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FORM 10-K 405
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
(FEE REQUIRED)
For the fiscal year ended December 31, 1994
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
(NO FEE REQUIRED)
For the transition period from ________ to ________
Commission file number: 0-17196
JONES GROWTH PARTNERS L.P.
(Exact name of registrant as specified in its charter)
Colorado 84-1143409
State of Organization (IRS Employer
Identification No.)
P.O. Box 3309, Englewood, Colorado 80155-3309 (303) 792-3111
(Address of principal executive office and Zip Code (Registrant's telephone
no. including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Limited Partnership
Interests
Indicate by check mark whether the 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
----- -----
State the aggregate market value of the voting stock held by non-affiliates of
the registrant: N/A
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405) is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. x
-----
DOCUMENTS INCORPORATED BY REFERENCE: None
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PART I.
ITEM 1. BUSINESS
THE PARTNERSHIP. Jones Growth Partners L.P. (the "Partnership") is a
Colorado limited partnership that was formed to acquire, own and operate cable
television systems in the United States. Jones Spacelink Cable Corporation, a
Colorado corporation, is the managing general partner (the "Managing General
Partner") and Growth Partners Inc., a Delaware corporation, is the associate
general partner (the "Associate General Partner") of the Partnership. Until
December 20, 1994, the date Jones Intercable, Inc. ("Intercable") acquired
substantially all of the assets of Jones Spacelink, Ltd. ("Spacelink"), the
Managing General Partner was a wholly owned subsidiary of Spacelink. As a
result of Intercable's acquisition of Spacelink's assets, the Managing General
Partner became a wholly owned subsidiary of Intercable. Intercable is a
Colorado corporation engaged in the business of owning and operating cable
television systems. The Associate General Partner is an affiliate of Lehman
Brothers Inc. The Partnership owns the cable television systems serving the
communities of Addison, Glen Ellyn, Warrenville, West Chicago, Wheaton, St.
Charles, Geneva, Winfield and certain portions of unincorporated DuPage and
Kane Counties, all in the State of Illinois (the "Wheaton System"). See Item
2.
CABLE TELEVISION SERVICES. The Wheaton System offers to its
subscribers various types of programming, which include basic service, tier
service, premium service, pay-per-view programs and packages including several
of these services at combined rates.
Basic cable television service usually consists of signals of all four
national television networks, various independent and educational television
stations (both VHF and UHF) and certain signals received from satellites.
Basic service also usually includes programs originated locally by the system,
which may consist of music, news, weather reports, stock market and financial
information and live or videotaped programs of a public service or
entertainment nature. FM radio signals are also frequently distributed to
subscribers as part of the basic service.
The Wheaton System offers tier services on an optional basis to their
subscribers. A tier generally includes most of the cable networks such as
Entertainment and Sports Programming Network (ESPN), Cable News Network (CNN),
Turner Network Television (TNT), Family Channel, Discovery and others, and the
cable television operators buy tier programming from these networks. The
Systems also offer a package that includes the basic service channels and the
tier services.
The Wheaton System also offers premium services to its subscribers,
which consist of feature films, sporting events and other special features that
are presented without commercial interruption. The cable television operators
buy premium programming from suppliers such as HBO, Showtime, Cinemax or others
at a cost based on the number of subscribers the cable operator serves.
Premium service programming usually is significantly more expensive than the
basic service or tier service programming, and consequently cable operators
price premium service separately when sold to subscribers.
The Wheaton System also offers to subscribers pay-per-view
programming. Pay-per-view is a service that allows subscribers to receive
single programs, frequently consisting of motion pictures that have recently
completed their theatrical exhibitions and major sporting events, and to pay
for such service on a program-by-program basis.
REVENUES. Monthly service fees for basic, tier and premium services
constitute the major source of revenue for the Wheaton System. In addition,
advertising sales are becoming a significant source of revenue for the Wheaton
System. As a result of the adoption by the FCC of new rules under the Cable
Television Consumer Protection and Competition Act of 1992 (the "1992 Cable
Act"), and several rate regulation orders, the Wheaton Systems' rate structures
for cable programming services and equipment have been revised. See Regulation
and Legislation. At December 31, 1994, the Wheaton System's monthly basic
service rates ranged from $9.63 to $11.29, monthly basic and tier ("basic
plus") service rates ranged from $18.79 to $22.11 and monthly premium services
ranged from $6.16 to $10.95 per premium service. Charges for additional
outlets have been eliminated,
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and charges for remote controls and converters have been "unbundled" from the
programming service rates. In addition, the Partnership earns revenues from
the Wheaton System's pay-per-view programs and advertising fees. Related
charges may include a nonrecurring installation fee that ranges from $4.95 to
$42.46; however, from time to time the Wheaton System has followed the common
industry practice of reducing or waiving the installation fee during
promotional periods. Commercial subscribers such as hotels, motels and
hospitals are charged a nonrecurring connection fee that usually covers the
cost of installation. Except under the terms of certain contracts with
commercial subscribers and residential apartment and condominium complexes, the
subscribers are free to discontinue the service at any time without penalty.
For the year ended December 31, 1994, of the total fees received by the Wheaton
System, basic service and tier service fees accounted for approximately 63% of
total revenues, premium service fees accounted for approximately 19% of total
revenues, pay-per-view fees were approximately 3% of total revenues,
advertising fees were approximately 6% of total revenues and the remaining 9%
of total revenues came principally from equipment rentals, installation fees
and program guide sales. The Partnership is dependent upon the timely receipt
of service fees to provide for maintenance and replacement of plant and
equipment, current operating expenses and other costs of the Wheaton System.
The Partnership's business consists of providing cable television
services to a large number of customers, the loss of any one of which would
have no material effect on the Partnership's business. The Wheaton System has
had some subscribers who later terminated the service. Terminations occur
primarily because people move to another home or to another city. In other
cases, people terminate on a seasonal basis or because they no longer can
afford or are dissatisfied with the service. The amount of past due accounts
in the Wheaton System is not significant. The Managing General Partner's
policy with regard to past due accounts is basically one of disconnecting
service before a past due account becomes material.
The Partnership does not depend to any material extent on the
availability of raw materials; it carries no significant amounts of inventory
and it has no material backlog of customer orders. The Partnership has no
employees because all properties are managed by employees of Intercable.
Intercable has engaged in research and development activities relating to the
provision of new services but the amount of the Partnership's funds expended
for such research and development has never been material.
Compliance with Federal, state and local provisions that have been
enacted or adopted regulating the discharge of materials into the environment
or otherwise relating to the protection of the environment has had no material
effect upon the capital expenditures, earnings or competitive position of the
Partnership.
FRANCHISES. The Wheaton System is constructed and operated under
non-exclusive, fixed-term franchises or other types of operating authorities
(referred to collectively herein as "franchises") granted by local governmental
authorities. The Wheaton System's franchises require that franchise fees
ranging from 3% to 5% of gross revenues of the cable system be paid to the
governmental authority that granted the franchise, that certain channels be
dedicated to municipal use, that municipal facilities, hospitals and schools be
provided cable service free of charge and that any new cable plant be
substantially constructed within specific periods. (See Item 2 for a range of
franchise expiration dates of the Wheaton System.)
The responsibility for franchising of cable television systems
generally is left to state and local authorities. There are, however, several
provisions in the Communications Act of 1934, as amended, that govern the terms
and conditions under which cable television systems provide service, including
the standards applicable to cable television operators seeking renewal of a
cable television franchise. In addition, the 1992 Cable Act also made several
procedural changes to the process under which a cable operator has not
substantially complied with the material terms of the franchise, has not
provided reasonable service in light of the community's needs, does not have
the financial, legal and technical ability to provide the services being
proposed for the future, or has not presented a reasonable proposal for future
service. A final decision of non-renewal by the franchising authority is
appealable in court. The Managing General Partner and its affiliates recently
have experienced lengthy negotiations with some franchising authorities for the
granting of franchise renewals and transfers. Some of the issues involved in
recent renewal negotiations include rate reregulation, customer service
standards, cable plant upgrade or replacement and shorter terms of franchise
agreements. The inability of the Partnership to renew a
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franchise, or lengthy negotiations or litigation involving the renewal process
could have an adverse impact on the business of the Partnership.
COMPETITION. Cable television systems currently experience
competition from several sources, but two technologies, Multichannel Multipoint
Distribution Service ("MMDS") systems, commonly called wireless cable systems,
and Direct Broadcast Satellite ("DBS") systems, which distribute programming to
home satellite dishes, currently pose the greatest potential threat to the
cable television industry.
MMDS systems will likely focus on providing service to residents of
rural areas that are not served by cable television systems, but providers of
programming via MMDS systems will generally have the potential to compete
directly with cable television systems in urban areas as well, and in some
areas of the country, MMDS systems are now in direct competition with cable
television systems. To date, the Wheaton System has not lost a significant
number of subscribers, nor a significant amount of revenue, to MMDS operators.
DBS operators deliver premium channel services and specialized
programming to subscribers by high-powered DBS satellites on a wide-scale
basis, and two major companies began operations in 1994. Subscribers are able
to receive DBS services virtually anywhere in the United States with a rooftop
or wall-mounted antenna. In some instances, DBS systems may serve as a
complement to cable television operations by enabling cable television
operators to offer additional channels of programming without the construction
of additional cable plant. DBS companies use video compression technology to
increase the channel capacity of their satellite systems to provide a wide
variety of program services that are competitive with those of cable television
systems.
Cable television systems also compete with broadcast television,
private cable television systems known as Master Antenna Television ("MATV"),
Satellite Master Antenna Television ("SMATV") and Television Receive-Only Earth
Stations ("TVRO"), which are satellite receiving antenna dishes that are used
by "backyard users" to receive satellite delivered programming directly in
their homes. MATV and SMATV generally serve multi-unit dwellings such as
condominiums, apartment complexes and private residential communities.
There is also potential competition from an emerging technology, Local
Multipoint Distribution Service ("LMDS"). When it is authorized for service,
the LMDS, sometimes referred to as cellular television, could have the
capability of delivering approximately 50 channels, or if two systems were
combined 100 channels, of video programming to a subscriber's home, which
capacity could be increased by using video compression technology. The
Managing General Partner believes that there are not any current fully
operational LMDS systems.
Although the Wheaton System has not yet encountered competition from a
telephone company entering into the business of providing video services to
subscribers, the Wheaton System could potentially face competition from
telephone companies doing so. A Federal cross-ownership restriction has
historically limited entry into the cable television business by potentially
strong competitors such as telephone companies. This restriction, which is
contained in the 1984 Cable Act, has generally prohibited telephone companies
from owning or operating cable television systems within their own telephone
service areas, but several recent court decisions have eliminated this
restriction. In addition, the FCC is authorizing telephone companies to
provide video dialtone service within their service areas. Legislation is also
pending in Congress that would permit telephone companies to provide video
programming thorough separate subsidiaries. The Managing General Partner
cannot predict at this time to what extent current restrictions will be
modified to permit telephone companies to provide cable television services
within their own service areas in competition with cable television systems.
See Regulation and Legislation, Ownership and Market Structure for a
description of the potential participation of the telephone industry in the
delivery of cable television services. Entry into the market by telephone
companies as direct competitors of the Wheaton System could adversely impact
the profitability of the Wheaton System. If a telephone company were to become
a direct competitor of the Partnership in an area served by the Wheaton System,
the Partnership could be at a competitive disadvantage because of the relative
financial strength of a telephone company compared to the Partnership.
Depending on a number of factors, such competition could also result in cable
television systems providing the same types of services now provided by the
telephone industry.
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The FCC has established a new wireless telecommunications service
known as Personal Communications Service ("PCS"). It is envisioned that PCS
would provide portable non-vehicular mobile communications services similar to
that available from cellular telephone companies, but at a lower cost. PCS
would be delivered by placing numerous microcells in a particular area to be
covered, accessible to both residential and business customers. Because of the
need to link the many microcells necessary to deliver this service
economically, many parties are investigating integration of PCS with cable
television operations. Several cable television multiple systems operators and
others, including affiliates of the Managing General Partner, hold or have
requested experimental licenses from the FCC to test PCS technology. The FCC
has established spectrum auctioning procedures for PCS licenses and the
licenses are being auctioned in a series of auction events.
While there are currently no MMDS systems operating in the Wheaton
System service area, an MMDS provider has begun operations in Chicago and is a
pending competitor. There are two TVRO dealers that provide minimal
competition, and one SMATV operator that services a 300-unit apartment complex
in the Wheaton System's service area.
Cable television franchises are not exclusive, so that more than one
cable television system may be built in the same area (known as an
"overbuild"), with potential loss of revenues to the operator of the original
cable television system. The Wheaton System currently faces no direct
competition from other cable television operators. Ameritech has announced
plans to build a cable television system in the Naperville, Illinois area and
to extend into several other communities within the next few years. Ameritech
is the major provider of telephone services in the Naperville, Illinois area,
and it has substantially greater financial resources than the Partnership. The
Managing General Partner is uncertain at this time whether Ameritech's plans
include any of the communities located in the Wheaton System.
REGULATION AND LEGISLATION. The cable television industry is
regulated through a combination of the Federal Communications Commission
("FCC"), some state governments, and most local governments. In addition, the
Copyright Act of 1976 imposes copyright liability on all cable television
systems. Cable television operations are subject to local regulation insofar
as systems operate under franchises granted by local authorities.
Cable Television Consumer Protection and Competition Act of 1992. On
October 5, 1992, Congress enacted the Cable Television Consumer Protection and
Competition Act of 1992 (the "1992 Cable Act"), which became effective on
December 4, 1992. This legislation has caused significant changes to the
regulatory environment in which the cable television industry operates. The
1992 Cable Act generally allows for a greater degree of regulation of the cable
television industry. Under the 1992 Cable Act's definition of effective
competition, nearly all cable television systems in the United States,
including those owned and managed by Intercable, are subject to rate
regulation of basic cable services. In addition, the 1992 Cable Act allows
the FCC to regulate rates for non-basic service tiers other than premium
services in response to complaints filed by franchising authorities and/or
cable subscribers. In April 1993, the FCC adopted regulations governing rates
for basic and non-basic services. The FCC's rules became effective on
September 1, 1993.
In compliance with these rules, the Managing General Partner reduced
rates charged for certain regulated services effective September 1, 1993.
These reductions resulted in some decrease in revenues and operating income
before depreciation and amortization; however, the decrease was not as severe
as originally anticipated. The Managing General Partner has undertaken actions
to mitigate a portion of these reductions primarily through (a) new service
offerings in some systems, (b) product re- marketing and re-packaging and (c)
marketing efforts directed at non-subscribers.
On February 22, 1994, however, the FCC adopted several additional rate
orders including an order which revised its earlier- announced regulatory
scheme with respect to rates. The FCC's new regulations generally require rate
reductions, absent a successful cost-of-service showing, of 17% of September
30, 1992 rates, adjusted for inflation, channel modifications, equipment costs,
and increases in programming costs. However, the FCC held rate reductions in
abeyance in certain systems. The new regulations became effective on
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May 15, 1994, but operators could elect to defer rate reductions to July 14,
1994, so long as they made no changes in their rates and did not restructure
service offerings between May 15 and July 14.
On February 22, 1994, the FCC also adopted interim cost-of-service
regulations. Rate reductions will not be required where it is successfully
demonstrated that rates for basic and other regulated programming services are
justified and reasonable using cost-of-service standards. The FCC established
an interim industry-wide 11.25% permitted rate of return, and requested
comments on whether this standard and other interim cost-of-service standards
should be made permanent. The FCC also established a presumption that
acquisition costs above a system's book value should be excluded from the rate
base, but the FCC will consider individual showings to rebut this presumption.
The need for special rate relief will also be considered by the FCC if an
operator demonstrates that the rates set by a cost-of-service proceeding would
constitute confiscation of investment, and that, absent a higher rate, the
return necessary to operate and to attract investment could not be maintained.
The FCC will establish a uniform system of accounts for operators that elect
cost-of-service rate regulation, and the FCC has adopted affiliate transaction
regulations. After a rate has been set pursuant to a cost-of-service showing,
rate increases for regulated services will be indexed for inflation, and
operators will also be permitted to increase rates in response to increases in
costs beyond their control, such as taxes and increased programming costs.
After analyzing the effects of the two methods of rate regulation, the
Partnership elected to file cost-of-service showings for the Wheaton System.
The Managing General Partner thus anticipates no further reduction in revenues
or operating income before depreciation and amortization resulting from the
FCC's rate regulations. At this time, however, the regulatory authorities have
not approved the cost-of-service showings, and there can be no assurance that
the Partnership's cost-of-service showings will prevent further rate reductions
in the Wheaton System until such final approvals are received.
Among other issues addressed by the FCC in its February 1994 rate
orders was the treatment of packages of a la carte channels. The FCC in its
rate regulations adopted April 1, 1993, exempted from rate regulation the price
of packages of a la carte channels upon the fulfillment of certain conditions.
On November 10, 1994, the FCC reversed its policy regarding rate regulation of
packages of a la carte services. A la carte services that are offered in a
package will now be subject to rate regulation by the FCC, although the FCC
indicated that it cannot envision circumstances in which any price for a
collective offering of premium channels that have traditionally been offered on
a per-channel basis would be found to be unreasonable.
On November 10, 1994, the FCC also announced a revision to its
regulations governing the manner in which cable operators may charge
subscribers for new cable programming services. In addition to the present
formula for calculating the permissible rate for new services, the FCC
instituted a three-year flat fee mark-up plan for charges relating to new
channels of cable programming services. Commencing on January 1, 1995,
operators may charge for new channels of cable programming services added after
May 14, 1994 at a rate of up to 20 cents per channel, but may not make
adjustments to monthly rates totaling more than $1.20 plus an additional 30
cents for programming license fees per subscriber over the first two years of
the three-year period for these new services. Operators may charge an
additional 20 cents in the third year only for channels added in that year plus
the costs for the programming. Operators electing to use the 20 cent per
channel adjustment may not also take a 7.5% mark-up on programming cost
increases, which is permitted under the FCC's current rate regulations. The
FCC has requested further comment as to whether cable operators should continue
to receive the 7.5% mark-up on increases in license fees on existing
programming services.
The FCC also announced that it will permit operators to offer a "new
product tier" ("NPT"). Operators will be able to price this tier as they elect
so long as, among other conditions, other channels that are subject to rate
regulation are priced in conformity with applicable regulations and operators
do not remove programming services from existing tiers and offer them on the
NPT.
There have been several lawsuits filed by cable operators and
programmers in Federal court challenging various aspects of the 1992 Cable Act,
including provisions relating to mandatory broadcast signal carriage,
retransmission consent, access to cable programming, rate regulations,
commercial leased channels and public
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access channels. On April 8, 1993, a three-judge Federal district court panel
issued a decision upholding the constitutionality of the mandatory signal
carriage requirements of the 1992 Cable Act. That decision was appealed
directly to the United States Supreme Court. The United States Supreme Court
vacated the lower court decision on June 27, 1994 and remanded the case to the
district court for further development of a factual record. The Supreme
Court's majority determined that the must-carry rules were content neutral, but
that it was not yet proven that the rules were needed to preserve the economic
health of the broadcasting industry. In the interim, the must-carry rules will
remain in place during the pendency of the proceedings in district court. In
1993, a Federal district court for the District of Columbia upheld provisions
of the 1992 Cable Act concerning rate regulation, retransmission consent,
restrictions on vertically integrated cable television operators and
programmers, mandatory carriage of programming on commercial leased channels
and public, educational and governmental access channels and the exemption for
municipalities from civil damage liability arising out of local regulation of
cable services. The 1992 Cable Act's provisions providing for multiple
ownership limits for cable operators and advance notice of free previews for
certain programming services have been found unconstitutional. In November
1993, the United States Court of Appeals for the District of Columbia held that
the FCC's regulations implemented pursuant to Section 10 of the 1992 Cable Act,
which permit cable operators to ban indecent programming on public, educational
or governmental access channels or leased access channels, were
unconstitutional, but the court has agreed to reconsider its decision. All of
these decisions construing provisions of the 1992 Cable Act and the FCC's
implementing regulations have been or are expected to be appealed.
Ownership and Market Structure. The FCC rules and Federal law
generally prohibit the direct or indirect common ownership, operation, control
or interest in a cable television system, on the one hand, and a local
television broadcast station whose television signal reaches any portion of the
community served by the cable television system, on the other hand. The FCC
recently lifted its ban on the cross-ownership of cable television systems by
broadcast networks. The FCC revised its regulations to permit broadcast
networks to acquire cable television systems serving up to 10% of the homes
passed in the nation, and up to 50% of the homes passed in a local market.
Neither the Partnership nor the Managing General Partner has any direct or
indirect ownership, operation, control or interest in a television broadcast
station, or a telephone company, and they are thus presently unaffected by the
cross-ownership rules.
The Cable Communications Policy Act of 1984 (the "1984 Cable Act") and
FCC regulations generally prohibit the common operation of a cable television
system and a telephone company within the same service area. Until recently, a
provision of a Federal court antitrust consent decree also prohibited the
regional Bell operating companies ("RBOCs") from engaging in cable television
operations. This prohibition was recently removed when the court retaining
jurisdiction over the consent decree ruled that the RBOCs could provide
information services over their facilities. This decision permits the RBOCs to
acquire or construct cable television systems outside of their own service
areas.
The 1984 Cable Act prohibited local exchange carriers, including the
RBOCs, from providing video programming directly to subscribers within their
local exchange telephone service areas, except in rural areas or by specific
waiver of FCC rules. Several Federal district courts have struck down the 1984
Cable Act's telco/cross-ownership provision as facially invalid and
inconsistent with the First Amendment. The United States Court of Appeals for
the Fourth and Ninth Circuits have upheld the appeals of two of these district
court decisions, and the United States Justice Department is expected to
request the United States Supreme Court to review these decisions. This
Federal cross-ownership rule is particularly important to the cable industry
since these telephone companies already own certain facilities needed for
cable television operation, such as poles, ducts and associated rights-of-way.
The FCC amended its rules in 1992 to permit local telephone companies
to offer "video dialtone" service for video programmers, including channel
capacity for the carriage of video programming and certain noncommon carrier
activities such as video processing, billing and collection and joint marketing
arrangements. In its video dialtone order, which was part of a comprehensive
proceeding examining whether and under what circumstances telephone companies
should be allowed to provide cable television services, including video
programming to their customers, the FCC concluded that neither the 1984 Cable
Act nor its rules apply to prohibit
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the interexchange carriers (i.e., long distance telephone companies such as
AT&T) from providing such services to their customers. Additionally, the FCC
also concluded that where a local exchange carrier ("LEC") makes its facilities
available on a common carrier basis for the provision of video programming to
the public, the 1984 Cable Act does not require the LEC or its programmer
customers to obtain a franchise to provide such service. This aspect of the
FCC's video dialtone order was upheld on appeal by the United States Court of
Appeals for the D.C. Circuit. The FCC recently issued an order reaffirming its
initial decision, and this order has been appealed. Because cable operators
are required to bear the costs of complying with local franchise requirements,
including the payment of franchise fees, the FCC's decision could place cable
operators at a competitive disadvantage vis-a-vis services offered on a common
carrier basis over local telephone company provided facilities. In its
Reconsideration Order, the FCC, among other actions, refused to require
telephone companies to justify cost allocations prior to the construction of
video dialtone facilities, and indicated that it would provide guidance on
costs that must be included in proposed video dialtone tariffs. The FCC also
established dual Federal/state jurisdiction over video dialtone services based
on the origination point of the video dialtone programming service. In a
separate proceeding, the FCC has proposed to increase the numerical limit on
the population of areas qualifying as "rural" and in which LECs can provide
cable service without a FCC waiver.
On January 12, 1995, the FCC adopted a Fourth Further Notice of
Proposed Rulemaking in its video dialtone docket. The FCC tentatively
concluded that it should not ban telephone companies from providing their own
video programming over their video dialtone platforms in those areas in which
the cable/telephone cross-ownership rules have been found unconstitutional.
The FCC requested comments on this issue and on further refinements of its
video dialtone regulatory framework concerning, among other issues, telephone
programmer affiliation standards, the establishment of structural safeguards to
prevent cross-subsidization of video dialtone and programming activities, and
the continuation of the FCC's ban prohibiting telephone companies from
acquiring cable systems within their telephone service areas for the provision
of video dialtone services. The FCC will also consider whether a LEC offering
video dialtone service must secure a local franchise if that LEC also engages
in the provision of video programming carried on its video dialtone platform.
The FCC has also proposed to broadly interpret its authority to waive the
cable/telephone cross-ownership ban upon a showing by telephone companies that
they comply with the safeguards which the FCC establishes as a condition of
providing video programming.
A number of bills that would have permitted telephone companies to
provide cable television service within their own service areas were considered
during the last Congress, but none were adopted. These bills would have
permitted the provision of cable television service by telephone companies in
their own service areas conditioned on the establishment of safeguards to
prevent cross-subsidization between telephone and cable television operations
and the provision of telecommunication services by cable television systems.
Similar legislation is expected to be considered by Congress during its current
session. The outcome of these FCC, legislative or court proceedings and
proposals or the effect of such outcome on cable system operations cannot be
predicted.
ITEM 2. PROPERTIES
The Partnership owned only one cable television system at December 31,
1994, the Wheaton System, which was acquired in October 1989.
The following sets forth (i) the monthly basic plus service rates
charged to subscribers, (ii) the number of basic subscribers and pay units and
(iii) the range of franchise expiration dates for the Wheaton System. The
monthly basic service rates set forth herein represent, with respect to systems
with multiple headends, the basic service rate charged to the majority of the
subscribers within the Wheaton System. While the charge for basic plus service
may have increased in 1993 in some cases as a result of the FCC's rate
regulations, overall revenues may have decreased due to the elimination of
charges for additional outlets and certain equipment. In cable television
systems, basic subscribers can subscribe to more than one pay TV service.
Thus, the total number of pay services subscribed to by basic subscribers are
called pay units. As of December 31, 1994, the Wheaton System operated
approximately 1,300 miles of cable plant, passing approximately 80,000 homes,
representing an
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approximate 60% penetration rate. Figures for numbers of subscribers, miles of
cable plant and homes passed are compiled from the Managing General Partner's
records and may be subject to adjustments.
<TABLE>
<CAPTION>
At December 31,
----------------------------------------------
WHEATON, ILLINOIS 1994 1993 1992
----------------- ---- ---- ----
<S> <C> <C> <C>
Monthly basic plus service rate $ 22.11 $ 22.11 $ 21.95
Basic subscribers 49,415 45,884 43,310
Pay units 40,065 39,984 34,491
</TABLE>
Franchise expiration dates range from April 1996 to October 2005.
PROGRAMMING SERVICES
Programming services provided by the Wheaton System include local
affiliates of the national broadcast networks, local independent broadcast
channels, the traditional satellite services (e.g., American Movie Classics,
Arts & Entertainment, Black Entertainment Network, C-SPAN, The Discovery
Channel, Lifetime, Entertainment Sports Network, Home Shopping Network, Mind
Extension University, Music Television, Nickelodeon, Turner Network Television,
The Nashville Network, Video Hits One, and superstations WOR, WGN and TBS. The
Wheaton System also provides a selection of premium channel programming (e.g.,
Cinemax, Encore, Home Box Office, Showtime and The Movie Channel).
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK
AND RELATED SECURITY HOLDER MATTERS
While the Partnership's interests are publicly held, there is no
established public market for the interests, and it is not expected that such a
market will develop in the future. As of February 15, 1995, the approximate
number of equity security holders in the Partnership was 9,209.
9
<PAGE> 10
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
For the Year Ended December 31,
-----------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues $19,615,180 $19,354,715 $18,276,938 $16,342,326 $13,747,545
Depreciation and
Amortization 12,583,108 12,737,314 12,396,480 11,771,912 11,061,716
Operating Loss (7,334,009) (7,047,610) (7,461,060) (7,912,013) (7,326,349)
Net Loss (9,644,492) (8,926,720) (9,538,943) (10,686,715) (10,586,236)
Weighted average
number of Limited
Partner Units
Outstanding 85,470 85,740 85,740 85,740 85,251
General Partners'
Deficit (525,237) (428,792) (339,525) (244,136) (137,269)
Limited Partners'
Capital 22,541,155 32,089,202 40,926,655 50,370,209 60,950,057
Total Assets 58,318,155 69,055,535 78,108,627 87,242,993 95,801,403
Credit Facility
and Other Debt 35,245,699 35,944,662 35,825,369 35,402,830 32,277,195
Managing General
Partner Advances - - 166,931 38,854 1,086,245
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
1994 Compared to 1993 -
Revenues of the Partnership for the year ended December 31, 1994 totalled
$19,615,180, compared to $19,354,715 in 1993, an increase of $260,465, or
approximately 1 percent. Increases in basic subscribers primarily accounted
for the increase in revenues. The Partnership added 3,531 basic subscribers in
1994, an increase of approximately 8 percent. Basic subscribers totalled
45,884 at December 31, 1993, compared to 49,415 at December 31, 1994.
Increases in advertising revenue also contributed to the increase in revenue.
The increase in revenues would have been greater if not for the reduction in
basic rates due to basic rate regulations issued by the FCC in April 1993 and
February 1994, with which the Partnership complied effective September 1993 and
July 1994, respectively.
Operating, general and administrative expenses increased $830,868, or
approximately 8 percent, from $10,882,377 in 1993 to $11,713,245 in 1994.
Operating, general and administrative expenses represented approximately 56
percent and 59 percent, respectively, of revenues in 1993 and 1994. The total
increase in operating, general and administrative expenses for the year ended
December 31, 1994 as compared to the prior year was the result of increases in
programming fees, system office costs and advertising sales related costs and
was partially offset by a decrease in copyright related costs. No other
individual factor significantly affected the increase in operating, general and
administrative expense for the period.
Management and supervisory fees to the Managing and Associate General
Partners and allocated administrative costs from the Managing General Partner
decreased $129,798, or approximately 4 percent, from $2,782,634 in 1993 to
$2,652,836 in 1994. This decrease is primarily the result of a decrease in the
allocated administrative costs, which was the result of a change in the
Managing General Partner's allocation methodology (Note 3).
Operating income before depreciation and amortization expense decreased
$440,605, or approximately 8 percent, from $5,689,704 in 1993 to $5,249,099 in
1994 as a result of the increases in operating, general and administrative
expenses exceeding the increases in revenues and the decreases in management
and supervisory fees to the
10
<PAGE> 11
Managing and Associate General Partners and allocated administrative costs from
the Managing General Partner. The decrease in operating income before
depreciation and amortization reflects the current operating environment of the
cable television industry. The FCC rate regulations under the 1992 Cable Act
have caused revenues to increase more slowly than otherwise would have been the
case. In turn, this has caused certain expenses which are a function of
revenue, such as franchise fees, copyright fees and management fees, to
increase more slowly than in prior years. However, other operating costs such
as programming fees, salaries and benefits, and marketing costs as well as
other costs incurred by the Managing General Partner, which are allocated to
the Partnership, continue to increase at historical rates. This situation has
led to reductions in operating income before depreciation and amortization as a
percent of revenue ("Operating Margin"). Such reductions in Operating Margins
may continue in the near term as the Partnership and the Managing General
Partner incur cost increases due to, among other things, increases in
programming fees, compliance costs associated with reregulation and
competition, that exceed increases in revenue. The Managing General Partner
will attempt to mitigate a portion of these reductions through (a) new service
offerings, (b) product re-marketing and re-packaging and (c) marketing efforts
targeted at non-subscribers.
Interest expense increased $347,558, or approximately 19 percent, from
$1,803,227 in 1993 to $2,150,785 in 1994. This increase in interest expense is
primarily due to higher average interest rates charged on interest bearing
obligations and was partially offset by lower average outstanding balances on
interest bearing obligations during 1994 as compared to 1993.
Net loss increased $717,772, or approximately eight percent, from
$8,926,720 in 1993 to $9,644,492 in 1994. These losses are the result of the
factors discussed above, and are expected to continue.
1993 Compared to 1992 -
Revenues of the Partnership for the year ended December 31, 1993 totaled
$19,354,715, an increase of $1,077,777, or approximately 6 percent, over the
amount reported in 1992. Of the total increase in revenues for the year ended
December 31, 1993, approximately $832,000 related to an increase in basic
service revenues, and approximately $132,000 related to an increase in
advertising revenue. The increase in basic service revenues can be attributed
primarily to an increase in the number of basic subscribers and basic service
rate adjustments in the Wheaton System. The increase in basic subscribers and
basic service rate adjustments accounted for approximately 56 percent and 44
percent, respectively, of the increase in total basic service revenues for the
year ended December 31, 1993 as compared to the amounts reported in the similar
period. The increase in revenues would have been greater if not for the
reduction in basic rates due to basic rate regulations issued by the FCC in
April 1993 with which the Partnership complied effective September 1, 1993.
Operating, general and administrative expenses increased $127,716, or
approximately one percent, from $10,754,661 in 1992 to $10,882,377 in 1993.
Operating, general and administrative expenses represented approximately 59
percent and 56 percent, respectively, of revenues in 1992 and 1993. The total
increase in operating, general and administrative expenses for the year ended
December 31, 1993 as compared to the prior year was the result of increases in
programming fees, marketing costs and advertising sales related costs and was
partially offset by a decrease in personnel related costs. No other individual
factor significantly affected the increase in operating, general and
administrative expenses for the periods discussed above.
Management and supervisory fees to the Managing and Associate General
Partners and allocated administrative costs from the Managing General Partner
increased $195,777, or approximately eight percent, from $2,586,857 in 1992 to
$2,782,634 in 1993. This increase was primarily the result of the 6 percent
increase in revenues for the year ended December 31, 1993, as compared to 1992,
upon which the management and supervisory fees and allocated administrative
costs are calculated.
Operating income before depreciation and amortization expense
increased $754,284, or approximately 15 percent, from $4,935,420 in 1992 to
$5,689,704 in 1993 as a result of the increase in revenues, which was partially
offset by the increases in operating, general and administrative expenses and
management and supervisory fees from the Managing and Associate General
Partners and allocated administrative costs from the Managing General Partner.
Interest expense decreased $267,493, or approximately 13 percent, from
$2,070,720 in 1992 to $1,803,227 in 1993. This decrease in interest expense
was primarily due to lower average interest rates charged on interest bearing
11
<PAGE> 12
obligations and was partially offset by higher outstanding balances on interest
bearing obligations during 1993 as compared to 1992.
Net loss decreased $612,223, or approximately 6 percent, from
$9,538,943 in 1992 to $8,926,720 in 1993. These losses were a result of the
factors discussed above.
Financial Condition
For the year ended December 31, 1994, the Partnership generated
operating income before depreciation and amortization of $5,249,099 and
incurred interest expense totalling $2,150,785, leaving $3,098,314 to fund
capital expenditures, principal payments and other non-operating costs. During
1994, the Partnership spent approximately $3,475,000 for capital expenditures
for its cable television operations serving the communities in the Wheaton
System. Approximately 50 percent of these expenditures related to cable,
hardware and labor for new subscriber installations, to extend the cable plant
to serve additional customers and to replace equipment in the Wheaton System.
Approximately 11 percent was for the replacement of converters, and the
remainder of these expenditures was for various enhancements. Capital
expenditures for 1995 are expected to be approximately $3,378,000 and will be
financed from cash flow from operations and borrowings from the Partnership's
new revolving credit facility. Approximately 53 percent of these expenditures
will relate to cable, hardware and labor to extend the cable plant to serve
additional customers, to make additional subscriber installations, and to
replace equipment in the Wheaton System, approximately 13 percent will relate
to the replacement of converters and the remainder of these expenditures will
relate to various other enhancements. The Managing General Partner presently
believes cash flow from operations and borrowings available from the new
revolving credit facility will be sufficient to fund capital expenditures and
interest payments and other liquidity needs of the Partnership over the
near-term.
At June 30, 1993, the Partnership's former revolving credit facility
converted to a term loan. The outstanding balance of $33,580,000 was repaid in
December 1994 with borrowings from a new $36,000,000 revolving credit facility.
The new revolving credit facility converts to a term loan on December 31, 1996,
at which time the then-outstanding balance is payable in quarterly installments
through December 30, 2002. At December 31, 1994, $35,000,000 was outstanding
under the new agreement leaving $1,000,000 available for future needs of the
Partnership. Interest on the outstanding principal balance is at the
Partnership's option of Prime plus 1/4 percent or the London Interbank Offered
Rate plus 1-1/4 percent. A fee of 3/8 of one percent per annum on the unused
portion of the new commitment is also required.
On January 12, 1993, the Partnership entered into an interest rate cap
agreement covering outstanding debt obligations of $20,000,000. The
Partnership paid a fee of $194,000 for the rate cap agreement. The agreement
protects the Partnership from LIBOR interest rates that exceed 7 percent for
three years from the date of the agreement.
Regulation and Legislation
On October 5, 1992, Congress enacted the Cable Television Consumer
Protection and Competition Act of 1992 (the "1992 Cable Act"), which became
effective on December 4, 1992. The 1992 Cable Act generally allows for a
greater degree of regulation of the cable television industry. In April 1993,
the FCC adopted regulations governing rates for basic and non-basic services.
These regulations became effective on September 1, 1993. Such regulations
caused reductions in rates for certain regulated services. On February 22,
1994, the FCC adopted several additional rate orders including an order which
revised its earlier-announced regulatory scheme with respect to rates. The
Partnership has filed a cost-of-service showing for its Wheaton System and thus
anticipates no further reductions in rates. The cost-of-service showing has
not yet received final approval from franchising authorities, however, and
there can be no assurance that the Partnership's cost-of-service showing will
prevent further rate reductions until such final approval is received. See
Item 1 for further discussion of the provisions of the 1992 Cable Act and the
FCC regulations promulgated thereunder.
12
<PAGE> 13
Item 8. FINANCIAL STATEMENTS
JONES GROWTH PARTNERS L.P.
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1994 AND 1993
AND FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
INDEX
<TABLE>
<CAPTION>
Page
--------
<S> <C>
Report of Independent Public Accountants 14
Balance Sheets 15
Statements of Operations 17
Statements of Partners' Capital (Deficit) 18
Statements of Cash Flows 19
Notes to Financial Statements 20
</TABLE>
13
<PAGE> 14
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of Jones Growth Partners L.P.:
We have audited the accompanying balance sheets of Jones Growth Partners L.P. (a
Colorado limited partnership ) as of December 31, 1994 and 1993, and the related
statements of operations, partners' capital (deficit) and cash flows for each of
the three years in the period ended December 31, 1994. These financial
statements are the responsibility of the Managing General Partner's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Jones Growth Partners L.P. as
of December 31, 1994 and 1993, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1994, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Denver, Colorado,
March 8, 1995.
14
<PAGE> 15
JONES GROWTH PARTNERS L.P.
(A Limited Partnership)
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
December 31,
-----------------------------------------
1994 1993
---------------- ----------------
<S> <C> <C>
CASH $ 170,648 $ 1,646,850
TRADE RECEIVABLES, less allowance
for doubtful receivables of $21,597 and $18,656 at
December 31, 1994 and 1993, respectively 66,829 231,353
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 43,210,371 39,735,832
Less- accumulated depreciation (20,003,575) (15,662,764)
----------- -----------
23,206,796 24,073,068
Franchise costs, net of accumulated amortization
of $35,174,652 and $28,474,550 at December 31, 1994
and 1993, respectively 24,682,296 31,382,398
Subscriber lists, net of accumulated amortization
of $7,053,212 and $5,709,743 at December 31, 1994
and 1993, respectively 2,351,070 3,694,539
Costs in excess of interests in net assets purchased,
net of accumulated amortization of $1,043,313 and
$844,586 at December 31, 1994 and 1993, respectively 6,897,742 7,096,469
----------- -----------
Total investment in cable
television properties 57,137,904 66,246,474
DEPOSITS, PREPAID EXPENSES AND OTHER 942,774 930,858
----------- -----------
Total assets $ 58,318,155 $ 69,055,535
=========== ===========
</TABLE>
The accompanying notes to financial statements
are an integral part of these balance sheets.
15
<PAGE> 16
JONES GROWTH PARTNERS L.P.
(A Limited Partnership)
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
<TABLE>
<CAPTION>
December 31,
-----------------------------------------
1994 1993
---------------- ----------------
<S> <C> <C>
LIABILITIES:
Credit facility and other debt $ 35,245,699 $ 35,944,662
Trade accounts payable and accrued liabilities 989,457 1,199,729
Accrued interest 16,780 196,876
Subscriber prepayments 50,301 53,858
----------- -----------
Total liabilities 36,302,237 37,395,125
----------- -----------
COMMITMENTS AND CONTINGENCIES (Note 7)
PARTNERS' CAPITAL (DEFICIT):
General Partners-
Contributed capital 1,000 1,000
Accumulated deficit (526,237) (429,792)
----------- -----------
(525,237) (428,792)
----------- -----------
Limited Partners-
Contributed capital, net of related
commissions and syndication costs
(85,740 units outstanding
at December 31, 1994 and 1993) 73,790,065 73,790,065
Accumulated deficit (51,248,910) (41,700,863)
----------- -----------
22,541,155 32,089,202
----------- -----------
Total partners' capital (deficit) 22,015,918 31,660,410
----------- -----------
Total liabilities and partners' capital (deficit) $ 58,318,155 $ 69,055,535
=========== ===========
</TABLE>
The accompanying notes to financial statements
are an integral part of these balance sheets.
16
<PAGE> 17
JONES GROWTH PARTNERS L.P.
(A Limited Partnership)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Year Ended
December 31,
---------------------------------------------------------------
1994 1993 1992
-------------------- -------------------- --------------------
<S> <C> <C> <C>
REVENUES $19,615,180 $19,354,715 $18,276,938
COSTS AND EXPENSES:
Operating, general and administrative 11,713,245 10,882,377 10,754,661
Management and supervisory fees
to the General Partners and
allocated administrative costs
from the Managing General Partner 2,652,836 2,782,634 2,586,857
Depreciation and amortization 12,583,108 12,737,314 12,396,480
---------- ---------- ----------
OPERATING LOSS (7,334,009) (7,047,610) (7,461,060)
OTHER INCOME (EXPENSE):
Interest expense (2,150,785) (1,803,227) (2,070,720)
Interest income 31,884 27,385 5,158
Other, net (191,582) (103,268) (12,321)
---------- ---------- ----------
NET LOSS $(9,644,492) $(8,926,720) $(9,538,943)
========== ========== ==========
ALLOCATION OF NET LOSS:
Managing General Partner $ (96,445) $ (89,267) $ (95,389)
========== ========== ==========
Limited Partners $(9,548,047) $(8,837,453) $(9,443,554)
========== ========== ==========
NET LOSS PER LIMITED PARTNERSHIP UNIT $ (111.36) $ (103.07) $ (110.14)
========== ========== ==========
WEIGHTED AVERAGE NUMBER OF LIMITED
PARTNER UNITS OUTSTANDING 85,740 85,740 85,740
========== ========== ==========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
17
<PAGE> 18
JONES GROWTH PARTNERS L.P.
(A Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
<TABLE>
<CAPTION>
For the Year Ended
December 31,
-------------------------------------------------------------
1994 1993 1992
------------------ ----------------- ------------------
<S> <C> <C> <C>
GENERAL PARTNERS:
Balance, beginning of year $ (428,792) $ (339,525) $ (244,136)
Net loss for the year (96,445) (89,267) (95,389)
---------- ---------- ----------
Balance, end of year $ (525,237) $ (428,792) $ (339,525)
========== ========== ==========
LIMITED PARTNERS:
Balance, beginning of year $32,089,202 $40,926,655 $50,370,209
Net loss for the year (9,548,047) (8,837,453) (9,443,554)
---------- ---------- ----------
Balance, end of year $22,541,155 $32,089,202 $40,926,655
========== ========== ==========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
18
<PAGE> 19
JONES GROWTH PARTNERS L.P.
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Year Ended
December 31,
----------------------------------------------------------
1994 1993 1992
------------------ ------------------ ------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (9,644,492) $(8,926,720) $(9,538,943)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 12,583,108 12,737,314 12,396,480
Amortization of interest rate
protection contract 64,668 64,668 30,000
Decrease (increase) in trade accounts receivable 164,524 (38,882) 67,394
Decrease (increase) in deposits, prepaid
expenses and other (76,583) (34,891) 107,431
Increase (decrease) in accrued
liabilities, accrued interest
and subscriber prepayments (393,925) (78,734) (146,039)
Increase (decrease) in accounts
payable to Jones Spacelink, Ltd. - (166,931) 128,077
------------ ----------- ----------
Net cash provided by operating activities 2,697,300 3,555,824 3,044,400
------------ ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (3,474,539) (2,530,983) (3,068,248)
Other - - 19,306
------------ ---------- ----------
Net cash used in investing activities (3,474,539) (2,530,983) (3,048,942)
------------ ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 36,155,437 1,142,586 1,457,242
Repayments of borrowings (36,854,400) (1,023,293) (1,034,703)
------------ ---------- ----------
Net cash provided by (used in)
financing activities (698,963) 119,293 422,539
------------ ---------- ----------
INCREASE (DECREASE) IN CASH (1,476,202) 1,144,134 417,997
CASH, AT BEGINNING OF YEAR 1,646,850 502,716 84,719
------------ ---------- ----------
CASH, AT END OF YEAR $ 170,648 $ 1,646,850 $ 502,716
============ ========== ==========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 2,266,213 $ 1,755,670 $ 1,927,239
============ ========== ==========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
19
<PAGE> 20
JONES GROWTH PARTNERS L.P.
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION AND PARTNERS' INTERESTS:
Formation and Business
Jones Growth Partners L.P. (the "Partnership"), a Colorado limited
partnership, was formed on June 14, 1989, pursuant to a public offering of
limited partnership interests sponsored by Jones Spacelink Cable Corporation.
The Partnership was formed to acquire, construct, develop and operate cable
television systems. Jones Spacelink Cable Corporation is the "Managing General
Partner" and, until December 20, 1994, was is a wholly owned subsidiary of
Jones Spacelink, Ltd. ("Spacelink"). Growth Partners Inc. is the "Associate
General Partner" and is an affiliate of Lehman Brothers Inc. On December 20,
1994, Jones Intercable, Inc. ("Intercable"), a Colorado corporation that was a
subsidiary of Spacelink, acquired substantially all of the assets of Spacelink,
including the shares of Jones Spacelink Cable Corporation, which as a result on
that date became a wholly owned subsidiary of Intercable. The Managing General
Partner and certain of its affiliates also own and operate cable television
systems for their own account and for the account of other managed limited
partnerships.
Contributed Capital
The capitalization of the Partnership is set forth in the accompanying
Statements of Partners' Capital (Deficit). No limited partner is obligated to
make any additional contributions to partnership capital.
The Managing General Partner and the Associate General Partner purchased
their general partner interests in the Partnership by contributing $500 each to
partnership capital. Also, in March 1990, the Managing General Partner
purchased approximately one percent of the limited partner interests sold.
Cable Television System Owned by the Partnership
On October 4, 1989, the Partnership purchased the cable television
systems serving the municipalities of Addison, Glen Ellyn, St. Charles,
Warrenville, West Chicago, Wheaton, Winfield and Geneva, and certain portions of
unincorporated areas of DuPage and Kane counties, all in the State of Illinois
(the "Wheaton System").
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Accounting Records
The accompanying financial statements have been prepared on the accrual
basis of accounting in accordance with generally accepted accounting principles.
The Partnership's tax returns are also prepared on the accrual basis.
Property, Plant and Equipment
Depreciation of property, plant and equipment is provided primarily using
the straight-line method over the following estimated service lives:
<TABLE>
<S> <C>
Cable distribution systems 5 - 15 years
Equipment and tools 5 years
Office furniture and equipment 5 years
Buildings 10 - 20 years
Vehicles 3 years
</TABLE>
20
<PAGE> 21
Replacements, renewals and improvements are capitalized and maintenance
and repairs are charged to expense as incurred.
Allocation of Cost of Purchased Cable Television Systems
Based on an independent appraisal, the Partnership allocated the total
purchase price of the Wheaton System acquired as follows: first, to the fair
value of net tangible assets acquired; second, to franchise costs in an amount
equal to the estimated value of franchise agreements; third, to subscriber
lists; and fourth, to costs in excess of interests in net assets purchased.
Other acquisition costs were capitalized and charged to investment in cable
television properties in the accompanying balance sheets.
Intangible Assets
Costs assigned to intangible assets are being amortized using the
straight-line method over the following estimated useful lives:
<TABLE>
<S> <C>
Franchise costs 11 years
Subscriber lists 2 years
Costs in excess of interests in net assets purchased 35 years
</TABLE>
Revenue Recognition
Subscriber prepayments are initially deferred and recognized as revenue
when earned.
(3) TRANSACTIONS WITH THE ASSOCIATE GENERAL PARTNER, MANAGING GENERAL
PARTNER AND CERTAIN OF ITS AFFILIATES:
Management Fees, Distribution Ratios and Reimbursements
The Managing General Partner manages the Partnership and receives a fee
for its services equal to five percent of the gross revenues of the
Partnership, excluding revenues from the sale of cable television systems or
franchises. Management fees paid to the Managing General Partner by the
Partnership for the years ended December 31, 1994, 1993 and 1992 were $980,759,
$967,736, and $913,847, respectively. The Associate General Partner
participates with the Managing General Partner in certain management decisions
affecting the Partnership and receives a supervisory fee of the lesser of one
percent of the gross revenues of the Partnership, excluding revenues from the
sale of cable television systems or franchises, or $200,000 accrued monthly and
payable annually. Supervisory fees accrued to the Associate General Partner by
the Partnership for the year ended December 31, 1994 were $196,152. Such fees
were paid in January 1995. Supervisory fees paid to the Associate General
Partner by the Partnership for the years ended December 31, 1993 and 1992 were
$193,547 and $182,769, respectively.
Any Partnership distributions made from cash flow (defined as cash
receipts derived from operations, less debt principal and interest payments and
cash expenses) are allocated 99 percent to the limited partners and one percent
to the Managing General Partner. Distributions from cash flow have not been
made and are not anticipated. Proceeds from the sale or refinancing of a cable
television system would be distributed generally as follows: first, to the
partners until they have received an amount equal to their initial capital
contributions (as reduced by all prior distributions other than distributions
from cash flow); second, to the limited partners until they have received a
liquidation preference equal to 8 percent per annum, cumulative and
noncompounded, on an amount equal to their initial capital contributions, less
any portion of such capital contributions which has been returned to the
limited partners from prior sale or refinancing proceeds, as determined for any
particular year; provided that such cumulative return will be reduced by all
prior distributions of cash flow from operations and prior distributions of
proceeds of sales or refinancings of the cable television systems. The balance
will be allocated 75 percent to the limited partners, 15 percent to the
Managing General Partner and 10 percent to the Associate General Partner. No
such distributions have yet been made.
21
<PAGE> 22
The Partnership reimburses the Managing General Partner and certain of
its subsidiaries for certain allocated general and administrative costs. These
expenses include salaries and benefits paid to corporate personnel, office rent
and related facilities expense. Such personnel provide engineering, marketing,
administrative, accounting, legal, and investor relations services to the
Partnership. Allocations of personnel costs are based primarily on actual time
spent by employees of the Managing General Partner and certain of its
affiliates with respect to each partnership managed. Remaining expenses are
allocated based upon the pro rata relationship of the Partnership's revenues to
the total revenues of all cable television systems owned or managed by the
Managing General Partner and certain of its affiliates, and/or the costs of
assets managed for the Partnership. Effective December 1, 1993, the allocation
method was changed to be based only on revenue, which the Managing General
Partner believes provides a more accurate method of allocation. All cable
television systems owned or managed by the Managing General Partner and certain
of its affiliates are allocated a proportionate share of these expenses.
Included in the costs allocated from the Managing General Partner and certain
of its affiliates are expenses allocated to the Managing General Partner and
certain of its affiliates from affiliated entities for information processing
and administrative services. The Managing General Partner believes that the
methodology used in allocating general and administrative costs is reasonable.
Reimbursements by the Partnership to the Managing General Partner for allocated
general and administrative costs for the years ended December 31, 1994, 1993
and 1992 were $1,475,925, $1,465,872, and $1,342,750, respectively.
Payments to/from Affiliates for Programming Services
The Partnership receives programming from Product Information Network,
Superaudio, The Mind Extension University and Jones Computer Network,
affiliates of the Managing General Partner. Payments to Superaudio by the
Partnership for the years ended December 31, 1994, 1993 and 1992 totaled
$28,415, $27,910 and $26,871, respectively. Payments to The Mind Extension
University for the years ended December 31, 1994, 1993 and 1992 totaled
$25,748, $16,242 and $15,395, respectively. Payments to Jones Computer
Network, which initiated service in 1994, totaled $10,683 in 1994. The
Partnership receives a commission from Product Information Network based on a
percentage of advertising revenue and number of subscribers. Product
Information Network, which initiated service in 1994, paid commissions to the
Partnership totalling $32,863 in 1994.
(4) PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment as of December 31, 1994 and 1993,
consisted of the following:
<TABLE>
<CAPTION>
December 31,
------------------------------------
1994 1993
--------------- --------------
<S> <C> <C>
Cable distribution systems $ 37,566,836 $ 34,450,026
Equipment and tools 2,497,923 2,346,435
Office furniture and equipment 2,444,845 2,412,623
Buildings 19,823 17,387
Vehicles 575,944 404,361
Land 105,000 105,000
----------- -----------
$ 43,210,371 $ 39,735,832
Less: accumulated depreciation $(20,003,575) $(15,662,764)
----------- -----------
$ 23,206,796 $ 24,073,068
=========== ===========
</TABLE>
22
<PAGE> 23
(5) DEBT:
At June 30, 1993, the Partnership's former revolving credit facility
converted to a term loan. The outstanding balance of $33,580,000 was repaid in
December 1994 with borrowings from a new $36,000,000 revolving credit facility.
The new revolving credit facility converts to a term loan on December 31, 1996,
at which time the then-outstanding balance is payable in quarterly installments
through December 30, 2002. At December 31, 1994, $35,000,000 was outstanding
under the new agreement, leaving $1,000,000 available for future needs of the
Partnership. Interest on the outstanding principal balance is at the
Partnership's option of Prime plus 1/4 percent or the London Interbank Offered
Rate plus 1-1/4 percent. A fee of 3/8 of one percent per annum on the unused
portion of the new commitment is also required. At December 31, 1994, the
Partnership was paying an average rate of 7.22 percent on the total outstanding
borrowings under its credit facility.
Total Partnership debt consists of the following:
<TABLE>
<CAPTION>
December 31,
-----------------------------------------
1994 1993
---------------- ----------------
<S> <C> <C>
Lending institutions-
Revolving credit and term loan facility $35,000,000 $35,770,000
Capitalized lease obligations 245,699 174,662
---------- ----------
$35,245,699 $35,944,662
========== ==========
</TABLE>
On January 12, 1993, the Partnership entered into an interest rate cap
agreement covering outstanding debt obligations of $20,000,000. The
Partnership paid a fee of $194,000. The agreement protects the Partnership
from LIBOR interest rates that exceed 7 percent for three years from the date
of the agreement. The fee will be charged to interest expense over the life of
the agreement using the straight-line method.
Installments due on all debt principal for the five years in the period
ending December 31, 1999 and thereafter, respectively, are: $73,710, $73,710,
$3,573,709, $4,224,570, $5,250,000 and 22,050,000.
(6) INCOME TAXES:
Income taxes have not been recorded in the accompanying financial
statements because they accrue directly to the partners. The Federal and state
income tax returns of the Partnership are prepared and filed by the Managing
General Partner.
The Partnership's tax returns, the qualification of the Partnership as
such for tax purposes, and the amount of distributable income or loss are
subject to examination by Federal and state taxing authorities. If such
examinations result in changes with respect to the Partnership's qualification
as such, or in changes with respect to the Partnership's recorded income or
loss, the tax liability of the Managing General Partner and limited partners
would likely be changed accordingly.
Taxable loss to the Partners is different from that reported in the
statements of operations due to the difference in depreciation recognized under
generally accepted accounting principles and the expense allowed for tax
purposes under the Modified Accelerated Cost Recovery System (MACRS). There
are no other significant differences between taxable loss and the net loss
reported in the statements of operations.
(7) COMMITMENTS AND CONTINGENCIES:
On October 5, 1992, Congress enacted the Cable Television Consumer
Protection and Competition Act of 1992 (the "1992 Cable Act") which became
effective on December 4, 1992. The 1992 Cable Act generally allows for a
greater degree of regulation of the cable television industry. In April 1993,
the Federal Communications Commission (the "FCC") adopted regulations governing
rates for basic and non-basic services. These regulations became effective on
September 1, 1993. Such regulations caused reductions in rates for certain
regulated services. On February 22, 1994, the FCC adopted several additional
rate orders including an order which revised its earlier-announced regulatory
23
<PAGE> 24
scheme with respect to rates. The Partnership has filed a cost-of-service
showing in the Wheaton System and anticipates no further reductions in rates
in that system. The cost-of-service showing has not yet received final
approval from franchising authorities, however, and there can be no assurance
that the Partnership's cost-of-service showing will prevent further rate
reductions until such final approval is received.
The Partnership rents office and other facilities under various
long-term lease arrangements. Rent paid under such lease arrangements totaled
$319,495, $310,788, and $256,179, for the years ended December 31, 1994, 1993
and 1992, respectively. Future minimum lease payments, as of December 31,
1994, under noncancelable operating leases for the five years in the period
ending December 31, 1999, and thereafter are as follows:
<TABLE>
<S> <C>
1995 $ 253,023
1996 253,245
1997 256,983
1998 219,817
1999 108,017
Thereafter -
---------
Total future minimum lease payments $1,091,085
=========
</TABLE>
(8) SUPPLEMENTARY PROFIT AND LOSS INFORMATION:
Supplementary profit and loss information for the respective
periods is presented below:
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------------
1994 1993 1992
------------- ------------- -------------
<S> <C> <C> <C>
Maintenance and repairs $ 269,565 $ 357,386 $ 374,069
============ ============ ============
Taxes, other than income and
payroll taxes $ 76,239 $ 73,114 $ 67,337
============ ============ ============
Advertising $ 515,701 $ 449,517 $ 400,567
============ ============ ============
Depreciation of property,
plant and equipment $ 4,340,811 $ 4,495,018 $ 4,154,183
============ ============ ============
Amortization of intangible assets $ 8,242,297 $ 8,242,296 $ 8,242,297
============ ============ ============
</TABLE>
24
<PAGE> 25
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Partnership itself has no officers or directors. Certain
information concerning the directors and executive officers of the Managing
General Partner is set forth below.
<TABLE>
<CAPTION>
Name Age Positions with the Managing General Partner
---- --- -------------------------------------------
<S> <C> <C>
Glenn R. Jones 65 Chairman of the Board and Chief Executive Officer
James B. O'Brien 45 President
Ruth E. Warren 45 Vice President/Operations
Elizabeth M. Steele 43 Vice President and Secretary
Kevin P. Coyle 43 Vice President/Finance
Larry W. Kaschinske 35 Controller
Timothy J. Burke 44 Director
</TABLE>
Mr. Glenn R. Jones has served as Chief Executive Officer of the Managing
General Partner since its inception in November 1988. Mr. Glenn R. Jones has
served as Chairman of the Board of Directors and Chief Executive Officer of
Intercable since its formation in 1970, and he was President from June 1984
until April 1988. Mr. Jones was elected a member of the Executive Committee of
the Board of Directors in April 1985. Mr. Jones is the sole shareholder,
President and Chairman of the Board of Directors of Jones International, Ltd.
He is also Chairman of the Board of Directors of the subsidiaries of Intercable
and of certain other affiliates of Intercable. Mr. Jones has been involved in
the cable television business in various capacities since 1961, is a past and
present member of the Board of Directors of the National Cable Television
Association, and is a former member of its Executive Committee. Mr. Jones is a
past director and member of the Executive Committee of C-Span. Mr. Jones has
been the recipient of several awards including the Grand Tam Award in 1989, the
highest award from the Cable Television Administration and Marketing Society;
the Chairman's Award from the Investment Partnership Association, which is an
association of sponsors of public syndications; the cable television industry's
Public Affairs Association President's Award in 1990, the Donald G. McGannon
award for the advancement of minorities and women in cable; the STAR Award from
American Women in Radio and Television, Inc. for exhibition of a commitment to
the issues and concerns of women in television and radio; and the Women in
Cable Accolade in 1990 in recognition of support of this organization. Mr.
Jones is also a founding member of the James Madison Council of the Library of
Congress and is on the Board of Governors of the American Society of Training
and Development.
Mr. James B. O'Brien was appointed President of the Managing General
Partner in January 1995. Mr. O'Brien joined Intercable in January 1982. Prior
to being elected President and a Director of Intercable in December 1989, Mr.
O'Brien served as a Division Manager, Director of Operations Planning/Assistant
to the CEO, Fund Vice President and Group Vice President/Operations. Mr.
O'Brien was appointed to Intercable's Executive Committee in August 1993. As
President, he is responsible for the day-to-day operations of the cable
television systems managed and owned by Intercable. Mr. O'Brien is a board
member of Cable Labs, Inc., the research arm of the U.S. cable television
industry. He also serves as a director of the Cable Television Administration
and Marketing Association and as a director of the Walter Kaitz Foundation, a
foundation that places people of any ethnic minority group in positions with
cable television systems, networks and vendor companies.
25
<PAGE> 26
Ms. Ruth E. Warren, the Managing General Partner's Vice
President/Operations, joined Intercable in August 1980 and has served in
various operational capacities, including system manager and Fund Vice
President, since then. Ms. Warren was elected Group Vice President/Operations
of Intercable in September 1990.
Ms. Elizabeth M. Steele, the Managing General Partner's Vice President
and Secretary, joined Intercable in August 1987 as Vice President/General
Counsel and Secretary. From August 1980 until joining Intercable, Ms. Steele
was an associate and then a partner at the Denver law firm of Davis, Graham &
Stubbs, which serves as counsel to Intercable.
Mr. Kevin P. Coyle was appointed Vice President/Finance of the Managing
General Partner in March 1995. Mr. Coyle joined The Jones Group, Ltd. in July
1981 as Vice President/Financial Services. In September 1985, he was appointed
Senior Vice President/Financial Services. He was elected Treasurer of
Intercable in August 1987, Vice President/Treasurer in April 1988 and Group
Vice President/Finance and Chief Financial Officer in October 1990.
Mr. Larry Kaschinske was appointed Controller of the Managing General
Partner in March 1995. Mr. Kaschinske joined Intercable in 1984 as a staff
accountant in Intercable's former Wisconsin Division; was promoted to Assistant
Controller in 1990 and named Controller in August 1994.
Mr. Timothy J. Burke joined Intercable in August 1982 as corporate tax
manager, was elected Vice President/Taxation in November 1986 and Group Vice
President/Taxation/Administration in October 1990.
<TABLE>
<CAPTION>
Name Age Positions with the Associate General Partner
---- --- --------------------------------------------
<S> <C> <C>
Rocco F. Andriola 36 President and Chief Executive Officer
John H. Ng 44 Vice President
</TABLE>
Mr. Rocco F. Andriola serves as Senior Vice President of Lehman Brothers
Inc. in its Diversified Asset Group and has held such position since June 1991.
From June 1989 though May 1991, Mr. Andriola held the position of First Vice
President in Lehman's Capital and Restructuring Group. From November 1986
through May 1989, Mr. Andriola held the position of Vice President in the
Corporate Transactions Group within the General Counsel's Office of Lehman.
From September 1982 through October 1986, Mr. Andriola was employed by the law
firm of Donovan Leisure Newton & Irvine as a corporate and securities attorney.
Mr. John H. Ng is a Vice President of Lehman Brothers Inc. and has been
employed by Lehman since November 1977. He is an asset manager in the
Diversified Asset Group and has held such position since 1985. From 1980 to
1985, Mr. Ng served as Senior Financial Analyst in the Corporate Planning and
Development Department, and from 1977 to 1980 he was an analyst in the
Controller's Department.
ITEM 11. EXECUTIVE COMPENSATION
The Partnership has no employees; however, various personnel are
required to operate the Wheaton System. Such personnel are employed by the
Managing General Partner and, pursuant to the terms of the limited partnership
agreement of the Partnership, the cost of such employment is charged by the
Managing General Partner to the Partnership as a direct reimbursement item.
See Item 13.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGERS
No person or entity owns more than 5 percent of the limited partnership
interests of the Partnership.
26
<PAGE> 27
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Managing General Partner and its affiliates engage in certain
transactions with the Partnership as contemplated by the limited partnership
agreement of the Partnership. The Managing General Partner believes that the
terms of such transactions are generally as favorable as could be obtained by
the Partnership from unaffiliated parties. This determination has been made by
the Managing General Partner in good faith, but none of the terms were or will
be negotiated at arm's-length and there can be no assurance that the terms of
such transactions have been or will be as favorable as those that could have
been obtained by the Partnership from unaffiliated parties.
The Managing General Partner charges the Partnership a management fee,
and the Associate General Partner charges the Partnership a supervision fee in
accordance with the limited partnership agreement of the Partnership.
The Partnership reimburses the Managing General Partner for certain
allocated overhead and administrative expenses in accordance with the terms of
the limited partnership agreement of the Partnership. These expenses consist
primarily of salaries and benefits paid to corporate personnel, rent, data
processing services and other facilities costs. Such personnel provide
engineering, marketing, administrative, accounting, legal and investor
relations services to the Partnership. Allocations of personnel costs are
based primarily on actual time spent by employees of the Managing General
Partner with respect to the Partnership. Remaining overhead costs are
allocated based on revenues and/or the costs of assets managed for the
Partnership. Systems owned by Intercable and all other systems owned by
partnerships for which Intercable is the general partner, are also allocated a
proportionate share of these expenses.
The Managing General Partner also advances funds and charges interest on
the balance payable from the Partnership. The interest rate charged the
Partnership approximates Intercable's weighted average cost of borrowing.
The Wheaton System receives stereo audio programming from Superaudio, a
joint venture owned 50% by an affiliate of the Managing General Partner and 50%
by an unaffiliated party, educational video programming from Mind Extension
University, Inc., an affiliate of the Managing General Partner, and computer
video programming from Jones Computer Network, Ltd., an affiliate of the
Managing General Partner, for fees based upon the number of subscribers
receiving the programming.
Product Information Network ("PIN"), an affiliate of the Managing
General Partner, provides advertising time for third parties on the Wheaton
System. In consideration, the revenues generated from the third parties are
shared two-thirds and one-third between PIN and the Partnership. During the
year ended December 31, 1994, the Partnership received revenues from PIN of
$32,863.
The charges to the Partnership for related party transactions are as
follows for the periods indicated:
<TABLE>
<CAPTION>
At December 31,
-----------------------------------------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Management fees $980,759 $967,736 $913,847
Supervisory fee, Associate General Partner 196,152 193,547 182,769
Allocation of expenses 1,475,925 1,465,782 1,342,750
Amount of notes and advances outstanding -0- -0- 166,931
Highest amount of notes and advances outstanding -0- 419,620 418,726
Programming fees:
Superaudio 28,415 27,910 26,871
Mind Extension University 25,748 16,242 15,395
Jones Computer Network 10,683 -0- -0-
</TABLE>
27
<PAGE> 28
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)1. See index to financial statements for the list of
financial statements and exhibits thereto filed as
part of this report.
3. The following exhibits are filed herewith.
4.1 Limited Partnership Agreement. (1)
10.1.1 Copy of a franchise and related documents thereto
granting a community antenna franchise for the
Village of Addison, Illinois. (1)
10.1.2 Ordinance No. 0-90-88 dated April 16, 1990 amending
the franchise. (3)
10.1.3 Copy of a franchise and related documents thereto
granting a community antenna franchise for DuPage
County, Illinois. (1)
10.1.4 Copy of a franchise and related documents thereto
granting a community antenna franchise for Kane
County (Geneva), Illinois. (3)
10.1.5 Copy of a franchise and related documents thereto
granting a community antenna franchise for Glen
Ellyn, Illinois. (1)
10.1.6 Copy of a franchise and related documents thereto
granting a community antenna franchise for St.
Charles, Illinois. (1)
10.1.7 Copy of a franchise and related documents thereto
granting a community antenna franchise for
Warrenville, Illinois. (1)
10.1.8 Copy of a franchise and related documents thereto
granting a community antenna franchise for Wheaton,
Illinois. (1)
10.1.9 Amendment dated September 5, 1990 to the franchise
agreement. (3)
10.1.10 Amendment dated August 12, 1991 to the franchise
agreement. (3)
10.1.11 Copy of a franchise and related documents thereto
granting a community antenna franchise for West
Chicago, Illinois. (1)
10.1.12 Resolution 1070 dated February 1, 1993 relating to a
rate increase. (3)
10.1.13 Copy of a franchise and related documents thereto
granting a community antenna franchise for Winfield,
Illinois. (1)
10.2.1 Credit Agreement dated December 30, 1994 among Jones
Growth Partners L.P. and Nationsbank of Texas, N.A.,
as agent for various lenders.
27 Financial Data Schedule
---------
(1) Incorporated by reference from the Partnership's
Annual Report on Form 10-K for fiscal year ended
December 31, 1989.
28
<PAGE> 29
(2) Incorporated by reference from the Partnership's
Annual Report on Form 10-K for fiscal year ended
December 31, 1991.
(3) Incorporated by reference from the Partnership's
Annual Report on Form 10-K for fiscal year ended
December 31, 1992.
(b) Reports on Form 8-K
None.
29
<PAGE> 30
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
JONES GROWTH PARTNERS L.P.
a Colorado limited partnership
By: Jones Spacelink Cable Corporation
By: /s/ Glenn R. Jones
----------------------------------
Glenn R. Jones
Chairman of the Board and Chief
Dated: March 27, 1995 Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By: /s/ Glenn R. Jones
----------------------------------
Glenn R. Jones
Chairman of the Board and Chief
Executive Officer
Dated: March 27, 1995 (Principal Executive Officer)
By: /s/ Kevin P. Coyle
----------------------------------
Kevin P. Coyle
Vice President/Finance
Dated: March 27, 1995 (Principal Accounting and
Financial Officer)
By: /s/ Larry Kaschinske
----------------------------------
Larry Kaschinske
Controller
Dated: March 27, 1995 (Principal Accounting Officer)
By: /s/ Timothy J. Burke
----------------------------------
Timothy J. Burke
Dated: March 27, 1995 Director
30
<PAGE> 31
Exhibit Page
------- ----
4.1 Limited Partnership Agreement. (1)
10.1.1 Copy of a franchise and related documents thereto
granting a community antenna franchise for the
Village of Addison, Illinois. (1)
10.1.2 Ordinance No. 0-90-88 dated April 16, 1990 amending
the franchise. (3)
10.1.3 Copy of a franchise and related documents thereto
granting a community antenna franchise for DuPage
County, Illinois. (1)
10.1.4 Copy of a franchise and related documents thereto
granting a community antenna franchise for Kane
County (Geneva), Illinois. (3)
10.1.5 Copy of a franchise and related documents thereto
granting a community antenna franchise for Glen
Ellyn, Illinois. (1)
10.1.6 Copy of a franchise and related documents thereto
granting a community antenna franchise for St.
Charles, Illinois. (1)
10.1.7 Copy of a franchise and related documents thereto
granting a community antenna franchise for
Warrenville, Illinois. (1)
10.1.8 Copy of a franchise and related documents thereto
granting a community antenna franchise for Wheaton,
Illinois. (1)
10.1.9 Amendment dated September 5, 1990 to the franchise
agreement. (3)
10.1.10 Amendment dated August 12, 1991 to the franchise
agreement. (3)
10.1.11 Copy of a franchise and related documents thereto
granting a community antenna franchise for West
Chicago, Illinois. (1)
10.1.12 Resolution 1070 dated February 1, 1993 relating to a
rate increase. (3)
10.1.13 Copy of a franchise and related documents thereto
granting a community antenna franchise for Winfield,
Illinois. (1)
10.2.1 Credit Agreement dated December 30, 1994 among Jones
Growth Partners L.P. and Nationsbank of Texas, N.A.,
as agent for various lenders.
27 Financial Data Schedule
---------
(1) Incorporated by reference from the Partnership's
Annual Report on Form 10-K for fiscal year ended
December 31, 1989.
(2) Incorporated by reference from the Partnership's
Annual Report on Form 10-K for fiscal year ended
December 31, 1991.
(3) Incorporated by reference from the Partnership's
Annual Report on Form 10-K for fiscal year ended
December 31, 1992.
<PAGE> 1
CREDIT AGREEMENT
among
JONES GROWTH PARTNERS L.P.,
Borrower
NATIONSBANK OF TEXAS, N.A.,
Agent
and
THE LENDERS NAMED HEREIN,
Lenders
$36,000,000
December 30, 1994
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
SECTION 1 DEFINITIONS AND TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Number and Gender of Words . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.3 Accounting Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2 COMMITMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.1 Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.2 Borrowing Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.3 Termination of Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 3 TERMS OF PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.1 Notes and Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.2 Interest and Principal Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.3 Interest Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.4 Quotation of Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.5 Default Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.6 Interest Recapture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.7 Interest Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.8 Maximum Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.9 Interest Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.10 Conversions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.11 Order of Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.12 Sharing of Payments, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.13 Offset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.14 Booking Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.15 Basis Unavailable or Inadequate for LIBOR Rate . . . . . . . . . . . . . . . . . . . 21
3.16 Additional Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.17 Change in Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.18 Consequential Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4 FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.1 Treatment of Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.2 Facility Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.3 Agent Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.4 Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 5 CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.1 Conditions Precedent to Initial Loan . . . . . . . . . . . . . . . . . . . . . . . . 24
5.2 Conditions Precedent to Each Loan . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 6 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.1 Purpose of Credit Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.2 Existence and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.3 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.4 Authorization and Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.5 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.8 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
</TABLE>
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<TABLE>
<S> <C> <C>
6.9 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.10 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.11 Properties; Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.12 Government Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.13 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.14 Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.15 Material Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.16 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.17 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.18 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.19 Prior Names . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.20 Licenses, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.21 Franchises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.22 Chief Executive Office; Chief Place of Business . . . . . . . . . . . . . . . . . . . 31
6.23 Subordinated Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.24 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 7 COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.1 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.2 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.3 Items to be Furnished . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.4 Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.5 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.6 Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.7 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.8 Maintenance of Existence, Assets, and Business . . . . . . . . . . . . . . . . . . . 34
7.9 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.10 Preservation and Protection of Rights . . . . . . . . . . . . . . . . . . . . . . . . 35
7.11 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.12 Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.13 Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.14 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.16 Compliance with Laws and Documents . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.17 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.18 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.19 Fiscal Year and Accounting Methods . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.20 Government Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.21 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.22 Loans, Advances, and Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.23 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.24 Dispositions of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.25 Mergers and Dissolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.26 Subordinated Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.27 Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.28 Management Fees end Allocated Expenses . . . . . . . . . . . . . . . . . . . . . . . 40
7.29 Rate Protection Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.30 Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 8 DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.1 Payment of Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.2 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
</TABLE>
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<TABLE>
<S> <C> <C>
8.3 Debtor Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.4 Judgments and Attachments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.5 Government Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.6 Misrepresentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.7 Franchise Agreements; FCC Licenses . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.9 Default Under Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.10 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.11 Validity and Enforceability of Loan Papers . . . . . . . . . . . . . . . . . . . . . 43
SECTION 9 RIGHTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
9.1 Remedies Upon Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
9.2 Company Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.3 Delegation of Duties and Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.4 Not in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.5 Course of Dealing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.6 Cumulative Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.7 Application of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.8 Diminution in Value of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.9 Certain Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
9.10 Limitation of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
9.11 Expenditures by Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 10 AGREEMENT AMONG LENDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
10.1 Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
10.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.3 Proportionate Absorption of Losses . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.4 Delegation of Duties; Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.5 Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
10.6 Default; Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
10.7 Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
10.8 Relationship of Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
10.9 Benefits of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 11 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
11.1 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
11.2 Nonbusiness Days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
11.3 Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
11.4 Form and Number of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
11.5 Exceptions to Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
11.6 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
11.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.8 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.9 Entirety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.10 Venue; Service of Process; Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . 51
11.11 Amendments, Consents, Conflicts, and Waivers . . . . . . . . . . . . . . . . . . . . 52
11.12 Multiple Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
11.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
11.14 Successors and Assigns; Participation . . . . . . . . . . . . . . . . . . . . . . . . 54
11.15 Confidentiality of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
11.16 Discharge Only Upon Payment in Full: Reinstatement in Certain Circumstances . . . . . 56
</TABLE>
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<TABLE>
<S> <C> <C>
Schedule 2.1 - Lenders and Committed Sums
Schedule 5.1(d) - UCC Filing Offices
Schedule 6.2 - Authorizations
Schedule 6.7 - Litigation
Schedule 6.9 - Environmental Matters
Schedule 6.11 - Location of Tangible Property
Schedule 6.15 - Material Agreements
Schedule 6.19 - Prior Names
Schedule 6.20 - Licenses
Schedule 6.21 - Franchise Agreements
Schedule 6.22 - Chief Executive Office; Chief Place of Business
Schedule 7.13 - Existing Debt
Schedule 7.14 - Existing Liens
Schedule 7.22 - Other Investments
Exhibit A - Form of Promissory Note (Revolving Period)
Exhibit A-1 - Form of Term Note
Exhibit B - Form of Security Agreement
Exhibit C-1 - Form of Notice of Borrowing
Exhibit C-2 - Form of Notice of Conversion
Exhibit D - Form of Compliance Certificate
Exhibit E - Form of Assignment and Assumption Agreement
Exhibit F - Form of Opinion of Counsel to Borrower
Exhibit G - Form of Subordination Agreement
</TABLE>
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CREDIT AGREEMENT
THIS AGREEMENT is entered into as of December 30, 1994, among JONES
GROWTH PARTNERS L.P., a Colorado limited partnership ("BORROWER"), Lenders
(hereinafter defined), and NATIONSBANK OF TEXAS, N.A., as a Lender and as Agent
for itself and the other Lenders.
Borrower has requested Lenders to extend credit to Borrower, never to
exceed the aggregate of $36,000,000 (in the form of revolving loans convertible
to a term loan), (i) to enable Borrower to refinance certain existing
indebtedness, and (ii) to provide working capital and other funds to be used
for general corporate purposes, capital expenditures of the Borrower, and any
other purpose permitted hereunder. Upon and subject to the terms of this
Agreement, Lenders are willing to extend such credit to Borrower. Accordingly,
in consideration of the mutual covenants contained herein, Borrower, Agent, and
Lenders agree as follows:
SECTION 1 DEFINITIONS AND TERMS.
1.1 Definitions. As used herein:
AGENT means NationsBank and its successor or successors as agent for
Lenders under this Agreement.
AFFILIATE means any Person which directly or indirectly controls, or
is controlled by, or is under common control with, Borrower, any Person which
owns directly or indirectly beneficially or of record 5% or more of any equity
interest or class of capital stock of Borrower or of which 5% or more of any
equity interest or class of capital stock is owned directly or indirectly
beneficially or of record by Borrower or a Subsidiary of any Person directly or
indirectly controlled by any of the foregoing. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract, or otherwise.
AFFILIATED ENTITY means (a) any Person that is an Affiliate of
Borrower, and (b) any other Person as to which Borrower or another Affiliated
Entity (i) is or has agreed or otherwise has a duty to become a general partner
of such Person or otherwise generally liable for or on account of the
liabilities, acts, or omissions of such Person, (ii) has agreed or otherwise
has a duty to acquire securities or other interests in or make capital
contributions, loans, or other investments to or on account of such Person, or
(iii) has an interest in such Person or has or may have a liability to or on
account of such Person that is material to the business, operations or
financial condition of the Borrower.
AGREEMENT means this Credit Agreement (as the same may hereafter be
amended, modified, supplemented or restated from time to time).
1
<PAGE> 7
ALLOCATED EXPENSES means for any period the fees payable (without
regard to Borrower's right to defer or limit actual payment) to Jones
Intercable and its Subsidiaries and Affiliates by the Borrower to compensate
Jones Intercable for that portion of its general overhead and administrative
expenses, including all of its direct and indirect expenses, fairly allocable
to the operation of the Borrower's business, including, but not limited to,
home office rent, supplies, telephone, travel, data processing and copying
charges, and salaries of full and part-time employees, including officers'
salaries.
ANNUALIZED OPERATING CASH FLOW means as of the end of any fiscal
quarter for which Borrower is required to deliver quarterly or annual Financial
Statements and the related Compliance Certificate pursuant to SECTIONS 7.3(a)
and 7.3(b) or, when used in connection with any calculation made as of a date
other than the end of a fiscal quarter, as of the end of the most recently
ended fiscal quarter for which Borrower is required to deliver quarterly or
annual Financial Statements and the related Compliance Certificate pursuant to
SECTIONS 7.3(a) and 7.3(b), Operating Cash Flow for such quarter times four.
APPLICABLE MARGIN means, at the time of any determination thereof, for
purposes of all Loans, the margin of interest over the Base Rate or the LIBOR
Rate, as the case may be, which is applicable at the time of any determination
of interest rates under this Agreement, which Applicable Margin shall be
subject to adjustment (upwards or downwards, as appropriate) based on the ratio
of Total Debt to Annualized Operating Cash Flow, as follows:
<TABLE>
<CAPTION>
======================================================
RATIO OF TOTAL DEBT APPLICABLE APPLICABLE
TO ANNUALIZED MARGIN FOR MARGIN FOR
OPERATING CASH FLOW BASE RATE LIBOR RATE
------------------------------------------------------
<S> <C> <C>
Greater than or equal 0.25% 1.25%
to 4.00 to 1
------------------------------------------------------
Greater than or equal 0.125% 1.00%
to 3.50 to 1 but less
than 4.00 to 1
------------------------------------------------------
Less than 3.50 to 1 0.0% 0.75%
======================================================
</TABLE>
The ratio of Total Debt to Annualized Operating Cash Flow shall be determined
from the then most current of the quarterly or annual Financial Statements and
related Compliance Certificate delivered by Borrower pursuant to SECTIONS
7.3(a) and 7.3(b) hereof. The adjustment, if any, to the Applicable Margin
shall be effective commencing on the fifth Business Day after the delivery of
such Financial Statements and related Compliance Certificate. If Borrower fails
at any time to timely furnish to Lenders the Financial Statements and related
Compliance
2
<PAGE> 8
Certificates as required to be delivered pursuant to SECTIONS 7.3(a) and (b)
hereof, and such failure shall not be remedied within five days, then the
margin applicable in the case of a ratio of Total Debt to Annualized Operating
Cash Flow equal to or greater than 4.0 to 1 shall apply until such time as such
Financial Statements and Compliance Certificate are so delivered.
ASSOCIATE GENERAL PARTNER means Growth Partners, Inc., a Delaware
corporation.
AUTHORIZATIONS means all filings, recordings, and registrations with,
and all validations or exemptions, approvals, orders, authorizations, consents,
franchises, licenses, certificates, and permits from, any Tribunal (including,
without limitation, the FCC).
BASE RATE means, for any day, the greater of (a) the prime rate per
annum most recently announced by Agent as its prime rate in effect at its
principal office in Dallas, Texas automatically fluctuating upward and downward
with and at the time specified in each such announcement without special notice
to Borrower or any other Person, which prime rate may not necessarily represent
the lowest or best rate actually charged to a customer, or (b) the sum of the
Federal Funds Rate plus 0.5%.
BASE RATE LOAN means a Loan bearing interest at the sum of the Base
Rate plus the Applicable Margin.
BASIC RATE means, with respect to each particular System, the minimum
standard monthly fees and charges charged to customers of such System for the
level of cable television service that is subscribed to by all subscribers,
unless in any particular System, such level of cable television service is a
Lifeline (as defined herein), in which case, it shall mean the aggregate
minimum standard monthly fees and charges charged to customers of such System
for the "basic service" and the first "tier" of services thereafter (as such
terms are commonly understood in the cable television industry). Lifeline shall
mean a level of cable television service that includes only broadcast stations,
PEG access channels and at most, three satellite delivered signals.
BASIC SUBSCRIBERS means, at any time, the total number of subscribers
subscribing to a System (excluding "second connects" as such term is commonly
understood in the cable television industry) who (a) pay the Basic Rate for
service in such System, and (b) are not more than sixty (60) days past due in
payment. In the case of commercial buildings, such as hotels or motels, or in
the case of multiple residential dwellings, such as apartment houses and
multifamily homes, which do not obtain reduced bulk service rates, each
separate guest unit or dwelling unit receiving service shall be counted as one
subscriber. The number of subscribers in a commercial building or in a multiple
residential dwelling which does obtain a reduced bulk service rate shall be
obtained by dividing (i) the aggregate dollar amount of monthly subscribers'
fees paid on account of such commercial building or multiple residential
dwelling for basic service by (ii) the applicable Basic Rate for the System in
which such building or dwelling is located. Residential households (other than
in a multiple residential dwelling) paying the Basic Rate under any form of
deferred payment arrangement shall not be included. Except for discounts to
senior citizens less than 20% of the otherwise applicable rate, residential
households
3
<PAGE> 9
(other than a multiple residential dwelling) paying for services on a
discounted basis or under any form of deferred payment arrangement shall not be
included.
BORROWER is defined in the preamble to this Agreement.
BORROWING DATE is defined in Section 2.2(a).
BUSINESS DAY means (a) for all purposes, any day other than Saturday,
Sunday, and any other day on which commercial banking institutions are required
or authorized by Law to be closed in Dallas, Texas, or New York, New York, and
(b) in respect of any LIBOR Rate Loan, a day on which dealings are current in
the London interbank market and commercial banks are open for domestic or
international business in London.
CAPITAL EXPENDITURE means, for any Person, the aggregate amount of all
purchases or acquisitions by such Person of, and expenditures for additions to,
items considered to be capital items, including, without limitation,
expenditures relating to property, plant, or equipment, which would be
capitalized on such Person's balance sheet.
CAPITAL LEASE means any capital lease or sublease which should be
capitalized in accordance with GAAP on a balance sheet.
CLOSING DATE means the date of execution and delivery of this
Agreement.
CODE means the Internal Revenue Code of 1986, as amended, together
with rules and regulations promulgated thereunder.
COLLATERAL means the collateral described in the Security Documents
from time to time subject to or intended to be subject to Liens securing the
Obligation.
COMMITTED SUM means, for any Lender, the amounts respectively stated
beside its name on SCHEDULE 2.1 or on the most recently amended SCHEDULE 2.1,
if any, delivered by Agent pursuant to this Agreement, subject to reduction and
cancellation as provided in this Agreement.
COMMITMENT PERCENTAGE means, at the time of any determination thereof
for any Lender the proportion which its Committed Sum bears to the aggregate
Committed Sums of all Lenders.
COMMUNICATIONS ACT means the Communications Act of 1934, as amended by
the Cable Communications Policy Act of 1984 and the Cable Television Consumer
Protection and Competition Act of 1992, and all rules and regulations
thereunder, in each case as from time to time in effect.
COMPLIANCE CERTIFICATE means a certificate signed by a Responsible
Officer of Borrower, substantially in the form of EXHIBIT D.
4
<PAGE> 10
CONSEQUENTIAL LOSS means any loss or expense other than loss of the
Applicable Margin which any Lender may reasonably charge in respect of a LIBOR
Rate Loan as a consequence of (a) any failure or refusal of Borrower to take
such Loan after Borrower shall have requested it under this Agreement, or (b)
any prepayment or payment of such Loan or conversion of such Loan to a Loan of
another Type, in each case, prior to the last day of the Interest Period
therefor.
CURRENT FINANCIALS means, at the time of any determination thereof,
the most recently delivered to Lenders of (a) the Financial Statements of
Borrower for the fiscal year ended December 31, 1993, and the quarter ended
September 30, 1994, and (b) the Financial Statements of Borrower most recently
delivered under SECTIONS 7.3(a) or 7.3(b), as the case may be.
DEBT means (without duplication), for any Person, all obligations,
contingent or otherwise (including, without limitation, contingent obligations
in connection with letters of credit), which in accordance with GAAP should be
classified upon such Person's balance sheet as liabilities, and the following,
whether or not classified upon such Person's balance sheet as liabilities (i)
liabilities secured (or for which the holder of such Debt has an existing
Right, contingent or otherwise, to be so secured) by any Lien existing on
property owned or acquired by such Person (whether or not the liability secured
thereby shall have been assumed), (ii) obligations which have been or under
GAAP should be capitalized for financial reporting purposes, (iii) all
guaranties, endorsements, and other contingent obligations with respect to Debt
of others, including, but not limited to, any obligations to purchase, sell, or
furnish property or services primarily for the purpose of enabling such other
Person to make payment of any of such Debt, or to otherwise assure the owner of
any of such Debt against loss with respect thereto, (iv) obligations to
repurchase assets previously sold, (v) obligations under Rate Protection
Agreements and foreign exchange or forward sale contracts or similar
arrangements, and (vi) obligations of such Person in connection with any
agreement to purchase, redeem, or otherwise acquire for value any capital stock
of such Person or any warrants, rights, or options to acquire such capital
stock.
DEBTOR RELIEF LAWS means the Bankruptcy Code of the United States of
America and all other applicable liquidation, conservatorship, bankruptcy,
moratorium, rearrangement, receivership, insolvency, reorganization, fraudulent
transfer or conveyance, suspension of payments or similar Laws from time to
time in effect affecting the Rights of creditors generally.
DEFAULT is defined in SECTION 8.
DEFAULT RATE means a per annum rate of interest equal from day to day
to the lesser of (a) with respect to any Loan, the rate otherwise applicable to
such Loan plus 2%, and, with respect to any other amounts due hereunder, the
Base Rate plus 3-1/2% and (b) the Maximum Rate.
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<PAGE> 11
DETERMINING LENDERS means, on any date of determination, any
combination of Lenders holding at least 71% of the Principal Debt, or, if no
Principal Debt is outstanding, any combination of Lenders holding at least 71%
of the Total Commitment.
DISTRIBUTION for any Person means, with respect to any shares of any
capital stock or other equity securities issued by such Person, (a) the
retirement, redemption, purchase, or other acquisition for value of any such
securities, (b) the declaration or payment of any dividend on or with respect
to any such securities, (c) any loan or advance by such Person to, or other
investment by such Person in, the holder of any of such securities, and (d) any
other payment by such Person with respect to such securities.
EMPLOYEE PLAN means an employee pension benefit plan covered by Title
IV of ERISA and established or maintained by Borrower.
ENVIRONMENTAL LAW means any Law that relates to the pollution or
protection of the environment or to Hazardous Substances.
ERISA means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations and rulings thereunder.
ERISA AFFILIATE means any company or trade or business (whether or not
incorporated) which, for purposes of Title/IV of ERISA, is a member of
Borrower's controlled group or which is under common control with Borrower
within the meaning of Section 414 of the Code.
EXCESS CASH FLOW means for any fiscal year of Borrower (commencing
with fiscal year 1997) Operating Cash Flow less the sum of (a) Capital
Expenditures, (b) Total Debt Service, (c) current fiscal year Management Fees
and Allocated Expenses earned and paid, and (d) $100,000.
EXHIBIT means an exhibit to this Agreement unless otherwise specified.
EXISTING CREDIT AGREEMENT means the Credit Agreement dated as of
February 28, 1990, as amended, among Borrower, the banks named therein and
Mellon Bank, N.A., as agent.
FCC means the Federal Communications Commission or any successor
agency thereto performing functions similar to those performed by the Federal
Communications Commission on the date hereof.
FCC LICENSE means any license or permit issued by the FCC, including,
without limitation, licenses issued in connection with the operation of
community antenna television systems, community antenna relay systems,
microwave systems, earth stations and business and other two-way radios.
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<PAGE> 12
FEDERAL FUNDS RATE means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 0.01%) determined (which determination
shall be conclusive and binding, absent manifest error) by Agent to be equal to
the weighted average of the rates on overnight federal funds transactions with
member banks of the Federal Reserve System arranged by federal funds brokers on
such day, as published by the Federal Reserve Bank of New York on the business
day next succeeding such day, or, if such rates are not published for any day,
the average of the quotations at approximately 10:00 a.m. (Dallas, Texas time)
received by the Agent from three Federal funds brokers of recognized standing
selected by the Agent in its sole discretion.
FINANCIAL STATEMENTS means balance sheets, profit and loss statements,
reconciliations of capital and surplus, and statements of cash flow prepared in
accordance with GAAP, which profit and loss statements and statements of cash
flow shall be in comparative form to the corresponding period of the preceding
fiscal year, and which balance sheets and reconciliations of capital and
surplus shall be in comparative form to the prior year end figures.
FRANCHISE means any 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 a cable television system or SMATV system and the reception and
transmission of signals by microwave, and shall include, without limitation,
all FCC Licenses and all certificates of compliance and cable television
registration statements which are required to be issued by or filed with the
FCC.
FRANCHISE AGREEMENT means any ordinance, agreement, contract or other
document stating the terms and conditions of any Franchise, including, without
limitation, all exhibits and schedules thereto, all amendments thereof and
consents, waivers and extensions issued thereunder, any documents incorporated
therein by reference and the application from which such Franchise was granted.
GAAP means generally accepted accounting principles of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
the Financial Accounting Standards Board which (except as set forth in SECTION
1.3) are applicable from time to time.
HAZARDOUS SUBSTANCE means any substance (a) the presence of which
requires removal, remediation, or investigation under any Environmental Law, or
(b) that is defined or classified as a hazardous waste, hazardous material,
pollutant, contaminant, or toxic or hazardous substance under any Environmental
Law.
HOMES PASSED means the actual number of residential dwellings which
can be connected to a System by a single drop line from existing trunk and
distribution lines, which lines are energized and capable of carrying cable
television signals to subscribers and are connected to an existing head end
facility. In the case of commercial buildings, such as hotels or motels, or in
the case of multiple residential dwellings, such as apartment houses and
multifamily homes, which do not and are not reasonably anticipated to obtain a
reduced bulk service rate, each
7
<PAGE> 13
separate guest unit or dwelling unit shall be counted as one residential
dwelling. The number of dwelling units in a commercial building or in a
multiple residential building which does or is reasonably anticipated to obtain
a reduced bulk service rate shall be obtained by dividing (a) the aggregate
dollar amount of monthly subscriber fees obtained or reasonably anticipated to
be obtained on account of such commercial building or multiple residential
building for basic service (as such term is commonly understood in the cable
television industry) by (b) the applicable Basic Rate. Except for discounts to
senior citizens less than 20% of the otherwise applicable rate, residential
households (other than a multiple residential dwelling) paying for or
reasonably expected to be paying for services on a discounted basis or under
any form of deferred payment arrangement shall not be included.
INTEREST EXPENSE means for any period of calculation thereof, all
interest (whether accrued as a liability and payable in cash or imputed, and
including interest payable pursuant to any Rate Protection Agreement) on Total
Debt during such period, (including, without limitation, imputed interest on
Capital Lease obligations).
INTEREST PERIOD is determined in accordance with SECTION 3.9.
JONES INTERCABLE means Jones Intercable, Inc., a Colorado corporation.
LAWS means all applicable statutes, laws, treaties, ordinances, rules,
regulations, orders, writs, injunctions, decrees, judgments, opinions, or
interpretations of any Tribunal.
LENDERS means the financial institutions named on SCHEDULE 2.1 or on
the most recently amended SCHEDULE 2.1, if any, delivered by Agent pursuant to
this Agreement, and, subject to the terms and conditions of this Agreement,
their respective successors and assigns, but not any Participant who is not
otherwise a party to this Agreement.
LIBOR RATE means with respect to a LIBOR Rate Loan for the relevant
Interest Period, the per annum rate of interest (rounded upward, if necessary,
to the nearest 0.01%) equal to the quotient obtained by dividing (a) the rate
at which deposits in United States dollars are offered to Agent by first-class
banks in the London interbank market at approximately 11:00 a.m. (London time)
two Business Days prior to the first day of the applicable Interest Period in
an amount comparable to the amount of Agent's relevant LIBOR Rate Loan therefor
and having a maturity comparable to the applicable Interest Period; by (b) one
minus the LIBOR Rate Reserve Requirement (expressed as a decimal) applicable to
such Interest Period.
LIBOR RATE LOAN means a Loan bearing interest at the sum of the LIBOR
Rate plus the Applicable Margin.
LIBOR RATE RESERVE REQUIREMENT means, with respect to any LIBOR Rate
Loan for the relevant Interest Period, the maximum aggregate reserve
requirements (including all basic, supplemental, emergency, special, marginal,
and other reserves required by applicable Law)
8
<PAGE> 14
applicable to a member bank of the Federal Reserve System in respect of
eurocurrency fundings or liabilities.
LIEN means any lien, mortgage, security interest, pledge, assignment,
charge, title retention agreement, or encumbrance of any kind, and any other
Right of or arrangement with any creditor to have its claim satisfied out of
any property or assets, or the proceeds therefrom, prior to the general
creditors of the owner thereof.
LIMITED PARTNERSHIP AGREEMENT means the Jones Growth Partners L.P.
Limited Partnership Agreement dated as of June 9, 1989, among Jones Spacelink
Cable Corporation, a Colorado corporation, as Managing General Partner, SLH
Growth Partners, Inc. (now known as Growth Partners, Inc.), as Associate
General Partner, and the limited partners admitted pursuant to such agreement.
LITIGATION means any action by or before any Tribunal.
LOAN means any amount disbursed by one or more Lenders to Borrower
under this Agreement, whether such amount constitutes an original disbursement
of funds or the continuation of an amount outstanding.
LOAN PAPERS means (a) this Agreement, certificates delivered pursuant
to this Agreement, and Exhibits and Schedules hereto, (b) all agreements,
documents, or instruments in favor of Agent or Lenders (or Agent on behalf of
Lenders) ever delivered pursuant to this Agreement or otherwise delivered in
connection with all or any part of the Obligation, including, without
limitation, the Notes, the Security Documents, and the Subordination Agreement,
and (c) all renewals, extensions, or restatements of, or amendments or
supplements to, any of the foregoing.
MANAGING GENERAL PARTNER means Jones Spacelink Cable Corporation, a
Colorado corporation.
MANAGEMENT FEES means, for any period, (i) management fees payable
(without regard to Borrower's right to defer or limit actual payment) by
Borrower to the Managing General Partner during such period for management
services provided to Borrower and (ii) the supervisory fee payable to the
Associate General Partner, in each case as described in the Limited Partnership
Agreement.
MATERIAL ADVERSE EVENT means any set of one or more circumstances or
events which, individually or collectively, would reasonably be expected to
result in any (a) impairment of the ability of Borrower to perform any of its
payment or other material obligations under the Loan Papers or, except as a
result of actions taken by Agent or Lenders, the ability of Agent or any Lender
to enforce any such obligations or any of their respective Rights under the
Loan Papers, (b) material and adverse effect on the financial condition of the
Borrower as represented to
9
<PAGE> 15
Lenders in the Financial Statements of Borrower for the fiscal year ended
December 31, 1993, and the quarter ended September 30, 1994, or (c) Default or
Potential Default.
MATERIAL AGREEMENT means, for any Person, any material written or oral
agreement, contract, commitment, or understanding to which such Person is a
party, by which such Person is directly or indirectly bound, or to which any
assets of such Person may be subject, and which is not cancelable by such
Person upon 30 days or less notice without liability for further payment other
than nominal penalty, and which requires such Person to pay more than $500,000
during any 12-month period, excluding purchase orders for materials or
inventory in the ordinary course of business.
MAXIMUM AMOUNT and MAXIMUM RATE respectively mean, for each Lender,
the maximum non-usurious amount and the maximum non-usurious rate of interest
which, under applicable Law, such Lender is permitted to contract for, charge,
take, reserve, or receive on the Obligation.
MULTIEMPLOYER PLAN means a multiemployer plan as defined in SECTIONS
3(37) or 4001 (a)(3) of ERISA or SECTION 414(f) of the Code to which Borrower
or any ERISA Affiliate is making, or has made, or is accruing, or has accrued,
an obligation to make contributions.
NATIONSBANK means NationsBank of Texas, N.A., in its individual
capacity as a Lender, and its successors and assigns.
NET OPERATING CASH FLOW means for any fiscal quarter, Operating Cash
Flow for such fiscal quarter less the sum of (a) Allocated Expenses and (b)
Management Fees, in each case, actually incurred and paid during such quarter.
NOTES means the promissory notes in substantially the form of EXHIBIT
A or EXHIBIT A-I, as applicable, executed by Borrower in favor of Lenders, and
all renewals, extensions, amendments, restatements, and consolidations of all
or ANY PART THEREOF, AND "NOTE" means any one of them.
NOTICE OF BORROWING is defined in SECTION 2.2(a).
NOTICE OF CONVERSION is defined in SECTION 3.10.
OBLIGATION means all present and future indebtedness, liabilities, and
obligations, and all renewals and extensions thereof, or any part thereof, now
or hereafter owed to Agent or any Lender by Borrower arising from, by virtue
of, or pursuant to any Loan Paper or any Rate Protection Agreement with a
Lender, together with all interest accruing thereon, fees, costs, and expenses
(including, without limitation, all attorneys' fees and expenses incurred in
the enforcement or collection thereof) payable under the Loan Papers.
10
<PAGE> 16
OPERATING CASH FLOW means for any fiscal quarter total revenues
(excluding the gain on the sale of any assets to the extent included therein)
of Borrower for such quarter, determined in accordance with GAAP, less
operating expenses of Borrower actually incurred and paid for such quarter,
excluding depreciation, amortization, Interest Expense, and other non-cash
charges, Allocated Expenses, and Management Fees.
PARTICIPANT is defined in SECTION 11.14(b).
PBGC means the Pension Benefit Guaranty Corporation, or any successor
thereof, established pursuant to ERISA.
PERMITTED DEBT means Debt described in SECTION 7. 13.
PERMITTED LIENS means Liens described in SECTION 7. 14.
PERSON means any individual, entity, or Tribunal.
POTENTIAL DEFAULT means the occurrence of any event or existence of
any circumstance which, with the giving of notice or lapse of time or both,
would become a Default.
PREMIUM SUBSCRIPTION means a Pay Service received by a Basic
Subscriber that (a) is in addition to the minimum package of subscriber
services that each Basic Subscriber to a System must receive as a subscriber
thereof, (b) is for a fee in addition to the Basic Rate, and (c) is not more
than sixty (60) days past due. The number of Premium Subscriptions in the case
of Basic Subscribers receiving a reduced bulk pay programming service rate
shall be determined by dividing (x) the aggregate dollar amount of monthly
subscribers' fees paid on account of such services by (y) the applicable
standard rate for the pay programming services received. As used herein, the
term "Pay Service" shall mean a cable television programming service available
to Basic Subscribers of a System for a separate charge, other than "pay per
view" events.
PRINCIPAL DEBT means, at the time of any determination thereof, the
aggregate unpaid principal balance of all Loans.
PRO FORMA TOTAL DEBT SERVICE means, without duplication, for the
succeeding twelve-month period from the end of any fiscal quarter or, with
respect to any calculation made as of a date other than the end of a fiscal
quarter, as of the end of the most recently ended fiscal quarter for which
Borrower is required to deliver quarterly or annual Financial Statements and
the related Compliance Certificate pursuant to SECTIONS 7.3(a) and 7.3(b),
Total Debt Service during such period; provided that, for purposes of this
definition, the rates of interest payable during any period on Total Debt (x)
bearing interest at a variable rate or at different fixed rates or (y) on which
interest does not become payable until a specified date after the end of such
quarter shall, in each case, be the interest rates per annum payable on such
Total Debt as of the date for which such calculation is made.
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<PAGE> 17
PRO RATA AND PRO RATA PART means, at the time of any determination
thereof for any Lender the proportion the Principal Debt owed to such Lender
bears to the aggregate Principal Debt owed to all Lenders, or if no loan has
been advanced or is then outstanding, the proportion which any Lender's
Committed Sum bears to the Total Commitment.
PURCHASER is defined in SECTION 11.14(c).
RATE PROTECTION AGREEMENTS means swap obligations (including without
limitation any master swap obligations), interest-rate collars, caps or floors
and any other interest rate hedge obligations of Borrower in connection with
any Debt for borrowed money (excluding any guaranties or like arrangements with
respect thereto) of Borrower.
REPORTABLE EVENT shall have the meaning specified in SECTION 4043 of
ERISA in connection with an Employee Plan, excluding events for which the
notice requirement is waived under applicable PBGC regulations.
REPRESENTATIVES means representatives, officers, directors, employees,
attorneys, and agents.
RESPONSIBLE OFFICER means the chairman, president, chief executive
officer, chief financial officer or treasurer of Borrower.
RIGHTS means rights, remedies, powers, privileges, and benefits.
SCHEDULE means a schedule attached to this Agreement unless specified
otherwise.
SECURITY AGREEMENT means a Security Agreement in the form and upon the
terms of Exhibit B, executed by Borrower, as the same may be amended, modified
or supplemented from time to time.
SECURITY DOCUMENTS means the Security Agreement, financing statements,
and any related documents.
SMATV means a satellite master antenna television system.
SOLVENT means, as to a Person, that (a) the aggregate fair market
value of such Person's assets exceeds its liabilities (whether contingent,
subordinated, unmatured, unliquidated, or otherwise), (b) such Person has
sufficient cash flow to enable it to pay its Debts as they mature, and (c) such
Person does not have unreasonably small capital to conduct such Person's
business.
SUBORDINATED DEBT means at any time (a) the outstanding principal
amount of all Debt owed by Borrower to Jones Intercable, the Managing General
Partner or the Associate General Partner, or any Affiliate or Subsidiary
thereof, and subordinated to the Obligation pursuant to the Subordination
Agreements, including, without limitation, all deferred Management Fees and
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<PAGE> 18
Allocated Expenses and interest thereon and all loans and advances, and (b) the
outstanding principal amount of other subordinated Debt of Borrower issued upon
terms, and pursuant to documents, satisfactory to Lenders.
SUBORDINATION AGREEMENT means an agreement in the form and upon the
terms of EXHIBIT G, executed and delivered by Jones Intercable, the Managing
General Partner and the Associate General Partner, as the same may be amended,
modified or supplemented from time to time.
SUBSIDIARY OF ANY PERSON AT ANY TIME means any corporation or other
entity of which a majority (by number of shares or number of votes) of any
class of outstanding capital stock normally entitled to vote for the election
of one or more directors (regardless of any contingency which does nor may
suspend or dilute the voting rights of such class) is at such time owned or
controlled directly or indirectly by such Person or one or more Subsidiaries of
such Person.
SYSTEM OR SYSTEMS means the assets constituting a domestic cable
television or an adjacent SMATV system (including, without limitation, all
related licenses, franchises and permits issued under federal, state or local
laws from time to time, and all agreements with public utilities and microwave
transmission companies, pole attachment, use, access or rental agreements,
utility easements and all other property owned or used in connection with the
entertainment and services provided pursuant to, and all interest of Borrower
to receive revenues from, or pursuant to, said licenses, franchises and
permits) owned and operated by 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 related head end facilities.
TAXES means, for any Person, taxes, assessments, or other governmental
charges or levies imposed upon such Person, its income, or any of its
properties, franchises, or assets.
TERMINATION DATE means the earlier of (a) December 31, 1996, and (b)
the effective date that Lenders' commitments to lend under this Agreement are
otherwise cancelled or terminated in accordance with this Agreement.
TOTAL COMMITMENT means, on any date of determination, the sum of all
Committed Sums for all Lenders (as the same may have been reduced or cancelled
as provided in this Agreement) then in effect.
TOTAL DEBT means at any time the sum of
(a) the outstanding principal amount of all Subordinated Debt
of Borrower of a type described in ITEM (B) of the definition of
Subordinated Debt;
(b) the outstanding Principal Debt;
(c) the total amount of Capital Lease obligations of Borrower; and
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<PAGE> 19
(d) to the extent not included in any of the foregoing, the
amount which is the subject of guaranties, endorsements, and other
contingent obligations of Borrower with respect to Debt of others,
including, but not limited to, any obligations to purchase, sell, or
furnish property or services primarily for the purpose of enabling
such other Person to make payment of any of such Debt, or to otherwise
assure the owner of any of such Debt against loss with respect
thereto.
TOTAL DEBT SERVICE means for any period, the sum of (a) all principal
and Interest Expense scheduled to be paid on Total Debt during such period
(including without limitation any amounts scheduled to be paid pursuant to any
Rate Protection Agreement), plus (b) all rentals (other than insurance premiums
and property Taxes) scheduled to be paid under Capital Leases during such
period.
TRIBUNAL means any (a) local, state, commonwealth, federal or foreign
judicial, executive, or legislative instrumentality, or any agency, authority,
commission, or board thereof, including, without limitation, any franchising
authority, (b) private arbitration board or panel, or (c) central bank.
TYPE means any type of Loan determined with respect to the interest
option applicable thereto.
1.2 Number and Gender of Words. Whenever in any Loan Paper the
singular number is used, the same shall include the plural where appropriate
and vice versa, and words of any gender shall include each other gender where
appropriate.
1.3 Accounting Principles. All accounting and financial terms used in
the Loan Papers and the compliance with each financial covenant therein shall
be determined in accordance with GAAP, and, all accounting principles shall be
applied on a consistent basis so that the accounting principles in a current
period are comparable in all material respects to those applied during the
preceding comparable period.
SECTION 2 COMMITMENT.
2.1 Facility. Subject to and in reliance upon the terms, conditions,
representations, and warranties in the Loan Papers, each Lender severally and
not jointly agrees to lend to Borrower such Lender's Commitment Percentage of
one or more Loans which, subject to the Loan Papers, Borrower may borrow,
repay, and reborrow under this Agreement; provided that (a) each such Loan must
occur on a Business Day and no later than the Business Day immediately
preceding the Termination Date; (b) each such Loan shall be in an amount not
less than $1,000,000 or a greater integral multiple of $250,000; (c) on any
date of determination, the Principal Debt shall never exceed the Total
Commitment (as such amount is subject to reduction and cancellation in
accordance with this Agreement); and (d) on any date of determination, the
Principal Debt for any Lender shall never exceed such Lender's Committed Sum.
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<PAGE> 20
2.2 Borrowing Procedure. The following procedures apply to Loans.
(a) Each Loan shall be made on Borrower's notice (a "NOTICE OF
BORROWING," substantially in the form of Exhibit C-I) to Agent requesting that
Lenders fund a Loan on a certain date (the "BORROWING DATE"), which notice (i)
shall be irrevocable and binding on Borrower, (ii) shall specify the Borrowing
Date, amount, Type, and (for a Loan comprised of LIBOR Rate Loans) Interest
Period, and (iii) must be received by Agent no later than 11:00 a.m. Dallas,
Texas time on the third Business Day preceding the Borrowing Date for any LIBOR
Rate Loan or on the Business Day immediately preceding the Borrowing Date for
any Base Rate Loan. No later than 2:00 p.m. Dallas, Texas time on the day on
which Agent receives a Notice of Borrowing pursuant to this SECTION 2.2(a),
Agent shall advise the other Lenders of such Notice of Borrowing and of each
Lender's portion of the requested Loan by telex or telecopier.
(b) Each Lender shall remit its Commitment Percentage of each
requested Loan to Agent's principal office in Dallas, in funds which are or
will be available for immediate use by Agent by 1:00 p.m. Dallas time on the
Borrowing Date therefor. Subject to receipt of such funds, Agent shall (unless
to its actual knowledge any of the conditions precedent therefor have not been
satisfied by Borrower, unless waived by Determining Lenders) make such funds
available to Borrower by causing such funds to be deposited to Borrower's
account as designated to Agent by Borrower. Notwithstanding the foregoing,
unless Agent shall have been notified by a Lender prior to a Borrowing Date
that such Lender does not intend to make available to Agent such Lender's
Commitment Percentage of the applicable Loan, Agent may assume that such Lender
has made such proceeds available to Agent on such date, as required herein, and
Agent may, in reliance upon such assumption (but shall not be required to),
make available to Borrower a corresponding amount in accordance with the
foregoing terms, but, if such corresponding amount is not in fact made
available to Agent by such Lender on such Borrowing Date, Agent shall be
entitled to recover such corresponding amount on demand (i) from such Lender,
together with interest at the Federal Funds Rate during the period commencing
on the date such corresponding amount was made available to Borrower and ending
on (but excluding) the date Agent recovers such corresponding amount from such
Lender, or (ii), if such Lender fails to pay such corresponding amount
forthwith upon such demand, then from Borrower, together with interest at a
rate per annum equal to the Federal Funds Rate during the period commencing on
such Borrowing Date and ending on (but excluding) the date Agent recovers such
corresponding amount from Borrower. No Lender shall be responsible for the
failure of any other Lender to make its Commitment Percentage of any Loan; and
no Lender's obligation to make its Commitment Percentage of any Loan shall be
affected by any other Lender's failure to make its Commitment Percentage of
such Loan.
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<PAGE> 21
2.3 Termination of Commitment. Without premium or penalty, and upon
giving not less than 5 Business Days prior written and irrevocable notice to
Agent, Borrower may terminate in whole or in part the unused portion of the
Total Commitment; provided that each partial termination shall be in an amount
of not less than $3,000,000 or a greater integral multiple of $1,000,000, and
shall be Pro Rata among all Lenders.
SECTION 3 TERMS OF PAYMENT.
3.1 Notes and Payments.
(a) Principal Debt shall be evidenced by the Notes, one
payable to each Lender in the stated principal amount of its Committed
Sum.
(b) Each payment or prepayment on the Obligation must be paid
at Agent's principal office in Dallas in funds which are or will be
available for immediate use by Agent by 1:00 p.m. Dallas, Texas time
on the day due. Agent shall pay to each Lender its Pro Rata Part of
each such payment or prepayment on the same day Agent shall have
received the same from Borrower, if such payment or prepayment is
received by Agent by 1:00 p.m. Dallas, Texas time, and otherwise
before 12:00 noon Dallas, Texas time on the Business Day next
following; if on the next Business Day, Agent shall pay interest on
the amount distributed at the Federal Funds Rate. If and to the extent
Agent shall not make such payments to Lenders when due, such unpaid
amounts shall accrue interest at the Federal Funds Rate from the due
date until (but not including) the date on which Agent makes such
payments to Lenders. Unless Agent shall have received notice from
Borrower prior to the date on which any payment is due to Lenders
hereunder that Borrower will not make such payment in full, Agent may
assume that Borrower has made such payment in full to Agent on such
date and Agent may, in reliance upon such assumption (but shall not be
required to), cause to be distributed to each Lender on such due date
an amount equal to the amount then due such Lender. If and to the
extent Borrower shall not have so made such payment in full to Agent,
each Lender shall repay to Agent forthwith on demand such amount
distributed to such Lender, together with interest thereon, for each
day from the date such amount is distributed to such Lender until the
date such Lender repays such amount to Agent (unless such repayment is
made on the same day as such distribution), at an interest rate per
annum equal to the Federal Funds Rate.
3.2 Interest and Principal Payments.
(a) Interest on each LIBOR Rate Loan shall be due and payable
as it accrues on the last day of its respective Interest Period;
provided that if any Interest Period is a period greater than 3
months, then accrued interest shall also be due and payable on the
date 3 months after the commencement of such Interest Period. Interest
on each Base Rate Loan shall be due and payable as it accrues on the
last Business day of each September, December, March, and June
(commencing March 1995).
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<PAGE> 22
(b) On the Termination Date the revolving loan facility under
this Agreement will convert to a term loan, which shall be evidenced
by Notes in the form of Exhibit A-I, one such Note executed and
delivered by Borrower to each Lender on the Termination Date in the
amount of such Lender's outstanding Principal Debt on such date, and
the outstanding Principal Debt shall be due and payable on the last
Business Day of each March, June, September, and December thereafter,
with the amount of each such payment being equal to the following
percentage of the outstanding Principal Debt as of the Termination
Date:
<TABLE>
<CAPTION>
Calendar Quarterly Annual
Year Percentage Percentage
<S> <C> <C>
1997 2.500% 10.000%
1998 3.000% 12.000%
1999 3.750% 15.000%
2000 5.000% 20.000%
2001 5.000% 20.000%
2002 5.750% 23.000%
</TABLE>
All unpaid Principal Debt and all accrued and unpaid interest is due
and payable in full on December 30, 2002.
(c) On any date of determination (i) if the Principal Debt
exceeds the aggregate of Lenders' Committed Sums, or (ii) if the sum
of the Principal Debt exceeds the Total Commitment, then Borrower
shall make a mandatory prepayment of the Principal Debt in at least
the amount of such excess, together with (x) all accrued and unpaid
interest on the principal amount so prepaid and (y) any Consequential
Loss arising as a result thereof.
(d) On each date that Borrower disposes of any asset or
investment and (i) the proceeds of such sale exceed $250,000 or (ii)
the proceeds of such sale when aggregated with all other proceeds from
dispositions during the same fiscal year exceed $250,000, Borrower
shall on the date of such disposition, repay or prepay (as the case
may be) outstanding Principal Debt in the full amount of the net cash
proceeds so received, which, (A) in the case of any prepayment
occurring after the Termination Date, shall be applied to principal
installments of the Principal Debt as specified in SECTION 3.2(b) in
the inverse order of maturity and (B) in the case of a prepayment or
repayment occurring at any time, concurrent with any such payment, the
Total Commitment shall be reduced in like amount, and each such
reduction shall reduce the Committed Sums of each Lender in accordance
with each Lender's Commitment Percentage. Borrower shall pay, on the
date of such prepayment, all accrued and unpaid interest on the
principal amount so prepaid and any Consequential Loss arising as a
result thereof.
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(e) On or before March 31 of each year (beginning March 31,
1997), Borrower shall make a mandatory prepayment in an amount equal
to 50% of Excess Cash Flow for the immediately preceding fiscal year
(as determined in accordance with the Current Financials), to be
applied to principal installments of the Principal Debt as specified
in SECTION 3.2(b) in the inverse order of maturity; provided that upon
any action or inaction or other determination by the FCC pursuant to
the rate regulations under the Cable Television Consumer Protection
and Competition Act of 1992 that in the reasonable judgment of Lenders
is reasonably likely to be a Material Adverse Event, the mandatory
prepayments shall be in an amount equal to 100% of Excess Cash Flow
for such immediately preceding fiscal year. Borrower shall pay, on the
date of such prepayment, all accrued and unpaid interest on the
principal amount so prepaid and any Consequential Loss arising as a
result thereof.
(f) After giving Agent advance written notice of the intent to
repay or prepay (as the case may be), Borrower may voluntarily repay
or prepay all or any part of the Principal Debt from time to time and
at any time, in whole or in part, without premium or penalty; provided
that (i) such notice must be received by Agent by 12:00 noon Dallas,
Texas time on (A) the third Business Day preceding the date of payment
of a LIBOR Rate Loan, and (B) one Business Day preceding the date of
payment of a Base Rate Loan; (ii) each such partial payment must be in
a minimum amount of at least $1,000,000 or a greater integral multiple
of $250,000 thereof; (iii) all accrued interest on the amount so paid
must also be paid in full, to the date of such prepayment; and (iv)
Borrower shall pay any related Consequential Loss. Each notice of
prepayment shall specify the prepayment date, the Type of Loan(s) and
amount of such Loan(s) to be prepaid and shall constitute a binding
obligation of Borrower to make a prepayment on the date stated
therein. After the Termination Date, any prepayment shall be applied
to principal installments of the Principal Debt as specified in
SECTION 3.2(b) in the inverse order of maturity and concurrent with
any such prepayment, the Total Commitment shall be reduced in like
amount, and each such reduction shall reduce the Committed Sums of
each Lender in accordance with each Lender's Commitment Percentage.
3.3 Interest Options. Except where specifically otherwise provided,
Loans shall bear interest at a rate per annum equal to the lesser of (a), as to
the respective Type of Loan (as designated by Borrower in accordance with this
Agreement), the Base Rate plus the Applicable Margin, or the LIBOR Rate plus
the Applicable Margin, as the case may be, and (b) the Maximum Rate. Each
change in the Base Rate and Maximum Rate, subject to the terms of this
Agreement, will become effective, without notice to Borrower or any other
Person, upon the effective date of such change.
3.4 Quotation of Rates. It is hereby acknowledged that a Responsible
Officer or other appropriately designated representative of Borrower may
telephone Agent on or before the date on which a Notice of Borrowing is to be
delivered by Borrower in order to receive an indication of the rates then in
effect, but such indicated rates shall neither be binding upon Agent or
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Lenders nor affect the rate of interest which thereafter is actually in effect
when the Notice of Borrowing is given.
3.5 Default Rate. To the extent permitted by Law, all Principal Debt
and past-due interest thereon shall bear interest after the occurrence and
during the continuance of a Default at the Default Rate until paid, regardless
whether such payment is made before or after entry of a judgment.
3.6 Interest Recapture. If the designated rate applicable to any Loan
exceeds the Maximum Rate, the rate of interest on such Loan shall be limited to
the Maximum Rate, but any subsequent reductions in such designated rate shall
not reduce the rate of interest thereon below the Maximum Rate until the total
amount of interest accrued thereon equals the amount of interest which would
have accrued thereon if such designated rate had at all times been in effect.
In the event that at maturity (stated or by acceleration), or at final payment
of the Notes, the total amount of interest paid or accrued is less than the
amount of interest which would have accrued if such designated rates had at all
times been in effect, then, at such time and to the extent permitted by Law,
Borrower shall pay an amount equal to the difference between (a) the lesser of
the amount of interest which would have accrued if such designated rates had at
all times been in effect and the amount of interest which would have accrued ff
the Maximum Rate had at all times been in effect, and (b) the amount of
interest actually paid or accrued on the Notes.
3.7 Interest Calculations.
(a) All payments of interest shall be calculated on the basis
of actual number of days (including the first day but excluding the
last day) elapsed but computed as if each calendar year consisted of
360 days (unless such calculation would result in the interest on the
Loans exceeding the Maximum Rate in which event such interest shall be
calculated on the basis of a year of 365 or 366 days, as the case may
be). All interest rate determinations and calculations by Agent shall
be conclusive and binding absent manifest error.
(b) The provisions of this Agreement relating to calculation
of the Base Rate and the LIBOR Rate are included only for the purpose
of determining the rate of interest or other amounts to be paid
hereunder that are based upon such rate. Each Lender may fund and
maintain its funding of all or any part of each Loan as it selects.
3.8 Maximum Rate. Regardless of any provision contained in any Loan
Paper, no Lender shall ever be entitled to contract for, charge, take, reserve,
receive, or apply, as interest on the Obligation, or any part thereof, any
amount in excess of the Maximum Rate, and, if Lenders ever do so, then such
excess shall be deemed a partial prepayment of principal and treated hereunder
as such and any remaining excess shall be refunded to Borrower. In determining
if the interest paid or payable exceeds the Maximum Rate, Borrower and Lenders
shall, to the maximum extent permitted under applicable Law, (a) treat all
Loans as but a single
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extension of credit (and Lenders and Borrower agree that such is the case and
that provision herein for multiple Loans is for convenience only), (b)
characterize any nonprincipal payment as an expense, fee, or premium rather
than as interest, (c) exclude voluntary prepayments and the effects thereof,
and (d) amortize, prorate, allocate, and spread the total amount of interest
throughout the entire contemplated term of the Obligation; provided that, if
the Obligation is paid and performed in full prior to the end of the full
contemplated term thereof, and if the interest received for the actual period
of existence thereof exceeds the Maximum Amount, Lenders shall refund such
excess, and, in such event, Lenders shall not, to the extent permitted by Law,
be subject to any penalties provided by any Laws for contracting for, charging,
taking, reserving, or receiving interest in excess of the Maximum Amount. If
the Laws of the State of Texas are applicable for purposes of determining the
"Maximum Rate" or the "Maximum Amount," such term shall mean the "indicated
rate ceiling" from time to time in effect under Article 1.04, Title 79, Revised
Civil Statutes of Texas, as amended. Pursuant to Article 15.10(b) of Chapter
15, Subtitle 79, Revised Civil Statutes of Texas, 1925, as amended, Borrower
agrees that such Chapter 15 (which regulates certain revolving credit loan
accounts and revolving triparty accounts) shall not govern or in any manner
apply to the Obligation.
3.9 Interest Periods. When Borrower requests a LIBOR Rate Loan,
Borrower may elect the interest period (each an "INTEREST PERIOD") applicable
thereto, which shall be, at Borrower's option, one, two, three or six months;
provided, however, (a) the initial Interest Period for a LIBOR Rate Loan shall
commence on the date of such Loan (including the date of any conversion
thereto), and each Interest Period occurring thereafter in respect of such Loan
shall commence on the day on which the next preceding Interest Period
applicable thereto expires; (b) if any Interest Period for a LIBOR Rate Loan
begins on a day for which there is no numerically corresponding Business Day in
the calendar month at the end of such Interest Period, such Interest Period
shall end on the last Business Day of such calendar month; (c) no Interest
Period may be chosen with respect to any portion of the Principal Debt which
would extend beyond the scheduled repayment date for such portion of the
Principal Debt; and (d) no more than an aggregate of five (5) Interest Periods
shall be in effect at one time.
3.10 Conversions. Borrower may (a) convert a LIBOR Rate Loan on the
last day of an Interest Period to a Base Rate Loan, (b) convert a Base Rate
Loan at any time to a LIBOR Rate Loan (subject to the dollar limits and
denominations of SECTION 2.1), and (c) elect a new Interest Period (in the case
of a LIBOR Rate Loan), by giving notice (a "NOTICE OF CONVERSION,"
substantially in the form of EXHIBIT C-2) of such intent no later than 10:00
a.m. Dallas, Texas time on the third Business Day prior to the date of
conversion or the last day of the Interest Period, as the case may be (in the
case of a conversion to a LIBOR Rate Loan or an election of a new Interest
Period with respect to any LIBOR Rate Loan), and no later than 10:00 a.m.
Dallas, Texas time one Business Day prior to the last day of the Interest
Period (in the case of a conversion to a Base Rate Loan); provided, that
Borrower may not convert to or continue a LIBOR Rate Loan if a Default or
Potential Default has occurred and is continuing. Absent Borrower's notice of
conversion or election of a new Interest Period, a LIBOR Rate Loan shall be
deemed converted to a Base Rate Loan effective as of the expiration of the
Interest Period applicable thereto.
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3.11 Order of Application.
(a) If no Default or Potential Default has occurred and is
continuing, payments and prepayments of the Obligation shall be
applied first to fees, second to accrued interest then due and payable
on the Principal Debt, and then to the remaining Obligation in the
order and manner as Borrower may direct.
(b) If a Default or Potential Default has occurred and is
continuing or if Borrower fails to give direction as described in (a)
preceding, any payment or prepayment (including proceeds from the
exercise of any Rights) shall be applied in the following order: (i)
to all fees and expenses for which Agent or Lenders have not been paid
or reimbursed in accordance with the Loan Papers; (ii) to accrued
interest on the Principal Debt; (iii) to the Principal Debt in such
order as Determining Lenders may elect (provided that Determining
Lenders will apply such proceeds in an order that will minimize any
Consequential Loss); and (iv) to the remaining Obligation in the order
and manner Determining Lenders deem appropriate.
3.12 Sharing of Payments, Etc. If any Lender shall obtain any payment
on account of the Loans, interest thereon or any other Obligation (whether
voluntary, involuntary, or otherwise, including, without limitation, as a
result of exercising its Rights under SECTION 3.13, but excluding any payment
to such Lender pursuant to SECTION 3.16, 7.7, 7.21 or 11.13), which is in
excess of its combined Pro Rata Part of the Principal Debt, such Lender shall
purchase from the other Lenders such participations as shall be necessary to
cause such purchasing Lender to share the excess payment ratably with each of
them, provided, however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, the purchase shall be
rescinded and the purchase price restored to the extent of the recovery.
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 of its Rights of payment (including the Right of offset) with
respect to such participation as fully as if such Lender were the direct
creditor of Borrower in the amount of such participation.
3.13 Offset. Upon the occurrence and during the continuance of a
Default, each Lender shall be entitled to exercise (for the benefit of all
Lenders in accordance with SECTION 3.12) the Rights of offset and/or banker's
Lien against each and every account and other property, or any interest
therein, which Borrower may now or hereafter have with, or which is now or
hereafter in the possession of, such Lender to the extent of the full amount of
the Obligation owed to such Lender.
3.14 Booking Loans. To the extent permitted by Law, any Lender may
make, carry, or transfer its Loans at, to, or for the account of any of its
branch offices or the office of any of its affiliates, provided that no
affiliate shall be entitled to receive any greater payment under SECTION 3.16
than the transferor Lender would have been entitled to receive with respect to
such
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3.15 Basis Unavailable or Inadequate for LIBOR Rate. If, on or before
any date on which a LIBOR Rate is to be determined for a Loan, any Lender
determines in good faith that the basis for determining any such rate is not
available or that the resulting rate does not accurately reflect the cost to
Lenders of making, maintaining, or converting Loans at such rate for the
applicable Interest Period, then Agent shall promptly give notice of such
determination to Borrower and Lenders (and such determination shall be
conclusive and binding on Borrower, absent manifest error) and such Loan shall
bear interest at the sum of the Base Rate plus the Applicable Margin. Until
Agent notifies Borrower that the circumstances giving rise to such condition no
longer exist, Lenders' commitments hereunder to make or maintain, or to convert
to, LIBOR Rate Loans shall be suspended and such Loans shall be made or
maintained at the sum of the Base Rate plus the Applicable Margin. Subject to
the terms and conditions of this Agreement, if Agent notifies Borrower that the
circumstances giving rise to the suspension of its obligations to make or
maintain LIBOR Rate Loans no longer exist, Borrower shall be entitled to
request LIBOR Rate Loans and convert Base Rate Loans to LIBOR Rate Loans as if
the provisions of this paragraph had never applied.
3.16 Additional Costs.
(a) If, in respect of all or any portion of any LIBOR Rate
Loan owed to any Lender (i) any change in present Law or any future
Law shall impose, modify, or deem applicable, or compliance by such
Lender with any requirement (whether or not having the force of Law)
of any Tribunal shall result, in any requirement that any reserves
(including, without limitation, any marginal, emergency, supplemental,
special, or other reserves) be maintained, and (ii) any of the same
results in a reduction in any sums receivable by such Lender hereunder
or an increase in the costs incurred by such Lender in advancing or
maintaining any portion of any LIBOR Rate Loan, then (iii) such Lender
(through Agent) shall notify Borrower upon becoming aware of same and
deliver to Borrower a certificate setting forth in reasonable detail
the amount necessary to compensate such Lender for such reduction or
such increase (which certificate shall be conclusive and binding as to
such amount, absent manifest error), and (iv) Borrower shall promptly
pay such amount to such Lender within ten days after demand therefor.
(b) If with respect to all or any portion of any Loan, any
change in present Law or any future Law regarding capital adequacy or
compliance by Agent or any Lender with any request, directive, or
requirement now existing or hereafter imposed by any Tribunal
regarding capital adequacy (whether or not having the force of Law),
shall result in a reduction in the rate of return on its capital as a
consequence of its obligations under this Agreement to a level below
that which it otherwise could have achieved (taking into consideration
its policies with respect to capital adequacy) by an amount deemed by
it to be material (and it may, in determining such amount, utilize
such assumptions and allocations of costs and expenses as it shall
deem reasonable and may use any reasonable averaging or attribution
method), then (unless the effect of such event is already reflected in
the rate of interest then applicable hereunder) Agent or such Lender
(through Agent) shall notify Borrower and deliver to Borrower a
certificate
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setting forth in reasonable detail the calculation of the
amount necessary to compensate Agent or such Lender therefor, which
certificate shall be conclusive and binding absent manifest error, and
Borrower shall promptly pay such amount to Agent or such Lender within
ten days after demand therefor.
(c) Any and all payments by Borrower hereunder or under the
Notes to or for the benefit of any Lender shall be made, in accordance
with SECTION 3.2, free and clear of and without deduction for any and
all Taxes, levies, imposts, deductions, charges or withholdings and
all liabilities with respect thereto, excluding (i) Taxes imposed on
its net income (including, without limitation, any Taxes imposed on
branch profits) and franchise Taxes imposed on it by the jurisdiction
under the Laws of which such Lender is organized or any political
subdivision thereof, (ii) Taxes imposed on its net income (including,
without limitation, any Taxes imposed on branch profits), and
franchise Taxes imposed on it, by the jurisdiction of such Lender's
applicable lending office or any political subdivision thereof, (iii)
any Taxes, levies, imposts, deductions, charges or withholdings that
are in effect and that would apply to a payment to such Lender as of
the Closing Date, (iv) if any Person acquires any interest in this
Agreement or any Note pursuant to the provisions hereof, including
without limitation a participation (whether or not by operation of
law), or a foreign Lender changes the office in which the Loan is
made, accounted for or booked (any such Person or such foreign Lender
in that event being referred to as a "Tax Transferee"), any Taxes,
levies, imposts, deductions, charges or withholdings to the extent
that they are in effect and would apply to a payment to such Tax
Transferred as of the date of the acquisition of such interest or
change in office, as the case may be, and (v) Taxes which are
otherwise included in any amounts otherwise payable by Borrower
pursuant to any other provision of this Agreement (all such
non-excluded Taxes, levies, imposts, deductions, charges, withholdings
and liabilities, excluding ITEMS (i) THROUGH (v) above, being
hereinafter referred to as "NON-EXCLUDED TAXES"). If Borrower shall be
required by Law to deduct any Non-excluded Taxes from or in respect of
any sum payable hereunder or under any Note to or for the benefit of
any Lender or any Tax Transferee, (A) the sum payable shall be
increased as may be necessary so that after making all required
deductions of Non-excluded Taxes such Lender or such Tax Transferee,
as the case may be, receives an amount equal to the sum it would have
received had no such deductions been made, (B) Borrower shall make
such deductions, and (C) Borrower shall pay the full amount so
deducted to the relevant taxation authority or other authority in
accordance with applicable Law. Within 30 days after the date that any
Lender or any Tax Transferee receives a refund of any Taxes for which
it has been indemnified by Borrower pursuant to the provisions of this
subsection (c), such Lender or Tax Transferee, as the case may be,
shall pay to Borrower such refund of Taxes along with any interest
received with respect thereto.
3.17 Change in Laws. If at any time any Law shall make it unlawful
for any Lender to make or maintain LIBOR Rate Loans, then such Lender (through
Agent) shall promptly notify Borrower and Agent, and (a) in respect of
undisbursed funds, such Lender shall not be obligated to make any requested
Loan which would be unlawful, and (b) in respect of any outstanding
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Loan (i) if maintaining such Loan until the last day of the Interest Period
applicable thereto is unlawful, such Loan shall be converted to a Base Rate
Loan as of the date of such notice, and Borrower shall pay any related
Consequential Loss, or (ii) if not so prohibited by Law, such Loan shall be
converted to a Base Rate Loan as of the last day of the Interest Period then
applicable thereto, or (iii) if any such conversion will not resolve such
unlawfulness, Borrower shall prepay promptly such LIBOR Rate Loan, without
penalty, but with any related Consequential Loss.
3.18 Consequential Loss. Borrower shall indemnify each Lender
against, and shall pay to such Lender within five days after demand, or such
earlier time as specified in this Agreement, any Consequential Loss of such
Lender. When any Lender demands that Borrower pay any Consequential Loss, such
Lender shall deliver to Borrower and Agent a certificate setting forth in
reasonable detail the basis for imposing such Consequential Loss and the
calculation of such amount thereof, which calculation shall be conclusive and
binding absent manifest error.
SECTION 4 FEES.
4.1 Treatment of Fees. Except as otherwise provided by Law, the fees
described in this SECTION 4 (a) do not constitute compensation for the use,
detention, or forbearance of money, (b) are in addition to, and not in lieu of,
interest and expenses otherwise described in this Agreement, (c) shall be
payable in accordance with SECTION 3.1, (d) shall be non-refundable, (e) shall,
to the fullest extent permitted by Law, bear interest, if not paid when due, at
the Default Rate, and (f) shall be calculated on the basis of actual number of
days (including the first day but excluding the last day) elapsed, calculated
on the basis of a year of 365 or 366 days, as the case may be.
4.2 Facility Fees. Borrower shall pay to Lenders on the Closing Date,
the facility fees as described in a separate letter agreement.
4.3 Agent Fees. Borrower shall pay to Agent, solely for its own
account, such fees as shall be agreed upon between Borrower and Agent.
4.4 Commitment Fee. Borrower shall pay to Agent, for the Pro Rata
account of Lenders, a commitment fee, payable as it accrues on each March 31,
June 30, September 30, and December 31 (commencing March 31, 1995), and on the
Termination Date, equal to 0.375% per annum, calculated from the date of this
Agreement on the amount by which (a) the aggregate Committed Sums exceed (b)
the average daily Principal Debt, in each case during the three month period
(or portion thereof commencing on the date hereof) preceding and including such
due date.
SECTION 5 CONDITIONS PRECEDENT.
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5.1 Conditions Precedent to Initial Loan. Lenders will not be
obligated to fund the initial Loan, unless Agent has received (with sufficient
copies for the Lenders) all of the following in form and substance satisfactory
to Agent and all Lenders (unless otherwise indicated, all documents shall be
dated as of the Closing Date):
(a) The Agreement. The Agreement (together with all schedules
thereto) executed by Borrower, each Lender, and Agent.
(b) Notes. For each Lender, a Note in the form of EXHIBIT A
each payable to the order of each such Lender, as contemplated in
SECTION 3.1.
(c) Security Agreement. A Security Agreement, in the form of
Exhibit B, executed by Borrower.
(d) UCC Financing Statements. UCC financing statements for
filing in each filing office set forth on SCHEDULE 5.1(d) hereto,
executed by Borrower as debtor in favor of Agent as secured party.
(e) Subordination. Subordination Agreements executed by each
of the Managing General Partner, the Associate General Partner and
Jones Intercable.
(f) Limited Partnership Agreement. Copies of a Certificate of
Limited Partnership and Borrower's Limited Partnership Agreement and
all amendments thereto, each accompanied by certificates, (i) one
dated a Current Date, issued by the appropriate Tribunal of the
jurisdiction of Borrower's organization, and (ii) one dated the
Closing Date, executed by the Secretary or an Assistant Secretary of
the Managing General Partner, in each case stating that it is correct
and complete. As used herein, the term "CURRENT DATE" means any date
not more than 60 days prior to the Closing Date.
(g) Articles of Incorporation. Copies of the Articles or
Certificate of Incorporation, and all amendments thereto, of the
Managing General Partner, accompanied by certificates that such copy
is correct and complete, one dated a Current Date (as used herein, the
term "CURRENT DATE" means any date not more than 60 days prior to the
Closing Date), issued by the appropriate Tribunal of the State of
Colorado, and one dated the Closing Date, executed by the Secretary or
an Assistant Secretary of the Managing General Partner.
(h) Bylaws. Copies of the Bylaws, and all amendments thereto,
of the Managing General Partner, accompanied by a certificate that
such copy is correct and complete, dated the Closing Date, executed by
the Secretary or an Assistant Secretary of the Managing General
Partner.
(i) Good Standing and Authority. Certificates of the
appropriate Tribunals of such jurisdictions as Agent may request, each
dated a Current Date, to the effect that
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the Managing General Partner is in good standing with respect to the
payment of franchise and similar Taxes and is duly qualified to
transact business in such jurisdictions (accompanied, if requested by
Agent, by the certificate of the Secretary or an Assistant Secretary
of the Managing General Partner, that such Tribunal certificates are
true and correct).
(j) Incumbency. Certificates of incumbency of all officers of
the Managing General Partner who will be authorized to execute or
attest any of the Loan Papers on behalf of the Managing General
Partner, executed by the Secretary or an Assistant Secretary of the
Managing General Partner.
(k) Resolutions. Copies of resolutions approving the Loan
Papers and authorizing the transactions contemplated in the Loan
Papers duly adopted by the Board of Directors of the Managing General
Partner, accompanied by a certificate of the Secretary or an Assistant
Secretary of the Managing General Partner, that such copy is a true
and correct copy of resolutions duly adopted by the unanimous written
consent of the Board of Directors of the Managing General Partner, and
that such resolutions constitute all the resolutions adopted with
respect to such transactions, have not been amended, modified, or
revoked in any respect, and are in full force and effect as of the
Closing Date.
(l) Opinion of Counsel to the Borrower. The opinion of
Elizabeth Steele, general counsel to Jones Intercable, addressed to
Agent and Lenders, substantially in the form of Exhibit F.
(m) Lien Searches and Lien Releases. Filing officer
certificates (or commercial reports similar thereto, if satisfactory
to Agent) under Section 9-407(2) of the UCC, releases or partial
releases of Liens or financing statements, and other evidence
satisfactory to Agent that there are no Liens on any assets of
Borrower, except the Permitted Liens.
(n) Insurance. Certificates of insurance for each policy of
insurance maintained by Borrower reflecting Agent, for the benefit of
Lenders, as an additional insured, together with evidence of payment
of all premiums thereon.
(o) Notice of Borrowing. A duly completed Notice of Borrowing
for the initial Loan, including completion of the calculations
required for such Loan.
(p) Current Financials. True and correct copies of the Current
Financials.
(q) Payment of Fees. Payment of all fees payable on or prior
to the Closing Date to Agent, or any Lender as provided for in SECTION
4 of the Agreement.
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(r) Authorizations. Evidence satisfactory to Lenders and
their counsel that the Borrower shall have made all filings and
registrations and shall have obtained all Authorizations which are or
may be required as prerequisites to the validity and enforceability of
the Loan Papers, and the transactions contemplated thereby.
(s) Repayment of Certain Existing Debt. Evidence satisfactory
to the Lenders and their counsel that the Borrower shall have paid or
concurrently with the making of the initial Loan will pay, in full
(including principal, interest, and fees) all outstanding Debt under
the Existing Credit Agreement and cancel all commitments thereunder.
(t) Other Documents. Such other agreements, documents,
instruments, opinions, certificates, and evidences as Agent may
reasonably request.
5.2 Conditions Precedent to Each Loan. In addition, Lenders will not
be obligated to fund (as opposed to continue or convert) any Loan unless on the
Borrowing Date of such Loan (and after giving effect thereto), as the case may
be: (a) Agent shall have timely received therefor a Notice of Borrowing; (b)
all of the representations and warranties of Borrower set forth in the Loan
Papers are true and correct in all material respects (except to the extent that
(i) the representations and warranties speak to a specific date or (ii) in the
case of representations and warranties set forth in SECTIONS 6.2, 6.3, 6.11,
6.15, 6.21, 6.22 and 6.23, the facts on which such representations and
warranties are based have been changed by transactions contemplated or
permitted by this Agreement and supplemental schedules have been delivered with
respect thereto); (c) no change in the financial condition of Borrower which is
a Material Adverse Event shall have occurred; (d) no Default or Potential
Default shall have occurred and be continuing; (e) the funding of such Loans is
permitted by Law; (f) the amount of such Loan when aggregated with other Total
Debt of the Borrower does not exceed the amount of Total Debt for which
Borrower may be obligated without violating the ratio of Annualized Operating
Cash Flow to Pro Forma Total Debt Service applicable to such date of
determination as set forth in SECTION 7.27(e); and (g) all conditions related
to such Loan must be satisfied in the reasonable determination of all Lenders
and their respective counsel, and upon the reasonable request of Agent,
Borrower shall deliver to Agent evidence substantiating any of the matters in
the Loan Papers which are necessary to enable Borrower to qualify for such
Loan. Each Notice of Borrowing delivered to Agent shall constitute the
representation and warranty by Borrower to Agent that the statements in CLAUSES
(b), (c), and (d) above are true and correct in all respects. Each condition
precedent in this Agreement is material to the transactions contemplated in
this Agreement, and time is of the essence in respect of each thereof. Subject
to the prior approval of all Lenders, Lenders may fund any Loan without all
conditions being satisfied, but, to the extent permitted by Law, the same shall
not be deemed to be a waiver of the requirement that each such condition
precedent be satisfied as a prerequisite for any subsequent funding, unless all
Lenders specifically waive each such item in writing.
SECTION 6 REPRESENTATIONS AND WARRANTIES. Borrower, represents and warrants to
Agent and Lenders as follows:
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6.1 Purpose of Credit Facility. Borrower will use: (a) some or all of
the proceeds of the Loans to repay and cancel all outstanding Debt created
pursuant to the Existing Credit Agreement; (b) all other proceeds of Loans for
(i) working capital, (ii) general corporate purposes, and (iii) capital
expenditures. The 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 Regulation U of
the Board of Governors of the Federal Reserve System, as amended. No part of
the proceeds of any Loan will be used, directly or indirectly, for a purpose
which violates any Law, including without limitation, the provisions of
Regulation U of the Board of Governors of the Federal Reserve System, as
amended.
6.2 Existence and Authority. Borrower is duly organized and validly
existing under the Laws of its jurisdiction of organization. Except where
failure would not be a Material Adverse Event, Borrower is duly qualified to
transact business as a foreign entity in each jurisdiction where the nature and
extent of its business and properties require the same. Except as described on
SCHEDULE 6.2, no Authorization which has not heretofore been obtained is
required to authorize, or is required in connection with, the execution,
delivery, legality, validity, binding effect, performance of, or enforceability
of the Loan Papers.
6.3 Subsidiaries. Borrower has no Subsidiaries.
6.4 Authorization and Contravention. The execution and delivery by
Borrower of each Loan Paper and the performance of its obligations thereunder
(a) are within the partnership power of Borrower, (b) have been duly authorized
by all necessary partnership action, (c) except as described on SCHEDULE 6.2,
require no action by or in respect of, or filing with, any Tribunal, which
action or filing has not been taken or made on or prior to the Closing Date,
(d) will not violate any provision of the Borrower's limited partnership
agreement, (e) will not violate any provision of Law applicable to it, (f)
will not violate any Material Agreement to which it is a party, other than such
violations which individually or collectively could not be a Material Adverse
Event, or (g) will not result in the creation or imposition of any Lien on any
asset of Borrower other than the Liens created under the Loan Papers. Borrower
is not in violation in any material respect of any provision of Law applicable
to it.
6.5 Binding Effect. Upon execution and delivery by all parties
thereto, each Loan Paper will constitute a legal, valid, and binding obligation
of Borrower, enforceable against Borrower in accordance with its terms, except
as enforceability may be limited by applicable Debtor Relief Laws and general
principles of equity.
6.6 Financial Statements. The Current Financials were prepared in
accordance with GAAP and present fairly the financial condition, results of
operations, and cash flows of Borrower as of, and for the portion of the fiscal
year ending on the date or dates thereof (subject in the case of interim
statements only to normal year-end audit adjustments). There were no material
liabilities, direct or indirect, fixed or contingent, of the Borrower as of the
date or dates of the Current Financials which are not reflected therein or in
the notes thereto. Except for
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transactions directly related to, or specifically contemplated by, the Loan
Papers, there have been no changes in the financial condition of the Borrower
from that shown in the Current Financials after such date which could be a
Material Adverse Event, nor has Borrower incurred any material liability
(including, without limitation, any liability under any Environmental Law),
direct or indirect, fixed or contingent, after such date.
6.7 Litigation. Except as described on SCHEDULE 6.7 and except for
Litigation affecting the cable industry generally, Borrower is not subject to,
or aware of the threat of, any Litigation which if adversely determined would
be reasonably likely to result in payment by Borrower of amounts in excess of
$500,000. There are no outstanding or unpaid judgments against Borrower or any
proceedings against Borrower's assets which would constitute a Default or
Potential Default under SECTION 8.4.
6.8 Taxes. All Tax returns of Borrower required to be filed have been
filed (or extensions have been granted) prior to delinquency, and all Taxes
imposed upon Borrower which are due and payable have been paid prior to
delinquency, other than Taxes for which the criteria specified in SECTION 7.5
have been satisfied.
6.9 Environmental Matters. Except as disclosed on SCHEDULE 6.9,
Borrower (a) does not know of any environmental condition or circumstance, such
as the presence of any Hazardous Substance, adversely affecting the properties
or operations of Borrower, (b) has not received any report of a violation by
Borrower of any Environmental Law, or (c) is not under any obligation to remedy
any violation of any Environmental Law. No facility of Borrower is currently
used for, or to the knowledge of Borrower has previously been used for,
storage, treatment, or disposal of any Hazardous Substance.
6.10 Employee Benefit Plans. (a) No Employee Plan has incurred any
material accumulated funding deficiency, as defined in SECTION 302 of ERISA and
SECTION 412 of the Code, (b) Borrower has not incurred any material liability
under ERISA to the PBGC in connection with any such Employee Plan, (c) Borrower
has not withdrawn in whole or in part from participation in a Multiemployer
Plan, (d) Borrower has not engaged in any "prohibited transaction" (as defined
in SECTION 406 of ERISA or SECTION 4975 of the Code) which could be a Material
Adverse Event, and (e) no Reportable Event has occurred which is likely to
result in the termination of any Employee Plan.
6.11 Properties; Liens. Borrower has good and marketable title to all
its property reflected on the Current Financials (except for property that is
obsolete or that has been disposed of in the ordinary course of business).
SCHEDULE 6.11 (as supplemented from time to time) accurately describes the
location of all tangible personal property of Borrower (including Systems), and
there is no Lien on any property of Borrower except for Permitted Liens.
6.12 Government Regulations. Borrower is not subject to regulation
under the Investment Company Act of 1940, as amended, the Public Utility Holding
Company Act of 1935,
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as amended, or any other Law (other than Regulations G, T, U, and X of the
Board of Governors of the Federal Reserve System) which regulates the
incurrence of Debt.
6.13 Transactions with Affiliates. Except as permitted by SECTION
7.15, Borrower is not a party to a transaction with any of its Affiliates,
other than transactions in the ordinary course of business and upon fair and
reasonable terms not materially less favorable than Borrower could obtain or
could become entitled to in an arms-length transaction with a Person that was
not an Affiliate.
6.14 Debt. Borrower is not an obligor on any Debt other than
Permitted Debt.
6.15 Material Agreements. Borrower is not a party to any Material
Agreement, except for the Loan Papers and the Material Agreements described on
SCHEDULE 6.15 (as supplemented from time to time). All such Material
Agreements are in full force and effect, and no default or potential default
exists on the part of Borrower thereunder.
6.16 Insurance. Borrower maintains with financially sound,
responsible, and reputable insurance companies or associations (or, as to
workers' compensation or similar insurance, with an insurance fund or by
self-insurance authorized by the jurisdictions in which it operates) insurance
concerning its properties and businesses against such casualties and
contingencies and of such types and in such amounts (and with co-insurance and
deductibles) as is customary in the case of same or similar businesses.
6.17 Labor Matters. There are no actual or threatened strikes, labor
disputes, slow downs, walkouts, or other concerted interruptions of operations
by the employees of Borrower that would be a Material Adverse Event. Hours
worked by and payment made to employees of Borrower have not been in violation
of the Fair Labor Standards Act or any other applicable Law dealing with such
matters, other than any such violations, individually or collectively, which
would not constitute a Material Adverse Event. All payments due from Borrower
on account of employee health and welfare insurance have been paid or accrued
as a liability on its books, other than any such nonpayments which would not,
individually or collectively, constitute a Material Adverse Event.
6.18 Solvency. At the time of each Loan hereunder each of Borrower,
the Managing General Partner and the Associate General Partner is (and after
giving effect to the transactions contemplated by the Loan Papers, and any
incurrence of additional indebtedness will be) Solvent.
6.19 Prior Names. Borrower has not used or transacted business under
any other partnership or trade name in the five-year period preceding the
Closing Date, except as set forth on SCHEDULE 6.19.
6.20 Licenses, etc. Borrower owns, possesses, or has the right to use
all patents, copyrights, licenses (including any FCC Licenses), trademarks,
service marks, trade names,
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permits, and other rights, including, without limitation, all agreements with
public utilities, and microwave transmission companies, and other entities
pursuant to which coaxial, fiber optic, or other type of cable and distribution
units are extended, pole agreements, and all other utility easements, necessary
to own and operate its properties (including Systems) and to carry on its
business as presently conducted. Each of the foregoing is in full force and
effect, and Borrower is in compliance in all material respects with all of the
material terms and conditions of each thereof, with no known conflict with the
rights of others. Borrower has not taken or failed to take any action which
taking or failure to take permits, or after giving of notice or lapse of time
or both would permit, the revocation or termination of any trademark, service
mark, trade name, patent, copyright, license (including FCC Licenses), permit
or other right that is necessary to conduct its business as now conducted.
SCHEDULE 6.20, correctly identifies each such trademark, service mark, trade
name, copyright, license (including FCC Licenses), permit or other right
relating to the Systems and as to which a security interest cannot be granted
or transferred without the consent of the grantor thereof.
6.21 Franchises. SCHEDULE 6.21, as supplemented to reflect any
renewals and extensions of Franchise Agreements, lists all Franchise Agreements
of the Borrower relating to the Systems. The Borrower has taken all action
required by the Tribunals listed on SCHEDULE 6.21 to lawfully transfer or grant
the Franchise Agreements to the Borrower. To the knowledge of Borrower after
due inquiry, all Franchise Agreements relating to the Systems were lawfully
transferred or granted to Borrower pursuant to the rules and regulations of the
Tribunals listed on SCHEDULE 6.21. The Franchise Agreements authorize Borrower
to operate one or more Systems until the respective expiration dates listed on
SCHEDULE 6.21. SCHEDULE 6.21 (as supplemented from time to time) correctly
identifies the franchisee and accurately describes the franchise area, the
exclusive or nonexclusive nature of each such Franchise Agreement and all
limitations contained in the Franchise Agreement or related statutes on the
assignment, sale or encumbering of the Franchise Agreement or the related
System's assets. Borrower is in compliance in all material respects with all
material terms and conditions of all Franchise Agreements relating to the
Systems and no event has occurred or exists which permits, or, after the giving
of notice, or the lapse of time or both would permit, the revocation or
termination of any such Franchise Agreement.
6.22 Chief Executive Office; Chief Place of Business. SCHEDULE 6.22
(as supplemented from time to time) accurately sets forth the location of the
chief executive office and chief place of business (as such terms are used in
the Uniform Commercial Code of each state whose law would purport to govern the
attachment and perfection of the security interests granted by the Security
Documents) of Borrower.
6.23 Subordinated Debt. Borrower has heretofore delivered to Agent
true and correct copies of all agreements or instruments evidencing, or setting
forth the terms of, the Subordinated Debt. The Obligation constitutes senior
indebtedness which is entitled to the benefits of the subordination provisions
of the Subordination Agreement.
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6.24 Full Disclosure. There is no material fact or condition relating
to the Loan Papers or the financial condition, business, or property of
Borrower which would be a Material Adverse Event and which has not been
related, in writing, to Agent and Lenders. All information heretofore furnished
by Borrower to Agent and Lenders in connection with the Loan Papers was, and
all such information hereafter furnished by Borrower to Agent will be, true and
accurate in all material respects or based on reasonable estimates on the date
as of which such information is stated or certified.
SECTION 7 COVENANTS. So long as Lenders are committed to fund Loans under this
Agreement and thereafter until the Obligation is paid and performed in full and
cancelled, unless Borrower receives a prior written consent to the contrary by
Agent on behalf of Determining Lenders, Borrower covenants and agrees that it
shall comply with the following:
7.1 Use of Proceeds. Borrower shall use the proceeds of Loans only
for the purposes represented in SECTION 6.1.
7.2 Books and Records. Borrower shall maintain books, records and
accounts necessary to prepare financial statements in accordance with GAAP.
7.3 Items to be Furnished. Borrower shall cause the following to be
furnished to Agent:
(a) Promptly after preparation, and no later than 120 days
after the last day of each fiscal year of Borrower, Financial
Statements showing the financial condition and results of operations
of Borrower as of, and for the year ended on, such last day,
accompanied by:
(i) the unqualified opinion of a firm of
nationally-recognized independent certified public
accountants, based on an audit using generally
accepted auditing standards, that such Financial
Statements were prepared in accordance with GAAP and
present fairly the financial condition and results of
operations of Borrower, and
(ii) a Compliance Certificate with respect
to such Financial Statements;
(b) Promptly after preparation, and no later than 60 days
after the last day of each of the first three fiscal quarters of
Borrower, Financial Statements showing the financial condition and
results of operations of Borrower for such fiscal quarter and for the
period from the beginning of the current fiscal year to, such last
day, accompanied by a Compliance Certificate with respect to such
Financial Statements.
(c) Prior to January 31 of each fiscal year of Borrower, the
financial budget for such fiscal year, and, if reasonably requested by
any Lender, financial projections for the succeeding five fiscal
years, accompanied by a certificate executed by a Responsible
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Officer certifying that such budget and, if applicable, projections
were prepared by Borrower based on assumptions which, in light of the
historical performance of Borrower and its prospects for the future,
are made in good faith.
(d) As soon as practicable, and in any event within 60 days
after the end of each fiscal quarter and 120 days after the end of
each fiscal year, a subscriber's report setting forth the number of
Homes Passed, Basic Subscribers and Premium Subscriptions for each
System as of the end of such quarter.
(e) Promptly after preparation, true, correct and complete
copies of any periodic or special reports filed by or on behalf of
Borrower with the FCC or any governmental authority succeeding to any
of its functions or with any state or local CATV authority if (i) such
reports indicate any material adverse change in the businesses,
operations, affairs or conditions of Borrower, or (ii) copies thereof
are requested by any Lender. Borrower will also promptly provide to
the Lenders copies of any notices or other communications from the FCC
or any governmental authority succeeding to any of its functions or
from any state or local CATV authority which could have a material
adverse effect on the business or operations of Borrower.
(f) Notice, promptly after Borrower knows or has reason to
know, of any amendment or supplement to, or renegotiation, extension
or renewal of, or waiver by any other party thereto of any right under
or conditions of (i) any Franchise Agreement or any FCC license, which
amendment, supplement, renegotiation, extension, renewal or waiver
would be material, or (ii) any agreement or instrument evidencing
Subordinated Debt.
(g) Notice promptly after Borrower knows of any requirement
not heretofore imposed upon it to obtain a Franchise from any
franchising authority in order to continue the operation of Borrower's
business in any location.
(h) Notice, promptly after Borrower knows or has reason to
know, of (i) the existence and status of any Litigation which, if
determined adversely to Borrower, would involve payment by Borrower of
amounts in excess of $500,000, (ii) any material change in any
material fact or circumstance represented or warranted in any Loan
Paper, (iii) a Default or Potential Default, specifying the nature
thereof and what action Borrower has taken, is taking, or proposes to
take with respect thereto, (iv) the receipt by Borrower of any notice
from any Tribunal of the expiration without renewal, termination,
material modification or suspension of, or institution of any
proceedings to terminate, materially modify, or suspend, any
Authorization granted by the FCC or any other Authorization now or
hereafter held by Borrower which is required for Borrower to operate
in compliance with all applicable Laws, (v) any federal, state, or
local statute, regulation, or ordinance or judicial or administrative
order limiting or controlling the operations of Borrower which has
been issued or adopted hereafter and which is of material adverse
importance or effect in relation to the operation of Borrower, or (vi)
the receipt by
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Borrower of notice of any violation or alleged violation of any
Environmental Law, which violation or alleged violation could
individually or collectively with other such violations or
allegations, be a Material Adverse Event.
(i) Promptly upon request therefor by Agent or any Lender
(through Agent), such information (not otherwise required to be
furnished under the Loan Papers) respecting the business affairs,
assets, and liabilities of the Borrower, and such opinions,
certifications and documents, in addition to those mentioned in this
Agreement, as reasonably requested.
7.4 Inspections. Borrower shall allow Agent or any Lender (or their
respective Representatives) to inspect any of its properties, to review
reports, files, and other records and to make and take away copies thereof, to
conduct tests or investigations, and to discuss any of its affairs, conditions,
and finances with Borrower's other creditors, directors, officers, employees,
public accountants, or other representatives from time to time, during
reasonable business hours upon reasonable notice to Borrower and upon affording
Borrower the opportunity to attend any meeting with Borrower's public
accountants or other outside third parties; provided that, if a Default or
Potential Default has occurred and is continuing, no such prior notice or
opportunity to attend any meeting shall be required.
7.5 Taxes. Borrower shall pay on or before the date on which
penalties attach thereto, any and all Taxes other than Taxes the amount or
validity of which is being contested in good faith by appropriate and lawful
proceedings diligently conducted, against which reserve or other provision
required by GAAP has been made, and in respect of which levy and execution of
any lien securing same have been and continue to be stayed.
7.6 Payment of Obligations. Borrower shall promptly pay (or renew and
extend) all of its material obligations as the same become due (unless being
contested in good faith by appropriate proceedings). Borrower shall not make
any voluntary prepayment of principal of, or interest on, any Debt other than
the Obligation, whether subordinate to the Obligation or not, if a Default or
Potential Default exists, and will not make any voluntary prepayment of
principal of, or interest on, the Subordinated Debt, whether or not a Default
or Potential Default exists.
7.7 Expenses. Borrower shall promptly pay within 15 Business Days
after request therefor (i) all reasonable out of pocket costs, fees, and
expenses paid or incurred by Agent incident to any Loan Paper (including, but
not limited to, the reasonable fees and expenses of counsel to Agent in
connection with the negotiation, preparation, delivery, and execution of the
Loan Papers and any related amendment, waiver, or consent) and (ii) all
reasonable costs and expenses of Lenders and Agent incurred by Agent or any
Lender in connection with the enforcement of the obligations of Borrower
arising under the Loan Papers or the exercise of any Rights arising under the
Loan Papers (including, but not limited to, reasonable attorneys' fees and
court costs), all of which shall be a part of the Obligation.
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7.8 Maintenance of Existence, Assets, and Business. Except as
otherwise permitted by SECTION 7.25, Borrower shall at all times (a) maintain
its existence as a limited partnership in the state of organization and its
authority to transact business in all other jurisdictions where the nature and
extent of its business and properties requires it to be so qualified; (b)
maintain all licenses, permits, and franchises necessary to conduct its
business as conducted on the Closing Date; (c) keep all of its assets which are
useful in and necessary to its business in good working order and condition
(ordinary wear and tear excepted) and make all necessary repairs thereto and
replacements thereof; (d) do all things necessary to renew, extend, and
continue in effect all Authorizations which may at any time and from time to
time be necessary for the Borrower to operate its business in substantial
compliance with applicable Law; and (e) continue to engage solely in the cable
television and telecommunications business.
7.9 Insurance. Borrower shall, at its cost and expense, maintain
insurance with financially sound and reputable insurers, in such amounts, and
covering such risks, as shall be ordinary and customary for similar companies
in the industry. Borrower shall deliver to Agent certificates of insurance from
time to time received by it for each such policy of insurance and evidence of
payment of all premiums thereon.
7.10 Preservation and Protection of Rights. Borrower shall perform
such acts and duly authorize, execute, acknowledge, deliver, file, and record
any additional agreements, documents, instruments, and certificates as Agent or
Determining Lenders may reasonably deem necessary or appropriate in order to
preserve and protect the Rights of Agent and Lenders under any Loan Paper.
7.11 Employee Benefit Plans. Borrower shall not, directly or
indirectly, (a) engage in any "prohibited transaction" (as defined in SECTION
406 of ERISA or SECTION 4975 of the Code), (b) incur any "accumulated funding
deficiency" as such term is defined in SECTION 302 of ERISA with respect to any
Employee Plan, (c) permit any Employee Plan to ever be subject to involuntary
termination proceedings, or (d) fully or partially withdraw from any
Multiemployer Plan.
7.12 Environmental Laws. Borrower shall conduct its business so as to
comply in all material respects with all applicable Environmental Laws and
shall promptly take corrective action to remedy any non-compliance with any
Environmental Law. Borrower shall deliver reasonable evidence of compliance
with the foregoing covenant to Agent within 30 days after any request therefor
from Determining Lenders.
7.13 Debt. Borrower shall not, directly or indirectly, create, incur,
or suffer to exist any direct, indirect, fixed, or contingent liability for any
Debt, other than:
(a) Debt existing on the Closing Date, as more particularly
described on SCHEDULE 7.13;
(b) Debt under this Agreement and the Notes;
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(c) Debt incurred by Borrower to any Lender under any Rate
Protection Agreement;
(d) Debt secured by a Lien described in SECTION 7.14(b) in
an amount which, when added to all obligations under Capital Leases
does not exceed in the aggregate at any time $1,000,000;
(e) current accounts payable arising out of transactions
(other than borrowings) in the ordinary course of business;
(f) obligations under any Capital Lease which, when added to
Debt described in SUBSECTION (d) preceding do not exceed in the
aggregate at any time $1,000,000;
(g) endorsements of instruments or items of payment for
deposit to the general account of Borrower in the ordinary course of
business;
(h) Subordinated Debt; and
(i) obligations permitted by SECTION 7.14(c) and (d).
7.14 Liens. Borrower will not, directly or indirectly, (a) create,
incur, or suffer or permit to be created or incurred or to exist any Lien upon
any of its assets, or (b) enter into or permit to exist any arrangement or
agreement which directly or indirectly prohibits Borrower from creating or
incurring any Lien on any of its assets, other than the Loan Papers and
operating leases or Capital Leases (so long as any such Lien under such leases
are limited to the property being leased thereunder), other than:
(a) The existing Liens described on SCHEDULE 7.14 hereto,
together with renewals and extensions thereof but not increases in the
principal debt secured thereby;
(b) Liens on property securing all or part of the purchase
price thereof to Borrower and Liens (whether or not assumed) existing
in property at the time of purchase thereof by Borrower (and
extension, renewal and replacement Liens upon the same property
theretofore subject to a Lien described in this SECTION 7.14(b),
provided that the amount secured by each Lien constituting such
extension, renewal or replacement shall not exceed the amount secured
by the Lien theretofore existing), and, provided, further,
(i) each such Lien is confined solely to the
property so purchased, improvements thereto and
proceeds thereof; and
(ii) the aggregate amount secured by all
such Liens when added to the amount of Debt and
obligations described in SECTION 7.13(f) shall not
exceed at any time $1,000,000;
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(c) Pledges or deposits made to secure payment of worker's
compensation, or to participate in any fund in connection with
worker's compensation, unemployment insurance, pensions, or other
social security programs;
(d) Good-faith pledges or deposits made to secure performance
of bids, tenders, contracts (other than for the repayment of borrowed
money), or leases, or to secure statutory obligations, surety or
appeal bonds, or indemnity, performance, or other similar bonds (other
than for the repayment of borrowed money) as all such Liens arise in
the ordinary course of business of Borrower;
(e) Encumbrances consisting of zoning restrictions,
easements, or other restrictions on the use of real property, none of
which impair in any material respect the use of such property by the
Person in question in the operation of its business, and none of which
is violated by existing or proposed structures or land use;
(f) The following so long as the validity or amount thereof
is being contested in good faith and by appropriate and lawful
proceedings diligently conducted, reserve or other appropriate
provision (if any) required by GAAP shall have been made, levy and
execution thereon have been stayed and continue to be stayed, and they
do not in the aggregate materially detract from the value of the
property of the Person in question, or materially impair the use
thereof in the operation of its business: Claims and Liens for Taxes
due and payable; claims and Liens upon, and defects of title to, real
or personal property, including any attachment of personal or real
property or other legal process prior to adjudication of a dispute on
the merits; claims and Liens of mechanics, materialmen, warehousemen,
carriers, landlords, or other like Liens; and adverse judgments on
appeal; and
(g) Liens created under the Loan Papers.
7.15 Transactions with Affiliates. Borrower shall not enter into or
carry out any transaction with (including, without limitation, purchasing
property or services from or selling property or services to) any of its
Affiliates except:
(a) The payment of Management Fees and Allocated Expenses
described in and permitted under the Limited Partnership Agreement, to
the extent permitted under this Agreement; and
(b) Transactions described in and permitted under section
2.2(n) of the Limited Partnership Agreement.
7.16 Compliance with Laws and Documents. Borrower (a) shall comply in
all material respects with all Laws applicable to it, including, without
limitation, the rules, regulations and policies promulgated by the FCC, (b)
shall not violate the provisions of any Material Agreement to which it is a
party in any respect that could be a Material Adverse Event; (c) shall not
violate
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the provisions of its limited partnership agreement or modify, repeal, replace,
or amend any provision thereof; and (d) shall not modify, repeal, replace, or
amend any provision of the Limited Partnership Agreement except for routine
amendments described in SECTION 6. I of the Limited Partnership Agreement.
7.17 Subsidiaries. Borrower shall not form or acquire any
Subsidiaries.
7.18 Assignment. Borrower shall not assign or transfer any of its
Rights, duties, or obligations under any of the Loan Papers.
7.19 Fiscal Year and Accounting Methods. Borrower will not change its
fiscal year for book accounting purposes or its method of accounting (other
than changes as are concurred with by Borrower's independent public accountants
as being required by GAAP).
7.20 Government Regulations. Borrower will not conduct its business
in such a way that it will become subject to regulation under the Investment
Company Act of 1940, as amended, the Public Utility Holding Company Act of
1935, as amended, or any other Law (other than Regulations G, T, U, and X of
the Board of Governors of the Federal Reserve System) which regulates the
incurrence of Debt.
7.21 INDEMNIFICATION. BORROWER SHALL INDEMNIFY, PROTECT, AND HOLD
AGENT AND LENDERS AND THEIR RESPECTIVE PARENTS, SUBSIDIARIES. DIRECTORS,
OFFICERS, EMPLOYEES, REPRESENTATIVES, AGENTS, SUCCESSORS AND ASSIGNS
(COLLECTIVELY, THE "INDEMNIFIED PARTIES") HARMLESS FROM AND AGAINST ANY AND ALL
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS,
SUITS, CLAIMS, AND PROCEEDINGS AND ALL REASONABLE AND NECESSARY COSTS, EXPENSES
(INCLUDING, WITHOUT LIMITATION, ALL REASONABLE ATTORNEYS' FEES AND LEGAL
EXPENSES WHETHER OR NOT SUIT IS BROUGHT), AND DISBURSEMENTS OF ANY KIND OR
NATURE WHATSOEVER (THE "INDEMNIFIED LIABILITIES") WHICH MAY AT ANY TIME BE
IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST THE INDEMNIFIED PARTIES, IN ANY
WAY RELATING TO OR ARISING OUT OF (A) THE DIRECT OR INDIRECT RESULT OF THE
VIOLATION BY BORROWER OF ANY ENVIRONMENTAL LAW, (B) BORROWER'S GENERATION,
MANUFACTURE, PRODUCTION, STORAGE, RELEASE, THREATENED RELEASE, DISCHARGE,
DISPOSAL OR PRESENCE IN CONNECTION WITH ITS PROPERTIES OF A HAZARDOUS SUBSTANCE
(INCLUDING, WITHOUT LIMITATION, (I) ALL DAMAGES OF ANY SUCH USE, GENERATION,
MANUFACTURE, PRODUCTION, STORAGE, RELEASE, THREATENED RELEASE, DISCHARGE,
DISPOSAL, OR PRESENCE, OR (II) THE COSTS OF ANY REQUIRED OR NECESSARY
ENVIRONMENTAL INVESTIGATION, MONITORING, REPAIR, CLEANUP, OR DETOXIFICATION AND
THE PREPARATION AND IMPLEMENTATION OF ANY CLOSURE, REMEDIAL, OR OTHER PLANS),
OR (C) THE LOAN PAPERS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN OR THE
USE OF PROCEEDS OF ANY LOAN, TO THE EXTENT THAT ANY OF THE INDEMNIFIED
LIABILITIES
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RESULTS, DIRECTLY OR INDIRECTLY, FROM ANY CLAIM MADE OR ACTION, SUIT, OR
PROCEEDING COMMENCED BY OR ON BEHALF OF ANY PERSON OTHER THAN SUCH INDEMNIFIED
PARTY (PROVIDED THAT, NO INDEMNIFIED PARTY SHALL HAVE THE RIGHT TO BE
INDEMNIFIED HEREUNDER FOR ITS OWN FRAUD, GROSS NEGLIGENCE, OR WILLFUL
MISCONDUCT). THE PROVISIONS OF AND UNDERTAKINGS AND INDEMNIFICATION SET FORTH
IN THIS PARAGRAPH SHALL SURVIVE THE SATISFACTION AND PAYMENT OF THE OBLIGATION
AND TERMINATION OF THIS AGREEMENT.
7.22 Loans, Advances, and Investments. Borrower shall not at any time
make or suffer to remain outstanding any loan or advance to, or purchase,
acquire or own any stock, bonds, notes or securities of, or any partnership
interest (whether general or limited) in, or any other interest in, or make any
capital contribution to, any other person, or agree, become or remain liable to
do any of the foregoing, except:
(a) loans and investments existing on the date hereof and
listed in SCHEDULE 7.22 hereto;
(b) trade credit extended, and loans and advances extended to
subcontractors or suppliers, under usual and customary terms in the
ordinary course of business;
(c) demand deposits, time deposits or certificates of deposit
in United States commercial banks having shareholders equity of at
least $1,000,000,000 and maturing not in excess of one year from the
date of acquisition; and
(d) obligations backed by the full faith and credit of the
United States of America maturing not in excess of one year from the
date of acquisition, commercial paper maturing not in excess of 270
days from the date of acquisition and rated P-1 by Moody's Investors
Service, Inc. or A-1 by Standard & Poor's Corporation on the date of
acquisition, and preferred stock or indebtedness which is (i) traded on
a national securities exchange and (ii) rated P-1 or better by Moody's
Investors Service, Inc. or A-1 by Standard & Poor's Corporation on the
date of acquisition.
7.23 Distributions. Borrower shall not directly or indirectly
declare, make, or pay any Distribution.
7.24 Dispositions of Assets. Borrower shall not sell, convey, assign,
lease, lend, abandon or otherwise transfer or dispose of, voluntarily or
involuntarily, directly or indirectly (any of the foregoing being referred to
in this SECTION 7.24 as a "TRANSACTION" and any series of related transactions
constituting but a single transaction), any of its properties or assets,
tangible or intangible (including but not limited to sale, assignment, discount
or other disposition of accounts, contract rights, chattel paper or general
intangibles with or without recourse), except (a) transactions in the ordinary
course of business, subject to the requirements of SECTION 3.2(d); provided
that no sale, conveyance, assignment, lease, abandonment or other transfer or
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<PAGE> 45
disposition of any System or substantial portion of any System shall be deemed
to be a transaction in the ordinary course of business, and (b) other sales and
dispositions of assets for a price not less than fair market value the proceeds
of which are used to repay outstanding Principal Debt in the manner and to the
extent required pursuant to SECTION 3.2(d).
7.25 Mergers and Dissolutions. Borrower will not, directly or
indirectly, merge or consolidate with any other Person, liquidate, wind up, or
dissolve (or suffer any liquidation or dissolution).
7.26 Subordinated Debt. Borrower shall not (a) pay interest on any
Subordinated Debt owed to Jones Intercable or Growth Partners, Inc. in excess
of the rate applicable to revolving credit loans under this Agreement, (b)
increase the rate of interest on any other Subordinated Debt or change any date
of payment to an earlier date, (c) make any payment or prepayment on the
Subordinated Debt, except in accordance with the Subordination Agreement.
7.27 Financial Covenants.
(a) Borrower shall never permit the ratio of its Total Debt
to its Annualized Operating Cash Flow as of the last day of any fiscal
quarter ending during a period set forth below to be greater than the
amount set forth below opposite such period:
<TABLE>
<CAPTION>
Period Maximum Ratio Permitted
------ -----------------------
<S> <C>
Closing Date to and including 4.75 to 1
June 30, 1995
July 1, 1995 to and 4.25 to 1
including March 31, 1996
April 1, 1996 to and 4.00 to 1
including December 31, 1996
January 1, 1997 and thereafter 3.50 to 1
</TABLE>
(b) Borrower shall never permit the ratio of its Net
Operating Cash Flow to its Interest Expense as of the last day of any
fiscal quarter for the fiscal quarter then ended, to be less than 2.00
to 1.00.
(c) Borrower shall never permit the ratio of (i) its Net
Operating Cash Flow multiplied by 4, to (ii) its Pro Forma Total Debt
Service, as of the last day of any fiscal quarter to be less than 1.10
to 1.00.
(d) Borrower shall never permit the aggregate amount of its
Capital Expenditures in any fiscal year to be greater than $3,500,000;
provided, however, if, for
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<PAGE> 46
any given fiscal year, actual Capital Expenditures are less than
$3,500,000, the difference may be carried over to the immediately
following fiscal year, but not to subsequent years.
7.28 Management Fees and Allocated Expenses. Borrower shall never
permit Management Fees to exceed 5.00% of its total revenue during any fiscal
year, and will not pay, or incur any obligation to pay, any management or
consulting fees except in accordance with the Management Agreement. Management
Fees and Allocated Expenses and any interest thereon are subordinate in right
of payment and enforcement to the Obligation as set forth in the Subordination
Agreement, and shall be deferred upon the occurrence and during the continuance
of a Default and until the end of the first full fiscal quarter following the
date on which any such Default is cured. Interest in respect of deferred
Management Fees and Allocated Expenses may not accrue at a rate in excess of
the rate applicable to revolving credit loans under this Agreement.
7.29 Rate Protection Agreements. Within 60 days after the initial
Borrowing Date, Borrower shall enter into Rate Protection Agreements, the terms
of which are satisfactory to Agent and Borrower, with a duration of at least
two years, which Rate Protection Agreements shall assure that the net interest
cost to Borrower on at least 50% of the Principal Debt under this Agreement is
fixed, capped or hedged.
7.30 Real Estate. Upon request of Lenders, Borrower shall execute
and deliver mortgages, deeds of trust or other collateral assignments
satisfactory in form and substance to Agent granting to Agent, for the benefit
of Lenders, a first priority Lien in all real property, or interest therein,
owned by Borrower, and shall deliver surveys, appraisals, environmental reports
and title insurance policies satisfactory to Agent.
SECTION 8 DEFAULT. The term "DEFAULT" means the occurrence of any one or more
of the following events:
8.1 Payment of Obligation. The failure or refusal of Borrower to pay
(a) Principal Debt when the same becomes due in accordance with the Loan
Papers, or (b) interest, fees, or any other part of the Obligation within 3
Business Days after the same becomes due and payable in accordance with the
Loan Papers; or the failure of Borrower to punctually and properly perform,
observe, and comply, with SECTION 7. 7, SECTION 7.21 or with any other
provision in the Loan Papers setting forth indemnification or reimbursement
obligations of Borrower and such failure or refusal continues for 15 Business
Days after notice from any Lender that such amount is due.
8.2 Covenants. The failure or refusal of Borrower to punctually and
properly perform, observe, and comply with:
(a) Any covenant, agreement, or condition contained in
SECTIONS 7.1, 7.18, 7.25, 7.27 and 7.28; and
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<PAGE> 47
(b) Any other covenant, agreement, or condition contained in
any Loan Paper (other that the covenants to pay the Obligation and the
covenants in clause (a) preceding), and such failure or refusal
continues for 30 days.
8.3 Debtor Relief. Borrower or Jones Intercable (a) shall not be
Solvent, (b) shall fail to pay its Debts generally as they become due, (c)
shall voluntarily seek, consent to, or acquiesces in the benefit of any Debtor
Relief Law, or (d) shall become a party to or is made the subject of any
proceeding provided for by any Debtor Relief Law, other than as a creditor or
claimant (unless, in the event such proceeding is involuntary, the petition
instituting same is dismissed within 60 days after its filing).
8.4 Judgments and Attachments. Borrower fails, within 30 days after
entry, to pay, bond, or otherwise discharge any judgment or order for the
payment of money in excess of $500,000 (individually or collectively) or any
warrant of attachment, sequestration, or similar proceeding against Borrower's
assets having a value (individually or collectively) of $500,000, which in each
such case is not either (a) stayed on appeal or (b) being diligently contested
in good faith by appropriate proceedings and adequate reserves have been set
aside on the books of Borrower to the extent required by GAAP and as to which
no foreclosure proceeding has been commenced against any property which has not
been stayed.
8.5 Government Action. (a) A Final non-appealable order is issued by
any Tribunal, including, but not limited to, the FCC or the United States
Justice Department, seeking to cause Borrower to divest a substantial portion
of its assets pursuant to any antitrust, restraint of trade, unfair
competition, industry regulation, or similar Laws, or (b) any Tribunal shall
condemn, seize, or otherwise appropriate, or take custody or control of all or
any substantial portion of the assets of Borrower.
8.6 Misrepresentation. Any material representation or warranty made
by Borrower contained in any Loan Paper shall at any time prove to have been
incorrect in any material respect when made.
8.7 Franchise Agreements; FCC Licenses. Any Franchise Agreement
relating to more than 10% of the Basic Subscribers in the aggregate with
respect to all Systems or any other material license, permit, certificate,
consent, approval, authorization or agreement granted by the FCC or by any
other Tribunal with jurisdiction over any System, whether presently existing or
hereafter granted to or obtained by Borrower shall expire without renewal on or
before payment in full of the Notes and all obligations hereunder, or be
suspended or revoked, or Borrower shall become subject to any injunction or
other order materially affecting or which may materially affect (both in the
sole good faith judgment of the Determining Lenders) Borrower's present or
proposed operations under any such Franchise Agreement or other material
license, permit, certificate, consent, approval, authorization or agreement.
8.8 Change of Ownership or Management. Jones Intercable shall cease
to be the general partner of Borrower or shall cease to manage Borrower.
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<PAGE> 48
8.9 Default Under Other Agreements. (a) Borrower fails to pay when
due (after lapse of any applicable grace periods) any Debt for borrowed money
in excess (individually or collectively) of $500,000; or (b) any default exists
under any agreement to which Borrower is a party, the effect of which is to
cause, or permit (after the lapse of time or giving of notice) any Person to
cause, an amount in excess (individually or collectively) of $500,000 to become
due and payable by Borrower prior to the stated maturity thereof, or to cause
or require Borrower to purchase or otherwise acquire any Debt for borrowed
money in an amount in excess (individually or collectively) of $500,000.
8.10 Employee Benefit Plans. Any of the following exists with
respect to any Employee Plan Of Borrower: (a)a Reportable Event;
(b)disqualification or involuntary termination proceedings; (c) voluntary
termination proceedings are initiated while a funding deficiency (as determined
under section 412 of the Code) exists; (d) withdrawal liability exists with
respect to a Multiemployer Plan; (e) a trustee is appointed by any federal
district court or the PBGC to administer an Employee Plan; (f) termination
proceedings are initiated by the PBGC; (g) failure by Borrower to promptly
notify Agent upon Borrower's receipt of notice of any proceeding or other
actions which may result in termination of an Employee Plan if such proceeding
or termination would constitute a Material Adverse Event.
8.11 Validity and Enforceability of Loan Papers. Any Loan Paper
shall, at any time after its execution and delivery and for any reason, cease
to be in full force and effect in any material respect or be declared to be
null and void or the validity or enforceability thereof be contested by
Borrower or Borrower shall deny that it has any or any further liability or
obligations under any Loan Paper to which it is a party.
SECTION 9 RIGHTS AND REMEDIES.
9.1 Remedies Upon Default.
(a) If a Default exists under SECTION 8.3, the commitment to
extend credit hereunder shall automatically terminate and the entire
unpaid balance of the Obligation shall automatically become due and
payable without any action of any kind whatsoever.
(b) If any other Default exists, subject to the terms of
SECTION 10, Agent may (and, subject to the terms of SECTION 10, shall
upon the request of Determining Lenders, at Determining Lenders'
election), do any one or more of the following: (i) if the maturity
of the Obligation has not already been accelerated under SECTION
9.1(a), declare the entire unpaid balance of the Obligation, or any
part thereof, immediately due and payable, whereupon it shall be due
and payable; (ii)terminate the commitments of Lenders to extend credit
hereunder; (iii) reduce any claim to judgment; (iv) to the extent
permitted by Law, exercise (or request each Lender to, and each Lender
shall be entitled to, exercise) the Rights of offset or banker's Lien
against the interest of Borrower in and to every account and other
property of Borrower which are in the possession of Agent or any
Lender to the extent of the full amount of the Obligation (to the
extent permitted
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<PAGE> 49
by Law, Borrower being deemed directly obligated to each Lender in the
full amount of the Obligation for such purposes); and (v) exercise any
and all other legal or equitable Rights afforded by the Loan Papers,
the Laws of the State of Texas or any other applicable jurisdiction as
Agent shall deem appropriate, or otherwise, including, but not limited
to, the Right to bring suit or other proceedings before any Tribunal
either for specific performance of any covenant or condition contained
in any of the Loan Papers or in aid of the exercise of any Right
granted to Agent or any Lender in any of the Loan Papers.
9.2 Company Waivers. To the extent permitted by Law, Borrower hereby
waives presentment and demand for payment, protest, notice of intention to
accelerate, notice of acceleration, and notice of protest and nonpayment, and
agrees that its liability with respect to the Obligation, or any part thereof,
shall not be affected by any renewal or extension in the time of payment of the
Obligation, by any indulgence, or by any release or change in any security for
the payment of the Obligation.
9.3 Delegation of Duties and Rights. Agent and Lenders may perform
any of their duties or exercise any of their Rights under the Loan Papers by or
through their respective Representatives.
9.4 Not in Control. None of the covenants or other provisions
contained in any Loan Paper shall, or shall be deemed to, give Agent or Lenders
the Right to exercise control over the assets (including, without limitation,
real property), affairs, or management of Borrower, the power of Agent or
Lenders being limited to the Right to exercise the remedies provided in this
SECTION 9.
9.5 Course of Dealing. The acceptance by Agent or Lenders at any time
and from time to time of partial payment on the Obligation shall not be deemed
to be a waiver of any Default then existing. No waiver by Agent, Determining
Lenders, or Lenders of any Default shall be deemed to be a waiver of any other
then-existing or subsequent Default. No delay or omission by Agent, Determining
Lenders, or Lenders in exercising any Right under the Loan Papers shall impair
such Right or be construed as a waiver thereof or any acquiescence therein, nor
shall any single or partial exercise of any such Right preclude other or
further exercise thereof, or the exercise of any other Right under the Loan
Papers or otherwise.
9.6 Cumulative Rights. All Rights available to Agent and Lenders
under the Loan Papers are cumulative of and in addition to all other Rights
granted to Agent and Lenders at law or in equity, whether or not the Obligation
is due and payable and whether or not Agent or Lenders have instituted any suit
for collection, foreclosure, or other action in connection with the Loan
Papers.
9.7 Application of Proceeds. Any and all proceeds ever received by
Agent or Lenders from the exercise of any Rights pertaining to the Obligation
shall be applied to the Obligation in the order and manner set forth in SECTION
3.
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<PAGE> 50
9.8 Diminution in Value of Collateral. Neither Agent nor any Lender
shall have any liability or responsibility whatsoever for any diminution in or
loss of value of any collateral now or hereafter securing payment or
performance of all or part of the Obligation.
9.9 Certain Proceedings. Borrower will promptly execute and deliver,
or cause the execution and delivery of, all applications, certificates,
instruments, registration statements, and all other documents and papers Agent
or Lenders may reasonably request in connection with the obtaining of any
consent, approval, registration, qualification, permit, license, or
authorization of any Tribunal or other Person necessary or appropriate for the
effective exercise of any Rights under the Loan Papers. Because Borrower agrees
that Agent's and Lenders' remedies at Law for failure of Borrower to comply
with the provisions of this paragraph would be inadequate and that such failure
would not be adequately compensable in damages, Borrower agrees that the
covenants of this paragraph may be specifically enforced.
9.10 Limitation of Rights. Notwithstanding any other provision of
this Agreement or any other Loan Paper, any action taken or proposed to be
taken by Agent, or Lender under any Loan Paper which would affect the
operational, voting, or other control of Borrower, shall be pursuant to the
Communications Act, any applicable state Law and any other applicable Laws in
effect from time to time, and the applicable rules and regulations thereunder
and, if and to the extent required thereby, subject to the prior consent of the
FCC.
9.11 Expenditures by Lenders. All court costs, reasonable attorneys'
fees, other costs of collection, and other sums spent by Lenders pursuant to
the exercise of any Right (including, without limitation, any effort to collect
or enforce any of the Notes) provided herein shall be payable to Lenders on
demand, shall become part of the Obligation, and, if not paid within 5 Business
Days, shall bear interest at the Default Rate from the date of demand for
payment until the date repaid by Borrower.
SECTION 10 AGREEMENT AMONG LENDERS.
10.1 Agent.
(a) Each Lender hereby appoints Agent (and Agent hereby
accepts such appointment) as its nominee and agent, in its name and on
its behalf: (i) to act as nominee for and on behalf of such Lender in
and under all Loan Papers; (ii) to arrange the means whereby the funds
of Lenders are to be made available to Borrower under the Loan Papers;
(iii) to take such action as may be requested by any Lender under the
Loan Papers (when such Lender is entitled to make such request under
the Loan Papers and after such requesting Lender has obtained the
concurrence of such other Lenders as may be required under the Loan
Papers); (iv) to receive all documents and items to be furnished to
Lenders under the Loan Papers; (v) to be the secured party, mortgagee,
beneficiary, and similar party in respect of, and to receive, as the
case may be, any collateral for the benefit of Lenders; (vi) to
promptly distribute to each Lender all items delivered by Borrower
pursuant to SECTION 7.3 and all other material information,
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<PAGE> 51
requests, documents, and items received from Borrower under the Loan
Papers; (vii) to promptly' distribute to each Lender its ratable part
of each payment or prepayment (whether voluntary, as proceeds of
collateral upon or after foreclosure, as proceeds of insurance
thereon, or otherwise) in accordance with the terms of the Loan
Papers; and (viii) to deliver to the appropriate Persons requests,
demands, approvals, and consents received from Lenders; provided,
however, Agent shall not be required to take any action which exposes
Agent to personal liability or which is contrary to the Loan Papers or
applicable Law.
(b) The Agent may resign as such at any time upon at least 30
days' prior notice to Borrower, and Lenders. Should the initial or any
successor Agent ever cease to be a party hereto or should the initial
or any successor Agent ever resign or be removed as Agent, then
Borrower (with the approval of Determining Lenders, which approval
will not be unreasonably withheld, and the Lender to be elected Agent)
shall elect the successor Agent from among the Lenders (other than the
resigning Agent). If no successor Agent shall have been so appointed
by the Determining Lenders, within 30 days after the retiring Agent's
giving of notice of resignation or the Determining Lenders' removal of
the retiring Agent, then the retiring Agent may, on behalf of Lenders,
appoint a successor Agent, which shall be a commercial bank having a
combined capital and surplus of at least $1,000,000,000. Upon the
acceptance of any appointment as Agent under the Loan Papers by a
successor Agent, such successor Agent shall thereupon succeed to and
become vested with all the Rights of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations of
Agent under the Loan Papers, and each Lender shall execute such
documents as any Lender may reasonably request to reflect such change
in and under the Loan Papers. After any retiring Agent's resignation
as Agent under the Loan Documents, the provisions of this SECTION 10
shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under the Loan Papers.
(c) Agent, in its capacity as a Lender, shall have the same
Rights under the Loan Papers as any other Lender and may exercise the
same as though it were not acting as Agent; the term "Lender" shall,
unless the context otherwise indicates, includes Agent; and any
resignation by Agent hereunder shall not impair or otherwise affect
any Rights which it has or may have in its capacity as an individual
Lender. Each Lender and Borrower agree that Agent is not a fiduciary
for Lenders or for Borrower but simply is acting in the capacity
described herein to alleviate administrative burdens for both Borrower
and Lenders, that Agent has no duties or responsibilities to Lenders
or Borrower except those expressly set forth herein, and that Agent in
its capacity as a Lender has all Rights of any other Lender.
(d) Agent and Lenders may now or hereafter be engaged in one
or more loan, letter of credit, leasing, or other financing
transactions with Borrower, act as trustee or depositary for Borrower,
or otherwise be engaged in other transactions with Borrower
(collectively, the "other activities") not the subject of the Loan
Papers. Without limiting
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<PAGE> 52
the Rights of Lenders specifically set forth in the Loan Papers,
Agent, and Lenders shall not be responsible to account to other
Lenders for such other activities, and no Lender shall have any
interest in any other activities, any present or future guaranties by
or for the account of Borrower which are not contemplated or included
in the Loan Papers, any present or future property taken as security
for any such other activities, or any property now or hereafter in the
possession or control of Agent or Lender which may be or become
security for the obligations of Borrower arising under the Loan Papers
by reason of the general description of indebtedness secured or of
property contained in any other agreements, documents or instruments
related to any such other activities; provided that, if any payments
in respect of such guaranties or such property or the proceeds thereof
shall be applied to reduction of the obligations of Borrower arising
under the Loan Papers, then each Lender shall be entitled to share in
such application ratably.
10.2 Expenses. Each Lender shall pay its Pro Rata Part of any
reasonable expenses (including, without limitation, court costs, reasonable
attorneys' fees and other costs of collection) incurred by Agent in connection
with any of the Loan Papers if Agent does not receive reimbursement therefor
from Borrower or other sources within 60 days after incurred; provided that
each Lender shall be entitled to receive its Pro Rata Part of any reimbursement
for such expenses, or part thereof, which Agent subsequently receives from
Borrower or such other sources.
10.3 Proportionate Absorption of Losses. Except as herein provided,
nothing in the Loan Papers shall be deemed to give any Lender any advantage
over any other Lender insofar as the Obligation arising under the Loan Papers
is concerned, or to relieve any Lender from ratably absorbing any losses
sustained with respect to the Obligation (except to the extent unilateral
actions or inactions by any Lender result in any credit, allowance, setoff,
defense, or counterclaim solely with respect to all or any part of such
Lender's Pro Rata Part of the Obligation).
10.4 Delegation of Duties; Reliance. In performing its duties as
Agent hereunder, Agent will take the same care as it takes in connection with
loans in which it alone is interested, subject to the limitations on
liabilities contained in this SECTION 10. Agent may perform any of its duties
or exercise any of its Rights under the Loan Papers by or through its
Representatives. Agent and its Representatives shall (a) be entitled to rely
upon (and shall be protected in relying upon) any writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telecopy, telegram, telex
or teletype message, statement, order, or other documents or conversation
believed by it or them to be genuine and correct and to have been signed or
made by the proper Person and, with respect to legal matters, upon opinion of
counsel selected by Agent, (b) be entitled to deem and treat each Lender as the
owner and holder of its Pro Rata Part of the Principal Debt for all purposes
until, subject to SECTION 11.14, written notice of the assignment or transfer
thereof shall have been given to and received by Agent (and, any request,
authorization, consent, or approval of any Lender shall be conclusive and
binding on each subsequent holder, assignee, or transferee of such Lender's Pro
Rata Part of the Principal Debt or Participant therein until such notice is
given and received), (c) not be deemed to have notice
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<PAGE> 53
of the occurrence of a Default unless a responsible officer of Agent, who
handles matters associated with the Loan Papers and transactions thereunder,
has actual knowledge thereof or Agent has been notified thereof by a Lender or
Borrower, and (d) be entitled to consult with legal counsel (including counsel
for Borrower), independent accountants and other experts selected by Agent and
shall not be liable for any action taken or omitted to be taken in good faith
by it in accordance with the advice of such counsel, accountants or experts.
10.5 Limitation of Liability.
(a) None of Agent or any of its Representatives shall be
liable for any action taken or omitted to be taken by it or them under
the Loan Papers in good faith and believed by it or them to be within
the discretion or power conferred upon it or them by the Loan Papers
or be responsible for the consequences of any error of judgment,
except for such Person's fraud, gross negligence, or willful
misconduct, and none of Agent or any of its Representatives has a
fiduciary relationship with any Lender by virtue of the Loan Papers
(provided that nothing herein shall negate the obligation of Agent to
account for funds received by it for the account of any Lender).
(b) Unless indemnified to its satisfaction against loss,
cost, liability, and expense, Agent shall not be compelled to do any
act under the Loan Papers or to take any action toward the execution
or enforcement of the powers thereby created or to prosecute or defend
any suit in respect of the Loan Papers. If Agent requests instructions
from Lenders or Determining Lenders, as the case may be, with respect
to any act or action (including, but not limited to, any failure to
act) in connection with any Loan Paper, Agent shall be entitled (but
shall not be required) to refrain (without incurring any liability to
any Person by so refraining) from such act or action unless and until
it has received such instructions. In no event, however, shall Agent
or any of its Representatives be required to take any action which it
or they determine could incur for it or them criminal or onerous civil
liability. Without limiting the generality of the foregoing, no
Lender shall have any right of action against Agent as a result of
Agent's acting or refraining from acting hereunder in accordance with
the instructions of Determining Lenders.
(c) Agent shall not be responsible in any manner to any
Lender or any Participant for, and each Lender represents and warrants
that it has not relied upon Agent in respect of, (i) the
creditworthiness of Borrower and the risks involved to such Lender,
(ii) the effectiveness, enforceability, genuineness, validity, or the
due execution of any Loan Paper, (iii) any representation, warranty,
document, certificate, report, or statement made therein or furnished
thereunder or in connection therewith, (iv) the existence, priority, or
perfection of any Lien granted or purported to be granted under any
Loan Paper, or (v) observation of or compliance with any of the terms,
covenants, or conditions of any Loan Paper on the part of Borrower.
Each Lender, jointly and severally, agrees to indemnify Agent and its
Representatives and hold them harmless from and against (but limited
to such Lender's Pro Rata Part of) any and all liabilities,
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<PAGE> 54
obligations, losses, damages, penalties, actions, judgments, suits,
costs, reasonable expenses,' and reasonable disbursements of any kind
or nature whatsoever which may be imposed on, asserted against, or
incurred by them in any way relating to or arising out of the Loan
Papers or any action taken or omitted by them under the Loan Papers,
to the extent Agent and its Representatives are not reimbursed for
such amounts by Borrower (provided that, Agent and its Representatives
shall not have the right to be indemnified hereunder for its or their
own fraud, gross negligence, or willful misconduct).
10.6 Default; Collateral. Upon the receipt by Agent of notice from
Borrower or any Lender that a Default or Potential Default has occurred, Agent
shall promptly notify Lenders. Upon the occurrence and continuance of a
Default, Determining Lenders or Lenders, as the case may be as required
hereunder, will instruct Agent regarding a course of action for the enforcement
of the Rights of Lenders; and Agent shall be entitled to refrain from taking
any action (without incurring any liability to any Person for so refraining)
unless and until Agent shall have received instructions from Determining
Lenders or Lenders, as the case may be. In actions with respect to any property
of Borrower, Agent is acting for the ratable benefit of each Lender. Any and all
agreements to subordinate (whether made heretofore or hereafter) other
indebtedness or obligations of Borrower to the Obligation shall be construed as
being for the ratable benefit of each Lender. If Agent acquires any security for
the Obligation or any guaranty of the Obligation upon or in lieu of
foreclosure, the same shall be held for the benefit of all Lenders in
proportion to their respective Pro Rata Parts.
10.7 Limitation of Liability. To the extent permitted by Law, (a)
neither any Lender nor any Participant shall incur any liability to any other
Lender or Participant except for acts or omissions in bad faith or gross
negligence or wilful misconduct, and (b)neither Agent nor Lender or Participant
shall incur any liability to any other Person for any act or omission of any
other Lender or any Participant.
10.8 Relationship of Lenders. Nothing herein shall be construed as
creating a partnership or joint venture among Agent and Lenders or among
Lenders.
10.9 Benefits of Agreement. Except for the representations and
covenants in SECTIONS 10. 1(b), 10. 1(c) and 10.9 in favor of Borrower, none of
the provisions of this SECTION 10 shall inure to the benefit of Borrower or any
other Person other than Lenders; consequently, neither Borrower nor any other
Person shall be entitled to rely upon, or to raise as a defense, in any manner
whatsoever, the failure of any Lender to comply with such provisions.
SECTION 11 MISCELLANEOUS.
11.1 Headings. The headings, captions, and arrangements used in any
of the Loan Papers are, unless specified otherwise, for convenience only and
shall not be deemed to limit, amplify, or modify the terms of the Loan Papers,
nor affect the meaning thereof.
49
<PAGE> 55
11.2 Nonbusiness Days. In any case where any payment or action is due
under any Loan Paper on a day which is not a Business Day, such payment or
action may be delayed until the next-succeeding Business Day, but interest
shall continue to accrue in respect of any payment to which it is applicable
until such payment is in fact made; provided that, if in the case of any such
payment in respect of a LIBOR Rate Loan the next-succeeding Business Day is in
the next calendar month, then such payment shall be made on the next-preceding
Business Day.
11.3 Communications. Unless specifically otherwise provided, whenever
any Loan Paper requires or permits any consent, approval, notice, request, or
demand from one party to another, such communication must be in writing (which
may be by telex or telecopy) to be effective and shall be deemed to have been
given (a) if by telex, when transmitted to the telex number, if any, for such
party, and the appropriate answerback is received, (b) if by telecopy, when
transmitted to the telecopy number for such party, if any, (and all such
communications sent by telecopy shall be confirmed promptly thereafter by
personal delivery or mailing in accordance with the provisions of this section;
provided, that any requirement in this parenthetical shall not affect the date
on which such telecopy shall be deemed to have been delivered), (c) if by mail,
on the fifth Business Day after it is enclosed in an envelope, properly
addressed to such party, properly stamped, sealed, and deposited in the
appropriate official postal service, or (d) if by any other means, when
actually delivered to such party. Until changed by notice pursuant hereto, the
address (and telex and telecopy numbers, if any) for each Lender and Agent is
set forth on SCHEDULE 2.1. Each such communication to Borrower shall be
addressed to:
Jones Growth Partners L.P.
c/o Jones Intercable, Inc.
9697 E. Mineral Avenue
Englewood Colorado 80112
Attn: Treasurer
Fax: 303-790-7324
with a copy to: Legal Department
Jones Intercable, Inc.
9697 E. Mineral Avenue
Englewood, Colorado 80112
Attn: General Counsel
Fax: 303-799-1644
11.4 Form and Number of Documents. Each agreement, document,
instrument, or other writing to be furnished under any provision of this
Agreement must be in form and substance and in such number of counterparts as
may be satisfactory to Agent and its counsel.
11.5 Exceptions to Covenants. Borrower shall not take any action or
fail to take any action which is permitted as an exception to any of the
covenants contained in any Loan Paper
50
<PAGE> 56
if such action or omission would result in the breach of any other covenant
contained in any of the Loan Papers.
11.6 Survival. All covenants, agreements, undertakings,
representations, and warranties made in any of the Loan Papers shall survive
all closings under the Loan Papers and, except as otherwise indicated, shall
not be affected by any investigation made by any party. All rights of
reimbursement and indemnification shall survive termination of this Agreement
and payment in full of the Obligation.
11.7 GOVERNING LAW. THE LAWS (OTHER THAN CONFLICT-OF-LAWS PROVISIONS
THEREOF) OF THE STATE OF TEXAS AND OF THE UNITED STATES OF AMERICA SHALL GOVERN
THE RIGHTS AND DUTIES OF THE PARTIES TO THE LOAN PAPERS AND THE VALIDITY,
CONSTRUCTION, ENFORCEMENT, AND INTERPRETATION OF THE LOAN PAPERS.
11.8 Invalid Provisions. If any provision in any Loan Paper is held
to be illegal, invalid, or unenforceable, such provision shall be fully
severable; the appropriate Loan Paper shall be construed and enforced as if
such provision had never comprised a part thereof; and the remaining provisions
thereof shall remain in full force and effect and shall not be affected by such
provision or by its severance therefrom. Agent, Lenders, and Borrower agree to
negotiate, in good faith, the terms of a replacement provision as similar to
the severed provision as may be possible and be legal, valid, and enforceable.
11.9 Entirety. A CREDIT AGREEMENT IN WHICH THE AMOUNT INVOLVED
EXCEEDS $50,000 IN VALUE IS NOT ENFORCEABLE UNLESS THE AGREEMENT IS IN WRITING
AND SIGNED BY THE PARTY TO BE BOUND OR BY THAT PARTY'S AUTHORIZED
REPRESENTATIVE. THE RIGHTS AND OBLIGATIONS OF THE BORROWER, LENDERS, AND AGENT
SHALL BE DETERMINED SOLELY FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS,
AND ANY PRIOR ORAL AGREEMENTS BETWEEN SUCH PARTIES ARE SUPERSEDED BY AND MERGED
INTO SUCH WRITINGS. THIS AGREEMENT (AS AMENDED IN WRITING FROM TIME TO TIME)
AND THE OTHER WRITTEN LOAN PAPERS EXECUTED BY BORROWER, ANY LENDER, AND/OR
AGENT REPRESENT THE FINAL AGREEMENT BETWEEN THE BORROWER, LENDERS, AND AGENT
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS BY SUCH PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN SUCH PARTIES. THIS PARAGRAPH IS INCLUDED HEREIN PURSUANT TO
SECTION 26. 02 OF THE TEXAS BUSINESS AND COMMERCE CODE, AS AMENDED FROM TIME TO
TIME.
11.10 VENUE; SERVICE OF PROCESS; JURY TRIAL. EACH PARTY HERETO, IN
EACH CASE FOR ITSELF, ITS SUCCESSORS AND ASSIGNS HEREBY (a) IRREVOCABLY SUBMITS
TO THE NONEXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS OF THE STATE
OF TEXAS AND AGREES AND CONSENTS
51
<PAGE> 57
THAT SERVICE OF PROCESS MAY BE MADE UPON IT IN ANY LEGAL PROCEEDING ARISING
OUT' OF OR IN CONNECTION WITH THE LOAN PAPERS AND THE OBLIGATION BY SERVICE OF
PROCESS AS PROVIDED BY TEXAS LAW, (b) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY LITIGATION ARISING OUT OF OR IN CONNECTION WITH THE LOAN
PAPERS AND THE OBLIGATION BROUGHT IN DISTRICT COURTS OF DALLAS COUNTY, TEXAS,
OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS,
DALLAS DIVISION, (c) IRREVOCABLY WAIVES ANY CLAIMS THAT ANY LITIGATION BROUGHT
IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM, (d) IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN
ANY SUCH LITIGATION BY THE MAILING OF COPIES THEREOF BY CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, POSTAGE PREPAID, AT ITS ADDRESS SET FORTH HEREIN, AND (e)
IRREVOCABLY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW, ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF ANY LOAN PAPER. The scope of each of the foregoing waivers is intended
to be all-encompassing of any and all disputes that may be filed in any court
and that relate to the subject matter of this transaction, including, without
limitation, contract claims, tort claims, breach of duty claims, and all other
common law and statutory claims. Borrower acknowledges that this waiver is a
material inducement to Agent's and each Lender's agreement to enter into a
business relationship, that Agent and each Lender has already relied on this
waiver in entering into this Agreement, and that Agent and each Lender will
continue to rely on each of such waivers in related future dealings. Borrower
further warrants and represents that it has reviewed these waivers with its
legal counsel, and that it knowingly and voluntarily agrees to each such waiver
following consultation with legal counsel. THE WAIVERS IN THIS SECTION 11.10
ARE IRREVOCABLE, MEANING THAT THEY MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND THESE WAIVERS SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
SUPPLEMENTS, AND REPLACEMENTS TO OR OF THIS OR ANY OTHER LOAN PAPER. In the
event of Litigation, this Agreement may be filed as a written consent to a
trial by the court.
11.11 Amendments, Consents, Conflicts, and Waivers.
(a) Except as otherwise specifically provided, (i) this
Agreement may only be amended by an instrument in writing executed
jointly by Borrower and Determining Lenders and supplemented only by
documents delivered or to be delivered in accordance with the express
terms hereof, and (ii) the other Loan Papers may only be the subject
of an amendment, modification, or waiver if Borrower and Determining
Lenders have approved same; provided that no amendment, waiver or
consent affecting the rights or duties of the Agent shall in any event
be effective unless in writing and signed by Agent in addition to the
Lenders required herein to take such action.
52
<PAGE> 58
(b) Any amendment to or consent or waiver under this
Agreement or any Loan Paper which purports to accomplish any of the
following must be by an instrument in writing executed by Borrower and
Agent and executed (or approved, as the case may be) by each Lender:
(i)extends the due date or decreases the amount of any scheduled
payment of the Obligation beyond the date specified in the Loan
Papers, or changes the dates or amounts specified on SECTION 3.2 for
amortization of the Total Commitment; (ii) decreases any rate or
amount of interest, fees, or other sums payable to Agent or Lenders
hereunder (except such reductions as are contemplated by this
Agreement); (iii) changes the definition of "APPLICABLE MARGIN,"
"COMMITTED SUM," "COMMITMENT PERCENTAGE," "DETERMINING LENDERS,"
"TERMINATION DATE," OR "TOTAL COMMITMENT"; (iv) increases any one or
more Lenders' Committed Sums; (v) waives compliance with, amends, or
releases (in whole or in part) any collateral for the Obligation
except to the extent dispositions of assets are permitted by this
Agreement; or (vi) changes this CLAUSE (b) or any other matter
specifically requiring the consent of all Lenders hereunder.
(c) Any conflict or ambiguity between the terms and
provisions herein and terms and provisions in any other Loan Paper
shall be controlled by the terms and provisions herein.
(d) No course of dealing nor any failure or delay by Agent,
any Lender, or any of their respective Representatives with respect to
exercising any Right of Agent or any Lender hereunder shall operate as
a waiver thereof. A waiver must be in writing and signed by Lenders
(or Determining Lenders, if required hereunder) to be effective, and
such waiver will be effective only in the specific instance and for
the specific purpose for which it is given.
11.12 Multiple Counterparts. This Agreement may be executed in a
number of identical counterparts, each of which shall be deemed an original for
all purposes and all of which constitute, collectively, one agreement; but, in
making proof of this Agreement, it shall not be necessary to produce or account
for more than one such counterpart. It is not necessary that each Lender
execute the same counterpart so long as identical counterparts are executed by
Borrower, each Lender, and Agent. This Agreement shall become effective when
counterparts hereof shall have been executed and delivered to Agent by each
Lender, Agent, and Borrower, or, in the case only of Lenders, when Agent shall
have received telecopied, telexed, or other evidence satisfactory to it that
each Lender has executed and is delivering to Agent a counterpart hereof.
Certain Lenders may have executed multiple signature pages hereof in addition
to full counterparts hereof, in which event, Borrower and Agent are authorized
to execute such additional signature pages and insert them, along with
signature pages for other parties hereto, into one or more counterparts of this
Agreement containing signatures of all parties hereto, each of which
counterpart shall be deemed an original of this Agreement for all purposes.
11.13 Taxes. Any Taxes payable by Agent or any Lender or ruled by a
Tribunal payable by Agent or any Lender in respect of this Agreement or any
other Loan Paper shall be paid by Borrower, together with interest and
penalties, if any (except for Taxes payable on the
53
<PAGE> 59
overall net income of any such Lender or Agent and except for interest and
penalties incurred as a result of the gross negligence or wilful misconduct of
Agent or any Lender). Agent or such Lender (through Agent) shall notify
Borrower and deliver to Borrower a certificate setting forth in reasonable
detail the calculation of the amount of such Taxes, which certificate shall be
conclusive and binding, and Borrower shall promptly pay such amount to Agent
for its account or the account of such Lender, as the case may be. If Agent or
such Lender subsequently receives a refund of such Taxes paid to it by
Borrower, then such recipient shall promptly pay such refund to Borrower.
11.14 Successors and Assigns; Participation.
(a) This Agreement shall be binding upon, and inure to the
benefit of the parties hereto and their respective successors and
assigns, except that (i) Borrower may not, directly or indirectly,
assign or transfer, or attempt to assign or transfer, any of its
Rights, duties or obligations under any Loan Papers without the
express written consent of all Lenders, and (ii) except as permitted
under this Section 11.14, no Lender may transfer, pledge, assign, sell
any participation in, or otherwise encumber its portion of the
Obligation. Notwithstanding clause (ii) of this SECTION 11.14(a), any
Lender may at any time, without the consent of Borrower or Agent,
assign all or any portion of its Rights under this Agreement, the Loan
Papers, and the Notes to a Federal Reserve Bank or to an Affiliate of
such Lender; provided, however, that no such assignment shall release
the transferor Lender from its obligations under this Agreement.
(b) Subject to the provisions of this section and in
accordance with applicable Law, any Lender may, upon notice to
Borrower and Agent, in the ordinary course of its commercial banking
business and in accordance with applicable Law, at any time sell to
one or more Persons (each a "PARTICIPANT") participating interests in
its portion of the Obligation. In the event of any such sale to a
Participant, (i) such Lender shall remain a "Lender" under this
Agreement and the Participant shall not constitute a "Lender"
hereunder, (ii) such Lender's obligations under this Agreement shall
remain unchanged, (iii) such Lender shall remain solely responsible
for the performance thereof, (iv) such Lender shall remain the holder
of its share of the Principal Debt for all purposes under this
Agreement, and (v) Borrower and Agent shall continue to deal solely
and directly with such Lender in connection with such Lender's Rights
and obligations under the Loan Papers. Participants shall have no
Rights under the Loan Papers other than certain voting Rights as
provided below. Subject to the following, each Lender shall be
entitled to obtain (on behalf of its Participants) the benefits of
SECTION 3 with respect to all participation in its part of the
Obligation outstanding from time to time so long as Borrower shall not
be obligated to pay any amount in excess of the amount that would be
due to such Lender under SECTION 3 calculated as though no
participation had been made. No Lender shall sell any participating
interest under which the Participant shall have any Rights to approve
any amendment, modification, or waiver of any Loan Paper, except to
the extent such amendment, modification, or waiver extends the due
date for payment of any amount in respect of principal, interest, or
fees due under the Loan
54
<PAGE> 60
Papers, reduces the interest rate or the amount of principal or fees
applicable to the Obligation (except such reductions as are
contemplated by this Agreement), or releases any Guaranty or
collateral, if any, for the Obligation; provided that in those cases
where a Participant is entitled to the benefits of SECTION 3 or a
Lender grants Rights to its Participants to approve amendments to or
waivers of the Loan Papers respecting the matters previously described
in this sentence, such Lender must include a voting mechanism in the
relevant participation agreement whereby a majority of such Lender's
portion of the Obligation (whether held by such Lender or
participated) shall control the vote for all of such Lender's portion
of the Obligation. Except in the case of the sale of a participating
interest to a Lender, the relevant participation agreement shall not
permit the Participant to transfer, pledge, assign, sell participation
in, its portion of the Obligation.
(c) Subject to the provisions of this section (upon the prior
written consent of Borrower and Agent which consent will not be
unreasonably withheld), any Lender may, in the ordinary course of its
commercial banking business and in accordance with applicable Law,
sell to one or more financial institutions (each a "Purchaser") all or
a portion of its Rights and obligations under the Loan Papers
(including, without limitation, the same portion of its Committed Sum
and the Loans at the time owing to it and the Notes held by it), and
such Purchaser shall assume such Rights and obligations, pursuant to
an Assignment Agreement, substantially in the form of EXHIBIT G
hereto; provided, however, that each such assignment pursuant to this
SECTION 11.14(c) shall include a ratable interest in the assigning
Lender's Committed Sum and Loans and Rights and obligations under this
Agreement shall be in a minimum aggregate amount of $5,000,000, and no
Lender shall assign more than 49% of its Committed Sum as in effect on
the Closing Date or on the date it became a Lender under this
Agreement, unless Borrower and Agent shall otherwise agree. Upon (i)
delivery of an executed copy of the Assignment Agreement to Borrower
and Agent and (ii) payment of a fee of $3,000 from such transferor to
Agent, from and after the assignment's effective date (which shall be
after the date of such delivery), such Purchaser shall for all
purposes be a Lender party to this Agreement and shall have all the
Rights and obligations of a Lender under this Agreement to the same
extent as if it were an original party hereto with commitments as set
forth in the assignment agreement, and the transferor Lender shall be
released from its obligations hereunder to a corresponding extent,
and, except as provided in the following sentence, no further consent
or action by Borrower, Lenders, or Agent shall be required. Upon the
consummation of any transfer to a Purchaser pursuant to this CLAUSE
(c), SCHEDULE 2.1 shall automatically be deemed to reflect the name,
address, and Committed Sum of such Purchaser, Agent shall deliver to
Borrower and Lenders an amended SCHEDULE 2.1 reflecting such changes,
Borrower shall execute and deliver to each of the transferor Lender
and such Purchaser a Note in the face amount of its Committed Sum
following such transfer, and, upon receipt of such Note, such
transferor Lender shall return to Borrower the Note previously
delivered to such Lender hereunder. A Purchaser shall be subject to
all the provisions in this section the same as if it were a Lender
signatory hereto as of the Closing Date.
55
<PAGE> 61
(d) No Participant or Purchaser (including for this purpose a
different lending office of a Lender) shall be entitled to receive any
greater payment under SECTION 3 than the transferor Lender would have
been entitled to receive with respect to the Rights assigned, unless
by reason of any provision herein requiring such Lender to designate a
different lending office under certain circumstances or at a time when
the circumstances giving rise to such greater payment did not exist.
(e) Borrower authorizes the Agent and each Lender to disclose
to any Participant or Purchaser (each, a "TRANSFEREE") and any
prospective transferee, subject to such transferee's agreement to be
bound by a provision similar to SECTION 11.15 hereof, any and all
financial and other information in such Person's possession concerning
the Borrower which has been or may be delivered to such Person by or
on behalf of any such Person in connection with this Agreement or any
other Loan Paper or such Person's credit evaluation of Borrower.
11.15 Confidentiality of Information. Agent and Lenders understand
that some of the information furnished to them pursuant to this Agreement and
pursuant to the Loan Papers may be received by them prior to the time such
information shall have been made public, and Agent and each Lender agrees that
except as permitted by SECTION 11.14(e) hereof it will keep all information so
furnished to it confidential until it shall otherwise have become public,
subject, however, to the obligations of each Lender under Law to make
information available to governmental agencies and examiners or pursuant to
legal process of court and the obligations of each Lender, if any, to provide
such information to any participants in the Loans under this Agreement.
11.16 Discharge Only Upon Payment in Full: Reinstatement in Certain
Circumstances. Borrower's obligations under the Loan Papers shall remain in
full force and effect until the Total Commitment shall have terminated and the
Obligation shall have been paid in full. If at any time any payment of the
principal of or interest on any Note or any other amount payable by Borrower
under any Loan Paper is rescinded or must be otherwise restored or returned
upon the insolvency, bankruptcy, or reorganization of Borrower or otherwise,
the obligations of Borrower under the Loan Papers with respect to such payment
shall be reinstated as though such payment had been due but not made at such
time.
[REMAINDER OF PAGE INTENTIONALLY BLANK. SIGNATURE PAGES FOLLOW.]
56
<PAGE> 62
EXECUTED as of the day and year first mentioned.
JONES GROWTH PARTNERS L.P., a
Colorado limited partnership
By JONES SPACELINK CABLE
CORPORATION, a Colorado
corporation, as managing general partner
By Illegible
---------------------------------------------
(Name)
------------------------------------------
(TITLE)
-----------------------------------------
NATIONSBANK OF TEXAS, N.A.,
as Agent and a Lender
By /s/ DOUGLAS E. ROPER
--------------------------------------------
(NAME) Douglas E. Roper
-----------------------------------------
(Title) Senior Vice President
----------------------------------------
PNC BANK, NATIONAL ASSOCIATION,
as a Lender
By /s/ THOMAS P. CORDER
--------------------------------------------
(NAME) Thomas P. Corder
----------------------------------------
(Title) Vice President
---------------------------------------
57
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<PERIOD-START> JAN-01-1994
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