtain
programming contracts from entertainment programmers and, in most cases, would
have to build a complete cable system, including headends, trunk lines and drops
to individual subscribers homes, throughout the franchise areas.
DBS. High-powered direct-to-home satellites have made possible the
---
wide-scale delivery of programming to individuals throughout the United States
using small roof-top or wall-mounted antennas. Several companies began offering
direct broadcast satellite ("DBS") service over the last few years. Companies
offering DBS service use video compression technology to increase channel
capacity of their systems to 100 or more channels and to provide packages of
movies, satellite network and other program services which are competitive to
those of cable television systems. DBS faces technical and legal obstacles to
offering its customers local broadcast programming, although at least one DBS
provider is now attempting to do so. In addition to emerging high-powered DBS
competition, cable television systems face competition from a major medium-
powered satellite distribution provider and several low-powered providers, whose
service requires use of much larger home satellite dishes. Not all subscribers
terminate cable television service upon acquiring a DBS system. The General
Partner has observed that there are DBS subscribers that also elect to subscribe
to cable television service in order to obtain the greatest variety of
programming on multiple television sets, including local programming not
available through DBS service. The ability of DBS service providers to compete
successfully with the cable television industry will depend on, among other
factors, the ability of DBS providers to overcome certain legal and technical
hurdles and the availability of equipment at reasonable prices.
Telephone and Utilities. Federal cross-ownership restrictions
-----------------------
historically limited entry by local telephone companies into the cable
television business. The 1996 Telecommunications Act (the "1996 Telecom Act")
eliminated this cross-ownership restriction, making it possible for companies
with considerable resources to overbuild existing cable operators and enter the
business. Several telephone companies have begun seeking cable television
franchises from local governmental authorities and constructing cable television
systems. Ameritech, one of the seven regional Bell Operating Companies
("BOCs"), which provides telephone service in a multi-state region including
Illinois, has been the most active BOC in seeking local cable franchises within
its service area. It has been begun cable service in competition with the
Partnership in Naperville, Illinois, and in competition with
5
<PAGE>
partnerships managed by the General Partner in Elgin and Glen Ellyn, Illinois.
Ameritech's overbuild of the Naperville System has resulted in the loss of a
substantial number of subscribers in the Naperville System, and it has had an
adverse effect on the Naperville System's revenues, cash flow and fair market
value. The General Partner expects that this competition will have a negative
impact on the price the Partnership will be able to obtain from the sale of the
Naperville System. The General Partner is taking prudent steps necessary to meet
this competition from Ameritech and, to the extent possible, to safeguard the
value of the Naperville System until a sale of the Naperville System can be
arranged. These steps include a judicial challenge to the terms on which a
franchise was issued to Ameritech. Litigation is currently pending in federal
court against both the City of Naperville and Ameritech and includes claims made
by the City of Naperville against the Partnership. See Item 3, Legal
Proceedings. The entry of telephone companies as direct competitors is likely to
continue over the next several years and could adversely affect the
profitability and market value of cable television systems. The entry of
electric utility companies into the cable television business, as now authorized
by the 1996 Telecom Act, could have a similar adverse effect. The local electric
utility in the Washington D.C. area recently announced plans to participate in
RCN, a planned video competitor.
Private Cable. Additional competition is provided by private cable
-------------
television systems, known as Satellite Master Antenna Television (SMATV),
serving multi-unit dwellings such as condominiums, apartment complexes, and
private residential communities. These private cable systems may enter into
exclusive agreements with apartment owners and homeowners associations, which
may preclude operators of franchised systems from serving residents of such
private complexes. Private cable systems that do not cross public rights of way
are free from the federal, state and local regulatory requirements imposed on
franchised cable television operators. In some cases, the Partnership and the
Venture have been unable to provide cable television service to buildings in
which private operators have secured exclusive contracts to provide video and
telephony services. The Partnership and the Venture are interested in providing
these same services, but expects that the market to install and provide these
services in multi-unit buildings will continue to be highly competitive.
MMDS. Cable television systems also compete with wireless program
----
distribution services such as multichannel, multipoint distribution service
("MMDS") systems, commonly called wireless cable, which are licensed to serve
specific areas. MMDS uses low-power microwave frequencies to transmit
television programming over-the-air to paying subscribers. The MMDS industry is
less capital intensive than the cable television industry, and it is therefore
more practical to construct MMDS systems in areas of lower subscriber
penetration. Wireless cable systems are now in direct competition with cable
television systems in several areas of the country, including the system in Pima
County, Arizona owned by the General Partner. Telephone companies have acquired
or invested in wireless companies, and may use MMDS systems to provide services
within their service areas in lieu of wired delivery systems. Enthusiasm for
MMDS has waned in recent months, however, as Bell Atlantic and NYNEX have
suspended their investment in two major MMDS companies. To date, neither the
Venture nor the Partnership has lost a significant number of subscribers, nor a
significant amount of revenue, to MMDS operators competing with the
Partnership's and the Venture's cable television systems. A series of actions
taken by the FCC, however, including reallocating certain frequencies to the
wireless services, are intended to facilitate the development of wireless cable
television systems as an alternative means of distributing video programming.
In addition, Local Multipoint Distribution Services ("LMDS"), could also pose a
significant threat to the cable television industry, if and when it becomes
established. The potential impact, however, of LMDS is difficult to assess due
to the newness of the technology and the absence of any current fully
operational LMDS systems.
Cable television systems are also in competition, in various degrees
with other communications and entertainment media, including motion pictures and
home video cassette recorders.
REGULATION AND LEGISLATION
- --------------------------
The operation of cable television systems is extensively regulated by
the FCC, some state governments and most local governments. The new 1996
Telecom Act alters the regulatory structure governing the nation's
telecommunications providers. It removes barriers to competition in both the
cable television market and the local telephone market. Among other things, it
also reduces the scope of cable rate regulation.
6
<PAGE>
The 1996 Telecom Act requires the FCC to undertake a host of
implementing rulemakings, the final outcome of which cannot yet be determined.
Moreover, Congress and the FCC have frequently revisited the subject of cable
regulation. Future legislative and regulatory changes could adversely affect
the Partnership's and the Venture's operations and there has been a recent
increase in calls to maintain or even tighten cable regulation in the absence of
widespread effective competition. This section briefly summarizes key laws and
regulations affecting the operation of the Partnership's and the Venture's cable
systems and does not purport to describe all present, proposed, or possible laws
and regulations affecting the Partnership and the Venture.
Cable Rate Regulation. The 1992 Cable Act imposed an extensive rate
---------------------
regulation regime on the cable television industry. Under that regime, all
cable systems are subject to rate regulation, unless they face "effective
competition" in their local franchise area. Federal law now defines "effective
competition" on a community-specific basis as requiring either low penetration
(less than 30 percent) by the incumbent cable operator, appreciable penetration
(more than 15 percent) by competing multichannel video providers ("MVPs"), or
the presence of a competing MVP affiliated with a local telephone company.
Although the FCC rules control, local government units (commonly
referred to as local franchising authorities or "LFAs") are primarily
responsible for administering the regulation of the lowest level of cable -- the
basic service tier ("BST"), which typically contains local broadcast stations
and public, educational, and government ("PEG") access channels. Before an LFA
begins BST rate regulation, it must certify to the FCC that it will follow
applicable federal rules, and many LFAs have voluntarily declined to exercise
this authority. LFAs also have primary responsibility for regulating cable
equipment rates. Under federal law, charges for various types of cable
equipment must be unbundled from each other and from monthly charges for
programming services. The 1996 Telecom Act allows operators to aggregate costs
for broad categories of equipment across geographic and functional lines. This
change should facilitate the introduction of new technology.
The FCC itself directly administers rate regulation of any cable
programming service tiers ("CPST"), which typically contain satellite-delivered
programming. Under the 1996 Telecom Act, the FCC can regulate CPST rates only
if an LFA first receives at least two rate complaints from local subscribers and
then files a formal complaint with the FCC. When new CPST rate complaints are
filed, the FCC now considers only whether the incremental increase is justified
and will not reduce the previously established CPST rate.
Under the FCC's rate regulations, most cable systems were required to
reduce their BST and CPST rates in 1993 and 1994, and have since had their rate
increases governed by a complicated price cap scheme that allows for the
recovery of inflation and certain increased costs, as well as providing some
incentive for expanding channel carriage. The FCC has modified its rate
adjustment regulations to allow for annual rate increases and to minimize
previous problems associated with regulatory lag. Operators also have the
opportunity of bypassing this "benchmark" regulatory scheme in favor of
traditional "cost-of-service" regulation in cases where the latter methodology
appears favorable. Premium cable services offered on a per-channel or per-
program basis remain unregulated, as do affirmatively marketed packages
consisting entirely of new programming product. Federal law requires that the
BST be offered to all cable subscribers, but limits the ability of operators to
require purchase of any CPST before purchasing premium services offered on a
per-channel or per-program basis.
The 1996 Telecom Act sunsets FCC regulation of CPST rates for all
systems (regardless of size) on March 31, 1999. Certain critics of the cable
television industry have called for a delay in the regulatory sunset and have
even urged more rigorous rate regulation in the interim, including a limit on
operators passing through to their customers increased programming costs. The
1996 Telecom Act also relaxes existing uniform rate requirements by specifying
that uniform rate requirements do not apply where the operator faces "effective
competition," and by exempting bulk discounts to multiple dwelling units,
although complaints about predatory pricing still may be made to the FCC.
Cable Entry Into Telecommunications. The 1996 Telecom Act provides
-----------------------------------
that no state or local laws or regulations may prohibit or have the effect of
prohibiting any entity from providing any interstate or intrastate
telecommunications service. States are authorized, however, to impose
"competitively neutral" requirements
7
<PAGE>
regarding universal service, public safety and welfare, service quality, and
consumer protection. State and local governments also retain their authority to
manage the public rights-of-way and may require reasonable, competitively
neutral compensation for management of the public rights-of-way when cable
operators provide telecommunications service. The favorable pole attachment
rates afforded cable operators under federal law can be gradually increased by
utility companies owning the poles (beginning in 2001) if the operator provides
telecommunications service, as well as cable service, over its plant.
Cable entry into telecommunications will be affected by the regulatory
landscape now being fashioned by the FCC and state regulators. One critical
component of the 1996 Telecom Act to facilitate the entry of new
telecommunications providers (including cable operators) is the interconnection
obligation imposed on all telecommunications carriers. In July 1997, the Eighth
Circuit Court of Appeals vacated certain aspects of the FCC's initial
interconnection order. That decision is now on appeal to the U.S. Supreme
Court.
Telephone Company Entry Into Cable Television. The 1996 Telecom Act
---------------------------------------------
allows telephone companies to compete directly with cable operators by repealing
the historic telephone company/cable cross-ownership ban. Local exchange
carriers ("LECs"), including the BOCs, can now compete with cable operators both
inside and outside their telephone service areas. Because of their resources,
LECs could be formidable competitors to traditional cable operators, and certain
LECs have begun offering cable service. As described above, the General Partner
is now witnessing the beginning of LEC competition in a few of its cable
communities.
Under the 1996 Telecom Act, an LEC providing video programming to
subscribers will be regulated as a traditional cable operator (subject to local
franchising and federal regulatory requirements), unless the LEC elects to
provide its programming via an "open video system" ("OVS"). To qualify for OVS
status, the LEC must reserve two-thirds of the system's activated channels for
unaffiliated entities. RCN and affiliates of local power companies recently
have been certified to provide OVS service in areas encompassing the General
Partner's cable systems in suburban Maryland and Virginia. This OVS potential
competition is not yet operational.
Although LECs and cable operators can now expand their offerings
across traditional service boundaries, the general prohibition remains on LEC
buyouts (i.e., any ownership interest exceeding 10 percent) of co-located cable
systems, cable operator buyouts of co-located LEC systems, and joint ventures
between cable operators and LECs in the same market. The 1996 Telecom Act
provides a few limited exceptions to this buyout prohibition, including a
carefully circumscribed "rural exemption." The 1996 Telecom Act also provides
the FCC with the limited authority to grant waivers of the buyout prohibition
(subject to LFA approval).
Electric Utility Entry Into Telecommunications/Cable Television. The
---------------------------------------------------------------
1996 Telecom Act provides that registered utility holding companies and
subsidiaries may provide telecommunications services (including cable
television) notwithstanding the Public Utilities Holding Company Act. Electric
utilities must establish separate subsidiaries, known as "exempt
telecommunications companies" and must apply to the FCC for operating authority.
Again, because of their resources, electric utilities could be formidable
competitors to traditional cable systems.
Additional Ownership Restrictions. The 1996 Telecom Act eliminates
---------------------------------
statutory restrictions on broadcast/cable cross-ownership (including broadcast
network/cable restrictions), but leaves in place existing FCC regulations
prohibiting local cross-ownership between co-located television stations and
cable systems. The 1996 Telecom Act also eliminates the three year holding
period required under the 1992 Cable Act's "anti-trafficking" provision. The
1996 Telecom Act leaves in place existing restrictions on cable cross-ownership
with SMATV and MMDS facilities, but lifts those restrictions where the cable
operator is subject to effective competition. In January 1995, however, the FCC
adopted regulations which permit cable operators to own and operate SMATV
systems within their franchise area, provided that such operation is consistent
with local cable franchise requirements.
Pursuant to the 1992 Cable Act, the FCC adopted rules precluding a
cable system from devoting more than 40 percent of its activated channel
capacity to the carriage of affiliated national program services. A companion
rule establishing a nationwide ownership cap on any cable operator equal to 30
percent of all domestic
8
<PAGE>
cable subscribers has been stayed pending further judicial review, although the
FCC recently expressed an interest in reviewing and reimposing this limit.
There are no federal restrictions on non-U.S. entities having an
ownership interest in cable television systems or the FCC licenses commonly
employed by such systems. Section 310(b)(4) of the Communications Act does,
however, prohibit foreign ownership of FCC broadcast and telephone licenses,
unless the FCC concludes that such foreign ownership is consistent with the
public interest. The investment of BCI Telecom Holding Inc. ("BTH") in the
General Partner could, therefore, adversely affect any plan to acquire FCC
broadcast or common carrier licenses. The Partnership, however, does not
currently plan to acquire such licenses.
Must Carry/Retransmission Consent. The 1992 Cable Act contains
---------------------------------
broadcast signal carriage requirements that allow local commercial television
broadcast stations to elect once every three years between requiring a cable
system to carry the station ("must carry") or negotiating for payments for
granting permission to the cable operator to carry the station ("retransmission
consent"). Less popular stations typically elect "must carry," and more popular
stations typically elect "retransmission consent." Must carry requests can
dilute the appeal of a cable system's programming offerings, and retransmission
consent demands may require substantial payments or other concessions. Either
option has a potentially adverse affect on the Partnership's and the Venture's
business. Additionally, cable systems are required to obtain retransmission
consent for all "distant" commercial television stations (except for satellite-
delivered independent "superstations" such as WGN). The burden associated with
"must carry" may increase substantially if broadcasters proceed with planned
conversion to digital transmission and the FCC determines that cable systems
must carry all analogue and digital broadcasts in their entirety.
Access Channels. LFAs can include franchise provisions requiring
---------------
cable operators to set aside certain channels for public, educational and
governmental access programming. Federal law also requires cable systems to
designate a portion of their channel capacity (up to 15 percent in some cases)
for commercial leased access by unaffiliated third parties. The FCC has adopted
rules regulating the terms, conditions and maximum rates a cable operator may
charge for use of the designated channel capacity, but use of commercial leased
access channels has been relatively limited. The FCC released revised rules in
February 1997 mandating a modest rate reduction. The reduction sparked some
increase in part-time use, but did not make commercial leased access
substantially more attractive to third party programmers. Certain of those
programmers have now appealed the revised rules to the D.C. Court of Appeals.
Should the courts and the FCC ultimately determine that no additional reduction
in access rates is required, cable operators could lose programming control of a
substantial number of cable channels.
Access to Programming. To spur the development of independent cable
---------------------
programmers and competition to incumbent cable operators, the 1992 Cable Act
imposed restrictions on the dealings between cable operators and cable
programmers. Of special significance from a competitive business posture, the
1992 Cable Act precludes video programmers affiliated with cable companies from
favoring cable operators over competitors and requires such programmers to sell
their programming to other multichannel video distributors. This provision
limits the ability of vertically integrated cable programmers to offer exclusive
programming arrangements to cable companies. There recently has been increased
interest in further restricting the marketing practices of cable programmers,
including subjecting programmers who are not affiliated with cable operators to
all of the existing program access requirements.
Inside Wiring. The FCC recently determined that an incumbent cable
-------------
operator can be required by the owner of a multiple dwelling unit ("MDU")
complex to remove, abandon or sell the "home run" wiring it initially provided.
In addition, the FCC is reviewing the enforceability of contracts to provide
exclusive video service within a MDU complex. The FCC has proposed abrogating
all such contracts held by incumbent cable operators, but allowing such
contracts when held by new entrants. These changes, and others now being
considered by the FCC, would, if implemented, make it easier for a MDU complex
owner to terminate service from an incumbent cable operator in favor of a new
entrant and leave the already competitive MDU sector even more challenging for
incumbent cable operators.
9
<PAGE>
Other FCC Regulations. In addition to the FCC regulations noted
---------------------
above, there are other FCC regulations covering such areas as equal employment
opportunity, subscriber privacy, programming practices (including, among other
things, syndicated program exclusivity, network program nonduplication, local
sports blackouts, indecent programming, lottery programming, political
programming, sponsorship identification, and children's programming
advertisements), registration of cable systems and facilities licensing,
maintenance of various records and public inspection files, frequency usage,
lockbox availability, antenna structure notification, tower marking and
lighting, consumer protection and customer service standards, technical
standards and consumer electronics equipment compatibility. Federal
requirements governing Emergency Alert Systems and Closed Captioning adopted in
1997 will impose additional costs on the operation of cable systems. The FCC is
currently considering whether cable customers must be allowed to purchase cable
converters from third party vendors. If the FCC concludes that such
distribution is required, and does not make appropriate allowances for signal
piracy concerns, it may become more difficult for cable operators to combat
theft of service. The FCC has the authority to enforce its regulations through
the imposition of substantial fines, the issuance of cease and desist orders
and/or the imposition of other administrative sanctions, such as the revocation
of FCC licenses needed to operate certain transmission facilities used in
connection with cable operations.
Internet Access. Many cable operators have begun offering high speed
---------------
internet service to their customers. At this time, there is no significant
federal or local regulation of this service. However, as internet services
develop, it is possible that new regulations could be imposed.
Copyright. Cable television systems are subject to federal copyright
---------
licensing covering carriage of television and radio broadcast signals. In
exchange for filing certain reports and contributing a percentage of their
revenues to a federal copyright royalty pool (that varies depending on the size
of the system and the number of distant broadcast television signals carried),
cable operators can obtain blanket permission to retransmit copyrighted material
on broadcast signals. The possible modification or elimination of this
compulsory copyright license is the subject of continuing legislative review and
could adversely affect the Partnership's and the Venture's ability to obtain
desired broadcast programming. In addition, the cable industry pays music
licensing fees to BMI and is negotiating a similar arrangement with ASCAP.
Copyright clearances for nonbroadcast programming services are arranged through
private negotiations.
State and Local Regulation. Cable television systems generally are
--------------------------
operated pursuant to nonexclusive franchises granted by a municipality or other
state or local government entity in order to cross public rights-of-way.
Federal law now prohibits franchise authorities from granting exclusive
franchises or from unreasonably refusing to award additional franchises. Cable
franchises generally are granted for fixed terms and in many cases include
monetary penalties for non-compliance and may be terminable if the franchisee
fails to comply with material provisions.
The terms and conditions of franchises vary materially from
jurisdiction to jurisdiction. Each franchise generally contains provisions
governing cable operations, service rates, franchise fees, system construction
and maintenance obligations, system channel capacity, design and technical
performance, customer service standards, and indemnification protections. A
number of states subject cable television systems to the jurisdiction of
centralized state governmental agencies, some of which impose regulation of a
character similar to that of a public utility. Although LFAs have considerable
discretion in establishing franchise terms, there are certain federal
limitations. For example, LFAs cannot insist on franchise fees exceeding 5
percent of the system's gross revenues, cannot dictate the particular technology
used by the system, and cannot specify video programming other than identifying
broad categories of programming.
Federal law contains renewal procedures designed to protect incumbent
franchisees against arbitrary denials of renewal. Even if a franchise is
renewed, the franchise authority may seek to impose new and more onerous
requirements such as significant upgrades in facilities and services or
increased franchise fees as a condition of renewal. Similarly, if a franchise
authority's consent is required for the purchase or sale of a cable system or
franchise, such authority may attempt to impose more burdensome or onerous
franchise requirements in connection with a request for consent. Historically,
franchises have been renewed for cable operators that have provided satisfactory
services and have complied with the terms of their franchises.
10
<PAGE>
GENERAL. The Partnership's and 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 Partnership's and the
Venture's business. The Systems have 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
Partnership's and the Venture's policy with regard to past due accounts is
basically one of disconnecting service before a past due account becomes
material.
The Partnership and the Venture do not depend to any material extent
on the availability of raw materials; they carry no significant amounts of
inventory and they have no material backlog of customer orders. Neither the
Partnership nor the Venture has any 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 Partnership's or the Venture's funds expended for such
research and development has never been material.
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
Partnership or the Venture.
ITEM 2. PROPERTIES
-------------------
The cable television systems owned by the Partnership and the Venture
are described below:
<TABLE>
<CAPTION>
OWNERSHIP SYSTEM ACQUISITION DATE
--------- ------ ----------------
<S> <C> <C>
Cable TV Fund 14-A, Ltd. Buffalo System September 1987
Naperville System September 1987
Calvert County System September 1987
Cable TV Fund 14-A/B Venture Broward System March 1988
</TABLE>
The following sets forth (i) the monthly basic plus service rates
charged to subscribers and (ii) the number of basic subscribers 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, 1997, the Buffalo System operated cable plant passing
approximately 23,900 homes, with an approximate 57 percent penetration rate; the
Naperville System operated cable plant passing approximately 43,800 homes, with
an approximate 43 percent penetration rate; the Calvert County System operated
cable plant passing approximately 26,300 homes, with an approximate 68 percent
penetration rate and the Broward System operated cable plant passing
approximately 89,100 homes, with an approximate 57 percent penetration rate.
The Naperville System's low penetration rate reflects the competition from
Ameritech's overbuild. See Item 1, Competition. Figures for numbers of
subscribers and homes passed are compiled from the General Partner's records and
may be subject to adjustments.
11
<PAGE>
CABLE TV FUND 14-A, LTD.
- ------------------------
<TABLE>
<CAPTION>
At December 31,
---------------------------------------------------------------------
BUFFALO SYSTEM 1997 1996 1995
- -------------- --------------------- ---------------------- ----------------------
<S> <C> <C> <C>
Monthly basic plus service rate $ 23.50 $ 22.50 $ 21.50
Basic subscribers 13,630 12,050 11,039
Pay units 7,298 7,984 7,313
</TABLE>
<TABLE>
<CAPTION>
At December 31,
---------------------------------------------------------------------
CALVERT COUNTY SYSTEM 1997 1996 1995
- --------------------- --------------------- ---------------------- ----------------------
<S> <C> <C> <C>
Monthly basic plus service rate $ 28.29 $ 26.70 $ 26.63
Basic subscribers 18,166 17,367 16,454
Pay units 17,622 17,509 17,893
</TABLE>
<TABLE>
<CAPTION>
At December 31,
--------------------------------------------------------------
NAPERVILLE SYSTEM 1997 1996 1995
- ----------------- -------------------- -------------------- ------------------
<S> <C> <C> <C>
Monthly basic plus service rate $23.87 $ 23.87 $ 23.87
Basic subscribers * 27,523 27,464
Pay units * 14,413 17,360
</TABLE>
* There have been no rate increases and there have been significant
reductions in the numbers of basic subscribers and pay units because of
competition due to Ameritech's overbuild of the Naperville System. See
Item 1, Competition. Basic subscriber and pay unit information for 1997 is
not disclosed for competitive reasons.
CABLE TV FUND 14-A/B VENTURE
- ----------------------------
<TABLE>
<CAPTION>
At December 31,
---------------------------------------------------------------------
BROWARD SYSTEM 1997 1996 1995
- -------------------------------------------------- --------------------- ---------------------- ----------------------
<S> <C> <C> <C>
Monthly basic plus service rate $ 27.25 $ 25.58 $ 24.16
Basic subscribers 51,032 50,957 49,654
Pay units 44,203 47,286 42,167
</TABLE>
ITEM 3. LEGAL PROCEEDINGS
--------------------------
Cable TV Fund 14-A, Ltd. v. City of Naperville and Ameritech New Media,
-----------------------------------------------------------------------
Inc. and City of Naperville v. Cable TV Fund 14-A, Ltd., United States District
- -------------------------------------------------------
Court for the Northern District of Illinois, Eastern Division, Case No. 96C
5962. The Partnership is plaintiff and counter-defendant in a suit challenging
certain actions arising from the City of Naperville's grant of a franchise to
Ameritech New Media, Inc. ("Ameritech NMI"). Specifically, the Partnership
alleges that under Cable Act standards, the City should have modified the
Partnership's Naperville franchise, because certain provisions of the franchise
are unduly burdensome in a competitive environment. Further, the Partnership
alleges that the franchise granted by the City to Ameritech NMI is materially
more favorable than the franchise granted to the Partnership, that this is
contrary to Illinois law and that the Ameritech NMI franchise therefore is void.
This suit also challenges the City's assertion that the Partnership has breached
its franchise in various ways, particularly by withholding certain payments and
seeks to impose liquidated damages on the Partnership for such breach. On cross
motions to dismiss and for partial summary judgment, the Court issued a number
of rulings that sustained the Partnership's right to proceed on the majority of
its claims. Upon issuance of the Court's ruling on the issue of the appropriate
standard of review, discovery will begin. A trial date has not yet been set.
12
<PAGE>
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. During 1997, a limited partner of the Partnership conducted a
"limited tender offer" for interests in the Partnership at a price of $305 per
interest. As of February 16, 1998, the number of equity security holders in the
Partnership was 11,671.
13
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
- -------------------------------
<TABLE>
<CAPTION>
For the Year Ended December 31,
----------------------------------------------------------------------
Cable TV Fund 14-A, Ltd. 1997 1996 1995 1994 1993
- ------------------------ -------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues $26,642,247 $47,808,719 $44,094,802 $40,442,268 $38,916,469
Depreciation and Amortization 10,111,635 14,627,726 14,459,479 14,826,256 15,197,677
Operating Loss (2,713,383) (397,890) (1,459,868) (3,323,006) (3,562,804)
Equity in Net Loss of
Cable Television Joint Venture (626,089) (815,252) (1,104,003) (1,468,218) (1,277,358)
Net Income (Loss) 62,735,041(a) (7,371,183) (8,536,167) (9,472,910) (8,608,115)
Net Income (Loss) per Limited
Partnership Unit 387.70(a) (45.61) (52.82) (58.61) (53.26)
Weighted Average Number of
Limited Partnership Units Outstanding 160,000 160,000 160,000 160,000 160,000
General Partner's
Deficit (72,389) (776,152) (702,440) (617,078) (522,349)
Limited Partners' Capital (Deficit) 19,267,904 (8,215,874) (918,403) 7,532,402 16,910,583
Total Assets 44,982,801 79,343,054 82,900,838 87,556,346 94,106,926
Debt 22,773,095 85,424,507 80,726,793 77,425,047 75,601,829
General Partner Advances 489,313 352,232 887,215 706,579 58,974
</TABLE>
<TABLE>
<CAPTION>
For the Year Ended December 31,
---------------------------------------------------------------------
Cable TV Fund 14-A/B Venture 1997 1996 1995 1994 1993
- ---------------------------------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenues $27,504,735 $25,519,105 $23,469,505 $22,183,524 $22,068,952
Depreciation and Amortization 8,775,019 8,408,157 8,774,507 9,188,994 9,352,808
Operating Income (Loss) 567,514 (18,682) (753,422) (2,661,198) (2,324,939)
Net Loss (2,310,292) (3,008,309) (4,073,811) (5,417,779) (4,713,500)
Partners' Capital 12,671,551 14,981,843 17,990,152 22,063,963 27,481,742
Total Assets 54,156,017 58,277,058 62,447,556 66,597,460 72,315,816
Debt 39,597,617 41,262,561 40,530,652 42,271,921 43,461,730
Jones Intercable, Inc. Advances 446,115 268,256 2,206,959 354,179 57,920
</TABLE>
(a) Net income resulted primarily from the sales of the Turnersville System in
January 1997 and the Central Illinois System in June 1997 by Cable TV Fund
14-A, Ltd.
14
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
- --------------------------------------------------------------------------------
OF OPERATIONS
-------------
The following discussion of the financial condition and results of
operations of Cable TV Fund 14-A, Ltd. (the "Partnership") and Cable TV Fund 14-
A/B Venture (the "Venture") contains, in addition to historical information,
forward-looking statements that are based upon certain assumptions and are
subject to a number of risks and uncertainties. The Partnership's and Venture's
actual results may differ significantly from the results predicted in such
forward-looking statements.
FINANCIAL CONDITION
- -------------------
It is the General Partner's publicly announced policy that it intends to
liquidate its managed partnerships, including the Partnership, as opportunities
for sales of partnership cable television systems arise in the marketplace. In
accordance with this policy, the Partnership sold two of its systems in 1997 and
the Venture expects to sell the Broward System in March 1998. The General
Partner continues to seek opportunities for the sale of the remaining systems.
There is no assurance as to the timing or terms of any sales.
Cable TV Fund 14-A, Ltd.-
- ------------------------
On January 10, 1997, the Partnership sold the Turnersville System to an
unaffiliated party for a sales price of $84,500,000. The Partnership
distributed $25,000,000 (or approximately $313 per each $1,000 invested in the
Partnership) of the sale proceeds to its limited partners in January 1997, paid
The Jones Group a brokerage fee of $2,112,500, representing 2.5 percent of the
sales price, for acting as a broker in this transaction and repaid $57,387,500
of the balance outstanding on its credit facility (of which $52,500,000 was
required to be repaid under the terms of the Partnership's credit facility).
Because the $25,000,000 distribution to the limited partners did not return 125
percent of the capital initially contributed to the Partnership by the limited
partners, the General Partner did not receive a general partner distribution
from the proceeds of the sale of the Turnersville System. Because the sale of
the Turnersville System did not represent a sale of all or substantially all of
the Partnership's assets, no vote of the limited partners of the Partnership was
required to approve this sale.
On June 30, 1997, the Partnership sold the Central Illinois System to an
unaffiliated party for a sales price of $20,005,280. The Partnership
distributed $9,547,500 (or approximately $119 per each $1,000 invested in the
Partnership) of the sale proceeds to its limited partners in July 1997, paid a
2.5 percent brokerage fee of $502,500 to The Jones Group for acting as a broker
in this transaction and repaid $9,800,000 of the balance outstanding on its
credit facility. Because the distributions to the limited partners from the
sales of the Turnersville System and the Central Illinois System did not return
125 percent of the capital initially contributed to the Partnership by the
limited partners, the General Partner did not receive a general partner
distribution from the proceeds of the sale of the Central Illinois System.
Because the sale of the Central Illinois System did not represent a sale of all
or substantially all of the Partnership's assets, no vote of the limited
partners of the Partnership was required to approve this sale.
On October 3, 1997, the Venture entered into an asset purchase agreement
(the "Agreement") to sell the Broward System to an unaffiliated party for a
sales price of $140,000,000. Refer to Management's Discussion and Analysis of
Financial Condition of the Venture for information pertinent to the Partnership
with respect to the sale of the Broward System.
For the twelve months ended December 31, 1997, the Partnership generated
net cash from operating activities totaling $3,358,555, which is available to
fund a portion of capital expenditures and non-operating costs. Capital
expenditures totaled approximately $8,016,000 during 1997. Approximately 37
percent of the expenditures related to new plant construction associated with
new homes passed in all of the Partnership's systems. Approximately 33 percent
of the expenditures related to construction of service drops to subscriber's
homes. The remaining expenditures were used to maintain the value of the
Partnership's systems. These expenditures were funded by cash generated from
operations and borrowings under the Partnership's credit facility. Budgeted
capital expenditures for 1998 are approximately $6,160,000. Approximately 41
percent of the expenditures will be used for new plant construction associated
with new homes passed in all of the Partnership's systems. Approximately 33
percent will relate to construction of service drops to subscribers' homes. The
remainder of the anticipated expenditures is necessary to maintain the value of
the Partnership's remaining systems until they are sold. Funding for the
improvements is expected to come from cash on hand, cash generated from
operations and, if necessary, borrowings under its credit facility.
In March 1997, the Partnership entered into a $37,500,000 revolving credit
facility. The Partnership borrowed $32,300,000 under the revolving credit
facility to repay the outstanding balance on its previous credit facility. Upon
the sale of the Central Illinois System on June 30, 1997 and as required by the
terms of the revolving credit facility, the Partnership repaid $9,800,000 of the
then-outstanding balance, and the commitment amount was reduced to $27,700,000,
of which $22,300,000 was outstanding at December 31, 1997, leaving $5,400,000
available for future borrowings. The revolving credit facility expires on
September 30, 2000, at which time the then-outstanding balance is payable in
full. Interest on the revolving credit facility's
15
<PAGE>
outstanding balance is at the Partnership's option of the London Interbank
Offered Rate ("LIBOR") plus 1.125 percent, the Certificate of Deposit Rate (the
"CD Rate") plus 1.25 percent or the Base Rate plus .125 percent. The effective
interest rates on amounts outstanding as of December 31, 1997 and 1996 were 6.79
percent and 6.67 percent, respectively.
Ameritech, which provides telephone service in a multi-state region
including Illinois, is providing cable television service in Naperville,
Illinois, a community currently served by the Partnership's Naperville System.
This competition is having an adverse effect on the Naperville System's
revenues, cash flow and fair market value. The General Partner expects that
this competition will have a negative impact on the price the Partnership will
be able to obtain from the sale of the Naperville System. The General Partner
is taking prudent steps necessary to meet this competition from Ameritech and,
to the extent possible, to safeguard the value of the Naperville System until a
sale of the Naperville System can be arranged. These steps include a judicial
challenge to the terms on which a franchise was issued to Ameritech. Litigation
is currently pending in federal court against both the City of Naperville and
Ameritech and includes claims made by the City of Naperville against the
Partnership. See "Item 3, Legal Proceedings."
The General Partner believes that the Partnership has sufficient sources
of capital available from cash on hand, cash generated from operations and
borrowings available under its revolving credit facility to meet its anticipated
needs.
Cable TV Fund 14-A/B Venture-
- ----------------------------
In addition to those systems owned directly by it, the Partnership owns a
27 percent interest in the Venture. The Partnership's investment in the
Venture, accounted for under the equity method, decreased by $626,089 compared
to the December 31, 1996 balance. This decrease represents the Partnership's
proportionate share of losses generated by the Venture during 1997.
On October 3, 1997, the Venture entered into an agreement to sell the
Broward System to an unaffiliated third party for $140,000,000, subject to
closing adjustments discussed below. Closing of this sale is scheduled for
March 31, 1998, subject to several conditions, including necessary governmental
and other third party consents. The General Partner expects that all material
consents will be obtained prior to the scheduled closing date. The closing
adjustments primarily relate to the number of equivalent basic subscribers at
closing. If equivalent basic subscribers are less than 56,637, the sales price
will be reduced $2,472 multiplied by the number by which the Broward System's
equivalent basic subscribers are less than 56,637, up to a maximum adjustment of
$7,000,000. Because it is estimated that the Broward System will have 55,274
equivalent basic subscribers, as defined in the agreement, at March 31, 1998, at
closing there will be a sales price reduction of approximately $3,369,000. The
General Partner expects that when final closing adjustments are done
approximately sixty days after closing, additional equivalent basic subscribers
that were not able to be counted at closing because they were relatively recent
subscribers at March 31, 1998 will be counted as equivalent basic subscribers
when final closing adjustments are done and the sales price will be adjusted
accordingly. If the sales price is adjusted upward, the Venture would make an
additional distribution to the two constituent partnerships of the Venture in
proportion to their ownership interests in the Venture.
Upon closing, the Venture will repay all of its indebtedness, which totaled
$39,597,617 at December 31, 1997 and a brokerage fee of approximately $3,500,000
to The Jones Group and then the Venture will distribute the remaining net sales
proceeds, or approximately $94,039,000, to the two constituent partnerships of
the Venture in proportion to their ownership interests in the Venture.
Accordingly, the Partnership will receive 27 percent of the net sales proceeds,
or approximately $25,491,000. The Partnership will distribute its net sales
proceeds to its limited partners of record as of the closing date of the sale of
the Broward System. Such distribution represents approximately $159 for each
$500 limited partnership interest or $318 for each $1,000 invested in the
Partnership. Because the distribution to the limited partners from the sales of
the Turnersville System and the Central Illinois System together with the
proposed distribution from the sale of the Broward System will not return 125
percent of the capital initially contributed to the Partnership by the limited
partners, the General Partner will not receive any general partner distribution
from the proceeds of the Broward System's sale. Because the proposed sale of
the Broward System does not constitute the sale of all or substantially all of
the Partnership's assets, no vote of the limited partners of the Partnership was
required to approve this sale. Because the Broward System represents the only
asset of the Venture, the Venture will be liquidated and dissolved upon the
completion of the sale of the Broward System.
Taking into account the 1997 distributions made on the sales of the
Turnersville System and the Central Illinois System and the distribution
expected to be made in the second quarter 1998 from the sale of the Broward
System, the limited partners will have received a total of $750 for each $1,000
invested in the Partnership.
For the twelve months ended December 31, 1997, the Venture generated net
cash from operating activities totaling $5,486,763 which is available to fund
capital expenditures and non-operating costs. The Venture expended
approximately $3,812,000 on capital additions during 1997. The construction of
service drops to homes accounted for approximately 39 percent
16
<PAGE>
of the expenditures. Cable television plant extensions related to new homes
passed accounted for approximately 38 percent of these expenditures. The
remainder of these expenditures was to maintain the value of the Broward System.
These capital expenditures were funded primarily from cash on hand and cash
generated from operations. Because the closing of the sale of the Broward System
is scheduled for March 31, 1998, the only capital expenditures expected to be
made will be to maintain the value of the Broward System until it is sold. These
capital expenditures are expected to be funded from cash on hand, cash generated
from operations and borrowings under its credit facility.
The Venture has a reducing revolving credit facility with an available
commitment of $42,500,000. The entire $42,500,000 commitment is available
through December 31, 1998, at which time the commitment will begin to reduce
quarterly until December 31, 2003 when the amount available will be zero. At
December 31, 1997, the balance outstanding was $39,402,968, leaving $3,097,032
available for future borrowings. Interest is at the Venture's option of Prime
plus 1/4 percent, LIBOR plus 1-1/4 percent or the CD Rate plus 1-3/8 percent.
The effective interest rates on amounts outstanding as of December 31, 1997 and
1996 were 7.10 percent and 6.79 percent, respectively. This credit facility
will be paid in full upon the sale of the Broward System.
The General Partner believes that the Venture has sufficient sources of
capital from cash on hand, cash generated from operations and borrowings under
its credit facility to service its current needs for the next year.
Year 2000 Issue
- ---------------
The Year 2000 issue is the result of many computer programs being written
such that they will malfunction when reading a year of "00." This problem could
cause system failure or miscalculations causing disruptions of business
processes.
The General Partner has initiated an assessment of its computer
applications to determine the extent of the problem. Based on this assessment,
the General Partner has determined that the majority of its computer
applications supporting business processes, including accounting and billing,
are designed to handle the Year 2000 appropriately.
The General Partner is currently focusing its efforts on the impact of the
Year 2000 issue on service delivery. The General Partner has established an
internal team to address this issue. The General Partner is identifying and
testing all date-sensitive equipment involved in delivering service to the
Venture's and the Partnership's customers. In addition, the General Partner
will assess its options regarding repair or replacement of affected equipment
during this testing. The General Partner currently has no definitive estimate of
the cost or the extent of the impact, if any, this problem will have on service
delivery; however, the General Partner does not believe that the impact will be
material. The General Partner anticipates completion of its testing in 1998, at
which time it will determine the financial impact on the Venture and the
Partnership. The General Partner expects that the financial impact on the
Venture of the Year 2000 issue likely will not be material because the General
Partner anticipates that the Venture will be liquidated before the year 2000.
RESULTS OF OPERATIONS
- ---------------------
Cable TV Fund 14-A, Ltd. -
- ------------------------
1997 Compared to 1996-
Revenues of the Partnership decreased $21,166,472, or approximately 44
percent, to $26,642,247 in 1997 compared to $47,808,719 in 1996. This decrease
was primarily a result of the sales of the Turnersville System on January 10,
1997 and the Central Illinois System on June 30, 1997. Disregarding the effect
of the sales of the Turnersville System and the Central Illinois System,
revenues would have decreased $1,800,522, or approximately 7 percent, to
$23,273,961 in 1997 from $25,074,483 in 1996. This decrease in revenues was due
to the Naperville System's loss of subscribers due to competition from
Ameritech.
Operating expenses consist primarily of costs associated with the operation
and administration of the Partnership'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 marketing expenses.
Operating expenses decreased $11,640,742, or approximately 42 percent, to
$16,385,590 in 1997 compared to $28,026,332 in 1996. This decrease was
primarily a result of the sales of the Turnersville System and the Central
Illinois System. Disregarding the effect of the Turnersville System and the
Central Illinois System sales, operating expenses would have decreased
$1,277,130, or approximately 8 percent, to $14,401,811 in 1997 from $15,678,941
in 1996. This decrease was primarily due to a decrease in subscriber related
expenses as a result of the Naperville System's loss of subscribers due to
competition from Ameritech. Operating expenses represented 62 percent and 63
percent, respectively, of revenues in 1997 and 1996.
17
<PAGE>
Management fees and allocated overhead from the General Partner decreased
$2,694,146, or approximately 49 percent, to $2,858,405 in 1997 compared to
$5,552,551 in 1996. This decrease was primarily a result of the sales of the
Turnersville System and the Central Illinois System. Disregarding the effect of
the Turnersville System and the Central Illinois System sales, management fees
and allocated overhead from the General Partner would have decreased $459,314,
or approximately 16 percent, to $2,500,729 in 1997 from $2,960,043 in 1996. This
decrease was due to the decrease in revenues, upon which such management fees
and allocations are based.
Depreciation and amortization expense decreased $4,516,091, or
approximately 31 percent, to $10,111,635 in 1997 compared to $14,627,726 in
1996. This decrease was a result of the sales of the Turnersville System and
the Central Illinois System. Disregarding the effect of the Turnersville System
and the Central Illinois System sales, depreciation and amortization expense
would have increased $1,161,639, or approximately 16 percent, to $8,242,821 in
1997 from $7,081,182 in 1996. This increase was a result of capital additions
to the Partnership's other systems during 1997.
Operating loss increased $2,315,493 to $2,713,383 in 1997 compared to
$397,890 in 1996. Disregarding the effect of the Turnersville System and the
Central Illinois System sales, operating loss increased $1,225,717 to $1,871,400
in 1997 from $645,683 in 1996. This increase was a result of the decrease in
revenues and the increase in depreciation and amortization expense exceeding the
decreases in operating expenses and management fees and allocated overhead from
the General Partner.
Interest expense decreased $4,026,632, or approximately 68 percent, to
$1,923,226 in 1997 compared to $5,949,858 in 1996. This decrease was primarily
due to lower outstanding balances on interest bearing obligations during 1997.
Portions of the proceeds from the sales of the Turnersville System and the
Central Illinois System were used to reduce the Partnership's debt.
The Partnership recognized a gain on the sale of the Turnersville System of
$62,923,951 and a gain on the sale of the Central Illinois System of $7,050,021
during 1997. No similar gains were recognized during 1996.
The Partnership reported income before equity in net loss of cable
television joint venture of $63,361,130 in 1997 compared to a loss before equity
in net loss of cable television joint venture of $6,555,931 in 1996. This
change was primarily a result of the gain on the sales of the Turnersville
System and the Central Illinois System.
1996 Compared to 1995-
Revenues of the Partnership increased $3,713,917, or approximately 8
percent, to $47,808,719 for 1996 compared to $44,094,802 in 1995. This increase
was primarily due to basic service rate increases and an increase in the number
of basic subscribers. Basic service rate increases accounted for approximately
51 percent of the increase in revenues. Increases in the number of basic
subscribers accounted for approximately 44 percent of the increase. The number
of basic subscribers increased by 3,167 subscribers, or approximately 3 percent,
to 109,037 at December 31, 1996 compared to 105,870 at December 31, 1995. No
other individual factor was significant to the increase in revenues.
Operating expenses increased $2,306,798, or approximately 9 percent, to
$28,026,332 for 1996 compared to $25,719,534 in 1995. Increases in programming
fees primarily accounted for the increase in operating expenses. The increases
in programming fees were due, in part, to the increase in the subscriber base.
No other individual factor was significant to the increase in revenues.
Operating expenses represented 59 percent of revenues in 1996 compared to 58
percent in 1995.
Management fees and allocated overhead from the General Partner increased
$176,894, or approximately 3 percent, to $5,552,551 for 1996 compared to
$5,375,657 in 1995. The increase was due to the increase in revenues, upon
which management fees are based.
Depreciation and amortization expense increased $168,247, or approximately
1 percent, to $14,627,726 for 1996 compared to $14,459,479 in 1995. This
increase was due to capital additions in 1996.
Operating loss decreased $1,061,978, or approximately 73 percent, to
$397,890 for 1996 compared to $1,459,868 in 1995. This decrease was due to the
increase in revenues exceeding the increases in operating expenses, depreciation
and amortization expense and management fees and allocated overhead from the
General Partner.
Interest expense decreased $51,639, or less than 1 percent, to $5,949,858
for 1996 compared to $6,001,497 in 1995. This decrease was due primarily to
lower effective interest rates on interest bearing obligations.
18
<PAGE>
Loss before equity in net loss of cable television joint venture decreased
$876,233, or approximately 12 percent, to $6,555,931 for 1996 compared to
$7,432,164 in 1995. This decrease was due to the factors discussed above.
Cable TV Fund 14-A/B Venture -
- ----------------------------
1997 Compared to 1996-
Revenues of the Venture's Broward County System increased $1,985,630, or
approximately 8 percent, to $27,504,735 in 1997 from $25,519,105 in 1996. Basic
service rate increases accounted for approximately 48 percent of the increase in
revenues. Increases in advertising sales accounted for approximately 20 percent
of the increase in revenues. No other individual factor significantly affected
the increase in revenues.
Operating expenses increased $1,036,786, or approximately 7 percent, to
$15,185,319 in 1997 from $14,148,533 in 1996. The increase in operating
expenses was due primarily to increases in programming fees and advertising
expenses. No other individual factor significantly affected the increase in
operating expenses. Operating expenses represented 55 percent of revenue for
both 1997 and 1996.
The cable television industry generally measures the financial performance
of a cable television system in terms of operating cash flow (revenues less
operating expenses). 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 cash flow increased
$948,844, or approximately 8 percent, to $12,319,416 in 1997 from $11,370,572 in
1996 due to the increase in revenues exceeding the increase in operating
expenses.
Management fees and allocated overhead from Jones Intercable, Inc.
decreased $4,214, or less than 1 percent, to $2,976,883 in 1997 from $2,981,097
in 1996. This decrease was due primarily to a decrease in allocated overhead
from Jones Intercable, Inc.
Depreciation and amortization expense increased $366,862, or approximately
4 percent, to $8,775,019 in 1997 from $8,408,157 in 1996. The increase in
depreciation and amortization expense was attributable to capital additions to
the Venture's asset base.
The Venture reported operating income of $567,514 in 1997 compared to an
operating loss of $18,682 in 1996. This change was due to the increase in cash
flow exceeding the increase in depreciation and amortization expense.
Interest expense decreased $129,510, or approximately 4 percent, to
$2,877,337 in 1997 from $3,006,847 in 1996 due to lower outstanding balances on
interest bearing obligations during 1997.
Net loss decreased $698,017, or approximately 23 percent, to $2,310,292 in
1997 from $3,008,309 in 1996. These losses were primarily the result of the
factors discussed above.
1996 Compared to 1995-
Revenues of the Venture's Broward County System increased $2,049,600, or
approximately 9 percent, to $25,519,105 in 1996 from $23,469,505 in 1995. Basic
service rate increases accounted for approximately 35 percent of the increase in
revenue. An increase in the number of basic subscribers accounted for
approximately 27 percent of the increases in revenue. The number of basic
subscribers totaled 50,957 at December 31, 1996 compared to 49,654 at December
31, 1995, an increase of 1,303, or approximately 3 percent. Increases in
premium service revenue accounted for approximately 16 percent of the increase
in revenue. No other individual factor significantly affected the increase in
revenues.
Operating expenses increased $1,528,324, or approximately 12 percent, to
$14,148,533 in 1996 from $12,620,209 in 1995. Operating expenses represented 55
percent of revenue in 1996, compared to 54 percent in 1995. The increase in
operating expenses was due primarily to increases in programming fees, which
were partially offset by decreases in personnel and marketing expenses. No
other individual factor significantly affected the increase in operating
expenses.
Operating cash flow increased $521,276, or approximately 5 percent, to
$11,370,572 in 1996 from $10,849,296 in 1995 due to the increase in revenues
exceeding the increase in operating expenses.
19
<PAGE>
Management fees and allocated overhead from Jones Intercable, Inc.
increased $152,886, or approximately 5 percent, to $2,981,097 in 1996 from
$2,828,211 in 1995. This increase was due primarily to the increase in revenues
upon which such management fees and allocations are based.
Depreciation and amortization expense decreased $366,350, or approximately
4 percent, to $8,408,157 in 1996 from $8,774,507 in 1995. The decrease in
depreciation and amortization expense was attributable to the maturation of a
portion of the Venture's asset base.
Operating loss decreased $734,740 to $18,682 in 1996 compared to $753,422
in 1995. This decrease was due to the increase in operating cash flow and the
decrease in depreciation and amortization.
Interest expense decreased $364,677, or approximately 11 percent, to
$3,006,847 in 1996 from $3,371,524 in 1995 due to lower outstanding balances and
lower effective interest rates on interest bearing obligations during 1996.
Net loss decreased $1,065,502, or approximately 26 percent, to $3,008,309
in 1996 from $4,073,811 in 1995. These losses were primarily the result of the
factors discussed above.
ITEM 8. FINANCIAL STATEMENTS
- -----------------------------
The audited financial statements of the Partnership and the Venture for the
year ended December 31, 1997 follow.
20
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To the Partners of Cable TV Fund 14-A, Ltd.:
We have audited the accompanying balance sheets of CABLE TV FUND 14-A, LTD.
(a Colorado limited partnership) as of December 31, 1997 and 1996, and the
related statements of operations, partners' capital (deficit) and cash flows for
each of the three years in the period ended December 31, 1997. 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 14-A, Ltd. as
of December 31, 1997 and 1996, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1997, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Denver, Colorado,
March 13, 1998.
21
<PAGE>
CABLE TV FUND 14-A, LTD.
------------------------
(A Limited Partnership)
BALANCE SHEETS
--------------
<TABLE>
<CAPTION>
December 31,
---------------------------
ASSETS 1997 1996
------ ------------ ------------
<S> <C> <C>
CASH $ 363,032 $ 1,257,022
TRADE RECEIVABLES, less allowance for doubtful receivables of
$85,436 and $255,399 at December 31, 1997 and 1996, respectively 931,372 1,142,329
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 86,431,357 137,237,866
Less- accumulated depreciation (50,186,043) (76,946,443)
------------ ------------
36,245,314 60,291,423
Franchise costs and other intangible assets, net of accumulated
amortization of $11,920,332 and $38,800,080 at
December 31, 1997 and 1996, respectively 2,461,042 11,788,190
Investment in cable television joint venture 3,337,731 3,963,820
------------ ------------
Total investment in cable television properties 42,044,087 76,043,433
DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 1,644,310 900,270
------------ ------------
Total assets $ 44,982,801 $ 79,343,054
============ ============
</TABLE>
The accompanying notes to financial statements
are an integral part of these balance sheets.
22
<PAGE>
CABLE TV FUND 14-A, LTD.
------------------------
(A Limited Partnership)
BALANCE SHEETS
--------------
<TABLE>
<CAPTION>
December 31,
---------------------------
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) 1997 1996
------------------------------------------- ------------ ------------
<S> <C> <C>
LIABILITIES:
Debt $ 22,773,095 $ 85,424,507
General Partner advances 489,313 352,232
Trade accounts payable and accrued liabilities 2,440,724 2,412,088
Subscriber prepayments 84,154 146,253
------------ ------------
Total liabilities 25,787,286 88,335,080
------------ ------------
COMMITMENTS AND CONTINGENCIES (Note 7)
PARTNERS' CAPITAL (DEFICIT):
General Partner-
Contributed capital 1,000 1,000
Accumulated deficit (73,389) (777,152)
------------ ------------
(72,389) (776,152)
------------ ------------
Limited Partners-
Net contributed capital (160,000 units outstanding at
December 31, 1997 and 1996) 68,722,000 68,722,000
Accumulated deficit (14,906,596) (76,937,874)
Distributions (34,547,500) -
------------ ------------
19,267,904 (8,215,874)
------------ ------------
Total liabilities and partners' capital (deficit) $ 44,982,801 $ 79,343,054
============ ============
</TABLE>
The accompanying notes to financial statements
are an integral part of these balance sheets.
23
<PAGE>
CABLE TV FUND 14-A, LTD.
------------------------
(A Limited Partnership)
STATEMENTS OF OPERATIONS
------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
REVENUES $26,642,247 $47,808,719 $44,094,802
COSTS AND EXPENSES:
Operating expenses 16,385,590 28,026,332 25,719,534
Management fees and allocated overhead from
General Partner 2,858,405 5,552,551 5,375,657
Depreciation and amortization 10,111,635 14,627,726 14,459,479
----------- ----------- -----------
OPERATING LOSS (2,713,383) (397,890) (1,459,868)
----------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (1,923,226) (5,949,858) (6,001,497)
Gain on sale of cable television systems 69,973,972 - -
Other, net (1,976,233) (208,183) 29,201
----------- ----------- -----------
Total other income (expense), net 66,074,513 (6,158,041) (5,972,296)
----------- ----------- -----------
INCOME (LOSS) BEFORE EQUITY IN NET LOSS OF
CABLE TELEVISION JOINT VENTURE 63,361,130 (6,555,931) (7,432,164)
EQUITY IN NET LOSS OF CABLE TELEVISION
JOINT VENTURE (626,089) (815,252) (1,104,003)
----------- ----------- -----------
NET INCOME (LOSS) $62,735,041 $(7,371,183) $(8,536,167)
=========== =========== ===========
ALLOCATION OF NET INCOME (LOSS):
General Partner $ 703,763 $ (73,712) $ (85,362)
=========== =========== ===========
Limited Partners $62,031,278 $(7,297,471) $(8,450,805)
=========== =========== ===========
NET INCOME (LOSS) PER LIMITED PARTNERSHIP UNIT $387.70 $(45.61) $(52.82)
=========== =========== ===========
WEIGHTED AVERAGE NUMBER OF LIMITED
PARTNERSHIP UNITS OUTSTANDING 160,000 160,000 160,000
=========== =========== ===========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
24
<PAGE>
CABLE TV FUND 14-A, LTD.
------------------------
(A Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
-----------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------
1997 1996 1995
------------ ----------- -----------
<S> <C> <C> <C>
GENERAL PARTNER:
Balance, beginning of year $ (776,152) $ (702,440) $ (617,078)
Net income (loss) for year 703,763 (73,712) (85,362)
------------ ----------- -----------
Balance, end of year $ (72,389) $ (776,152) $ (702,440)
============ =========== ===========
LIMITED PARTNERS:
Balance, beginning of year $ (8,215,874) $ (918,403) $ 7,532,402
Net income (loss) for year 62,031,278 (7,297,471) (8,450,805)
Distributions (34,547,500) - -
------------ ----------- -----------
Balance, end of year $ 19,267,904 $(8,215,874) $ (918,403)
============ =========== ===========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
25
<PAGE>
CABLE TV FUND 14-A, LTD.
------------------------
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 62,735,041 $ (7,371,183) $ (8,536,167)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 10,111,635 14,627,726 14,459,479
Equity in net loss of cable television joint venture 626,089 815,252 1,104,003
Gain on sale of cable television systems (69,973,972) - -
Amortization of interest rate protection contract - - 16,667
Decrease (increase) in trade receivables 210,957 186,386 (258,134)
Increase in deposits, prepaid expenses
and deferred charges (454,813) (726,606) (63,074)
Increase (decrease) in trade accounts payable and
accrued liabilities and subscriber prepayments (33,463) (349,332) 398,277
Increase (decrease) in General Partner advances 137,081 (534,983) 180,636
------------ ------------ ------------
Net cash provided by operating activities 3,358,555 6,647,260 7,301,687
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (8,016,393) (10,381,131) (10,737,233)
Proceeds from sale of cable television systems, net
of brokerage fees 100,962,760 - -
------------ ------------ ------------
Net cash provided by (used in)
investing activities 92,946,367 (10,381,131) (10,737,233)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 36,894,399 5,183,313 3,546,885
Repayment of debt (99,545,811) (485,599) (245,139)
Distributions to limited partners (34,547,500) - -
------------ ------------ ------------
Net cash provided by (used in)
financing activities (97,198,912) 4,697,714 3,301,746
------------ ------------ ------------
Increase (decrease) in cash (893,990) 963,843 (133,800)
Cash, beginning of year 1,257,022 293,179 426,979
------------ ------------ ------------
Cash, end of year $ 363,032 $ 1,257,022 $ 293,179
============ ============ ============
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 2,375,177 $ 6,136,741 $ 5,740,361
============ ============ ============
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
26
<PAGE>
CABLE TV FUND 14-A, LTD.
------------------------
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(1) ORGANIZATION AND PARTNERS' INTERESTS
------------------------------------
Formation and Business
----------------------
Cable TV Fund 14-A, Ltd. (the "Partnership"), a Colorado limited
partnership, was formed on February 6, l987, under a public program sponsored by
Jones Intercable, Inc. ("Intercable"), a publicly held Colorado corporation.
The Partnership was formed to acquire, construct, develop and operate cable
television systems. Intercable is the "General Partner" and manager of the
Partnership. Intercable and its subsidiaries also own and operate cable
television systems. In addition, Intercable manages cable television systems
for other limited partnerships for which it is general partner and, also, for
other affiliated entities.
On January 8, 1988, the Partnership and Cable TV Fund 14-B, Ltd. ("Fund 14-
B") formed Cable TV Fund 14-A/B Venture (the "Venture"), to acquire the cable
television system serving areas in and around Broward County, Florida (the
"Broward System"). The Partnership contributed $18,975,000 to the capital of
the Venture for 27 percent ownership interest and Fund 14-B contributed
$51,025,000 to the capital of the Venture for 73 percent ownership interest.
Cable Television System Acquisitions
------------------------------------
The Partnership acquired the cable television systems serving certain areas
in and around the communities of Turnersville, New Jersey (the "Turnersville
System"); Buffalo, Minnesota; Naperville, Illinois; and Calvert County, Maryland
in 1987. In 1991, the Partnership purchased additional cable television systems
serving certain communities in Central Illinois (the "Central Illinois System").
As discussed below, the Partnership sold the Turnersville System on January 10,
1997 and the Central Illinois System on June 30, 1997.
Cable Television System Sales
-----------------------------
On January 10, 1997, the Partnership sold the Turnersville System to an
unaffiliated party for a sales price of $84,500,000. The Partnership
distributed $25,000,000 (or approximately $313 per each $1,000 invested in the
Partnership) of the sale proceeds to its limited partners in January 1997, paid
The Jones Group, Ltd. ("The Jones Group"), a subsidiary of the General Partner,
a brokerage fee of $2,112,500, representing 2.5 percent of the sales price, for
acting as a broker in this transaction and repaid $57,387,500 of the balance
outstanding on its credit facility (of which $52,500,000 was required to be
repaid under the terms of the Partnership's credit facility). Because the
$25,000,000 distribution to the limited partners did not return 125 percent of
the capital initially contributed to the Partnership by the limited partners,
the General Partner did not receive a general partner distribution from the
proceeds of the sale of the Turnersville System. Because the sale of the
Turnersville System did not represent a sale of all or substantially all of the
Partnership's assets, no vote of the limited partners of the Partnership was
required to approve this sale.
On June 30, 1997, the Partnership sold the Central Illinois System to an
unaffiliated party for a sales price of $20,005,280. The Partnership
distributed $9,547,500 (or approximately $119 per each $1,000 invested in the
Partnership) of the sale proceeds to its limited partners in July 1997, paid a
2.5 percent brokerage fee of $502,500 to The Jones Group for acting as a broker
in this transaction and repaid $9,800,000 of the balance outstanding on its
credit facility. Because the distributions to the limited partners from the
sales of the Turnersville System and the Central Illinois System did not return
125 percent of the capital initially contributed to the Partnership by the
limited partners, the General Partner did not receive a general partner
distribution from the proceeds of the sale of the Central Illinois System.
Because the sale of the Central Illinois System did not represent a sale of all
or substantially all of the Partnership's assets, no vote of the limited
partners of the Partnership was required to approve this sale.
27
<PAGE>
The pro forma effect of the sales of the Turnersville System and the
Central Illinois System on the results of the Partnership's operations for the
years ended December 31, 1997 and 1996, assuming the transaction had occurred at
the beginning of the year, is presented in the following unaudited tabulation:
<TABLE>
<CAPTION>
For the Year Ended December 31, 1997
-----------------------------------------
Unaudited
Pro Forma Unaudited
As Reported Adjustments Pro Forma
------------ ------------- ------------
<S> <C> <C> <C>
Revenues $26,642,247 $ (3,368,286) $23,273,961
=========== ============ ===========
Operating Loss $(2,713,383) $ 706,983 $(2,006,400)
=========== ============ ===========
Income (Loss) Before Equity in Net Loss of
Cable Television Joint Venture $63,361,130 $(67,467,656) $(4,106,526)
=========== ============ ===========
</TABLE>
<TABLE>
<CAPTION>
For the Year Ended December 31, 1996
----------------------------------------
Unaudited
Pro Forma Unaudited
As Reported Adjustments Pro Forma
----------- ------------ ------------
<S> <C> <C> <C>
Revenues $47,808,719 $(22,734,236) $25,074,483
=========== ============ ===========
Operating Loss $ (397,890) $ (247,793) $ (645,683)
=========== ============ ===========
Loss Before Equity in Net Loss of
Cable Television Joint Venture $(6,555,931) $ 4,506,698 $(2,049,233)
=========== ============ ===========
</TABLE>
On October 3, 1997, the Venture entered into an agreement to sell the
Broward System to an unaffiliated third party for $140,000,000, subject to
closing adjustments discussed below. Closing of this sale is scheduled for
March 31, 1998, subject to several conditions, including necessary governmental
and other third party consents. The General Partner expects that all material
consents will be obtained prior to the scheduled closing date. The closing
adjustments primarily relate to the number of equivalent basic subscribers at
closing. If equivalent basic subscribers are less than 56,637, the sales price
will be reduced $2,472 multiplied by the number by which the Broward System's
equivalent basic subscribers are less than 56,637, up to a maximum adjustment of
$7,000,000. Because it is estimated that the Broward System will have 55,274
equivalent basic subscribers, as defined in the agreement, at March 31, 1998, at
closing there will be a sales price reduction of approximately $3,369,000. The
General Partner expects that when final closing adjustments are done
approximately sixty days after closing, additional equivalent basic subscribers
that were not able to be counted at closing because they were relatively recent
subscribers at March 31, 1998 will be counted as equivalent basic subscribers
when final closing adjustments are done and the sales price will be adjusted
accordingly. If the sales price is adjusted upward, the Venture would make an
additional distribution to the two constituent partnerships of the Venture in
proportion to their ownership interests in the Venture.
Upon closing, the Venture will repay all of its indebtedness, which totaled
$39,597,617 at December 31, 1997 and a brokerage fee of approximately $3,500,000
to The Jones Group and then the Venture will distribute the remaining net sales
proceeds, or approximately $94,039,000, to the two constituent partnerships of
the Venture in proportion to their ownership interests in the Venture.
Accordingly, the Partnership will receive 27 percent of the net sales proceeds,
or approximately $25,491,000. The Partnership will distribute its net sales
proceeds to its limited partners of record as of the closing date of the sale of
the Broward System. Such distribution represents approximately $159 for each
$500 limited partnership interest or $318 for each $1,000 invested in the
Partnership. Because the distribution to the limited partners from the sales of
the Turnersville System and the Central Illinois System together with the
proposed distribution from the sale of the Broward System will not return 125
percent of the capital initially contributed to the Partnership by the limited
partners, the General Partner will not receive any general partner distribution
from the proceeds of the Broward System's sale. Because the proposed sale of
the Broward System does not constitute the sale of all or substantially all of
the Partnership's assets, no vote of the limited partners of the Partnership was
required to approve this sale. Because the Broward System represents the only
asset of the Venture, the Venture will be liquidated and dissolved upon the
completion of the sale of the Broward System.
28
<PAGE>
Taking into account the 1997 distributions made on the sales of the
Turnersville System and the Central Illinois System and the distribution
expected to be made in the second quarter 1998 from the sale of the Broward
System, the limited partners will have received a total of $750 for each $1,000
invested in the Partnership.
Contributed Capital, Commissions and Syndication Costs
------------------------------------------------------
The capitalization of the Partnership is set forth in the accompanying
statements of partners' capital (deficit). No limited partner is obligated to
make any additional contribution to partnership capital.
Intercable purchased its interest in the Partnership by contributing $1,000
to partnership capital.
All profits and losses of the Partnership are allocated 99 percent to the
limited partners and 1 percent to Intercable, 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's agreement and
interest income earned prior to the first acquisition by the Partnership of a
cable television system, which was allocated 100 percent to the limited
partners.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
Accounting Records
------------------
The accompanying financial statements have been prepared on the accrual
basis of accounting in accordance with generally accepted accounting principles.
The Partnership'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.
Purchase Price Allocation
-------------------------
The Partnership allocated the total contract purchase price of cable
television systems acquired as follows: first, to the fair value of net
tangible assets acquired; second, to the value of subscriber lists and a
noncompete agreement with previous owners; third, to franchise costs; and
fourth, to costs in excess of interests in net assets purchased. Other system
acquisition costs were capitalized and charged to distribution systems, except
for the Central Illinois System which were charged to intangible assets.
Investment in Cable Television Joint Venture
--------------------------------------------
In addition to its wholly owned systems, the Partnership owns a 27 percent
interest in the Venture through a capital contribution made in March 1988 of
$18,975,000. The Venture acquired the Broward System in March 1988. The
Venture incurred losses of $2,310,292, $3,008,309 and $4,073,811 in 1997, 1996
and 1995, respectively, of which $626,089, $815,252 and $1,104,003,
respectively, was allocated to the Partnership. The investment is accounted for
on the equity method. The operations of the Venture are significant to the
Partnership and should be reviewed in conjunction with these financial
statements.
Property, Plant and Equipment
-----------------------------
Depreciation of property, plant and equipment is provided primarily using
the straight-line method over the following estimated service lives:
<TABLE>
<CAPTION>
<S> <C>
Cable distribution systems 5 - 15 years
Equipment and tools 5 - 7 years
Office furniture and equipment 3 - 5 years
Buildings 30 years
Vehicles 3 - 4 years
</TABLE>
Replacements, renewals and improvements are capitalized and maintenance and
repairs are charged to expense as incurred.
Property, plant and equipment and the corresponding accumulated
depreciation are written off as certain assets become fully depreciated and are
no longer in service.
29
<PAGE>
Intangible Assets
-----------------
Costs assigned to intangible assets are being amortized using the straight-
line method over the following remaining estimated useful lives:
Franchise costs 2 - 6 years
Costs in excess of interests in
net assets purchased 30 years
Revenue Recognition
-------------------
Subscriber prepayments are initially deferred and recognized as revenue
when earned.
Reclassification
----------------
Certain prior year amounts have been reclassified to conform to the 1997
presentation.
(3) TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES
----------------------------------------------------
Management Fees, Distribution Ratios and Reimbursements
-------------------------------------------------------
Intercable manages the Partnership and receives a fee for its services
equal to 5 percent of the gross revenues of the Partnership, excluding revenues
from the sale of cable television systems or franchises. Management fees paid
to Intercable by the Partnership for the years ended December 31, 1997, 1996,
and 1995 (exclusive of the Partnership's 27 percent interest in the Venture)
were $1,332,112, $2,390,436 and $2,204,740, respectively.
Any 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
Intercable. Any distributions other than interest income on limited partner
subscriptions earned prior to the acquisition of the Partnership'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 125 percent of the amount initially contributed to the
Partnership capital by the limited partners; the balance, 75 percent to the
limited partners and 25 percent to Intercable.
The Partnership reimburses Intercable for certain allocated overhead and
administrative expenses. These expenses represent the salaries and related
benefits paid for corporate personnel, rent, data processing services and other
corporate related facilities costs. Such personnel provide engineering,
marketing, administrative, accounting, legal and investor relations services to
the Partnership. Such services, and their related costs, are necessary to the
operation of the Partnership and would have been incurred by the Partnership if
it was a stand alone entity. Allocations of personnel costs are based primarily
on actual time spent by employees of Intercable 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 Intercable and certain of its subsidiaries. Systems owned by Intercable and
all other systems owned by partnerships for which Intercable is the general
partner are also allocated a proportionate share of these expenses. Intercable
believes that the methodology used in allocating overhead and administrative
expenses is reasonable. Reimbursements made to Intercable by the Partnership
for allocated overhead and administrative expenses (exclusive of the
Partnership's 27 percent interest in the Venture) were $1,526,293, $3,162,115
and $3,170,917 in 1997, 1996 and 1995, respectively.
The Partnership was charged interest during 1997 at an average interest
rate of 7.82 percent on the amounts due Intercable, which approximated
Intercable's weighted average cost of borrowing. Total interest charged to the
Partnership by Intercable was $2,783, $250,004 and $23,107 for the years ended
December 31, 1997, 1996 and 1995, respectively.
Payments to/from Affiliates for Programming Services
----------------------------------------------------
The Partnership receives or has received programming from Superaudio,
Knowledge TV, Inc., Jones Computer Network, Ltd., Great American Country, Inc.
and Product Information Network, all of which are affiliates of Intercable.
Payments to Superaudio totaled $40,647, $63,513 and $54,644 in 1997, 1996
and 1995, respectively. Payments to Knowledge TV, Inc. totaled $46,123, $71,736
and $61,431 in 1997, 1996 and 1995, respectively. Payments to Jones Computer
Network, Ltd., whose service was discontinued in April 1997, totaled $22,173,
$61,374 and $65,248 in 1997, 1996 and 1995,
30
<PAGE>
respectively. Payments to Great American Country, Inc., which initiated service
in 1996, totaled $28,314 and $35,100 in 1997 and 1996, respectively.
The Partnership receives a commission from Product Information Network
based on a percentage of advertising revenue and number of subscribers. Product
Information Network paid commissions to the Partnership totaling $87,685,
$90,304 and $77,790 in 1997, 1996 and 1995, respectively.
(4) PROPERTY, PLANT AND EQUIPMENT
-----------------------------
Property, plant and equipment as of December 31, 1997 and 1996, consisted
of the following:
<TABLE>
<CAPTION>
December 31,
---------------------------
1997 1996
------------ ------------
<S> <C> <C>
Cable distribution systems $ 81,803,602 $126,936,005
Equipment and tools 2,572,960 4,124,407
Office furniture and equipment 743,694 1,714,390
Buildings 199,109 2,407,909
Vehicles 1,040,067 1,667,374
Land 71,925 387,781
------------ ------------
86,431,357 137,237,866
Less - accumulated depreciation (50,186,043) (76,946,443)
------------ ------------
$ 36,245,314 $ 60,291,423
============ ============
</TABLE>
(5) DEBT
----
<TABLE>
<CAPTION>
December 31,
---------------------------
Debt consists of the following: 1997 1996
------------ ------------
<S> <C> <C>
Lending institutions-
Revolving credit and term loan $ 22,300,000 $ 84,700,000
Capital lease obligations 473,095 724,507
------------ ------------
$ 22,773,095 $ 85,424,507
============ ============
</TABLE>
In March 1997, the Partnership entered into a $37,500,000 revolving credit
facility. The Partnership borrowed $32,300,000 under the revolving credit
facility to repay the outstanding balance on its previous credit facility. Upon
the sale of the Central Illinois System on June 30, 1997 and as required by the
terms of the revolving credit facility, the Partnership repaid $9,800,000 of the
then-outstanding balance, and the commitment amount was reduced to $27,700,000,
of which $22,300,000 was outstanding at December 31, 1997, leaving $5,400,000
available for future borrowings. The revolving credit facility expires on
September 30, 2000, at which time the then-outstanding balance is payable in
full. Interest on the revolving credit facility's outstanding balance is at the
Partnership's option of the London Interbank Offered Rate plus 1.125 percent,
the Certificate of Deposit Rate plus 1.25 percent or the Base Rate plus .125
percent. The effective interest rates on amounts outstanding as of December 31,
1997 and 1996 were 6.79 percent and 6.67 percent, respectively.
Installments due on debt principal for each of the five years in the period
ending December 31, 2002, and thereafter, respectively, are: $141,929, $141,929,
$22,441,927, $47,310, $-0- and $-0-. At December 31, 1997, substantially all of
the Partnership's property, plant and equipment secured the above indebtedness.
At December 31, 1997, the carrying amount of the Partnership's long-term
debt did not differ significantly from the estimated fair value of the financial
instruments. The fair value of the Partnership'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.
31
<PAGE>
(6) INCOME TAXES
------------
Income taxes have not been recorded in the accompanying financial
statements because they accrue directly to the partners. The federal and state
income tax returns of the Partnership are prepared and filed by the General
Partner.
The Partnership's tax returns, the qualification of the Partnership as such
for tax purposes, and the amount of distributable partnership income or loss are
subject to examination by federal and state taxing authorities. If such
examinations result in changes with respect to the Partnership's qualification
as such, or in changes with respect to the Partnership's recorded income or
loss, the tax liability of the general and limited partners would likely be
changed accordingly.
Taxable loss reported to the partners is different from that reported in
the statements of operations due to the difference in depreciation recognized
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 loss and the net loss reported
in the statements of operations.
(7) COMMITMENTS AND CONTINGENCIES
-----------------------------
The Partnership rents office and other facilities under various long-term
lease arrangements. Rent paid under such lease arrangements totaled $206,236,
$296,719 and $242,084, respectively, for the years ended December 31, 1997, 1996
and 1995. Minimum commitments under operating leases for the five years in the
period ending December 31, 2002, and thereafter are as follows:
<TABLE>
<CAPTION>
<S> <C>
1998 $215,258
1999 128,498
2000 1,250
2001 -
2002 -
Thereafter -
-------
$345,006
=======
</TABLE>
(8) SUPPLEMENTARY PROFIT AND LOSS INFORMATION
-----------------------------------------
Supplementary profit and loss information is presented below:
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------
1997 1996 1995
---------- ----------- -----------
<S> <C> <C> <C>
Maintenance and repairs $ 346,054 $ 633,182 $ 761,244
========== =========== ===========
Taxes, other than income and payroll taxes $ 158,832 $ 147,180 $ 213,244
========== =========== ===========
Advertising $ 420,665 $ 717,531 $ 694,205
========== =========== ===========
Depreciation of property, plant and equipment $7,626,491 $11,032,939 $10,706,143
========== =========== ===========
Amortization of intangible assets $2,485,144 $ 3,594,787 $ 3,753,336
========== =========== ===========
</TABLE>
32
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To the Partners of Cable TV Fund 14-A/B Venture:
We have audited the accompanying balance sheets of CABLE TV FUND 14-A/B
VENTURE (a Colorado general partnership) as of December 31, 1997 and 1996, and
the related statements of operations, partners' capital and cash flows for each
of the three years in the period ended December 31, 1997. 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 14-A/B Venture
as of December 31, 1997 and 1996, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1997, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Denver, Colorado,
March 13, 1998.
33
<PAGE>
CABLE TV FUND 14-A/B VENTURE
----------------------------
(A General Partnership)
BALANCE SHEETS
--------------
<TABLE>
<CAPTION>
December 31,
---------------------------
ASSETS 1997 1996
------ ------------ ------------
<S> <C> <C>
CASH $ 499,861 $ 489,615
TRADE RECEIVABLES, less allowance for doubtful receivables of
$105,836 and $104,005 at December 31, 1997 and 1996, respectively 1,188,262 879,267
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 59,704,351 55,892,778
Less- accumulated depreciation (31,090,988) (27,437,977)
------------ ------------
28,613,363 28,454,801
Franchise costs and other intangible assets, net of accumulated
amortization of $57,752,957 and $52,915,541 at December 31, 1997
and 1996, respectively 23,234,009 28,071,425
------------ ------------
Total investment in cable television properties 51,847,372 56,526,226
DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 620,522 381,950
------------ ------------
Total assets $ 54,156,017 $ 58,277,058
============ ============
</TABLE>
The accompanying notes to financial statements
are an integral part of these balance sheets.
34
<PAGE>
CABLE TV FUND 14-A/B VENTURE
----------------------------
(A General Partnership)
BALANCE SHEETS
--------------
<TABLE>
<CAPTION>
December 31,
---------------------------
LIABILITIES AND PARTNERS' CAPITAL 1997 1996
--------------------------------- ------------ ------------
<S> <C> <C>
LIABILITIES:
Debt $ 39,597,617 $ 41,262,561
Jones Intercable, Inc. advances 446,115 268,256
Trade accounts payable and accrued liabilities 956,693 1,282,624
Subscriber prepayments 484,041 481,774
------------ ------------
Total liabilities 41,484,466 43,295,215
------------ ------------
COMMITMENTS AND CONTINGENCIES (Note 7)
PARTNERS' CAPITAL:
Contributed capital 70,000,000 70,000,000
Accumulated deficit (57,328,449) (55,018,157)
------------ ------------
12,671,551 14,981,843
------------ ------------
Total liabilities and partners' capital $ 54,156,017 $ 58,277,058
============ ============
</TABLE>
The accompanying notes to financial statements
are an integral part of these balance sheets.
35
<PAGE>
CABLE TV FUND 14-A/B VENTURE
----------------------------
(A General Partnership)
STATEMENTS OF OPERATIONS
------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
REVENUES $27,504,735 $25,519,105 $23,469,505
COSTS AND EXPENSES:
Operating expenses 15,185,319 14,148,533 12,620,209
Management fees and allocated overhead from
Jones Intercable, Inc. 2,976,883 2,981,097 2,828,211
Depreciation and amortization 8,775,019 8,408,157 8,774,507
----------- ----------- -----------
OPERATING INCOME (LOSS) 567,514 (18,682) (753,422)
----------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (2,877,337) (3,006,847) (3,371,524)
Other, net (469) 17,220 51,135
----------- ----------- -----------
Total other income (expense) (2,877,806) (2,989,627) (3,320,389)
----------- ----------- -----------
NET LOSS $(2,310,292) $(3,008,309) $(4,073,811)
=========== =========== ===========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
36
<PAGE>
CABLE TV FUND 14-A/B VENTURE
----------------------------
(A General Partnership)
STATEMENTS OF PARTNERS' CAPITAL
-------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
CABLE TV FUND 14-A, LTD. (27%):
Balance, beginning of year $ 3,963,820 $ 4,779,072 $ 5,883,075
Net loss for year (626,089) (815,252) (1,104,003)
----------- ----------- -----------
Balance, end of year $ 3,337,731 $ 3,963,820 $ 4,779,072
=========== =========== ===========
CABLE TV FUND 14-B, LTD. (73%):
Balance, beginning of year $11,018,023 $13,211,080 $16,180,888
Net loss for year (1,684,203) (2,193,057) (2,969,808)
----------- ----------- -----------
Balance, end of year $ 9,333,820 $11,018,023 $13,211,080
=========== =========== ===========
TOTAL:
Balance, beginning of year $14,981,843 $17,990,152 $22,063,963
Net loss for year (2,310,292) (3,008,309) (4,073,811)
----------- ----------- -----------
Balance, end of year $12,671,551 $14,981,843 $17,990,152
=========== =========== ===========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
37
<PAGE>
CABLE TV FUND 14-A/B VENTURE
----------------------------
(A General Partnership)
STATEMENTS OF CASH FLOWS
------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(2,310,292) $(3,008,309) $(4,073,811)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 8,775,019 8,408,157 8,774,507
Amortization of interest rate protection agreement - 793 82,085
Decrease (increase) in trade receivables (308,995) 214,700 (492,782)
Increase in deposits, prepaid expenses
and deferred charges (523,164) (455,610) (193,197)
Increase (decrease) in trade accounts payable and
accrued liabilities and subscriber prepayments (323,664) 44,605 (187,604)
Increase (decrease) in Jones Intercable, Inc. advances 177,859 (1,938,703) 1,852,780
----------- ----------- -----------
Net cash provided by operating activities 5,486,763 3,265,633 5,761,978
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (3,811,573) (3,879,797) (3,903,813)
----------- ----------- -----------
Net cash used in investing activities (3,811,573) (3,879,797) (3,903,813)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 1,419,267 3,612,576 108,593
Repayment of debt (3,084,211) (2,880,667) (1,849,862)
----------- ----------- -----------
Net cash provided by (used in)
financing activities (1,664,944) 731,909 (1,741,269)
----------- ----------- -----------
Increase in cash 10,246 117,745 116,896
Cash, beginning of year 489,615 371,870 254,974
----------- ----------- -----------
Cash, end of year $ 499,861 $ 489,615 $ 371,870
=========== =========== ===========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 2,997,551 $ 2,929,302 $ 3,467,008
=========== =========== ===========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
38
<PAGE>
CABLE TV FUND 14-A/B VENTURE
----------------------------
(A General Partnership)
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(1) ORGANIZATION AND PARTNERS' INTERESTS
------------------------------------
Formation and Business
----------------------
On January 8, 1988, Cable TV Fund 14-A, Ltd. ("Fund 14-A") and Cable TV
Fund 14-B, Ltd. ("Fund 14-B") (collectively, the "Venture Partners") formed a
Colorado general partnership known as Cable TV Fund 14-A/B Venture (the
"Venture") by contributing $18,975,000 and $51,025,000, respectively, for 27
percent and 73 percent ownership interests, respectively. The Venture was
formed for the purpose of acquiring the cable television system serving areas in
and around Broward County, Florida (the "Broward System").
Jones Intercable, Inc. ("Intercable") is the "General Partner" of each of
the Venture Partners and manages the Venture. Intercable and its subsidiaries
also own and operate cable television systems. In addition, Intercable manages
cable television systems for other limited partnerships for which it is general
partner and for other affiliated entities.
Contributed Capital
-------------------
The capitalization of the Venture is set forth in the accompanying
Statements of Partners' Capital.
All Venture distributions, including those made from cash flow, from the
sale or refinancing of Venture property and on dissolution of the Venture, shall
be made to the Venture Partners in proportion to their 27 and 73 percent
interests in the Venture.
Proposed Sale of a Cable Television System
------------------------------------------
On October 3, 1997, the Venture entered into an agreement to sell the
Broward System to an unaffiliated third party for $140,000,000, subject to
closing adjustments discussed below. Closing of this sale is scheduled for
March 31, 1998, subject to several conditions, including necessary governmental
and other third party consents. The General Partner expects that all material
consents will be obtained prior to the scheduled closing date. The closing
adjustments primarily relate to the number of equivalent basic subscribers at
closing. If equivalent basic subscribers are less than 56,637, the sales price
will be reduced $2,472 multiplied by the number by which the Broward System's
equivalent basic subscribers are less than 56,637, up to a maximum adjustment of
$7,000,000. Because it is estimated that the Broward System will have 55,274
equivalent basic subscribers, as defined in the agreement, at March 31, 1998, at
closing their will be a sales price reduction of approximately $3,369,000. The
General Partner expects that when final closing adjustments are done
approximately sixty days after closing, additional equivalent basic subscribers
that were not able to be counted at closing because they were relatively recent
subscribers at March 31, 1998 will be counted as equivalent basic subscribers
when final closing adjustments are done and the sales price will be adjusted
accordingly. If the sales price is adjusted upward, the Venture would make an
additional distribution to the two constituent partnerships of the Venture in
proportion to their ownership interests in the Venture.
Upon closing, the Venture will repay all of its indebtedness, which totaled
$39,597,617 at December 31, 1997 and a brokerage fee of approximately $3,500,000
to the Jones Group and then the Venture will distribute the remaining net sales
proceeds, or approximately $94,039,000, to the two constituent partnerships of
the Venture in proportion to their ownership interests in the Venture.
Accordingly, Fund 14-A will receive 27 percent of the net sales proceeds
(approximately $25,491,000, or $318 for each $1,000 invested in Fund 14-A) and
Fund 14-B will receive 73 percent of the net sales proceeds (approximately
$68,548,000, or $524 for each $1,000 invested in Fund 14-B).
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
Accounting Records
------------------
The accompanying financial statements have been prepared on the accrual
basis of accounting in accordance with generally accepted accounting principles.
The Venture's tax returns are also prepared on the accrual basis.
The preparation of financial statements in conformity with generally
accepted accounting principles requires Intercable's management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent
39
<PAGE>
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.
Purchase Price Allocation
-------------------------
The Broward System acquisition was accounted for as a purchase with the
purchase price allocated to tangible and intangible assets based upon an
independent appraisal. The method of allocation of purchase price was as
follows: first, to the fair value of net tangible assets acquired; second, to
the value of subscriber lists and noncompete agreements with previous owners;
third, to franchise costs; and fourth, to costs in excess of interests in net
assets purchased. Brokerage fees paid to an affiliate of Intercable and other
system acquisition costs were capitalized and included in the cost of intangible
assets.
Property, Plant and Equipment
-----------------------------
Depreciation is provided using the straight-line method over the following
estimated service lives:
<TABLE>
<CAPTION>
<S> <C>
Cable distribution systems 5 - 15 years
Equipment and tools 5 - 7 years
Office furniture and equipment 3 - 5 years
Buildings 30 years
Vehicles 3 - 4 years
</TABLE>
Replacements, renewals and improvements are capitalized and maintenance and
repairs are charged to expense as incurred.
Property, plant and equipment and the corresponding accumulated
depreciation are written off as certain assets become fully depreciated and are
no longer in service.
Intangible Assets
-----------------
Costs assigned to franchises, subscriber lists 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>
<CAPTION>
<S> <C>
Franchise costs 1 - 5 years
Subscriber lists 1 year
Costs in excess of interests in
net assets purchased 31 years
</TABLE>
Revenue Recognition
-------------------
Subscriber prepayments are initially deferred and recognized as revenue
when earned.
Reclassifications
-----------------
Certain prior year amounts have been reclassified to conform to the 1997
presentation.
(3) TRANSACTIONS WITH AFFILIATES
----------------------------
Management Fees and Reimbursements
----------------------------------
Intercable manages 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 Intercable
by the Venture for the years ended December 31, 1997, 1996 and 1995 were
$1,375,237, $1,275,955 and $1,173,475, respectively.
The Venture reimburses Intercable for allocated overhead and administrative
expenses. These expenses represent the salaries and related benefits paid for
corporate personnel, rent, data processing services and other corporate
facilities costs. Such personnel provide engineering, marketing, accounting,
administrative, legal, and investor relations services to the Venture. Such
services, and their related costs, are necessary to the operation of the Venture
and would have been incurred by the Venture if it was a stand alone entity.
Allocations of personnel costs are based primarily on actual time spent by
employees of Intercable 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 Intercable and certain of
its subsidiaries. Systems owned by Intercable and all other systems owned by
partnerships for which Intercable is the general partner are also allocated a
proportionate share of these
40
<PAGE>
expenses. Intercable believes that the methodology used in allocating overhead
and administrative expenses is reasonable. Reimbursements made to Intercable by
the Venture for allocated overhead and administrative expenses during the years
ended December 31, 1997, 1996 and 1995 were $1,601,646, $1,705,142 and
$1,654,736, respectively.
The Venture was charged interest during 1997 at an average interest rate of
7.82 percent on the amounts due Intercable, which approximated Intercable's
weighted average cost of borrowing. Total interest charged to the Venture by
Intercable was $2,678, $122,224 and $155,659 for the years ended December 31,
1997, 1996 and 1995, respectively.
Payments to/from Affiliates for Programming Services
----------------------------------------------------
The Venture receives or has received programming from Superaudio, Knowledge
TV, Inc., Great American Country, Inc. and Product Information Network, all of
which are affiliates of Intercable.
Payments to Superaudio totaled $37,459, $34,421 and $30,171 in 1997, 1996
and 1995, respectively. Payments to Knowledge TV, Inc. totaled $41,668, $37,113
and $32,268 in 1997, 1996 and 1995, respectively. Payments to Great American
Country, Inc., which initiated service in 1996, totaled $79,127 in 1997 and
$47,590 in 1996.
The Venture receives a commission from Product Information Network based on
a percentage of advertising revenue and number of subscribers. Product
Information Network paid commissions to the Venture totaling $80,297, $49,973
and $23,430 in 1997, 1996 and 1995, respectively.
(4) PROPERTY, PLANT AND EQUIPMENT
-----------------------------
Property, plant and equipment as of December 31, 1997 and 1996, consisted
of the following:
<TABLE>
<CAPTION>
December 31,
---------------------------
1997 1996
------------ ------------
<S> <C> <C>
Cable distribution systems $ 53,144,005 $ 49,591,013
Equipment and tools 2,074,443 1,899,148
Office furniture and equipment 1,191,559 1,149,554
Buildings 1,875,016 1,870,430
Vehicles 688,461 651,766
Land 730,867 730,867
------------ ------------
59,704,351 55,892,778
Less - accumulated depreciation (31,090,988) (27,437,977)
------------ ------------
$ 28,613,363 $ 28,454,801
============ ============
</TABLE>
(5) DEBT
----
<TABLE>
<CAPTION>
Debt consists of the following: December 31,
---------------------------
1997 1996
------------ ------------
<S> <C> <C>
Lending institutions-
Reducing revolving credit facility $ 39,402,968 $ 41,102,968
Capital lease obligations 194,649 159,593
------------ ------------
$ 39,597,617 $ 41,262,561
============ ============
</TABLE>
The Venture has a reducing revolving credit facility with an available
commitment of $42,500,000. The entire $42,500,000 commitment is available
through December 31, 1998, at which time the commitment will begin to reduce
quarterly until December 31, 2003 when the amount available will be zero. At
December 31, 1997, the balance outstanding was $39,402,968, leaving $3,097,032
available for future borrowings. Interest is at the Venture's option of Prime
plus 1/4 percent, LIBOR plus 1-1/4 percent or the CD Rate plus 1-3/8 percent.
The effective interest rates on amounts outstanding as of
41
<PAGE>
December 31, 1997 and 1996 were 7.10 percent and 6.79 percent, respectively.
This credit facility will be paid in full upon the sale of the Venture's Broward
System.
Installments due on debt principal for each of the five years in the period
ending December 31, 2002 and thereafter, respectively, are: $58,394,
$3,761,363, $6,858,395, $8,519,465, $10,200,000 and $10,200,000. At December
31, 1997, substantially all of the Venture's property, plant and equipment
secured the above indebtedness.
At December 31, 1997, 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 financial
statements because they accrue directly to the partners of Fund 14-A and Fund
14-B.
The Venture's tax returns, the qualification of the Venture as such for tax
purposes, and the amount of distributable Venture income or loss are subject to
examination by federal and state taxing authorities. If such examinations
result in changes with respect to the Venture's qualification as such, or in
changes with respect to the Venture's recorded income or loss, the tax liability
of the Venture's general partners would likely be changed accordingly.
Taxable loss reported to the partners is different from that reported in
the statements of operations due to the difference in depreciation recognized
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 loss and the net loss reported
in the statements of operations.
(7) COMMITMENTS AND CONTINGENCIES
-----------------------------
Office and other facilities are rented under various long-term lease
arrangements. Rent paid under such lease arrangements totaled $49,301, $21,762
and $22,680, respectively for the years ended December 31, 1997, 1996 and 1995.
Minimum commitments under operating leases for each of the five years in the
period ending December 31, 2002 and thereafter are as follows:
<TABLE>
<CAPTION>
<S> <C>
1998 $ 34,466
1999 33,300
2000 33,300
2001 33,300
2002 33,300
Thereafter 291,378
--------
$459,044
========
</TABLE>
42
<PAGE>
(8) SUPPLEMENTARY PROFIT AND LOSS INFORMATION
-----------------------------------------
Supplementary profit and loss information is presented below:
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Maintenance and repairs $ 169,474 $ 163,219 $ 204,878
========== ========== ==========
Taxes, other than income and payroll taxes $ 491,297 $ 425,691 $ 268,757
========== ========== ==========
Advertising $ 168,056 $ 197,237 $ 152,727
========== ========== ==========
Depreciation of property, plant and equipment $3,849,922 $3,570,740 $3,429,925
========== ========== ==========
Amortization of intangible assets $4,925,097 $4,837,417 $5,344,582
========== ========== ==========
</TABLE>
43
<PAGE>
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. Directors of the General Partner serve until the next annual
meeting of the General Partner and until their successors shall be elected and
qualified.
<TABLE>
<C> <C> <S>
Glenn R. Jones 68 Chairman of the Board and Chief Executive Officer
James B. O'Brien 48 President and Director
Ruth E. Warren 48 Group Vice President/Operations
Kevin P. Coyle 46 Group Vice President/Finance
Christopher J. Bowick 42 Group Vice President/Technology
Cheryl M. Sprague 45 Group Vice President/Human Resources
Cynthia A. Winning 46 Group Vice President/Marketing
Elizabeth M. Steele 46 Vice President/General Counsel/Secretary
Larry W. Kaschinske 38 Vice President/Controller
Robert E. Cole 65 Director
William E. Frenzel 69 Director
Josef J. Fridman 52 Director
Donald L. Jacobs 59 Director
Robert Kearney 61 Director
James J. Krejci 56 Director
Raphael M. Solot 64 Director
Howard O. Thrall 50 Director
Siim A. Vanaselja 41 Director
Sanford Zisman 58 Director
Robert B. Zoellick 44 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, and he is a member of the Board of Directors and
of the Executive Committee of the National Cable Television Association. In
addition, Mr. Jones is a member of 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 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 President's Award
from the Cable Television Public Affairs Association in recognition of Jones
International's educational efforts through Mind Extension University (now
Knowledge TV); the Donald G. McGannon Award for the advancement of minorities
and women in cable from the United Church of Christ Office of Communications;
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
Cableforce 2000 Accolade awarded by Women in Cable in recognition of the General
Partner's innovative employee programs; the Most Outstanding Corporate
Individual Achievement Award from the International Distance Learning Conference
for his contributions to distance education; the Golden Plate Award from the
American Academy of Achievement for his advances in distance education; the Man
of the Year named
44
<PAGE>
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. 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 the
Chairman of the Board of Directors of the Cable Television Administration and
Marketing Association and as a director and a member of the Executive Committee
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 marketing manager,
director of marketing, assistant division manager, regional vice president 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. Prior 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. Bowick also has served
since 1995 as President of Jones Futurex, Inc., a wholly owned subsidiary of the
General Partner that manufactures and markets data encryption products.
Ms. Cheryl M. Sprague joined the General Partner in November 1997 as
Group Vice President/Human Resources. Prior to November 1997 and since December
1995, Ms. Sprague served as Director, Human Resources for Westmoreland Coal
Company, where she was responsible for human resources management for said
company and three of its subsidiaries. From October 1993 to December 1995, Ms.
Sprague served as President of Peak Executive Resources, where she provided
consulting services in organizational development and human resources to
businesses experiencing organizational transition. From April 1992 to October
1993, Ms. Sprague was Vice President, Human Resources for Penrose-St. Francis
Healthcare System, where she was responsible for management of all human
resources activities. Ms. Sprague serves as an adjunct instructor at Regis
University and has earned the professional designation as a Senior Professional
in Human Resources from the Society for Human Resource Management and its
affiliate, the Human Resources Certification Board. Ms. Sprague is a past
president of the Colorado Human Resource Association and was named by that
association as the Colorado Human Resources Administrator of the Year in 1986.
Ms. Sprague also serves as a director on the Area VI Board for the Society for
Human Resource Management.
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.
45
<PAGE>
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, named Controller in August 1994 and was elected
Vice President/Controller in June 1996.
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 in
April 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. Josef J. Fridman was appointed a Director of the General Partner in
February 1998. Mr. Fridman is currently senior vice-president, law and
corporate secretary of BCE Inc., Canada's largest telecommunications company.
Mr. Fridman joined Bell Canada, a wholly owned subsidiary of BCE Inc., in 1969,
and has held increasingly senior positions with Bell Canada and BCE Inc. since
such time. Mr. Fridman has held his current position since January 1991. Mr.
Fridman's directorships include Telesat Canada, TMI Communications, Inc.,
Telebec Itee, BCI Telecom Holding Inc. and BCE Corporate Services Inc. He is a
member of the Quebec Bar Association, the Canadian, American and International
Bar Associations and the Lord Reading Law Society. Mr. Fridman is a governor of
the Quebec Bar Association.
Mr. Donald L. Jacobs was appointed a Director of the General Partner in
April 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. Robert Kearney was appointed a director of the General Partner in July
1997. Mr. Kearney is a retired executive officer of Bell Canada. Prior to his
retirement in December 1993, Mr. Kearney was the President and Chief Executive
Officer of Bell Canada. He served as Chairman of BCE Canadian Telecom Group in
1994 and as Deputy Chairman of BCI Management Limited in 1995. During his
career, Mr. Kearney served in a variety of capacities in the Canadian, American
and International Standards organizations, and he has served on several
corporate, professional and civic boards.
Mr. James J. Krejci is President and CEO of Imagelink Technologies, Inc., a
privately financed company with leading technology in the desktop or personal
computer videoconferencing market. Prior to joining
46
<PAGE>
Imagelink Technologies in July 1996, Mr. Krejci was President of the
International Division of International Gaming Technology, the world's largest
gaming equipment manufacturer, with headquarters in Reno, Nevada. 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 subsidiaries of Jones International, Ltd. until leaving
the General Partner in May 1994. Mr. Krejci started his career as an electronics
research engineer with the Allen-Bradley Company, then moved to the 3M Company,
General Electric and Becton Dickinson until March 1985 when he joined Jones
International, Ltd. Mr. Krejci has been a director of the General Partner since
August 1987.
Mr. Raphael M. Solot was appointed a Director of the General Partner in
March 1996. Mr. Solot is an attorney and has practiced law for 34 years with an
emphasis on franchise, corporate and partnership law and complex litigation.
Mr. Howard O. Thrall was appointed a Director of the General Partner in
March 1996. Mr. Thrall had previously served as a Director of the General
Partner from December 1988 to December 1994. Mr. Thrall is a management and
international marketing consultant, having active assignments with First
National Net, Inc., LEP Technologies, Cheong Kang Associates (Korea), Aero
Investment Alliance, Inc. and Western Real Estate Partners, among others. From
September 1993 through July 1996, Mr. Thrall served as Vice President of Sales,
Asian Region, for World Airways, Inc. headquartered at the Washington Dulles
International Airport. 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. Siim A. Vanaselja was appointed a Director of the General Partner in
August 1996. He is the Executive Vice President and Chief Financial Officer of
Bell Canada International Inc. and Vice President of BCI Telecom Holding Inc.
Mr. Vanaselja joined BCE Inc., Canada's largest telecommunications company, in
February 1994 as Assistant Vice-President, International Taxation. In June
1994, he was appointed Assistant Vice-President and Director of Taxation, and in
February 1995, Mr. Vanaselja was appointed Vice-President, Taxation. On August
1, 1996, Mr. Vanaselja was appointed the Executive Vice President and Chief
Financial Officer of Bell Canada International Inc., a subsidiary of BCE Inc.
Prior to joining BCE Inc. and since August 1989, Mr. Vanaselja was a partner in
the Toronto office of KPMG Peat Marwick Thorne. Mr. Vanaselja has been a member
of the Institute of Chartered Accountants of Ontario since 1982 and is a member
of the Canadian Tax Foundation, the Tax Executives Institute and the
International Fiscal Association.
Mr. Sanford Zisman was appointed a director of the General Partner in June
1996. Mr. Zisman is a principal in the law firm of Zisman & Ingraham, P.C. of
Denver, Colorado and he has practiced law for 32 years, specializing in the
areas of tax, business and estate planning and probate administration. Mr.
Zisman was a member of the Board of Directors of Saint Joseph Hospital, the
largest hospital in Colorado, serving at various times as Chairman of the Board,
Chairman of the Finance Committee and Chairman of the Strategic Planning
Committee. Since 1982, he has also served on the Board of Directors of Maxim
Series Fund, Inc., a subsidiary of Great-West Life Assurance Company.
Mr. Robert B. Zoellick was appointed a Director of the General Partner in
April 1995. Mr. Zoellick is the John M. Olin Professor at the U.S. Naval
Academy for the 1997-1998 term. From 1993 through 1997, he was an Executive
Vice President at 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 currently serves on the boards of Alliance Capital and
Said Holdings.
47
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
--------------------------------
The Partnership has no employees; however, various personnel are required
to operate the Systems. Such personnel are employed by the General Partner and,
the cost of such employment is charged by the General Partner to the Partnership
or the Venture as a direct reimbursement item. See Item 13.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGERS
----------------------------------------------------------------------
As of February 16, 1998, no person or entity owned 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 Partnership and the Venture. The General Partner believes that the terms of
such transactions are generally as favorable as could be obtained by the
Partnership and 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 Partnership or the Venture from unaffiliated parties.
TRANSACTIONS WITH THE GENERAL PARTNER
The General Partner charges the Partnership and Venture a 5 percent
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
Partnership and 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 and 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 Jones Intercable, Inc. is the general partner
are also allocated a proportionate share of these expenses.
The General Partner from time to time also advances funds to the
Partnership and the Venture and charges interest on the balance payable. The
interest rate charged approximates the General Partner's weighted average cost
of borrowing.
TRANSACTIONS WITH AFFILIATES
Knowledge TV, Inc., a company owned 67 percent by Jones Education Group,
Ltd., 7 percent by Mr. Jones and 26 percent by the General Partner, operates the
television network JEC Knowledge TV. JEC Knowledge TV provides programming
related to computers and technology; business, careers and finance; health and
wellness; and global culture and languages. Knowledge TV. Inc. sells its
programming to the Systems.
Jones Computer Network, Ltd., a wholly owned subsidiary of Jones Education
Group, Ltd., a company owned 64 percent by Jones International, Ltd., 16 percent
by the General Partner, 12 percent by BTH and 8 percent by Mr. Jones, operated
the television network Jones Computer Network. This network provided
programming focused primarily on computers and technology. Jones Computer
Network sold its programming to the Systems. Jones Computer Network, Ltd.
terminated its programming in April 1997.
48
<PAGE>
The Great American Country network provides country music video programming
to the Systems. This network, owned and operated by Great American Country,
Inc., a subsidiary of Jones International Networks, Ltd., an affiliate of the
General Partner, commenced service in 1996 in the Systems.
Jones Galactic Radio, Inc. is a subsidiary of Jones International Networks,
Ltd., an affiliate of the General Partner. Superaudio, a joint venture between
Jones Galactic Radio, Inc. and an unaffiliated entity, provides audio
programming to the Systems.
The Product Information Network Venture (the "PIN Venture") is a venture
among a subsidiary of Jones International Networks, Ltd., an affiliate of the
General Partner, and two unaffiliated cable system operators. The PIN Venture
operates the Product Information Network ("PIN"), which is a 24-hour network
that airs long-form advertising generally known as "infomercials." The PIN
Venture generally makes incentive payments of approximately 60 percent of its
net advertising revenue to the cable systems that carry its programming. The
Partnership's and the Venture's systems carry PIN for all or part of each day.
Revenues received by the Partnership from the PIN Venture relating to the
Partnership's owned cable television systems totaled approximately $87,685 for
the year ended December 31, 1997. Revenues received by the Venture from the PIN
Venture relating the Venture's owned cable television systems totaled
approximately $80,297 for the year ended December 31, 1997.
The charges to the Partnership and to the Venture for related party
transactions are as follows for the periods indicated:
<TABLE>
<CAPTION>
For the Year Ended December 31,
-------------------------------------------------------------------
Cable TV Fund 14-A 1997 1996 1995
- ------------------ --------------------- --------------------- ---------------------
<S> <C> <C> <C>
Management fees $1,332,112 $2,390,436 $2,204,740
Allocation of expenses 1,526,293 3,162,115 3,170,917
Interest expense 2,783 250,004 23,107
Amount of advances outstanding 489,313 352,232 887,215
Highest amount of advances outstanding 489,313 3,453,993 887,215
Programming fees:
Knowledge TV, Inc. 46,123 71,736 61,431
Jones Computer Network, Ltd. 22,173 61,374 65,248
Great American Country 28,314 35,100 0
Superaudio 40,647 63,513 54,644
</TABLE>
<TABLE>
<CAPTION>
For the Year Ended December 31,
-------------------------------------------------------------------
Cable TV Fund 14-A/B Venture 1997 1996 1995
- ---------------------------- --------------------- --------------------- ---------------------
<S> <C> <C> <C>
Management fees $1,375,237 $1,275,955 $1,173,475
Allocation of expenses 1,601,646 1,705,142 1,654,736
Interest expense 2,678 122,224 155,659
Amount of advances outstanding 446,115 268,256 2,206,959
Highest amount of advances outstanding 446,115 2,206,959 2,206,959
Programming fees:
Knowledge TV, Inc. 41,668 37,113 32,268
Great American Country 79,127 47,590 0
Superaudio 37,459 34,421 30,171
</TABLE>
49
<PAGE>
PART IV.
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
<C> <C> <S>
(a) 1. See index to financial statements for the list of financial
statements and exhibits thereto filed as part of this report.
3. The following exhibits are filed herewith.
4.1 Limited Partnership Agreement for Cable TV Fund 14-A, Ltd.
(1)
4.2 Joint Venture Agreement of Cable TV Fund 14-A/B Venture,
dated as of January 8, 1988, between Cable TV Fund 14-A,
Ltd. and Cable TV Fund 14-B, Ltd. (1)
10.1.1 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the Big
Cypress Seminole Indian Reservation, Florida (Fund 14-A/B).
(2)
10.1.2 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Brighton Seminole Indian Reservation, Florida (Fund 14-A/B).
(2)
10.1.3 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
unincorporated portions of Broward County, Florida (Fund 14-
A/B). (3)
10.1.4 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for Cooper
City, Florida (Fund 14-A/B). (10)
10.1.5 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for Dania,
Florida (Fund 14-A/B). (3)
10.1.6 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for Davie,
Florida (Fund 14-A/B). (3)
10.1.7 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Hollywood Seminole Indian Reservation, Florida (Fund 14-
A/B). (2)
10.1.8 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Immokalee Seminole Indian Reservation, Florida (Fund 14-
A/B). (2)
10.1.9 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for Lauderdale
Lakes, Florida (Fund 14-A/B). (3)
10.1.3 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the County
of Calvert, Maryland (Fund 14-A). (1)
10.1.4 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for St. Mary's
County, Maryland (Fund 14-A). (5)
10.1.5 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for Southern
Anne Arundel County, Maryland (Fund 14-A). (1)
10.1.6 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the City
of Albertville, Minnesota (Fund 14-A). (1)
</TABLE>
50
<PAGE>
<TABLE>
<CAPTION>
<C> <S>
10.1.7 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for City of Big
Lake, Minnesota (Fund 14-A). (1)
10.1.8 Copy of Ordinance No. 1200 dated 3/5/90 relating to the City of
Big Lake franchise (Fund 14-A). (5)
10.1.9 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the City of
Buffalo, Minnesota (Fund 14-A). (1)
10.1.10 Copy of Ordinance dated 4/16/90 relating to the Buffalo
franchise (Fund 14-A). (5)
10.1.11 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the City of
Cokato, Minnesota (Fund 14-A). (1)
10.1.12 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the City of
Dassel, Minnesota (Fund 14-A). (1)
10.1.13 Copy of Ordinance No. 10.044 dated 1/16/90 relating to the
Dassel franchise (Fund 14-A). (5)
10.1.14 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the City of
Dayton, Minnesota (Fund 14-A). (1)
10.1.15 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the City of
Delano, Minnesota (Fund 14-A). (1)
10.1.16 Copy of Ordinance No. 0-90-01 dated 3/20/90 relating to the
Delano franchise (Fund 14-A). (5)
10.1.17 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the City of
Elk River, Minnesota (Fund 14-A). (1)
10.1.18 Copy of Ordinance No. 90-3 dated 2/26/90 relating to the City
of Elk River franchise (Fund 14-A). (5)
10.1.19 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the Township
of Hassan, Minnesota (Fund 14-A). (2)
10.1.20 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the City of
Maple Lake, Minnesota (Fund 14-A). (1)
10.1.21 Copy of Ordinance No. 38 dated 3/5/90 relating to the City of
Maple Lake franchise (Fund 14-A). (5)
10.1.22 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the City of
Monticello, Minnesota (Fund 14-A). (1)
10.1.23 Copy of Ordinance No. 183 dated 2/26/90 relating to the City of
Monticello franchise (Fund 14-A). (5)
10.1.24 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the Township
of Monticello, Minnesota (Fund 14-A). (1)
</TABLE>
51
<PAGE>
<TABLE>
<CAPTION>
<C> <S>
10.1.25 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the Township
of Ostego, Minnesota (Fund 14-A). (1)
10.1.26 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the City of
Rockford, Minnesota (Fund 14-A). (1)
10.1.27 Resolutions 90-14 and 90-15 dated 4/10/90 relating to the City
of Rockford franchise (Fund 14-A). (5)
10.1.28 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the Town of
Rockford, Minnesota (Fund 14-A). (2)
10.1.29 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the City of
St. Michael, Minnesota (Fund 14-A). (1)
10.1.30 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the City of
Watertown, Minnesota (Fund 14-A). (1)
10.2.1 Revolving Credit Agreement dated March 31, 1997 among Cable TV
Fund 14-A, Ltd. and Royal Bank of Canada.
10.2.2 Credit Agreement dated as of September 30, 1988 among Cable TV
Fund 14-A/B Venture and The Bank of Nova Scotia, as agent for
various lenders. (Fund 14-A/B) (6)
10.2.3 First Letter Amendment dated June 11, 1990 to Credit Agreement
dated as of September 30, 1988 among Cable TV Fund 14-A/B
Venture and The Bank of Nova Scotia, as agent for various
lenders. (Fund 14-A/B) (6)
10.2.4 Second Letter Amendment dated May 28, 1992 to Credit Agreement
dated as of September 30, 1988 among Cable TV Fund 14-A/B
Venture and The Bank of Nova Scotia, as agent for various
lenders. (Fund 14-A/B) (6)
10.2.5 Third Letter Amendment dated June 30, 1994 to Credit Agreement
dated as of September 30, 1988 among Cable TV Fund 14-A/B
Venture and The Bank of Nova Scotia, as agent for various
lenders. (Fund 14-A/B) (9)
10.2.6 Fourth Letter Amendment dated June 24, 1996 to Credit Agreement
dated as of September 30, 1988 among Cable TV Fund 14-A/B
Venture and The Bank of Nova Scotia, as agent for various
lenders. (Fund 14-A/B) (12)
10.3.1 Purchase and Sale Agreement dated as of March 31, 1988 by and
between Cable TV Fund 14-A/B Venture as Buyer and Jones
Intercable, Inc. as Seller. (Fund 14-A/B) (7)
10.3.2 Purchase and Sale Agreement dated as of May 30, 1991, by and
between Jones Intercable, Inc. and Fund 14-A. (Fund 14-A) (8)
10.3.3 Asset Purchase Agreement dated as of March 28, 1996, between
Cable TV Fund 14-A, Ltd. and Lenfest Atlantic, Inc. (11)
10.3.4 Asset Purchase Agreement dated March 12, 1997 between Cable TV
Fund 14-A, Ltd. and Triax Midwest Associates, L.P. (12)
</TABLE>
52
<PAGE>
<TABLE>
<CAPTION>
<C> <C> <S>
10.3.5 Asset Purchase Agreement dated as of October 3, 1997, among
Comcast Corporation, Cable TV Fund 14 A/B Venture, Jones
International, Ltd., Jones Intercable, Inc., Cable TV Fund 14-
A, Ltd. and Cable TV Fund 14-B, Ltd. (13)
27 Financial Data Schedule
__________
(1) Incorporated by reference from Registrant's Report on Form
10-K for fiscal year ended December 31, 1987 (Commission File
Nos. 0-15378 and 0-16200)
(2) Incorporated by reference from Registrant's Report on Form
10-K for fiscal year ended December 31, 1990 (Commission File
Nos. 0-15378 and 0-16200)
(3) Incorporated by reference from Registrant's Report on Form
10-K for fiscal year ended December 31, 1989 (Commission File
Nos. 0-15378 and 0-16200)
(4) Incorporated by reference from the Annual Report on Form 10-K
for fiscal year ended December 31, 1990 of Jones Intercable,
Inc. (Commission File No. 1-9953)
(5) Incorporated by reference from Registrant's Report on Form
10-K for fiscal year ended December 31, 1992.
(6) Incorporated by reference from Registrants' Reports on Form
8-K dated March 31, 1993 (Commission File Nos. 0-15378 and
0-16200)
(7) Incorporated by reference from Registrants' Reports on Form
8-K dated March 31, 1988 (Commission File Nos. 0-15378 and
0-16200)
(8) Incorporated by reference from Fund 14-A's Report on Form 8-K
dated June 12, 1991 (Commission File No. 0-15378).
(9) Incorporated by reference from the Annual Report on Form 10-K
for fiscal year ended December 31, 1994 of Jones Intercable,
Inc. (Commission File No. 1-9953)
(10) Incorporated by reference from Registrant's Report on Form
10-K for fiscal year ended December 31, 1994.
(11) Incorporated by reference from Registrant's Report on Form
10-K for fiscal year ended December 31, 1995.
(12) Incorporated by reference from Registrant's Report on Form
10-K for fiscal year ended December 31, 1996.
(13) Incorporated by reference from Registrant's Current Report
on Form 8-K dated October 15, 1997.
(b) Reports on Form 8-K
-------------------
Current Report on Form 8-K dated October 15, 1997, describing
the execution of an Asset Purchase Agreement dated October 3,
1997, to sell the Broward System.
</TABLE>
53
<PAGE>
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 14-A, 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 23, 1998 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.
By: /s/ Glenn R. Jones
------------------
Glenn R. Jones
Chairman of the Board and Chief
Executive Officer
Dated: March 23, 1998 (Principal Executive Officer)
By: /s/ Kevin P. Coyle
------------------
Kevin P. Coyle
Group Vice President/Finance
Dated: March 23, 1998 (Principal Financial Officer)
By: /s/ Larry Kaschinske
--------------------
Larry Kaschinske
Vice President/Controller
Dated: March 23, 1998 (Principal Accounting Officer)
By: /s/ James B. O'Brien
--------------------
James B. O'Brien
Dated: March 23, 1998 President and Director
By: /s/ Robert E. Cole
------------------
Robert E. Cole
Dated: March 23, 1998 Director
By: /s/ William E. Frenzel
----------------------
William E. Frenzel
Dated: March 23, 1998 Director
54
<PAGE>
By: --------------------------
Josef J. Fridman
Dated: March 23, 1998 Director
By: --------------------------
Donald L. Jacobs
Dated: March 23, 1998 Director
By: --------------------------
Robert Kearney
Dated: March 23, 1998 Director
By: /s/ James J. Krejci
--------------------------
James J. Krejci
Dated: March 23, 1998 Director
By: /s/ Raphael M. Solot
--------------------------
Raphael M. Solot
Dated: March 23, 1998 Director
By: /s/ Howard O. Thrall
--------------------------
Howard O. Thrall
Dated: March 23, 1998 Director
By: --------------------------
Siim A. Vanaselja
Dated: March 23, 1998 Director
By: /s/ Sanford Zisman
--------------------------
Sanford Zisman
Dated: March 23, 1998 Director
By: /s/ Robert B. Zoellick
--------------------------
Robert B. Zoellick
Dated: March 23, 1998 Director
55
<PAGE>
EXHIBIT 10.2.1
CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT is dated March 31, 1997 and is made by
and among CABLE TV FUND 14-A, LTD, a Colorado limited partnership (the
"Borrower"), the BANKS (as hereinafter defined), and ROYAL BANK OF CANADA, in
its capacity as agent for the Banks under this Agreement (hereinafter referred
to in such capacity as the "Agent").
WITNESSETH:
WHEREAS, the Borrower has requested the Banks to provide a revolving
credit facility to the Borrower in an aggregate principal amount not to exceed
$37,500,000; and
WHEREAS, the revolving credit shall be used to refinance the
Borrower's obligations under the Prior Bank Facility (as defined herein) and for
general business purposes; and
WHEREAS, the Banks are willing to provide such credit upon the terms
and conditions hereinafter set forth;
NOW, THEREFORE, the parties hereto, in consideration of their mutual
covenants and agreements hereinafter set forth and intending to be legally bound
hereby, covenant and agree as follows:
1. CERTAIN DEFINITIONS
-------------------
1.1 Certain Definitions.
--------------------
In addition to words and terms defined elsewhere in this Agreement,
the following words and terms shall have the following meanings, respectively,
unless the context hereof clearly requires otherwise:
Affiliate as to any Person shall mean any other Person (i) which
---------
directly or indirectly controls, is controlled by, or is under common control
with such Person, (ii) which beneficially owns or holds 5% or more of any class
of the voting or other equity interests of such Person, or (iii) 5% or more of
any class of voting interests or other equity interests of which is beneficially
owned or held, directly or indirectly, by such Person. Control, as used in this
definition, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or otherwise, including
the power to elect a majority of the directors or trustees of a corporation or
trust, as the case may be.
<PAGE>
Agent shall mean Royal Bank of Canada, and its successors and assigns.
-----
Agent's Fee shall have the meaning assigned to that term in Section
-----------
9.15.
Agent's Letter shall have the meaning assigned to that term in
--------------
Section 9.15.
Agreement shall mean this Credit Agreement, as the same may be
---------
supplemented or amended from time to time, including all schedules and exhibits.
Allocated Overhead shall mean, for any period, the fees payable
------------------
(without regard to the Borrower's right to defer or limit actual payment) to the
General Partner to compensate the General Partner for that portion of its
general overhead and administrative expenses, including all of its direct and
indirect expenses, allocable to the operation of the Borrower's business,
including, but not limited to, home office rent, supplies, telephone, travel and
copying charges and salaries of full and part-time employees.
Annualized Cash Flow shall mean, at any time, Cash Flow for the
--------------------
immediately preceding fiscal quarter multiplied by four.
Annual Statements shall have the meaning assigned to that term in
-----------------
Section 5.19.
Applicable Margin shall mean, at the time of any determination
------------------
thereof, for purposes of all Loans, the margin of interest over the Base Rate,
Euro-Rate or CD Rate, as the case may be, which is applicable at the time of any
determination of interest rates under this Agreement, which Applicable Margin
shall be subject to adjustment (upwards or downwards, as appropriate) based on
the Leverage Ratio, as follows:
<TABLE>
<CAPTION>
Applicable Margin
---------------------------------
Leverage Ratio Base-Rate Loans Euro-Rate Loans CD Rate Loans
- -------------------- ----------------- ----------------- ------------------
<S> <C> <C> <C>
3.0:1 or greater .375% 1.375% 1.50%
2.5: 1 or greater .125% 1.125% 1.25%
but less than or
equal to 3.0:1
less than 2.5:1 0.00% .875% 1.00%
</TABLE>
For purposes of this definition, the Applicable Margin shall be determined as at
the end of each of the first three quarterly periods of each fiscal year of the
Borrower and at the end of each fiscal year of the Borrower, based on the
relevant financial statements delivered pursuant to Section 7.3.1 or Section
7.3.2; changes in the Applicable Margin shall become effective on the date which
is the earlier of (i) two Business Days after the date the Agent receives such
financial statements and (ii) the 60th day after the end of each of the first
three quarters of each fiscal year
-2-
<PAGE>
or the 120th day after the end of each fiscal year, as the case may be, and
shall remain in effect until the next change to be effected pursuant to this
definition; provided, that (a) until the first such financial statements are
delivered after the date hereof, the Applicable Margin shall be determined by
reference to the Leverage Ratio set forth in the Closing Certificate delivered
to the Agent and (b) if any financial statements referred to above are not
delivered within the time periods specified above, then, for the period from and
including the date on which such financial statements are delivered, the
Applicable Margin as at the end of the fiscal period that would have been
covered thereby shall be deemed to be the Applicable Margin which would be
applicable when the Leverage Ratio is equal to or greater than 3.00:1.
Assessment Rate for any day shall mean the rate per annum (rounded
---------------
upward to the nearest 1/100 of 1%) as determined by the Agent in accordance
with its usual procedures to be the maximum effective assessment rate per annum
payable by a bank insured by the Federal Deposit Insurance Corporation (or any
successor) for such day for insurance on Dollar time deposits, exclusive of any
credit allowed against such annual assessment on account of assessment payments
made or to be made by such bank. The CD Rate shall be adjusted automatically as
of the effective date of each change in the Assessment Rate.
Assignment and Assumption Agreement shall mean an Assignment and
-----------------------------------
Assumption Agreement by and among a Purchasing Bank, a Transferor Bank and the
Agent, as Agent and on behalf of the remaining Banks, substantially in the form
of Exhibit 1.1(A).
- -----------------
Authorized Officer shall mean until notice to the contrary, the
------------------
President, any Vice President and the Treasurer of the General Partner. The
Borrower may amend such list of individuals from time to time by giving written
notice of such amendment to the Agent.
Banks shall mean the financial institutions named on Schedule 1.1(B)
----- ---------------
and their respective successors and assigns as permitted hereunder, each of
which is referred to herein as a Bank.
Base Rate shall mean the greater of (i) the interest rate per annum
---------
announced from time to time by the Agent at its Principal Office as its then
prime rate, which rate may not be the lowest rate then being charged commercial
borrowers by the Agent, or (ii) the Federal Funds Effective Rate plus one half
of one percent (.5%) per annum.
Basic Subscribers shall mean, at any time, the total number of
-----------------
subscribers subscribing to the Cable Systems (excluding "second connects" as
such term is commonly understood in the cable television industry) who (i) pay
the Basic Subscriber Rate for service, and (ii) are not more than 60 days past
due in payment. 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 such services shall be counted as one
subscriber. The number of subscribers in a commercial building or in a multiple
residential dwelling which obtains a reduced bulk service rate shall be obtained
by dividing (x) the aggregate dollar amount of monthly subscribers' fees paid on
account of such commercial building or multiple residential
-3-
<PAGE>
dwelling for basic service by (y) the Basic Subscriber Rate. Except for
discounts to senior citizens less than 20% of the otherwise applicable rate,
residential households (other than in a multiple residential dwelling) paying
the Basic Subscriber Rate on a discounted basis or under any form of deferred
payment arrangement shall not be included.
Benefit Arrangement shall mean at any time an "employee benefit plan,"
-------------------
within the meaning of Section 3(3) of ERISA, which is neither a Plan nor a
Multiemployer Plan and which is maintained, sponsored or otherwise contributed
to by any member of the ERISA Group.
Borrowing Date shall mean, with respect to any Loan, the date for the
--------------
making thereof or the renewal or conversion thereof at or to the same or a
different Interest Rate Option, which shall be a Business Day.
Borrowing Tranche shall mean specified portions of Loans outstanding
-----------------
as follows: (i) any Loans to which either a CD Rate Option or Euro-Rate Option
applies which become subject to the same Interest Rate Option under the same
Loan Request by the Borrower and which have the same Interest Period shall
constitute one Borrowing Tranche, and (ii) all Loans to which a Base Rate Option
applies shall constitute one Borrowing Tranche.
Business Day shall mean any day other than a Saturday or Sunday or a
------------
legal holiday on which commercial banks are authorized or required to be closed
for business in New York, New York and, if the applicable Business Day relates
to any Loan to which the EuroRate Option applies, such day must also be a day on
which dealings in dollar deposits are carried on in the London interbank market.
Cable Franchises shall have the meaning assigned to such terms in
----------------
Section 5.15.
Cable TV Fund 14-A/B Venture shall mean Cable TV Fund 14-A/B
----------------------------
Venture, a Colorado general partnership.
Cable System shall mean the assets constituting a CATV System serving
------------
the communities in and around Buffalo, Minnesota; Naperville, Illinois; Calvert
County, Maryland; and Central Illinois (including, without limitation, all
related licenses, franchises and permits issued under federal, state or local
laws from time to time, and all agreements with public utilities and microwave
transmission companies, pole attachment, use, access or rental agreements,
conduit occupancy rights, utility easements and all other property owned or used
in connection with the services provided pursuant to, and all other interests of
the holder thereof to receive revenues from, or pursuant to, said licenses,
franchises and permits) listed on Schedule 5.15 and all assets constituting such
a system hereafter acquired by the Borrower serving subscribers within a
geographical area covered by one or more Franchises from the same Head End
facility or by two or more related Head End facilities.
-4-
<PAGE>
Cash Flow shall mean, for any period, total consolidated revenues of
---------
the Borrower for such period, less the sum of (i) operating expenses of the
Borrower for such period and (ii) general and administrative expenses of the
Borrower for such period (excluding Management Fees and Allocated Overhead for
such period, if any, included in clauses (i) and (ii)).
CATV System shall mean a community antenna television system.
-----------
CD Rate shall mean, with respect to the Loans comprising any Borrowing
-------
Tranche to which the CD Rate Option applies for any Interest Period, the
interest rate per annum determined by the Agent by adding:
(A) the rate per annum obtained by dividing (the resulting
quotient to be rounded upward to the nearest 1/100 of 1%) (i) the
rate of interest (which shall be the same for each day in such
Interest Period) which is the arithmetic average computed by the Agent
of the rates determined by the Agent in accordance with its usual
procedures to be the average of the secondary market bid rates at or
about 11:00 a.m., New York time, on the first day of such Interest
Period by dealers of recognized standing in negotiable certificates of
deposit for the purchase at face value of negotiable certificates of
deposit of the Agent for delivery on such day in amounts comparable to
such CD Rate Loan and having maturities comparable to such Interest
Period by (ii) a number equal to 1.00 minus the CD Rate Reserve
Percentage; and
(B) the Assessment Rate.
The CD Rate may also be expressed by the following formula:
[average of the secondary market]
CD Rate = [bid rates determined by the Agent] + Assessment Rate
[1.00 - CD Rate Reserve Percentage]
The CD Rate shall be adjusted with respect to any CD Rate Option outstanding on
the effective date of any change in the CD Rate Reserve Percentage as of such
effective date. The Agent shall give prompt written notice to the Borrower of
the CD Rate as determined or adjusted in accordance herewith, which
determination shall be conclusive absent manifest error.
CD Rate Reserve Percentage shall mean the maximum effective percentage
--------------------------
(expressed as a decimal, rounded upward to the nearest 1/100 of 1%), as
determined in good faith by the Agent, which is in effect on such day as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the reserve requirements (including supplemental,
marginal and emergency reserve requirements) for a member bank of such System in
respect of nonpersonal time deposits in Dollars in the United
-5-
<PAGE>
States. The CD Rate shall be adjusted automatically as of the effective date of
each change in the CD Rate Reserve Percentage.
Change in Control shall mean the occurrence of either or both of
-----------------
the following:
(a) the failure of Jones Intercable to own, free and clear of all
Liens or other encumbrances, 100% of the outstanding general partnership
interests in the Borrower; or
(b) the failure of Jones Intercable to be the sole general partner of
the Borrower; provided, however, that if Jones Intercable ceases to be the sole
-------- -------
general partner of the Borrower but within 90 days thereafter a replacement
general partner acceptable to the Required Banks in their sole discretion shall
have been appointed, then no Change in Control shall be deemed to have occurred.
Closing Date shall mean the date hereof.
------------
Collateral shall mean all property of the Borrower in which security
----------
interests are to be granted under the Security Agreement; provided that the
interest of Borrower in Cable TV Fund 14-A/B Venture shall not be part of the
Collateral.
Commitment Fee shall have the meaning assigned to that term in
--------------
Section 2.3.
Communications Act shall mean the Communications Act of 1934 and the
------------------
rules and regulations issued thereunder, as amended, reformed or otherwise
modified from time to time.
Dollar, Dollars, U.S. Dollars and the symbol $ shall mean lawful
----------------------------- -
money of the United States of America.
Environmental Complaint shall mean any written complaint setting forth
-----------------------
a cause of action for personal or property damage or natural resource damage or
equitable relief, order, notice of violation, citation, request for information
issued pursuant to any Environmental Laws by an Official Body, subpoena or other
written notice of any type relating to, arising out of, or issued pursuant to,
any of the Environmental Laws or any Environmental Conditions, as the case may
be.
Environmental Conditions shall mean any conditions of the environment,
------------------------
including the workplace, the ocean, natural resources (including flora or
fauna), soil, surface water, groundwater, any actual or potential drinking water
supply sources, substrata or the ambient air, relating to or arising out of, or
caused by, the use, handling, storage, treatment, recycling, generation,
transportation, release, spilling, leaking, pumping, emptying, discharging,
injecting, escaping, leaching, disposal, dumping, threatened release or other
management or
-6-
<PAGE>
mismanagement of Regulated Substances resulting from the use of, or operations
on, any Property.
Environmental Laws shall mean all federal, state, local and foreign
------------------
Laws and regulations. including permits, licenses, authorizations, bonds,
orders, judgments, and consent decrees issued, or entered into, pursuant
thereto, relating to pollution or protection of human health or the environment
or employee safety in the workplace.
ERISA shall mean the Employee Retirement Income Security Act of 1974,
-----
as the same may be amended or supplemented from time to time, and any successor
statute of similar import, and the rules and regulations thereunder, as from
time to time in effect.
ERISA Group shall mean, at any time, the Borrower and all members of a
-----------
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control and all other entities which, together with
the Borrower, are treated as a single employer under Section 414 of the Internal
Revenue Code.
Euro-Rate shall mean, with respect to the Loans comprising any
---------
Borrowing Tranche to which the Euro-Rate Option applies for any Interest Period,
the interest rate per annum determined by the Agent by dividing (the resulting
quotient rounded upward to the nearest 1/16th of 1% per annum) (i) the rate of
interest determined by the Agent in accordance with its usual procedures (which
determination shall be conclusive absent manifest error) to be the London
interbank offered rate of interest per annum appearing on Telerate display page
3750 or such other display page on the Telerate System as may replace such page
evidencing quotes by the British Bankers' Association (or appropriate successor
or, if the British Bankers' Association or its successor ceases to provide such
quotes, a comparable replacement determined by the Agent) at approximately 11:00
a.m., London time, two (2) Business Days prior to the first day of such Interest
Period for an amount comparable to such Borrowing Tranche and having a borrowing
date and a maturity comparable to such Interest Period by (ii) a number equal to
1.00 minus the Euro-Rate Reserve Percentage. The Euro-Rate may also be expressed
by the following formula:
Euro-Rate = Telerate page 3750 quoted by British Bankers'
Association or appropriate successor
------------------------------------
1.00 - Euro-Rate Reserve Percentage
The Euro-Rate shall be adjusted with respect to any Euro-Rate Option outstanding
on the effective date of any change in the Euro-Rate Reserve Percentage as of
such effective date. The Agent shall give prompt notice to the Borrower of the
Euro-Rate as determined or adjusted in accordance herewith, which determination
shall be conclusive absent manifest error.
Euro-Rate Reserve Percentage shall mean the maximum percentage
----------------------------
(expressed as a decimal rounded upward to the nearest 1/100 of 1%) as determined
by the Agent which is in effect during any relevant period, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the reserve requirements (including
-7-
<PAGE>
supplemental, marginal and emergency reserve requirements) with respect to
eurocurrency funding (currently referred to as "Eurocurrency Liabilities") of a
member bank in such System.
Event of Default shall mean any of the events described in
----------------
Section 8.1 and referred to therein as an "Event of Default."
Expiration Date shall mean, with respect to the Revolving Credit
---------------
Commitments, September 30, 2000.
Facility Fees shall mean the fees referred to in Fee Letters.
-------------
FCC shall mean the Federal Communications Commission or any successor
---
agency thereto performing functions similar to those performed by the Federal
Communications Commission on the date hereof.
FCC License shall mean any license or permit issued by the FCC,
-----------
including, without limitation, licenses issued in connection with the operation
of CATV or SMATV systems, community antenna relay systems, microwave systems,
earth stations and business and other two-way radios.
Federal Funds Effective Rate for any day shall mean the rate per
----------------------------
annum (based on a year of 360 days and actual days elapsed and rounded upward
to the nearest 1/100 of 1%) announced by the Federal Reserve Bank of New York
(or any successor) on such day as being the weighted average of the rates on
overnight federal funds transactions arranged by federal funds brokers on the
previous trading day, as computed and announced by such Federal Reserve Bank (or
any successor) in substantially the same manner as such Federal Reserve Bank
computes and announces the weighted average it refers to as the "Federal Funds
Effective Rate" as of the date of this Agreement; provided, if such Federal
--------
Reserve Bank (or its successor) does not announce such rate on any day, the
"Federal Funds Effective Rate" for such day shall be the Federal Funds Effective
Rate for the last day on which such rate was announced.
Fee Letters shall have the meaning assigned to that term in Section
-----------
2.4.
Financial Projections shall have the meaning assigned to that
---------------------
term in Section 5.19(ii).
Franchise shall mean any franchise, permit, license or other
---------
authorization granted by any Official Body, including all laws, regulations and
ordinances relating thereto, for the construction, operation and maintenance of
a CATV or SMATV system and the reception and transmission of signals by
microwave, and shall include, without limitation, all FCC Licenses and all
certificates of compliance and cable television registration statements which
are required to be issued by or filed with the FCC.
Franchise Agreement shall mean any ordinance, agreement, contract or
-------------------
other document stating the terms and conditions of any Franchise, including,
without limitation,
-8-
<PAGE>
all exhibits and schedules thereto, all amendments thereof and consents, waivers
and extensions issued thereunder, any documents incorporated therein by
reference and the application from which such Franchise was granted.
GAAP shall mean generally accepted accounting principles as are in
----
effect from time to time, subject to the provisions of Section 1.3, and applied
on a consistent basis both as to classification of items and amounts.
General Partner shall mean Jones Intercable until such time as Jones
---------------
Intercable is replaced in accordance with the terms of this Agreement by another
Person as the general partner of the Borrower, at which time "General Partner"
shall mean such other Person. Whenever the term "General Partner" is used
herein, such term shall mean any such Person in its capacity as general partner
of the Borrower.
General Partner Advances shall mean (i) all amounts representing
------------------------
deferred Management Fees and deferred Allocated Overhead, (ii) all amounts
representing the Borrower's obligation to repay cash advances or loans made to
the Borrower by the General Partner or any previous general partner of the
Borrower, and (iii) any interest accrued on any of the foregoing amounts.
Head End shall mean the antenna site, the tower and the antenna, the
--------
microwave communications equipment, the earth station and the head-end
facilities, equipment, leaseholds or other real estate and leasehold
improvements relating thereto.
Historical Statements shall have the meaning assigned to that
---------------------
term in Section 4.19(i).
Indebtedness shall mean, as to any Person at any time, any and all
------------
indebtedness, obligations or liabilities (whether matured or unmatured,
liquidated or unliquidated, direct or indirect, absolute or contingent, or joint
or several) of such Person for or in respect of: (i) borrowed money, (ii)
amounts raised under or liabilities in respect of any note purchase or
acceptance credit facility, (iii) reimbursement obligations (contingent or
otherwise) under any letter of credit, currency swap agreement, interest rate
swap, cap, collar or floor agreement or other interest rate management device,
(iv) any other transaction (including forward sale or purchase agreements,
capitalized leases and conditional sales agreements) having the commercial
effect of a borrowing of money entered into by such Person to finance its
operations or capital requirements (but not including trade payables and accrued
expenses incurred in the ordinary course of business which are not represented
by a promissory note or other evidence of indebtedness and which are not more
than thirty (30) days past due), or (v) any guaranty of Indebtedness for
borrowed money.
Insolvency Proceeding shall mean, with respect to any Person, (a) any
---------------------
case, action or proceeding with respect to such Person (1) before any court or
any other Official Body under any bankruptcy, insolvency, reorganization or
other similar Law now or hereafter in effect, or (ii) for the appointment of a
receiver, liquidator, assignee, custodian, trustee,
-9-
<PAGE>
sequestrator, conservator (or similar official) of the Borrower or otherwise
relating to liquidation, dissolution, winding-up or relief of such Person, or
(b) any general assignment for the benefit of creditors, composition, marshaling
of assets for creditors, or other, similar arrangement in respect of such
Person's creditors generally or any substantial portion of its creditors,
undertaken under any Law.
Intercompany Subordination Agreement shall mean a Subordination
------------------------------------
Agreement among the Borrower, the General Partner and the Agent in the form
attached hereto as Exhibit 1.l(I)(2) pursuant to which the General Partner
-----------
Advances shall be subordinated to the repayment of the Obligations.
Interest Coverage Ratio shall mean, at any time, the ratio, computed
-----------------------
on a consolidated basis, of: (a) Cash Flow for the immediately preceding Fiscal
Quarter to (b) Interest Expense for the immediately preceding Fiscal Quarter.
Interest Expense shall mean, for any period, the interest expense of
----------------
the Borrower for such period, including, (whether or not includable under GAAP)
all net amounts payable with respect to interest rate hedging and similar
agreements, commitment fees owed with respect to the Commitments and the portion
of any capitalized lease of the Borrower allocable to interest expense, in each
case paid or payable during such period.
Interest Period shall have the meaning assigned to such term in
---------------
Section 3.2.
Interest Rate Option shall mean any CD Rate Option, Euro-Rate
--------------------
Option or Base Rate Option.
Interim Statements shall have the meaning assigned to that term
------------------
in Section 5.19.
Internal Revenue Code shall mean the Internal Revenue Code of 1986, as
---------------------
the same may be amended or supplemented from time to time, and any successor
statute of similar import, and the rules and regulations thereunder, as from
time to time in effect.
Jones Intercable Shall mean Jones Intercable Inc., a Colorado
----------------
corporation.
Labor Contracts shall mean all employment agreements, employment
---------------
contracts, collective bargaining agreements and other agreements among the
Borrower or the General Partner or its employees.
Law shall mean any law (including common law), constitution, statute,
---
treaty, regulation, rule, ordinance, opinion, release, ruling, order,
injunction, writ, decree or award of any Official Body.
-10-
<PAGE>
Leverage Ratio shall mean, at any time, the ratio, computed on a
--------------
consolidated basis, of: (a) Total Debt at such time to (b) Annualized Cash Flow.
Lien shall mean any mortgage, deed of trust, pledge, lien, security
----
interest, charge or other encumbrance or security arrangement of any nature
whatsoever, whether voluntarily or involuntarily given, including any
conditional sale or title retention arrangement, and any assignment, deposit
arrangement or lease intended as, or having the effect of, security and any
filed financing statement or other notice of any of the foregoing (whether or
not a lien or other encumbrance is created or exists at the time of the filing).
Loan Documents shall mean this Agreement, the Agent's Letter, the Fee
--------------
Letters, the Intercompany Subordination Agreement, the Notes, the Security
Agreement, and any other instruments, certificates or documents delivered or
contemplated to be delivered hereunder or thereunder or in connection herewith
or therewith, as the same may be supplemented or amended from time to time in
accordance herewith or therewith, and Loan Document shall mean any of the Loan
-------------
Documents.
Loan Request shall have the meaning given to such term in Section 2.5.
------------
Loans or Revolving Credit Loans shall mean collectively and Loan or
----- ---------------------- ----
Revolving Credit Loan shall mean separately all Revolving Credit Loans or any
- ---------------------
Revolving Credit Loan made by the Banks or one of the Banks to the Borrower
pursuant to Section 2.1.
Management Fees shall mean, for any period, the management fees
---------------
payable by the Borrower to the General Partner during such period for management
services provided to the Borrower pursuant to the Partnership Agreement.
Material Adverse Change shall mean any set of circumstances or events
-----------------------
which (a) has or could reasonably be expected to have any material adverse
effect whatsoever upon the validity or enforceability of this Agreement or any
other Loan Document, (b) is or could reasonably be expected to be material and
adverse to the business, properties, assets, financial condition, results of
operations or prospects (with respect to the Borrower's ability to pay the
Obligations) of the Borrower or impairs materially or could reasonably be
expected to impair materially the ability of the Borrower to duly and punctually
pay or perform its Indebtedness, or (c) impairs materially or could reasonably
be expected to impair materially the ability of the Agent or any of the Banks,
to the extent permitted, to enforce their legal remedies pursuant to this
Agreement or any other Loan Document.
Month, with respect to an Interest Period under the Euro-Rate Option,
-----
shall mean the interval between the days in consecutive calendar months
numerically corresponding to the first day of such Interest Period. If any Euro-
Rate Interest Period begins on a day of a calendar month for which there is no
numerically corresponding day in the month in which such Interest Period is to
end, the final month of such Interest Period shall be deemed to end on the last
Business Day of such final month.
-11-
<PAGE>
Multiemployer Plan shall mean any employee benefit plan which is a
------------------
"multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA and to
which the Borrower or any member of the ERISA Group is then making or accruing
an obligation to make contributions or, within the preceding five Plan years,
has made or had an obligation to make such contributions.
Multiple Employer Plan shall mean a Plan which has two or more
----------------------
contributing sponsors (including the Borrower or any member of the ERISA Group)
at least two of whom are not under common control, as such a plan is described
in Sections 4063 and 4064 of ERISA.
Notices shall have the meaning assigned to that term in Section 10.6.
-------
Obligation shall mean any obligation or liability of the Borrower to
----------
the Agent or any of the Banks, howsoever created, arising or evidenced, whether
direct or indirect, absolute or contingent, now or hereafter existing, or due or
to become due, under or in connection with this Agreement, the Notes, the
Agent's Letter, the Fee Letters or any other Loan Document.
Official Body shall mean any national, federal, state, local or other
-------------
government or political subdivision or any agency, authority, bureau, central
bank, commission, department or instrumentality of either, or any court,
tribunal, grand jury or arbitrator, in each case whether foreign or domestic.
Partnership Agreement shall mean the Limited Partnership Agreement of
---------------------
the Borrower dated February 4, 1987, a copy of which has been provided to the
Agent and which is attached to the Certificate delivered pursuant to Section
6.1.2, as such agreement may be amended, restated or otherwise modified from
time to time after the date hereof.
Pay-to-Basic Rate shall mean, at any time, a percentage derived from a
-----------------
fraction the numerator of which is the number of Pay Units at such time and the
denominator of which is the number of Basic Subscribers at such time.
Pay Unit shall mean a cable programming service subscribed to by any
--------
subscriber of a cable system at an additional charge in excess of the amount
paid by any such subscriber for basic or expanded basic service, which
subscription is not more than 60 days past due. The number of Pay Units in the
case of subscribers receiving a reduced bulk payprogramming service rate shall
be determined by dividing (x) the aggregate dollar amount of monthly
subscribers' fees paid on account of such services by (y) the standard rate for
the pay programming services received.
PBGC shall mean the Pension Benefit Guaranty Corporation established
----
pursuant to Subtitle A of Title IV of ERISA or any successor.
-12-
<PAGE>
Permitted Asset Sale shall mean a sale of assets of substantially all
--------------------
of a Cable System if the following conditions are met: (i) no Potential Default
or Event of Default will exist after or be caused by such Sale, (ii) the
Borrower owns not fewer than 2 of the Cable Systems after such sale, and (iii)
the Proceeds therefor is applied to repay the Obligations in accordance with
Section 4.5.
Permitted Investments shall mean:
---------------------
(i) direct obligations of the United States of America or any
agency or instrumentality thereof or obligations backed by the full faith and
credit of the United States of America maturing in twelve (12) months or less
from the date of acquisition;
(ii) commercial paper maturing in 180 days or less rated not
lower than A-1, by Standard & Poor's or P-1 by Moody's Investors Service, Inc.
on the date of acquisition; and
(iii) demand deposits, time deposits or certificates of deposit
maturing within one year in commercial banks whose obligations are rated A-1, A
or the equivalent or better by Standard & Poor's on the date of acquisition.
Permitted Liens shall mean:
---------------
(i) Liens for taxes, assessments, or similar charges, incurred in
the ordinary course of business and which are not yet due and payable;
(ii) Pledges or deposits made in the ordinary course of business
to secure payment of workmen's compensation, or to participate in any fund in
connection with workmen's compensation, unemployment insurance, old-age pensions
or other social security programs;
(iii) Liens of mechanics, materialmen, warehousemen, carriers, or
other like Liens, securing obligations incurred in the ordinary course of
business that are not yet due and payable and Liens of landlords securing
obligations to pay lease payments that are not yet due and payable or in
default;
(iv) Good-faith pledges or deposits made in the ordinary course
of business to secure performance of bids, tenders, contracts (other than for
the repayment of borrowed money) or leases, not in excess of the aggregate
amount due thereunder, or to secure statutory obligations, or surety, appeal,
indemnity, performance or other similar bonds required in the ordinary course of
business;
(v) Encumbrances consisting of zoning restrictions, easements or
other restrictions on the use of real property, none of which materially impairs
the use of such property or the value thereof, and none of which is violated in
any material respect by existing or proposed structures or land use;
-13-
<PAGE>
(vi) Liens, security interests and mortgages in favor of the
Agent for the benefit of the Banks,
(vii) Liens on property leased by the Borrower under capital and
operating leases not prohibited by any Loan Document securing obligations of
such Borrower to the lessor under such leases;
(viii) Any Lien existing on the date of this Agreement and
described on Schedule 1.1(P), provided that the principal amount secured thereby
is not hereafter increased, and no additional assets become subject to such
Lien;
(ix) Purchase Money Security Interests, provided that the
aggregate amount of loans and deferred payments secured by such Purchase Money
Security Interests shall not exceed $750,000; and
(x) The following, (A) if the validity or amount thereof is being
contested in good faith by appropriate and lawful proceedings diligently
conducted so long as levy and execution thereon have been stayed and continue to
be stayed or (B) if a final judgment is entered and such judgment is discharged
within thirty (30) days of entry, and in either case they do not affect the
Collateral or, in the aggregate, materially impair the ability of the Borrower
to perform its Obligations hereunder or under the other Loan Documents:
(1) Claims or Liens for taxes, assessments or charges due and payable
and subject to interest or penalty, provided that the Borrower maintains such
reserves or other appropriate provisions as shall be required by GAAP and pays
all such taxes, assessments or charges forthwith upon the commencement of
proceedings to foreclose any such Lien;
(2) Claims, Liens or encumbrances upon, and defects of title to, real
or personal property other than the Collateral, including any attachment of
personal or real property or other legal process prior to adjudication of a
dispute on the merits; or
(3) Liens resulting from final judgments or orders described in
Section 8.1.6.
Permitted Subordinated Indebtedness shall mean Indebtedness owing to
-----------------------------------
the General Partner provided such Indebtedness is subject to the Intercompany
Subordination Agreement.
Person shall mean any individual, corporation, partnership, limited
------
liability company, association, joint-stock company, trust, unincorporated
organization, joint venture, government or political subdivision or agency
thereof, or any other entity.
-14-
<PAGE>
Plan shall mean at any time an employee pension benefit plan
----
(including a Multiple Employer Plan, but not a Multiemployer Plan) which is
covered by Title IV of ERISA or is subject to the minimum funding standards
under Section 412 of the Internal Revenue Code and either (i) is maintained by
any member of the ERISA Group for employees of any member of the ERISA Group or
(ii) has at any time within the preceding five years been maintained by any
entity which was at such time a member of the ERISA Group for employees of any
entity which was at such time a member of the ERISA Group.
Pole Agreement shall mean any conduit occupancy rights, pole
--------------
agreement, pole rental, pole use, access or similar agreement with any telephone
company, public authority, public utility or other entity pursuant to which the
coaxial, fiber-optic or other type of cable and local distribution units of a
cable television system are extended.
Potential Default shall mean any event or condition which with notice,
-----------------
passage of time or a determination by the Agent or the Required Banks, or any
combination of the foregoing, would cause or constitute an Event of Default.
Principal Office shall mean the main banking office of the Agent
----------------
in New York, New York.
Prior Bank Facility shall mean the revolving credit facility provided
-------------------
pursuant to that certain $80,000,000 Credit Agreement dated July 21, 1994, as
amended, among The Bank of Nova Scotia, as Agent, and certain commercial lending
institutions party thereto.
Prior Security Interest shall mean a valid and enforceable perfected
-----------------------
firstpriority security interest under the Uniform Commercial Code in the
Collateral which is subject only to (i) Liens for taxes not yet due and payable
to the extent such prospective tax payments are given priority by statute or
(ii) Purchase Money Security Interests as permitted hereunder.
Proceeds shall mean with respect to any sale of assets permitted by
--------
Section 7.2.7(iv), the aggregate of (i) the cash paid to or on behalf of the
Borrower, directly or indirectly, in connection therewith and (ii) the
Indebtedness of the Borrower incurred or assumed by or on behalf of the
purchaser, whether fixed or contingent, less the expenses incurred by the
Borrower in connection with such sale.
Prohibited Transaction shall mean any prohibited transaction as
----------------------
defined in Section 4975 of the Internal Revenue Code or Section 406 of ERISA for
which neither an individual nor a class exemption has been issued by the United
States Department of Labor.
Property shall mean all real property, both owned and leased, of
--------
any Borrower.
Purchase Money Security Interest shall mean Liens upon tangible
--------------------------------
personal property securing loans to the Borrower or deferred payments by the
Borrower for the purchase of such tangible personal property.
-15-
<PAGE>
Purchasing Bank shall mean a Bank which becomes a party to this
---------------
Agreement by executing an Assignment and Assumption Agreement.
Ratable Share shall mean the proportion that a Bank's Commitment
-------------
bears to the Commitments of all of the Banks.
Regulated Substances shall mean any substance, including any solid,
--------------------
liquid, semisolid, gaseous, thermal, thoriated or radioactive material, refuse,
garbage, wastes, chemicals, petroleum products, by-products, coproducts,
impurities, dust, scrap, heavy metals, defined as a "hazardous substance,"
"pollutant," "pollution," "contaminant," "hazardous or toxic substance,"
"extremely hazardous substance," "toxic chemical," "toxic waste," "hazardous
waste," "industrial waste," "residual waste," "solid waste," "municipal waste,"
"mixed waste," "infectious waste," "chemotherapeutic waste," "medical waste," or
"regulated substance" or any related materials, substances or wastes as now or
hereafter defined pursuant to any Environmental Laws, ordinances, rules,
regulations or other directives of any Official Body, the generation,
manufacture, extraction, processing, distribution, treatment, storage, disposal,
transport, recycling, reclamation, use, reuse, spilling, leaking, dumping,
injection, pumping, leaching, emptying, discharge, escape, release or other
management or mismanagement of which is regulated by the Environmental Laws.
Regulation U shall mean Regulation U, T, G or X as promulgated by the
------------
Board of Governors of the Federal Reserve System, as amended from time to time.
Reportable Event shall mean a reportable event described in Section
----------------
4043 of ERISA and regulations thereunder with respect to a Plan or Multiemployer
Plan.
Required Banks shall mean
--------------
(i) if there are no Loans outstanding, Banks whose Commitments
aggregate at least 66 2/3% of the Commitments of all of the Banks, or
(ii) if there are Loans outstanding, any Bank or group of Banks
if the sum of the Loans of such Banks then outstanding aggregates at least 66
2/3% of the total principal amount of all of the Loans then outstanding.
Revolving Credit Base Rate Option or Base Rate Option shall mean the
--------------------------------- ----------------
option of the Borrower to have Loans bear interest at the rate and under the
terms and conditions set forth in Section 3.1.1(i).
Revolving Credit CD Rate Option or CD Rate Option shall mean the
------------------------------- --------------
option of the Borrower to have Loans bear interest at the rate and under the
terms and conditions set forth in Section 3.1.1 (iii).
Revolving Credit Commitment or Commitment shall mean, as to any Bank
--------------------------- ----------
at any time, the amount initially set forth opposite its name on Schedule 1.1
------------
(B) in the
- ---
-16-
<PAGE>
column labeled "Amount of Commitment for Revolving Credit Loans," and thereafter
on Schedule I to the most recent Assignment and Assumption Agreement, and
Revolving Credit Commitments or Commitments shall mean the aggregate Revolving
- ----------------------------- ------------
Credit Commitments of all of the Banks.
Revolving Credit Euro-Rate Option or Euro-Rate Option shall mean the
--------------------------------- ----------------
option of the Borrower to have Loans bear interest at the rate and under the
terms and conditions set forth in Section 3.1.1(ii).
Revolving Credit Notes or Notes shall mean collectively and Revolving
---------------------- ----- ---------
Credit Note or Note shall mean separately all the Revolving Credit Notes of the
- ------------ ----
Borrower in the form of Exhibit 1.1(R) evidencing the Revolving Credit Loans
--------------
together with all amendments, extensions, renewals, replacements, refinancings
or refundings thereof in whole or in part.
Revolving Facility Usage shall mean at any time the sum of the
------------------------
Revolving Credit Loans outstanding.
Royal Bank of Canada shall mean Royal Bank of Canada, its
--------------------
successors and assigns.
Security Agreement shall mean the Security Agreement in substantially
------------------
the form of Exhibit 1.1(S) executed and delivered by the Borrower to the Agent
for the benefit of the Banks.
Standard & Poor's shall mean Standard & Poor's Ratings Services,
-----------------
a division of The McGraw-Hill Companies, Inc.
Subsidiary of any Person at any time shall mean (i) any corporation or
----------
trust of which more than 50% (by number of shares or number of votes) of the
outstanding capital stock or shares of beneficial interest normally entitled to
vote for the election of one or more directors or trustees (regardless of any
contingency which does or may suspend or dilute the voting rights) is at such
time owned directly or indirectly by such Person or one or more of such Person's
Subsidiaries, (ii) any partnership of which such Person is a general partner or
of which 50% or more of the partnership interests is at the time directly or
indirectly owned by such Person or one or more of such Person's Subsidiaries,
(iii) any limited liability company of which such Person is a member or of which
more than 50% of the limited liability company interests is at the time directly
or indirectly owned by such Person or one or more of such Person's Subsidiaries
or (iv) any corporation, trust, partnership, limited liability company or other
entity which is controlled or capable of being controlled by such Person or one
or more of such Person's Subsidiaries, provided, that for all purposes of this
Agreement, Cable TV Fund 14-A Venture shall not be deemed to be a Subsidiary of
the Borrower.
Total Debt shall mean all Indebtedness of the Borrower, excluding
----------
General Partner Advances.
-17-
<PAGE>
Transferor Bank shall mean the selling Bank pursuant to an
---------------
Assignment and Assumption Agreement.
Uniform Commercial Code shall have the meaning assigned to that
-----------------------
term in Section 5.2.1
1.2 Construction.
------------
Unless the context of this Agreement otherwise clearly requires, the
following rules of construction shall apply to this Agreement and each of the
other Loan Documents:
1.2.1 Number; Inclusion.
-----------------
References to the plural include the singular, the plural, the part
and the whole; "or" has the inclusive meaning represented by the phrase
"and/or," and "including" has the meaning represented by the phrase "including
without limitation";
1.2.2 Determination.
-------------
References to "determination" of or by the Agent or the Banks shall be
deemed to include good-faith estimates by the Agent or the Banks (in the case of
quantitative determinations) and good-faith beliefs by the Agent or the Banks
(in the case of qualitative determinations) and such determination shall be
conclusive absent manifest error;
1.2.3 Agent's Discretion and Consent.
------------------------------
Whenever the Agent or the Banks are granted the right herein to act in
its or their sole discretion or to grant or withhold consent such right shall be
exercised in good faith;
1.2.4 Documents Taken as a Whole.
--------------------------
The words "hereof," "herein," "hereunder," "hereto" and similar terms
in this Agreement or any other Loan Document refer to this Agreement or such
other Loan Document as a whole and not to any particular provision of this
Agreement or such other Loan Document;
1.2.5 Headings.
--------
The section and other headings contained in this Agreement or such
other Loan Document and the Table of Contents (if any), preceding this Agreement
or such other Loan Document are for reference purposes only and shall not
control or affect the construction of this Agreement or such other Loan Document
or the interpretation thereof in any respect;
-18-
<PAGE>
1.2.6 Implied References to this Agreement.
------------------------------------
Article, section, subsection, clause, schedule and exhibit references
are to this Agreement or other Loan Document, as the case may be, unless
otherwise specified;
1.2.7 Persons.
-------
Reference to any Person includes such Person's successors and assigns
but, if applicable, only if such successors and assigns are permitted by this
Agreement or such other Loan Document, as the case may be, and reference to a
Person in a particular capacity excludes such Person in any other capacity;
1.2.8 Modifications to Documents.
--------------------------
Reference to any agreement (including this Agreement and any other
Loan Document together with the schedules and exhibits hereto or thereto),
document or instrument means such agreement, document or instrument as amended,
modified, replaced, substituted for, superseded or restated;
1.2.9 From, To and Through.
--------------------
Relative to the determination of any period of time, "from" means
"from and including," "to" means "to but excluding," and "through" means
"through and including"; and
1.2.10 Shall; Will.
-----------
References to "shall" and "will" are intended to have the same
meaning.
1.3 Accounting Principles.
---------------------
Except as otherwise provided in this Agreement, all computations and
determinations as to accounting or financial matters and all financial
statements to be delivered pursuant to this Agreement shall be made and prepared
in accordance with GAAP (including principles of consolidation where
appropriate), and all accounting or financial terms shall have the meanings
ascribed to such terms by GAAP; provided, however, that all accounting terms
-------- -------
used in Section 7.2 (and all defined terms used in the definition of any
accounting term used in Section 7.2 shall have the meaning given to such terms
(and defined terms) under GAAP as in effect on the date hereof applied on a
basis consistent with those used in preparing the Annual Statements referred to
in Section 5.19. In the event of any change after the date hereof in GAAP, and
if such change would result in the inability to determine compliance with the
financial covenants set forth in Section 7.2 based upon the Borrower's regularly
prepared financial statements by reason of the preceding sentence, then the
parties hereto agree to endeavor, in good faith, to agree upon an amendment to
this Agreement that would adjust such financial covenants
-19-
<PAGE>
in a manner that would not affect the substance thereof, but would allow
compliance therewith to be determined in accordance with the Borrower's
financial statements at that time.
2. REVOLVING CREDIT FACILITY
-------------------------
2.1 Revolving Credit Commitments.
----------------------------
2.1.1 Commitment
----------
Subject to the terms and conditions hereof and relying upon the
representations and warranties herein set forth, each Bank severally agrees to
make Revolving Credit Loans to the Borrower at any time or from time to time on
or after the date hereof to the Expiration Date provided that after giving
effect to such Loan the aggregate amount of Loans from such Bank shall not
exceed such Bank's Revolving Credit Commitment. Within such limits of time and
amount and subject to the other provisions of this Agreement, the Borrower may
borrow, repay and reborrow pursuant to this Section 2.1.
2.1.2 Voluntary Reduction of Commitment.
---------------------------------
The Borrower shall have the right at any time and from time to
time upon three (3) Business Days' prior written notice to the Agent to reduce
permanently, in a minimum amount of $1,000,000 and whole multiples of $100,000
of principal, or terminate the Commitments, without penalty or premium except as
hereinafter set forth, provided that any such reduction or termination shall be
accompanied by prepayment of the Notes, together with the full amount of
interest accrued on the principal sum to be prepaid (and all amounts referred to
in Section 4.6.2 hereof), to the extent that the aggregate amount thereof then
outstanding exceeds the Commitment as so reduced or terminated.
2.2 Nature of Banks' Obligations with Respect to Revolving Credit
-------------------------------------------------------------
Loans.
-----
Each Bank shall be obligated to participate in each request for
Revolving Credit Loans pursuant to Section 2.5 in accordance with its Ratable
Share. The aggregate of each Bank's Revolving Credit Loans outstanding hereunder
to the Borrower at any time shall never exceed its Revolving Credit Commitment.
The obligations of each Bank hereunder are several. The failure of any Bank to
perform its obligations hereunder shall not affect the Obligations of the
Borrower to any other party nor shall any other party be liable for the failure
of such Bank to perform its obligations hereunder. The Banks shall have no
obligation to make Revolving Credit Loans hereunder on or after the Expiration
Date.
2.3 Commitment Fees.
---------------
Accruing from the date hereof until the Expiration Date, the Borrower
agrees to pay to the Agent for the account of each Bank, as Proceeds for such
Bank's Revolving Credit Commitment hereunder, a nonrefundable commitment fee
(the "Commitment Fee") equal to
-20-
<PAGE>
3/8% per annum (computed on the basis of a year of 365 or 366 days, as the case
may be, and actual days elapsed) on the average daily difference between the
amount of such Bank's Revolving Credit Commitment and the principal amount of
Loans outstanding to such Bank as the same may be constituted from time to time.
All Commitment Fees shall be payable in arrears on the last Business Day of each
June, September, December and March after the date hereof and on the Expiration
Date or upon acceleration of the Notes.
2.4 Revolving Credit Facility Fee.
-----------------------------
The Borrower agrees to pay to the Agent for the account of each Bank
on the Closing Date, as consideration for such Bank's Revolving Credit
Commitment, a nonrefundable facility fee described in those certain letters
entered into between the Borrower and each Bank (the "Fee Letters").
2.5 Revolving Credit Loan Requests.
------------------------------
Except as otherwise provided herein, the Borrower may from time to
time prior to the Expiration Date request the Banks to make Revolving Credit
Loans, or renew or convert the Interest Rate Option applicable to existing
Revolving Credit Loans pursuant to Section 3.1, by delivering to the Agent, not
later than 2:00 p.m., New York time, (i) three (3) Business Days prior to the
proposed Borrowing Date with respect to the making of Revolving Credit Loans to
which a CD Rate Option or a Euro-Rate Option applies or the conversion to or the
renewal of a CD Rate Option or a Euro-Rate Option for any Revolving Credit
Loans; and (ii) one (1) Business Day prior to either the proposed Borrowing Date
with respect to the making of a Revolving Credit Loan to which the Base Rate
Option applies or the last day of the preceding Interest Period with respect to
the conversion to the Base Rate Option for any Revolving Credit Loan, of a duly
completed request therefor substantially in the form of Exhibit 2.5 or a request
by telephone immediately confirmed in writing by letter, facsimile or telex in
such form (each, a "Loan Request"), it being understood that the Agent may rely
on the authority of any individual making such a telephonic request without the
necessity of receipt of such written confirmation. Each Loan Request shall be
irrevocable and shall specify (i) the proposed Borrowing Date; (ii) the
aggregate amount of the proposed Revolving Credit Loans comprising each
Borrowing Tranche, which shall be in integral multiples of $100,000 and not less
than $1,000,000 for each Borrowing Tranche to which a CD Rate Option or a Euro-
Rate Option applies and not less than the lesser of $1,000,000 or the maximum
amount available for Borrowing Tranches to which the Base Rate Option applies;
(iii) whether a CD Rate Option or a Euro-Rate Option or Base Rate Option shall
apply to the proposed Revolving Credit Loans comprising the applicable Borrowing
Tranche; and (iv) in the case of a Borrowing Tranche to which a CD Rate Option
or a Euro-Rate Option applies, an appropriate Interest Period for the proposed
Revolving Credit Loans comprising such Borrowing Tranche.
2.6 Making Revolving Credit Loans.
-----------------------------
The Agent shall, promptly after receipt by it of a Loan Request
pursuant to Section 2.5, notify the Banks of its receipt of such Loan Request
specifying: (i) the proposed
-21-
<PAGE>
Borrowing Date and the time and method of disbursement of the Revolving Credit
Loans requested thereby; (ii) the amount and type of each such Revolving Credit
Loan and the applicable Interest Period (if any); and (iii) the apportionment
among the Banks of such Revolving Credit Loans as determined by the Agent in
accordance with Section 2.2. Each Bank shall remit the principal amount of each
Revolving Credit Loan to the Agent such that the Agent is able to, and the Agent
shall, to the extent the Banks have made funds available to it for such purpose
and subject to Section 6.2, fund such Revolving Credit Loans to the Borrower in
U.S. Dollars and immediately available funds at the Principal Office prior to
2:00 p.m., New York time, on the applicable Borrowing Date, provided that if any
--------
Bank fails to remit such funds to the Agent in a timely manner, the Agent may
elect in its sole discretion to fund with its own funds the Revolving Credit
Loans of such Bank on such Borrowing Date, and such Bank shall be subject to the
repayment obligation in Section 9.16.
2.7 Revolving Credit Notes.
----------------------
The Obligation of the Borrower to repay the aggregate unpaid principal
amount of the Revolving Credit Loans made to it by each Bank, together with
interest thereon, shall be evidenced by a Revolving Credit Note dated the
Closing Date payable to the order of such Bank in a face amount equal to the
Revolving Credit Commitment of such Bank.
3. INTEREST RATES
--------------
3.1 Interest Rate Options.
---------------------
The Borrower shall pay interest in respect of the outstanding unpaid
principal amount of the Loans as selected by it from the Base Rate Option, CD
Rate Option or Euro-Rate Option set forth below applicable to the Loans, it
being understood that, subject to the provisions of this Agreement, the Borrower
may select different Interest Rate Options and different Interest Periods to
apply simultaneously to the Loans comprising different Borrowing Tranches and
may convert to or renew one or more Interest Rate Options with respect to all or
any portion of the Loans comprising any Borrowing Tranche, provided that there
--------
shall not be at any one time outstanding more than eight (8) Borrowing Tranches
in the aggregate among all of the Loans accruing interest at a CD Rate Option or
a Euro-Rate Option. If at any time the designated rate applicable to any Loan
made by any Bank exceeds such Bank's highest lawful rate, the rate of interest
on such Bank's Loan shall be limited to such Bank's highest lawful rate.
3.1.1 Revolving Credit Interest Rate Options.
--------------------------------------
Subject to the provisions of Section 3.1.3, the Borrower shall
have the right to select from the following Interest Rate Options applicable to
the Revolving Credit Loans:
(i) Revolving, Credit Base Rate Option: A fluctuating rate
----------------------------------
per annum (computed on the basis of a year of 365 or 366 days, as the case may
be, and actual days
-22-
<PAGE>
elapsed) equal to the Base Rate plus the Applicable Margin, such interest rate
to change automatically from time to time effective as of the effective date of
each change in the Base Rate;
(ii) Revolving Credit Euro-Rate Option: A rate per annum
---------------------------------
(computed on the basis of a year of 360 days and actual days elapsed) equal to
the Euro-Rate plus the Applicable Margin; or
(iii) Revolving Credit CD Rate Option: A rate per annum
-------------------------------
(computed on the basis of a year of 360 days and actual days elapsed) equal to
the CD Rate plus the Applicable Margin.
3.1.2 Rate Quotations.
---------------
The Borrower may call the Agent on or before the date on which a Loan
Request is to be delivered to receive an indication of the rates then in effect,
but it is acknowledged that such projection shall not be binding on the Agent or
the Banks nor affect the rate of interest which thereafter is actually in effect
when the election is made.
3.1.3 Options During Default.
----------------------
Notwithstanding anything herein to the contrary, the Borrower shall
not be entitled to select the CD Rate Option or the Euro-Rate Option while there
exists either a Potential Default of Event of Default. Subject to the provisions
of Sections 3.3 and 9.2, any Loan in respect of which an Interest Period ends
while a Potential Default or Event of Default exists shall automatically be
converted at the end of such Interest Period to a Loan bearing the Base Rate.
3.2 Interest Periods.
----------------
At any time when the Borrower shall select, convert to or renew a CD Rate
Option or a Euro-Rate Option, the Borrower shall notify the Agent thereof at
least three (3) Business Days prior to the effective date of such CD Rate Option
or such Euro-Rate Option by delivering a Loan Request. The notice shall specify
an interest period (the "Interest Period") during which such Interest Rate
Option shall apply, such Interest Period to be one, two, three or six Months if
the Borrower selects the Euro-Rate Option and 30, 60, 90 or 180 days if the
Borrower selects the CD Rate Option. Notwithstanding the preceding sentence, the
following provisions shall apply to any selection of, renewal of, or conversion
to a CD Rate Option or a Euro-Rate Option:
3.2.1 Ending Date and Business Day.
----------------------------
Any Interest Period which would otherwise end on a date which is not a
Business Day shall be extended to the next succeeding Business Day unless such
Business Day falls in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day;
-23-
<PAGE>
3.3.2 Amount of Borrowing Tranche.
---------------------------
Each Borrowing Tranche of CD Rate Loans or Euro-Rate Loans shall be in
integral multiples of $100,000 and not less than $1,000,000;
3.2.3 Termination Before Expiration Date.
----------------------------------
The Borrower shall not select, convert to or renew an Interest Period
for any portion of the Loans that would end after the Expiration Date; and
3.2.4 Renewals.
--------
In the case of the renewal of a CD Rate Option or a Euro-Rate Option
at the end of an Interest Period, the first day of the new Interest Period shall
be the last day of the preceding Interest Period, without duplication in payment
of interest for such day.
3.3 Interest After Default.
----------------------
To the extent permitted by Law, upon the occurrence of an Event of Default
and until such time such Event of Default shall have been cured or waived:
3.3.1 Interest Rate.
-------------
The rate of interest for each Loan otherwise applicable pursuant to
Section 3.1 shall be increased by 2.0% per annum; and
3.3.2 Other Obligations.
-----------------
Each other Obligation hereunder if not paid when due shall bear
interest at a rate per annum equal to the sum of the rate of interest
applicable under the Revolving Credit Base Rate Option plus an additional 2.0%
per annum from the time such Obligation becomes due and payable and until it is
paid in full.
3.3.3 Acknowledgement.
---------------
The Borrower acknowledges that the increase in rates referred to in
this Section 3.3 reflects, among other things, the fact that such Loans or other
amounts have become a substantially greater risk given their default status and
that the Banks are entitled to additional compensation for such risk; and all
such interest shall be payable by Borrower upon demand by Agent.
-24-
<PAGE>
3.4 CD Rate or Euro-Rate Unascertainable; Illegality; Increased
------------------------------------------------------------
Costs; Deposits Not Available.
- ------------------------------
3.4.1 Unascertainable.
---------------
If on any date on which a Euro-Rate would otherwise be determined, the
Agent shall have determined that:
(i) adequate and reasonable means do not exist for ascertaining
such CD Rate or Euro-Rate, or
(ii) a contingency has occurred which materially and adversely
affects the secondary markets for negotiable certificates of deposit maintained
by dealers of recognized standing relating to the CD Rate or the London
interbank eurodollar market relating to the Euro-Rate, the Agent shall have the
rights specified in Section 3.4.3.
3.4.2 Illegality; Increased Costs; Deposits Not Available.
--------------------------------------------------
If at any time any Bank shall have determined that:
(i) the making, maintenance or funding of any Loan to which a CD
Rate Option or a Euro-Rate Option applies has been made impracticable or
unlawful by compliance by such Bank in good faith with any Law or any
interpretation or application thereof by any Official Body or with any request
or directive of any such Official Body (whether or not having the force of Law),
or
(ii) such CD Rate Option or Euro-Rate Option will not adequately
and fairly reflect the cost to such Bank of the establishment or maintenance of
any such Loan, or
(iii) after making all reasonable efforts, deposits of the
relevant amount in Dollars for the relevant Interest Period for a Loan to which
a CD Rate Option or a Euro-Rate Option applies, respectively, are not available
to such Bank at the effective cost of funding a proposed CD Rate Loan or in the
London interbank market, then the Agent shall have the rights specified in
Section 3.4.3.
3.4.3 Agent's and Bank's Rights.
-------------------------
In the case of any event specified in Section 3.4.1 above, the Agent
shall promptly so notify the Banks and the Borrower thereof, and in the case of
an event specified in Section 3.4.2 above, such Bank shall promptly so notify
the Agent and endorse a certificate to such notice as to the specific
circumstances of such notice, and the Agent shall promptly send copies of such
notice and certificate to the other Banks and the Borrower. Upon such date as
shall be specified in such notice (which shall not be earlier than the date such
notice is given), the obligation of (A) the Banks, in the case of such notice
given by the Agent, or (B) such Bank, in
-25-
<PAGE>
the case of such notice given by such Bank, to allow the Borrower to select,
convert to or renew a CD Rate Option or a Euro-Rate Option shall be suspended
until the Agent shall have later notified the Borrower, or such Bank shall have
later notified the Agent, of the Agent's or such Bank's, as the case may be,
determination that the circumstances giving rise to such previous determination
no longer exist. If at any time the Agent makes a determination under Section
3.4.1 and the Borrower has previously notified the Agent of its selection of,
conversion to or renewal of a CD Rate Option or a Euro-Rate Option and such
Interest Rate Option has not yet gone into effect, such notification shall be
deemed to provide for selection of, conversion to or renewal of the Base Rate
Option otherwise available with respect to such Loans. If any Bank notifies the
Agent of a determination under Section 3.4.2, the Borrower shall, subject to the
Borrower's indemnification Obligations under Section 3.6.2, as to any Loan of
the Bank to which a CD Rate Option or a Euro-Rate Option applies, on the date
specified in such notice either convert such Loan to the Base Rate Option
otherwise available with respect to such Loan or prepay such Loan in accordance
with Section 4.4. Absent due notice from the Borrower of conversion or
prepayment, such Loan shall automatically be converted to the Base Rate Option
otherwise available with respect to such Loan upon such specified date.
3.5 Selection of Interest Rate Options.
-----------------------------------
If the Borrower fails to select a new Interest Period to apply to any
Borrowing Tranche of Loans under the Euro-Rate Option or the CD Rate Option at
the expiration of an existing Interest Period applicable to such Borrowing
Tranche in accordance with the provisions of Section 3.2, the Borrower shall be
deemed to have converted such Borrowing Tranche to the Revolving Credit Base
Rate Option as applicable, commencing upon the last day of the existing Interest
Period.
4. PAYMENTS
--------
4.1 Payments.
--------
All payments and prepayments to be made in respect of principal,
interest, Commitment Fees, Facility Fees, Agent's Fee or other fees or amounts
due from the Borrower hereunder shall be payable prior to 2:00 p.m., New York
time, on the date when due without presentment, demand, protest or notice of any
kind, all of which are hereby expressly waived by the Borrower, and without set-
off, counterclaim or other deduction of any nature, and an action therefor shall
immediately accrue. Such payments shall be made to the Agent at the Principal
Office for the ratable accounts of the Banks with respect to the Loans in U.S.
Dollars and in immediately available funds, and the Agent shall promptly
distribute such amounts to the Banks in immediately available funds, provided
--------
that in the event payments are received by 11:00 a.m., New York time, by the
Agent with respect to the Loans and such payments are not distributed to the
Banks on the same day received by the Agent, the Agent shall pay the Banks the
Federal Funds Effective Rate with respect to the amount of such payments for
each day held by the Agent and not distributed to the Banks. The Agent's and
each Bank's statement of account, ledger or other relevant record shall, in the
absence of manifest error, be conclusive as the
-26-
<PAGE>
statement of the amount of principal of and interest on the Loans and other
amounts owing under this Agreement and shall be deemed an "account stated."
4.2 Pro Rata Treatment of Banks.
---------------------------
Each borrowing shall be allocated to each Bank according to its Ratable
Share, and each selection of, conversion to or renewal of any Interest Rate
Option and each payment or prepayment by the Borrower with respect to principal,
interest, Commitment Fees, Facility Fees, or other fees (except for the Agent's
Fee) or amounts due from the Borrower hereunder to the Banks with respect to the
Loans, shall (except as provided in Section 3.4.3 in the case of an event
specified in Section 3.4 [CD Rate or Euro-Rate Unascertainable]; Section 3.4.2
[Illegality; Increased Costs; Deposits Not Available], 4.4 [Voluntary
Prepayments] or 4.6 [Additional Compensation in Certain Circumstances]) be made
in proportion to the applicable Loans outstanding from each Bank and, if no such
Loans are then outstanding, in proportion to the Ratable Share of each Bank.
4.3 Interest Payment Dates.
-----------------------
Interest on Loans to which the Base Rate Option applies shall be due and
payable in arrears on the first Business Day of each June, September, December
and March after the date hereof and on the Expiration Date or upon acceleration
of the Notes after the date hereof and on the Expiration Date or upon
acceleration of the Notes. Interest on loans to which a CD Rate Option applies
shall be due and payable on the last day of each Interest Period for those Loans
and, if such Interest Period is longer than ninety (90) days, on the 90th day of
such Interest Period. Interest on Loans to which the Euro-Rate Option applies
shall be due and payable on the last day of each Interest Period for those Loans
and, if such Interest Period is longer than three (3) Months, also on the 90th
day of such Interest Period. Interest on mandatory prepayments of principal
under Section 4.5 shall be due on the date such mandatory prepayment is due.
Interest on the principal amount of each Loan or other monetary Obligation shall
be due and payable on demand after such principal amount or other monetary
Obligation becomes due and payable (whether on the stated maturity date, upon
acceleration or otherwise).
4.4 Voluntary Prepayments.
---------------------
4.4.1 Right to Prepay.
---------------
The Borrower shall have the right at its option from time to time to
prepay the Loans in whole or part without premium or penalty (except as provided
in Section 4.4.2 below or in Section 4.6):
(i) at any time with respect to any Loan,
(ii) on the date specified in a notice by any Bank pursuant to
Section 3.4 [CD Rate or Euro-Rate Unascertainable] with respect to any Loan to
which a CD Rate Option or Euro-Rate Option applies.
-27-
<PAGE>
Whenever the Borrower desires to prepay any part of the Loans, it
shall provide a prepayment notice to the Agent at least one (1) Business Day
prior to the date of prepayment of Loans setting forth the following
information:
(x) the date, which shall be a Business Day, on which the proposed
prepayment is to be made;
(y) a statement indicating the application of the prepayment between
the Revolving Credit Loans; and
(z) the total principal amount of such prepayment, which shall not be
less than $100,000.
The principal amount of the Loans for which a prepayment notice is
given, together with interest on such principal amount except with respect to
Loans to which the Base Rate Option applies, shall be due and payable on the
date specified in such prepayment notice as the date on which the proposed
prepayment is to be made. Except as provided in Section 3.4.3, if the Borrower
prepays a Loan but fails to specify the applicable Borrowing Tranche which the
Borrower is prepaying, the prepayment shall be applied first to Loans to which
the Base Rate Option applies, then to Loans to which the CD Rate Option applies
and then to Loans to which the Euro-Rate Option applies. Any prepayment
hereunder shall be subject to the Borrower's Obligation to indemnify the Banks
under Section 4.6.2.
4.4.2 Replacement of a Bank.
---------------------
In the event any Bank (i) gives notice under Section 3.4 or Section
4.6.1, (ii) does not fund Revolving Credit Loans because the making of such
Loans would contravene any Law applicable to such Bank, (iii) does not approve
any action as to which consent of the Required Banks is requested by the
Borrower and obtained hereunder, or (iv) becomes subject to the control of an
Official Body (other than normal and customary supervision), then the Borrower
shall have the right at its option, with the consent of the Agent, which shall
not be unreasonably withheld, to prepay the Loans of such Bank in whole,
together with all interest accrued thereon, and terminate such Bank's Commitment
within ninety (90) days after (w) receipt of such Bank's notice under Section
3.4 or 4.6.1, (x) the date such Bank has failed to fund Revolving Credit Loans
because the making of such Loans would contravene Law applicable to such Bank,
(y) the date of obtaining the consent which such Bank has not approved, or (z)
the date such Bank became subject to the control of an Official Body, as
applicable; provided that the Borrower shall also pay to such Bank at the time
--------
of such prepayment any amounts required under Section 4.6 and any accrued
interest due on such amount and any related fees provided, further, the
--------
remaining Banks shall have no obligation hereunder to increase their
Commitments. Notwithstanding the foregoing, the Agent may only be replaced
subject to the requirements of Section 9.14.
-28-
<PAGE>
4.4.3 Change of Lending Office.
------------------------
Each Bank agrees that upon the occurrence of any event giving rise to
increased costs or other special payments under Section 3.4.2 [Illegality, Etc.]
or 4.6.1 [Increased Costs, Etc.] with respect to such Bank, it will if requested
by the Borrower, use reasonable efforts (subject to overall policy Proceeds of
such Bank) to designate another lending office for any Loans affected by such
event, provided that such designation is made on such terms that such Bank and
--------
its lending office suffer no economic, legal or regulatory disadvantage, with
the object of avoiding the consequence of the event giving rise to the operation
of such Section. Nothing in this Section 4.4.3 shall affect or postpone any of
the Obligations of the Borrower or any other Borrower or the rights of the Agent
or any Bank provided in this Agreement.
4.5 Mandatory Prepayments.
---------------------
4.5.1 Sale of Assets.
--------------
4.5.1.1 Within five (5) Business Days after any Permitted
Asset Sale, (i) the Borrower shall make a payment to reduce the principal amount
of the Revolving Credit Usage equal to 50% of the Proceeds in respect thereof
and (ii) the Commitments shall automatically reduce by the same amount.
4.5.1.2 Contemporaneously with the sale or transfer of any
Cable System which is not a Permitted Asset Sale, (i) the Borrower shall repay
in full all of the Obligations and (ii) the Commitments shall automatically
reduce to zero ($0).
4.5.2 Reduction of Commitment.
-----------------------
Whenever the principal amount of the Revolving Facility Usage
exceed the Commitment (whether because of a reduction thereof pursuant to
Section 4.5.1 or otherwise), the Borrower shall make a payment of principal
sufficient to reduce such excess to zero together with interest accrued thereon.
4.5.3 Application Among Interest Rate Options.
---------------------------------------
All prepayments required pursuant to this Section 4.5 shall be
applied among the Interest Rate Options as elected by the Borrower or, if the
Borrower makes no such election, then first to the principal amount of the Loans
subject to the Base Rate Option, then to Loans subject to a CD Rate Option and
then to Loans subject to a Euro-Rate Option. In accordance with Section 4.6.2,
the Borrower shall indemnify the Banks for any loss or expense, including loss
of margin, incurred with respect to any such prepayments applied against Loans
subject to a CD Rate Option or a Euro-Rate Option on any day other than the last
day of the applicable Interest Period.
-29-
<PAGE>
4.6 Additional Compensation in Certain Circumstances.
------------------------------------------------
4.6.1 Increased Costs or Reduced Return Resulting From Taxes,
------------------------------------------------------
Reserves, Capital Adequacy Requirements, Expenses, Etc.
- -------------------------------------------------------
If the adoption of or any change in any Law, guideline or
interpretation or application thereof by any Official Body charged with the
interpretation or administration thereof or compliance with any request or
directive (whether or not having the force of Law) of any central bank or other
Official Body made subsequent to the date hereof:
(i) subjects any Bank to any tax or changes the basis of
taxation with respect to this Agreement, the Notes, the Loans or payments by the
Borrower of principal, interest, Commitment Fees, or other amounts due from the
Borrower hereunder or under the Notes (except for taxes on the overall net
income of such Bank),
(ii) imposes, modifies or deems applicable any reserve,
special deposit or similar requirement against credits or commitments to extend
credit extended by, or assets (funded or contingent) of, deposits with or for
the account of, or other acquisitions of funds by, any Bank, or
(iii) imposes, modifies or deems applicable any capital
adequacy or similar requirement (A) against assets (funded or contingent) of, or
letters of credit, other credits or commitments to extend credit extended by,
any Bank, or (B) otherwise applicable to the obligations of any Bank under this
Agreement, and the result of any of the foregoing is to increase the cost to,
reduce the income receivable by, or impose any expense (including loss of
margin) upon any Bank with respect to this Agreement, the Notes or the making,
maintenance or funding of any part of the Loans (or, in the case of any capital
adequacy or similar requirement, to have the effect of reducing the rate of
return on any Bank's capital, taking into consideration such Bank's customary
policies with respect to capital adequacy) by an amount which such Bank in its
sole discretion deems to be material, such Bank shall from time to time notify
the Borrower and the Agent of the amount determined in good faith (using any
averaging and attribution methods employed in good faith) by such Bank to be
necessary to compensate such Bank for such increase in cost, reduction of
income, additional expense or reduced rate of return. Such notice shall set
forth in reasonable detail the basis for such determination. Such amount shall
be due and payable by the Borrower to such Bank ten (10) Business Days after
such notice is given.
4.6.2 Indemnity.
---------
In addition to the compensation required by Section 4.6.1, the
Borrower shall indemnify each Bank against all liabilities, losses or expenses
(including loss of margin, any loss or expense incurred in liquidating or
employing deposits from third parties and any loss or expense incurred in
connection with funds acquired by a Bank to fund or maintain Loans subject to a
CD Rate Option or a Euro-Rate Option) which such Bank sustains or incurs as a
consequence of any:
-30-
<PAGE>
(i) payment, prepayment, conversion or renewal of any Loan to
which a CD Rate Option or a Euro-Rate Option applies on a day other than the
last day of the corresponding Interest Period (whether or not such payment or
prepayment is mandatory, voluntary or automatic and whether or not such payment
or prepayment is then due);
(ii) attempt by the Borrower to revoke (expressly, by later
inconsistent notices or otherwise) in whole or part any Loan Requests under
Section 2.5 or notice relating to prepayments under Section 3.4 or notice of
reductions of the Commitments under Section 2.5 or
(iii) default by the Borrower in the performance or observance
of any covenant or condition contained in this Agreement or any other Loan
Document, including any failure of the Borrower to pay when due (by acceleration
or otherwise) any principal, interest, Commitment Fee or any other amount due
hereunder.
If any Bank sustains or incurs any such loss or expense, it shall from
time to time notify the Borrower of the amount determined in good faith by such
Bank (which determination may include such assumptions, allocations of costs and
expenses and averaging or attribution methods as such Bank shall deem reasonable
so long as such are consistent with such Bank's past practices) to be necessary
to indemnify such Bank for such loss or expense. Such notice shall set forth in
reasonable detail the basis for such determination. Such amount shall be due and
payable by the Borrower to such Bank fifteen (15) Business Days after such
notice is given.
5. REPRESENTATIONS AND WARRANTIES
------------------------------
5.1 Representations and Warranties.
------------------------------
The Borrower represents and warrants to the Agent and each of the
Banks as follows:
5.1.1 Organization and Qualification.
------------------------------
(a) The Borrower is a limited partnership duly organized and validly
existing under the laws of the State of Colorado and is duly qualified to do
business in the states of Colorado, Illinois, Maryland and Minnesota, the only
other jurisdiction(s) in which the conduct or contemplated conduct of its
business or the ownership or lease of its assets requires such qualification.
(b) The General Partner is a corporation duly organized, validly
existing and in good standing under the laws of the State of Colorado. The
General Partner is duly qualified and in good standing in all jurisdictions in
which the conduct of its business or the ownership or lease of its assets
requires such qualification (except where the failure to do so would not have a
material adverse effect on the business operations or financial condition of the
General Partner).
-31-
<PAGE>
(c) Each of the Borrower and the General Partner has full partnership
or corporate power and authority, respectively, holds all requisite governmental
licenses, permits and other approvals to enter into and perform its respective
Obligations under this Agreement, the Notes and each other Loan Document to
which it is a party and holds all requisite material governmental licenses,
permits and other approvals to own and hold under lease its property and to
conduct its business substantially as currently conducted by it.
(d) The General Partner is the sole general partner of the Borrower
and owns 100% of the outstanding general partnership interests in the Borrower,
free and clear of all Liens or other encumbrances other than Permit Liens.
5.2 Due Authorization, Noncontravention, Etc.
----------------------------------------
The execution, delivery and performance by and on behalf of the Borrower of
this Agreement, the Notes and each other Loan Document are within the Borrower's
and the General Partner's powers, have been duly authorized by all necessary
action and do not
(i) contravene the Borrower's partnership agreement, the General
Partner's articles or certificate of incorporation, bylaws and any other
governing documents;
(ii) contravene (x) any law or governmental regulation or court decree
or order binding on or affecting the Borrower or the General Partner or (y) any
contractual restriction binding on or affecting the General Partner or the
Borrower which contravention is reasonably likely to have a material adverse
effect on the Borrower's consolidated business, operations, assets, revenues,
properties or prospects (with respect to the Borrower's ability to pay or repay
the Obligations); or
(iii) result in, or require the creation or imposition of, any Lien on
any of the Borrower's or the General Partner's properties (other than the Lien
of the Security Agreement).
5.3 Government Approval, Regulation, Etc.
------------------------------------
Other than as set forth in Schedule 5.3, or those which have been
------------
obtained and are in full force and effect, no authorization or approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body or other Person is required for the due execution, delivery or
performance by the General Partner of the Intercompany Subordination Agreement
or by the Borrower of this Agreement, the Notes or any other Loan Document.
Neither the Borrower nor the General Partner is an "investment company" within
the meaning of the Investment Company Act of 1940, as amended, or a "holding
company," or a "subsidiary company" of a "holding company," or an "affiliate" of
a "holding company" or of a "subsidiary company" of a "holding company," within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
-32-
<PAGE>
5.4 Validity, Etc.
-------------
This Agreement constitutes, and the Notes and each other Loan Document
executed by the Borrower will, on the due execution and delivery thereof,
constitute, the legal, valid and binding obligations of the Borrower,
enforceable in accordance with their respective terms. Each of the Partnership
Agreement and the Intercompany Subordination Agreement constitutes the legal,
valid and binding obligation of the General Partner, enforceable in accordance
with its respective terms.
5.5 Partnership Agreement.
-----------------------
The Partnership Agreement is in full force and effect, and no default
or event which, with the passage of time or notice or both, would constitute a
default has occurred and is continuing thereunder.
5.6 No Material Adverse Change.
--------------------------
Since the date of the financial statements described in Section
5.19(i), there has been no material adverse change in the Borrower's business,
assets, properties, revenue, financial condition, operations or (with respect to
the Borrower's ability to pay or repay the Obligations) prospects.
5.7 Litigation, Labor Controversies, Etc.
------------------------------------
Except as set forth in Schedule 5.7, there are no actions, suits,
------------
proceedings or investigations pending or, to the knowledge of the Borrower,
threatened against the Borrower or the General Partner at law or equity before
any Official Body which individually or in the aggregate may result in any
Material Adverse Change. Neither the Borrower nor the General Partner is in
violation of any order, writ, injunction or any decree of any Official Body
which may result in any Material Adverse Change.
5.8 Subsidiaries.
------------
The Borrower has no Subsidiaries.
5.9 Ownership of Properties.
-----------------------
The Borrower owns good and marketable title to all of its properties
and assets, real and personal, tangible and intangible, of any nature
whatsoever, free and clear of all Liens, charges or claims, except for Permitted
Liens. The Borrower owns no patents, trademarks, trade names, service marks and
copyrights.
5.10 Taxes.
-----
The Borrower has filed all tax returns and reports required by law to
have been filed by it and has paid all taxes and governmental charges thereby
shown to be owing, except
-33-
<PAGE>
any such taxes or charges which are being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with GAAP
shall have been set aside on its books.
5.11 Pension and Welfare Plans.
-------------------------
The Borrower has not established or maintained, nor has it ever made or
been obligated to make contributions to nor is it obligated to make
contributions to, any Plan, Benefit Arrangement or Multiemployer Plan.
5.12 Environmental Warranties.
------------------------
Except as disclosed on Schedule 5.12:
-------------
(i) The Borrower has not received any Environmental Complaint
from any Official Body or private Person alleging that the Borrower or any prior
owner of any of the Property owned by the Borrower is a potentially responsible
party under the Comprehensive Environmental Response, Cleanup and Liability Act,
42 U.S.C. (S) 9601, et seq., and Borrower has no reason to believe that such an
-- ---
Environmental Complaint might be received. There are no pending or, to the
Borrower's knowledge, threatened Environmental Complaints relating to the
Borrower or, to the Borrower's knowledge, any prior owner of any of the Property
owned by the Borrower pertaining to, or arising out of, any Environmental
Conditions.
(ii) The Borrower is in compliance with the Environmental Laws
and, to the Borrower's knowledge, there are no circumstances at, on or under any
of the Property that constitute a breach of or noncompliance with any of the
Environmental Laws, and there are no past or present Environmental Conditions
at, on or under any of the Property or, to Borrower's knowledge, at, on or under
adjacent property, that prevent compliance with the Environmental Laws at any of
the Property.
(iii) Neither any of the Property owned by the Borrower nor any
structures, improvements, equipment, fixtures, activities or facilities thereon
or thereunder contain or use Regulated Substances except in compliance with
Environmental Laws. The Borrower engages in no processes, facilities,
operations, equipment or other activities at, on or under any of the Property,
and, to the Borrower's knowledge there are no such processes, facilities,
operations, equipment or other activities, at, on or under adjacent property,
that currently result in the release or threatened release of Regulated
Substances onto any of the Property, except to the extent that such releases or
threatened releases are not a breach of or otherwise not a violation of the
Environmental Laws.
(iv) There are no aboveground storage tanks, underground storage
tanks or underground piping associated with such tanks, used for the management
of Regulated Substances at, on or under any of the Property owned by the
Borrower that (a) do not have, to the extent required by Environmental Laws, a
full operational secondary containment system in place, and (b) are not
otherwise in compliance with all Environmental Laws. There are
-34-
<PAGE>
no abandoned underground storage tanks or underground piping associated with
such tanks, previously used for the management of Regulated Substances at, on or
under any of the Property owned by the Borrower that have not either been closed
in place in accordance with Environmental Laws or removed in compliance with all
applicable Environmental Laws and no contamination associated with the use of
such tanks exists on any of the Property that is not in compliance with
Environmental Laws.
(v) The Borrower has all material permits, licenses,
authorizations, plans and approvals necessary under the Environmental Laws for
the conduct of the business of the Borrower presently conducted. The Borrower
has submitted all material notices, reports and other filings required by the
Environmental Laws to be submitted to an Official Body which pertain to past and
current operations on any of the Property.
(vi) All past and present on-site generation, storage,
processing, treatment, recycling, reclamation, disposal or other use or
management of Regulated Substances at, on, or under any of the Property owned by
the Borrower and all off-site transportation, storage, processing, treatment,
recycling, reclamation, disposal or other use or management of Regulated
Substances have been done in accordance with the Environmental Laws.
5.13 Regulations G, U and X.
----------------------
The Borrower is not engaged in the business of extending credit for
the purpose of purchasing or carrying margin stock, and no proceeds of any Loans
will be used for a purpose which violates, or would be inconsistent with
Regulation G, U or X. Terms for which meanings are provided in Regulation G, U
or X or any regulations substituted therefor, as from time to time in effect,
are used in this Section with such meanings.
5.14 Accuracy of Information.
-----------------------
Neither this Agreement nor any other Loan Document, nor any
certificate, statement, agreement or other documents furnished to the Agent or
any Bank in connection herewith or therewith, contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained herein and therein, in light of the circumstances under
which they were made, not misleading. There is no fact known to the Borrower or
the General Partner which materially adversely affects the business, property,
assets, financial condition, results of operations or prospects (with respect to
the Borrower's ability to pay or repay the obligations) of the Borrower which
has not been set forth in this Agreement or in the certificates, statements,
agreements or other documents furnished in writing to the Agent and the Banks
prior to or at the date hereof in connection with the transactions contemplated
hereby.
5.15 Cable Authorizations.
--------------------
Schedule 5.15 accurately and completely lists all CATV and SMATV
-------------
systems currently owned by the Borrower and all Franchises issued or granted to
the Borrower (such
-35-
<PAGE>
Franchises, together with all renewals and extensions thereof, are referred to
collectively as the "Cable Franchises"). The Cable Franchises constitute the
only material Franchises required or advisable in connection with the conduct by
the Borrower of its business as presently conducted. All of the Cable Franchises
are duly issued in the name of the Borrower (or are issued in some other name
but have been duly and validly assigned to the Borrower), the Borrower has full
power and authority to operate thereunder, and each such Cable Franchise will
expire on the date set forth for such Cable Franchise in Schedule 5.15. All
-------------
assets of the Cable Svstems and all Cable Franchises, contracts, agreements and
other things necessary or advisable in connection with the present or proposed
operation of the Cable Systems shall at all times be owned (or leased on terms
and conditions permitted hereunder) and held by the Borrower. Schedule 5.15
-------------
accurately and completely lists all agreements, if any, which are presently in
effect with public utilities for the use of public utility facilities in
connection with the Cable Systems. Each of the Borrower and the General Partner
(with respect to the business and operations of the Borrower) has the right and
authority (contractual, by law or otherwise) to provide pay television and
related services to subscribers. Schedule 5.15 accurately and completely lists
-------------
(i) all deeds, leases, leaseholds and other interests in real property held by
the Borrower, together with accurate legal descriptions of all such real
property owned or leased by the Borrower, and (ii) all Pole Agreements and wire
line-crossing agreements to which the Borrower is a party. Other than the
Franchise held by Ameritech New Media, Inc. covering the City of Naperville,
Illinois and the Franchise held by Anderson Pacific Corporation covering the
Village of Rantoul, Illinois, the Cable Franchises, to the best knowledge of the
General Partner and the Borrower, no Franchise has been granted with respect to
the territory covered by the Cable Franchises nor, to the best of the Borrower's
knowledge, is any application for any such Franchise pending. As of the date of
this Agreement, there is no overbuilding of any territory covered by the Cable
Systems other than overbuilding in Rantoul, Illinois and Naperville, Illinois.
5.16 Registration and Regulatory Compliance.
--------------------------------------
With respect to each of the Cable Systems, there is a registration
statement on file with the FCC which fully complies with all applicable
requirements of 47 C.F.R. Part 76, Subpart B. The Borrower is the holder of each
of the FCC Licenses listed on Schedule 5.15, each of which has the effective and
-------------
expiration dates noted on Schedule 5.15, and is, to the best of the Borrower's
-------------
and General Partner's knowledge, lawfully issued (and continues to exist)
pursuant to the rules and regulations of the FCC after compliance with all
applicable requirements of law. The Borrower is presently in compliance in all
material respects with all terrns and conditions of all FCC Licenses covering
the Cable Systems, all federal, state and local laws, all rules regulations and
administrative orders of the FCC (other than with respect to compliance with
regulations promulgated by the FCC regarding rates and codified at 47 C.F.R.
(S)(S) 76.922-76.924, with which, to the Borrower's knowledge, it is in
compliance in all material respects) and all state and local commissions or
authorities which are applicable to the Borrower or the operation of the Cable
Systems (including, without limitation, those regarding signal leakage), and the
foregoing permit any contemplated and continued operation of the Cable Systems
without the obtaining of any further approvals, covenants, modifications or the
taking of any other action of any kind or nature whatsoever. The Borrower has
received no notice that any
-36-
<PAGE>
fact or any past, present or threatened occurrence would preclude or impair its
ability to obtain any FCC License or other Franchise necessary for the operation
or proposed expansion of the Cable Systems.
5.17 Franchises, Copyrights and Licenses.
-----------------------------------
The Borrower possesses, or has the right to use, all FCC Licenses and all
other Franchises, all copyrights, all licenses (including all cable television
or broadcast licenses), all rights under agreements with public utilities and
microwave transmission companies, Pole Agreements and all utility easements and
other rights the absence of which is reasonably likely to have a material
adverse effect on the business, properties, operations or conditions, financial
or otherwise, or prospects (with respect to the Borrower's ability to pay or
repay the Obligations) of the Borrower, each of which is in full force and
effect and with which the Borrower is in compliance in all material respects,
with no known conflict with the rights of others which could affect or impair in
any material manner the business, properties, operations or condition, financial
or otherwise, or prospects (with respect to the Borrower's ability to pay or
repay the Obligations) of the Borrower. The General Partner or any other
Affiliate of the Borrower providing services to the Borrower has obtained all
licenses, permits, authorizations and Franchises necessary for the ownership of
its properties used in providing services to the Cable Systems, the conduct of
its business in connection with the Cable Systems and any proposed expansions of
the Cable Systems, in all instances in which the failure to have obtained such
licenses, permits, authorizations and Franchises could have a material adverse
impact on the business, properties, operations or condition, financial or
otherwise, of the Borrower. To the best of the Borrower's knowledge, no event
has occurred which permits, or after the giving of notice or the lapse of time,
or both, would permit, the revocation or termination of any Cable Franchise or
any copyright, license, permit, authorization or other right of the FCC so as to
adversely affect in any material manner the business, properties, operations or
condition, financial or otherwise, or prospects (with respect to the Borrower's
ability to pay or repay the Obligations) of the Borrower.
5.18 Communications Act Filings.
--------------------------
The Borrower has duly and timely filed all cable television registration
statements and other filings which are required to be filed under the
Communications Act, and has complied in all other material respects with the
Communications Act (other than with respect to compliance with regulations
promulgated by the FCC regarding rates and codified at 47 C.F.R. (S)(S) 76.922-
76.924, with which, to the Borrower's knowledge, it is in compliance in all
material respects), including, without limitation, the rules and regulations of
the FCC relating to the carriage of television signals. The Borrower has
recorded or deposited with and paid to the United States Copyright Office, the
Register of Copyrights and the Copyright Royalty Tribunal all notices,
statements of account, royalty fees and other documents, instruments and amounts
required under the Copyright Act, and is not liable to any person for copyright
infringement under the Copyright Act.
-37-
<PAGE>
5.19 Financial Statements.
--------------------
(i) Historical Statements. The Borrower has delivered to the
---------------------
Agent copies of its audited consolidated year end financial statements for and
as of the end of the fiscal year ended December 31, 1995 (the "Annual
Statements"). In addition, the Borrower has delivered to the Agent copies of its
unaudited consolidated interim financial statements for the fiscal year to date
and as of the end of the fiscal quarter ended September 30, 1996 (the "Interim
Statements") (the Annual and Interim Statements being collectively referred to
as the "Historical Statements"). The Historical Statements were compiled from
the books and records maintained by the Borrower's management, are correct and
complete and fairly represent the consolidated financial condition of the
Borrower as of their dates and the results of operations for the fiscal periods
then ended and have been prepared in accordance with GAAP consistently applied,
subject (in the case of the Interim Statements) to normal year-end audit
adjustments.
(ii) Financial Projections. The Borrower has delivered to the
---------------------
Agent financial projections of the Borrower for the period 1996-2000 derived
from various assumptions of the Borrower's management (the "Financial
Projections" which were prepared by the Borrower's management in good faith.
(iii) Accuracy of Financial Statements. The Borrower has no
----------------------------------
liabilities, contingent or otherwise, or forward or long-term commitments that
are not disclosed in the Historical Statements or in the notes thereto, and
except as disclosed therein there are no unrealized or anticipated losses from
any commitments of the Borrower which may cause a Material Adverse Change. Since
September 30, 1996, no Material Adverse Change has occurred.
5.20 No Event of Default, Compliance With Instruments.
------------------------------------------------
No event has occurred and is continuing and no condition exists or
will exist after giving effect to the borrowings or other extensions of credit
to be made on the Closing Date under or pursuant to the Loan Documents which
constitutes an Event of Default or Potential Default. None of the Borrower or
the General Partner is in violation of (i) any term of its certificate of
incorporation, bylaws, certificate of limited partnership, partnership
agreement, certificate of formation, limited liability company agreement or
other organizational documents or (ii) any material agreement or instrument to
which it is a party or by which it or any of its properties may be subject or
bound where such violation would constitute a Material Adverse Change.
5.21 Security Interests.
------------------
The Liens and security interests granted to the Agent for the benefit
of the Banks pursuant to the Security Agreement in the Collateral constitute and
will continue to constitute Prior Security Interests under the Uniform
Commercial Code as in effect in each applicable jurisdiction (the "Uniform
Commercial Code") or other applicable Law entitled to all the rights, benefits
and priorities provided by the Uniform Commercial Code or such Law. Upon
-38-
<PAGE>
the filing of financing statements relating to said security interests in each
office and in each jurisdiction where required in order to perfect the security
interests described above, such action as is necessary or advisable to establish
such rights of the Agent will have been taken, and there will be upon execution
and delivery of the Security Agreement and such filings, no necessity for any
further action in order to preserve, protect and continue such rights, except
the filing of continuation statements with respect to such financing statements
within six months prior to each five-year anniversary of the filing of such
financing statements. All filing fees and other expenses in connection with each
such action have been or will be paid by the Borrower.
5.22 Insurance.
---------
Borrower's insurance policies are all valid and in full force and
effect. Such policies and bonds provide adequate coverage from reputable and
financially sound insurers in amounts sufficient to insure the assets and risks
of the Borrower in accordance with prudent business practice in the industry of
the Borrower. No notice has been given or claim made and no grounds exist to
cancel or avoid any of such policies or bonds or to reduce the coverage provided
thereby.
5.23 Compliance With Laws.
--------------------
The Borrower is in compliance in all material respects with all
applicable Laws (other than Environmental Laws which are specifically addressed
in Section 5.12) in all jurisdictions in which the Borrower is presently or will
be doing business except where the failure to do so would not constitute a
Material Adverse Change.
5.24 Material Contracts; Burdensome Restrictions.
-------------------------------------------
Schedule 5.24 lists all material contracts relating to the business
-------------
operations of the Borrower. The Borrower has no employee benefit plans or Labor
Contracts. All such material contracts are valid, binding and enforceable upon
the Borrower and each of the other parties thereto in accordance with their
respective terms, and there is no default thereunder, to the Borrower's
knowledge, with respect to parties other than the Borrower. The Borrower is not
bound by any contractual obligation, or subject to any restriction in any
organization document, or any requirement of Law which is reasonably likely to
result in a Material Adverse Change.
5.25 Employment Matters.
------------------
There are no current or threatened strikes, picketing, handbilling or
other work stoppages or slowdowns at facilities of the Borrower which in any
case would constitute a Material Adverse Change.
5.26 Senior Debt Status.
------------------
The Obligations of the Borrower under this Agreement, the Notes, and
each of the other Loan Documents to which it is a party do rank and will rank
superior in priority
-39-
<PAGE>
of payment with all other Indebtedness of the Borrower except Indebtedness of
the Borrower to the extent secured by Permitted Liens. There is no Lien upon or
with respect to any of the properties or income of the Borrower which secures
indebtedness or other obligations of any Person except for Permitted Liens.
5.27 Updates to Schedules.
--------------------
Should any of the information or disclosures provided on any of the
Schedules attached hereto become outdated or incorrect in such a manner as is
reasonably likely to constitute a Material Adverse Change, the Borrower shall
promptly provide the Agent in writing with such revisions or updates to such
Schedule as may be necessary or appropriate to update or correct same; provided,
--------
however, that if within 30 days after providing the Agent with such revisions or
updates, the Borrower has received no notice from the Agent to the contrary, the
Schedules shall be deemed to have been amended, modified or superseded by any
such correction or update, and any breach of warranty or representation
resulting from the inaccuracy or incompleteness of any such Schedule shall be
deemed to have been cured thereby.
6. CONDITIONS OF LENDING
---------------------
The obligation of each Bank to make Loans hereunder is subject to the
performance by the Borrower of its Obligations to be performed hereunder at or
prior to the making of any such Loans and to the satisfaction of the following
further conditions:
6.1 First Loans.
-----------
On the Closing Date:
6.1.1 Officer's Certificate.
---------------------
The representations and warranties of the Borrower contained in
Section 4 and in each of the other Loan Documents shall be true and accurate in
all material respects on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of such date
(except representations and warranties which relate solely to an earlier date or
time, which representations and warranties shall be true and correct in all
material respects on and as of the specific dates or times referred to therein),
and the Borrower shall have performed and complied with all covenants and
conditions hereof and thereof, no Event of Default or Potential Default shall
have occurred and be continuing or shall exist; and there shall be delivered to
the Agent for the benefit of each Bank a certificate of the Borrower, dated the
Closing Date and signed by an Authorized Officer, to each such effect and, on
the Closing Date, demonstrating the calculation of the ratios described in
Sections 7.2.13 and 7.2.14.
-40-
<PAGE>
6.1.2 Secretary's Certificate.
-----------------------
There shall be delivered to the Agent for the benefit of each Bank a
certificate dated the Closing Date and signed by the Secretary or an Assistant
Secretary of the Borrower and the General Partner, as appropriate, certifying as
appropriate as to:
(i) all action taken by each Borrower in connection with
this Agreement and the other Loan Documents;
(ii) the names of the Authorized Officers and the true
signatures of such officers, on which the Agent and each Bank may conclusively
rely;
(iii) copies of the Borrower's organizational documents,
including its certificate of limited partnership, limited partnership agreement
and certificate of formation as in effect on the Closing Date certified by the
appropriate state official where such documents are filed in a state office
together with certificates from the appropriate state officials as to the
continued existence and good standing of the Borrower in each state where
organized or qualified to do business;
(iv) all action taken by the General Partner in connection with
this Agreement and the other Loan Documents; and
(v) copies of the General Partner's organizational documents,
including its bylaws and articles of incorporation as in effect on the Closing
Date certified by the appropriate state official where such documents are filed
in a state office together with certificates from the appropriate state
officials as to the continued existence and good standing of the General Partner
in each state where organized or where the Borrower is qualified to do business.
6.1.3 Delivery of Loan Documents.
--------------------------
The Notes, Intercompany Subordination Agreement and Security Agreement
and the other Loan Documents shall have been duly executed and delivered to the
Agent for the benefit of the banks, together with all appropriate financing
statements.
6.1.4 Opinion of Counsel.
------------------
There shall be delivered to the Agent for the benefit of each Bank a
written opinion of the corporate general counsel of the General Partner dated
the Closing Date and in form and substance satisfactory to the Agent and its
counsel as to such matters incident to the transactions contemplated herein as
the Agent may reasonably request.
6.1.5 Legal Details.
-------------
All legal details and proceedings in connection with the transactions
contemplated by this Agreement and the other Loan Documents shall be in form and
substance
-41-
<PAGE>
satisfactory to the Agent and counsel for the Agent, and the Agent shall have
received all such other counterpart originals or certified or other copies of
such documents and proceedings in connection with such transactions, in form and
substance satisfactory to the Agent and said counsel, as the Agent or said
counsel may reasonably request.
6.1.6 Payment of Fees.
---------------
The Borrower shall have paid or caused to be paid to the Agent for
itself and for the account of the Banks to the extent not previously paid the
Facility Fees, all other commitment and other fees accrued through the Closing
Date and the costs and expenses for which the Agent and the Banks are entitled
to be reimbursed.
6.1.7 Consents.
--------
All material consents required to effectuate the transactions contemplated
hereby shall have been obtained.
6.1.8 Officer's Certificate Regarding MACs.
------------------------------------
Since September 30, 1996, no Material Adverse Change shall have occurred;
prior to the Closing Date, there shall have been no material change in the
management of the Borrower; and there shall have been delivered to the Agent for
the benefit of each Bank a certificate dated the Closing Date and signed by an
Authorized Officer to each such effect.
6.1.9 No Violation of Laws.
--------------------
The making of the Loans shall not contravene any Law applicable to the
Borrower or any of the Banks.
6.1.10 No Actions or Proceedings.
-------------------------
No action, proceeding, investigation, regulation or legislation shall
have been instituted, threatened. or proposed before any court, governmental
agency or legislative body to enjoin, restrain or prohibit, or to obtain damages
in respect of, this Agreement, the other Loan documents or the consummation of
the transactions contemplated hereby or thereby or which, in the agent's sole
discretion, would make it inadvisable to consummate the transactions
contemplated by this Agreement or any of the other Loan Documents.
6. 1.11 Insurance Policies; Certificates of Insurance; Endorsements.
-----------------------------------------------------------
The Borrower shall have delivered evidence acceptable to the Agent
that adequate insurance in compliance with Section 7.1.3 is in full force and
effect and that all certificates of insurance name the Agent as additional
insured lender loss payee.
-42-
<PAGE>
6.1.12 Filing Receipts.
---------------
The Agent shall have received (1) copies of all filing receipts and
acknowledgments issued by any governmental authority to evidence any recordation
or filing necessary to perfect the Lien of the Banks on the Collateral or other
satisfactory evidence of such recordation and filing and (2) evidence in a form
acceptable to the Agent that such Lien constitutes a Prior Security Interest in
favor of the Banks. Without limiting the foregoing, the Agent shall have
received payoff letters, termination statements and other items necessary to
terminate Liens granted in connection with the Prior Bank Facility and to
evidence such termination.
6.2 Each Additional Loan.
--------------------
At the time of making any Loans other than Loans made on the Closing
Date and conversion or renewal of Loans, and after giving effect to the proposed
extensions of credit: the representations and warranties of the Borrower
contained in Article 5 and in the other Loan Documents shall be true in all
material respects on and as of the date of such additional Loan with the same
effect as though such representations and warranties had been made on and as of
such date (except representations and warranties which expressly relate solely
to an earlier date or time, which representations and warranties shall be true
and correct in all material respects on and as of the specific dates or times
referred to therein) and the Borrower shall have performed and complied with all
covenants and conditions hereof, no Event of Default or Potential Default shall
have occurred and be continuing or shall exist; the making of the Loans shall
not contravene any Law applicable to the Borrower or any of the Banks; and the
Borrower shall have delivered to the Agent a duly executed and completed Loan
Request.
7. COVENANTS
---------
7.1 Affirmative Covenants.
---------------------
The Borrower covenants and agrees that until payment in full of the
Loans and interest thereon, satisfaction of all of the Borrower's other
Obligations under the Loan Documents and termination of the revolving credit
Commitments, the Borrower shall comply at all times with the following
affirmative covenants:
7.1.1 Preservation of Existence, Etc.
------------------------------
The Borrower shall maintain its legal existence as a limited
partnership and its license or qualification and good standing in each
jurisdiction in which its ownership or lease of property or the nature of its
business makes such license or qualification necessary, except as otherwise
expressly permitted in Section 7.2.6.
-43-
<PAGE>
7.1.2 Payment of Liabilities, Including Taxes, Etc.
--------------------------------------------
The Borrower shall duly pay and discharge all liabilities to which it is
subject or which are asserted against it, promptly as and when the same shall
become due and payable, including all taxes, assessments and governmental
charges upon it or any of its properties, assets, income or profits, prior to
the date on which penalties attach thereto, except to the extent that such
liabilities, including taxes, assessments or charges, are being contested in
good faith and by appropriate and lawful proceedings diligently conducted and
for which such reserve or other appropriate provisions, if any, as shall be
required by GAAP shall have been made, but only to the extent that failure to
discharge any such liabilities would not result in any additional liability
which would adversely affect to a material extent the financial condition of the
Borrower or which would affect the Collateral, provided that the Borrower will
--------
pay all such liabilities forthwith upon the commencement of proceedings to
foreclose any Lien which may have attached as security therefor.
7.1.3 Maintenance of Insurance.
-------------------------
The 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 famish
reasonable notice to Banks and opportunity to cure any non-payment of premiums
prior to termination of coverage; and furnish to the Agent on behalf of the
Banks on an annual basis with certificates of such insurance and cause the Agent
on behalf of the Banks to be named as additional insured and the loss payee
thereof, as their interests may appear.
7.1.4 Maintenance of Properties and Leases.
------------------------------------
The Borrower shall maintain in good repair, working order and condition
(ordinary wear and tear excepted) in accordance with the general practice of
other businesses of similar character and size, all of those properties useful
or necessary to its business, and from time to time, the Borrower will make or
cause to be made all appropriate repairs, renewals or replacements thereof.
7.1.5 Patents, Trademarks, Etc.
------------------------
The Borrower shall advise the Agent if it comes to own any patents,
trademarks, service marks, trade names or copyrights, or any licenses,
franchises, permits or authorizations necessary for the ownership and operation
of its properties and business if such are not subject to the Prior Security
Interest of the Agent on behalf of the Banks.
7.1.6 Visitation Rights.
-----------------
The Borrower shall permit any of the officers or authorized employees or
representatives of the Agent or any of the Banks to visit and inspect any of its
properties and to
-44-
<PAGE>
examine and make excerpts from its books and records and discuss its business
affairs, finances and accounts with its officers, all in such detail and at such
times and as often as any of the Banks may reasonably request, provided that
--------
each Bank shall provide the Borrower and the Agent with reasonable notice prior
to any visit or inspection, and any visit or inspection shall be during normal
business hours. In the event any Bank desires to conduct an audit of the
Borrower, such Bank shall make a reasonable effort to conduct such audit
contemporaneously with any audit to be performed by the Agent.
7.1.7 Keeping of Records and Books of Account.
---------------------------------------
The Borrower shall maintain and keep proper books of record and account
which enable the Borrower to issue financial statements in accordance with GAAP
and as otherwise required by applicable Laws of any Official Body having
jurisdiction over the Borrower, and in which full, true and correct entries
shall be made in all material respects of all its dealings and business and
financial affairs.
7.1.8 Compliance With Laws.
--------------------
The Borrower shall comply with all applicable Laws, including all
Environmental Laws, in all respects, provided that it shall not be deemed to be
--------
a violation of this Section 7.1.8 if any failure to comply with any Law would
not result in fines, penalties, remediation costs, other similar liabilities or
injunctive relief which in the aggregate would constitute a Material Adverse
Change. Without limiting the foregoing, the Borrower will timely, from time to
time in accordance with applicable law, record or deposit with and pay to the
United States Copyright Office, the Register of Copyrights and the Copyright
Royalty Tribunal all notices, statements of account, royalty fees and other
documents, instruments and amounts required under the Copyright Act of the
United States.
7.1.9 Use of Proceeds.
---------------
7.1.9.1 General.
-------
The Borrower will use the proceeds of the Loans only for (i) general
corporate purposes and for working capital or (ii) to repay and terminate
Indebtedness outstanding under the prior bank facility. The proceeds of the
Loans shall not be used for any purposes which contravenes any applicable Law or
any provision hereof.
7.1.9.2 Margin Stock.
------------
The Borrower shall not use the proceeds of the Loans to purchase margin
stock as more fully provided in Section 5.13.
-45-
<PAGE>
7. 1. 10 Further Assurances.
------------------
The Borrower shall from time to time at its expense, faithfully preserve
and protect the Agent's Lien on and Prior Security Interest in the Collateral as
a continuing first priority perfected Lien, subject only to Permitted Liens, and
shall do such other acts and things as the Agent in its sole discretion may deem
necessary or advisable from time to time in order to preserve, perfect and
protect the Liens granted under the Loan Documents and to exercise and enforce
its rights and remedies thereunder with respect to the Collateral.
7.1.11 Subordination of Intercompany Loans.
-----------------------------------
The Borrower shall cause any General Partner Advances to be
subordinated pursuant to the terms of the Intercompany Subordination Agreement.
7.2 Negative Covenants.
------------------
The Borrower covenants and agrees that until payment in full of the Loans
and interest thereon, satisfaction of all of Borrower's other Obligations
hereunder and termination of the Revolving Credit Commitments, the Borrower
shall comply with the following negative covenants:
7.2.1 Indebtedness.
------------
The Borrower shall not, at any time create, incur, assume or suffer to
exist any Indebtedness, except:
(i) Indebtedness under the Loan Documents or interest rate
hedging and similar arrangements;
(ii) Capitalized and operating leases as and to the extent not
prohibited by any Loan Document;
(iii) Indebtedness secured by Purchase Money Security Interests
not exceeding $750,000;
(iv) Unsecured Indebtedness incurred in the ordinary course of
business (including open accounts extended by suppliers on normal trade terms in
connection with purchases of goods and services); and
(v) Permitted Subordinated Indebtedness owing to the General
Partner.
-46-
<PAGE>
7.2.2 Liens.
-----
The Borrower shall not. at any time create, incur, assume or suffer to
exist any Lien on any of its property or assets. tangible or intangible, now
owned or hereafter acquired, or agree or become liable to do so, except
Permitted Liens.
7.2.3 Guaranties.
----------
The Borrower shall not, at any time, directly or indirectly, become or be
liable in respect of any guaranty, or assume, guarantee, become surety for,
endorse or otherwise agree, become or remain directly or contingently liable
upon or with respect to any obligation or liability of any other Person, except
for guaranties of Indebtedness of the Borrower permitted hereunder, and the
obligation of the Borrower to indemnify the General Partner pursuant to Section
10.6 of the Partnership Agreement.
7.2.4 Loans and Investments.
---------------------
The Borrower shall not, at any time make or suffer to remain outstanding
any loan or advance to, or purchase, acquire or own any stock, bonds, notes or
securities of, or any partnership interest (whether general or limited) or
limited liability company interest in, or any other investment or interest in,
or make any capital contribution to, any other Person or agree, become or remain
liable to do any of the foregoing, except:
(i) trade credit extended on usual and customary terms in
the ordinary course of business;
(ii) advances to employees to meet expenses incurred by such
employees in the ordinary course of business;
(iii) Permitted Investments; and
(iv) its interest in Cable TV Fund 14-A/B Venture.
7.2.5 Dividends and Related Distributions.
-----------------------------------
The Borrower shall not make or pay, or agree to become or remain liable to
make or pay, any dividend or other distribution of any nature (whether in cash,
property, securities or otherwise) on account of or in respect of its
partnership interests on account of the purchase, redemption, retirement or
acquisition of its partnership interests, including, without limitation, General
Partner Advances except, provided no Potential Default or Event of Default will
exist after or be caused thereby, (i) the payment to the General Partner of
General Partner Advances as and to the extent permitted by and to the
subordinated in accordance with Section 8.1.11 and the Intercompany
Subordination Agreement and (ii) distribution to the General Partner of proceeds
of Permitted Assets Sales not in excess of the amount of the prepayment of the
principal amount of the Loans occasioned by such as required by Section 4.5.
-47-
<PAGE>
7.2.6 Liquidations, Mergers, Consolidations, Acquisitions.
---------------------------------------------------
The Borrower shall not dissolve, liquidate or wind up its affairs, or
become a party to any merger or consolidation, or acquire by purchase, lease or
otherwise all or substantially all of the assets or capital stock of any other
Person.
7.2.7 Dispositions of Assets.
----------------------
The Borrower shall not sell, convey, assign, lease, abandon or otherwise
transfer or dispose of, voluntarily or involuntarily, any of its properties or
assets, tangible or intangible (including sale, assignment, discount or other
disposition of accounts, contract rights, chattel paper, equipment or general
intangibles with or without recourse or of capital stock, except:
(i) transactions involving the sale of inventory in the ordinary
course of business;
(ii) any non-material sale, transfer or lease of assets in the
ordinary course of business which are neither Cable Systems nor which are
necessary or required in the conduct of the Borrower's business;
(iii) any sale, transfer or lease of assets in the ordinary
course of business which are replaced by substitute assets of similar type and
value, provided such substitute assets are subject to the Banks' Prior Security
--------
Interest; or
(iv) a Permitted Asset Sale which causes the reduction of the
Revolving Credit Commitment and repayment of the Revolving Credit Outstandings
pursuant to Section 4.5.1 and in connection with which the Borrower makes all
payments required by Section 4.5.
7.2.8 Affiliate Transactions.
----------------------
Except for General Partner Advances, payable in accordance with the terms
of the Intercompany Subordination Agreement, the Borrower shall not enter into
or carry out any transaction with any of its Affiliates (including purchasing
property or services from or selling property or services to any Affiliate) (a)
other than as set forth in Section 2.2(n) of the Limited Partnership Agreement
or (b) unless such arrangement or contract is fair and equitable to the Borrower
and is an arrangement or contract of the kind which would be entered into by a
prudent person in the position of the Borrower with a person which is not one of
its Affiliates.
7.2.9 Subsidiaries, Partnerships and Joint Ventures.
---------------------------------------------
The Borrower shall not own or create directly or indirectly any
Subsidiaries. Other than with respect to its interest in Cable TV Fund 14-A/B
Venture, the Borrower shall not become or agree to (1) become a general or
limited partner in any general or
-48-
<PAGE>
limited partnership, (2) become a member or manager of, or hold a limited
liability company interest in, a limited liability company, or (3) become a
joint venturer or hold a joint venture interest in any joint venture.
7.2.10 Continuation of or Change in Business.
-------------------------------------
The Borrower shall not engage in any business other than the operation of
Cable Systems, and the Borrower shall not permit any material change in such
business.
7.2.11 Plans and Benefit Arrangements.
------------------------------
The Borrower shall not create or maintain any Plan, Benefit Arrangement or
Multiemployer Plan.
7.2.12 Changes in Organizational Documents.
-----------------------------------
Except for routine amendments of the Borrower's partnership agreement
pursuant to Section 6.1 thereof, of which the Borrower shall give the Agent
contemporaneous notice, the Borrower shall not amend in any respect its
Partnership Agreement, bylaws, certificate of limited partnership, certificate
of formation or other organizational documents without providing at least ten
(10) calendar days' prior written notice to the Agent and the Banks and, in the
event such change would be adverse to the Banks as determined by the Agent in
its sole discretion, obtaining the prior written consent of the Required Banks.
7.2.13 Maximum Leverage Ratio.
----------------------
The Borrower shall not at any time permit the Leverage Ratio to exceed the
ratio set forth below for the periods specified below:
Period Ratio
------ -----
Closing Date to March 31, 1998 3.5 to 1.0
April 1, 1998 and thereafter 3.0 to 1.0
7.2.14 Minimum Interest Coverage Ratio.
-------------------------------
The Borrower shall not permit the Interest Coverage Ratio calculated as of
the end of each fiscal quarter, to be less than or equal to 2.5 to 1.0.
7.3 Reporting Requirements.
----------------------
The Borrower covenants and agrees that until payment in full of the Loans,
and interest thereon, satisfaction of all of the Borrower's other Obligations
hereunder and under the other Loan Documents and termination of the Revolving
Credit Commitments, the Borrower will furnish or cause to be furnished to the
Agent, which will then promptly deliver to each of the Banks:
-49-
<PAGE>
7.3.1 Quarterly Financial Statements.
------------------------------
As soon as available and in any event within sixty (60) calendar days after
the end of each of the first three fiscal quarters in each fiscal year,
financial statements of the Borrower, consisting of a consolidated balance sheet
as of the end of such fiscal quarter and related consolidated and consolidating
statements of income, partners' equity and cash flows for the fiscal quarter
then ended and the fiscal year through that date, all in reasonable detail and
certified (subject to normal year-end audit adjustments) by an Authorized
Officer as having been prepared in accordance with GAAP, consistently applied,
and setting forth in comparative form the respective financial statements for
the corresponding date and period in the previous fiscal year.
7.3.2 Annual Financial Statements.
---------------------------
As soon as available and in any event within one hundred twenty (120) days
after the end of each fiscal year of the Borrower, financial statements of the
Borrower consisting of a consolidated balance sheet as of the end of such fiscal
year, and related consolidated statements of income, partners' equity and cash
flows for the fiscal year then ended, all in reasonable detail and setting forth
in comparative form the financial statements as of the end of and for the
preceding fiscal year, and certified by independent certified public accountants
of nationally recognized standing satisfactory to the Agent. The certificate or
report of accountants shall be free of qualifications (other than any
consistency qualification that may result from a change in the method used to
prepare the financial statements as to which such accountants concur) and shall
not indicate the occurrence or existence of any event, condition or contingency
which would materially impair the prospect of payment or performance of any
covenant, agreement or duty of the Borrower under any of the Loan Documents. The
Borrower shall deliver with such financial statements and certification by their
accountants a letter of such accountants to the Agent and the Banks
substantially (i) to the effect that, based upon their ordinary and customary
examination of the affairs of the Borrower, performed in connection with the
preparation of such consolidated financial statements, and in accordance with
generally accepted auditing standards, they are not aware of the existence of
any condition or event which constitutes an event of default or Potential
Default or, if they are aware of such condition or event, stating the nature
thereof and confirming the Borrower's calculations with respect to the
certificate to be delivered pursuant to Section 7.3.3 with respect to such
financial statements and (ii) to the effect that the banks are intended to rely
upon such accountant's certification of the annual financial statements and that
such accountants authorize the Borrower to deliver such reports and certificate
to the banks on such accountants' behalf.
7.3.3 Certificate of the Borrower.
---------------------------
Concurrently with the financial statements of the Borrower furnished to the
Agent pursuant to Sections 7.3.1 and 7.3.2, a certificate of the Borrower signed
by an Authorized Officer, in the form of Exhibit 7.3.3, to the effect
-------------
that, except as described pursuant to Section 7.3.4, (i) the representations and
warranties of the Borrower contained in Article 4 and
-50-
<PAGE>
in the other Loan Documents are true and correct in all material respects on and
as of the date of such certificate with the same effect as though such
representations and warranties had been made on and as of such date (except
representations and warranties which expressly relate solely to an earlier date
or time) and the Borrower has performed and complied with all covenants and
conditions hereof, (ii) no Event of Default or Potential Default exists and is
continuing on the date of such certificate and (iii) containing calculations in
sufficient detail to demonstrate compliance as of the date of such financial
statements with all financial covenants contained in Section 7.2.
7.3.4 Notice of Default.
-----------------
Promptly after such Authorized Officer learns of the occurrence of an
Event of Default or Potential Default, a certificate signed by an Authorized
Officer setting forth the details of such Event of Default or Potential Default
and the action which the Borrower proposes to take with respect thereto.
7.3.5 Notice of Litigation.
--------------------
Promptly after the commencement thereof, notice of all actions,
suits, proceedings or investigations before or by any Official Body or any other
Person against the Borrower which relate to the Collateral, involve a claim or
series of claims in excess of $1,000,000 or which if adversely determined
would constitute a Material Adverse Change.
7.3.6 Certain Events.
--------------
Written notice to the Agent:
(i) at least ten (10) calendar days prior thereto, with
respect to any proposed sale or transfer of assets pursuant to Section
7.2.7(iv);
(ii) within the time limits set forth in Section 7.2.12, any
amendment to the organizational documents of the Borrower; and
(iii) at least thirty (30) calendar days prior thereto, with
respect to any change in the Borrower's locations from the locations set forth
in Schedule A to the Security Agreement.
7.3.7 Budgets, Forecasts, Other Reports and Information.
-------------------------------------------------
Promptly upon their becoming available to the Borrower:
(i) the annual budget and any forecasts or projections of the
Borrower, to be supplied not later than thirty (30) days prior to commencement
of the fiscal year to which any of the foregoing may be applicable,
-51-
<PAGE>
(ii) any reports including management letters submitted to the
Borrower or the General Partner by independent accountants in connection with
any annual, interim or special audit,
(iii) any reports, notices or proxy statements generally
distributed by the Borrower to its limited partners on a date no later than the
date supplied to such limited partners,
(iv) regular or periodic reports, including Forms 10-K, 10-Q
and 8-K, registration statements and prospectuses, filed by the Borrower with
the Securities and Exchange Commission,
(v) a copy of any order in any proceeding to which the
Borrower is a party issued by any Official Body, and
(vi) such other reports and information as any of the Banks
may from time to time reasonably request. The Borrower shall also notify the
Banks promptly of the enactment or adoption of any Law of which it has notice
which may result in a Material Adverse Change.
7.3.8 Cable System Information.
------------------------
7.3.8.1 Subscribers, Etc.
----------------
As soon as practicable and in any event within 60 days after the end
of each Fiscal Quarter, a subscribers report setting forth for each Cable System
as of the end of such Fiscal quarter (i) the number of Basic Subscribers and Pay
Units as of the end of such Fiscal quarter, (ii) the Pay-to-Basic Ratio as of
the end of such Fiscal Quarter, (iii) upon request of the Agent or any Lender,
the number of subscribers initiating and terminating Cable Systems service
during such Fiscal Quarter, and (iv) upon request by the Agent or any Lender, an
aging of the Borrower's accounts receivable as of the end of such Fiscal
Quarter, which report shall also include a description of any Cable Systems sold
during such Fiscal quarter and the consideration received therefor.
7.3.8.2 Franchises, Etc.
-----------------------
Promptly after the occurrence of (i) any lapse or other termination
of any Franchise issued to the Borrower which lapse or termination may have a
material adverse effect on the business, operations, financial condition or
prospects (with respect to the Borrower's ability to pay or repay the
Obligations) of the Borrower, (ii) any refusal by any Official Body to renew or
extend any such Franchise, or (iii) any dispute between the Borrower and any
Official Body which, if adversely determined, is reasonably likely to have a
material adverse effect on the business, operations, financial condition or
prospects (with respect to the Borrower's ability to pay or repay the
Obligations) of the Borrower, notice thereof.
-52-
<PAGE>
7.3.8.3 Regulatory Matters, Etc.
-----------------------
Promptly upon their becoming available to the Borrower, copies
of (i) any periodic or special report filed by the Borrower with the FCC or with
any other Official Body regulating the Cable Systems, if (A) such report
indicates any material adverse changes in the business, operations, financial
condition or prospects (with respect to the Borrower's ability to pay or repay
the Obligations) of the Borrower, or (B) a copy thereof is requested by any
Lender, and (ii) any material notice or other material communication from the
FCC or from any other Official Body regulating cable systems which specifically
relates to the operation of the Cable Systems.
8. DEFAULT
-------
8.1 Events of Default.
-----------------
An Event of Default shall mean the occurrence or existence of any one
or more of the following events or conditions (whatever the reason therefor and
whether voluntary, involuntary or effected by operation of Law):
8.1.1 Payments Under Loan Documents.
-----------------------------
The Borrower shall fail to pay any principal of any Loan (including
scheduled installments, mandatory prepayments or the payment due at maturity)
when due or shall fail to pay any interest on any Loan when due (and such
default shall continue unremedied for a period of five days or more), in
accordance with the terms hereof or thereof,
8.1.2 Breach of Warranty.
------------------
Any representation or warranty made at any time by the Borrower herein
or by the Borrower in any other Loan Document, or in any certificate, other
instrument or statement furnished pursuant to the provisions hereof or thereof,
shall prove to have been false or misleading in any material respect as of the
time it was made or furnished;
8.1.3 Breach of Negative Covenants or Visitation Rights.
-------------------------------------------------
The Borrower shall default in the observance or performance of any
covenant contained in Section 7.1.6 or Section 7.2;
8.1.4 Breach of Other Covenants.
-------------------------
The Borrower or General Partner shall default in the observance or
performance of any other covenant, condition or provision hereof or of any other
Loan Document and such default shall continue unremedied for a period of ten
(10) Business Days after any officer of the Borrower becomes aware of the
occurrence thereof (such grace period to be
-53-
<PAGE>
applicable only in the event such default can be remedied by corrective action
of the Borrower as determined by the Agent in its sole discretion);
8.1.5 Defaults in Other Agreements or Indebtedness.
--------------------------------------------
A default or event of default shall occur at any time under the terms
of any other agreement involving borrowed money or the extension of credit or
any other Indebtedness under which the Borrower may be obligated as a borrower
or guarantor in excess of $ 1,000,000 in the aggregate, and such breach, default
or event of default consists of the failure to pay (beyond any period of grace
permitted with respect thereto, whether waived or not) any indebtedness when due
(whether at stated maturity, by acceleration or otherwise) or if such breach or
default permits or causes the acceleration of any indebtedness (whether or not
such right shall have been waived) or the termination of any commitment to lend;
8.1.6 Final Judgments or Orders.
-------------------------
Any final judgments or orders for the payment of money in excess of
$1,000,000 in the aggregate (unless fully covered by insurance) shall be entered
against the Borrower by a court having jurisdiction in the premises, which
judgment is not discharged, vacated, bonded or stayed pending appeal within a
period of thirty (30) days from the date of entry;
8.1.7 Loan Document Unenforceable.
---------------------------
Any of the Loan Documents shall cease to be legal, valid and binding
agreements enforceable against the party executing the same or such party's
successors and assigns (as permitted under the Loan Documents) in accordance
with the respective terms thereof or shall in any way be terminated (except in
accordance with its terms) or become or be declared ineffective or inoperative
or shall in any way be challenged or contested or cease to give or provide the
respective Liens, security interests, rights, titles, interests, remedies,
powers or privileges intended to be created thereby;
8.1.8 Uninsured Losses; Proceedings Against Assets.
--------------------------------------------
There shall occur any uninsured damage to or loss, theft or
destruction of any of the Collateral in excess of $1,000,000 or the Collateral
or any other of the Borrower's assets are attached, seized, levied upon or
subjected to a writ or distress warrant; or such come within the possession of
any receiver, trustee, custodian or assignee for the benefit of creditors and
the same is not cured within thirty (30) days thereafter;
8.1.9 Notice of Lien or Assessment.
----------------------------
A notice of Lien or assessment in excess of $1,000,000 which is not a
Permitted Lien is filed of record with respect to all or any part of the
Borrower's assets by the United States, or any department, agency or
instrumentality thereof, or by any state, county,
-54-
<PAGE>
municipal or other governmental agency, including the PBGC, or any taxes or
debts owing at any time or times hereafter to any one of these becomes payable
and the same is not paid within thirty (30) days after the same becomes payable;
8.1.10 Insolvency.
----------
The Borrower or the General Partner ceases to be solvent or
admits in writing its inability to pay its debts as they mature;
8.1.11 Partnership Agreement.
---------------------
There shall occur any default under the Partnership Agreement;
8.1.12 Cessation of Business; Authorizations; Franchise Agreements.
-----------------------------------------------------------
The Borrower ceases to conduct its business as contemplated,
except as expressly permitted under Section 7.2.6 or 7.2.7, or the Borrower is
enjoined, restrained or in any way prevented by court order from conducting all
or any material part of its business and such injunction, restraint or other
preventive order is not dismissed within thirty (30) days after the entry
thereof,
8.1.13 Change in Control.
-----------------
A Change in Control shall occur;
8.1.14 Involuntary Proceedings.
-----------------------
A proceeding shall have been instituted in a court having jurisdiction
in the premises seeking a decree or order for relief in respect of the Borrower
or the General Partner in an involuntary case under any applicable bankruptcy,
insolvency, reorganization or other similar law now or hereafter in effect, or
for the appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator, conservator (or similar official) of the Borrower or for any
substantial part of its property, or for the winding-up or liquidation of its
affairs, and such proceeding shall remain undismissed or unstayed and in effect
for a period of thirty (30) consecutive days or such court shall enter a decree
or order granting any of the relief sought in such proceeding; or
8.1.15 Voluntary Proceedings.
---------------------
The Borrower or the General Partner shall commence a voluntary case
under any applicable bankruptcy, insolvency, reorganization or other similar law
now or hereafter in effect, shall consent to the entry of an order for relief in
an involuntary case under any such law, or shall consent to the appointment or
taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator, conservator (or other similar official) of itself or for any
substantial part of its property or shall make a general assignment for the
benefit of creditors,
-55-
<PAGE>
or shall fail generally to pay its debts as they become due, or shall take any
action in furtherance of any of the foregoing.
8.2 Consequences of Event of Default.
--------------------------------
8.2.1 Events of Default Other Than Bankruptcy, Insolvency or
------------------------------------------------------
Reorganization Proceedings.
- --------------------------
If an Event of Default specified under Sections 8.1.1 through 8.1.13
shall occur and be continuing, the Banks and the Agent shall be under no
further obligation to make Loans and the Agent may, and upon the request of the
Required Banks, shall by written notice to the Borrower, declare the unpaid
principal amount of the Notes then outstanding and all interest accrued thereon,
any unpaid fees and all other Indebtedness of the Borrower to the Banks
hereunder and thereunder to be forthwith due and payable, and the same shall
thereupon become and be immediately due and payable to the Agent for the benefit
of each Bank without presentment, demand, protest or any other notice of any
kind, all of which are hereby expressly waived.
8.2.2 Bankruptcy, Insolvency or Reorganization Proceedings.
----------------------------------------------------
If an Event of Default specified under Section 8.1.14 or 8.1.15 shall
occur, the Banks shall be under no further obligations to make Loans hereunder
and the unpaid principal amount of the Notes then outstanding and all interest
accrued thereon, any unpaid fees and all other Indebtedness of the Borrower to
the Banks hereunder and thereunder shall be immediately due and payable, without
presentment, demand, protest or notice of any kind, all of which are hereby
expressly waived; and
8.2.3 Set-off.
-------
If an Event of Default shall occur and be continuing, any Bank to whom
any Obligation is owed by any Borrower hereunder or under any other Loan
Document or any participant of such Bank which has agreed in writing to be bound
by the provisions of Section 9.13 and any branch, Subsidiary or Affiliate of
such Bank or participant anywhere in the world shall have the right, in addition
to all other rights and remedies available to it, without notice to such
Borrower, to set-off against and apply to the then unpaid balance of all the
Loans and all other Obligations of the Borrower and the other Borrower hereunder
or under any other Loan Document any debt owing to, and any other funds held in
any manner for the account of, the Borrower or such other Borrower by such Bank
or participant or by such branch, Subsidiary or Affiliate, including all funds
in all deposit accounts (whether time or demand, general or special,
provisionally credited or finally credited, or otherwise) now or hereafter
maintained by the Borrower or such other Borrower for its own account (but not
including funds held in custodian or trust accounts) with such Bank or
participant or such branch, Subsidiary or Affiliate. Such right shall exist
whether or not any Bank or the Agent shall have made any demand under this
Agreement or any other Loan Document, whether or not such debt owing to or funds
held for the account of the Borrower or such other Borrower is or are matured or
unmatured and
-56-
<PAGE>
regardless of the existence or adequacy of any Collateral, guaranty or any other
security, right or remedy available to any Bank or the Agent; and
8.2.4 Suits, Actions, Proceedings.
---------------------------
If an Event of Default shall occur and be continuing, and whether or
not the Agent shall have accelerated the maturity of Loans pursuant to any of
the foregoing provisions of this Section 8.2, the Agent or any Bank, if owed any
amount with respect to the Notes, may proceed to protect and enforce its rights
by suit in equity, action at law and/or other appropriate proceeding, whether
for the specific performance of any covenant or agreement contained in this
Agreement or the Notes, including as permitted by applicable Law the obtaining
of the ex parte appointment of a receiver, and, if such amount shall have become
-- -----
due, by declaration or otherwise, proceed to enforce the payment thereof or any
other legal or equitable right of the Agent or such Bank; and
8.2.5 Application of Proceeds.
-----------------------
From and after the date on which the Agent has taken any action
pursuant to this Section 8.2 and until all Obligations of the Borrower have been
paid in full, any and all proceeds received by the Agent from any sale or other
disposition of the Collateral, or any part thereof, or the exercise of any other
remedy by the Agent, shall be applied as follows:
(i) first, to reimburse the Agent and the Banks for out-of-
pocket costs, expenses and disbursements, including reasonable attorneys' and
paralegals' fees and legal expenses, incurred by the Agent or the Banks in
connection with realizing on the Collateral or collection of any Obligations of
any of the Borrower under any of the Loan Documents, including advances made by
the Banks or any one of them or the Agent for the reasonable maintenance,
preservation, protection or enforcement of, or realization upon, the Collateral,
including advances for taxes, insurance, repairs and the like and reasonable
expenses incurred to sell or otherwise realize on, or prepare for sale or other
realization on, any of the Collateral;
(ii) second, to the repayment of all Indebtedness then due and
unpaid of the Borrower to the Banks incurred under this Agreement or any of the
other Loan Documents, whether of principal, interest, fees, expenses or
otherwise, in such manner as the Agent may determine in its discretion; and
(iii) the balance, if any, to the Borrower, unless otherwise
required by Law.
8.2.6 Other Rights and Remedies.
-------------------------
In addition to all of the rights and remedies contained in this
Agreement or in any of the other Loan Documents, the Agent shall have all of the
rights and remedies of a secured party under the Uniform Commercial Code or
other applicable Law, all of which rights
-57-
<PAGE>
and remedies shall be cumulative and non-exclusive, to the extent permitted by
Law. The Agent may, and upon the request of the Required Banks shall, exercise
all post-default rights granted to the Agent and the Banks under the Loan
Documents or applicable Law.
8.3 Notice of Sale.
--------------
Any notice required to be given by the Agent of a sale, lease, or
other disposition of the Collateral or any other intended action by the Agent,
if given ten (10) days prior to such proposed action, shall constitute
commercially reasonable and fair notice thereof to the Borrower.
9. THE AGENT
---------
9.1 Appointment.
-----------
Each Bank hereby irrevocably designates, appoints and authorizes Royal
Bank of Canada to act as Agent for such Bank under this Agreement and to execute
and deliver or accept on behalf of each of the Banks the other Loan Documents.
Each Bank hereby irrevocably authorizes, and each holder of any Note by the
acceptance of a Note shall be deemed irrevocably to authorize, the Agent to take
such action on its behalf under the provisions of this Agreement and the other
Loan Documents and any other instruments and agreements referred to herein, and
to exercise such powers and to perform such duties hereunder as are specifically
delegated to or required of the Agent by the terms hereof, together with such
powers as are reasonably incidental thereto. Royal Bank of Canada agrees to act
as the Agent on behalf of the Banks to the extent provided in this Agreement.
9.2 Delegation of Duties.
--------------------
The Agent may perform any of its duties hereunder by or through agents
or employees (provided such delegation does not constitute a relinquishment of
--------
its duties as Agent) and, subject to Sections 9.5 and 9.6, shall be entitled to
engage and pay for the advice or services of any attorneys, accountants or other
experts concerning all matters pertaining to its duties hereunder and to rely
upon any advice so obtained.
9.3 Nature of Duties; Independent Credit Investigation.
--------------------------------------------------
The Agent shall have no duties or responsibilities except those
expressly set forth in this Agreement and no implied covenants, functions,
responsibilities, duties, obligations, or liabilities shall be read into this
Agreement or otherwise exist. The duties of the Agent shall be mechanical and
administrative in nature; the Agent shall not have by reason of this Agreement a
fiduciary or trust relationship in respect of any Bank; and nothing in this
Agreement, expressed or implied, is intended to or shall be so construed as to
impose upon the Agent any obligations in respect of this Agreement except as
expressly set forth herein. Without limiting the generality of the foregoing,
the use of the term "agent" in this Agreement with reference to the Agent is not
-58-
<PAGE>
intended to connote any fiduciary or other implied (or express) obligations
arising under agency doctrine of any applicable Law. Instead, such term is used
merely as a matter of market custom, and is intended to create or reflect only
an administrative relationship between independent contracting parties. Each
Bank expressly acknowledges (i) that the Agent has not made any representations
or warranties to it and that no act by the Agent hereafter taken, including any
review of the affairs of any of the Borrower, shall be deemed to constitute any
representation or warranty by the Agent to any Bank; (ii) that it has made and
will continue to make, without reliance upon the Agent, its own independent
investigation of the financial condition and affairs and its own appraisal of
the creditworthiness of each of the Borrower in connection with this Agreement
and the making and continuance of the Loans hereunder; and (iii) except as
expressly provided herein, that the Agent shall have no duty or responsibility,
either initially or on a continuing basis, to provide any Bank with any credit
or other information with respect thereto, whether coming into its possession
before the making of any Loan or at any time or times thereafter.
9.4 Actions in Discretion of Agent; Instructions From the Banks.
-----------------------------------------------------------
The Agent agrees, upon the written request of the Required Banks, to
take or refrain from taking any action of the type specified as being within the
Agent's rights, powers or discretion herein, provided that the Agent shall not
--------
be required to take any action which exposes the Agent to personal liability or
which is contrary to this Agreement or any other Loan Document or applicable
Law. In the absence of a request by the Required Banks, the Agent shall have
authority, in its sole discretion, to take or not to take any such action,
unless this Agreement specifically requires the consent of the Required Banks or
all of the Banks. Any action taken or failure to act pursuant to such
instructions or discretion shall be binding on the Banks, subject to Section
9.6. Subject to the provisions of Section 9.6, no Bank shall have any right of
action whatsoever against the Agent as a result of the Agent acting or
refraining from acting hereunder in accordance with the instructions of the
Required Banks, or in the absence of such instructions, in the absolute
discretion of the Agent.
9.5 Reimbursement and Indemnification of Agent by the Borrower.
----------------------------------------------------------
The Borrower unconditionally agrees to pay or reimburse the Agent and
hold the Agent harmless against (a) liability for the payment of all reasonable
out-of-pocket costs, expenses and disbursements, including fees and expenses of
counsel (including the allocated costs of staff counsel), appraisers and
environmental consultants, incurred by the Agent (i) in connection with the
development, negotiation, preparation, printing, execution, administration,
syndication, interpretation and performance of this Agreement and the other Loan
Documents, (ii) relating to any requested amendments, waivers or consents
pursuant to the provisions hereof, (iii) in connection with the enforcement of
this Agreement or any other Loan Document or collection of amounts due hereunder
or thereunder or the proof and allowability of any claim arising under this
Agreement or any other Loan Document, whether in bankruptcy or receivership
proceedings or otherwise, and (iv) in any workout or restructuring or in
connection with the protection, preservation, exercise or enforcement of any of
the terms hereof or of any
-59-
<PAGE>
rights hereunder or under any other Loan Document or in connection with any
foreclosure, collection or bankruptcy proceedings, and (b) all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against the Agent, in its capacity as such, in any
way relating to or arising out of this Agreement or any other Loan Documents or
any action taken or omitted by the Agent hereunder or thereunder, provided that
--------
the Borrower shall not be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements if the same results from the Agent's gross negligence
or willful misconduct, or if the Borrower was not given notice of the subject
claim and the opportunity to participate in the defense thereof, at its expense
(except that the Borrower shall remain liable to the extent such failure to give
notice does not result in a loss to the Borrower), or if the same results from a
compromise or settlement agreement entered into without the consent of the
Borrower, which shall not be unreasonably withheld.
9.6 Exculpatory Provisions; Limitation of Liability.
-----------------------------------------------
Neither the Agent nor any of its directors, officers, employees,
agents, attorneys or Affiliates shall (a) be liable to any Bank for any action
taken or omitted to be taken by it or them hereunder, or in connection herewith
including pursuant to any Loan Document, unless caused by its or their own gross
negligence or willful misconduct, (b) be responsible in any manner to any of the
Banks for the effectiveness, enforceability, genuineness, validity or the due
execution of this Agreement or any other Loan Documents or for any recital,
representation, warranty, document, certificate, report or statement herein or
made or furnished under or in connection with this Agreement or any other Loan
Documents, or (c) be under any obligation to any of the Banks to ascertain or to
inquire as to the performance or observance of any of the terms, covenants or
conditions hereof or thereof on the part of the Borrower, or the financial
condition of the Borrower, or the existence or possible existence of any Event
of Default or Potential Default. No claim may be made by any of the Borrower,
any Bank, the Agent or any of their respective Subsidiaries against the Agent,
any Bank or any of their respective directors, officers, employees, agents,
attorneys or Affiliates, or any of them, for any special, indirect or
consequential damages or, to the fullest extent permitted by Law, for any
punitive damages in respect of any claim or cause of action (whether based on
contract, tort, statutory liability, or any other ground) based on, arising out
of or related to any Loan Document or the transactions contemplated hereby or
any act, omission or event occurring in connection therewith, including the
negotiation, documentation, administration or collection of the Loans, and each
of the Borrower (for itself and on behalf of each of its Subsidiaries), the
Agent and each Bank hereby waive, releases and agree never to sue upon any claim
for any such damages, whether such claim now exists or hereafter arises and
whether or not it is now known or suspected to exist in its favor. Each Bank
agrees that, except for notices, reports and other documents expressly required
to be furnished to the Banks by the Agent hereunder or given to the Agent for
the account of or with copies for the Banks, the Agent and each of its
directors, officers, employees, agents, attorneys or Affiliates shall not have
any duty or responsibility to provide any Bank with any credit or other
information concerning the business, operations, property, condition (financial
or
-60-
<PAGE>
otherwise), prospects or creditworthiness of the Borrower which may come into
the possession of the Agent or any of its directors, officers, employees,
agents, attorneys or Affiliates.
9.7 Reimbursement and Indemnification of Agent by Banks.
---------------------------------------------------
Each Bank agrees to reimburse and indemnify the Agent (to the extent
not reimbursed by the Borrower and without limiting the Obligation of the
Borrower to do so) in proportion to its Ratable Share from and against all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements, including attorneys' fees and disbursements
(including the allocated costs of staff counsel), and costs of appraisers and
environmental consultants, of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against the Agent, in its capacity as such, in any
way relating to or arising out of this Agreement or any other Loan Documents or
any action taken or omitted by the Agent hereunder or thereunder, provided that
--------
no Bank shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements (a) if the same results from the Agent's gross negligence or
willful misconduct, or (b) if such Bank was not given notice of the subject
claim and the opportunity to participate in the defense thereof, at its expense
(except that such Bank shall remain liable to the extent such failure to give
notice does not result in a loss to the Bank), or (c) if the same results from a
compromise and settlement agreement entered into without the consent of such
Bank, which shall not be unreasonably withheld. In addition, each Bank agrees
promptly upon demand to reimburse the Agent (to the extent not reimbursed by the
Borrower and without limiting the Obligation of the Borrower to do so) in
proportion to its Ratable Share for all amounts due and payable by the Borrower
to the Agent in connection with the Agent's periodic audit of the Borrower's
books, records and business properties.
9.8 Reliance by Agent.
-----------------
The Agent shall be entitled to rely upon any writing, telegram, telex
or teletype message, resolution, notice, consent, certificate, letter,
cablegram, statement, order or other document or conversation by telephone or
otherwise believed by it to be genuine and correct and to have been signed, sent
or made by the proper Person or Persons, and upon the advice and opinions of
counsel and other professional advisers selected by the Agent. The Agent shall
be fully justified in failing or refusing to take any action hereunder unless it
shall first be indemnified to its satisfaction by the Banks against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action.
9.9 Notice of Default.
-----------------
The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Potential Default or Event of Default unless the Agent has
received written notice from a Bank or the Borrower referring to this Agreement,
describing such Potential Default or Event of Default and stating that such
notice is a "notice of default."
-61-
<PAGE>
9.10 Notices.
-------
The Agent shall promptly send to each Bank a copy of all notices
received from the Borrower pursuant to the provisions of this Agreement or the
other Loan Documents promptly upon receipt thereof. The Agent shall promptly
notify the Borrower and the other Banks of each change in the Base Rate and the
effective date thereof.
9.11 Banks in Their Individual Capacities.
------------------------------------
With respect to its Revolving Credit Commitment, the Revolving Credit
Loans and any other rights and powers given to it as a Bank hereunder or under
any of the other Loan Documents, the Agent shall have the same rights and powers
hereunder as any other Bank and may exercise the same as though it were not the
Agent, and the term "Banks" shall, unless the context otherwise indicates,
include the Agent in its individual capacity. Royal Bank of Canada and its
Affiliates and each of the Banks and their respective Affiliates may, without
liability to account, except as prohibited herein, make loans to, accept
deposits from, discount drafts for, act as trustee under indentures of, and
generally engage in any kind of banking or trust business with, the Borrower and
their Affiliates, in the case of the Agent, as though it were not acting as
Agent hereunder and in the case of each Bank, as though such Bank were not a
Bank hereunder. The Banks acknowledge that, pursuant to such activities, the
Agent or its Affiliates may (i) receive information regarding the Borrower
(including information that may be subject to confidentiality obligations in
favor of the Borrower) and acknowledge that the Agent shall be under no
obligation to provide such information to them, and (ii) accept fees and other
consideration from the Borrower for services in connection with this Agreement
and otherwise without having to account for the same to the Banks.
9.12 Holders of Notes.
----------------
The Agent may deem and treat any payee of any Note as the owner
thereof for all purposes hereof unless and until written notice of the
assignment or transfer thereof shall have been filed with the Agent. Any
request, authority or consent of any Person who at the time of making such
request or giving such authority or consent is the holder of any Note shall be
conclusive and binding on any subsequent holder, transferee or assignee of such
Note or of any Note or Notes issued in exchange therefor.
9.13 Equalization of Banks.
---------------------
The Banks and the holders of any participations in any Notes agree
among themselves that, with respect to all amounts received by any Bank or any
such holder for application on any Obligation hereunder or under any Note or
under any such participation, whether received by voluntary payment, by
realization upon security, by the exercise of the right of set-off or banker's
lien, by counterclaim or by any other non-pro rata source, equitable adjustment
will be made in the manner stated in the following sentence so that, in effect,
all such excess amounts will be shared ratably among the Banks and such holders
in proportion to their interests in payments under the Notes, except as
otherwise provided in Section 3.4.3, 4.4.2 or 4.6.
-62-
<PAGE>
The Banks or any such holder receiving any such amount shall purchase for cash
from each of the other Banks an interest in such Bank's Loans in such amount as
shall result in a ratable participation by the Banks and each such holder in the
aggregate unpaid amount under the Notes, provided that if all or any portion of
--------
such excess amount is thereafter recovered from the Bank or the holder making
such purchase, such purchase shall be rescinded and the purchase price restored
to the extent of such recovery, together with interest or other amounts, if any,
required by law (including court order) to be paid by the Bank or the holder
making such purchase.
9.14 Successor Agent.
---------------
The Agent may resign as Agent by giving not less than thirty (30)
days' prior written notice to the Borrower. If the Agent shall resign under this
Agreement, then either (a) the Borrower shall appoint from among the Banks a
successor agent for the Banks, or (b) if a successor agent shall not be so
appointed and approved within the thirty (30) day period following the Agent's
notice to the Banks of its resignation, then the Borrower shall appoint, with
the consent of the Required Banks, such consent not to be unreasonably withheld,
a successor agent who shall serve as Agent. Upon its appointment pursuant to
either clause (a) or (b) above, such successor agent shall succeed to the
rights, powers and duties of the Agent, and the term "Agent" shall mean such
successor agent, effective upon its appointment, and the former Agent's rights,
powers and duties as Agent shall be terminated without any other or further act
or deed on the part of such former Agent or any of the parties to this
Agreement. After the resignation of any Agent hereunder, the provisions of this
Section 8 shall inure to the benefit of such former Agent and such former Agent
shall not by reason of such resignation be deemed to be released from liability
for any actions taken or not taken by it while it was an Agent under this
Agreement.
9.15 Agent's Fee.
-----------
The Borrower shall pay to the Agent a nonrefundable fee (the "Agent's
Fee") under the terms of a letter (the "Agent's Letter") between the Borrower
and Agent, as amended from time to time.
9.16 Availability of Funds.
---------------------
The Agent may assume that each Bank has made or will make the proceeds
of a Loan available to the Agent unless the Agent shall have been notified by
such Bank on or before the later of (1) the close of Business on the Business
Day preceding the Borrowing Date with respect to such Loan or (2) four (4) hours
before the time on which the Agent actually funds the proceeds of such Loan to
the Borrower (whether using its own funds pursuant to this Section 9.16 or using
proceeds deposited with the Agent by the Banks and whether such funding occurs
before or after the time on which Banks are required to deposit the proceeds of
such Loan with the Agent). The Agent may, in reliance upon such assumption (but
shall not be required to), make available to the Borrower a corresponding
amount. If such corresponding amount is not in fact made available to the Agent
by such Bank, the Agent shall be entitled to recover such amount on demand from
such Bank (or, if such Bank fails to pay such amount forthwith upon
-63-
<PAGE>
such demand from the Borrower) together with interest thereon, in respect of
each day during the period commencing on the date such amount was made available
to the Borrower and ending on the date the Agent recovers such amount, at a rate
per annum equal to the applicable interest rate in respect of the Loan.
9.17 Calculations.
------------
In the absence of gross negligence or willful misconduct, the Agent
shall not be liable for any error in computing the amount payable to any Bank
whether in respect of the Loans, fees or any other amounts due to the Banks
under this Agreement. In the event an error in computing any amount payable to
any Bank is made, the Agent, the Borrower and each affected Bank shall,
forthwith upon discovery of such error, make such adjustments as shall be
required to correct such error, and any compensation therefor will be calculated
at the Federal Funds Effective Rate.
9.18 Beneficiaries.
-------------
Except as expressly provided herein, the provisions of this Section 9
are solely for the benefit of the Agent and the Banks, and the Borrower shall
not have any rights to rely on or enforce any of the provisions hereof. In
performing its functions and duties under this Agreement, the Agent shall act
solely as agent of the Banks and does not assume and shall not be deemed to have
assumed any obligation toward or relationship of agency or trust with or for the
Borrower.
10. MISCELLANEOUS
-------------
10.1 Modifications, Amendments or Waivers.
------------------------------------
With the written consent of the Required Banks, the Agent, acting on
behalf of all the Banks, and the Borrower, on behalf of the Borrower, may from
time to time enter into written agreements amending or changing any provision of
this Agreement or any other Loan Document or the rights of the Banks or the
Borrower hereunder or thereunder, or may grant written waivers or consents to a
departure from the due performance of the Obligations of the Borrower hereunder
or thereunder. Any such agreement, waiver or consent made with such written
consent shall be effective to bind all the Banks and the Borrower; provided,
--------
that, without the written consent of all the Banks, no such agreement, waiver or
consent may be made which will:
10.1.1 Increase of Commitment; Extension or Expiration Date.
----------------------------------------------------
Increase the amount of the Revolving Credit Commitment of any
Bank hereunder or extend the Expiration Date;
-64-
<PAGE>
10.1.2 Extension of Payment; Reduction of Principal Interest or
--------------------------------------------------------
Fees; Modification of Terms of Payment.
- ---------------------------------------
Whether or not any Loans are outstanding, extend the time for
payment of principal or interest of any Loan (excluding the due date of any
mandatory prepayment of a Loan or any mandatory Commitment reduction in
connection with such a mandatory prepayment hereunder except for mandatory
reductions of the Commitments on the Expiration Date), the Commitment Fee or any
other fee payable to any Bank, or reduce the principal amount of or the rate of
interest borne by any Loan or reduce the Commitment Fee or any other fee payable
to any Bank, or otherwise affect the terms of payment of the principal of or
interest of any Loan, the Commitment Fee or any other fee payable to any Bank;
10.1.3 Release of Collateral.
---------------------
Except for sales of assets permitted by Section 7.2.7, release
any Collateral or any other guaranty security for any of the Borrower's
Obligations; or
10.1.4 Miscellaneous.
-------------
Amend Section 4.2 [Pro Rata Treatment of Banks], 9.6
[Exculpatory Provisions, Etc.] or 9.13 [Equalization of Banks] or this Section
10. 1, alter any provision regarding the pro rata treatment of the Banks, change
the definition of Required Banks, or change any requirement providing for the
Banks or the Required Banks to authorize the taking of any action hereunder;
provided, further, that no agreement, waiver or consent which would modify the
- --------
interests, rights or obligations of the Agent in its capacity as Agent shall be
effective without the written consent of the Agent.
10.2 No Implied Waivers; Cumulative Remedies; Writing Required.
---------------------------------------------------------
No course of dealing and no delay or failure of the Agent or any Bank
in exercising any right, power, remedy or privilege under this Agreement or any
other Loan Document shall affect any other or future exercise thereof or operate
as a waiver thereof, nor shall any single or partial exercise thereof or any
abandonment or discontinuance of steps to enforce such a right, power, remedy or
privilege preclude any further exercise thereof or of any other right, power,
remedy or privilege. The rights and remedies of the Agent and the Banks under
this Agreement and any other Loan Documents are cumulative and not exclusive of
any rights or remedies which they would otherwise have. Any waiver, permit,
consent or approval of any kind or character on the part of any Bank of any
breach or default under this Agreement or any such waiver of any provision or
condition of this Agreement must be in writing and shall be effective only to
the extent specifically set forth in such writing.
-65-
<PAGE>
10.3 Reimbursement and Indemnification of Banks by the Borrower;
-----------------------------------------------------------
Taxes.
- ------
The Borrower agrees unconditionally upon demand to pay or reimburse to
each Bank (other than the Agent, as to which the Borrower's Obligations are set
forth in Section 9.5) and to save such Bank harmless against (1) liability for
the payment of all reasonable out-of-pocket costs expenses and disbursements
(including fees and expenses of counsel (including allocated costs of staff
counsel) for each Bank except with respect to (a) and (b) below), incurred by
such Bank (a) in connection with the administration and interpretation of this
Agreement, and other instruments and documents to be delivered hereunder, (b)
relating to any amendments, waivers or consents pursuant to the provisions
hereof, (c) in connection with the enforcement of this Agreement or any other
Loan Document, or collection of amounts due hereunder or thereunder or the proof
and allowability of any claim arising under this Agreement or any other Loan
Document, whether in bankruptcy or receivership proceedings or otherwise, and
(d) in any workout or restructuring or in connection with the protection,
preservation, exercise or enforcement of any of the terms hereof or of any
rights hereunder or under any other Loan Document or in connection with any
foreclosure, collection or bankruptcy proceedings, or (ii) all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against such Bank, in its capacity as such, in any
way relating to or arising out of this Agreement or any other Loan Documents or
any action taken or omitted by such Bank hereunder or thereunder, provided that
--------
the Borrower shall not be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements (A) if the same results from such Bank's gross
negligence or willful misconduct, or (B) if the Borrower was not given notice of
the subject claim and the opportunity to participate in the defense thereof, at
its expense (except that the Borrower shall remain liable to the extent such
failure to give notice does not result in a loss to the Borrower), or (C) if the
same results from a compromise or settlement agreement entered into without the
consent of the Borrower, which shall not be unreasonably withheld. The Banks
will attempt to minimize the fees and expenses of legal counsel for the Banks
which are subject to reimbursement by the Borrower hereunder by considering the
usage of one law firm to represent the Banks and the Agent if appropriate under
the circumstances. The Borrower agrees unconditionally to pay all stamp,
document, transfer, recording or filing taxes or fees and similar impositions
now or hereafter determined by the agent or any bank to be payable in connection
with this Agreement or any other Loan Document, and the borrower agrees
unconditionally to save the Agent and the Banks harmless from and against any
and all present or future claims, liabilities or losses with respect to or
resulting from any omission to pay or delay in paying any such taxes, fees or
impositions.
10.4 Holidays.
--------
Whenever payment of a Loan to be made or taken hereunder shall be due
on a day which is not a Business Day such payment shall be due on the next
Business Day and such extension of time shall be included in computing interest
and fee, except that the Loans shall be due on the Business Day preceding the
Expiration Date if the Expiration Date is not a Business Day. Whenever any
payment or action to be made or taken hereunder (other than payment of the
-66-
<PAGE>
Loans) shall be stated to be due on a day which is not a business Day, such
payment or action shall be made or taken on the next following Business Day
(except as provided in Section 3.2 with respect to Interest Periods under the
Euro-Rate Option), and such extension of time shall not be included in computing
interest or fees, if any, in connection with such payment or action.
10.5 Funding by Branch, Subsidiary or Affiliate.
------------------------------------------
10.5.1 Notional Funding.
----------------
Each Bank shall have the right from time to time, without notice
to the Borrower, to deem any branch, Subsidiary or Affiliate (which for the
purposes of this Section 10.5 shall mean any corporation or association which is
directly or indirectly controlled by or is under direct or indirect common
control with any corporation or association which directly or indirectly
controls such Bank) of such Bank to have made, maintained or funded any Loan to
which the Euro-Rate Option applies at any time, provided that immediately
--------
following (on the assumption that a payment were then due from the Borrower to
such other office), and as a result of such change, the Borrower would not be
under any greater financial obligation pursuant to Section 4.6 than it would
have been in the absence of such change. Notional funding offices may be
selected by each Bank without regard to such Bank's actual methods of making,
maintaining or funding the Loans or any sources of funding actually used by or
available to such Bank.
10.5.2 Actual Funding.
--------------
Each Bank shall have the right from time to time to make or
maintain any Loan by arranging for a branch, Subsidiary or Affiliate of such
Bank to make or maintain such Loan subject to the last sentence of this Section
10.5.2. If any Bank causes a branch, Subsidiary or Affiliate to make or maintain
any part of the Loans hereunder, all terms and conditions of this Agreement
shall, except where the context clearly requires otherwise, be applicable to
such part of the Loans to the same extent as if such Loans were made or
maintained by such Bank, but in no event shall any Bank's use of such a branch,
Subsidiary or Affiliate to make or maintain any part of the Loans hereunder
cause such Bank or such branch, Subsidiary or Affiliate to incur any cost or
expenses payable by the Borrower hereunder or require the Borrower to pay any
other compensation to any Bank (including any expenses incurred or payable
pursuant to Section 4.6) which would otherwise not be incurred.
10.6 Notices.
-------
All notices, requests, demands, directions and other communications
(as used in this Section 9.6, collectively referred to as "notices") given to or
made upon any party hereto under the provisions of this Agreement shall be by
telephone or in writing (including telex or facsimile communication) unless
otherwise expressly permitted hereunder and shall be delivered or sent by telex
or facsimile to the respective parties at the addresses and numbers set forth
under their respective names on Schedule 1.1(B) hereof or in accordance with
---------------
any subsequent unrevoked written direction from any party to the others. All
notices shall, except as otherwise
-67-
<PAGE>
expressly herein provided, be effective (a) in the case of telex or facsimile,
when received, (b) in the case of hand-delivered notice, when hand-delivered,
(c) in the case of telephone when telephoned, provided, however, that in order
-------
to be effective, telephonic notices must be confirmed in writing no later than
the next day by letter, facsimile or telex, (d) if given by mail, four (4) days
after such communication is deposited in the mail with first-class postage
prepaid, return receipt requested, and (e) if given by any other means
(including by air courier), when delivered; provided, that notices to the Agent
--------
shall not be effective until received. Any Bank giving any notice to the
Borrower shall simultaneously send a copy thereof to the Agent, and the Agent
shall promptly notify the other Banks of the receipt by it of any such notice.
10.7 Severability.
------------
The provisions of this Agreement are intended to be severable. If any
provision of this Agreement shall be held invalid or unenforceable in whole or
in part in any jurisdiction, such provision shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without in any
manner affecting the validity or enforceability thereof in any other
jurisdiction or the remaining provisions hereof in any jurisdiction.
10.8 Governing Law.
-------------
This Agreement shall be deemed to be a contract under the Laws of the
State of New York and for all purposes shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York without
regard to its conflict-of-laws principles.
10.9 Prior Understanding.
-------------------
This Agreement and the other Loan Documents supersede all prior
understandings and agreements, whether written or oral, between the parties
hereto and thereto relating to the transactions provided for herein and therein,
including any prior confidentiality agreements and commitments.
10.10 Duration; Survival.
------------------
All representations and warranties of the Borrower contained herein
or made in connection herewith shall survive the making of Loans and shall not
be waived by the execution and delivery of this Agreement, any investigation
by the Agent or the Banks, the making of Loans, or payment in full of the Loans.
All covenants and agreements of the Borrower contained in Sections 7.1, 7.2 and
7.3 herein shall continue in full force and effect from and after the date
hereof so long as the Borrower may borrow hereunder and until termination of
the Revolving Credit Commitments and payment in full of the Loans. All covenants
and agreements of the Borrower contained herein relating to the payment of
principal, interest, premiums, additional compensation or expenses and
indemnification, including those set forth in the Notes, Article 4 and Sections
9.5, 9.7 and 10.3, shall survive payment in full of the Loans and termination of
the Revolving Credit Commitments.
-68-
<PAGE>
10.11 Successors and Assigns.
----------------------
(i) This Agreement shall be binding upon and shall inure to
the benefit of the Banks, the Agent, the Borrower and their respective
successors and assigns, except that the Borrower may not assign or transfer any
of its rights and Obligations hereunder or any interest herein. Each Bank may,
at its own cost, make assignments of or sell participations in all or any part
of its Revolving Credit Commitment and the Loans made by it to one or more banks
or other entities, subject to the consent of the Borrower and the Agent with
respect to any assignee, such consent not to be unreasonably withheld, provided
--------
that (1) no consent of the Borrower shall be required in the case of an
assignment by a Bank to an Affiliate of such Bank, or in the event there exists
a Potential Default or Event of Default, and (2) assignments may not be made in
amounts less than $3,000,000 and increments of $1,000,000 thereof (except for
lesser amounts constituting all of the assigning Bank's Revolving Credit
Commitment and Loans). In the case of an assignment, upon receipt by the Agent
of the Assignment and Assumption Agreement, the assignee shall have, to the
extent of such assignment (unless otherwise provided therein), the same rights,
benefits and obligations as it would have if it had been a signatory Bank
hereunder, the Commitments shall be adjusted accordingly, and upon surrender of
any Note subject to such assignment, the Borrower shall execute and deliver a
new Note to the assignee in an amount equal to the amount of the Revolving
Credit Commitment assumed by it and a new Revolving Credit Note or Term Note to
the assigning Bank in an amount equal to the Revolving Credit Commitment
retained by it hereunder. The assigning Bank shall pay to the Agent a service
fee in the amount of $3,000 for each assignment. In the case of a participation,
the participant shall only have the rights specified in Section 8.2.3 (the
participant's rights against such Bank in respect of such participation to be
those set forth in the agreement executed by such Bank in favor of the
participant relating thereto and not to include any voting rights except with
respect to changes of the type referenced in Sections 10.1.1, 10.1.2, or
10.1.3, all of such Bank's obligations under this Agreement or any other Loan
Document shall remain unchanged, and all amounts payable by the Borrower
hereunder or thereunder shall be determined as if such Bank had not sold such
participation.
(ii) Any assignee or participant which is not incorporated
under the Laws of the United States of America or a state thereof shall deliver
to the Borrower and the Agent the form of certificate described in Section
10.17 relating to federal income tax withholding. Each Bank may furnish any
publicly available information concerning the Borrower and any other information
concerning the Borrower in the possession of such Bank from time to time to
assignees and participants (including prospective assignees or participants),
provided that such assignees and participants agree to be bound by the
- --------
provisions of Section 10.12.
(iii) Notwithstanding any other provision in this Agreement,
any Bank may at any time pledge or grant a security interest in all or any
portion of its rights under this Agreement, its Note and the other Loan
Documents to any Federal Reserve Bank in accordance with Regulation A of the FRB
or U.S. Treasury Regulation 31 CFR Section 203.14 without notice to or consent
of the Borrower or the Agent. No such pledge or grant of a security
-69-
<PAGE>
interest shall release the transferor Bank of its obligations hereunder or under
any other Loan Document.
10.12 Confidentiality.
---------------
The Agent and the Banks each agree to keep confidential all
information obtained from any Borrower or its Subsidiaries which is nonpublic
and confidential or proprietary in nature (including any information the
Borrower specifically designates as confidential), except as provided below, and
to use such information only in connection with their respective capacities
under this Agreement and for the purposes contemplated hereby. The Agent and the
Banks shall be permitted to disclose such information (i) to outside legal
counsel, accountants and other professional advisors who need to know such
information in connection with the administration and enforcement of this
Agreement, subject to agreement of such Persons to maintain the confidentiality,
(ii) to assignees and participants as contemplated by Section 10.11, (iii) to
the extent requested by any bank regulatory authority or, with notice to the
Borrower, as otherwise required by applicable Law or by any subpoena or similar
legal process, or in connection with any investigation or proceeding arising out
of the transactions contemplated by this Agreement, (iv) if it becomes publicly
available other than as a result of a breach of this Agreement or becomes
available from a source not known to be subject to confidentiality restrictions,
or (v) if the Borrower shall have consented to such disclosure.
10.13 Counterparts.
------------
This Agreement may be executed by different parties hereto on any
number of separate counterparts, each of which, when so executed and delivered,
shall be an original, and all such counterparts shall together constitute one
and the same instrument.
10.14 Agent's or Bank's Consent.
-------------------------
Whenever the Agent's or any Bank's consent is required to be obtained
under this Agreement or any of the other Loan Documents as a condition to any
action, inaction, condition or event, unless otherwise specified herein, the
Agent and each Bank shall be authorized to give or withhold such consent in its
sole and absolute discretion and to condition its consent upon the giving of
additional collateral, the payment of money or any other matter.
10.15 Exceptions.
----------
The representations, warranties and covenants contained herein shall
be independent of each other, and no exception to any representation,. warranty
or covenant shall be deemed to be an exception to any other representation,
warranty or covenant contained herein unless expressly provided, nor shall any
such exceptions be deemed to permit any action or omission that would be in
contravention of applicable Law.
-70-
<PAGE>
10.16 CONSENT TO FORUM; WAIVER OF JURY TRIAL.
--------------------------------------
THE AGENT, EACH BANK AND THE BORROWER HEREBY IRREVOCABLY CONSENT TO
THE NONEXCLUSIVE JURISDICTION OF THE FEDERAL COURTS AND THE COURTS OF THE STATE
OF NEW YORK LOCATED IN MANHATTAN BOROUGH, AND WAIVES PERSONAL SERVICE OF ANY AND
ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY
CERTIFIED OR REGISTERED MAIL DIRECTED TO PARTY AT THE ADDRESSES SET FORTH
HEREIN, AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT
THEREOF. THE AGENT, EACH BANK AND THE BORROWER WAIVES ANY OBJECTION TO
JURISDICTION AND VENUE OF ANY ACTION INSTITUTED AGAINST IT AS PROVIDED HEREIN
AND AGREES NOT TO ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE. THE
BORROWER, THE AGENT AND THE BANKS HEREBY WAIVE TRIAL BY JURY IN ANY ACTION,
SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS
AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE COLLATERAL TO THE FULL EXTENT
PERMITTED BY LAW.
10.17 Tax Withholding Clause.
----------------------
Each Bank or assignee or participant of a Bank that is not
incorporated under the Laws of the United States of America or a state thereof
agrees that it will deliver to each of the Borrower and the Agent two (2) duly
completed copies of the following: (i) Internal Revenue Service Form W-9, 4224
or 1001, or other applicable form prescribed by the Internal Revenue Service,
certifying that such Bank, assignee or participant is entitled to receive
payments under this Agreement and the other Loan Documents without deduction or
withholding of any United States federal income taxes, or is subject to such tax
at a reduced rate under an applicable tax treaty, or (ii) Internal Revenue
Service Form W-8 or other applicable form or a certificate of such Bank,
assignee or participant indicating that no such exemption or reduced rate is
allowable with respect to such payments. Each Bank, assignee or participant
required to deliver to the Borrower and the Agent a form or certificate pursuant
to the preceding sentence shall deliver such form or certificate as follows: (A)
each Bank which is a party hereto on the Closing Date shall deliver such form or
certificate at least five (5) Business Days prior to the first date on which any
interest or fees are payable by the Borrower hereunder for the account of such
Bank; (B) each assignee or participant shall deliver such form or certificate at
least five (5) Business Days before the effective date of such assignment or
participation (unless the Agent in its sole discretion shall permit such
assignee or participant to deliver such form or certificate less than five (5)
Business Days before such date in which case it shall be due on the date
specified by the Agent). Each Bank, assignee or participant which so delivers a
Form W-8, W-9, 4224 or 1001 further undertakes to deliver to each of the
Borrower and the Agent two (2) additional copies of such form (or a successor
form) on or before the date that such form expires or becomes obsolete or after
the occurrence of any event requiring a change in the most recent form so
delivered by it, and such amendments thereto or extensions or renewals thereof
as may be reasonably requested
-71-
<PAGE>
by the Borrower or the Agent, either certifying that such Bank, assignee or
participant is entitled to receive payments under this Agreement and the other
Loan Documents without deduction or withholding of any United States federal
income taxes or is subject to such tax at a reduced rate under an applicable tax
treaty or stating that no such exemption or reduced rate is allowable. The Agent
shall be entitled to withhold United States federal income taxes at the full
withholding rate unless the Bank, assignee or participant establishes an
exemption or that it is subject to a reduced rate as established pursuant to the
above provisions.
10.18 Nonrecourse Obligations.
-----------------------
Anything contained in this Agreement or other Loan Documents to the
contrary notwithstanding, in any action or proceeding brought on this Agreement
or the other Loan Documents or the Obligations, no deficiency judgment shall be
enforced against the separate assets of the General Partner (other than
distributions to the General Partner made in violation of the Intercompany
Subordination Agreement), and the liability of the General Partner for any of
the Obligations shall be limited to the interest of the General Partner in the
collateral described in the Loan Documents, its interest in any other assets of
the Borrower, and any distributions made in violation of the Intercompany
Subordination Agreement. Subject to the preceding sentence, the Agent may join
any present or future general partners of the Borrower in their capacities as
general partners, as defendants in any legal action it undertakes to enforce the
Banks' rights and remedies under this Agreement and the other Loan Documents.
Notwithstanding the foregoing, nothing set forth herein shall be deemed to
prohibit the Agent and the Banks from taking legal action and enforcing any
judgment arising therefrom against a present or future general partner of the
Borrower arising by reason of any fraud or intentional misconduct of such
general partner.
-72-
<PAGE>
IN WITNESS WHEREOF, the parties hereto, by their officers thereunto
duly authorized, have executed this Agreement as of the day and year first above
written.
CABLE TV FUND 14-A, LTD
By: Jones Intercable, Inc., its sole
general partner
By: /s/ J. Roy Pottle
--------------------------------
Title: Vice President/Treasurer
--------------------------------
ROYAL BANK OF CANADA,
individually and as Agent
By: ________________________________
Title: ________________________________
CORESTATES BANK, N.A.
By: ________________________________
Title: ________________________________
COLORADO NATIONAL BANK
By: ________________________________
Title: ________________________________
-73-
<PAGE>
IN WITNESS WHEREOF, the parties hereto, by their officers thereunto
duly authorized, have executed this Agreement as of the day and year first above
written.
CABLE TV FUND 14-A, LTD
By: Jones Intercable, Inc., its sole
general partner
By: _______________________________
Title: _______________________________
ROYAL BANK OF CANADA,
individually and as Agent
By: /s/ SIGNATURE ILLEGIBLE
--------------------------------
Title: Senior Manager
--------------------------------
CORESTATES BANK, N.A.
By: ________________________________
Title: ________________________________
COLORADO NATIONAL BANK
By: ________________________________
Title: ________________________________
-74-
<PAGE>
ROYAL BANK OF CANADA,
individually and as Agent
By: ________________________________
Title: ________________________________
CORESTATES BANK, N.A.
By: /s/ Anthony B. Parisi
--------------------------------
Title: Vice President
--------------------------------
COLORADO NATIONAL BANK
By: ________________________________
Title: ________________________________
-75-
<PAGE>
IN WITNESS WHEREOF, the parties hereto, by their officers thereunto
duly authorized, have executed this Agreement as of the day and year first above
written.
CABLE TV FUND 14-A, LTD
By: Jones Intercable, Inc., its sole
general partner
By: ________________________________
Title: ________________________________
ROYAL BANK OF CANADA,
individually and as Agent
By: ________________________________
Title: ________________________________
CORESTATES BANK, N.A.
By: ________________________________
Title: ________________________________
COLORADO NATIONAL BANK
By: /s/ SIGNATURE ILLEGIBLE
--------------------------------
Title: Vice President
--------------------------------
-76-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 363,032
<SECURITIES> 0
<RECEIVABLES> 1,016,808
<ALLOWANCES> (85,436)
<INVENTORY> 0
<CURRENT-ASSETS> 1,644,310
<PP&E> 86,431,357
<DEPRECIATION> (50,186,043)
<TOTAL-ASSETS> 44,982,801
<CURRENT-LIABILITIES> 3,014,191
<BONDS> 22,773,095
0
0
<COMMON> 0
<OTHER-SE> 19,195,515
<TOTAL-LIABILITY-AND-EQUITY> 44,982,801
<SALES> 0
<TOTAL-REVENUES> 26,642,247
<CGS> 0
<TOTAL-COSTS> 29,355,630
<OTHER-EXPENSES> (67,997,739)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,923,226
<INCOME-PRETAX> 62,735,041
<INCOME-TAX> 0
<INCOME-CONTINUING> 62,735,041
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 62,735,041
<EPS-PRIMARY> 387.70
<EPS-DILUTED> 387.70
</TABLE>
