<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM 10-Q
(Mark one)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transaction period from to
---------------- -------------------------
Commission File Number 33-17174
--------
CENCOM CABLE INCOME PARTNERS II, L.P.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 43-1456575
- ------------------------------- ----------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
12444 Powerscourt Drive - Suite 400
St. Louis, Missouri 63131
- --------------------------------------- -----
(Address of Principal Executive Offices) (Zip Code)
(Registrant's telephone number, including area code) (314) 965-0555
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
<PAGE> 2
CENCOM CABLE INCOME PARTNERS II, L.P.
FORM 10-Q - FOR THE QUARTER ENDED JUNE 30, 1997
INDEX
<TABLE>
<CAPTION>
Page
<S> <C>
Part I. Financial Information
Item 1. Financial Statements
a. Balance Sheets - June 30, 1997 and December 31, 1996 3
b. Statements of Operations - Three Months Ended June 30, 1997 and 1996 4
c. Statements of Operations - Six Months Ended June 30, 1997 and 1996 5
d. Statement of Partners' Capital (Deficit) - Six Months Ended
June 30, 1997 6
e. Statements of Cash flows - Six Months Ended June 30, 1997 and 1996 7
f. Notes to Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 11
Part II. Other Information
Item 1. Legal Proceedings 17
Item 2. Change in Securities - None -
Item 3. Defaults upon Senior Securities - None -
Item 4. Submission of Matters to a Vote of Security Holders 17
Item 5. Other Information - None -
Item 6. Exhibits and Reports on Form 8-K 18
Signature Page 19
</TABLE>
Page 2
<PAGE> 3
CENCOM CABLE INCOME PARTNERS II, L.P.
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
---------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 356,252 $ 531,285
Accounts receivable, net 54,490 222,708
Prepaid expenses and other 56,542 78,705
----------- ------------
Total current assets 467,284 832,698
PROPERTY, PLANT AND EQUIPMENT, net 3,123,966 18,938,808
INVESTMENT IN UNCONSOLIDATED LIMITED PARTNERSHIP 2,631,853 ---
FRANCHISE COSTS, net of accumulated amortization of $1,251,222 and
$22,383,464, respectively 45,145 724,004
DEBT ISSUANCE COSTS, net of accumulated amortization of $3,955 and
$-0-, respectively 261,045 350,000
RESTRICTED FUNDS HELD IN ESCROW 750,000 ---
----------- ------------
$ 7,279,293 $ 20,845,510
=========== ============
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Current maturities of long-term debt $ --- $ 36,700,000
Accounts payable and accrued expenses 1,001,304 2,397,674
Income taxes withheld on behalf of Limited Partners 2,408,798 ---
Payables to General Partner and affiliate 4,363,374 3,532,580
Subscriber deposits 12,217 18,460
----------- ------------
Total current liabilities 7,785,693 42,648,714
----------- ------------
LONG-TERM DEBT 5,800,000 ---
----------- ------------
DEFERRED REVENUE 19,860 24,803
----------- ------------
PARTNERS' CAPITAL (DEFICIT):
General Partner --- (2,828,374)
Limited Partners (250,000 units authorized; 90,915 units issued and
outstanding) (5,867,093) (18,540,466)
Note receivable from General Partner (459,167) (459,167)
----------- ------------
Total Partners' capital (deficit) (6,326,260) (21,828,007)
----------- ------------
$ 7,279,293 $ 20,845,510
=========== ============
</TABLE>
The accompanying notes are an integral part of these balance sheets.
Page 3
<PAGE> 4
CENCOM CABLE INCOME PARTNERS II, L.P.
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1997 AND 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
SERVICE REVENUES $ 1,686,605 $ 4,550,665
------------ -----------
OPERATING EXPENSES:
Operating, general and administrative 1,057,220 2,565,284
Depreciation and amortization 357,599 1,470,726
Liquidation costs 122,784 200,000
------------ -----------
1,537,603 4,236,010
------------ -----------
Income from operations 149,002 314,655
------------ -----------
OTHER INCOME (EXPENSE):
Interest income 155,857 14,706
Interest expense (256,825) (768,292)
Equity in income of unconsolidated limited partnership (See Note 2) 8,131,853 ---
Gain on sale of cable television systems 23,662,873 ---
------------ -----------
31,693,758 (753,586)
------------ -----------
Net income (loss) $ 31,842,760 $ (438,931)
============ ===========
NET INCOME (LOSS) PER LIMITED PARTNERSHIP UNIT $ 337.12 $ (4.78)
============ ===========
AVERAGE NUMBER OF LIMITED PARTNERSHIP UNITS OUTSTANDING 90,915 90,915
============ ===========
</TABLE>
The accompanying notes are an integral part of these statements.
Page 4
<PAGE> 5
CENCOM CABLE INCOME PARTNERS II, L.P.
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
------------- --------------
<S> <C> <C>
SERVICE REVENUES $ 6,309,583 $ 8,911,886
------------- --------------
OPERATING EXPENSES:
Operating, general and administrative 3,657,406 5,086,562
Depreciation and amortization 1,729,842 2,852,503
Liquidation costs 326,469 209,198
------------- --------------
5,713,717 8,148,263
------------- --------------
Income from operations 595,866 763,623
------------- --------------
OTHER INCOME (EXPENSE):
Interest income 167,711 22,091
Interest expense (1,076,666) (1,471,708)
Equity in income of unconsolidated limited partnership (see Note 2) 8,131,853 ---
Gain on sale of cable television systems 36,230,293 ---
------------- --------------
43,453,191 (1,449,617)
------------- --------------
Net income (loss) $ 44,049,057 $ (685,994)
============= ==============
NET INCOME (LOSS) PER LIMITED PARTNERSHIP UNIT $ 453.40 $ (7.47)
============= ==============
AVERAGE NUMBER OF LIMITED PARTNERSHIP UNITS OUTSTANDING 90,915 90,915
============= ==============
</TABLE>
The accompanying notes are an integral part of these statements.
Page 5
<PAGE> 6
CENCOM CABLE INCOME PARTNERS II, L.P.
STATEMENT OF PARTNERS' CAPITAL (DEFICIT)
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Note
Receivable
From
General Limited General
Partner Partners Partner Total
------------- ------------- ---------- --------------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1996 $ (2,828,374) $ (18,540,466) $ (459,167) $ (21,828,007)
Net income 2,828,374 41,220,683 --- 44,049,057
Distributions --- (28,547,310) --- (28,547,310)
------------- ------------- ---------- --------------
BALANCE, June 30, 1997 $ --- $ (5,867,093) $ (459,167) $ (6,326,260)
============= ============= ========== ==============
</TABLE>
The accompanying notes are an integral part of this statement.
Page 6
<PAGE> 7
CENCOM CABLE INCOME PARTNERS II, L.P.
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
------------ -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 44,049,057 $ (685,994)
Adjustments to reconcile net income (loss) to net cash provided by operating
activities-
Depreciation and amortization 1,729,842 2,852,503
Amortization of debt issuance costs 353,955 ---
Equity in income of unconsolidated limited partnership (8,131,853) ---
Gain on sales of cable television systems (36,230,293) ---
Changes in assets and liabilities, net of effects from sales of cable television
systems
Accounts receivable, net (163,617) (20,365)
Prepaid expenses and other (56,505) (99,507)
Accounts payable and accrued expenses (664,886) (168,765)
Accrued income taxes withheld on behalf of Limited Partners 2,408,798 ---
Payables to General Partner and affiliates 830,794 458,354
Subscriber deposits (550) (1,370)
Deferred revenue (1,437) (1,551)
------------ -----------
Net cash provided by operating activities 4,123,305 2,333,305
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment, net (813,250) (1,007,223)
Proceeds from sales of cable television systems, net of cash sold 51,477,222 ---
Restricted funds held in escrow (750,000) ---
Distributions from investment in unconsolidated limited partnership 5,500,000 ---
------------ -----------
Net cash provided by (used in) investing activities 55,413,972 (1,007,223)
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to Limited Partners (26,138,512) ---
Income taxes withheld related to distribution (2,408,798) ---
Repayments on revolving line of credit (36,700,000) (1,500,000)
Borrowings on credit agreement 5,800,000 ---
Debt issuance costs (265,000) ---
------------ -----------
Net cash used in financing activities (59,712,310) (1,500,000)
------------ -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (175,033) (173,918)
CASH AND CASH EQUIVALENTS, beginning of period 531,285 935,858
------------ -----------
CASH AND CASH EQUIVALENTS, end of period $ 356,252 $ 761,940
============ ===========
</TABLE>
The accompanying notes are an integral part of these statements.
Page 7
<PAGE> 8
CENCOM CABLE INCOME PARTNERS II, L.P.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. RESPONSIBILITY FOR INTERIM FINANCIAL STATEMENTS:
The financial statements of Cencom Cable Income Partners II, L.P. (the
"Partnership" or "CCIP II") as of June 30, 1997 and 1996, are unaudited;
however, in the opinion of management, such statements include all adjustments
necessary for a fair presentation of the results for the periods presented.
The interim financial statements should be read in conjunction with the
financial statements and notes thereto contained in the Partnership's Form 10-K
for the year ended December 31, 1996. Interim results are not necessarily
indicative of results for a full year.
2. INVESTMENT IN UNCONSOLIDATED LIMITED PARTNERSHIP:
The Partnership owns Limited Partnership units of Cencom Partners, L.P.
("CPLP") which provide the Partnership an 84.03% ownership interest in CPLP.
The Partnership owns only limited partnership units and does not exercise
significant influence over CPLP's operations; therefore, its investment in CPLP
is accounted for using the equity method. For the period ended June 30, 1997,
the Partnership recorded a gain from its investment in CPLP totaling
approximately $8,132,000, net of previously unrecorded losses of approximately
$15,875,000. Also during the current period the Partnership received a cash
distribution from CPLP in the amount of $5,500,000.
Summary financial information for the operating results of CPLP, which are not
consolidated with the operating results of the Partnership, are as follows:
<TABLE>
<CAPTION>
For the Three For the Three For the Six For the Six
Months Ended Months Ended Months Ended Months Ended
June 30, 1997 June 30, 1996 June 30, 1997 June 30, 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Service revenues $ 884,834 $ 3,398,275 $ 4,454,198 $ 6,726,575
============ ============ ============ ============
Income (loss) from operations $ (165,291) $ (355,346) $ (1,329,682) $ (681,874)
============ ============ ============ ============
Gain on sale of cable television systems $ 32,614,346 $ --- $ 32,614,346 $ ---
============ ============ ============ ============
Net income (loss) $ 32,449,055 $ (1,029,217) $ 31,284,664 $ (2,029,866)
============ ============ ============ ============
</TABLE>
3. LIQUIDATION:
The General Partner distributed a disclosure statement to the Limited Partners
on March 6, 1997, which described various transactions and requested consent
for certain proposed sales of cable television systems by the Partnership and
CPLP to affiliates of the General Partner. A majority of the Limited Partners
gave their consent for the sale of certain cable television systems to
affiliates of the General Partner. Following receipt of the Limited Partners'
consent, the Partnership and CPLP consummated the transactions with the
affiliates of the General Partner, in accordance with the disclosure statement.
On March 31, 1997, the Partnership consummated the sale of certain of the cable
television systems located in Texas in two separate asset sale transactions
with unaffiliated third parties. The sales price was approximately
$15,255,000, after initial closing adjustments, for the sale of approximately
10,400 basic subscribers, in the aggregate. Pursuant to the asset sale
transactions with the unaffiliated third parties, the aggregate amount of
$750,000 was deposited into indemnification escrow accounts. These funds will
be released to the Partnership upon mutual satisfaction of the seller's
representations and warranties related to the assets that were sold.
Page 8
<PAGE> 9
Proceeds from the sales of the Texas systems on March 31, 1997 and the South
Carolina systems on April 7, 1997 were used to reduce to zero the balance of
outstanding indebtedness, with the remaining funds of approximately $14.0
million placed in short-term investments.
Proceeds from the sale of certain of the cable television systems owned by CPLP
on April 7, 1997 to affiliates of the General Partner enabled CPLP to reduce
the balance of its outstanding indebtedness to zero and retire its special
limited partnership interests, with the remaining funds of approximately $6.6
million placed in short-term investments. During May 1997, CPLP distributed
$5.5 million to the Partnership.
The Partnership utilized its short-term investments, the distribution received
from CPLP and funds available under its new credit facility (see Note 6) for
the purpose of making a distribution to the Limited Partners. During June
1997, the Partnership made a distribution of $314 per Unit, net of $2.4 million
withheld for state income taxes, to the Limited Partners, for a total net
distribution of approximately $26.1 million. No distribution was made by the
Partnership to the General Partner.
Bids submitted to date with respect to the Northeast Missouri systems and the
remainder of the Texas systems were considered too low relative to the
appraised fair market values of such systems established pursuant to appraisal
process. Thus, these bids have not been accepted by the General Partner. The
General Partner continues to seek potential purchasers for these remaining
systems.
Upon dissolution, the General Partner or other liquidating agent is required to
liquidate partnership assets and to distribute all available proceeds as soon
as practicable after their receipt by the Partnership. After payment of the
Partnership's liabilities, these sales proceeds will be distributed as set
forth in the Partnership Agreement.
Upon finalization of a complete plan of liquidation and the determination of
net proceeds (in accordance with that prescribed in the Partnership Agreement)
from sales of all assets, the Partnership will change its basis of accounting
from the going-concern basis to the liquidation basis. Under the liquidation
basis of accounting, assets are recorded at their estimated realizable values
and liabilities are recorded at their estimated settlement amounts.
4. PARTNER ALLOCATIONS
In accordance with the Partnership Agreement, net income including equity in
income of unconsolidated limited partnership and excluding gain on sale of
cable television systems shall be allocated to those partners with negative
capital balances in proportion to such negative balances until the negative
balances are restored to zero. Gains attributed to the sale or disposition of
assets sold shall be allocated to those partners with negative capital account
balances, after giving effect to the net income for the current year, in
proportion to such negative balances until the negative balances are restored
to zero. After the partners' capital accounts have been restored to zero,
gains on sale of cable television systems are allocated to the Limited Partners
until they receive an amount equal to cash distributions received with respect
to the 11% Preferred Return in excess of net profits previously allocated
reduced by certain previously allocated gains. Next, gains are allocated to
the Limited Partners until the sum of all allocated net profits (other than
certain previously allocated gains) equals their unpaid 11% Preferred Return.
5. LITIGATION
On April 15, 1997, a petition was filed, and on June 19, 1997, an amended
petition was filed by certain of the limited partners of the Partnership
against Cencom Properties II, Inc., the general partner of the Partnership,
Cencom Partners Inc., the general partner of CPLP, the brokerage firms
involved in the original sale of the limited partnership units and Cencom Cable
Entertainment, Inc. ("Cencom Cable"). Cencom Cable provided management
services to both the Partnership and CPLP and also owned all of the stock of
the general partners of each of these partnerships prior to mid-1994. The
plaintiffs allege that the defendants breached fiduciary duties, committed
fraud
Page 9
<PAGE> 10
and made various misrepresentations in the marketing and sale of CCIP II
limited partnership units and in the management of CCIP II. The plaintiffs
seek recovery of the consideration paid for their partnership units,
restitution of all profits received by the defendants in connection with the
management of the Partnership and punitive damages.
On June 10, 1997, a purported class action was filed in Delaware Chancery Court
under the name Wallace, Matthews, Lerner and Roberts v. Wood et al, Case No.
15731, on behalf of the limited partners of the Partnership against Cencom
Properties II,0 Inc., Cencom Cable, Charter Communications, Inc., the parent of
Cencom Partners, Inc. and Cencom Partners II, Inc., certain other affiliates of
Charter, certain individuals, including officers of Charter or Cencom
Properties II, Inc. and certain other unaffiliated parties. The plaintiffs
allege that the defendants breached fiduciary duties and the terms of the CCIP
II partnership agreement in connection with the investment in CPLP, the
management of CCIP II assets and the sale of certain Partnership assets. The
damages claimed by the plaintiffs are as yet unspecified.
All affiliated entities named above in these two lawsuits believe that they
have meritorious defenses in both actions, including defenses based on
applicable statutes of limitations, and intend to defend the actions
vigorously.
6. LONG-TERM DEBT
On May 23, 1997, the Partnership terminated its existing secured revolving
line of credit agreement for $65.0 million and entered into a credit agreement
(the "Credit Agreement") with a bank for borrowings up to $8,500,000. The
Credit Agreement also provides for borrowings up to $7,500,000 by CPLP, with
each partnership held jointly and severally liable in the event of default. At
June 30, 1997, CCIP II had $5,800,000 of indebtedness outstanding under the
Credit Agreement and CPLP had $-0- of indebtedness outstanding under the Credit
Agreement. The debt bears interest at rates, at the Partnership's option,
based on the higher of the prime rate of the Canadian Imperial Bank of Commerce
(the agent bank) or the Federal Funds Rate plus 1/2 of 1%, or LIBOR plus
applicable margins based upon the Partnership's leverage ratio at the time of
the borrowings. At June 30, 1997, the interest rate on this outstanding
indebtedness was 9.25%. The weighted average interest rate and borrowings by
CCIP II for the period from May 23, 1997 to June 30, 1997 related to the Credit
Agreement w s 9.25% and $1,436,842, respectively. As this debt instrument
bears interest at current market rates, its carrying amount approximates fair
market value at June 30, 1997.
Borrowings under the Credit Agreement are subject to certain financial and
nonfinancial covenants and restrictions, the most restrictive of which requires
the maintenance of a ratio of total debt to annualized operating cash flow of
4.00 to 1.00 at June 30, 1997. A quarterly commitment fee of 0.375% per annum
is payable on the unused portion of the Credit Agreement. Commencing March 31,
1999, and at the end of each calendar quarter thereafter, the borrowing
capacity shall be reduced by $800,000. Quarterly reductions will continue
until March 31, 2002, at which time the borrowing capacity shall be reduced by
$1,600,000, quarterly until December 31, 2002.
7. RELATED PARTY
Payables to General Partner and affiliates were approximately $4.4 million at
June 30, 1997 and approximately $3.5 million at December 31, 1996. At December
31, 1996, the payable to General Partner consisted of deferred management fees,
of which approximately $2.3 million was deferred under the terms of the
Partnership Agreement and approximately $1.2 million was deferred under the
terms of the credit facility. At June 30, 1997, the payables to General
Partner and affiliates consisted primarily of deferred management fees, with
approximately $2.5 million deferred under the terms of the Partnership
Agreement and approximately $1.4 million voluntarily deferred by the General
Partner. In addition, at June 30, 1997, payables to General Partner and
affiliates included $500,000 payable to CPLP, proceeds of which were used to
reduce bank indebtedness.
Page 10
<PAGE> 11
CENCOM CABLE INCOME PARTNERS II, L.P.
Item 2: Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
The following table sets forth the approximate number of subscribers of the
Partnership as of the dates indicated.
<TABLE>
<CAPTION>
June 30, December 31, June 30,
1997 1996 1996
-------- ------------ --------
<S> <C> <C> <C>
Basic Subscribers:
Texas systems 11,600 21,900 22,400
South Carolina systems N/A 20,800 20,700
Northeast Missouri systems 1,900 2,000 2,100
------ ------ ------
13,500 44,700 45,200
====== ====== ======
Premium Subscriptions:
Texas systems 4,500 7,600 7,900
South Carolina systems N/A 10,400 10,900
Northeast Missouri systems 800 900 900
------ ------ ------
5,300 18,900 19,700
====== ====== ======
</TABLE>
The following table sets forth certain items in dollars and as a percentage of
total revenues for the periods indicated:
<TABLE>
<CAPTION>
For the Three Months
Ended June 30
-------------
(Unaudited)
1997 1996
-------------------------- -------------------------
% of % of
Amount Revenue Amount Revenue
----------- ------- ----------- -------
<S> <C> <C> <C> <C>
Service Revenues $ 1,686,605 100.0% $ 4,550,665 100.0%
----------- ------- ----------- -------
Operating Expenses:
Operating, General and Administrative 1,057,220 62.7 2,565,284 56.4
Depreciation and Amortization 357,599 21.2 1,470,726 32.3
Liquidation Costs 122,784 7.3 200,000 4.4
----------- ------- ----------- -------
1,537,603 91.2 4,236,010 93.1
----------- ------- ----------- -------
Income from Operations 149,002 8.8 314,655 6.9
----------- ------- ----------- -------
Other Income (Expense):
Interest Income 155,857 9.2 14,706 .3
Interest Expense (256,825) (15.2) (768,292) (16.9)
Equity in Income of Unconsolidated
Limited Partnership 8,131,853 482.1 --- ---
Gain on Sales of Cable Television
Systems 23,662,873 1,403.1 --- ---
----------- ------- ----------- -------
31,693,758 1,879.2 (753,586) (16.6)
----------- ------- ----------- -------
Net Income (Loss) $31,842,760 1,888.0 $ (438,931) (9.7)
=========== ======= =========== =======
</TABLE>
Page 11
<PAGE> 12
The following table sets forth certain items in dollars and as a percentage of
total revenues for the periods indicated:
<TABLE>
<CAPTION>
For the Six Months
Ended June 30
-------------
(Unaudited)
1997 1996
-------------------------- -------------------------
% of % of
Amount Revenue Amount Revenue
----------- ------- ----------- -------
<S> <C> <C> <C> <C>
Service Revenues $ 6,309,583 100.0% $ 8,911,886 100.0%
----------- ------- ----------- -------
Operating Expenses:
Operating, General and Administrative 3,657,406 58.0 5,086,562 57.1
Depreciation and Amortization 1,729,842 27.4 2,852,503 32.0
Liquidation Costs 326,469 5.2 209,198 2.3
----------- ------- ----------- -------
5,713,717 90.6 8,148,263 91.4
----------- ------- ----------- -------
Income from Operations 595,866 9.4 763,623 8.6
----------- ------- ----------- -------
Other Income (Expense):
Interest Income 167,711 2.7 22,091 .2
Interest Expense (1,076,666) (17.1) (1,471,708) (16.5)
Equity in Income of Unconsolidated
Limited Partnership 8,131,853 128.9 --- ---
Gain on Sales of Cable Television
Systems 36,230,293 574.2 --- ---
----------- ------- ----------- -------
43,453,191 688.7 (1,449,617) (16.3)
----------- ------- ----------- -------
Net Income (Loss) $44,049,057 698.1 $ (685,994) (7.7)
=========== ======= =========== =======
</TABLE>
Service Revenues
The Partnership earns substantially all of its revenues from monthly
subscription fees for basic tier, expanded tier, premium channels, equipment
rental and ancillary services provided by its cable television systems.
Service revenues decreased by 62.9% and 29.2% for the three and six months
ended June 30, 1997, respectively, when compared to the similar periods of
1996. These decreases are due to the sale of certain of the Texas systems on
March 31, 1997, (the "Texas Sales") and the sale of the South Carolina systems
on April 7, 1997, (the "South Carolina Sale") (collectively the "System
Sales").
Basic subscribers of the Partnership at June 30, 1997 were approximately
13,500, which represents a decrease of 70.0% versus December 31, 1996 as a
result of the System Sales. Basic subscribers in the Northeast Missouri
systems and the Texas systems that were not sold on March 31, 1997
(collectively the "Remaining Systems") have decreased 0.7% from approximately
13,600 subscribers at December 31, 1996.
Premium service subscriptions decreased 72.0% from 18,900 subscriptions at
December 31, 1996 to 5,300 subscriptions at June 30, 1997. This decrease is
primarily due to the System Sales. Premium subscriptions for the Remaining
Systems decreased 1.9% from approximately 5,400 subscriptions at December 31,
1996.
Page 12
<PAGE> 13
Operating Expenses
Operating, general and administrative expenses of the Partnership decreased by
$1,508,000 and $1,429,000, or 58.8% and 28.1%, respectively, for the three and
six months ended June 30, 1997 versus the similar periods of 1996. These
decreases are primarily the result of the Partnership serving fewer subscribers
as a result of the System Sales.
Depreciation and amortization expense decreased by $1,113,000 and $1,123,000,
or 75.7% and 39.4%, respectively, for the three and six months ended June 30,
1997 versus the similar periods of 1996. These decreases are related to the
smaller base of depreciable and amortizable assets as a result of the System
Sales.
Liquidation costs of $123,000 and $326,000 were incurred by the Partnership for
the three and six months ended June 30, 1997, related to System Sales. These
costs consisted primarily of legal fees.
Other Income and Expenses
Interest income was $156,000 and $168,000 for the three and six months ended
June 30, 1997. Interest income was primarily generated by the Partnership
during the period following the System Sales when approximately $14.0 million
was invested in short-term commercial paper. These investments were sold in
order to make the distribution to the Limited Partners in June 1997.
Interest expense was $257,000 and $1,077,000 for the three and six months ended
June 30, 1997, which was a decrease of 66.6% and 26.8% versus the similar
periods of 1996. These decreases are primarily the result of lower average
outstanding indebtedness of the Partnership during 1997 as a result of
utilizing proceeds from the System Sales to reduce debt balances.
Equity in income of unconsolidated limited partnership relates to the gain
recorded by the Partnership for its share of the net income recorded by Cencom
Partners, L.P., primarily due to its gain on the sale of cable television
systems.
Gain on sale of cable television systems by the Partnership is the result of
the sale of certain of the Texas systems on March 31, 1997 and from the sale of
the South Carolina system on April 7, 1997. The gain is net of brokerage fees
of approximately $403,000.
Net Income
Net income was $31.8 million and $44.0 million for the three and six months
ended June 30, 1997, versus net losses of $0.4 million and $0.7 million for the
three and six months ended June 30, 1996, respectively. The primary reasons
for the change are the gains on sales of cable television systems and the
equity in income of unconsolidated limited partnership during 1997.
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<PAGE> 14
Liquidity and Capital Resources
The Registrant has historically been able to meet capital needs through
borrowings under credit facilities and from cash generated by operations. The
Registrant anticipates that cash generated from operations and available credit
should be adequate for future foreseeable capital requirements over the
remaining life of the Partnership.
Prior to May 23, 1997, the Partnership had maintained for a secured revolving
line of credit with a consortium of banks for borrowings up to a maximum of
$65.0 million. Outstanding borrowings under this credit facility were
$36,700,000 at December 31, 1996, which was reduced to $21,718,122 at March 31,
1997 from the proceeds of the sale of certain of the Texas systems.
Outstanding indebtedness was reduced to zero on April 7, 1997 from the proceeds
of the sale of the South Carolina system.
On May 23, 1997, the Partnership terminated its existing secured revolving
line of credit agreement for $65.0 million and entered into a credit agreement
(the "Credit Agreement") with a bank for borrowings up to $8,500,000. The
Credit Agreement also provides for borrowings up to $7,500,000 by CPLP, with
each partnership held jointly and severally liable in the event of default. At
June 30, 1997, CCIP II had $5,800,000 of indebtedness outstanding under the
Credit Agreement and CPLP had $-0- of indebtedness outstanding under the Credit
Agreement. The debt bears interest at rates, at the Partnership's option,
based on the prime rate of the Canadian Imperial Bank of Commerce (the agent
bank), or LIBOR plus applicable margins based upon the Partnership's leverage
ratio at the time of the borrowings. At June 30, 1997, the interest rate on
this outstanding indebtedness was 9.25%. The weighted average interest rate
and borrowings by CCIP II for the period from May 23, 1997 to June 30, 1997
related to the Credit Agreement was 9.25% and $1,436,842, respectively. As
this debt instrument bears interest at current market rates, its carrying
amount approximates fair market value at June 30, 1997.
Borrowings under the Credit Agreement are subject to certain financial and
nonfinancial covenants and restrictions, the most restrictive of which requires
the maintenance of a ratio of total debt to annualized operating cash flow of
4.00 to 1.00 at June 30, 1997. A quarterly commitment fee of 0.375% per annum
is payable on the unused portion of the Credit Agreement. Commencing March 31,
1999, and at the end of each calendar quarter thereafter, the total amount
outstanding (based upon available borrowings) shall be reduced by $800,000.
Quarterly payments will continue until March 31, 2002, at which time the total
outstanding (based upon available borrowings) shall be reduced by $1,600,000,
payable quarterly until December 31, 2002 or such time as the outstanding
indebtedness under the Credit Agreement is reduced to zero.
The Partnership made capital expenditures of approximately $813,000 during the
first six months of 1997, primarily related to subscriber installations and
improvements to the cable plant.
Payables to General Partner and affiliates were approximately $4.4 million at
June 30, 1997 and approximately $3.5 million at December 31, 1996. At December
31, 1996, the payable to General Partner consisted of deferred management fees,
of which approximately $2.3 million was deferred under the terms of the
Partnership Agreement and approximately $1.2 million was deferred under the
terms of the credit facility. At June 30, 1997, the payables to General
Partner and affiliates consisted primarily of deferred management fees, with
approximately $2.5 million deferred under the terms of the Partnership
Agreement and approximately $1.4 million voluntarily deferred by the General
Partner. In addition, at June 30, 1997, payables to General Partner and
affiliates included $500,000 payable to CPLP, proceeds of which were used to
reduce bank indebtedness.
The Partnership Agreement provides for the dissolution of the Partnership to
have been initiated on or before December 31, 1995. In accordance with the
Partnership Agreement, the General Partner began dissolution during 1995. Two
independent appraisals were received, resulting in an appraised value of
$73,850,000 as of March 31, 1995 for the Partnership's cable systems (the
"Systems") (excluding its investment in CPLP). The General Partner retained a
broker to market the Systems using an auction process and accepted bids with
respect to the South Carolina systems, and for the Cleveland, Jasper,
Woodville, Marlin, Madisonville and Buffalo systems, which constitute a portion
of the Texas systems, for an aggregate purchase price of $51,950,000. The bid
for the South Carolina systems was submitted by an affiliate of the General
Partner. In accordance with the Partnership Agreement, the sale of assets to
an affiliate of the General Partner is subject to an appraisal process,
requiring two
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<PAGE> 15
independent appraisers to jointly determine the appraised value, and must be
approved by a majority of outstanding Limited Partner units.
Concurrent with the liquidation of the Partnership's Systems, CPLP is
liquidating its assets through sales of the CPLP Systems. The liquidation is
being effected to satisfy the requirement by CPLP's senior bank lenders that
the CPLP credit facility be repaid in accordance with its terms. The CPLP
liquidation was also commenced to facilitate the liquidation of the
Partnership, which requires the liquidation of all of the Partnership's assets,
including its entire ownership interest in CPLP.
To liquidate CPLP, the general partner engaged two independent appraisers, who
jointly reached a valuation of $60,900,000 for all of the CPLP Systems.
Thereafter, a broker was retained to market the CPLP Systems using an auction
process substantially identical to that employed for the Partnership's Systems.
As a result of the auction process, CPLP's general partner accepted bids by
affiliates of the General Partner for CPLP's South Carolina and North Carolina
Systems which served approximately 29,900 basic subscribers (82.5% of CPLP's
total basic subscribers) for an aggregate price of $52,450,000, subject to
written consent from the Limited Partners of the Registrant. The bids
submitted for CPLP's Texas Systems were below the appraised fair market value
and have not been accepted by its general partner. CPLP intends to continue to
operate its Texas Systems until an acceptable bid is received.
On March 31, 1997, the Partnership consummated the sale of certain of its cable
television systems located in Texas in two separate asset sale transactions
with unaffiliated third parties. The sales price was approximately
$15,255,000, after initial closing adjustments, for the sale of approximately
10,400 basic subscribers, in the aggregate. Pursuant to the asset sale
transactions with the unaffiliated third parties, the aggregate amount of
$750,000 was deposited into indemnification escrow accounts. These funds will
be released to the Partnership upon mutual satisfaction of the seller's
representations and warranties related to the assets that were sold.
The General Partner distributed a disclosure statement to the Limited Partners
on March 6, 1997 which described the various transactions and requested consent
for certain proposed sales by the Partnership and CPLP to affiliates of the
General Partner. On April 7, 1997, the last day of the voting period, a
majority of the Limited Partners gave their consent for the sale of certain
cable television systems to affiliates of the General Partner. Following
receipt of the Limited Partners' consent, the Partnership and CPLP consummated
the transactions with the affiliates of the General Partner, in accordance with
the disclosure statement.
Proceeds from the sales of the Texas systems on March 31, 1997 and the South
Carolina systems on April 7, 1997 were used to reduce to zero the balance of
outstanding indebtedness, with the remaining funds of approximately $14.0
million placed in short-term investments.
Proceeds from the sale of certain of the cable television systems owned by CPLP
on April 7, 1997 to affiliates of the General Partner enabled CPLP to reduce to
zero the balance of its outstanding indebtedness and retire its special limited
partnership interests, with the remaining funds of approximately $6.6 million
placed in short-term investments. During May 1997, CPLP distributed
approximately $5.5 million to the Partnership.
The Partnership utilized its short-term investments, the distribution that it
received from CPLP and funds available under its new credit facility (see Note
6 of the financial statements) for the purpose of generating a distribution to
the Limited Partners. During June 1997, the Partnership made a distribution of
$314 per Unit, net of amounts withheld for state income taxes to the Limited
Partners, for a total net distribution of approximately $26.1 million. No
distribution was made by the Partnership to the General Partner.
Bids submitted to date with respect to the Northeast Missouri systems and the
remainder of the Texas systems were considered to be too low relative to the
appraised fair market values of such systems established pursuant to the
appraisal process. Thus, these bids have not been accepted by the General
Partner. The General Partner continues to seek potential purchasers for these
remaining systems.
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<PAGE> 16
Upon dissolution, the General Partner or other liquidating agent is required to
liquidate partnership assets and to distribute all available proceeds as soon
as practicable after their receipt by the Partnership. After payment of the
Partnership's liabilities, these sales proceeds will be distributed as set
forth in the Partnership Agreement.
The Partnership does not maintain property and casualty insurance covering its
underground cable television distribution plant. The General Partner believes
that the likelihood of any material damage to such distribution plant, due to
natural disasters or otherwise, is minimal and that damage to such distribution
plant at any individual location is unlikely to have a material adverse effect
on the Partnership. The General Partner also believes that its decision not to
insure such distribution plant is consistent with standard practices in the
cable television industry.
The Partnership believes that it has generally complied with the provisions of
the 1992 Act regarding cable programming service rates. However, some Systems
may be charging rates which are in excess of allowable rates and, accordingly,
may be subject to challenge by regulatory authorities; such challenge may
result in the Partnership being required to make refunds to subscribers. The
amount of refunds, if any, which could be payable by the Partnership in the
event such Systems' rates are successfully challenged by regulatory authorities
is not currently estimable. The Partnership has not reserved any amounts for
payment of such refunds as the General Partner does not believe that the
amounts of any such refunds would have a material adverse effect on the
financial position or results of the Partnership.
Page 16
<PAGE> 17
Part II. Other Information
Item 1. Legal Proceedings
On April 15, 1997, a petition was filed, and on June 19, 1997, an amended
petition was filed by certain of the limited partners of the Partnership
against Cencom Properties II, Inc., the general partner of the Partnership,
Cencom Partners Inc., the general partner of CPLP, the brokerage firms
involved in the original sale of the limited partnership units and Cencom Cable
Entertainment, Inc. ("Cencom Cable"). Cencom Cable provided management
services to both the Partnership and CPLP and also owned all of the stock of
the general partners of each of these partnerships prior to mid-1994. The
plaintiffs allege that the defendants breached fiduciary duties, committed
fraud and made various misrepresentations in the marketing and sale of CCIP II
limited partnership units and in the management of CCIP II. The plaintiffs
seek recovery of the consideration paid for their partnership units,
restitution of all profits received by the defendants in connection with the
management of the Partnership and punitive damages.
On June 10, 1997, a purported class action was filed in Delaware Chancery Court
under the name Wallace, Matthews, Lerner and Roberts v. Wood et al, Case No.
15731, on behalf of the limited partners of the Partnership against Cencom
Properties II, Inc., Cencom Cable, Charter Communications, Inc., the parent of
Cencom Partners, Inc. and Cencom Partners II, Inc., certain other affiliates of
Charter, certain individuals, including officers of Charter or Cencom
Properties II, Inc. and certain other unaffiliated parties. The plaintiffs
allege that the defendants breached fiduciary duties and the terms of the CCIP
II partnership agreement in connection with the investment in CPLP, the
management of CCIP II assets and the sale of certain Partnership assets. The
damages claimed by the plaintiffs are as yet unspecified.
All affiliated entities named above in these two lawsuits believe that they
have meritorious defenses in both actions, including defenses based on
applicable statutes of limitations, and intend to defend the actions
vigorously.
Item 2. Change in Securities - None
Item 3. Defaults upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders
On March 6, 1997, the General Partner distributed to each holder of units of
limited partnership interest a Disclosure Statement for the purpose of
obtaining the consent of the holders of a majority of such units for the sale
of certain cable television systems to affiliates of the General Partner. On
April 7, 1997, the General Partner was notified that holders of a majority of
units had given their consent for the transactions with the affiliates of the
General Partner (49,194 votes for, which represented 54.1% of the 90,915 issued
and outstanding units; 1,478 votes against; 1,850 votes abstained). The
transactions with the affiliates of the General Partner were consummated on
April 7, 1997, as described in the Disclosure Statement following the receipt
of consent.
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
10(y) Credit Agreement dated as of May 23, 1997 among Cencom
Cable Income Partners II, L.P. and Cencom Partners, L.P. as
the Borrowers and Canadian Imperial Bank of Commerce as the
Lender and Agent (the "Credit Agreement").
27 Financial Data Schedule
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<PAGE> 18
B. Reports on Form 8-K
On April 15, 1997, the Partnership filed a report on Form 8-K related to
the three separate sales of cable television systems between march 31, 1997 and
April 7, 1997, reported in Part I, Item 2 herein, as follows:
a) On March 31, 1997, the Partnership sold the cable television
systems serving jasper, Woodville and Cleveland, Texas, to an
unaffiliated third party for approximately $9,986,000.
b) On March 31, 1997, the Partnership sold the cable television
systems serving Marlin, Madisonville and Buffalo, Texas, to an
unaffiliated third party for approximately $5,269,000.
c) On April 7, 1997, the Partnership sold the cable television systems
serving Anderson County, South Carolina, to an affiliate of the
General Partner for approximately $36,636,000. The sale of these
cable television systems was consummated following notification of
approval by a majority of the Limited Partners for such transaction.
Pursuant to Article 3 of Regulation S-X, the Form 8-K filing included certain
unaudited pro forma financial information related to the three sale
transactions.
Page 18
<PAGE> 19
CENCOM CABLE INCOME PARTNERS II, L.P.
FOR QUARTER ENDED JUNE 30, 1997
SIGNATURES
Pursuant to the requirements 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.
CENCOM CABLE INCOME PARTNERS II, L.P.
By: Cencom Properties II, Inc.,
its General Partner
By: /s/ Jerald L. Kent
--------------------------------
Jerald L. Kent
Executive Vice President and
Chief Financial Officer
By: /s/Jerald L. Kent August 13, 1997
---------------------------------
Jerald L. Kent
Executive Vice President and
Chief Financial Officer
By: /s/Ralph G. Kelly August 13, 1997
---------------------------------
Ralph G. Kelly
Treasurer
Page 19
<PAGE> 1
U.S. $16,000,000
CREDIT AGREEMENT,
DATED AS OF MAY 23, 1997
AMONG
CENCOM CABLE INCOME PARTNERS II, L.P.
AND
CENCOM PARTNERS, L.P.,
AS THE BORROWERS,
VARIOUS FINANCIAL INSTITUTIONS,
AS THE LENDERS,
AND
CANADIAN IMPERIAL BANK OF COMMERCE,
AS THE AGENT.
<PAGE> 2
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.1. Defined Terms 1
1.2. Use of Defined Terms 18
1.3. Cross-References 18
1.4. Accounting and Financial Determinations 18
ARTICLE II
COMMITMENTS, LOANS,
BORROWING PROCEDURES AND NOTES
2.1. Commitments 19
2.1.1. Loan Commitment 19
2.1.2. Lenders Not Required to Make the Loans 19
2.2. Reduction of the Commitment Amounts 19
2.2.1. Optional 19
2.2.2. Mandatory 19
2.3. Borrowing Procedure 20
2.4. Continuation and Conversion Elections 20
2.5. Funding 21
2.6. Notes 21
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
3.1. Repayments and Prepayments; Application 21
3.1.1. Repayments and Prepayments 21
3.1.2. Application 22
3.2. Interest Provisions 22
3.2.1. Rates 22
3.2.2. Post-Maturity Rates 22
3.2.3. Payment Dates 22
3.3. Fees 23
3.3.1. Upfront Fee 23
3.3.2. Commitment Fee 23
ARTICLE IV
CERTAIN LIBO RATE AND OTHER PROVISIONS
4.1. LIBO Rate Lending Unlawful 23
4.2. Deposits Unavailable 24
4.3. Increased LIBO Rate Loan Costs, etc. 24
4.4. Funding Losses 24
4.5. Increased Capital Costs 24
<PAGE> 3
Section Page
4.6 Taxes 25
4.7. Payments, Computations, etc. 25
4.8. Sharing of Payments 26
4.9. Setoff 26
ARTICLE V
CONDITIONS TO CREDIT EXTENSIONS
5.1. Initial Borrowing 27
5.1.1. Partnership and Corporate Documents, etc. 27
5.1.2. Delivery of Notes 27
5.1.3. [INTENTIONALLY OMITTED] 28
5.1.4. Payment of Outstanding Indebtedness, etc. 28
5.1.5. Holdings Pledge Agreement 28
5.1.6. Security Agreements 28
5.1.7. Subordination Agreement 29
5.1.8. Closing Date Certificate 29
5.1.9. Opinion of Counsel 29
5.1.10. Insurance 29
5.1.11. [INTENTIONALLY OMITTED] 29
5.1.12. Solvency Certificate 29
5.1.13. Pro Forma Compliance Certificate 29
5.1.14. Closing Fees, Expenses, etc. 30
5.2. All Borrowings 30
5.2.1. Compliance with Warranties, No Default, etc. 30
5.2.2. Borrowing Request 30
5.2.3. Satisfactory Legal Form 30
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.1. Organization, etc. 31
6.2. Due Authorization, Non-Contravention, Validity, etc 31
6.3. Government Approval, Regulation, etc. 31
6.4. Security, etc. 32
6.5. Financial Information 32
6.6. No Material Adverse Change 32
6.7. Litigation, Labor Controversies, etc. 32
6.8. Compliance With Laws 32
6.9. Subsidiaries 33
6.10. Ownership of Properties 33
6.11. Taxes 33
6.12. Pension and Welfare Plans 33
6.13. Environmental Warranties 34
6.14. Regulations G, U and X 34
6.15. Accuracy of Information 35
6.16. Licenses and Franchises 35
6.17. Franchises 35
6.18. Agreements with Affiliates; Management Agreement 35
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<PAGE> 4
Section Page
6.19. Solvency 35
6.20. The Systems 36
6.21. Rate Regulation 37
6.22. Absence of Default 37
6.23. Business 37
6.24. Payment of Wages 37
6.25. Delivery of Certain Documents 37
ARTICLE VII
COVENANTS
7.1. Affirmative Covenants 38
7.1.1. Financial Information, Reports, Notices, etc. 38
7.1.2. Maintenance of Existence; Compliance with Laws, etc. 40
7.1.3. Maintenance of Licenses 40
7.1.4. Conduct of Business; Maintenance of Necessary Authorizations 40
7.1.5. Maintenance of Properties 41
7.1.6. Insurance 41
7.1.7. Books and Records; Accounting Method 41
7.1.8. Environmental Covenant 41
7.1.9. Additional Collateral 42
7.1.10. Use of Proceeds 42
7.1.11. Payment of Indebtedness; Loans 42
7.1.12. Management 42
7.1.13. Interest Rate Hedging 42
7.1.14. Delivery of the New London Franchise Agreement 42
7.2. Negative Covenants 42
7.2.1. Business Activities 42
7.2.2. Indebtedness 43
7.2.3. Liens 43
7.2.4. Financial Condition 44
7.2.5. Investments 45
7.2.6. Restricted Payments, etc. 45
7.2.7. Capital Expenditures, etc. 46
7.2.8. Rental Obligations 46
7.2.9. Take or Pay Contracts 46
7.2.10. Consolidation, Merger, etc. 46
7.2.11. Asset Dispositions, etc. 46
7.2.12. Modification of Certain Agreements 47
7.2.13. Transactions with Affiliates 47
7.2.14. Negative Pledges, Restrictive Agreements, etc. 47
7.2.15. Real Estate 47
7.2.16. ERISA Liabilities 48
ARTICLE VIII
EVENTS OF DEFAULT
8.1 Listing of Events of Default 48
8.1.1. Non-Payment of Obligations 48
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<PAGE> 5
8.1.2. Breach of Warranty 48
8.1.3. Non-Performance of Certain Covenants and Obligations 48
8.1.4. Non-Performance of Other Covenants and Obligations 48
8.1.5. Default on Other Indebtedness 48
8.1.6. Judgments 48
8.1.7. Pension Plans 49
8.1.8. Change in Control 49
8.1.9. Bankruptcy, Insolvency, etc. 49
8.1.10. Impairment of Security, etc. 49
8.1.11. Impairment of Necessary Authorizations, etc. 49
8.1.12. Management 50
8.2. Action if Bankruptcy 50
8.3. Action if Other Event of Default 50
ARTICLE IX
THE AGENT
9.1. Actions 50
9.2. Funding Reliance, etc. 51
9.3. Exculpation 51
9.4. Successor 51
9.5. Loans by CIBC 52
9.6. Credit Decisions 52
9.7. Copies, etc. 52
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1. Waivers, Amendments, etc. 52
10.2. Notices 53
10.3. Payment of Costs and Expenses 53
10.4. Indemnification 53
10.5. Survival 54
10.6. Severability 54
10.7. Headings 55
10.8. Execution in Counterparts, Effectiveness, etc. 55
10.9. Governing Law; Entire Agreement 55
10.10. Successors and Assigns 55
10.11. Sale and Transfer of Loans and Notes;
Participations in Loans and Notes 55
10.11.1. Assignments 55
10.11.2. Participations 56
10.12. Other Transactions 57
10.13. Certain Collateral and Other Matters 57
10.14. Forum Selection and Consent to Jurisdiction 57
10.15. Waiver of Jury Trial 58
-iv-
<PAGE> 6
SCHEDULE I - Disclosure Schedule
EXHIBIT A - Form of Note
EXHIBIT B - Form of Borrowing Request
EXHIBIT C - Form of Continuation/Conversion Notice
EXHIBIT D - Form of Lender Assignment Agreement
EXHIBIT E-1 - Form of Borrowers Security Agreement
EXHIBIT E-2 - Form of Partnership (CCIPII) Security Agreement
EXHIBIT E-3 - Form of Partnership (CPLP) Security Agreement
EXHIBIT F - Form of Holdings Pledge Agreement
EXHIBIT G - Form of Compliance Certificate
EXHIBIT H - Form of Closing Date Certificate
EXHIBIT I-1 - Form of Subscriber Report of CCIPII
EXHIBIT I -2 - Form of Subscriber Report of CPLP
EXHIBT J-1 - Form of Cencom Properties Subordination Agreement
EXHIBIT J-2 - Form of CPI Subordination Agreement
EXHIBIT K - Form of Opinion of Counsel to the Obligors
EXHIBIT L - Form of Solvency Certificate
-v-
<PAGE> 7
CREDIT AGREEMENT
This CREDIT AGREEMENT, dated as of May 23, 1997, is made among CENCOM
CABLE INCOME PARTNERS II, L.P., a Delaware limited partnership ("CCIPII"), and
CENCOM PARTNERS, L.P., a Delaware limited partnership ("CPLP", and, together
with CCIPII, collectively, the "Borrowers" and each individually, a
"Borrower"), the various financial institutions as are or may become parties
hereto (collectively, the "Lenders"), and CANADIAN IMPERIAL BANK OF COMMERCE,
acting by or through one or more of its affiliates, branches or agencies
("CIBC"), as agent (in such capacity, the "Agent") for the Lenders.
W I T N E S S E T H:
WHEREAS, each Borrower is engaged in the business of providing cable
television service to residential and commercial subscribers;
WHEREAS, the Borrowers seek to obtain from the Lenders, on the terms and
subject to the conditions set forth herein (including Article V) and in the
other Loan Documents, Commitments from the Lenders pursuant to which Loans may
be made from time to time in a maximum aggregate amount not to exceed
$16,000,000, provided that the amount available for Loans shall be reduced on a
periodic basis commencing March 31, 1999 pursuant to the terms set forth
hereinafter;
WHEREAS, the proceeds of the Loans will be used
(a) to make distributions to the respective limited partners of the
Borrowers in a combined aggregate amount, insofar as proceeds of the
Loans are concerned, not to exceed $9,500,000 for the period until May
15, 1998 (collectively, the "Distribution");
(b) to finance capital expenditures of the Borrowers;
(c) for working capital purposes of the Borrowers; and
(d) for general corporate purposes of the Borrowers; and
WHEREAS, the Lenders are willing, on the terms and subject to the
conditions hereinafter set forth (including Article V), to extend such
Commitments and make such Loans to the Borrowers;
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1 Defined Terms. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall, except where the context otherwise requires, have the following meanings
(such meanings to be equally applicable to the singular and plural forms
thereof):
"Affiliate" of any Person means any other Person which, directly or
indirectly, controls, is controlled by or is under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any Plan). A Person shall be deemed to be "controlled by" any
other Person if such other Person possesses, directly or indirectly, power
<PAGE> 8
(a) to vote 10% or more of the securities (on a fully diluted basis)
or other equity interests having ordinary voting power for the election of
directors or managing general partners; or
(b) to direct or cause the direction of the management and policies
of such Person whether by contract or otherwise.
"Agent" is defined in the preamble and includes each other Person as shall
have subsequently been appointed as the successor Agent pursuant to Section
9.4.
"Agent's Fee Letter" means the fee letter dated as of May 23, 1997, among
the Borrowers and the Agent (or its designee) with respect to certain fees.
"Agreement" means, on any date, this Credit Agreement as originally in
effect on the Effective Date and as thereafter from time to time amended,
supplemented, amended and restated, or otherwise modified and in effect on such
date.
"Alternate Base Rate" means, on any date and with respect to all Base Rate
Loans, a fluctuating rate of interest per annum equal to the higher of
(a) the rate of interest most recently announced or established by
CIBC at its Domestic Office as its base or prime, as applicable, rate for
Dollar loans; and
(b) the Federal Funds Rate plus 1/2 of 1%.
The Alternate Base Rate is not necessarily intended to be the lowest rate of
interest determined by CIBC in connection with extensions of credit. Changes
in the rate of interest on that portion of any Loans maintained as Base Rate
Loans will take effect simultaneously with each change in the Alternate Base
Rate. The Agent will give notice promptly to the Borrowers and the Lenders of
changes in the Alternate Base Rate.
"Annualized Operating Cash Flow" means, for any Fiscal Quarter, the
product of the Operating Cash Flow for such Fiscal Quarter multiplied by four.
"Applicable Law" means, in respect of any Person, all provisions of
constitutions, statutes, rules, regulations and orders of all Official Bodies
applicable to such Person, including the Licenses (but excluding Franchises),
the Federal Communications Act of 1934 and Title 47 of the United States Code,
and all orders and decrees of all Official Bodies in proceeds or actions to
which the Person in question is a party or by which it is bound.
"Applicable Margin" means (a) initially, (i) with respect to the unpaid
principal amount of each Base Rate Loan, 1.00% and, (ii) with respect to the
unpaid principal amount of each LIBO Rate Loan, 2.00%, and (b) thereafter, (i)
with respect to the unpaid principal amount of each Base Rate Loan, the
applicable percentage set forth below in the column entitled "Applicable Margin
for Base Rate Loans", and (ii) with respect to the unpaid principal amount of
each LIBO Rate Loan, the applicable percentage set forth below in the column
entitled "Applicable Margin for LIBO Rate Loans", in each case, as determined
in accordance with the Compliance Certificate most recently delivered pursuant
to clause (c) of Section 7.1.1:
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<PAGE> 9
Applicable Margin Applicable Margin
Leverage Ratio for Base Rate Loans for LIBO Rate Loans
-------------- ---------------------------- --------------------
X > 2.75:1 1.00% 2.00%
-
X < 2.75:1 0.75% 1.75%
provided, that if the Borrowers shall fail to deliver a Compliance Certificate
for a given Fiscal Quarter within the time required by clause (c) of Section
7.1.1, then the Applicable Margin with respect to any type of Loan shall be
deemed to be the highest margin set forth above with respect to such type of
Loan for the period from the day on which such Compliance Certificate was due
to be delivered through (but excluding) the date such Compliance Certificate is
in fact delivered. Any reduction in any Applicable Margin shall be effective
beginning on the date which the Agent receives a Compliance Certificate
pursuant to clause (c) of Section 7.1.1. In any event, upon the occurrence and
during the continuance of an Event of Default, the Applicable Margin shall be
the highest Applicable Margin.
"Assignee Lender" is defined in Section 10.11.1.
"Authorized Officer" means, relative to any Obligor, those of its partners
or officers whose signatures and incumbency shall have been certified to the
Agent and the Lenders pursuant to Section 5.1.1.
"Base Rate Loan" means a Loan bearing interest at a fluctuating rate
determined by reference to the Alternate Base Rate.
"Borrower" and "Borrowers" are defined in the preamble.
"Borrowers Security Agreement" means the Security Agreement executed and
delivered by each Borrower pursuant to Section 5.1.6, substantially in the form
of Exhibit E-1 hereto, as amended, supplemented, amended and restated or
otherwise modified from time to time.
"Borrowing" means the Loans of the same type and, in the case of LIBO Rate
Loans, having the same Interest Period made by all Lenders on the same Business
Day and pursuant to the same Borrowing Request in accordance with Section 2.1.
"Borrowing Request" means a loan request and certificate duly executed by
an Authorized Officer of the applicable Borrower, substantially in the form of
Exhibit B hereto.
"Business Day" means
(a) any day which is neither a Saturday or Sunday nor a legal
holiday on which banks are authorized or required to be closed in New
York, New York; and
(b) relative to the making, continuing, prepaying or repaying of
any LIBO Rate Loans, any day which is covered in clause (a) immediately
above and on which dealings in Dollars are carried on in the London
interbank market.
"Capital Expenditures" means, with respect to any Person or Persons for
any period, the sum of
(a) the aggregate amount of all expenditures of such Person or
Persons, taken as a whole, for fixed or capital assets made during such
period which, in accordance with GAAP, would be classified as capital
expenditures; and
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(b) the aggregate amount of all Capitalized Lease Liabilities of
such Person or Persons, incurred during such period.
"Capitalized Lease Liabilities" means, with respect to any Person or
Persons, all monetary obligations of such Person or Persons, taken as a whole,
under any leasing or similar arrangement which, in accordance with GAAP, would
be classified as capitalized leases, and, for purposes of this Agreement and
each other Loan Document, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with GAAP, and the stated
maturity thereof shall be the date of the last payment of rent or any other
amount due under such lease prior to the first date upon which such lease may
be terminated by the lessee without payment of a penalty.
"Cash Equivalent Investment" means, at any time:
(a) any evidence of Indebtedness, maturing not more than one year
after such time, issued or guaranteed by the United States Government;
(b) commercial paper, maturing not more than nine months from the
date of issue, which is issued by
(i) a corporation (other than an Affiliate of any Obligor)
organized under the laws of any state of the United States or of
the District of Columbia and rated at least A-1 by Standard &
Poor's Ratings Group or at least P-1 by Moody's Investors Service,
Inc., or
(ii) any Lender (or its holding company);
(c) any certificate of deposit or bankers acceptance, maturing not
more than one year after such time, which is issued by either
(i) a commercial banking institution that is a member of the
Federal Reserve System and has a combined capital and surplus and
undivided profits of not less than $500,000,000, or
(ii) any Lender; or
(d) any repurchase agreement entered into with any Lender (or other
commercial banking institution of the stature referred to in clause
(c)(i)) which
(i) is secured by a fully perfected security interest in any
obligation of the type described in any of clauses (a) through (c),
and
(ii) has a market value at the time such repurchase agreement
is entered into of not less than 100% of the repurchase obligation
of such Lender (or other commercial banking institution)
thereunder.
"Casualty Event" means the damage, destruction or condemnation, as the
case may be, of property of either Borrower.
"Casualty Proceeds" means, with respect to any Casualty Event, the amount
of any insurance proceeds or condemnation awards received by or on behalf of
the applicable Borrower in connection with such Casualty Event.
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"CC II" means CC II Holdings, Inc., a Delaware corporation and the owner
of all of the capital stock of the general partner of CCIPII.
"CC III" means CC III Holdings, Inc., a Delaware corporation and the owner
of all of the capital stock of the general partner of CPLP.
"CCIPII" is defined in the preamble.
"Cencom Properties" means Cencom Properties II, Inc., a Delaware
corporation and the general partner of CCIPII.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.
"CERCLIS" means the Comprehensive Environmental Response Compensation
Liability Information System List.
"Change in Control" means, unless the Required Lenders shall have
otherwise agreed in writing: (a) (i) each of Jerald L. Kent, Howard L. Wood and
Barry L. Babcock (or any substitute general partner which is not rejected by
the Required Lenders as provided below) shall cease for any reason to be a
general partner of Charter Group, or (ii) Charter Group shall for any reason
fail to be controlled, directly or indirectly, by at least one of such
individuals, or (iii) a majority of the voting equity of and economic interests
in Charter Group shall for any reason fail to be owned by at least one of such
individuals; provided, however, that if any of the events described in clause
(i), (ii) or (iii) above occurs solely as a result of the death, disability or
legal incapacity of any such individual (or any substitute general partner
which is not rejected by the Required Lenders, as provided below), such event
shall not constitute an Event of Default unless (w) 90 days after the
occurrence of such event, the Borrowers shall have failed to provide the Agent
and the Lenders with a written proposal as to the identity of one or more
willing substitute general partners of Charter Group, together with a list of
the names of the individuals proposed to be engaged in senior management of
Charter Group, or (x) the Required Lenders shall have rejected, in writing, any
such proposal given (within such 90-day period by the Borrowers) or (y) any
such substitute general partner shall fail to become a general partner of
Charter Group within a reasonable time thereafter or (z) the senior management
proposed by the Borrowers as set forth in clause (w) above, or any combination
thereof, shall for any reason fail to engage in senior management of Charter
Group; or (b) Charter Group shall for any reason fail to control Charter
Communications, directly or indirectly, or Charter Group shall fail for any
reason to own a majority of the voting equity of and economic interests in
Charter Communications (for purposes of this clause (b), "control" shall mean
possession of the power to direct or cause the direction of management or
policies, whether through ownership of securities or partnership or other
ownership interests, by contract or otherwise); or (c) CPI shall cease to be
the sole general partner of CPLP, or Charter Communications shall fail to own
and control, directly or indirectly, 100% of the voting and equity interests in
CPI; or (d) Cencom Properties shall cease to be the sole general partner of
CCIPII, or Charter Communications shall fail to own and control, directly or
indirectly, 100% of the voting and equity interests in Cencom Properties.
"Charter Communications" means Charter Communications, Inc., a Delaware
corporation.
"Charter Group" means Charter Communications Group, a Missouri general
partnership.
"CIBC" is defined in the preamble.
"Closing Date" means the date all closing conditions set forth in Section
5.1 are satisfied.
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"Closing Date Certificate" means a certificate of a duly Authorized
Officer of each Borrower executed and delivered pursuant to Section 5.1.8,
substantially in the form of Exhibit H.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Commitment" means, relative to any Lender, such Lender's obligation to
make Loans pursuant to Section 2.1.1.
"Commitment Amount" means, on any date, $16,000,000, as such amount may be
reduced from time to time pursuant to Section 2.2.
"Commitment Termination Date" means the earliest of
(a) December 31, 2002;
(b) May 31, 1997, if the Closing Date shall not have occurred prior
to such date;
(c) the date on which the Commitment Amount is terminated in full
or reduced to zero pursuant to Section 2.2; and
(d) the date on which any Commitment Termination Event occurs.
Upon the occurrence of any event described in clause (c) or (d), the
Commitments shall terminate automatically and without any further action.
"Commitment Termination Event" means
(a) the occurrence of any Default described in clauses (a) through
(d) of Section 8.1.9 with respect to either Borrower; or
(b) the occurrence and continuance of any other Event of Default
and either
(i) the declaration of the Loans to be due and payable
pursuant to Section 8.3, or
(ii) in the absence of such declaration, the giving of notice
by the Agent, acting at the direction of the Required Lenders, to
the Borrowers that the Commitments have been terminated.
"Compliance Certificate" means a certificate duly executed by the chief
financial or other senior financial or accounting Authorized Officer with a
title of Vice President or higher of the general partner of each Borrower,
substantially in the form of Exhibit G attached hereto, together with such
changes as the Agent may from time to time request for purposes of monitoring
the Borrowers' compliance herewith.
"Contingent Liability" means any agreement, undertaking or arrangement by
which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to, or otherwise to invest in, a
debtor, or otherwise to assure a creditor against loss) the indebtedness,
obligation or any other liability of any other Person (other than by
endorsements of instruments in the course of collection), or guarantees the
payment of dividends or other distributions upon the shares of any other
Person. The amount of any Person's obligation under any Contingent Liability
shall (subject to any limitation set therein) be deemed to be the outstanding
principal amount (or maximum principal amount, if larger) of the debt,
obligation or other liability guaranteed thereby.
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"Continuation/Conversion Notice" means a notice of continuation or
conversion and certificate duly executed by an Authorized Officer of the
applicable Borrower, substantially in the form of Exhibit C hereto.
"Controlled Group" means all members of a controlled group of corporations
and all members of a controlled group of trades or businesses (whether or not
incorporated) under common control which, together with the applicable
Borrower, are treated as a single employer under Section 414(b) or 414(c) of
the Code or Section 4001 of ERISA.
"CPI" means Cencom Partners, Inc., a Delaware corporation and the general
partner of CPLP.
"CPLP" is defined in the preamble.
"Debt Service" means, for any period, the sum of the amounts for such
period of:
(a) all regularly scheduled Interest Expense payments made in cash
by the Borrowers,
plus
(b) all mandatory scheduled principal repayments of the Loans and
other Funded Debt actually made by the Borrowers during such period,
including principal reductions of the Loans actually made and resulting
from the operation of Section 2.2.2.
"Default" means any Event of Default or any condition, occurrence or event
which, after notice or lapse of time or both, would constitute an Event of
Default.
"Disclosure Schedule" means the Disclosure Schedule attached hereto as
Schedule I, as it may be amended, supplemented or otherwise modified from time
to time by the Borrowers with the written consent of the Agent and the Required
Lenders.
"Distribution" is defined in clause (a) of the third recital.
"Dollar" and the symbol "$" mean the lawful currency of the United States.
"Domestic Office" means, relative to any Lender, the office of such Lender
designated as such below its signature hereto or designated in the Lender
Assignment Agreement or such other office of a Lender (or any successor or
assign of such Lender) within the United States as may be designated from time
to time by written notice from such Lender, as the case may be, to each other
Person party hereto.
"Effective Date" means the date this Agreement becomes effective pursuant
to Section 10.8.
"Environmental Laws" means all applicable federal, state or local
statutes, laws, ordinances, codes, rules, regulations and guidelines (including
consent decrees and administrative orders) relating to public health and safety
and protection of the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time.
References to sections of ERISA also refer to any successor sections.
"Event of Default" is defined in Section 8.1.
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<PAGE> 14
"Excess Cash Flow" means, for any Fiscal Year,
(a) Operating Cash Flow for such Fiscal Year,
less
(b) the sum (without duplication) of the amounts for such Fiscal
Year of:
(i) Debt Service for such Fiscal Year (including all
principal repayments of the Loans actually made by the Borrowers
pursuant to Section 2.2.2 to the extent such repayments permanently
reduce the Commitments),
plus
(ii) the amount of all Capital Expenditures made by the
Borrowers during such Fiscal Year,
plus
(iii) to the extent deducted in determining Operating Cash
Flow, the amount of federal, state and local income taxes paid in
cash by the Borrowers for such Fiscal Year,
plus
(iv) the amount of all Management Fees permitted to be paid
hereunder and paid in cash by the Borrowers.
"FCC" means the Federal Communications Commission or any other regulatory
body which succeeds to the functions of the Federal Communications Commission.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to
(a) the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published for such day (or, if such day is not
a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York; or
(b) if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such
transactions received by CIBC from three federal funds brokers of
recognized standing selected by it.
"Fiscal Quarter" means any quarter of a Fiscal Year.
"Fiscal Year" means any period of twelve consecutive calendar months
ending on December 31; references to a Fiscal Year with a number corresponding
to any calendar year (e.g., the "1997 Fiscal Year") refer to the Fiscal Year
ending on the December 31 occurring during such calendar year.
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<PAGE> 15
"Fixed Charge Coverage Ratio" means, for any four consecutive Fiscal
Quarters, the ratio of:
(a) Annualized Operating Cash Flow in respect of the last Fiscal
Quarter of such period
to
(b) Fixed Charges for such period.
"Fixed Charges" means, for any period, the sum for such period of
(a) Debt Service for such period;
plus
(b) dividends and other distributions paid by the Borrowers during
such period;
plus
(c) the amount of all Management Fees paid in cash by the
Borrowers;
plus
(d) Capital Expenditures made by the Borrowers during such period;
plus
(e) all federal, state and local income taxes actually paid in cash
by the Borrowers.
"Franchise" means any material franchise, permit, license or other
authorization granted by any governmental unit or authority, including all laws,
regulations and ordinances relating thereto, for the construction, operation and
maintenance of, or the right to construct, own, operate, promote, extend and/or
otherwise exploit, a community antenna television system or SMATV system and the
reception and transmission of signals by microwave, and shall include all
licenses issued by the FCC for the operation of community antenna relay systems,
earth stations, two-way radios, microwave systems and all certificates of
compliance and cable television registration statements which are required to be
issued by or filed with the FCC or any state, county, city, town, village or the
local governmental authority in connection with the ongoing operation of
business by the Borrowers.
"Franchise Agreement" means any material ordinance, agreement, contract or
other document stating the terms and conditions of any Franchise, including 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.
"F.R.S. Board" means the Board of Governors of the Federal Reserve System
or any successor thereto.
"Funded Debt" means, on any date of determination, the sum of the
aggregate amount of all Indebtedness of the type set forth in clauses (a), (b),
(c) and (g) of the definition of Indebtedness as of such date.
"GAAP" is defined in Section 1.4.
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"Hazardous Material" means
(a) any "hazardous substance", as defined by CERCLA;
(b) any "hazardous waste", as defined by the Resource Conservation
and Recovery Act, as amended;
(c) any petroleum product; or
(d) any pollutant or contaminant or hazardous, dangerous or toxic
chemical, material or substance within the meaning of any other
applicable federal, state or local law, regulation, ordinance or
requirement (including consent decrees and administrative orders)
relating to or imposing liability or standards of conduct concerning any
hazardous, toxic or dangerous waste, substance or material, all as
amended or hereafter amended.
"Hedging Obligations" means, with respect to any Person, all liabilities
of such Person under interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements, and all other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates.
"herein", "hereof", "hereto", "hereunder" and similar terms contained in
this Agreement or any other Loan Document refer to this Agreement or such other
Loan Document, as the case may be, as a whole and not to any particular
Section, paragraph or provision of this Agreement or such other Loan Document.
"Holdings Pledge Agreement" means the Pledge Agreement executed and
delivered by CC II and CC III pursuant to Section 5.1.5, substantially in the
form of Exhibit F hereto, as amended, supplemented, amended and restated or
otherwise modified from time to time.
"Impermissible Qualification" means, relative to the opinion or
certification of any independent public accountant as to any financial
statement of any Obligor, any qualification or exception to such opinion or
certification
(a) which is of a "going concern" or similar nature;
(b) which relates to the limited scope of examination of matters
relevant to such financial statement; or
(c) which relates to the treatment or classification of any item in
such financial statement and which, as a condition to its removal, would
require an adjustment to such item the effect of which would be to cause
such Obligor to be in default of any of its obligations under Section
7.2.4.
"including" means including without limiting the generality of any
description preceding such term, and, for purposes of this Agreement and each
other Loan Document, the parties hereto agree that the rule of ejusdem generis
shall not be applicable to limit a general statement, which is followed by or
referable to an enumeration of specific matters, to matters similar to the
matters specifically mentioned.
"Indebtedness" of any Person means, without duplication:
(a) all obligations of such Person for borrowed money and all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments;
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<PAGE> 17
(b) all obligations, contingent or otherwise, relative to the face
amount of all letters of credit, whether or not drawn, and banker's
acceptances issued for the account of such Person;
(c) all obligations of such Person as lessee under leases which
have been or should be, in accordance with GAAP, recorded as Capitalized
Lease Liabilities;
(d) all other items which, in accordance with GAAP, would be
included as liabilities on the liability side of the balance sheet of
such Person as of the date at which Indebtedness is to be determined;
(e) net liabilities of such Person under all Hedging Obligations;
(f) whether or not so included as liabilities in accordance with
GAAP, all obligations of such Person to pay the deferred purchase price
of property or services, and indebtedness (excluding prepaid interest
thereon) secured by a Lien on property owned or being purchased by such
Person (including indebtedness arising under conditional sales or other
title retention agreements), whether or not such indebtedness shall have
been assumed by such Person or is limited in recourse; and
(g) all Contingent Liabilities of such Person in respect of any of
the foregoing.
For all purposes of this Agreement, the Indebtedness of any Person shall
include the Indebtedness of any partnership or joint venture in which such
Person is a general partner or a joint venturer.
"Indemnified Liabilities" is defined in Section 10.4.
"Indemnified Parties" is defined in Section 10.4.
"Interest Expense" means, for any period, the total interest expense
(including commitment fees payable under this Agreement) computed in accordance
with GAAP that is payable by the Borrowers in respect of Funded Debt for such
period.
"Interest Expense Ratio" means, as of the last day of any Fiscal Quarter,
the ratio of:
(a) Annualized Operating Cash Flow in respect of such Fiscal
Quarter
to
(b) Interest Expense for the four Fiscal Quarter period then ended.
"Interest Period" means, relative to any LIBO Rate Loans, the period
beginning on (and including) the date on which such LIBO Rate Loan is made or
continued as, or converted into, a LIBO Rate Loan pursuant to Section 2.3 or
2.4 and ending on (but excluding) the day which numerically corresponds to such
date one, two, three, six or (subject to availability to all Lenders) nine or
twelve months thereafter (or, if such month has no numerically corresponding
day, on the last Business Day of such month), in either case as the applicable
Borrower may select in its relevant notice pursuant to Section 2.3 or 2.4;
provided, however, that
(a) such Borrower shall not be permitted to select Interest Periods
to be in effect at any one time which have expiration dates occurring on
more than five different dates;
(b) Interest Periods commencing on the same date for Loans comprising
part of the same Borrowing shall be of the same duration;
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(c) if an Interest Period would otherwise end on a day which is not
a Business Day, such Interest Period shall end on the next following
Business Day (unless such next following Business Day is the first
Business Day of a calendar month, in which case such Interest Period
shall end on the Business Day next preceding such numerically
corresponding day), and Interest Periods shall be selected to coincide
with amortization and commitment reduction dates; and
(d) Interest Periods shall be selected by the Borrowers so that
required payments under Section 2.2.2 will not result in the breakage of
Interest Periods and no Interest Period may end later than the date set
forth in clause (a) of the definition of "Commitment Termination Date".
"Investment" means, relative to any Person,
(a) any loan or advance made by such Person to any other Person
(excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business);
(b) any Contingent Liability of such Person; and
(c) any ownership or similar interest held by such Person in any
other Person.
The amount of any Investment shall be the original principal or capital amount
thereof less all returns of principal or equity thereon (and without adjustment
by reason of the financial condition of such other Person) and shall, if made
by the transfer or exchange of property other than cash, be deemed to have been
made in an original principal or capital amount equal to the fair market value
of such property.
"Lender Assignment Agreement" means a Lender Assignment Agreement,
substantially in the form of Exhibit D hereto.
"Lenders" is defined in the preamble.
"Leverage Ratio" means, as of the last day of any Fiscal Quarter, the
ratio of
(a) Funded Debt of the Borrowers outstanding on such date
to
(b) Annualized Operating Cash Flow of the Borrowers as of such
date.
The "LIBO Rate (Reserve Adjusted)" means, relative to any Loan to be made,
continued or maintained as, or converted into, a LIBO Rate Loan for any
Interest Period, a rate per annum (rounded upwards, if necessary, to the
nearest 1/16 of 1%) determined pursuant to the following formula:
LIBO Rate = LIBO Rate
------------------------------
(Reserve Adjusted) 1.00 - LIBO Reserve Percentage
The LIBO Rate (Reserve Adjusted) for any Interest Period for LIBO Rate
Loans will be determined by the Agent on the basis of the LIBOR Reserve
Percentage in effect on the date, and the applicable rates furnished to and
received by the Agent from CIBC, two Business Days before the first day of such
Interest Period.
"LIBO Rate" means, relative to any Interest Period for LIBO Rate Loans,
the rate of interest equal to the average (rounded upwards, if necessary, to
the nearest 1/16 of 1%) of the rates per annum at which Dollar deposits in
immediately available funds are offered to CIBC's LIBOR Office in the London
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<PAGE> 19
interbank market as at or about 11:00 a.m. (London time) two Business Days prior
to the beginning of such Interest Period for delivery on the first day of such
Interest Period, and in an amount approximately equal to the amount of CIBC's
LIBO Rate Loan and for a period approximately equal to such Interest Period.
"LIBO Rate Loan" means a Loan bearing interest, at all times during an
Interest Period applicable to such Loan, at a fixed rate of interest determined
by reference to the LIBO Rate (Reserve Adjusted).
"LIBOR Office" means, relative to any Lender, the office of such Lender
designated as such below its signature hereto or designated in the Lender
Assignment Agreement or such other office of a Lender as designated from time
to time by notice from such Lender to the Borrowers and the Agent, whether or
not outside the United States, which shall be making or maintaining LIBO Rate
Loans of such Lender hereunder.
"LIBOR Reserve Percentage" means, relative to any Interest Period for LIBO
Rate Loans, the reserve percentage (expressed as a decimal) equal to the
maximum aggregate reserve requirements (including all basic, emergency,
supplemental, marginal and other reserves and taking into account any
transitional adjustments or other scheduled changes in reserve requirements)
specified under regulations issued from time to time by the F.R.S. Board and
then applicable to assets or liabilities consisting of and including
"Eurocurrency Liabilities", as defined in Regulation D of the F.R.S. Board,
having a term approximately equal or comparable to such Interest Period.
"License" means each license issued to either Borrower by the FCC as
required for the construction or operation of a cable station, transmitter,
tower or antenna, together with all related applications, approvals,
authorizations, and permits.
"Lien" means any security interest, mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or otherwise),
charge against or interest in property to secure payment of a debt or
performance of an obligation or other priority or preferential arrangement of
any kind or nature whatsoever.
"Loan" is defined in Section 2.1.1.
"Loan Document" means this Agreement, the Notes, the Agent's Fee Letter,
each Security Agreement, the Holdings Pledge Agreement, each Rate Protection
Agreement and each other agreement, document or instrument delivered in
connection with this Agreement and such other agreements, whether or not
specifically mentioned herein or therein.
"Management Agreement" means, collectively, (a) the Management Agreement,
dated as of December 8, 1987, as assigned pursuant to that certain Assignment
and Assumption Agreement, dated as of July 15, 1994, as modified by that
certain First Amendment to Management Agreement, dated as of December 31, 1995,
between Cencom Properties and CCIPII and (b) the Management Agreement, dated as
of March 21, 1990 and assigned pursuant to that certain Assignment and
Assumption Agreement, dated as of July 15, 1994, between CPI and CPLP, in each
case, as the same may be amended, supplemented, amended and restated or
otherwise modified from time to time in accordance with Section 7.2.12.
"Material Adverse Effect" means a material adverse effect on (a) the
business, assets, financial condition, properties, operations or prospects of
either Borrower since December 31, 1996, (b) the ability of either Borrower or
any other Obligor to perform its obligations under any of the Loan Documents to
which such Borrower or such Obligor is a party, (c) the validity or
enforceability of any of the Loan Documents, or (d) the rights or remedies of
the Agent or the Lenders under the Loan Documents.
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"Necessary Authorizations" means all material approvals and licenses from,
and all material filings and registrations with, any governmental or other
regulatory authority, including the Franchises, Licenses and all material
approvals, licenses, filings and registrations under the Federal Communications
Act of 1934, necessary to enable the Borrowers to acquire, construct, maintain
and operate their respective Systems.
"Net Disposition Proceeds" means, with respect to a Permitted Disposition
of the assets of either Borrower,
(a) the gross cash proceeds received by such Borrower from such
Permitted Disposition,
less
(b) the sum of
(i) all reasonable and customary fees and expenses with
respect to legal, investment banking, brokerage and accounting and
other professional fees, sales commissions and disbursements and
all other reasonable fees, expenses and charges, in each case
actually incurred in connection with such Permitted Disposition
which have not been paid to any Affiliate of either Borrower, and
(ii) all taxes and other governmental costs and expenses
actually paid or estimated by the applicable Borrower (in good
faith) to be payable in cash in connection with such Permitted
Disposition;
provided, however, that if, after the payment of all taxes with respect to such
Permitted Disposition, the amount of estimated taxes, if any, pursuant to
clause (b)(ii) above exceeded the tax amount actually paid in cash in respect
of such Permitted Disposition, the aggregate amount of such excess shall be
immediately payable, pursuant to clause (b) of Section 2.2.2 and clause (b) of
Section 3.1.1, as Net Disposition Proceeds.
"Net Equity Proceeds" means, with respect to the sale or issuance by
either Borrower to any Person of any partnership or equity interests after the
Effective Date, the excess of:
(a) the gross cash proceeds received by such Borrower from such
sale or issuance,
over
(b) all reasonable and customary underwriting commissions and
legal, investment banking, brokerage and accounting and other
professional fees, sales commissions and disbursements and all other
reasonable fees, expenses and charges, in each case actually incurred in
connection with such sale or issuance which have not been paid to
Affiliates of either Borrower in connection therewith.
"Net Income" means, for any period, the net income of the Borrowers for
such period on a consolidated basis as computed in accordance with GAAP.
"Net Issuance Proceeds" means, as to any issuance of indebtedness for
borrowed money by either Borrower, the excess of:
(a) the gross cash proceeds received by such Borrower,
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over
(b) all reasonable and customary fees and expenses with respect to
underwriting commissions and legal, investment banking, brokerage and
accounting and other professional fees, sales commissions and
disbursements actually incurred in connection with such issuance which
have not been paid to Affiliates of either Borrower in connection
therewith.
"New London Franchise Agreement" is defined in clause (b) of Section 6.25.
"Note" means a joint and several promissory note of the Borrowers payable
to any Lender, substantially in the form of Exhibit A hereto (as such
promissory note may be amended, endorsed or otherwise modified from time to
time), evidencing the aggregate Indebtedness of the Borrowers to such Lender
resulting from outstanding Loans, and also means all other promissory notes
accepted from time to time in substitution therefor or renewal thereof.
"Obligations" means all obligations (monetary or otherwise) of the
Borrowers and each other Obligor arising under or in connection with this
Agreement, the Notes and each other Loan Document.
"Obligor" means either Borrower, CC II, CC III, Cencom Properties, CPI
and/or any other Person (other than the Agent or any Lender) obligated under
any Loan Document.
"Official Body" means any government or political subdivision or any
agency, authority, bureau, central bank, commission, department or
instrumentality of either, or any court, tribunal or arbitrator, in each case
whether foreign or domestic.
"Operating Cash Flow" means, for any period for the Borrowers, the sum of
the amounts for such period of:
(a) Net Income (excluding any extraordinary gains and losses and
taxes in respect thereof);
plus
(b) to the extent deducted in determining Net Income, Interest
Expense,
plus
(c) to the extent deducted in determining Net Income, depreciation
of assets, amortization expense,
plus
(d) to the extent deducted in determining Net Income, income tax
expense,
plus
(e) to the extent deducted in determining Net Income, management
fees and financial advisory fees and other non-cash charges.
"Organic Document" means, relative to any Obligor, as applicable, its
certificate of incorporation, its by-laws and all shareholder agreements,
voting trusts and similar arrangements applicable to any of its authorized
shares of capital stock, its partnership agreement and all other relating to the
control or management of such entity, except for the Management Agreement.
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"Participant" is defined in Section 10.11.2.
"Partnership (CCIPII) Security Agreement" means the Security Agreement
executed and delivered by Cencom Properties and Charter Communications pursuant
to Section 5.1.6, substantially in the form of Exhibit E-2 hereto, as amended,
supplemented, amended and restated or otherwise modified from time to time.
"Partnership (CPLP) Security Agreement" means the Security Agreement
executed and delivered by CPI, Charter Communications and CCIPII pursuant to
Section 5.1.6, substantially in the form of Exhibit E-3 hereto, as amended,
supplemented, amended and restated or otherwise modified from time to time.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Pension Plan" means a "pension plan", as such term is defined in section
3(2) of ERISA, which is subject to Title IV of ERISA (other than a
multiemployer plan as defined in section 4001(a)(3) of ERISA), and to which any
Borrower or any corporation, trade or business that is, along with such
Borrower, a member of a Controlled Group, may have liability, including any
liability by reason of having been a substantial employer within the meaning of
section 4063 of ERISA at any time during the preceding five years, or by reason
of being deemed to be a contributing sponsor under section 4069 of ERISA.
"Percentage" means, relative to any Lender, the percentage set forth
opposite its signature hereto or set forth in the then most recent Lender
Assignment Agreement executed by such Lender, as such percentage may be
adjusted from time to time pursuant to Lender Assignment Agreement(s) executed
by such Lender and its Assignee Lender(s) and delivered pursuant to Section
10.11.1.
"Permitted Disposition" means a sale, disposition or other conveyance of
assets by either Borrower in accordance with the terms of clause (b) of Section
7.2.11.
"Person" means any natural person, corporation, partnership, firm,
association, trust, government, governmental agency or any other entity,
whether acting in an individual, fiduciary or other capacity.
"Plan" means any Pension Plan or Welfare Plan.
"Pole Agreement" means any pole attachment agreement or underground
conduit use agreement which was entered into in connection with the operation
of any System.
"Pro-Forma Debt Service" means, for any four consecutive Fiscal Quarters,
the sum of
(a) Interest Expense for such period;
plus
(b) all mandatory scheduled principal repayments of the Loans and
other Funded Debt scheduled to be made by the Borrowers during such
period, including principal reductions of the Loans scheduled to be made
and resulting from the operation of Section 2.2.2;
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<PAGE> 23
plus
(c) the amount of all management fees, financial advisory fees and
any other similar fees scheduled to be paid by the Borrowers during such
period.
"Pro-Forma Debt Service Ratio" means, at any time, for the four
consecutive Fiscal Quarters subsequent to such time, the ratio of
(a) Annualized Operating Cash Flow in respect of the last Fiscal
Quarter prior to such time
to
(b) the amount of Pro-Forma Debt Service for such period.
"Quarterly Payment Date" means the last day of each March, June, September
and December or, if any such day is not a Business Day, the next succeeding
Business Day.
"Rate Protection Agreement" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or any similar
arrangement designed to hedge the risk of variable interest rate volatility,
between either Borrower and one or more of the Agent, the Lenders or an
Affiliate thereof, as such agreement or arrangement may be modified,
supplemented and in effect from time to time.
"Release" means a "release", as such term is defined in CERCLA.
"Required Lenders" means, at any time, Lenders holding at least 66-2/3% of
the then aggregate outstanding principal amount of the Notes then held by the
Lenders or, if no such principal amount is then outstanding, Lenders having at
least 66-2/3% of the Commitments.
"Resource Conservation and Recovery Act" means the Resource Conservation
and Recovery Act, 42 U.S.C. Section 6901, et seq., as in effect from time to
time.
"Security Agreement" means, as the context may require, the Borrowers
Security Agreement, the Partnership (CCIPII) Security Agreement or the
Partnership (CPLP) Security Agreement, substantially in the form of Exhibit
E-1, E-2 or E-3 hereto, respectively, in each case as amended, supplemented,
amended and restated or otherwise modified from time to time.
"Solvency Certificate" means a Solvency Certificate, substantially in the
form of Exhibit L hereto, duly executed and delivered by the chief financial or
other senior financial or accounting Authorized Officer with a title of Vice
President or higher of the general partner of each Borrower.
"Stated Maturity Date" means December 31, 2002.
"Subordination Agreement" means, collectively, (a) the Subordination
Agreement to be executed and delivered by an Authorized Officer of each of CPI
and CPLP, and (b) the Subordination Agreement to be executed and delivered by
an Authorized Officer of Cencom Properties and CCIPII, in each case pursuant
to Section 5.1.7 and in substantially the form of Exhibit J, as amended,
supplemented, amended and restated or otherwise modified from time to time.
"Subscriber Report" of either Borrower means a report, substantially in
the form of the monthly operating report of such Borrower previously delivered
to the Agent and referred to in clause (d) of
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Section 6.25, a copy of which is attached as Exhibit I-1 or I-2 hereto,
completed by such Borrower with appropriate insertions.
"Subsidiary" means, with respect to any Person, any corporation of
which more than 50% of the outstanding capital stock having ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether at the time capital stock of any other class or
classes of such corporation shall or might have voting power upon the
occurrence of any contingency) is at the time directly or indirectly owned by
such Person, by such Person and one or more other Subsidiaries of such Person,
or by one or more other Subsidiaries of such Person, and also includes any
partnership interest in any Person.
"System or Systems" means the assets constituting a cable television
or SMATV system (including all related licenses, Franchises and permits issued
under federal, state or local laws from time to time, and all Pole Agreements,
utility easements and all other property owned or used in connection with the
entertainment and services provided pursuant to, and all interest of either
Borrower to receive revenues from, or pursuant to, said licenses, Franchises
and permits) owned by such Borrower and serving subscribers within a
geographical area covered by one or more Franchises from the same head end
facility or by two or more head end facilities.
"Taxes" is defined in Section 4.6.
"type" means, relative to any Loan, the portion thereof, if any,
being maintained as a Base Rate Loan or a LIBO Rate Loan.
"U.C.C." means the Uniform Commercial Code as in effect from time to
time in the State of New York.
"United States" or "U.S." means the United States of America, its
fifty States and the District of Columbia.
"Welfare Plan" means a welfare plan, as such term is defined in
section 3(1) of ERISA.
SECTION 1.2. Use of Defined Terms. Unless otherwise defined or the
context otherwise requires, terms for which meanings are provided in this
Agreement shall have such meanings when used in the Disclosure Schedule and in
each Note, Borrowing Request, Continuation/Conversion Notice, Loan Document,
notice and other communication delivered from time to time in connection with
this Agreement or any other Loan Document.
SECTION 1.3. Cross-References. Unless otherwise specified,
references in this Agreement and in each other Loan Document to any Article or
Section are references to such Article or Section of this Agreement or such
other Loan Document, as the case may be, and, unless otherwise specified,
references in any Article, Section or definition to any clause are references
to such clause of such Article, Section or definition.
SECTION 1.4. Accounting and Financial Determinations. Unless
otherwise specified, all accounting terms used herein or in any other Loan
Document shall be interpreted, all accounting determinations and computations
hereunder or thereunder (including under Section 7.2.4) shall be made, and all
financial statements required to be delivered hereunder or thereunder shall be
prepared in accordance with, those generally accepted accounting principles
("GAAP") applied in the preparation of the financial statements referred to in
Section 6.5.
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ARTICLE II
COMMITMENTS, LOANS,
BORROWING PROCEDURES AND NOTES
SECTION 2.1. Commitments. On the terms and subject to the conditions
of this Agreement (including Article V), each Lender severally agrees to make
Loans pursuant to the Commitments described in this Section 2.1.
SECTION 2.1.1. Loan Commitment. From time to time on any Business
Day occurring on and after the Closing Date and prior to the Commitment
Termination Date, each Lender agrees to make Loans (relative to such Lender,
its "Loans") to the Borrowers equal to such Lender's Percentage of the
aggregate amount of the Borrowing of the Loans requested by such Borrower to be
made on such day, provided that, in any event, (a) the aggregate principal
amount of all Loans permitted to be borrowed by CPLP shall not exceed
$7,500,000 at any one time outstanding and (b) at such time, if any, as either
Borrower has sold or otherwise transferred all or substantially all of its
assets, such Borrower shall immediately cease to have the right to borrow under
this Agreement. The Commitment of each Lender described in this Section 2.1.1
is herein referred to as its "Loan Commitment". On the terms and subject to
the conditions hereof, the Borrowers may from time to time borrow, prepay and
reborrow the Loans.
SECTION 2.1.2. Lenders Not Required to Make the Loans. No Lender
shall be required to make any Loan if, after giving effect thereto, the
aggregate outstanding principal amount of all the Loans
(a) of all the Lenders would exceed the Commitment Amount; or
(b) of such Lender would exceed such Lender's Percentage of
the Commitment Amount.
SECTION 2.2. Reduction of the Commitment Amounts. The Commitment
Amount is subject to reduction from time to time pursuant to this Section 2.2.
SECTION 2.2.1. Optional. The Borrowers may, from time to time on any
Business Day occurring after the time of the initial Borrowing hereunder,
voluntarily reduce the unused amount of the Commitment Amount; provided,
however, that all such reductions shall require at least three Business Days'
prior notice to the Agent and be permanent, and any partial reduction of any
Commitment Amount shall be in a minimum amount of $500,000 and in an integral
multiple of $100,000.
SECTION 2.2.2. Mandatory. (a) On each date set forth below, the
Commitment Amount shall, without any further action, automatically and
permanently be reduced by the amount set forth opposite each reduction date
below:
Dollar
Reduction Date Reduction
-------------- ---------
March 31, 1999 $800,000
June 30, 1999 $800,000
September 30, 1999 $800,000
December 31, 1999 $800,000
March 31, 2000 $800,000
June 30, 2000 $800,000
September 30, 2000 $800,000
December 31, 2000 $800,000
March 31, 2001 $800,000
June 30, 2001 $800,000
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September 30, 2001 $800,000
December 31, 2001 $800,000
March 31, 2002 $1,600,000
June 30, 2002 $1,600,000
September 30, 2002 $1,600,000
December 31, 2002 $1,600,000
provided, however, that, in any event, the Commitment Amount on the Commitment
Termination Date shall be zero. Reductions of the Commitment Amount made
pursuant to Section 2.2.1 and/or clause (b) or clause (c) of this Section 2.2.2
shall be applied to diminish the amount of scheduled reductions to such
Commitment Amount thereafter becoming effective pursuant to this Section, in
the inverse order of scheduled occurrence. Each such reduction in the
Commitment Amount shall be permanent and automatic.
(b) The Commitment Amount shall, concurrently with the receipt by
either Borrower of any Net Disposition Proceeds, Casualty Proceeds, Net Equity
Proceeds or Net Issuance Proceeds, as the case may be, be reduced by an
aggregate amount equal to 100% of such Net Disposition Proceeds, 100% of such
Casualty Proceeds, 100% of such Net Equity Proceeds or 100% of such Net
Issuance Proceeds, as the case may be; provided, however, that the Commitment
Amount shall not be reduced by the amount of any Casualty Proceeds received by
such Borrower under this clause (b) so long as (i) (A) such Borrower informs
the Agent no later than 30 days following the occurrence of the Casualty Event
resulting in such Casualty Proceeds of its good faith intention to apply such
Casualty Proceeds to the rebuilding or replacement of the property which was
the subject of such Casualty Event, and (B) such Casualty Proceeds are in fact
applied to rebuild or replace such damaged, destroyed or condemned property
within 180 days following the receipt of such Casualty Proceeds, and (ii) no
Default shall have occurred and be continuing. Each such reduction in the
Commitment Amount shall be permanent and automatic.
(c) The Commitment Amount shall, 120 days after the end of each
Fiscal Year ending on or after December 31, 1998, be reduced by an aggregate
amount equal to 50% of Excess Cash Flow for such Fiscal Year. Each such
reduction in the Commitment Amount shall be permanent and automatic.
SECTION 2.3. Borrowing Procedure. By delivering a Borrowing Request
to the Agent on or before 10:00 a.m. (New York time) on a Business Day, either
Borrower may from time to time irrevocably request, on not less than three nor
more than five Business Days' notice, that a Borrowing be made in a minimum
amount of $100,000 and an integral multiple of $100,000 or in the unused amount
of the applicable Commitment. On the terms and subject to the conditions of
this Agreement, each Borrowing shall be comprised of the type of Loans, and
shall be made on the Business Day, specified in such Borrowing Request
(provided that the Borrowing made on the Closing Date shall be comprised solely
of Base Rate Loans). On or before 11:00 a.m. (New York time) on such Business
Day each Lender shall deposit with the Agent same day funds in an amount equal
to such Lender's Percentage of the requested Borrowing. Such deposit will be
made to an account which the Agent shall specify from time to time by notice to
the Lenders. To the extent funds are received from the Lenders, the Agent shall
make such funds available to the applicable Borrower by wire transfer to the
accounts such Borrower shall have specified in its Borrowing Request. No
Lender's obligation to make any Loan shall be affected by any other Lender's
failure to make any Loan.
SECTION 2.4. Continuation and Conversion Elections. By delivering a
Continuation/Conversion Notice to the Agent on or before 10:00 a.m. (New York
time) on a Business Day, either Borrower may from time to time irrevocably
elect, on not less than three nor more than five Business Days' notice that
all, or any portion in an aggregate minimum amount of $500,000 and an integral
multiple of $100,000, of any Loans be, in the case of Base Rate Loans,
converted into LIBO Rate Loans or, in the case of LIBO Rate Loans, be converted
into a Base Rate Loan or continued as a LIBO Rate Loan (in the absence of
delivery of a Continuation/Conversion Notice with respect to any LIBO Rate
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Loan at least three Business Days before the last day of the then current
Interest Period with respect thereto, such LIBO Rate Loan shall, on such last
day, automatically convert to a Base Rate Loan); provided, however, that (x)
each such conversion or continuation shall be pro rated among the applicable
outstanding Loans of all Lenders, and (y) such Borrower shall not request that
any portion of the outstanding principal amount of any Loans may be continued
as, or be converted into, LIBO Rate Loans when any Default has occurred and is
continuing.
SECTION 2.5. Funding. Each Lender may, if it so elects, fulfill its
obligation to make, continue or convert LIBO Rate Loans hereunder by causing
one of its foreign branches or Affiliates (or an international banking facility
created by such Lender) to make or maintain such LIBO Rate Loan; provided,
however, that such LIBO Rate Loan shall nonetheless be deemed to have been made
and to be held by such Lender, and the obligation of each Borrower to repay
such LIBO Rate Loan shall nevertheless be to such Lender for the account
of such foreign branch, Affiliate or international banking facility. In
addition, each Borrower hereby consents and agrees that, for purposes of any
determination to be made for purposes of Section 4.1, 4.2, 4.3 or 4.4, it shall
be conclusively assumed that each Lender elected to fund all LIBO Rate Loans by
purchasing Dollar deposits in its LIBOR Office's interbank eurodollar market.
SECTION 2.6. Notes. Each Lender's Loans under a Commitment shall be
evidenced by a Note payable by each Borrower, jointly and severally, to the
order of such Lender in a maximum principal amount equal to such Lender s
Percentage of the original applicable Commitment Amount. Each Borrower hereby
irrevocably authorizes each Lender to make (or cause to be made) appropriate
notations on the grid attached to such Lender's Notes (or on any continuation
of such grid), which notations, if made, shall evidence, inter alia, the date
of, the outstanding principal of, and the interest rate and Interest Period
applicable to the Loans evidenced thereby. Such notations shall be conclusive
and binding on the Borrowers absent manifest error; provided, however, that the
failure of any Lender to make any such notations shall not limit or otherwise
affect any Obligations of any Borrower or any other Obligor.
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1. Repayments and Prepayments; Application.
SECTION 3.1.1. Repayments and Prepayments. Each Borrower shall,
jointly and severally, repay in full the unpaid principal amount of each Loan
upon the Stated Maturity Date therefor. Prior thereto, such Borrower
(a) may, from time to time on any Business Day, make a voluntary
prepayment, in whole or in part, of the outstanding principal amount of
any Loans; provided, however, that
(i) any such prepayment of the Loans shall be made pro rata among
the Loans of the same type and, if applicable, having the same
Interest Period of all Lenders that have made such Loans;
(ii) such Borrower shall pay any breakage costs caused thereby
pursuant to Section 4.4 if such prepayment of any LIBO Rate
Loan is made on any day other than the last day of the Interest
Period for such Loan;
(iii) all such voluntary prepayments shall require at least three
but no more than five Business Days' prior written notice to the
Agent; and
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(iv) all such voluntary partial prepayments shall be, in the case
of LIBO Rate Loans, in an aggregate minimum amount of $500,000
and an integral multiple of $100,000 and, in the case of Base Rate
Loans, in a aggregate minimum amount of $500,000 and an integral
multiple of $100,000; and
(b) shall, on each date when any reduction in the Commitment Amount
shall become effective, including pursuant to Section 2.2, make
a mandatory prepayment of all Loans in an aggregate amount equal to
the excess, if any, of the aggregate, outstanding principal amount of
all Loans over the Commitment Amount as so reduced.
Each prepayment of any Loans made pursuant to this Section shall be without
premium or penalty, except as may be required by Section 4.4. No voluntary
prepayment of principal of any Loans shall cause a reduction in the Commitment
Amount.
SECTION 3.1.2. Application. Each prepayment or repayment of the
principal of the Loans shall be applied, to the extent of such prepayment or
repayment, first, to the principal amount thereof being maintained as Base Rate
Loans, and second, to the principal amount thereof being maintained as LIBO
Rate Loans (with such application to earliest maturing LIBO Rate Loans first).
SECTION 3.2. Interest Provisions. Interest on the outstanding
principal amount of Loans shall accrue and be payable in accordance with this
Section 3.2.
SECTION 3.2.1. Rates. Pursuant to an appropriately delivered
Borrowing Request or Continuation/Conversion Notice, the applicable Borrower
may elect that Loans comprising a Borrowing accrue interest at a rate per
annum:
(a) on that portion maintained from time to time as a Base Rate
Loan, equal to the sum of the Alternate Base Rate from time to time in
effect plus the Applicable Margin; and
(b) on that portion maintained from time to time as a LIBO Rate
Loan, during each Interest Period applicable thereto, equal to the sum of
the LIBO Rate (Reserve Adjusted) for such Interest Period plus the
Applicable Margin.
All LIBO Rate Loans shall bear interest from and including the first day of the
applicable Interest Period to (but not including) the last day of such Interest
Period at the interest rate determined as applicable to such LIBO Rate Loan.
SECTION 3.2.2. Post-Maturity Rates. After the date any principal
amount of any Loan is due and payable (whether on the Stated Maturity Date,
upon acceleration or otherwise), after any other monetary Obligation of either
Borrower shall have become due and payable, and after the date any other Event
of Default shall have occurred (and so long as such Event of Default shall be
continuing), the Borrowers shall, jointly and severally, pay, but only to the
extent permitted by law, interest (after as well as before judgment) on such
amounts at a rate per annum equal to the rate otherwise applicable to such Loan
plus a margin of 2.0%.
SECTION 3.2.3. Payment Dates. Interest accrued on each Loan shall be
payable, without duplication:
(a) on the Stated Maturity Date therefor;
(b) on the date of any payment or prepayment, in whole or in part,
of principal outstanding on such Loan with respect to the
amount so paid or prepaid;
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(c) with respect to Base Rate Loans, on each Quarterly Payment Date
occurring after the date of the initial Borrowing hereunder;
(d) with respect to LIBO Rate Loans, the last day of each applicable
Interest Period (and, if such Interest Period shall exceed three months,
at the end of each three month period occurring during such Interest
Period);
(e) with respect to any Base Rate Loans converted into LIBO Rate
Loans on a day when interest would not otherwise have been payable
pursuant to clause (c), on the date of such conversion; and
(f) on that portion of any Loans the Stated Maturity Date of which
is accelerated pursuant to Section 8.2 or Section 8.3, immediately upon
such acceleration.
Interest accrued on Loans or other monetary Obligations arising under this
Agreement or any other Loan Document after the date such amount is due and
payable (whether on the Stated Maturity Date, upon acceleration or otherwise)
shall be payable upon demand.
SECTION 3.3. Fees. The Borrowers agree, jointly and severally, to
pay the fees set forth in this Section 3.3. All such fees shall be
non-refundable.
SECTION 3.3.1. Upfront Fee. The Borrowers agree, jointly and
severally, to pay on the Closing Date to the Agent for the account of each
Lender having a Commitment on the Closing Date, an upfront fee as set forth in
the Agent's Fee Letter.
SECTION 3.3.2. Commitment Fee. The Borrowers agree, jointly and
severally, to pay to the Agent for the account of each Lender having an
outstanding Commitment, for the period (including any portion thereof when any
of its Commitments are suspended by reason of such Borrower's inability to
satisfy any condition of Article V) commencing on the Effective Date and
continuing through the final Commitment Termination Date, a commitment fee at
the rate of 0.375% per annum on such Lender's Percentage of the sum of the
average daily unused portion of the Commitment Amount. Such commitment fees
shall be payable by the Borrowers, jointly and severally, in arrears on each
Quarterly Payment Date, commencing with the first such day following the
Effective Date, and on the Commitment Termination Date.
ARTICLE IV
CERTAIN LIBO RATE AND OTHER PROVISIONS
SECTION 4.1. LIBO Rate Lending Unlawful. If any Lender shall
determine (which determination shall, upon notice thereof to the Borrowers and
the Lenders, be conclusive and binding on each Borrower) that the introduction
of or any change in or in the interpretation of any law makes it unlawful, or
any central bank or other governmental authority asserts that it is unlawful,
for such Lender to make, continue or maintain any Loan as, or to convert any
Loan into, a LIBO Rate Loan, the obligations of all Lenders to make, continue,
maintain or convert any such Loans shall, upon such determination, forthwith be
suspended until such Lender shall notify the Agent that the circumstances
causing such suspension no longer exist, and all LIBO Rate Loans shall
automatically convert into Base Rate Loans at the end of the then current
Interest Periods with respect thereto or sooner, if required by such law or
assertion.
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SECTION 4.2. Deposits Unavailable. If the Agent shall have
determined that
(a) Dollar deposits in the relevant amount and for the relevant
Interest Period are not available to CIBC in its relevant market; or
(b) by reason of circumstances affecting CIBC's relevant market,
adequate means do not exist for ascertaining the interest rate applicable
hereunder to LIBO Rate Loans,
then, upon notice from the Agent to the Borrowers and the Lenders, the
obligations of all Lenders under Section 2.3 and Section 2.4 to make or
continue any Loans as, or to convert any Loans into, LIBO Rate Loans shall
forthwith be suspended until the Agent shall notify the Borrowers and the
Lenders that the circumstances causing such suspension no longer exist.
SECTION 4.3. Increased LIBO Rate Loan Costs, etc. The Borrowers
agree, jointly and severally, to reimburse each Lender for any increase in the
cost to such Lender of, or any reduction in the amount of any sum receivable by
such Lender in respect of, making, continuing or maintaining (or of its
obligation to make, continue or maintain) any Loans as, or of converting (or of
its obligation to convert) any Loans into, LIBO Rate Loans. Such Lender shall
promptly notify the Agent and the Borrowers in writing of the occurrence of any
such event, such notice to state, in reasonable detail, the reasons therefor
and the additional amount required fully to compensate such Lender for such
increased cost or reduced amount. Such additional amounts shall be payable by
the Borrowers directly to such Lender within five days of its receipt of such
notice, and such notice shall, in the absence of manifest error, be conclusive
and binding on each Borrower.
SECTION 4.4. Funding Losses. In the event any Lender shall incur any
loss or expense (including any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such Lender
to make, continue or maintain any portion of the principal amount of any Loan
as, or to convert any portion of the principal amount of any Loan into, a LIBO
Rate Loan) as a result of
(a) any conversion or repayment or prepayment of the principal
amount of any LIBO Rate Loans on a date other than the scheduled last day
of the Interest Period applicable thereto, whether pursuant to Section
3.1 or otherwise;
(b) any Loans not being made as LIBO Rate Loans in accordance with
the Borrowing Request therefor; or
(c) any Loans not being continued as, or converted into, LIBO Rate
Loans in accordance with the Continuation/ Conversion Notice therefor,
then, upon the written notice of such Lender to the Borrowers (with a copy to
the Agent), the Borrowers shall, within five days of their receipt thereof,
jointly and severally, pay directly to such Lender such amount as will (in the
reasonable determination of such Lender) reimburse such Lender for such loss or
expense. Such written notice (which shall include calculations in reasonable
detail) shall, in the absence of manifest error, be conclusive and binding on
each Borrower.
SECTION 4.5. Increased Capital Costs. If any change in, or the
introduction, adoption, effectiveness, interpretation, reinterpretation or
phase-in of, any law or regulation, directive, guideline, decision or request
(whether or not having the force of law) of any court, central bank, regulator
or other governmental authority affects or would affect the amount of capital
required or expected to be maintained by any Lender or any Person controlling
such Lender, and such Lender determines (in its sole and absolute discretion)
that the rate of return on its or such controlling Person's capital as a
consequence of its Commitments, participation in the Loans made by such Lender
is reduced to a level below that
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which such Lender or such controlling Person could have achieved but for the
occurrence of any such circumstance, then, in any such case upon notice from
time to time by such Lender to the Borrowers, the Borrowers shall, jointly and
severally, immediately pay directly to such Lender additional amounts
sufficient to compensate such Lender or such controlling Person for such
reduction in rate of return. A statement of such Lender as to any such
additional amount or amounts (including calculations thereof in reasonable
detail) shall, in the absence of manifest error, be conclusive and binding on
each Borrower. In determining such amount, such Lender may use any reasonable
method of averaging and attribution that it shall deem applicable.
SECTION 4.6. Taxes. All payments by the Borrowers of principal of,
and interest on, the Loans and all other amounts payable hereunder (including
fees) shall be made free and clear of and without deduction for any present or
future income, excise, stamp or franchise taxes and other taxes, fees, duties,
withholdings or other charges of any nature whatsoever imposed by any taxing
authority, but excluding franchise taxes and taxes imposed on or measured by
any Lender's net income or receipts (such non-excluded items being called
"Taxes"). In the event that any withholding or deduction from any payment to be
made by the Borrowers hereunder is required in respect of any Taxes pursuant to
any applicable law, rule or regulation, then the Borrowers will, jointly and
severally,
(a) pay directly to the relevant authority the full amount required
to be so withheld or deducted;
(b) promptly forward to the Agent an official receipt or other
documentation satisfactory to the Agent evidencing such payment to such
authority; and
(c) pay to the Agent for the account of the Lenders such additional
amount or amounts as is necessary to ensure that the net amount actually
received by each Lender will equal the full amount such Lender would have
received had no such withholding or deduction been required.
Moreover, if any Taxes are directly asserted against the Agent or any Lender
with respect to any payment received by the Agent or such Lender hereunder, the
Agent or such Lender may pay such Taxes and the Borrowers will, jointly and
severally, promptly pay such additional amounts (including any penalties,
interest or expenses) as is necessary in order that the net amount received by
such person after the payment of such Taxes (including any Taxes on such
additional amount) shall equal the amount such person would have received had
not such Taxes been asserted.
If the Borrowers fail to pay any Taxes when due to the appropriate
taxing authority or fails to remit to the Agent, for the account of the
respective Lenders, the required receipts or other required documentary
evidence, the Borrowers shall, jointly and severally, indemnify the Lenders for
any incremental Taxes, interest or penalties that may become payable by any
Lender as a result of any such failure. For purposes of this Section 4.6, a
distribution hereunder by the Agent or any Lender to or for the account of any
Lender shall be deemed a payment by the Borrowers.
Upon the request of the Borrowers or the Agent, each Lender that is
organized under the laws of a jurisdiction other than the United States shall,
prior to the due date of any payments under the Notes, execute and deliver to
the Borrowers and the Agent, on or about the first scheduled payment date in
each Fiscal Year, one or more (as the Borrowers or the Agent may reasonably
request) United States Internal Revenue Service Forms 4224 or Forms 1001 or
such other forms or documents (or successor forms or documents), appropriately
completed, as may be applicable to establish the extent, if any, to which a
payment to such Lender is exempt from withholding or deduction of Taxes.
SECTION 4.7. Payments, Computations, etc. Unless otherwise expressly
provided, all payments by the Borrowers pursuant to this Agreement, the Notes
or any other Loan Document shall be made by the Borrowers to the Agent for the
pro rata account of the Lenders entitled to receive such payment. All
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<PAGE> 32
such payments required to be made to the Agent shall be made, without setoff,
deduction or counterclaim, not later than 11:00 a.m. (New York time) on the
date due, in same day or immediately available funds, to such account as the
Agent shall specify from time to time by notice to the Borrowers. Funds
received after that time shall be deemed to have been received by the Agent on
the next succeeding Business Day. The Agent shall promptly remit in same day
funds to each Lender its share, if any, of such payments received by the Agent
for the account of such Lender. All interest and fees shall be computed on the
basis of the actual number of days (including the first day but excluding the
last day) occurring during the period for which such interest or fee is payable
over a year comprised of 365 or, if appropriate, 366 days (or, in the case of
interest on (a) a LIBO Rate Loan or (b) a Base Rate Loan calculated at the
Federal Funds Rate, 360 days). Whenever any payment to be made shall otherwise
be due on a day which is not a Business Day, such payment shall (except as
otherwise required by clause (c) of the definition of the term "Interest
Period") be made on the next succeeding Business Day and such extension of time
shall be included in computing interest and fees, if any, in connection with
such payment.
SECTION 4.8. Sharing of Payments. If any Lender shall obtain any
payment or other recovery (whether voluntary, involuntary, by application of
setoff or otherwise) on account of any Loan (other than pursuant to the terms
of Sections 4.3, 4.4, 4.5 and 4.6) in excess of its pro rata share of payments
then or therewith obtained by all Lenders entitled thereto, such Lender shall
purchase from the other Lenders such participations in Borrowings made by them
as shall be necessary to cause such purchasing Lender to share the excess
payment or other recovery ratably with each of them; provided, however, that if
all or any portion of the excess payment or other recovery is thereafter
recovered from such purchasing Lender, the purchase shall be rescinded and each
Lender which has sold a participation to the purchasing Lender shall repay to
the purchasing Lender the purchase price to the ratable extent of such recovery
together with an amount equal to such selling Lender's ratable share (according
to the proportion of
(a) the amount of such selling Lender's required repayment to the
purchasing Lender
to
(b) total amount so recovered from the purchasing Lender)
of any interest or other amount paid or payable by the purchasing Lender in
respect of the total amount so recovered. Each Borrower agrees that any Lender
so purchasing a participation from another Lender pursuant to this Section may,
to the fullest extent permitted by law, exercise all its rights of payment
(including pursuant to Section 4.9) with respect to such participation as fully
as if such Lender were the direct creditor of such Borrower in the amount of
such participation. If under any applicable bankruptcy, insolvency or other
similar law, any Lender receives a secured claim in lieu of a setoff to which
this Section applies, such Lender shall, to the extent practicable, exercise
its rights in respect of such secured claim in a manner consistent with the
rights of the Lenders entitled under this Section to share in the benefits of
any recovery on such secured claim.
SECTION 4.9. Setoff. Each Lender shall, upon the occurrence of any
Default described in clauses (a) through (d) of Section 8.1.9 or, with the
consent of the Required Lenders, upon the occurrence of any other Event of
Default, have the right to appropriate and apply to the payment of the
Obligations owing to it (whether or not then due), and (as security for such
Obligations) each Borrower hereby grants to each Lender a continuing security
interest in, any and all balances, credits, deposits, accounts or moneys of
such Borrower then or thereafter maintained with such Lender; provided,
however, that any such appropriation and application shall be subject to the
provisions of Section 4.8. Each Lender agrees promptly to notify the Borrowers
and the Agent after any such setoff and application made by such Lender;
provided, however, that the failure to give such notice shall not affect the
validity of such setoff and application. The rights of each Lender under this
Section are in addition to other rights and remedies (including other rights of
setoff under applicable law or otherwise) which such Lender may have.
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ARTICLE V
CONDITIONS TO CREDIT EXTENSIONS
SECTION 5.1. Initial Borrowing. The obligations of the Lenders to
fund the initial Borrowing shall be subject to the prior or concurrent
fulfillment of each of the conditions precedent set forth in this Section 5.1
to the satisfaction of the Agent.
SECTION 5.1.1. Partnership and Corporate Documents, etc. The Agent
shall have received
(a) from each Borrower, a copy of
(i) such Borrower's certificate of limited partnership,
certified by the Secretary of State for the state of its
organization;
(ii) a certificate, dated the Closing Date, of an
Authorized Officer of Cencom Properties, in the case of the
CCIPII, and CPI, in the case of the CPLP, as to
(A) such Borrower's Organic Documents, as in
effect on the date of such certificate;
(B) all action then in full force and effect
authorizing the execution, delivery and performance
of this Agreement, the Notes and each other Loan
Document to be executed by such Borrower; and
(C) the incumbency and signatures of those
Authorized Officers authorized to act with respect to
this Agreement, the Notes and each other Loan
Document to be executed by such Borrower (upon which
certificate the Agent and each Lender may
conclusively rely until the Agent shall have received
a further certificate canceling or amending such
prior certificate, which further certificate shall be
reasonably satisfactory to the Agent);
(b) from each other Obligor, a certificate, dated the Closing
Date, of its Secretary or Assistant Secretary as to
(i) resolutions of its Board of Directors then in
full force and effect authorizing the execution, delivery and
performance of each Loan Document to be executed by it;
(ii) the incumbency and signatures of those of its
officers authorized to act with respect to this Agreement, the
Notes and each other Loan Document executed by it (upon which
certificate the Agent and each Lender may conclusively rely
until the Agent shall have received a further certificate of
the Secretary of such Obligor canceling or amending such prior
certificate, which further certificate shall be reasonably
satisfactory to the Agent); and
(iii) its Organic Documents, as in effect on the
date of such certificate; and
(c) such other documents (certified if requested) as the
Agent or the Required Lenders may reasonably request with respect to
any matter relevant to this Agreement or the transactions contemplated
hereby.
SECTION 5.1.2. Delivery of Notes. The Agent shall have received, for
the account of each Lender, such Lender s Notes duly executed and delivered by
each Borrower.
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<PAGE> 34
SECTION 5.1.3. [INTENTIONALLY OMITTED]
SECTION 5.1.4. Payment of Outstanding Indebtedness, etc. All
Indebtedness identified in Item 7.2.2(b) ("Indebtedness to be Paid") of the
Disclosure Schedule, together with all interest, all prepayment premiums and
other amounts due and payable with respect thereto, shall have been paid in
full; and the Agent shall have received executed copies of proper Uniform
Commercial Code Form UCC-3 termination statements necessary to release all
Liens and other rights of any Person (i) in any collateral described in the
Borrowers Security Agreement previously granted by any Person, and (ii)
securing any of the Indebtedness identified in Item 7.2.2(b) ("Indebtedness to
be Paid") of the Disclosure Schedule, together with such termination document
from such other lenders and such other Uniform Commercial Code Form UCC-3
termination statements or similar documents as the Agent may reasonably request
from the Borrowers.
SECTION 5.1.5. Holdings Pledge Agreement. The Agent shall have
received executed counterparts of the Holdings Pledge Agreement, duly executed
by CC II and CC III, dated as of the Closing Date, together with the
certificates evidencing all of the issued and outstanding shares of CPI and
Cencom Properties, all of which shares shall be pledged pursuant to the
Holdings Pledge Agreement, which certificates shall in each case be accompanied
by undated stock powers duly executed in blank, or, if any securities pledged
pursuant to the Holdings Pledge Agreement are uncertificated securities,
confirmation and evidence satisfactory to the Agent that the security interest
in such uncertificated securities has been transferred to and perfected by it
for the benefit of the Lenders in accordance with Section 8-313 and Section
8-321 of the Uniform Commercial Code, as in effect in the State of New York.
SECTION 5.1.6. Security Agreements. The Agent shall have received
executed counterparts of the Borrowers Security Agreement, duly executed and
delivered by the Borrowers, the Partnership (CCIPII) Security Agreement, duly
executed and delivered by the parties thereto and the Partnership (CPLP)
Security Agreement, duly executed and delivered by the parties thereto, each
dated as of the Closing Date, together with
(a) acknowledgment copies of properly filed Uniform Commercial Code
financing statements (Form UCC-1), dated a date reasonably near to
the Closing Date (or such other evidence of filing as may be
acceptable to the Agent), or, if acceptable to the Agent, Uniform
Commercial Code financing statements suitable for filing, naming each
grantor under the Borrowers Security Agreement, the Partnership
(CCIPII) Security Agreement and the Partnership (CPLP) Security
Agreement, as the debtors and the Agent as the secured party, or
other similar instruments or documents, filed or, if acceptable to
the Agent, suitable for filing, under the Uniform Commercial Code of
all jurisdictions as may be necessary or, in the opinion of the Agent,
desirable to perfect the security interest of the Agent pursuant to
the Borrowers Security Agreement, the Partnership (CCIPII) Security
Agreement and the Partnership (CPLP) Security Agreement;
(b) executed copies of proper Uniform Commercial Code Form
UCC-3 termination statements and other suitable instruments or
documents, if any, necessary to release and/or, in the Agent s
discretion, assign all Liens and other rights of any Person (other
than Liens permitted under Section 7.2.3)
(i) in any collateral described in the Borrowers
Security Agreement, the Partnership (CCIPII) Security
Agreement and the Partnership (CPLP) Security Agreement
previously granted by any Person, and
(ii) securing any of the Indebtedness identified in
Item 7.2.2(b) (Indebtedness to be Paid ) of the Disclosure
Schedule,
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together with such other Uniform Commercial Code Form UCC-3
termination statements or other suitable instruments or documents as
the Agent may reasonably request from such Obligors; and
(c) copies of Uniform Commercial Code Requests for
Information or Copies (Form UCC-11), or a similar search report
certified by a party acceptable to the Agent, dated a date reasonably
near to the Closing Date, listing all effective financing statements
which name each Obligor that is a grantor under the Borrowers Security
Agreement, the Partnership (CCIPII) Security Agreement or the
Partnership (CPLP) Security Agreement (under their respective present
name and any previous names), as the debtor and which are filed in
the jurisdictions in which filings were made pursuant to clause (a)
above, together with copies of such financing statements (none of
which (other than those described in clause (a), if such Form UCC-11
or search report, as the case may be, is current enough to list such
financing statements described in clause (a)) shall cover any
collateral described in the Borrowers Security Agreement, the
Partnership (CCIPII) Security Agreement or the Partnership (CPLP)
Security Agreement, except for such financing statements as to which
the Liens thereunder are released by the Uniform Commercial Code Form
UCC-3 statements delivered pursuant to the preceding clause (b) or
permitted under Section 7.2.3), together with recent tax and judgment
searches with respect to such Obligors.
SECTION 5.1.7. Subordination Agreement. The Agent shall have
received counterparts of the Subordination Agreement dated as of the Closing
Date and duly executed and delivered by CPI or Cencom Properties, as the case
may be, and the applicable Borrower.
SECTION 5.1.8. Closing Date Certificate. The Agent shall have
received the Closing Date Certificate, dated the Closing Date and duly executed
by an Authorized Officer of each Borrower, in which such Borrower shall agree
and acknowledge that the statements made therein shall be deemed to be true and
correct representations and warranties made as of such date under this
Agreement, and, at the time such certificate is delivered, such statements
shall in fact be true and correct. All documents and agreements required to be
appended to the Closing Date Certificate shall be in form and substance
satisfactory to the Agent.
SECTION 5.1.9. Opinion of Counsel. The Agent shall have received an
opinion, dated the Closing Date and addressed to the Agent and each Lender,
from Paul, Hastings, Janofsky & Walker LLP, counsel to the Obligors,
substantially in the form of Exhibit K hereto.
SECTION 5.1.10. Insurance. The Agent shall have received
satisfactory evidence of insurance maintained and in effect on the Effective
Date, certified by an Authorized Officer of the each Borrower, together with an
insurance broker's certificate confirming each Borrower maintains customary
coverages as well as coverages which satisfy the requirements of the Loan
Documents.
SECTION 5.1.11. [INTENTIONALLY OMITTED]
SECTION 5.1.12. Solvency Certificate. The Agent shall have received
the Solvency Certificate, executed and delivered by the chief financial officer
of each Borrower and dated the Closing Date.
SECTION 5.1.13. Pro Forma Compliance Certificate. The Agent shall
have received, with counterparts for each Lender, an initial Compliance
Certificate, dated the Closing Date and computed on a pro forma basis as if the
initial Borrowing had been made and the Distribution had been consummated,
which shall also include, among other things, a calculation of the Leverage
Ratio, duly executed (and with all schedules thereto duly completed) and
delivered by the chief financial or other senior financial or accounting
Authorized Officer with a title of Vice President or higher of the general
partner of each Borrower.
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SECTION 5.1.14. Closing Fees, Expenses, etc. The Agent and the
Lenders shall have received all fees due and payable on or before the Closing
Date and all reasonable costs and expenses (including legal fees and expenses
to the Agent) due and payable pursuant to Sections 3.3 and 10.3, to the extent
then invoiced.
SECTION 5.2. All Borrowings. The obligation of each Lender to make
any Borrowing (including the initial Borrowing) shall be subject to the
satisfaction of each of the conditions precedent set forth in this Section 5.2.
SECTION 5.2.1. Compliance with Warranties, No Default, etc. Both
before and after giving effect to any Borrowing (but, if any Default of the
nature referred to in Section 8.1.5 shall have occurred with respect to any
other Indebtedness, without giving effect to the application, directly or
indirectly, of the proceeds thereof) the following statements shall be true and
correct:
(a) the representations and warranties set forth in Article
VI (excluding, however, those contained in Section 6.7) and in each
other Loan Document shall be true and correct in all material respects
with the same effect as if then made (unless stated to relate solely
to an early date, in which case such representations and warranties
shall be true and correct as of such earlier date).
(b) except as disclosed by the Borrowers to the Agent and the
Lenders pursuant to Section 6.7,
(i) no labor controversy, litigation, arbitration or
governmental investigation or proceeding shall be pending or,
to the knowledge of either Borrower, threatened against such
Borrower which might have a Material Adverse Effect or which
purports to affect the legality, validity or enforceability of
this Agreement, the Notes, any material Franchise or any other
Loan Document; and
(ii) no development shall have occurred in any labor
controversy, litigation, arbitration or governmental
investigation or proceeding disclosed pursuant to Section 6.7
which might have a Material Adverse Effect; and
(c) no Default shall have then occurred and be continuing,
and neither Borrower nor any other Obligor is in violation in any
material respect of any law or governmental regulation or court order
or decree.
SECTION 5.2.2. Borrowing Request. The Agent shall have received a
Borrowing Request. The delivery of a Borrowing Request and the acceptance by
the applicable Borrower of the proceeds of such Borrowing shall constitute a
representation and warranty by such Borrower that on the date of such Borrowing
(both immediately before and after giving effect to such Borrowing and the
application of the proceeds thereof) the statements made in Section 5.2.1 are
true and correct.
SECTION 5.2.3. Satisfactory Legal Form. All documents executed or
submitted pursuant hereto by or on behalf of either Borrower or any other
Obligor shall be satisfactory in form and substance to the Agent and their
counsel; the Agent and its counsel shall have received all information,
approvals, opinions, documents or instruments as the Agent or its counsel may
reasonably request.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders and the Agent to enter into this
Agreement and to make Borrowings hereunder, each Borrower represents and
warrants unto the Agent and each Lender as set forth in this Article VI.
SECTION 6.1. Organization, etc. Each Borrower is a limited
partnership duly organized, validly existing and in good standing under the
laws of the State of Delaware having, in the case of CCIPII, Cencom Properties
as its sole general partner, and in the case of CPLP, CPI as its sole general
partner. Each Borrower has the partnership power and authority to own its
properties and to carry on its business as now being and hereafter proposed to
be conducted. Each Borrower is duly qualified, in good standing and authorized
to do business in each jurisdiction in which the character of its properties or
the nature of its businesses requires such qualification or authorization.
SECTION 6.2. Due Authorization, Non-Contravention, Validity, etc.
(a) Each Borrower has the partnership power and has taken all necessary
partnership action (and their respective general partners have taken all
necessary corporate action) to authorize it to borrow hereunder, to execute,
deliver and perform this Agreement, the Notes and each of the other Loan
Documents to which it is a party in accordance with their respective terms, to
grant the Liens provided for in the Loan Documents, to make the Distribution,
and to consummate the transactions contemplated hereby and thereby. This
Agreement has been duly executed and delivered by each Borrower and is, and
each of the other Loan Documents to which such Borrower is a party is, a legal,
valid and binding obligation of such Borrower enforceable in accordance with
its terms, and each Loan Document executed pursuant hereto by each other
Obligor will, on the due execution and delivery thereof by such Obligor, be the
legal, valid and binding obligation of such Obligor enforceable in accordance
with its terms, subject, as to enforcement of remedies, to the following
qualifications:
(i) an order of specific performance and an injunction are
discretionary remedies and, in particular, may not be available where
damages are considered an adequate remedy at law, and
(ii) enforcement may be limited by bankruptcy, insolvency,
liquidation, reorganization, reconstruction and other similar laws
affecting enforcement of creditors' rights generally (insofar as any
such law relates to the bankruptcy, insolvency or similar event of
such Borrower).
(b) The execution, delivery and performance, in accordance with their
respective terms, by each Borrower of this Agreement, the Notes and the other
Loan Documents to which it is party, the granting of the Liens pursuant to the
Loan Documents, the making of the Distribution, and the consummation of the
transactions contemplated hereby and thereby, do not and will not (i) require
any consent or approval not already obtained, (ii) violate any material
Applicable Law respecting such Borrower, (iii) conflict with, result in a
breach of, or constitute a default (A) under any Organic Document, as amended,
of such Borrower, (B) under any Organic Document, as amended, of any other
Obligor, (C) under the Licenses or the Management Agreement, or (D) under any
material indenture, agreement, order, decree, judgment or other instrument to
which such Borrower or any other Obligor is a party or by which it or any of
its properties may be bound, including the Pole Agreements, or (iv) result in
or require the creation or imposition of any Lien upon or with respect to any
property now owned or hereafter acquired by such Borrower except any Liens
permitted under Section 7.2.3.
SECTION 6.3. Government Approval, Regulation, etc. Neither Borrower
is required to obtain any consent, approval, authorization, permit or license
which has not already been obtained from, or effect any filing or registration
which has not already been effected with, any federal, state or local
regulatory authority in connection with the execution, delivery and performance
of this Agreement or any
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other Loan Document, the granting of the Liens pursuant to the Loan Documents
and the making of the Distribution, and no authorization or approval or other
action by, and no notice to or filing with, any Official Body or other Person
is required for the due execution, delivery or performance by such Borrower or
any other Obligor of this Agreement, the Notes or any other Loan Document to
which it is a party. Neither Borrower is required to register under the
provisions of the Investment Company Act of 1940, as amended, and neither the
entering into or performance by such Borrower of this Agreement or any other
Loan Document to which it is a party nor the issuance of the Notes violates any
provision of such Act or requires any consent, approval or authorization of, or
registration with, the Securities and Exchange Commission or any other
governmental or public body or authority pursuant to any provisions of such
act. Neither Borrower is 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.
SECTION 6.4. Security, etc. The security interests granted in the
Collateral (as such term is defined in the Holdings Pledge Agreement and each
Security Agreement) are valid and are or, upon the filing of Uniform Commercial
Code financing statements with respect to the Security Agreements, will be
fully perfected security interests in the Collateral securing, in accordance
with the respective terms of the Security Agreements and the Holdings Pledge
Agreement, the Obligations, and such security interests are subject to no prior
Liens, and the Security Agreements and the Holdings Pledge Agreement are
enforceable as security for the Obligations in accordance with their respective
terms with respect to the Collateral against each Borrower and each other
Obligor.
SECTION 6.5. Financial Information. The audited balance sheets of
each Borrower as at December 31, 1996 and December 31, 1995, and the related
statements of earnings and cash flow of such Borrower, copies of which have
been furnished to the Agent and each Lender, have been prepared in accordance
with GAAP consistently applied, and present fairly the consolidated financial
condition of the corporations covered thereby as at the dates thereof and the
results of their operations for the periods then ended. When furnished to the
Agent and the Lenders in accordance with Section 7.1.1 hereof, all copies of
the balance sheets and statements of income for each Borrower shall be complete
and correct in all material respects and shall present fairly, in accordance
with GAAP consistently applied, the financial position of such Borrower on and
as at the date thereof and the results of operations for the periods then
ended. Each Borrower shall have no material liabilities, contingent or
otherwise, other than as disclosed in the financial statements referred to in
the preceding sentences for the most recently ended Fiscal Year or quarter, as
appropriate, and there shall be no material unrealized losses of such Borrower
and no material anticipated losses of such Borrower other than those which have
been previously disclosed in writing to the Agent and the Lenders and
identified to the Agent and the Lenders as such.
SECTION 6.6. No Material Adverse Change. Since December 31, 1996,
there has been no material adverse change in the business, assets, financial
condition, properties, operations or prospects of either Borrower.
SECTION 6.7. Litigation, Labor Controversies, etc. Except as
disclosed in Item 6.7 ("Litigation") of the Disclosure Schedule, there is no
labor controversy, action, suit, proceeding or investigation pending against,
or, to the best of each Borrower s knowledge, threatened against or in any
other manner relating adversely to, such Borrower or any of its properties,
including, the Franchises and the Licenses, in any court or before any
arbitrator of any kind or before or by any governmental body that (i) calls
into question the validity of this Agreement or any other Loan Document, or
(ii) could, if determined adversely to such Borrower, have a Material Adverse
Effect.
SECTION 6.8. Compliance With Laws. Each Borrower is in compliance
with all Applicable Laws, non-compliance with which could have a Material
Adverse Effect.
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SECTION 6.9. Subsidiaries. Neither Borrower has any Subsidiaries,
except that CCIPII has an 84% limited partnership interest in CPLP.
SECTION 6.10. Ownership of Properties. Each Borrower has good, legal
and marketable title to, or a valid leasehold interest in, all of its
properties and assets. Neither Borrower has any patents, trademarks, trade
names, service marks and copyrights. None of such properties or assets is
subject to any Liens, charges or claims, except as permitted pursuant to
Section 7.2.3. Except for financing statements evidencing any Liens permitted
under Section 7.2.3, no financing statement under the U.C.C. and no other
filing which names a Borrower as debtor or which covers or purports to cover
any of the assets of such Borrower is on file in any state or other
jurisdiction, and such Borrower has not signed any such financing statement or
filing or any security agreement authorizing any secured party thereunder to
file any such financing statement or filing. Neither Borrower owns any parcel
of real estate with a fair market value in excess of $100,000, except as set
forth in Item 6.10 ("Ownership of Properties") of the Disclosure Schedule.
SECTION 6.11. Taxes. All federal, state and other tax returns of
each Borrower required by law to be filed have been duly filed and all federal,
state and other taxes, including, withholding taxes, assessments and other
governmental charges or levies required to be paid by such Borrower or imposed
upon such Borrower or any of its properties, income, profits or assets, which
are due and payable, have been paid, except any such (x) the payment of which
such Borrower is diligently contesting in good faith by appropriate
proceedings, (y) for which adequate reserves have been provided on the books of
such Borrower, and (z) as to which no Lien other than as permitted pursuant to
Section 7.2.3 has attached and no foreclosure, distraint, sale or similar
proceedings have been commenced. The charges, accruals and reserves on the
books of such Borrower in respect of taxes are, in the reasonable judgment of
such Borrower, adequate.
SECTION 6.12. Pension and Welfare Plans. Each Borrower and each of
its Plans are in compliance with ERISA and the Code and such Borrower has not
incurred any accumulated funding deficiency with respect to any such Plan
within the meaning of ERISA or the Code. Each Borrower and each other Person
which is affiliated with such Borrower within the meaning of Section 414 of the
Code have complied with all requirements of ERISA Sections 601 through 608 and
Code Section 4980B. Neither Borrower has made any promises of retirement or
other benefits to employees, except as set forth in any Plan. Neither
Borrower has incurred any material liability to the PBGC in connection with any
such Plan. The assets of each such Plan which is subject to Title IV of ERISA
are sufficient to provide the benefits under such Plan payment of which the
PBGC would guarantee if such Plan were terminated, and such assets are also
sufficient to provide all other "benefit liabilities" (as defined in ERISA
Section 4001(a)(1b)) due under the Plan upon termination. No Reportable Event
has occurred and is continuing with respect to any such Plan. No such Plan or
trust created thereunder, or party in interest (as defined in Section 3(14) of
ERISA), or any fiduciary (as defined in Section 3(21) of ERISA), has engaged in
a "prohibited transaction" (as such term is defined in Section 406 of ERISA or
Section 4975 of the Code) which would subject such Plan or any other Plan of
either Borrower, any trust created thereunder, or any such party in interest or
fiduciary, or any party dealing with any such Plan or any such trust to the
penalty or tax on "prohibited transactions" imposed by Section 502 of ERISA or
Section 4975 of the Code. Neither Borrower is a participant in, nor is such
Borrower obligated to make any payment to, any Multiemployer Plan. Except as
disclosed in Item 6.12 ("Employee Benefit Plans") of the Disclosure Schedule,
neither such Borrower nor any member of the Controlled Group has any contingent
liability with respect to any post-retirement benefit under a Welfare Plan,
other than liability for continuation coverage described in Part 6 of Title I
of ERISA.
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SECTION 6.13. Environmental Warranties. Except as set forth in Item
6.13 ("Environmental Matters") of the Disclosure Schedule:
(a) all facilities and property (including underlying
groundwater) owned or leased by each Borrower have been, and
continue to be, owned or leased by such Borrower in material
compliance with all Environmental Laws;
(b) there have been no past, and there are no pending or
threatened
(i) claims, complaints, notices or requests for
information received by such Borrower with respect to any
alleged violation of any Environmental Law, or
(ii) complaints, notices or inquiries to such
Borrower regarding potential liability under any Environmental
Law;
(c) there have been no Releases of Hazardous Materials at, on
or under any property now or previously owned or leased by such
Borrower that, singly or in the aggregate, have, or may reasonably be
expected to have, a Material Adverse Effect;
(d) such Borrower has been issued and is in material
compliance with all permits, certificates, approvals, licenses and
other authorizations relating to environmental matters and necessary
or desirable for their businesses;
(e) no property now or previously owned or leased by such
Borrower is listed or proposed for listing (with respect to owned
property only) on the National Priorities List pursuant to CERCLA, on
the CERCLIS or on any similar state list of sites requiring
investigation or clean-up;
(f) to the best of such Borrower's knowledge, there are no
underground storage tanks, active or abandoned, including petroleum
storage tanks, on or under any property now or previously owned or
leased by such Borrower that, singly or in the aggregate, have, or may
reasonably be expected to have, a Material Adverse Effect;
(g) to the best of such Borrower's knowledge, such Borrower
has not directly transported or directly arranged for the
transportation of any Hazardous Material to any location which is
listed or proposed for listing on the National Priorities List
pursuant to CERCLA, on the CERCLIS or on any similar state list or
which is the subject of federal, state or local enforcement actions or
other investigations which may lead to material claims against such
Borrower thereof for any remedial work, damage to natural resources or
personal injury, including claims under CERCLA;
(h) to the best of such Borrower's knowledge, there are no
polychlorinated biphenyls or friable asbestos present at any property
now or previously owned or leased by such Borrower that, singly or in
the aggregate, have, or may reasonably be expected to have, a Material
Adverse Effect; and
(i) to the best of such Borrower's knowledge, no conditions
exist at, on or under any property now or previously owned or leased
by such Borrower which, with the passage of time, or the giving of
notice or both, would give rise to liability under any Environmental
Law.
SECTION 6.14. Regulations G, U and X. Each Borrower is not engaged
principally or as one of its important activities in the business of extending
credit for the purpose of purchasing or carrying any margin stock within the
meaning of Regulations G, T, U, and X of the F.R.S. Board.
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SECTION 6.15. Accuracy of Information. All information, reports,
prospectuses and other papers and data relating to the Borrowers, Charter
Communications, Cencom Properties or CPI and furnished by or on behalf of
either Borrower, Charter Communications, Cencom Properties or CPI to the Agent
and the Lenders, or any of them, were, at the time furnished complete and
correct in all material respects to the extent necessary to give the Agent and
the Lenders true and accurate knowledge of the subject matter. Notwithstanding
the foregoing, with respect to projections of each Borrower's future
performance, such representations and warranties are made in good faith and to
the best of such Borrower's knowledge. No fact or situation is currently known
to either Borrower which has had or which could have a Material Adverse Effect.
SECTION 6.16. Licenses and Franchises. The Franchises and Licenses
have been duly authorized by the grantors thereof and are in full force and
effect. Each Borrower is in compliance in all material respects with all of
the provisions thereof, and no material default has occurred and is continuing
thereunder. True, complete and correct copies of all Franchise Agreements
(other than the New London Franchise Agreement) and Licenses have been
delivered to the Agent and each Lender as of the Closing Date. Each Borrower
has secured all Necessary Authorizations and all such Necessary Authorizations
are in full force and effect. Neither any License nor any Necessary
Authorization is the subject of any pending or, to the best of such Borrower s
knowledge, threatened attack or revocation. Except as set forth in Item 6.16
("Licenses and Franchises") of the Disclosure Schedule, there is no competitor
of any Borrower which is currently overbuilding any territory within the
System. No other Franchise, License or Franchise Agreement with respect to the
territory covered by any Franchise or License has been granted, nor is any
application for such a Franchise, License or franchise agreement pending. Any
SMATV System owned and operated by either Borrower is being operated pursuant
to a valid and binding agreement for the operation of such SMATV System, and in
accordance with Applicable Law. Each Borrower possesses or has the right to use
all Franchises, and all copyrights, licenses, trademarks, service marks, trade
names or other rights, including licenses and permits granted by the FCC,
agreements with public utilities and microwave transmission companies, pole or
conduit attachment, use, access or rental agreements and utility easements,
that are necessary for the conduct of the Systems of such Borrower.
SECTION 6.17. Franchises. Item 6.17 ("Franchises") of the Disclosure
Schedule hereto contains a true and complete list of all Franchises of each
Borrower, all of which (to the knowledge of such Borrower) were lawfully issued
pursuant to the rules and regulations of Official Bodies listed on such Item
6.17. The Franchises authorize such Borrower to operate the Systems until the
expiration dates listed on such Item 6.17, and no other further approval,
filing or other action of any Official Body is or will be necessary or
advisable in order to permit such Borrower's operation of the Systems in
accordance with the terms thereof, except as set forth in such Item 6.17 of the
Disclosure Schedule.
SECTION 6.18. Agreements with Affiliates; Management Agreement.
Except as set forth in the Management Agreement, a true and complete copy of
which has been provided to the Agent, neither Borrower has (a) any agreements
or binding arrangements of any kind with any Affiliates or (b) any management
or consulting agreements of any kind with any third party (including
Affiliates).
SECTION 6.19. Solvency. Both before and immediately after giving
effect to any Borrowings requested hereunder and the distributions permitted by
the proviso to clause (a) of Section 7.2.6:
(a) the fair value of the assets of each Borrower will exceed
the total amount of liabilities (including contingent, subordinated,
unmatured and unliquidated liabilities) of such Borrower, on a
going-concern basis;
(b) the present fair salable value (as defined below) of the
assets of each Borrower will exceed the probable total liabilities
(including contingent, subordinated, unmatured and unliquidated
liabilities) of such Borrower as they become absolute and matured;
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(c) each Borrower will be able to pay its debts, including
contingent liabilities, as they mature and become due;
(d) each Borrower is not, and will not be, engaged in a
business for which its capital is, or would be, unreasonably small for
its business; and
(e) each Borrower has not incurred (by way of assumption or
otherwise) any obligations or liabilities (contingent or otherwise)
under this Agreement or any other Loan Document, nor has such Borrower
made any conveyance pursuant to or in connection therewith, with
actual intent to hinder, delay or defraud either present or future
creditors of such Borrower.
For purposes of this Section, the "fair salable value" of such Borrower's
assets means the amount which may be realized within a reasonable time, either
through collection or sale of such assets at the regular market value, based
upon the amount which could be obtained for such assets within such period by a
capable and diligent seller from an interested buyer who is willing (but is
under no compulsion) to purchase under ordinary selling conditions.
SECTION 6.20. The Systems. (a) Each Borrower and the Systems owned
or to be owned by it are in substantial compliance in all material respects
with all applicable federal, state and local laws, rules and regulations,
including the Communications Act of 1934, the Cable Communications Policy Act
of 1984, the Cable Television Consumer Protection and Competition Act of 1992,
the Copyright Revision Act of 1976, and the rules and regulations of the FCC
and the United States Copyright Office, including rules and laws governing
system registration, use of aeronautical frequencies and signal carriage, equal
employment opportunity, cumulative leakage index testing and reporting, signal
leakage, and subscriber privacy. Without limiting the generality of the
foregoing:
(i) the communities included in the areas covered by the
Franchises covering Systems have been registered with the FCC;
(ii) all of the annual performance tests on such Systems
required under the rules and regulations of the FCC for at least the
two year period prior to the date hereof have been performed;
(iii) where required, appropriate authorizations from the FCC
have been obtained for the use of all aeronautical frequencies in use
in such Systems and such Systems are presently being operated in
compliance with such authorizations (and all required certificates,
permits and clearances from governmental agencies, including the
Federal Aviation Administration, with respect to all towers, earth
stations, business radios and frequencies utilized and carried by such
Systems have been obtained); and
(iv) all notices to subscribers of such Systems and such
Systems required by the rules and regulations of the FCC have been
provided.
(b) All notices, statements of account, supplements and other
documents required under Section 111 of the Copyright Act of 1976 and under the
rules of the Copyright Office with respect to the carriage of off- air signals
by the Systems owned by such Borrower have been duly filed, and the proper
amount of copyright fees have been paid on a timely basis, and each such System
qualifies for the compulsory license under Section 111 of the Copyright Act of
1976.
(c) The carriage of all off-air signals by the Systems owned by such
Borrower is permitted by valid transmission consent agreements or by must-carry
elections by broadcasters.
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(d) Each Borrower has complied in all material respects with its
obligations with regard to protecting the privacy rights of any past or present
customers of the Systems owned or to be owned by such Borrower.
SECTION 6.21. Rate Regulation. Each Borrower has reviewed and
evaluated in detail the FCC rules currently in effect (the Rate Regulation
Rules") implementing the rate regulation provisions of the Cable Television
Consumer Protection and Competition Act of 1992 (the "Rate Regulation Act").
Based upon such review, completion by such Borrower of all applicable
worksheets contemplated by the Rate Regulation Rules for each System owned or
to be owned by such Borrower:
(i) such Systems are in material compliance with the Rate
Regulation Act and the Rate Regulation Rules applicable to them; and
(ii) no reduction of rates or refunds to subscribers is
required thereunder as of the date hereof.
SECTION 6.22. Absence of Default. The Borrowers and the other
Obligors are in compliance in all material respects with all of the provisions
of their respective Organic Documents, and no event has occurred or failed to
occur (including any matter which could create an Event of Default hereunder by
cross-default) which has not been remedied or waived, the occurrence or
non-occurrence of which constitutes, or with the passage of time or giving of
notice or both would constitute, (i) an Event of Default, (ii) a default by
either Borrower under any indenture, agreement or other instrument, including
the Franchise Agreements and the Pole Agreements, or any judgment, decree or
order to which such Borrower is a party or by which such Borrower or any of its
properties may be bound or affected, or under any of the Licenses, which has
had or could have a Material Adverse Effect or (iii) a default by either
Borrower or other Obligor under any Management Agreement.
SECTION 6.23. Business. The Borrowers are engaged solely in the
business of constructing, operating and maintaining the Systems and engaging in
other activities relating to the cable television industry.
SECTION 6.24. Payment of Wages. Each Borrower is in compliance with
the Fair Labor Standards Act, as amended, and such Borrower has paid all
minimum and overtime wages required by law to be paid to its employees.
SECTION 6.25. Delivery of Certain Documents. The Borrowers have
previously delivered to the Agent true, complete and correct copies of
(a) all Licenses of each Borrower in effect as of the Closing
Date;
(b) all Franchise Agreements of each Borrower in effect as of
the Closing Date (other than the Franchise Agreement between CCIPII
and the City of New London, Missouri (the "New London Franchise
Agreement"); and
(c) a fully completed Subscriber Report as of March 31, 1997
of each Borrower.
No Official Body has taken any action to revoke or suspend any License,
Franchise Agreement or Pole Agreement.
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ARTICLE VII
COVENANTS
SECTION 7.1. Affirmative Covenants. Each Borrower agrees with the
Agent and each Lender that, until all Commitments have terminated and all
Obligations have been paid and performed in full, such Borrower will perform
the obligations set forth in this Section 7.1.
SECTION 7.1.1. Financial Information, Reports, Notices, etc. Each
Borrower will furnish, or will cause to be furnished, to each Lender and the
Agent copies of the following financial statements, reports, notices and
information:
(a) as soon as available and in any event within 45 days
after the end of each Fiscal Quarter of each Fiscal Year of such
Borrower, the balance sheet of such Borrower as of the end of such
Fiscal Quarter (including comparisons to the then current budget and
to the comparable period for the prior year) and the statement of
earnings and cash flow of such Borrower for such Fiscal Quarter and
for the period commencing at the end of the previous Fiscal Year and
ending with the end of such Fiscal Quarter (including comparisons to
the then current budget and to the comparable period for the prior
year);
(b) as soon as available and in any event within 120 days
after the end of each Fiscal Year of such Borrower, (i) a copy of the
annual audit report for such Fiscal Year for such Borrower, including
therein the balance sheet of such Borrower as of the end of such
Fiscal Year and the statement of earnings and cash flow of such
Borrower for such Fiscal Year, in each case certified (without any
Impermissible Qualification) in a manner acceptable to the Agent and
the Required Lenders by Arthur Andersen & Co. LLP or other "big six"
independent certified public accountants, together with a statement of
such accountants (A) to the effect that their audit examination has
included a review of the terms of this Agreement and the Notes as they
relate to accounting matters, (B) as to whether, in connection with
their audit examination, any Default has come to their attention and
if such a Default has come to their attention, specifying the nature
and period of existence thereof, and (C) that such accountants have
authorized such Borrower to deliver such financial statements and
opinion thereon to the Agent and the Lenders pursuant to this
Agreement; and (ii) the unaudited balance sheet of such Borrower on a
state-by-state basis as at the end of such Fiscal Year and the related
statement of income for each such state grouping, which shall be
certified by the chief financial or other senior financial or
accounting Authorized Officer with a title of Vice President or higher
of Cencom Properties, in the case of CCIPII and CPI, in the case of
CPLP, to be, in his or her opinion, complete and correct in all
material respects and to present fairly, in accordance with GAAP
consistently applied, the financial position of such state grouping as
at the end of such period and the results of operations for such
period;
(c) concurrent with the delivery of any financial statements
pursuant to clause (a) or (b) above, a Compliance Certificate,
executed by the chief financial or other senior financial accounting
Authorized Officer with a title of Vice President or higher of such
Borrower, showing (in reasonable detail and with appropriate
calculations and computations in all respects satisfactory to the
Agent) compliance with the financial covenants set forth in Sections
7.2.4, 7.2.7 and 7.2.11;
(d) as soon as possible and in any event within ten days
after the occurrence of each Default, a statement of the chief
financial or or other senior financial accounting Authorized Officer
with a title of Vice President or higher of the general partner of
such Borrower setting forth details of such Default and the action
which such Borrower has taken and proposes to take with respect
thereto;
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(e) as soon as possible and in any event within ten days
after (i) the occurrence of any adverse development with respect to
any litigation, action, proceeding, or labor controversy described in
Section 6.7 or (ii) the commencement of any labor controversy,
litigation, action, proceeding of the type described in Section 6.7,
notice thereof and copies of all documentation relating thereto;
(f) promptly after the filing thereof, copies of all reports
and registration statements which such Borrower files with the
Securities and Exchange Commission or any national securities
exchange;
(g) immediately upon becoming aware of the institution of any
steps by such Borrower or any other Person to terminate any Pension
Plan, or the failure to make a required contribution to any Pension
Plan if such failure is sufficient to give rise to a Lien under
section 302(f) of ERISA, or the taking of any action with respect to a
Pension Plan which could result in the requirement that such Borrower
furnish a bond or other security to the PBGC or such Pension Plan, or
the occurrence of any event with respect to any Pension Plan which
could result in the incurrence by such Borrower of any material
liability, fine or penalty, or any material increase in the contingent
liability of such Borrower with respect to any post-retirement Welfare
Plan benefit, notice thereof and copies of all documentation relating
thereto;
(h) notice to the Agent promptly following the issuance or
adoption after the date of this Agreement of any federal, state or
local statute, regulation or ordinance or judicial or administrative
order limiting or controlling the operations of such Borrower which
might have a Material Adverse Effect except for any statute,
regulation or order affecting the cable and communications industry in
general, together with a copy of such statute, regulation, ordinance
or judicial or administrative order;
(i) promptly, and in any event within 60 days after the
beginning of each Fiscal Year, quarterly cash flow, income statement
and capital expenditure budgets, in addition to a budget for
anticipated subscriber growth, in each case for the current Fiscal
Year, each in reasonable detail satisfactory to the Agent and
certified by an Authorized Officer of such Borrower;
(j) as soon as practicable, and in any event within 45 days
after the end of each calendar month, a Subscriber Report;
(k) promptly upon the occurrence thereof, notice of (i) any
lapse or other termination of any License, Franchise or other
authorization issued to such Borrower by any Official Body, (ii) any
refusal by any Official Body to renew or extend any such License,
Franchise or other authorization (unless such Borrower is still in the
process of negotiating the terms of an extension of such License,
Franchise or other authorization, and has a good faith expectation
that such License, Franchise or authorization will be renewed or
extended), or (iii) any dispute between such Borrower and any Official
Body which may have a Material Adverse Effect;
(l) promptly upon their becoming available to such Borrower,
a copy of (i) any periodic or special report filed by such Borrower
with the FCC or any governmental authority succeeding to any of its
functions or with any state or local authority regulating Systems if
(A) such report indicates any material change in the business,
operations or financial condition of such Borrower, or (B) a copy
thereof is requested by a Lender and (ii) any material notice or other
material communication from the FCC or any governmental authority
succeeding to any of its functions or from any state or local
regulatory authority which specifically relate to the operation of the
Systems, including all amendments or renewals of Necessary
Authorizations;
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(m) promptly upon receipt thereof, copies of all reports, if
any, submitted to such Borrower in connection with an audit of such
Borrower by such Borrower s independent public accountants, including
any management report prepared in connection with the annual audit
referred to in clause (b) above;
(n) at least five Business Days prior to the consummation of
any asset sale permitted under clause (b) of Section 7.2.11, a
certificate from the chief financial or other senior financial or
accounting Authorized Officer with a title of Vice President or higher
of the general partner of the applicable Borrower setting forth in
reasonable detail the assets to be sold and the Annualized Operating
Cash Flow of the remaining assets of the Borrowers; and
(o) such other information respecting the condition or
operations, financial or otherwise, of such Borrower as any Lender
through the Agent may from time to time reasonably request.
SECTION 7.1.2. Maintenance of Existence; Compliance with Laws, etc.
Each Borrower will:
(a) preserve and maintain its existence in the state of its
formation; and
(b) comply in all material respects with the requirements of
all Applicable Law, including
(i) the requirements of the Fair Labor Standards
Act, as amended, including the provisions of such act relating
to the payment of minimum and overtime wages as the same may
become due from time to time; and
(ii) the payment and discharge all taxes, including
withholding taxes, assessments and governmental charges or
levies required to be paid by it or imposed upon it or its
income or profits or upon any properties belonging to it prior
to the date on which penalties attach thereto, and all lawful
claims for labor, materials and supplies which, if unpaid,
might become a Lien or charge upon any of its properties;
except that no such tax, assessment, charge, levy or claim
need be paid which is being diligently contested in good faith
by appropriate proceedings and for which adequate reserves
shall have been set aside on the appropriate books, but only
so long as such tax, assessment, charge, levy or claim does
not become a Lien or charge other than a Lien permitted under
Section 7.2.3 and no foreclosure, distraint, sale or similar
proceedings shall have been commenced. Each Borrower shall
timely file all information returns required by federal, state
or local tax authorities.
SECTION 7.1.3. Maintenance of Licenses. Each Borrower will preserve
and maintain its rights, franchises, licenses and privileges, including the
Licenses and Franchises (to the extent required to prevent the occurrence of a
Default under Section 8.1.11), all material Pole Agreements, and all other
Necessary Authorizations.
SECTION 7.1.4. Conduct of Business; Maintenance of Necessary
Authorizations. Each Borrower will (a) engage solely in the business of
constructing, maintaining and operating the System and of investing in other
cable television systems and SMATV Systems and engaging in other activities
relating to the cable television industry; (b) qualify and remain qualified
and authorized to do business in each jurisdiction in which the character of
its properties or the nature of its businesses requires such qualification or
authorization; and (c) do all things reasonably necessary to renew, extend and
continue in effect all Necessary Authorizations which may at any time and from
time to time be necessary to operate and own the Systems and other assets of
such Borrower in compliance with all applicable laws and regulations.
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SECTION 7.1.5. Maintenance of Properties. Each Borrower will
maintain or cause to be maintained in the ordinary course of business in good
repair, working order and condition (reasonable wear and tear excepted) all
properties used in its business (whether owned or held under lease), and from
time to time make or cause to be made all needed and appropriate repairs,
renewals, replacements, additions, betterments and improvements thereto.
SECTION 7.1.6. Insurance. Each Borrower will
(a) maintain or cause to be maintained with insurance
companies of nationally recognized standing insurance coverage in at
least such amounts and against at least such risks as insurance
coverage evidenced by the certificates of insurance delivered pursuant
to Section 5.1.10 of the Credit Agreement; and
(b) require that each insurance policy provide for at least
thirty (30) days prior written notice to the Agent of any termination
of or proposed cancellation or nonrenewal of such policy, and that
each insurance policy insuring assets pledged to the Agent and the
Lenders as Collateral for the obligations name the Agent as additional
named loss payee to the extent of the Obligations secured by such
assets. All such amounts paid in respect of any such policy directly
to the Agent shall, provided no Default then exists, be applied to the
prepayment of the Obligations or the rebuilding or repairing of the
portion of the System giving rise to the payment of insurance
benefits, as such Borrower may elect; otherwise, such amounts shall be
applied by the Agent, (i) prior to the acceleration of the Loans, as
provided in Section 8.2 or 8.3 or, if the Required Lenders so elect,
to the prepayment of the Obligations or to the rebuilding or repairing
of the portion of the System giving rise to the payment of insurance
benefits, and any balance thereof remaining after payment in full of
the Obligations shall be paid to such Borrower or as otherwise
required by law, and (ii) after the acceleration of the Loans, as
provided under Section 8.2 or 8.3.
SECTION 7.1.7. Books and Records; Accounting Method. (a) Each
Borrower will keep books and records which accurately reflect all of its
business affairs and transactions and permit representatives of the Agent and
the Lenders, upon prior notice, to (a) visit and inspect the properties of such
Borrower at all reasonable times, (b) inspect and (at the expense of such
Borrower) make extracts from and copies of its books and records, and (c)
discuss with the principal officers of the Cencom Properties, in the case of
CCIPII and CPI, in the case of CPLP, the manager and the independent public
accountant of such Borrower (and such Borrower hereby authorizes such
independent public accountant to discuss such Borrower s financial matters with
each Lender or its representatives whether or not any representative of such
Borrower is present), its business, assets, liabilities, financial position,
results of operations and business prospects. Each Borrower shall pay any fees
of such independent public accountant incurred in connection with the Agent s
or any Lender s exercise of its rights pursuant to this Section.
(b) Each Borrower will maintain a system of accounting established
and administered in accordance with GAAP consistently applied, keep adequate
records and books of account in which complete entries will be made in
accordance with such accounting principles consistently applied and reflecting
all transactions required to be reflected by such accounting principles, and
keep accurate and complete records of its properties and assets. Each Borrower
will maintain a Fiscal Year ending on December 31.
SECTION 7.1.8. Environmental Covenant. Each Borrower will
(a) use and operate all of its facilities and properties in
material compliance with all Environmental Laws, keep all necessary
permits, approvals, certificates, licenses and other authorizations
relating to environmental matters in effect and remain in material
compliance therewith, and handle all Hazardous Materials in material
compliance with all applicable Environmental Laws;
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(b) immediately notify the Agent and provide copies upon
receipt of all written claims, complaints, notices or inquiries
relating to the condition of its facilities and properties or
compliance with Environmental Laws; and
(c) provide such information and certifications which the
Agent may reasonably request from time to time to evidence compliance
with this Section 7.1.8.
SECTION 7.1.9. Additional Collateral. Each Borrower shall cause the
Agent and the Lenders to have at all times a first priority perfected security
interest (unless otherwise agreed to by the Required Lenders) in all of the
assets of such Borrower, including Franchises and Licenses (to the extent
permitted by law) and any personal or material real property acquired by such
Borrower after the Effective Date. Without limiting the generality of the
foregoing, such Borrower shall deliver to the Agent all assets for which
possession by the Agent is required for perfection of such security interest,
and shall execute, deliver and/or file (as applicable), or cause to be
executed, delivered and/or filed (as applicable), the Holdings Pledge
Agreement, each Security Agreement, Uniform Commercial Code (Form UCC-1)
financing statements, Uniform Commercial Code (Form UCC-3) termination
statements, and other documentation necessary to grant and perfect such
security interest, in each case in form and substance satisfactory to the
Agent.
SECTION 7.1.10. Use of Proceeds. The Borrowers shall apply no more
than $9,500,000 of the proceeds of the Borrowings made on the Closing Date to
the Distribution. The Borrowers shall apply the proceeds of Loans made on or
after the Closing Date, to the extent permitted hereunder, for working capital,
capital expenditure and other general corporate purposes (including the payment
of all reasonable closing fees and expenses). Without limiting the foregoing,
no proceeds of any Loan will be used to acquire any equity security of a class
which is registered pursuant to Section 12 of the Securities Exchange Act of
1934 or any "margin stock", as defined in F.R.S. Board Regulation U.
SECTION 7.1.11. Payment of Indebtedness; Loans. Subject to any
provisions regarding subordination herein or in any other Loan Document, each
Borrower will pay any and all of its Indebtedness when and as it becomes due,
other than amounts diligently disputed in good faith.
SECTION 7.1.12. Management. The Borrowers will obtain and maintain
management services for the operation of the Systems under the terms of their
respective Management Agreements.
SECTION 7.1.13. Interest Rate Hedging. Each Borrower shall enter
into one or more Rate Protection Agreements which fix or place a limit on such
Borrower s interest obligations hereunder or under the Notes in an aggregate
principal amount of not less than fifty percent (50%) of the Commitment Amount
within 90 days of the Closing Date, such Rate Protection Agreements to provide
such interest rate protection for a weighted average period of not less than
two (2) years from the date of such Rate Protection Agreement. All obligations
of each Borrower to the Agent or any Lender or any affiliate of any of them,
pursuant to any Rate Protection Agreement, shall rank pari passu with the other
Obligations.
SECTION 7.1.14. Delivery of the New London Franchise Agreement. The
Borrowers shall deliver to the Agent and each other Lender no later than 45
days following the Closing Date a copy of the New London Franchise Agreement
certified to be true, correct and complete by an Authorized Officer of CCIPII.
SECTION 7.2. Negative Covenants. Each Borrower agrees with the Agent
and each Lender that, until all Commitments have terminated and all Obligations
have been paid and performed in full, such Borrower will perform the
obligations set forth in this Section 7.2.
SECTION 7.2.1. Business Activities. Neither Borrower will engage in
any business activity, except those described in Section 7.1.4 and such
activities as may be incidental or related thereto.
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SECTION 7.2.2. Indebtedness. Neither Borrower will create, incur,
assume or suffer to exist or otherwise become or be liable in respect of any
Indebtedness, other than, without duplication, the following:
(a) the Indebtedness in respect of the Loans and other
Obligations;
(b) until the date of the initial Borrowing, Indebtedness
identified in Item 7.2.2(b) ("Indebtedness to be Paid") of the
Disclosure Schedule;
(c) Indebtedness existing as of the Effective Date which is
identified in Item 7.2.2(c) ("Ongoing Indebtedness") of the Disclosure
Schedule;
(d) Accrued but unpaid management fees and any interest
thereon due pursuant to the Management Agreement, subject to the terms
of the Charter Communications Subordination Agreement;
(e) Indebtedness arising under payment and performance bonds
and letters of credit issued for such Borrower s account in the
ordinary course of such Borrower's business in favor of the grantors
of the Licenses and the Pole Agreements, in an aggregate amount not to
exceed $500,000;
(f) Indebtedness in an aggregate principal amount not to
exceed $1,000,000 at any time outstanding which is incurred by the
Borrowers to vendors of any assets permitted to be acquired pursuant
to Section 7.2.7 to finance its acquisition of such assets and/or for
Capitalized Lease Liabilities;
(g) 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, but
excluding any Indebtedness of the type described in clauses (a), (b),
(c) and (f) of the definition of Indebtedness); and
(h) other Indebtedness of such Borrower in an aggregate
amount not to exceed $500,000 at any one time outstanding;
provided, however, that no Indebtedness otherwise permitted by clause (d), (e),
(f), (g) or (h) shall be permitted if, after giving effect to the incurrence
thereof, any Default shall have occurred and be continuing.
SECTION 7.2.3. Liens. Neither Borrower will create, incur, assume or
suffer to exist any Lien upon any of its property, revenues or assets, whether
now owned or hereafter acquired, except:
(a) the Liens securing payment of the Obligations, granted
pursuant to any Loan Document;
(b) until the date of the initial Borrowing, the Liens
securing payment of the Indebtedness of the type permitted and
described in clause (b) of Section 7.2.2;
(c) the Liens granted prior to the Effective Date to secure
payment of the Indebtedness of the type permitted and described in
clause (c) of Section 7.2.2;
(d) the Liens granted to secure payment of the Indebtedness
of the type permitted and described in clause (f) of Section 7.2.2 and
covering only those assets acquired with the proceeds of such
Indebtedness;
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(e) (i) Liens on real estate for real estate taxes not yet
delinquent, and (ii) Liens for taxes, assessments or other
governmental charges or levies not at the time delinquent or
thereafter payable without penalty or 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;
(f) Liens of carriers, warehousemen, mechanics, materialmen
and landlords incurred in the ordinary course of business for sums not
overdue or 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;
(g) Liens incurred in the ordinary course of business in
connection with workmen's compensation, unemployment insurance or
other forms of governmental insurance or benefits, or to secure
performance of tenders, statutory obligations, leases and contracts
(other than for borrowed money) entered into in the ordinary course of
business or to secure obligations on surety or appeal bonds;
(h) restrictions on the transfer of assets imposed by any of
the Licenses as presently in effect or by the Federal Communications
Act of 1934 and any regulations thereunder;
(i) easements, rights-of-way, restrictions and other similar
encumbrances on the use of real property which do not interfere with
the ordinary conduct of the business of either Borrower or to the
ownership of its properties which were not incurred in connection with
the Indebtedness or other extensions of credit and which do not in the
aggregate materially detract from the value of such properties or
materially impair their use in the operation of the business of such
Borrower;
(j) Liens in favor of utility companies granted in connection
with Pole Agreements; and
(k) other Liens securing Indebtedness in an amount not to
exceed $1,000,000 in the aggregate.
SECTION 7.2.4. Financial Condition. The Borrowers will not permit:
(a) the Leverage Ratio at any time, for the then most
recently completed Fiscal Quarters, to exceed the ratio set forth
opposite such Fiscal Quarter as set forth below:
Leverage
Fiscal Quarter Ratio
-------------- ------------
[S] [C]
March 31, 1997 4.00:1
June 30, 1997 4.00:1
September 30, 1997 4.00:1
December 31, 1997 4.00:1
March 31, 1998 4.00:1
June 30, 1998 4.00:1
September 30, 1998 4.00:1
December 31, 1998 4.00:1
March 31, 1999 3.50:1
June 30, 1999 3.50:1
September 30, 1999 3.50:1
December 31, 1999 3.50:1
March 31, 2001 3.00:1
and for each
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Fiscal Quarter
thereafter
(b) the Interest Coverage Ratio to be less than 2.25:1 at any
time;
(c) the Pro-Forma Debt Service Coverage Ratio to be less than
1.15:1 at any time; and
(d) commencing January 1, 1999, the Fixed Charge Coverage
Ratio to be less than 1.10:1 at any time.
It is understood and agreed that if, after giving effect to any asset sale
permitted under clause (b) of Section 7.2.11, the Annualized Operating Cash
Flow of the remaining assets of the Borrowers is less than $2,000,000, the
foregoing covenants will be adjusted in a manner satisfactory to the Required
Lenders to take into account such sale.
SECTION 7.2.5. Investments. Neither Borrower will make, incur,
assume or suffer to exist any Investment in any other Person, except:
(a) Investments existing on the Effective Date, in each case
identified in Item 7.2.5(a) ( Ongoing Investments ) of the Disclosure
Schedule;
(b) Cash Equivalent Investments;
(c) without duplication, Investments permitted as
Indebtedness pursuant to Section 7.2.2;
(d) without duplication, Investments permitted as Capital
Expenditures pursuant to Section 7.2.7; and
(e) other Investments in an aggregate amount at any one time
not to exceed $100,000;
provided, however, that
(f) any Investment which when made complies with the
requirements of the definition of the term "Cash Equivalent Investment"
may continue to be held notwithstanding that such Investment if made
thereafter would not comply with such requirements; and
(g) no Investment otherwise permitted by clause (d), (e)
shall be permitted to be made if, immediately before or after giving
effect thereto, any Default shall have occurred and be continuing.
SECTION 7.2.6. Restricted Payments, etc. On and at all times after
the Effective Date, neither Borrower will:
(a) declare, pay or make any dividends or other distributions
(in cash, property or obligations) on the partnership or other equity
interests (now or hereafter outstanding) of such Borrower or apply any
of its funds, property or assets to the purchase, redemption, sinking
fund or other retirement of, or agree to purchase or redeem, any
partnership or other equity interests of such Borrower, or make any
payments pursuant to any tax sharing or similar arrangements;
provided, however , that such Borrowers may make distributions to
their respective partners prior to May 15, 1998, in an aggregate
amount not to exceed $30,000,000 (which amount shall include the
Distribution) in accordance with Applicable Law and the Organic
Documents of such Borrower as in effect on the Effective Date;
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(b) make any payments to any Person for management, advisory,
overhead or similar items except, so long as no Default shall have
occurred and be continuing, such Borrower may incur, and pay as they
accrue, management fees under the Management Agreement in an amount
not to exceed 5% of such Borrower s gross revenues for any Fiscal
Year, subject to the subordination provisions of the Charter
Communications Subordination Agreement and provided, that, only 60% of
such management fees may be paid in cash until Fiscal Year 1999, and
none of such management fees shall be payable in cash thereafter; and
(c) such Borrower will not make any deposit for any of the
foregoing purposes.
SECTION 7.2.7. Capital Expenditures, etc. The Borrowers will not
make or commit to make Capital Expenditures in any Fiscal Year, except Capital
Expenditures which do not give rise to Capitalized Lease Liabilities and do not
aggregate, in any Fiscal Year, an amount in excess of the amount set forth
below opposite such Fiscal Year:
Maximum Permitted
Fiscal Year Capital Expenditures
----------- --------------------
1997 $3,100,000
1998 $4,800,000
1999 and each $1,000,000
Fiscal Year
thereafter
provided that, to the extent the amount of all Capital Expenditures permitted
to be made in any Fiscal Year pursuant to this Section exceeds the aggregate
amount of Capital Expenditures made during such Fiscal Year, such excess amount
may be carried forward to (but only to) the immediately succeeding Fiscal Year.
It is understood and agreed that, after giving effect to any asset sale
permitted under clause (b) of Section 7.2.11, the Maximum Permitted Capital
Expenditures as set forth above shall be reduced in a manner satisfactory to
the Required Lenders and the Borrowers to take into account such asset sale.
SECTION 7.2.8. Rental Obligations. The Borrowers will not enter into
at any time any arrangement which involves the leasing by the Borrowers from
any lessor of any real or personal property (or any interest therein), except
(a) arrangements which, together with all other such arrangements which shall
then be in effect, will not require the payment of an aggregate amount of
rentals by the Borrowers in excess of (excluding escalations resulting from a
rise in the consumer price or similar index) $100,000 for any Fiscal Year or
$500,000 during the full remaining term of such arrangements and (b) payments
under Capitalized Lease Liabilities; provided, however, that any calculation
made for purposes of this Section shall exclude any amounts required to be
expended for maintenance and repairs, insurance, taxes, assessments, and other
similar charges, and amounts payable under Pole Agreements.
SECTION 7.2.9. Take or Pay Contracts. Neither Borrower will enter
into or be a party to any arrangement for the purchase of materials, supplies,
other property or services if such arrangement by its express terms requires
that payment be made by such Borrower regardless of whether such materials,
supplies, other property or services are delivered or furnished to it.
SECTION 7.2.10. Consolidation, Merger, etc. Neither Borrower shall
at any time (i) liquidate or dissolve itself (or suffer any liquidation or
dissolution) or otherwise wind up, (ii) enter into any transaction of
consolidation or merger, or (iii) create any Subsidiary.
SECTION 7.2.11. Asset Dispositions, etc. Neither Borrower will sell,
transfer, lease, contribute or otherwise convey all or any part of its assets,
or grant options, warrants or other equity rights in such Borrower, to any
Person, unless
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(a) such sale, transfer, lease, contribution or conveyance
(i) is in the ordinary course of its business or is, in the good faith
opinion of such Borrower, of obsolete or worn out property or property
no longer used in its business, (ii) is to a Borrower, or (iii) is
permitted by Section 7.2.10; or
(b) such sale, transfer, lease, contribution or conveyance is
for fair market value to any Person that is not an Affiliate and the
following conditions are met:
(i) after giving effect to any sale, the Annualized
Operating Cash Flow of the remaining assets of the Borrowers
shall be equal to at least $1,000,000;
(ii) immediately prior to and immediately after
giving effect to such disposition, no Default or Event of
Default shall have occurred or would result therefrom;
(iii) such Borrower has applied any Net Disposition
Proceeds pursuant to Section 3.1.1(b); and
(iv) all the consideration for such sale, transfer,
lease, contribution or conveyance is cash.
SECTION 7.2.12. Modification of Certain Agreements. Neither Borrower
shall enter into any amendment of, or agree to or accept or consent to any
waiver of any of the provisions of, (a) its Organic Documents, (b) the
Management Agreement, (c) the Charter Communications Subordination Agreement,
(d) any Franchise Agreement or (e) any License. Notwithstanding anything to
the contrary in the immediately foregoing sentence, any such Organic Document,
Franchise Agreement or License may be amended or modified without the prior
written consent of any of the Agent and the Required Lenders so long as copies
of all documents evidencing or related to such amendment or modification are
furnished to Agent and the Lenders within five (5) Business Days prior to its
effective date; provided that the prior written consent of any of the Agent and
the Required Lenders shall not be required in connection with the renewal of
any License or Franchise Agreement in the ordinary course; provided further
that no such amendment or modification (i) adversely affects the rights of the
Agent and the Lenders, or any of them, (ii) might have a Material Adverse
Effect or (iii) adversely affects any Collateral (as such term is defined in
any Security Agreement or the Holdings Pledge Agreement).
SECTION 7.2.13. Transactions with Affiliates. Neither Borrower shall
at any time engage in any transaction with an Affiliate, nor make an assignment
or other transfer of any of its properties or assets to any Affiliate, except
on terms that are fair and reasonable and that are not less advantageous to
such Borrower than would be the case if such transaction had been effected with
a non-Affiliate. In addition, such Borrower shall receive the benefit of any
discounts, rebates or special payment terms for pay television programming
available to Charter Communications which Charter Communications is permitted
to pass through to such Borrower, but which are not available to such Borrower
from a non-Affiliate.
SECTION 7.2.14. Negative Pledges, Restrictive Agreements, etc.
Neither Borrower will enter into any agreement (excluding this Agreement and
any other Loan Document) prohibiting the creation or assumption of any Lien
upon its properties, revenues or assets, whether now owned or hereafter
acquired, or the ability of such Borrower or any other Obligor to amend or
otherwise modify this Agreement or any other Loan Document.
SECTION 7.2.15. Real Estate. Neither Borrower shall purchase or
become obligated to purchase real estate (other than easements, rights-of-way,
restrictions and other similar encumbrances on the use of real property), other
than purchases, in the ordinary course of business of owning and operating the
System.
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SECTION 7.2.16. ERISA Liabilities. Neither Borrower shall not allow
the assets of any of its Plans to be less than the amount necessary to provide
all accrued benefits under such Plans. Neither Borrower shall not become a
participant in any Multiemployer Plan.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1. Listing of Events of Default. Each of the following
events or occurrences described in this Section 8.1 shall constitute an "Event
of Default".
SECTION 8.1.1. Non-Payment of Obligations. Any Borrower shall
default in the payment or prepayment when due of any principal of any Loan, or
such Borrower shall default (and such default shall continue unremedied for a
period of five days) in the payment when due of any interest on any Loan, any
commitment fee or of any other Obligation.
SECTION 8.1.2. Breach of Warranty. Any representation or warranty of
any Borrower or any other Obligor made or deemed to be made hereunder or in any
other Loan Document executed by it or any other writing or certificate
furnished by or on behalf of such Borrower or any other Obligor to the Agent or
any Lender for the purposes of or in connection with this Agreement or any such
other Loan Document (including any certificates delivered pursuant to Article
V) is or shall be incorrect when made or deemed made in any material respect.
SECTION 8.1.3. Non-Performance of Certain Covenants and Obligations.
Any Borrower shall default in the due performance and observance of any of its
obligations under Section 7.1.1 or Section 7.2.
SECTION 8.1.4. Non-Performance of Other Covenants and Obligations.
Any Borrower or other Obligor shall default in the due performance and
observance of any other agreement contained herein or in any other Loan
Document executed by it, and such default shall continue unremedied for a
period of 30 days after such Borrower or other Obligor has actual knowledge
thereof or written notice thereof shall have been given to such Borrower or
other Obligor by the Agent or any Lender.
SECTION 8.1.5. Default on Other Indebtedness. A default shall occur
in the payment when due, whether by acceleration or otherwise, of any
Indebtedness (other than Indebtedness described in Section 8.1.1) of any
Borrower any other Obligor having a principal amount, individually or in the
aggregate, in excess of $500,000, or a default shall occur in the performance
or observance of any obligation or condition with respect to such Indebtedness
if the effect of such default is to accelerate the maturity of any such
Indebtedness or such default shall continue unremedied for any applicable
period of time sufficient to permit the holder or holders of such Indebtedness,
or any trustee or agent for such holders, to cause such Indebtedness to become
due and payable prior to its expressed maturity.
SECTION 8.1.6. Judgments. Any judgment or order for the payment of
money in excess of $500,000 shall be rendered against any Borrower or any other
Obligor and either
(a) enforcement proceedings shall have been commenced by any
creditor upon such judgment or order; or
(b) there shall be any period of 30 consecutive days during
which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect.
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SECTION 8.1.7. Pension Plans. Any of the following events shall
occur with respect to any Pension Plan
(a) the institution of any steps by any Borrower, any member
of its Controlled Group or any other Person to terminate a Pension
Plan if, as a result of such termination, such Borrower or any such
member could be required to make a contribution to such Pension Plan,
or could reasonably expect to incur a liability or obligation to such
Pension Plan, in excess of $500,000; or
(b) a contribution failure occurs with respect to any Pension
Plan sufficient to give rise to a Lien under section 302(f) of ERISA.
SECTION 8.1.8. Change in Control. Any Change in Control shall occur.
SECTION 8.1.9. Bankruptcy, Insolvency, etc. Either Borrower or any
other Obligor shall
(a) become insolvent or generally fail to pay, or admit in
writing its inability or unwillingness to pay, debts as they become
due;
(b) apply for, consent to, or acquiesce in, the appointment
of a trustee, receiver, sequestrator or other custodian for such
Borrower or any other Obligor or any property of any thereof, or make
a general assignment for the benefit of creditors;
(c) in the absence of such application, consent or
acquiescence, permit or suffer to exist the appointment of a trustee,
receiver, sequestrator or other custodian for such Borrower or any
other Obligor or for a substantial part of the property of any
thereof, and such trustee, receiver, sequestrator or other custodian
shall not be discharged within 60 days, provided that such Borrower
and each other Obligor hereby expressly authorizes the Agent and each
Lender to appear in any court conducting any relevant proceeding
during such 60-day period to preserve, protect and defend their rights
under the Loan Documents;
(d) permit or suffer to exist the commencement of or commence
any bankruptcy, reorganization, debt arrangement or other case or
proceeding under any bankruptcy or insolvency law, or any dissolution,
winding up or liquidation proceeding, in respect of such Borrower or
any other Obligor, and, if any such case or proceeding is not
commenced by such Borrower or such other Obligor, such case or
proceeding shall be consented to or acquiesced in by such Borrower or
such other Obligor or shall result in the entry of an order for relief
or shall remain for 60 days undismissed, provided that such Borrower
and each other Obligor hereby expressly authorizes the Agent and each
Lender to appear in any court conducting any such case or proceeding
during such 60-day period to preserve, protect and defend their rights
under the Loan Documents; or
(e) take any corporate action authorizing, or in furtherance
of, any of the foregoing.
SECTION 8.1.10. Impairment of Security, etc. Any Loan Document, or
any Lien granted thereunder, shall (except in accordance with its terms), in
whole or in part, terminate, cease to be effective or cease to be the legally
valid, binding and enforceable obligation of any Obligor party thereto; either
Borrower, any other Obligor or any other party shall, directly or indirectly,
contest in any manner such effectiveness, validity, binding nature or
enforceability; or any Lien securing any Obligation shall, in whole or in part,
cease to be a perfected first priority Lien, subject only to those exceptions
expressly permitted by such Loan Document.
SECTION 8.1.11. Impairment of Necessary Authorizations, etc. Any
Necessary Authorization (including any License or Franchise) shall be
terminated, suspended or revoked and such termination, suspension or revocation
shall not be waived or stayed, or there shall occur a material default under
any
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<PAGE> 56
Necessary Authorization (including any License or Franchise) which shall
not have been waived within 30 days of the occurrence thereof, or any
proceedings shall in any way be brought to challenge (and shall continue
uncontested for a period of 30 days) the validity or enforceability of any
Necessary Authorization (including any License or Franchise) or any Necessary
Authorization (including any License or any Franchise) shall expire due to
termination, nonrenewal or for any other reason, which, together with any other
such Necessary Authorization (including any Licenses or Franchise) described in
this Section 8.1.11, account for Franchise(s) and/or Necessary Authorization(s)
that contribute(s) 7.5% or more to the Operating Cash Flow of the Borrowers; or
any System or Systems having Franchise(s) and/or Necessary Authorization(s)
that contribute(s) 7.5% or more to the Operating Cash Flow of the Borrowers
shall fail for any period of five consecutive calendar days to operate or
maintain any cable signal, and such failure shall not be substantially covered
by insurance issued by a solvent financially responsible insurance company,
which insurance shall be in full force and effect and with respect to which
such Borrower shall have made all scheduled payments.
SECTION 8.1.12. Management. (a) Charter Communications or any
Affiliate satisfactory to the Required Lenders shall for any reason cease
providing management to either Borrower or there shall be a material default,
other than a payment default required by the Charter Communications
Subordination Agreement, under the Management Agreement.
(b) There shall have occurred any event which could have a materially
adverse effect upon the ability of Charter Communications to fulfill its
obligations under the Management Agreement.
SECTION 8.2. Action if Bankruptcy. If any Event of Default described
in clauses (a) through (d) of Section 8.1.9 shall occur, the Commitments (if
not theretofore terminated) shall automatically terminate immediately and the
outstanding principal amount of all outstanding Loans and all other Obligations
shall automatically be and become immediately due and payable, without notice
or demand.
SECTION 8.3. Action if Other Event of Default. If any Event of
Default (other than any Event of Default described in clauses (a) through (d)
of Section 8.1.9) shall occur for any reason, whether voluntary or involuntary,
and be continuing, the Agent may, or upon the direction of the Required
Lenders, shall, by notice to the Borrowers, declare all or any portion of the
outstanding principal amount of the Loans and other Obligations to be due and
payable and/or the Commitments (if not theretofore terminated) to be
terminated, whereupon the full unpaid amount of such Loans and other
Obligations which shall be so declared due and payable shall be and become
immediately due and payable, without further notice, demand or presentment,
and/or, as the case may be, the Commitments shall terminate.
ARTICLE IX
THE AGENT
SECTION 9.1. Actions. Each Lender hereby appoints CIBC as its Agent
under and for purposes of this Agreement, the Notes and each other Loan
Document. Each Lender authorizes the Agent to act on behalf of such Lender
under this Agreement, the Notes and each other Loan Document and, in the
absence of other written instructions from the Required Lenders received from
time to time by the Agent, to exercise such powers hereunder and thereunder as
are specifically delegated to or required of the Agent by the terms hereof and
thereof, together with such powers as may be reasonably incidental thereto.
Each Lender hereby indemnifies (which indemnity shall survive any termination
of this Agreement) the Agent, pro rata according to such Lender's Percentage,
from and against any and all liabilities, obligations, losses, damages, claims,
costs or expenses of any kind or nature whatsoever which may at any time be
imposed on, incurred by, or asserted against, the Agent in any way relating to
or arising out of this Agreement, the Notes and any other Loan Document,
including reasonable attorneys' fees, and as to which the Agent is not
reimbursed by the Borrowers; provided, however, that no Lender shall be liable
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for the payment of any portion of such liabilities, obligations, losses,
damages, claims, costs or expenses which are determined by a court of competent
jurisdiction in a final proceeding to have resulted solely from the Agent's
gross negligence or wilful misconduct. The Agent shall not be required to take
any action hereunder, under the Notes or under any other Loan Document, or to
prosecute or defend any suit in respect of this Agreement, the Notes or any
other Loan Document, unless it is indemnified hereunder to its satisfaction.
If any indemnity in favor of the Agent shall be or become, in the Agent's
determination, inadequate, the Agent may call for additional indemnification
from the Lenders and cease to do the acts indemnified against hereunder until
such additional indemnity is given.
SECTION 9.2. Funding Reliance, etc. Unless the Agent shall have been
notified by telephone, confirmed in writing, by any Lender by 5:00 p.m. (New
York time) on the day prior to a Borrowing that such Lender will not make
available the amount which would constitute its Percentage of such Borrowing on
the date specified therefor, the Agent may assume that such Lender has made
such amount available to the Agent and, in reliance upon such assumption, make
available to the applicable Borrower a corresponding amount. If and to the
extent that such Lender shall not have made such amount available to the Agent,
such Lender and each Borrower, severally agree to repay the Agent forthwith on
demand such corresponding amount together with interest thereon, for each day
from the date the Agent made such amount available to such Borrower to the date
such amount is repaid to the Agent, at the interest rate applicable at the time
to Loans comprising such Borrowing.
SECTION 9.3. Exculpation. Neither the Agent nor any of its
directors, officers, employees or agents shall be liable to any Lender for any
action taken or omitted to be taken by it under this Agreement or any other
Loan Document, or in connection herewith or therewith, except for its own wilful
misconduct or gross negligence, nor responsible for any recitals or warranties
herein or therein, nor for the effectiveness, enforceability, validity or due
execution of this Agreement or any other Loan Document, nor for the creation,
perfection or priority of any Liens purported to be created by any of the Loan
Documents, or the validity, genuineness, enforceability, existence, value or
sufficiency of any collateral security, nor to make any inquiry respecting the
performance by either Borrower of its obligations hereunder or under any other
Loan Document. Any such inquiry which may be made by the Agent shall not
obligate it to make any further inquiry or to take any action. The Agent shall
be entitled to rely upon advice of counsel concerning legal matters and upon
any notice, consent, certificate, statement or writing which the Agent believes
to be genuine and to have been presented by a proper Person.
SECTION 9.4. Successor. The Agent may resign as such at any time
upon at least 30 days' prior notice to the Borrowers and all Lenders. If the
Agent at any time shall resign, the Required Lenders may appoint another Lender
as a successor Agent which shall thereupon become the Agent hereunder. If no
successor Agent shall have been so appointed by the Required Lenders, and shall
have accepted such appointment, within 30 days after the retiring Agent's
giving notice of resignation, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent, which shall be one of the Lenders or a
commercial banking institution organized under the laws of the U.S. (or any
State thereof) or a U.S. branch or agency of a commercial banking institution,
and having a combined capital and surplus of at least $250,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall be entitled to receive from the retiring Agent such
documents of transfer and assignment as such successor Agent may reasonably
request, and shall thereupon succeed to and become vested with all rights,
powers, privileges and duties of the retiring Agent, and the retiring Agent
shall be discharged from its duties and obligations under this Agreement.
After any retiring Agent's resignation hereunder as the Agent, the provisions
of
(a) this Article IX shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was the Agent
under this Agreement; and
(b) Section 10.3 and Section 10.4 shall continue to inure to
its benefit.
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SECTION 9.5. Loans by CIBC. CIBC shall have the same rights and
powers with respect to (x) the Loans made by it or any of its Affiliates, and
(y) the Notes held by it or any of its Affiliates as any other Lender and may
exercise the same as if it were not the Agent. CIBC and its Affiliates may
accept deposits from, lend money to, and generally engage in any kind of
business with either Borrower or any Affiliate of such Borrower as if CIBC was
not the Agent hereunder.
SECTION 9.6. Credit Decisions. Each Lender acknowledges that it has,
independently of the Agent and each other Lender, and based on such Lender's
review of the financial information of the Borrowers, this Agreement, the other
Loan Documents (the terms and provisions of which being satisfactory to such
Lender) and such other documents, information and investigations as such Lender
has deemed appropriate, made its own credit decision to extend its Commitments.
Each Lender also acknowledges that it will, independently of the Agent and each
other Lender, and based on such other documents, information and investigations
as it shall deem appropriate at any time, continue to make its own credit
decisions as to exercising or not exercising from time to time any rights and
privileges available to it under this Agreement or any other Loan Document.
SECTION 9.7. Copies, etc. The Agent shall give prompt notice to each
Lender of each notice or request required to be given and actually given to the
Agent by the Borrowers pursuant to the terms of this Agreement (unless
concurrently delivered to the Lenders by either Borrower). The Agent will
distribute to each Lender each document or instrument received for its account
and copies of all other communications received by the Agent from the Borrowers
for distribution to the Lenders by the Agent in accordance with the terms of
this Agreement.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. Waivers, Amendments, etc. The provisions of this
Agreement and of each other Loan Document may from time to time be amended,
modified or waived, if such amendment, modification or waiver is in writing and
consented to by the Borrowers and the Required Lenders; provided, however, that
no such amendment, modification or waiver which would:
(a) modify any requirement hereunder that any particular
action be taken by all the Lenders or by the Required Lenders shall be
effective unless consented to by each Lender;
(b) modify this Section 10.1, change the definition of
"Required Lenders", increase any Commitment Amount or the Percentage of
any Lender, reduce any fees described in Article III, change the
schedule of reductions to the Commitments provided for in Section
2.2.2, release any all or substantially all collateral security,
except as otherwise specifically provided in any Loan Document, or
extend the Commitment Termination Date shall be made without the
consent of each Lender directly affected thereby;
(c) extend the due date for, or reduce the amount of, any
scheduled repayment or prepayment of principal of or interest on any
Loan (or reduce the principal amount of or rate of interest on any
Loan) shall be made without the consent of the holder of the Note
evidencing such Loan; or
(d) affect adversely the interests, rights or obligations of
the Agent qua the Agent, unless consented to by the Agent, as the case
may be.
No failure or delay on the part of the Agent, any Lender or the holder of any
Note in exercising any power or right under this Agreement or any other Loan
Document shall operate as a waiver thereof, nor
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shall any single or partial exercise of any such power or right preclude any
other or further exercise thereof or the exercise of any other power or right.
No notice to or demand on the Borrowers in any case shall entitle it to any
notice or demand in similar or other circumstances. No waiver or approval by
the Agent, any Lender or the holder of any Note under this Agreement or any
other Loan Document shall, except as may be otherwise stated in such waiver or
approval, be applicable to subsequent transactions. No waiver or approval
hereunder shall require any similar or dissimilar waiver or approval thereafter
to be granted hereunder. All rights and remedies hereunder are cumulative, and
not exclusive of rights and remedies provided under law or otherwise.
SECTION 10.2. Notices. All notices and other communications provided
to any party hereto under this Agreement or any other Loan Document shall be in
writing or by facsimile and addressed, delivered or transmitted to such party
at its address or facsimile number set forth below its signature hereto or set
forth in the Lender Assignment Agreement or at such other address or facsimile
number as may be designated by such party in a notice to the other parties.
Any notice, if mailed and properly addressed with postage prepaid or if
properly addressed and sent by pre-paid courier service, shall be deemed given
when received; any notice, if transmitted by facsimile, shall be deemed given
when transmitted.
SECTION 10.3. Payment of Costs and Expenses. The Borrowers, jointly
and severally, agree to pay on demand all reasonable expenses of the Agent
(including the reasonable legal fees and out-of-pocket expenses of Mayer, Brown
& Platt, counsel to the Agent) in connection with
(a) the negotiation, preparation, execution and delivery of
this Agreement and of each other Loan Document, including schedules
and exhibits, and any amendments, waivers, consents, supplements or
other modifications to this Agreement or any other Loan Document as
may from time to time hereafter be required, whether or not the
transactions contemplated hereby are consummated, and
(b) the filing, recording, refiling or rerecording of the
Holdings Pledge Agreement and each Security Agreement and/or any
Uniform Commercial Code financing statements and any other security
instruments relating thereto and all amendments, supplements and
modifications to any thereof and any and all other documents or
instruments of further assurance required to be filed or recorded or
refiled or rerecorded by the terms hereof or of the Holdings Pledge
Agreement or such Security Agreement or other security instrument, and
(c) the preparation and review of the form of any document or
instrument relevant to this Agreement or any other Loan Document, and
(d) the ongoing administration of this Agreement and the other
Loan Documents and the consideration of legal matters related thereto.
The Borrowers further agree, jointly and severally, to pay, and to save the
Agent and the Lenders harmless from all liability for, any stamp or other taxes
which may be payable in connection with the execution or delivery of this
Agreement, the Loans made hereunder, or the issuance of the Notes or any other
Loan Documents. The Borrowers also agree, jointly and severally, to reimburse
the Agent and each Lender upon demand for all reasonable out-of-pocket expenses
(including attorneys' fees and legal expenses) incurred by the Agent or such
Lender in connection with (x) the negotiation of any restructuring or "work-out"
, whether or not consummated, of any Obligations and (y) the enforcement of any
Obligations.
SECTION 10.4. Indemnification. In consideration of the execution and
delivery of this Agreement by each Lender and the extension of the Commitments,
the Borrowers hereby, jointly and severally, indemnify, exonerate and hold the
Agent and each Lender and each of their respective
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affiliates, officers, directors, employees and agents (collectively, the
"Indemnified Parties") free and harmless from and against any and all actions,
causes of action, suits, losses, costs, liabilities and damages, and expenses
incurred in connection therewith (irrespective of whether any such Indemnified
Party is a party to the action for which indemnification hereunder is sought),
including reasonable attorneys' fees and disbursements (collectively, the
"Indemnified Liabilities"), incurred by the Indemnified Parties or any of them
as a result of, or arising out of, or relating to
(a) any transaction financed or to be financed in whole or in
part, directly or indirectly, with the proceeds of any Loan;
(b) the entering into and performance of this Agreement and
any other Loan Document by any of the Indemnified Parties (including
any action brought by or on behalf of either Borrower as the result of
any determination by the Required Lenders pursuant to Article V not to
fund any Loan);
(c) any investigation, litigation or proceeding related to
any acquisition or proposed acquisition by either Borrower of all or
any portion of the stock or assets of any Person, whether or not the
Agent or such Lender is party thereto;
(d) any investigation, litigation or proceeding related to any
environmental cleanup, audit, compliance or other matter relating to
the protection of the environment or the Release by either Borrower of
any Hazardous Material; or
(e) the presence on or under, or the escape, seepage,
leakage, spillage, discharge, emission, discharging or releases from,
any real property owned or operated by either Borrower of any
Hazardous Material (including any losses, liabilities, damages,
injuries, costs, expenses or claims asserted or arising under any
Environmental Law), regardless of whether caused by, or within the
control of, either Borrower,
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the relevant Indemnified Party's
gross negligence or wilful misconduct. Each Borrower and its successors and
assigns hereby waive, release and agree not to make any claim or bring any cost
recovery action against the Agent or any Lender under CERCLA or any state
equivalent, or any similar law now existing or hereafter enacted. It is
expressly understood and agreed that to the extent that any of such Persons is
strictly liable under any Environmental Laws, such Borrower's obligation to
such Person under this indemnity shall likewise be without regard to fault on
the part of such Borrower with respect to the violation or condition which
results in liability of such Person. If and to the extent that the foregoing
undertaking may be unenforceable for any reason, the Borrowers hereby agree,
jointly and severally, to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law.
SECTION 10.5. Survival. The obligations of each Borrower under
Sections 4.3, 4.4, 4.5, 4.6, 10.3 and 10.4, and the obligations of the Lenders
under Section 9.1, shall in each case survive any termination of this
Agreement, the payment in full of all the Obligations and the termination of
all the Commitments. The representations and warranties made by each Obligor
in this Agreement and in each other Loan Document shall survive the execution
and delivery of this Agreement and each such other Loan Document.
SECTION 10.6. Severability. Any provision of this Agreement or any
other Loan Document which is prohibited or unenforceable in any jurisdiction
shall, as to such provision and such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement or such Loan Document or affecting the validity or
enforceability of such provision in any other jurisdiction.
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SECTION 10.7. Headings. The various headings of this Agreement and
of each other Loan Document are inserted for convenience only and shall not
affect the meaning or interpretation of this Agreement or such other Loan
Document or any provisions hereof or thereof.
SECTION 10.8. Execution in Counterparts, Effectiveness, etc. This
Agreement may be executed by the parties hereto in several counterparts, each
of which shall be executed by the Borrowers and the Agent and be deemed to be
an original and all of which shall constitute together but one and the same
agreement. This Agreement shall become effective when counterparts hereof
executed on behalf of each Borrower and each Lender (or notice thereof
satisfactory to the Agent) shall have been received by the Agent and notice
thereof shall have been given by the Agent to the Borrowers, the Agent and each
Lender.
SECTION 10.9. Governing Law; Entire Agreement. THIS AGREEMENT, THE
NOTES AND EACH OTHER LOAN DOCUMENT SHALL EACH BE DEEMED TO BE A CONTRACT MADE
UNDER AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. This Agreement, the
Notes and the other Loan Documents constitute the entire understanding among
the parties hereto with respect to the subject matter hereof and supersede any
prior agreements, written or oral, with respect thereto.
SECTION 10.10. Successors and Assigns. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that:
(a) neither Borrower may assign or transfer its rights or
obligations hereunder without the prior written consent of the Agent
and all Lenders; and
(b) the rights of sale, assignment and transfer of the
Lenders are subject to Section 10.11.
SECTION 10.11. Sale and Transfer of Loans and Notes; Participations
in Loans and Notes. Each Lender may assign, or sell participations in, its
Loans and Commitments to one or more other Persons in accordance with this
Section 10.11.
SECTION 10.11.1. Assignments. The Agent and each Lender,
(a) with the written consents of the Borrowers (which consent
shall not be unreasonably delayed or withheld and which shall be
deemed to have been given in the absence of a written notice delivered
by the Borrowers to the Agent, on or before the fifth Business Day
after receipt by the Borrowers of such Lender s request for consent,
stating, in reasonable detail, the reasons why the Borrowers propose
to withhold such consent) and the Agent, may at any time assign and
delegate to one or more commercial banks or other financial
institutions or other Persons, and
(b) with notice to the Borrowers and the Agent, but without
the consent of the Borrowers or the Agent, may assign and delegate to
any of its Affiliates or to any other Lender
(each Person described in either of the foregoing clauses as being the Person
to whom such assignment and delegation is to be made, being hereinafter
referred to as an Assignee Lender ), all or any fraction of such Lender s
total Loans and Commitments (which assignment and delegation shall be of a
constant, and not a varying, percentage of all the assigning Lender s Loans and
Commitments) in a minimum aggregate amount equal to the lesser of $5,000,000 or
all of such Lender s remaining Loans and Commitments, and increments of
$1,000,000; provided, however, that any such Assignee Lender will comply, if
applicable, with the provisions contained in the last sentence of Section 4.6
and further, provided, however, that, the Borrowers, each other Obligor and the
Agent shall be entitled to continue to deal solely and directly with such
Lender in connection with the interests so assigned and delegated to an
Assignee Lender until
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(c) written notice of such assignment and delegation,
together with payment instructions, addresses and related information
with respect to such Assignee Lender, shall have been given to the
Borrowers and the Agent by such Lender and such Assignee Lender;
(d) such Assignee Lender shall have executed and delivered to
the Borrowers and the Agent a Lender Assignment Agreement, accepted by
the Agent; and
(e) the processing fees described below shall have been paid.
From and after the date that the Agent accepts such Lender Assignment
Agreement, (x) the Assignee Lender thereunder shall be deemed automatically to
have become a party hereto and to the extent that rights and obligations
hereunder have been assigned and delegated to such Assignee Lender in
connection with such Lender Assignment Agreement, shall have the rights and
obligations of a Lender hereunder and under the other Loan Documents, and (y)
the assignor Lender, to the extent that rights and obligations hereunder have
been assigned and delegated by it in connection with such Lender Assignment
Agreement, shall be released from its obligations hereunder and under the other
Loan Documents. Within five Business Days after its receipt of notice that the
Agent has received an executed Lender Assignment Agreement, the Borrowers shall
execute and deliver to the Agent (for delivery to the relevant Assignee Lender)
new Notes evidencing such Assignee Lender's assigned Loans and Commitments and,
if the assignor Lender has retained Loans and Commitments hereunder,
replacement Notes in the principal amount of the Loans and Commitments retained
by the assignor Lender hereunder (such Notes to be in exchange for, but not in
payment of, those Notes then held by such assignor Lender). Each such Note
shall be dated the date of the predecessor Notes. The assignor Lender shall
mark the predecessor Notes "exchanged" and deliver them to the Borrowers.
Accrued interest on that part of the predecessor Notes evidenced by the new
Notes, and accrued fees, shall be paid as provided in the Lender Assignment
Agreement. Accrued interest on that part of the predecessor Notes evidenced by
the replacement Notes shall be paid to the assignor Lender. Accrued interest
and accrued fees shall be paid at the same time or times provided in the
predecessor Notes and in this Agreement. Such assignor Lender or such Assignee
Lender must also pay a processing fee to the Agent upon delivery of any Lender
Assignment Agreement in the amount of $3,000. Any attempted assignment and
delegation not made in accordance with this Section 10.11.1 shall be null and
void.
SECTION 10.11.2. Participations. Any Lender may at any time sell to
one or more commercial banks or other Persons (each of such commercial banks
and other Persons being herein called a "Participant") participating interests
in any of the Loans, Commitments or other interests of such Lender hereunder;
provided, however, that
(a) no participation contemplated in this Section 10.11 shall
relieve such Lender from its Commitments or its other obligations
hereunder or under any other Loan Document;
(b) such Lender shall remain solely responsible for the
performance of its Commitments and such other obligations;
(c) the Borrowers and each other Obligor and the Agent shall
continue to deal solely and directly with such Lender in connection
with such Lender's rights and obligations under this Agreement and
each of the other Loan Documents; and
(d) no Participant, unless such Participant is an Affiliate
of such Lender, or is itself a Lender, shall be entitled to require
such Lender to take or refrain from taking any action hereunder or
under any other Loan Document, except that such Lender may agree with
any Participant that such Lender will not, without such Participant's
consent, take any actions of the type described in clause (b) or (c)
of Section 10.1.
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Each Borrower acknowledges and agrees that each Participant, for purposes of
Sections 4.3, 4.4, 4.5, 4.6, 4.8, 4.9, 10.3 and 10.4, shall be considered a
Lender.
SECTION 10.12. Other Transactions. Nothing contained herein shall
preclude the Agent or any Lender from engaging in any transaction, in addition
to those contemplated by this Agreement or any other Loan Document, with either
Borrower or any of its Affiliates in which such Borrower or such Affiliate is
not restricted hereby from engaging with any other Person.
SECTION 10.13. Certain Collateral and Other Matters. (a) The Agent
is authorized on behalf of all the Lenders, without the necessity of any notice
to or further consent from the Lenders, from time to time to take any action
with respect to any collateral security or the Loan Documents which may be
necessary to perfect and maintain perfected the security interest in and Liens
upon the collateral security granted pursuant to the Loan Documents.
(b) The Lenders irrevocably authorize the Agent, at its option and in
its discretion, to release any security interest or Lien granted to or held by
the Agent upon any collateral (i) upon termination of the Commitments and
payment in full in cash of all principal of and interest on the Loans, all fees
payable pursuant to Section 3.3 and 10.3, all Reimbursement Obligations
(including interest thereon) and all other fees, costs and expenses that are
payable under this Agreement or under any other Loan Document and have been
invoiced (in which case the Lenders hereby authorize the Agent to execute, and
the Agent agrees to execute, reasonable releases in connection with this
Agreement); (ii) constituting property sold or to be sold or disposed of as
part of or in connection with any disposition permitted hereunder; (iii)
constituting property in which either Borrower owned no interest at the time
the security interest and/or Lien was granted or at any time thereafter; (iv)
constituting property leased to either Borrower under a lease which has expired
or been terminated in a transaction permitted under this Agreement or is about
to expire and which has not been, and is not intended by the applicable
Borrower to be, renewed or extended; (v) consisting of an instrument evidencing
Indebtedness or other debt instrument, if the Indebtedness evidenced thereby
has been paid in full; or (vi) if approved, authorized or ratified in writing
by the Required Lenders or, if required by Section 10.1, each Lender. Upon
request by the Agent at any time, the Lenders will confirm in writing the Agent
s authority to release particular types or items of collateral pursuant to this
Section 10.13.
SECTION 10.14. Forum Selection and Consent to Jurisdiction. ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE AGENT, THE
LENDERS OR EITHER BORROWER SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE
COURTS OF THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE
AGENT S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR
OTHER PROPERTY MAY BE FOUND. EACH BORROWER HEREBY EXPRESSLY AND IRREVOCABLY
SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE
PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE
BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION.
EACH BORROWER HEREBY IRREVOCABLY APPOINTS CT CORPORATION SYSTEMS (THE "PROCESS
AGENT"), WITH AN OFFICE ON THE DATE HEREOF AT 1633 BROADWAY, NEW YORK, NEW YORK
10019, UNITED STATES, AS ITS ADMINISTRATIVE AGENT TO RECEIVE, ON SUCH
BORROWER'S BEHALF AND ON BEHALF OF SUCH BORROWER S PROPERTY, SERVICE OF COPIES
OF THE SUMMONS AND COMPLAINT AND ANY OTHER PROCESS
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WHICH MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING. SUCH SERVICE MAY BE MADE
BY MAILING OR DELIVERING A COPY OF SUCH PROCESS TO SUCH BORROWER IN CARE OF THE
PROCESS AGENT AT THE PROCESS AGENT S ABOVE ADDRESS, AND EACH BORROWER HEREBY
IRREVOCABLY AUTHORIZES AND DIRECTS THE PROCESS AGENT TO ACCEPT SUCH SERVICE ON
ITS BEHALF. AS AN ALTERNATIVE METHOD OF SERVICE, EACH BORROWER FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE
PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. EACH
BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE
LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO
ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. TO THE EXTENT THAT EITHER BORROWER HAS OR HEREAFTER MAY
ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS
(WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN
AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, SUCH
BORROWER HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS
UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
SECTION 10.15. Waiver of Jury Trial. THE AGENT, THE LENDERS AND EACH
BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL
OR WRITTEN) OR ACTIONS OF THE AGENT, THE LENDERS OR EITHER BORROWER. EACH
BORROWER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER LOAN
DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE AGENT AND THE LENDERS ENTERING INTO THIS AGREEMENT AND EACH
SUCH OTHER LOAN DOCUMENT.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized as of the
day and year first above written.
CENCOM CABLE INCOME PARTNERS
II, L.P.
By Cencom Properties II, Inc., its
General Partner
By: /s/ Ralph G. Kelly
----------------------------------
Title: Treasurer
Address: c/o Charter Communications, Inc.
12444 Powerscourt Drive, Suite 400
St. Louis, MO 63131-3660
Facsimile No.: (314) 965-6640
Attention: Melvin Z. Bryant
CENCOM PARTNERS, L.P.
By Cencom Partners, Inc., its General Partner
By: /s/ Ralph G. Kelly
----------------------------------
Title: Treasurer
Address: c/o Charter Communications, Inc.
12444 Powerscourt Drive, Suite 400
St. Louis, MO 63131-3660
Facsimile No.: (314) 965-6640
Attention: Melvin Z. Bryant
<PAGE> 66
CANADIAN IMPERIAL BANK OF COMMERCE, acting by or through
one or more of its affiliates, branches or agencies,
as the Agent
By: Matt Jones
-----------------------------------
Title: DIRECTOR, CIBC WOOD GUNDY
SECURITIES CORP., AS AGENT
By: Matt Jones
-----------------------------------
Title: DIRECTOR, CIBC WOOD GUNDY
SECURITIES CORP., AS AGENT
Address: 425 Lexington Avenue
New York, NY 10017
Facsimile No.: (212) 856-3558
Attention: Matt Jones
PERCENTAGE LENDERS:
100.0000000000% CIBC INC.
By: Matt Jones
-------------------------------------
Title: ________________________, CIBC Wood
Gundy Securities Corp., as Agent
Domestic Office
and LIBOR Office
Address: Two Paces West
2727 Paces Ferry Road
Suite 1200
Atlanta, Georgia 30339
Facsimile No.: (770) 319-4950
Attention: Deirdre McBride
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
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<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
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<CURRENT-LIABILITIES> 7,785,693
<BONDS> 5,800,000
0
0
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<OTHER-SE> (6,326,260)
<TOTAL-LIABILITY-AND-EQUITY> 7,279,293
<SALES> 1,686,605
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<CGS> 0
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<OTHER-EXPENSES> 1,537,603
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<EXTRAORDINARY> 8,131,853
<CHANGES> 0
<NET-INCOME> 31,842,760
<EPS-PRIMARY> 337.12
<EPS-DILUTED> 337.12
</TABLE>
