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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: 0-17733
CABLE TV FUND 15-A, LTD.
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(Exact name of registrant as specified in its charter)
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Colorado 84-1091413
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State of Organization (IRS Employer
Identification No.)
P.O. Box 3309, Englewood, Colorado 80155-3309 (303) 792-3111
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(Address of principal executive office and Zip Code (Registrant's telephone no. including area code)
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Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Interests
Indicate by check mark whether the 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
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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
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DOCUMENTS INCORPORATED BY REFERENCE: None
(15776)
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PART I.
ITEM 1. BUSINESS
THE PARTNERSHIP. Cable TV Fund 15-A, Ltd. (the "Partnership") is a
Colorado limited partnership that was formed pursuant to the public offering of
limited partnership interests in the Cable TV Fund 15 Limited Partnership
Program (the "Program"), which was sponsored by Jones Intercable, Inc. (the
"General Partner"). The Partnership was formed for the purpose of acquiring
and operating cable television systems. The Partnership owns the cable
television systems serving the areas in and around the communities of
Barrington, Elgin, South Elgin, Hawthorn Woods, Kildeer, Lake Zurich, Indian
Creek, Vernon Hills and certain unincorporated areas of Kane and Lake counties,
all in the State of Illinois (the "Barrington System") and the cable television
systems serving the areas in and around the municipalities of Flossmoor, La
Grange, La Grange Park, Riverside, Indian Head Park, Hazel Crest, Thornton,
Lansing, Matteson, Richton Park, Crete, University Park, Olympia Fields,
Western Springs and certain areas of Cook and Will Counties, all in the State
of Illinois (the "South Suburban System"). See Item 2. The Barrington System
and the South Suburban System may collectively hereinafter be referred to as
the "Systems."
CABLE TELEVISION SERVICES. The Systems offer to their subscribers
various types of programming, which include basic service, tier service,
premium service, pay-per-view programs and packages including several of these
services at combined rates.
Basic cable television service usually consists of signals of all four
national television networks, various independent and educational television
stations (both VHF and UHF) and certain signals received from satellites.
Basic service also usually includes programs originated locally by the system,
which may consist of music, news, weather reports, stock market and financial
information and live or videotaped programs of a public service or
entertainment nature. FM radio signals are also frequently distributed to
subscribers as part of the basic service.
The Systems offer tier services on an optional basis to their
subscribers. A tier generally includes most of the cable networks such as
Entertainment and Sports Programming Network (ESPN), Cable News Network (CNN),
Turner Network Television (TNT), Family Channel, Discovery and others, and the
cable television operators buy tier programming from these networks. The
Systems also offer a package that includes the basic service channels and the
tier services.
The Systems also offer premium services to their subscribers, which
consist of feature films, sporting events and other special features that are
presented without commercial interruption. The cable television operators buy
premium programming from suppliers such as HBO, Showtime, Cinemax or others at
a cost based on the number of subscribers the cable operator serves. Premium
service programming usually is significantly more expensive than the basic
service or tier service programming, and consequently cable operators price
premium service separately when sold to subscribers.
The Systems also offer to subscribers pay-per-view programming.
Pay-per-view is a service that allows subscribers to receive single programs,
frequently consisting of motion pictures that have recently completed their
theatrical exhibitions and major sporting events, and to pay for such service
on a program-by-program basis.
REVENUES. Monthly service fees for basic, tier and premium services
constitute the major source of revenue for the Systems. In addition,
advertising sales are becoming a significant source of revenues for the
Systems. 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 Systems' rate structures for
cable programming services and equipment have been revised. See Regulation and
Legislation. At December 31, 1994, the Systems' monthly basic service rates
ranged from $10.45 to $12.86, monthly basic and tier ("basic plus") service
rates ranged from $20.90 to $23.58 and monthly premium services ranged from
$3.95 to $10.95 per premium service. Charges for additional outlets have been
eliminated, and charges for remote controls and converters have been
"unbundled" from the programming service rates. In addition, the Partnership
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earns revenues from the Systems' pay-per-view programs and advertising fees.
Related charges may include a nonrecurring installation fee that ranges from
$1.99 to $42.45; however, from time to time the Systems have followed the
common industry practice of reducing or waiving the installation fee during
promotional periods. Commercial subscribers such as hotels, motels and
hospitals are charged a nonrecurring connection fee that usually covers the
cost of installation. Except under the terms of certain contracts with
commercial subscribers and residential apartment and condominium complexes, the
subscribers are free to discontinue the service at any time without penalty.
For the year ended December 31, 1994, of the total fees received by the
Systems, basic service and tier service fees accounted for approximately 59% of
total revenues, premium service fees accounted for approximately 22% of total
revenues, pay-per-view fees were approximately 3% of total revenues,
advertising fees were approximately 6% of total revenues and the remaining 10%
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 Systems.
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. Each of the Systems has
had some subscribers who later terminated the service. Terminations occur
primarily because people move to another home or to another city. In other
cases, people terminate on a seasonal basis or because they no longer can
afford or are dissatisfied with the service. The amount of past due accounts
in the Systems is not significant. The General Partner's policy with regard to
past due accounts is basically one of disconnecting service before a past due
account becomes material.
The 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 the General
Partner. The General Partner has engaged in research and development
activities relating to the provision of new services but the amount of the
Partnership's 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 Systems are constructed and operated under
non-exclusive, fixed-term franchises or other types of operating authorities
(referred to collectively herein as "franchises") granted by local governmental
authorities. The Systems' 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 Systems.)
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 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 franchise, or
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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 Partnership has not lost a significant number
of subscribers, nor a significant amount of revenue, to MMDS operators
competing with its cable television systems.
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"). MATV and SMATV generally serve multi-unit dwellings such as
condominiums, apartment complexes and private residential communities, and
TVROs are satellite receiving antenna dishes that are used by "backyard users."
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 General
Partner believes that there are not any current fully operational LMDS systems.
Although the Systems have not yet encountered competition from a
telephone company entering into the cable television business, the Systems
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 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 Systems could adversely
impact the profitability of the Systems. If a telephone company were to become
a direct competitor of the Partnership in an area served by a Partnership
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
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competition could also result in cable television systems providing the same
types of services now provided by the telephone industry.
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 General Partner, hold or have requested
experimental licenses from the FCC to test PCS technology.
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 Systems currently face no direct competition from
other cable television operators.
COMPETITION FOR SUBSCRIBERS IN THE PARTNERSHIP'S SYSTEMS. Following
is a summary of competition from DBS, MMDS, SMATV and TVRO operators in the
Systems' franchise areas: There is one MMDS operator in the Chicago area that
transmits from the Sears Tower in Chicago. This operator provides little
competition to the Systems because most of the subscribers in the Systems'
service areas reside outside the reach of the transmitter. There is no
competition from SMATV operators. There is one TVRO operator in the Systems'
service area providing minimal competition. 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. The General Partner
is uncertain at this time whether Ameritech's plans include any of the
communities located in the Systems' service area.
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 the General Partner, 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 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 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.
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However, the FCC held rate reductions in abeyance in certain systems. The new
regulations became effective on 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 in the Systems. The
General Partner anticipates no further reduction in revenues or operating
income before depreciation and amortization resulting from the FCC's rate
regulations. At this time, the regulatory authorities have not approved the
cost-of-service showings, and there can be no assurance that the Partnership's
cost-of-service showings will prevent further rate reductions until such final
approval is received.
Among other issues addressed by the FCC in its February 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 not 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 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 Courts of Appeals for
the Fourth and the 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 two 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 the interexchange carriers (i.e., long
distance telephone companies such as AT&T) from providing such services
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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 telecomunication 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 cable television systems owned by the Partnership at December 31,
1994 are described below:
SYSTEM ACQUISITION DATE
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Barrington December 1989
South Suburban September 1990
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 Systems. The monthly
basic service rates set forth herein represent, with respect to systems with
multiple headends, the basic service rate charged to the majority of the
subscribers within the system. 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
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subscribed to by basic subscribers are called pay units. As of December 31,
1994, the Systems operated approximately 1,400 miles of cable plant, passing
approximately 158,000 homes, representing an approximate 60% penetration rate.
Figures for numbers of subscribers, miles of cable plant and homes passed are
compiled from the General Partner's records and may be subject to adjustments.
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At December 31,
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BARRINGTON, ILLINOIS 1994 1993 1992
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Monthly basic service rate $23.58 $23.58 $21.95
Basic subscribers 41,330 37,836 35,816
Pay units 36,333 38,425 34,255
</TABLE>
Franchise expiration dates range from June 1995 to November 2006. Any
franchises expiring in 1995 are in the renewal process.
<TABLE>
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At December 31,
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SOUTH SUBURBAN, ILLINOIS 1994 1993 1992
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Monthly basic service rate $20.90 $20.96 $21.95
Basic subscribers 32,711 29,573 28,287
Pay units 31,082 29,292 29,927
</TABLE>
Franchise expiration dates range from August 1996 to December 2004.
PROGRAMMING SERVICES
Programming services provided by the Systems 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
Partnership's Systems also provide a selection, which varies by system, 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 is publicly held, there is no public market for
the limited partnership interests, and it is not expected that a market will
develop in the future. As of February 15, 1995, the approximate number of
equity security holders in the Partnership was 12,418.
9
<PAGE> 10
Item 6. Selected Financial Data
<TABLE>
<CAPTION>
For Year Ended December 31,
------------------------------------------------------------------------------------
1994 1993 1992 1991 1990(a)
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues $ 31,086,361 $ 30,139,742 $ 27,478,157 $ 24,202,335 $ 13,277,651
Depreciation and Amortization 22,409,936 21,921,234 20,970,611 19,155,463 12,865,342
Operating Loss (12,760,453) (11,405,328) (11,660,432) (10,560,650) (8,970,414)
Net Loss (17,968,299) (16,147,302) (18,244,077) (16,952,402) (12,480,998)
Net Loss per Limited
Partnership Unit (83.45) (74.99) (84.73) (78.73) (83.72)
Weighted average number of Limited
Partnership Units outstanding 213,174 213,174 213,174 213,174 147,585
General Partner's Deficit (820,009) (640,326) (478,853) (296,412) (126,888)
Limited Partners' Capital 10,682,587 28,471,203 44,457,032 62,518,668 79,301,546
Total Assets 92,800,087 108,708,332 124,778,551 138,035,736 147,630,093
Debt 70,287,693 70,694,251 70,674,319 71,447,117 65,158,327
General Partner Advances 10,952,538 8,630,540 7,609,685 392,325 2,136,754
</TABLE>
(a) Fund 15-A acquired the South Suburban System in September 1990.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
CABLE TV FUND 15-A
Results of Operations
1994 Compared to 1993-
Revenues of Cable TV Fund 15-A, Ltd. (the "Partnership") increased
$946,619, or approximately 3 percent, from $30,139,742 in 1993 to $31,086,361
in 1994. Increases in advertising sales and basic subscribers primarily
accounted for the increase in revenues. At December 31, 1993, the
Partnership's systems had 66,575 basic subscribers compared to 74,041 basic
subscribers at December 31, 1994, an increase of 11 percent. The increase in
revenues would have been greater except for the decrease in basic rates due to
basic rate regulations issued by the FCC in April 1993 with which the
Partnership complied effective September 1993. No other individual factor
contributed significantly to the increase in revenues.
Operating, general and administrative expense of the Partnership
increased $1,689,311, or approximately 11 percent, from $15,842,152 in 1993 to
$17,531,463 in 1994. Operating, general and administrative expense represented
approximately 53 percent of revenue in 1993 compared to approximately 56
percent in 1994. Increases in programming fees and personnel related costs,
due in part to the increase in the subscriber base, were primarily responsible
for the increase. No other individual factor contributed significantly to the
increase in expense. Management fees and allocated overhead from the General
Partner increased $123,731, or approximately 3 percent, from $3,781,684 in 1993
to $3,905,415 in 1994. The increase was due to the increase in revenues, upon
which such fees and allocations are based, and increases in allocated expenses
from the General Partner. The General Partner has experienced increases in
expenses, including personnel costs and reregulation costs, a portion of which
is allocated to the Partnership. Depreciation and amortization expense
increased $488,702, or approximately 2 percent, from $21,921,234 in 1993 to
$22,409,936 in 1994 due to capital additions during 1993.
Operating loss increased $1,355,125, or approximately 12 percent, from
$11,405,328 in 1993 to $12,760,453 in 1994. The increase was due to the
increases in operating, general and administrative expenses, management fees
and allocated overhead from the General Partner and depreciation and
amortization expense exceeding the increase in revenues. Operating income
before depreciation and amortization decreased $866,423, or approximately 8
percent, from $10,515,906 in 1993 to $9,649,483 in 1994, due to the increases
in operating, general and administrative expense and management fees and
allocated overhead from the General Partner exceeding the increase in revenues.
The decrease in
10
<PAGE> 11
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 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 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 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 $486,409, or approximately 11 percent, from
$4,466,901 in 1993 to $4,953,310 in 1994, due to higher effective interest
rates on interest bearing obligations. Net loss increased $1,820,997, or
approximately 11 percent, from $16,147,302 in 1993 to $17,968,299 in 1994.
Such losses were the result of the factors discussed above and are expected to
continue in the future.
1993 Compared to 1992 -
Revenues of the Partnership increased $2,661,585, or approximately 10
percent, from $27,478,157 in 1992 to $30,139,742 in 1993. The addition of
2,472 basic subscribers in 1993 accounted for approximately 44 percent of the
increase in revenues. At December 31, 1992, the Partnership's systems had
64,103 basic subscribers compared to 66,575 basic subscribers at December 31,
1993. Basic service rate adjustments implemented by the Partnership accounted
for approximately 29 percent of the increase in revenues. The increase in
revenues would have been greater except for the reduction in basic rates due
to basic rate regulation issued by the FCC in April 1993 with which the
Partnership complied effective September 1993. No other individual factor
contributed significantly to the increase in revenues.
Operating, general and administrative expense of the Partnership
increased $1,065,552, or approximately 7 percent, from $14,776,600 in 1992 to
$15,842,152 in 1993. Operating, general and administrative expense represented
approximately 54 percent of revenue in 1992 compared to approximately 53
percent in 1993. Increases in programming fees, due in part to the increase in
the subscriber base, were primarily responsible for the increase. Advertising
expense accounted for approximately 13 percent of the increase in operating,
general and administrative expenses. No other individual factor contributed
significantly to the increase. Management fees and allocated overhead from the
General Partner increased $390,306, or approximately 12 percent, from
$3,391,378 in 1992 to $3,781,684 in 1993. The increase was due to the increase
in revenue, upon which such fees and allocations are based, and an increase in
allocated expenses from the General Partner. Depreciation and amortization
expense increased $950,623, or approximately 5 percent, from $20,970,611 in
1992 to $21,921,234 in 1993 due to significant capital additions during 1993.
Operating loss decreased $255,104, or approximately 2 percent, from
$11,660,432 in 1992 to $11,405,328 in 1993. The decrease was due to the fact
that revenue growth exceeded the increases in operating, general and
administrative expense, management fees and allocated overhead from the General
Partner and depreciation and amortization expense. Operating income before
depreciation and amortization increased $1,205,727, or approximately 13
percent, from $9,310,179 in 1992 to $10,515,906 in 1993. The increase was due
to the increase in revenues exceeding the increases in operating, general and
administrative expense and management fees and allocated overhead from the
General Partner.
Interest expense decreased $1,904,667, or approximately 30 percent,
from $6,371,568 in 1992 to $4,466,901 in 1993. The decrease was due to the
expiration of certain rate swap agreements and to lower effective interest
rates on interest bearing obligations. Other expense increased $61,769 from
$216,225 in 1992 to $277,994 in 1993 due primarily to the allocated
depreciation from related entities that provide advertising sales, warehouse
and converter repair services to the Partnership. Net loss decreased
$2,096,775, or approximately 11 percent, from $18,244,077 in 1992 to
$16,147,302 in 1993. Such losses were the result of the factors discussed
above.
Financial Condition
Capital expenditures totalled approximately $6,188,500 during 1994.
Approximately 34 percent of these expenditures related to service drops to
subscribers' homes, and approximately 21 percent related to plant extensions in
the
11
<PAGE> 12
Barrington System and South Suburban System. Approximately 10 percent related
to the rebuild of cable plant. The remainder of the capital expenditures was
used for various system enhancements. Funding for these expenditures was
provided from cash generated from operations and advances from the General
Partner.
Anticipated capital expenditures for 1995 for the Partnership are
approximately $4,802,000. Approximately 40 percent of the total expenditures
will be used for construction of service drops to subscribers' homes.
Approximately 20 percent of the total expenditures will be used for plant
extensions in the Partnership's systems. Remaining expenditures will be used
for various enhancements in the Partnership's systems. The actual level of
capital expenditures will depend, in part, upon the Partnership's liquidity
position. Funding for these expenditures is expected to come from cash
generated from operations, borrowings under the Partnership's new revolving
credit facility and, in its discretion, advances from the General Partner.
During September 1990, the Partnership entered into a revolving credit
and term loan facility with commercial lending institutions that provided for a
loan of up to $72,000,000. The revolving credit period expired December 31,
1993, at which time the then-outstanding principal balance of $70,500,000
converted to a term loan payable in 24 quarterly installments beginning March
31, 1994. The Partnership made installment payments on that loan in 1994 and
then repaid the $68,385,000 balance of the loan on November 21, 1994, at which
time the Partnership borrowed $70,000,000 under a new revolving credit
facility. At December 31, 1994, $70,000,000 was outstanding under the new
revolving credit facility. Under the terms of the new revolving credit
facility, interest on the outstanding principal balance is at the Partnership's
option of the base rate plus 1/2 percent or a fixed rate defined as the CD rate
plus 1-5/8 percent or the London Interbank Offered Rate plus 1-1/2 percent.
Under terms of the new revolving credit facility, the maximum amount available
to the Partnership is $70,000,000 through March 31, 1995, at which time the
maximum amount available will increase to $80,000,000. At December 31, 1996,
the revolving credit facility converts to a term loan, at which time the
then-outstanding principal balance will convert to a term loan payable in 24
consecutive quarterly installments beginning March 31, 1997. Prior to April 1,
1995, the Partnership will pay a commitment fee of 3/8 of one percent on any
unused portion of the $70,000,000 commitment and 1/8 of one percent on the
additional $10,000,000. After April 1, 1995, the Partnership will pay an
additional commitment fee of 3/8 of one percent on any unused portion of the
$80,000,000 commitment. A one-time loan facility fee of $500,000 was paid at
closing of the new loan in November 1994. This amount will be amortized over
the life of the loan.
The General Partner has advanced funds to the Partnership to fund
capital expenditures and may make additional advances in the future; however,
it has no obligation to do so. Advances outstanding at December 31, 1994
totalled $10,952,538. Interest on such advances is calculated at the General
Partner's weighted average cost of borrowing. Such advances are expected to be
repaid over time with borrowings under the new credit facility. Since the
amount of borrowings available under the new credit facility is limited by
certain leverage covenants, it is anticipated that these advances will be
repaid over time as the Partnership increases cash flow.
The Partnership's capital may become a deficit in 1995, which is
principally the result of depreciation and amortization charges being greater
than equity invested. These deficits are expected to be recovered upon
liquidation of the Partnership.
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 cost-of-service showings for the Barrington
System and the South Suburban System and thus anticipates no further reductions
in rates in these systems. The cost-of-service showings have not yet received
final approvals from franchising authorities, however, and there can be no
assurance that the Partnership s cost-of-service showings will prevent further
rate reductions in these systems until such final approvals are 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
CABLE TV FUND 15-A
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1994 AND 1993
INDEX
<TABLE>
<CAPTION>
Page
----
15-A
----
<S> <C>
Report of Independent Public Accountants 14
Balance Sheets 16
Statements of Operations 15
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 Cable TV Fund 15-A:
We have audited the accompanying balance sheets of CABLE TV FUND 15-A
(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 General Partner's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Cable TV Fund 15-A
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
CABLE TV FUND 15-A
(A Limited Partnership)
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
--------------------------------------
ASSETS 1994 1993
------ -------------- --------------
<S> <C> <C>
CASH $ 26,010 $ 166,914
TRADE RECEIVABLES, less allowance for
doubtful receivables of $110,979 and $97,030
at December 31, 1994 and 1993, respectively 618,743 454,358
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 68,491,779 62,303,243
Less- accumulated depreciation (25,879,360) (18,860,815)
-------------- --------------
42,612,419 43,442,428
Franchise costs, net of accumulated amortization
of $61,022,656 and $47,985,907 at December 31, 1994
and 1993, respectively 34,474,730 47,511,479
Subscriber lists, net of accumulated amortization
of $9,332,644 and $7,274,854 at December 31, 1994
and 1993, respectively 3,944,018 6,001,808
Costs in excess of interests in net assets purchased,
net of accumulated amortization of $1,305,270 and
$1,029,434 at December 31, 1994 and 1993,
respectively 9,733,654 10,009,490
-------------- --------------
Total investment in cable
television properties 90,764,821 106,965,205
DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 1,390,513 1,121,855
-------------- --------------
Total assets $ 92,800,087 $ 108,708,332
============== ==============
</TABLE>
The accompanying notes to financial statements
are an integral part of these balance sheets.
15
<PAGE> 16
CABLE TV FUND 15-A
(A Limited Partnership)
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) -------------------------------------
1994 1993
------------- ------------
<S> <C> <C>
LIABILITIES:
Debt $ 70,287,693 $ 70,694,251
Accounts payable -
Trade 149,934 25,565
General Partner 10,952,538 8,630,540
Accrued liabilities 1,399,978 1,299,136
Subscriber prepayments 147,366 227,963
------------ ------------
Total liabilities 82,937,509 80,877,455
------------ ------------
COMMITMENTS AND CONTINGENCIES (Note 7)
PARTNERS' CAPITAL (DEFICIT):
General Partner-
Contributed capital 1,000 1,000
Accumulated deficit (821,009) (641,326)
------------ ------------
(820,009) (640,326)
------------ ------------
Limited Partners-
Net contributed capital
(213,174 units outstanding at
December 31, 1994 and 1993) 90,575,991 90,575,991
Accumulated deficit (79,893,404) (62,104,788)
------------ ------------
10,682,587 28,471,203
------------ ------------
Total liabilities and
partners' capital (deficit) $ 92,800,087 $108,708,332
============ ============
</TABLE>
The accompanying notes to financial statements
are an integral part of these balance sheets.
16
<PAGE> 17
CABLE TV FUND 15-A
(A Limited Partnership)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For Year Ended December 31,
-------------------------------------------------------
1994 1993 1992
--------------- --------------- ---------------
<S> <C> <C> <C>
REVENUES $ 31,086,361 $ 30,139,742 $ 27,478,157
COSTS AND EXPENSES:
Operating, general and
administrative 17,531,463 15,842,152 14,776,600
Management fees and allocated
overhead from General Partner 3,905,415 3,781,684 3,391,378
Depreciation and amortization 22,409,936 21,921,234 20,970,611
--------------- --------------- ---------------
OPERATING LOSS (12,760,453) (11,405,328) (11,660,432)
--------------- --------------- ---------------
OTHER INCOME (EXPENSE):
Interest expense (4,953,310) (4,466,901) (6,371,568)
Other, net (254,536) (275,073) (212,077)
--------------- --------------- ---------------
Total other income
(expense) (5,207,846) (4,741,974) (6,583,645)
--------------- --------------- ---------------
NET LOSS $ (17,968,299) $ (16,147,302) $ (18,244,077)
=============== =============== ===============
ALLOCATION OF NET LOSS:
General Partner $ (179,683) $ (161,473) $ (182,441)
=============== =============== ===============
Limited Partners $ (17,788,616) $ (15,985,829) $ (18,061,636)
=============== =============== ===============
NET LOSS PER LIMITED PARTNERSHIP UNIT $ (83.45) $ (74.99) $ (84.73)
=============== =============== ===============
WEIGHTED AVERAGE NUMBER OF LIMITED
PARTNERSHIP UNITS OUTSTANDING 213,174 213,174 213,174
=============== =============== ===============
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
17
<PAGE> 18
CABLE TV FUND 15-A
(A Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
<TABLE>
<CAPTION>
For Year Ended December 31,
-----------------------------------------------------
1994 1993 1992
------------- ------------- -------------
<S> <C> <C> <C>
GENERAL PARTNER:
Balance, beginning of year $ (640,326) $ (478,853) $ (296,412)
Net loss for year (179,683) (161,473) (182,441)
------------- ------------- -------------
Balance, end of year $ (820,009) $ (640,326) $ (478,853)
============= ============= =============
LIMITED PARTNERS:
Balance, beginning of year $ 28,471,203 $ 44,457,032 $ 62,518,668
Net loss for year (17,788,616) (15,985,829) (18,061,636)
------------- ------------- -------------
Balance, end of year $ 10,682,587 $ 28,471,203 $ 44,457,032
============= ============= =============
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
18
<PAGE> 19
CABLE TV FUND 15-A
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For Year Ended December 31,
-----------------------------------------------------
1994 1993 1992
------------- ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(17,968,299) $(16,147,302) $(18,244,077)
Adjustments to reconcile net
loss to net cash provided by
operating activities:
Depreciation and amortization 22,409,936 21,921,234 20,970,611
Amortization of interest rate protection contract - - 57,294
Decrease (increase) in trade receivables (164,385) 37,204 (52,116)
Decrease (increase) in deposits, prepaid expenses
and deferred charges (289,674) 224,641 174,186
Increase (decrease) in trade accounts
payable, accrued liabilities and
subscriber prepayments 144,614 (963,704) (1,457,670)
------------- ------------ ------------
Net cash provided by operating activities 4,132,192 5,072,073 1,448,228
------------- ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (6,188,536) (6,124,076) (7,843,261)
------------- ------------ ------------
Net cash used in investing activities (6,188,536) (6,124,076) (7,843,261)
------------- ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 70,224,678 158,652 649,039
Repayment of debt (70,631,236) (138,720) (1,421,837)
Increase in advances from
General Partner 2,321,998 1,020,855 7,217,360
------------- ------------ ------------
Net cash provided by financing activities 1,915,440 1,040,787 6,444,562
------------- ------------ ------------
Increase (decrease) in cash (140,904) (11,216) 49,529
Cash, beginning of year 166,914 178,130 128,601
------------- ------------ ------------
Cash, end of year $ 26,010 $ 166,914 $ 178,130
============= ============ ============
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 4,880,346 $ 5,142,792 $ 6,411,029
============= ============ ============
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
19
<PAGE> 20
CABLE TV FUND 15-A
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION AND PARTNERS' INTERESTS
Formation and Business
Cable TV Fund 15-A, Ltd. (the "Partnership"), a Colorado
limited partnership, was formed on February 9, 1989, under a public program
sponsored by Jones Intercable, Inc. ("Intercable"). The Partnership was formed
to acquire, construct, develop and operate cable television systems.
Intercable, a publicly held Colorado corporation, is the "General Partner" and
manager of the Partnership. Intercable and its subsidiaries also own and
operate cable television systems. In addition, Intercable manages cable
television systems for other limited partnerships for which it is the general
partner and, also, for affiliated entities.
Contributed Capital, Commissions and Syndication Costs
The capitalization of the Partnership is set forth in the
accompanying statements of partners' capital (deficit). No limited partner is
obligated to make any additional contribution to partnership capital.
Intercable purchased its interest in the Partnership by
contributing $1,000 to partnership capital.
All profits and losses of the Partnership are allocated 99
percent to the limited partners and 1 percent to Intercable, except for income
or gain from the sale or disposition of cable television properties, which will
be allocated to the partners based upon the formula set forth in the
Partnership Agreement, and interest income earned prior to the first
acquisition by the Partnership of a cable television system, which was
allocated 100 percent to the limited partners.
Partnership Acquisitions
The Partnership owns the cable television systems serving the
communities of Barrington, Elgin, South Elgin, Hawthorn Woods, Kildeer, Lake
Zurich, Indian Creek, Vernon Hills and certain unincorporated areas of Kane and
Lake counties, all in the State of Illinois (the "Barrington System") and the
cable television systems serving the communities of Flossmoor, LaGrange,
LaGrange Park, Riverside, Indianhead Park, Hazel Crest, Thornton, Lansing,
Matteson, Richton Park, University Park, Crete, Olympia Fields and Western
Springs, all in the State of Illinois (the "South Suburban System").
The Partnership allocated the total contract purchase price of
the cable television systems acquired as follows: first, to the fair value of
net tangible assets acquired; second, to the value of subscriber lists; third,
to franchise costs; and fourth, to costs in excess of interests in net assets
purchased. System acquisition costs were allocated to intangible assets based
upon the relative value of these assets at acquisition.
(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.
20
<PAGE> 21
Property, Plant and Equipmen
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 3 - 5 years
Office furniture and equipment 5 years
Buildings 10 - 20 years
Vehicles 3 years
</TABLE>
Replacements, renewals and improvements are capitalized and
maintenance and repairs are charged to expense as incurred.
Intangible Assets
Costs assigned to franchises and subscriber lists are being
amortized using the straight-line method over the following remaining estimated
useful lives:
<TABLE>
<S> <C>
Franchise costs 1 - 6 years
Subscriber lists 1 - 6 years
Costs in excess of interests in net assets purchased 36 years
</TABLE>
Revenue Recognition
Subscriber prepayments are initially deferred and recognized
as revenue when earned.
(3) TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES
Management Fees, Distribution Ratios and Reimbursement
Intercable manages the Partnership and receives a fee for its
services equal to 5 percent of the gross revenues of the Partnership, excluding
revenues from the sale of cable television systems or franchises. Management
fees paid to Intercable by the Partnership for the years ended December 31,
1994, 1993 and 1992 were $1,554,318, $1,506,987 and $1,373,908, respectively.
Any Partnership distributions made from cash flows (defined as
cash receipts derived from routine operations, less debt principal and interest
payments and cash expenses) are allocated 99 percent to the limited partners
and 1 percent to Intercable. Any distributions other than interest income on
limited partner subscriptions earned prior to the acquisition of the
Partnership's first cable television system or from cash flow, such as from the
sale or refinancing of a system or upon dissolution of the Partnership, will be
made as follows: first, to the limited partners in an amount which, together
with all prior distributions, will equal the amount initially contributed to
the Partnership capital by the limited partners and Intercable; second, to the
limited partners which, together with all prior distributions, will equal a 6%
per annum cumulative and noncompounded return on the capital contributions of
the limited partners; the balance, 75 percent to the limited partners and 25
percent to Intercable.
The Partnership reimburses Intercable for certain allocated
overhead and administrative expenses. These expenses include salaries and
benefits paid for corporate personnel, rent, data processing services and other
corporate facilities costs. Such personnel provide engineering, marketing,
administrative, accounting, legal and investor relations services to the
Partnership. Allocations of personnel costs are based primarily on actual
time spent by employees of Intercable with respect to each partnership managed.
Remaining overhead costs are allocated based on revenues and/or the cost of
assets managed for the partnership. Effective December 1, 1993, the allocation
method was changed to be based only on revenue, which Intercable believes
provides a more accurate method of allocation. Systems owned by Intercable and
all other systems owned by partnerships for which Jones Intercable, Inc. is
general partner are also allocated a proportionate share of these expenses.
Intercable believes that the methodology used in allocating overhead and
administrative expenses
21
<PAGE> 22
is reasonable. Overhead and administrative expenses allocated to the
Partnership by Intercable for the years ended December 31, 1994, 1993 and 1992
were $2,351,097, $2,274,697 and $2,017,470, respectively.
The Partnership was charged interest during 1994 at an average
interest rate of 10 percent on the amounts due Intercable, which approximated
Intercable's weighted average cost of borrowing. Total interest charged the
Partnership by Intercable for the years ended December 31, 1994, 1993 and 1992
was $898,722, $897,332 and $610,876, 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 Intercable. Payments to Superaudio totalled $11,268, $11,013
and $22,855 in 1994, 1993 and 1992, respectively. Payments to The Mind
Extension University totalled $38,866, $24,193 and $10,434 in 1994, 1993 and
1992, respectively. Payments to Jones Computer Network, which initiated
service in 1994, totalled $13,084 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
$1,472 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 $ 64,190,774 $ 58,485,704
Equipment and tools 2,164,664 2,027,927
Office furniture and equipment 522,263 432,211
Buildings 630,231 627,978
Vehicles 805,847 551,423
Land 178,000 178,000
------------ ------------
$ 68,491,779 $ 62,303,243
Less: accumulated depreciation $(25,879,360) $(18,860,815)
------------ ------------
$ 42,612,419 $ 43,442,428
============ ============
</TABLE>
22
<PAGE> 23
(5) DEBT
<TABLE>
<CAPTION>
Debt consists of the following: December 31,
-----------------------------
1994 1993
----------- -----------
<S> <C> <C>
Lending institutions-
Revolving credit and term loan $70,000,000 $70,500,000
Capital lease obligations 287,693 194,251
----------- -----------
$70,287,693 $70,694,251
=========== ===========
</TABLE>
During September 1990, the Partnership entered into a
revolving credit and term loan facility with commercial lending institutions
that provided for a loan of up to $72,000,000. The revolving credit period
expired December 31, 1993, at which time the then-outstanding principal
balance of $70,500,000 converted to a term loan payable in 24 quarterly
installments beginning March 31, 1994. The Partnership made installment
payments on that loan in 1994 and then repaid the $68,385,000 balance of the
loan on November 21, 1994, at which time the Partnership borrowed $70,000,000
under a new revolving credit facility. At December 31, 1994, $70,000,000 was
outstanding under the new revolving credit facility. Under the terms of the
new revolving credit facility, interest on the outstanding principal balance
is at the Partnership's option of the base rate plus 1/2 percent or a fixed
rate defined as the CD rate plus 1-5/8 percent or the London Interbank Offered
Rate plus 1-1/2 percent. Under terms of the new revolving credit facility,
the maximum amount available to the Partnership is $70,000,000 through
March 31, 1995, at which time the maximum amount available will increase to
$80,000,000. At December 31, 1996, the revolving credit facility converts to
a term loan, at which time the then-outstanding principal balance will convert
to a term loan payable in 24 consecutive quarterly installments beginning
March 31, 1997. Prior to April 1, 1995, the Partnership will pay a commitment
fee of 3/8 of one percent on any unused portion of the $70,000,000 commitment
and 1/8 of one percent on the additional $10,000,000. After April 1, 1995, the
Partnership will pay an additional commitment fee of 3/8 of one percent on any
unused portion of the $80,000,000 commitment. A one-time loan facility fee of
$500,000 was paid at closing of the new loan in November 1994. This amount
will be amortized over the life of the loan.
Installments due on debt principal for each of the five years
in the period ending December 31, 1999 and thereafter, respectively, are:
$86,308, $86,308, $5,336,308, $7,028,769, $8,750,000 and $49,000,000. At
December 31, 1994, substantially all of the Partnership's property, plant and
equipment secured the above indebtedness.
(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
Intercable.
The Partnership's tax returns, the qualification of the
Partnership as such for tax purposes, and the amount of distributable
Partnership income or loss are subject to examination by Federal and state
taxing authorities. If such examinations result in changes with respect to the
Partnership's qualification as such, or in changes with respect to the
Partnership's recorded income or loss, the tax liability of the general and
limited partners would likely be changed accordingly.
Taxable income (loss) reported to the partners is different
from that reported in the statements of operations due to the difference in
depreciation recognized under generally accepted accounting principles and the
expense allowed for tax purposes under the Modified Accelerated Cost Recovery
System (MACRS). There are no other significant differences between taxable
income (loss) and the net income (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
23
<PAGE> 24
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
scheme with respect to rates. The Partnership has filed cost-of-service
showings for the Barrington System and the South Suburban System and thus
anticipates no further reductions in rates in these systems. The
cost-of-service showings have not yet received final approvals from
franchising authorities, however, and there can be no assurance that the
Partnership's cost-of-service showings will prevent further rate reductions in
these systems until such final approvals are received.
Office and other facilities are rented under various long-term
lease arrangements. Rent paid under such lease arrangements totalled $125,648,
$130,712 and $122,468, respectively, for the years ended December 31, 1994,
1993 and 1992. Minimum commitments under operating leases for each of the five
years in the period ending December 31, 1999 and thereafter are as follows:
<TABLE>
<S> <C>
1995 $ 60,338
1996 52,356
1997 36,229
1998 21,774
1999 11,873
Thereafter 18,000
---------
$ 200,570
---------
</TABLE>
(8) SUPPLEMENTARY PROFIT AND LOSS INFORMATION
Supplementary profit and loss information is presented below:
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------------------
1994 1993 1992
-------------- -------------- --------------
<S> <C> <C> <C>
Maintenance and repairs $ 190,432 $ 200,391 $ 155,005
============= ============= =============
Taxes, other than income and
payroll taxes $ 96,020 $ 106,332 $ 91,248
============= ============= =============
Advertising $ 700,024 $ 747,069 $ 695,582
============= ============= =============
Depreciation of property,
plant and equipment $ 7,039,561 $ 6,550,859 $ 5,600,236
============= ============= =============
Amortization of intangible assets $ 15,370,375 $ 15,370,375 $ 15,370,375
============= ============= =============
</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 General
Partner is set forth below.
<TABLE>
<CAPTION>
Name Age Positions with the General Partner
---- --- ----------------------------------
<S> <C> <C>
Glenn R. Jones 65 Chairman of the Board and Chief Executive Officer
Derek H. Burney 55 Vice Chairman of the Board
James B. O'Brien 45 President, Chief Operating Officer and Director
Ruth E. Warren 45 Group Vice President/Operations
Kevin P. Coyle 43 Group Vice President/Finance
Christopher J. Bowick 40 Group Vice President/Technology
Timothy J. Burke 44 Group Vice President/Taxation/Administration
Raymond L. Vigil 48 Group Vice President/Human Resources and Director
Cynthia A. Winning 43 Group Vice President/Marketing
Elizabeth M. Steele 43 Vice President/General Counsel/Secretary
Larry W. Kaschinske 35 Controller
James J. Krejci 53 Director
Christine Jones Marocco 39 Director
Daniel E. Somers 47 Director
Robert S. Zinn 58 Director
David K. Zonker 41 Director
</TABLE>
Mr. Glenn R. Jones has served as Chairman of the Board of Directors
and Chief Executive Officer of the General Partner since its formation in 1970,
and he was President from June 1984 until April 1988. Mr. Jones 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 the General Partner and of certain other affiliates of the
General Partner. Mr. Jones has been involved in the cable television business
in various capacities since 1961, is a past and present member of the Board of
Directors 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. Derek H. Burney was appointed a Director of the General Partner in
December 1994 and Vice Chairman of the Board of Directors in January 1995. He
is also a member of the Executive Committee of the Board of Directors. Mr.
Burney joined BCE Inc., Canada's largest telecommunications company, in January
1993 as Executive Vice President, International. He has been the Chairman of
Bell Canada International Inc., a
25
<PAGE> 26
subsidiary of BCE, since January 1993 and, in addition, has been Chief
Executive Officer of BCI since July 1993. Prior to joining BCE, Mr. Burney
served as Canada's ambassador to the United States from 1989 to 1992. Mr.
Burney also served as chief of staff to the Prime Minister of Canada from March
1987 to January 1989 where he was directly involved with the negotiation of the
U.S. - Canada Free Trade Agreement. In July 1993, he was named an Officer of
the Order of Canada. Mr. Burney is chairman of Bell Cablemedia plc. He is a
director of Mercury Communications Limited, Videotron Holdings plc, Tele-Direct
(Publications) Inc., Teleglobe Inc., Bimcor Inc., Maritime Telegraph and
Telephone Company, Limited, Moore Corporation Limited and Northbridge
Programming Inc.
Mr. James B. O'Brien, the General Partner's President, joined the
General Partner in January 1982. Prior to being elected President and a
Director of the General Partner in December 1989, Mr. O'Brien served as a
Division Manager, Director of Operations Planning/Assistant to the CEO, Fund
Vice President and Group Vice President/Operations. Mr. O'Brien was appointed
to the General Partner's Executive Committee in August 1993. As President, he
is responsible for the day-to-day operations of the cable television systems
managed and owned by the General Partner. Mr. O'Brien is also President and a
Director of Jones Cable Group, Ltd., Jones Global Funds, Inc. and Jones Global
Management, Inc., all affiliates of the General Partner. Mr. O'Brien is a
board member of Cable Labs, Inc., the research arm of the U.S. cable
television industry. He also serves as a director of the Cable Television
Administration and Marketing Association and as a director of the Walter Kaitz
Foundation, a foundation that places people of any ethnic minority group in
positions with cable television systems, networks and vendor companies.
Ms. Ruth E. Warren joined the General Partner in August 1980 and has
served in various operational capacities, including system manager and Fund
Vice President, since then. Ms. Warren was elected Group Vice
President/Operations of the General Partner in September 1990.
Mr. Kevin P. Coyle joined The Jones Group, Ltd. in July 1981 as Vice
President/Financial Services. In September 1985, he was appointed Senior Vice
President/Financial Services. He was elected Treasurer of the General Partner
in August 1987, Vice President/Treasurer in April 1988 and Group Vice
President/Finance and Chief Financial Officer in October 1990.
Mr. Christopher J. Bowick joined the General Partner in September 1991
as Group Vice President/Technology and Chief Technical Officer. Previous to
joining the General Partner, Mr. Bowick worked for Scientific Atlanta's
Transmission Systems Business Division in various technical management
capacities since 1981, and as Vice President of Engineering since 1989.
Mr. Timothy J. Burke joined the General Partner in August 1982 as
corporate tax manager, was elected Vice President/Taxation in November 1986 and
Group Vice President/Taxation/Administration in October 1990.
Mr. Raymond L. Vigil joined the General Partner in June 1993 as Group
Vice President/Human Resources. Previous to joining the General Partner, Mr.
Vigil served as Executive Director of Learning with USWest. Prior to USWest,
Mr. Vigil worked in various human resources posts over a 14-year term with the
IBM Corporation.
Ms. Cynthia A. Winning joined the General Partner as Group Vice
President/Marketing in December 1994. Previous to joining the General Partner,
Ms. Winning served since 1994 as the President of PRS Inc., Denver, Colorado, a
sports and event marketing company. From 1979 to 1981 and from 1986 to 1994,
Ms. Winning served as the Vice President and Director of Marketing for Citicorp
Retail Services, Inc., a provider of private-label credit cards for ten
national retail department store chains. From 1981 to 1986, Ms. Winning was
the Director of Marketing Services for Daniels & Associates cable television
operations, as well as the Western Division Marketing Director for Capital
Cities Cable. Ms. Winning also serves as a board Member of Cities in Schools,
a dropout intervention/prevention program.
26
<PAGE> 27
Ms. Elizabeth M. Steele joined the General Partner in August 1987 as
Vice President/General Counsel and Secretary. From August 1980 until joining
the General Partner, Ms. Steele was an associate and then a partner at the
Denver law firm of Davis, Graham & Stubbs, which serves as counsel to the
General Partner.
Mr. Larry Kaschinske joined the General Partner in 1984 as a staff
accountant in the General Partner's former Wisconsin Division; was promoted to
Assistant Controller in 1990 and named Controller in August 1994.
Mr. James J. Krejci was President of the International Division of
International Gaming Technology International headquartered in Reno, Nevada,
until March 1995. Prior to joining IGT in May 1994, Mr. Krejci was Group Vice
President of Jones International, Ltd. and a Group Vice President of the
General Partner. Prior to May 1994, he also served as Group Vice President of
Jones Futurex, Inc., an affiliate of the General Partner engaged in
manufacturing and marketing data encryption devices, Jones Interactive, Inc., a
subsidiary of Jones International, Ltd. providing computer data and billing
processing facilities and Jones Lightwave, Ltd., a company owned by Jones
International, Ltd. and Mr. Jones, which is engaged in the provision of
telecommunications services. Mr. Krejci has been a Director of the General
Partner since August 1987.
Ms. Christine Jones Marocco was appointed a Director of the General
Partner in December 1994. She is the daughter of Glenn R. Jones. Ms. Marocco
is also a director of Jones International, Ltd.
Mr. Daniel E. Somers was appointed a Director of the General Partner
in December 1994 and also serves on the General Partner's Audit Committee.
From January 1992 to January 1995, Mr. Somers worked as Senior Vice President
and Chief Financial Officer of Bell Canada International Inc. and was appointed
Executive Vice President and Chief Financial Officer on February 1, 1995. He
is also a Director of certain of its affiliates. Prior to joining Bell Canada
International Inc. and since January 1989, Mr. Somers was the President and
Chief Executive Officer of Radio Atlantic Holdings Limited. Mr. Somers is a
member of the North American Society of Corporate Planning, the Financial
Executives Institution and the Financial Analysts Federation.
Mr. Robert S. Zinn was appointed a Director of the General Partner in
December 1994. Mr. Zinn joined the General Partner in January 1991 and is a
member of its Legal Department. He is also Vice President/Legal Affairs of
Jones International, Ltd. Prior to joining the General Partner, Mr. Zinn was
in private law practice in Denver, Colorado for over 25 years.
Mr. David K. Zonker was appointed a Director of the General Partner in
December 1994. Mr. Zonker has been the President of Jones International
Securities, Ltd., a subsidiary of Jones International, Ltd. since January 1984
and he has been its Chief Executive Officer since January 1988. From October
1980 until joining Jones International Securities, Ltd. in January 1984, Mr.
Zonker was employed by the General Partner. Mr. Zonker is a member of the
Board of Directors of various affiliates of the General Partner, including
Jones International Securities, Ltd. Mr. Zonker is licensed by the National
Association of Securities Dealers, Inc. and he is a past chairman of the
Investment Program Association, a trade organization based in Washington, D.C.
that promotes direct investments. He is a member of the Board of Trustees of
Graceland College, Lamoni, Iowa; the International Association of Financial
Planners and the American and Colorado Institutes of Certified Public
Accountants.
ITEM 11. EXECUTIVE COMPENSATION
The Partnership has no employees; however, various personnel are
required to operate the cable television systems owned by the Partnership.
Such personnel are employed by the General Partner and, pursuant to the terms
of the limited partnership agreement of the Partnership, the cost of such
employment is charged by the General Partner to the Partnership as a direct
reimbursement item. See Item 13.
27
<PAGE> 28
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGERS
No person or entity owns more than 5 percent of the limited
partnership interests of the Partnership.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The General Partner and its affiliates engage in certain transactions
with the Partnership as contemplated by the limited partnership agreement of
the Partnership. The 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 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 General Partner charges the Partnership a management fee, and the
Partnership reimburses the 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 General Partner with respect to the partnership
managed. Remaining overhead costs are allocated based on revenues and/or the
costs of assets managed for the Partnership. Systems owned by the General
Partner and all other systems owned by partnerships for which Jones Intercable,
Inc. is the general partner, are also allocated a proportionate share of these
expenses.
The General Partner also advances funds and charges interest on the
balance payable from the Partnership. The interest rate charged the
Partnership approximates the General Partner's weighted average cost of
borrowing.
The Systems receive stereo audio programming from Superaudio, a joint
venture owned 50% by an affiliate of the General Partner and 50% by an
unaffiliated party, educational video programming from Mind Extension
University, Inc., an affiliate of the General Partner, and computer video
programming from Jones Computer Network, Ltd., an affiliate of the General
Partner, for fees based upon the number of subscribers receiving the
programming.
Product Information Network ("PIN"), an affiliate of the General
Partner, provides advertising time for third parties on the Systems. In
consideration, the revenues generated from the third parties are shared
two-thirds and one-third between PIN and the Partnership. During the year
ended December 31, 1994, the Partnership received revenues from PIN of $1,472.
The charges to the Partnership for related party transactions are as
follows for the periods indicated:
<TABLE>
<CAPTION>
At December 31,
--------------------------------------------------------
Cable TV Fund 15-A 1994 1993 1992
------------------ ---- ---- ----
<S> <C> <C> <C>
Management fees $ 1,554,318 $ 1,506,987 $ 1,373,908
Allocation of expenses 2,351,096 2,274,697 2,017,470
Interest on advances paid to the General Partner 898,722 897,332 610,876
Amount of advances outstanding 10,952,538 8,630,540 7,609,685
Highest amount of advances outstanding 10,952,538 9,091,909 7,609,685
Programming fees:
Superaudio 11,268 11,013 22,855
Mind Extension University 38,866 24,193 10,434
Jones Computer Network 13,084 -0- -0-
</TABLE>
28
<PAGE> 29
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
<TABLE>
<S> <C> <C>
(a) 1. See index to financial statements for the list of financial statements and exhibits
thereto filed as part of this report.
3. The following exhibits are filed herewith.
4.1 Limited Partnership Agreement for Cable TV Fund 15-A, Ltd. (1)
10.1.1 Copy of franchise and related documents granting a community antenna television system
franchise for the Village of Barrington, Illinois. (1)
10.1.2 Copy of franchise and related documents granting a community antenna television system
franchise for Cook County, Illinois. (2)
10.1.3 Copy of franchise and related documents granting a community antenna television system
franchise for the Village of Crete, Illinois. (3)
10.1.4 Copy of franchise and related documents granting a community antenna television system
franchise for the Village of Deer Park, Illinois. (1)
10.1.5 Copy of franchise and related documents granting a community antenna television system
franchise for the City of Elgin, Illinois. (1)
10.1.6 Copy of franchise and related documents granting a community antenna television system
franchise for the Village of Flossmoor, Illinois. (3)
10.1.7 Copy of franchise and related documents granting a community antenna television system
franchise for the Village of Hawthorn Woods, Illinois. (1)
10.1.8 Copy of franchise and related documents granting a community antenna television system
franchise for the Village of Hazel Crest, Illinois. (3)
10.1.9 Copy of franchise and related documents granting a community antenna television system
franchise for Hoffman Estates, Illinois. (2)
10.1.10 Copy of franchise and related documents granting a community antenna television system
franchise for the Village of Indian Creek, Illinois. (1)
10.1.11 Copy of franchise and related documents granting a community antenna television system
franchise for the Village of Indian Head Park, Illinois. (3)
10.1.12 Copy of franchise and related documents granting a community antenna television system
franchise for the County of Kane, Illinois. (2)
10.1.13 Copy of franchise and related documents granting a community antenna television system
franchise for the Village of Kildeer, Illinois. (1)
10.1.14 Copy of franchise and related documents granting a community antenna television system
franchise for the Village of La Grange, Illinois. (3)
</TABLE>
29
<PAGE> 30
<TABLE>
<S> <C>
10.1.15 Copy of franchise and related documents granting a community antenna television system
franchise for the Village of La Grange Park, Illinois. (3)
10.1.16 Copy of franchise and related documents granting a community antenna television system
franchise for the County of Lake, Illinois. (1)
10.1.17 Copy of amendment to franchise agreement dated May 15, 1991. (3)
10.1.18 Copy of franchise and related documents granting a community antenna television system
franchise for the Village of Lake Barrington, Illinois. (4)
10.1.19 Copy of Resolution 92-R-20 dated 9/8/92. (2)
10.1.20 Copy of franchise and related documents granting a community antenna television system
franchise for the Village of Lake Zurich, Illinois. (4)
10.1.21 Copy of franchise and related documents granting a community antenna television system
franchise for the Village of Lansing, Illinois. (3)
10.1.22 Copy of franchise and related documents granting a community antenna television system
franchise for the Village of Long Grove, Illinois. (2)
10.1.23 Copy of franchise and related documents granting a community antenna television system
franchise for the Village of Matteson, Illinois. (3)
10.1.24 Copy of franchise and related documents granting a community antenna television system
franchise for the Village of Olympia Fields, Illinois. (3)
10.1.25 Copy of franchise and related documents granting a community antenna television system
franchise for the Village of Riverside, Illinois. (3)
10.1.26 Copy of franchise and related documents granting a community antenna television system
franchise for the Village of South Elgin, Illinois. (1)
10.1.27 Copy of franchise and related documents granting a community antenna television system
franchise for Thornton, Illinois. (3)
10.1.28 Copy of franchise and related documents granting a community antenna television system
franchise for the Village of University Park, Illinois. (3)
10.1.29 Copy of franchise and related documents granting a community antenna television system
franchise for the Village of Vernon Hills, Illinois. (1)
10.1.30 Copy of franchise and related documents granting a community antenna television system
franchise for the Village of Western Springs, Illinois. (3)
10.2.1 Credit Agreement dated as of November 21, 1994 among Cable TV Fund 15-A, Ltd. and
Shawmut Bank Connecticut, N.A., as agent for various lenders.
27 Financial Data Schedule
----------
</TABLE>
30
<PAGE> 31
(1) Incorporated by reference from Registrant's
Report on Form 10-K for the fiscal year ended
December 31, 1989.
(2) Incorporated by reference from Registrant's
Report on Form 10-K for the fiscal year ended
December 31, 1992.
(3) Incorporated by reference from the Annual Report
on Form 10-K of Jones Intercable, Inc.
(Commission File No. 1-9953) for fiscal year
ended 5/31/90.
(4) Incorporated by reference from Registrant's
Report on Form 10-K for the fiscal year ended
December 31, 1990.
(b) Reports on Form 8-K
None.
31
<PAGE> 32
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
CABLE TV FUND 15-A, LTD.
a Colorado limited partnership
By: Jones Intercable, Inc.
By: /s/ Glenn R. Jones
-------------------------------
Glenn R. Jones
Chairman of the Board and Chief
Dated: March 23, 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.
<TABLE>
<S> <C> <C> <C>
By: /s/ Glenn R. Jones
--------------------------------------
Glenn R. Jones
Chairman of the Board and Chief
Executive Officer
Dated: March 23, 1995 (Principal Executive Officer)
By: /s/ Kevin P. Coyle
--------------------------------------
Kevin P. Coyle
Group Vice President/Finance
Dated: March 23, 1995 (Principal Financial Officer)
By: /s/ Larry Kaschinske
--------------------------------------
Larry Kaschinske
Controller
Dated: March 23, 1995 (Principal Accounting Officer)
By: /s/ James B. O'Brien
--------------------------------------
James B. O'Brien
Dated: March 23, 1995 President and Director
By: /s/ Raymond L. Vigil
--------------------------------------
Raymond L. Vigil
Dated: March 23, 1995 Group Vice President and Director
By: /s/ Robert S. Zinn
--------------------------------------
Robert S. Zinn
Dated: March 23, 1995 Director
</TABLE>
32
<PAGE> 33
<TABLE>
<S> <C> <C> <C>
By: /s/ David K. Zonker
--------------------------------------
David K. Zonker
Dated: March 23, 1995 Director
By:
--------------------------------------
Derek H. Burney
Dated: Director
By:
--------------------------------------
James J. Krejci
Dated: Director
By:
--------------------------------------
Christine Jones Marocco
Dated: Director
By:
--------------------------------------
Daniel E. Somers
Dated: Director
</TABLE>
33
<PAGE> 34
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C>
4.1 Limited Partnership Agreement for Cable TV Fund 15-A, Ltd. (1)
10.1.1 Copy of franchise and related documents granting a community antenna television system
franchise for the Village of Barrington, Illinois. (1)
10.1.2 Copy of franchise and related documents granting a community antenna television system
franchise for Cook County, Illinois. (2)
10.1.3 Copy of franchise and related documents granting a community antenna television system
franchise for the Village of Crete, Illinois. (3)
10.1.4 Copy of franchise and related documents granting a community antenna television system
franchise for the Village of Deer Park, Illinois. (1)
10.1.5 Copy of franchise and related documents granting a community antenna television system
franchise for the City of Elgin, Illinois. (1)
10.1.6 Copy of franchise and related documents granting a community antenna television system
franchise for the Village of Flossmoor, Illinois. (3)
10.1.7 Copy of franchise and related documents granting a community antenna television system
franchise for the Village of Hawthorn Woods, Illinois. (1)
10.1.8 Copy of franchise and related documents granting a community antenna television system
franchise for the Village of Hazel Crest, Illinois. (3)
10.1.9 Copy of franchise and related documents granting a community antenna television system
franchise for Hoffman Estates, Illinois. (2)
10.1.10 Copy of franchise and related documents granting a community antenna television system
franchise for the Village of Indian Creek, Illinois. (1)
10.1.11 Copy of franchise and related documents granting a community antenna television system
franchise for the Village of Indian Head Park, Illinois. (3)
10.1.12 Copy of franchise and related documents granting a community antenna television system
franchise for the County of Kane, Illinois. (2)
10.1.13 Copy of franchise and related documents granting a community antenna television system
franchise for the Village of Kildeer, Illinois. (1)
10.1.14 Copy of franchise and related documents granting a community antenna television system
franchise for the Village of La Grange, Illinois. (3)
10.1.15 Copy of franchise and related documents granting a community antenna television system
franchise for the Village of La Grange Park, Illinois. (3)
10.1.16 Copy of franchise and related documents granting a community antenna television system
franchise for the County of Lake, Illinois. (1)
10.1.17 Copy of amendment to franchise agreement dated May 15, 1991. (3)
10.1.18 Copy of franchise and related documents granting a community antenna television system
franchise for the Village of Lake Barrington, Illinois. (4)
10.1.19 Copy of Resolution 92-R-20 dated 9/8/92. (2)
10.1.20 Copy of franchise and related documents granting a community antenna television system
franchise for the Village of Lake Zurich, Illinois. (4)
10.1.21 Copy of franchise and related documents granting a community antenna television system
franchise for the Village of Lansing, Illinois. (3)
10.1.22 Copy of franchise and related documents granting a community antenna television system
franchise for the Village of Long Grove, Illinois. (2)
10.1.23 Copy of franchise and related documents granting a community antenna television system
franchise for the Village of Matteson, Illinois. (3)
10.1.24 Copy of franchise and related documents granting a community antenna television system
franchise for the Village of Olympia Fields, Illinois. (3)
10.1.25 Copy of franchise and related documents granting a community antenna television system
franchise for the Village of Riverside, Illinois. (3)
10.1.26 Copy of franchise and related documents granting a community antenna television system
franchise for the Village of South Elgin, Illinois. (1)
10.1.27 Copy of franchise and related documents granting a community antenna television system
franchise for Thornton, Illinois. (3)
10.1.28 Copy of franchise and related documents granting a community antenna television system
franchise for the Village of University Park, Illinois. (3)
10.1.29 Copy of franchise and related documents granting a community antenna television system
franchise for the Village of Vernon Hills, Illinois. (1)
10.1.30 Copy of franchise and related documents granting a community antenna television system
franchise for the Village of Western Springs, Illinois. (3)
10.2.1 Credit Agreement dated as of November 21, 1994 among Cable TV Fund 15-A, Ltd. and
Shawmut Bank Connecticut, N.A., as agent for various lenders.
27 Financial Data Schedule
</TABLE>
----------
(1) Incorporated by reference from Registrant's
Report on Form 10-K for the fiscal year ended
December 31, 1989.
(2) Incorporated by reference from Registrant's
Report on Form 10-K for the fiscal year ended
December 31, 1992.
(3) Incorporated by reference from the Annual Report
on Form 10-K of Jones Intercable, Inc.
(Commission File No. 1-9953) for fiscal year
ended 5/31/90.
(4) Incorporated by reference from Registrant's
Report on Form 10-K for the fiscal year ended
December 31, 1990.
<PAGE> 1
$80,000,000
CREDIT AGREEMENT
dated as of November 21, 1994
among
CABLE TV FUND I5-A, LTD.
as the Borrower
and
VARIOUS FINANCIAL INSTITUTIONS
as the Lenders,
and
SHAWMUT BANK CONNECTICUT, N.A.,
as Agent for the Lenders.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2. Use of Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 1.3. Cross-References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 1.4. Accounting and Financial Determinations . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES AND NOTES . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 2.1. Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 2.1.1. Revolving Loan Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 2.1.2. Lenders Not Permitted or Required to Make
Revolving Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 2.2. Reduction of Commitment Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 2.3. Borrowing Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 2.4. Continuation and Conversion Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 2.5. Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 2.6. Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE III
CONVERSION, REPAYMENTS, PREPAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 3.1. Conversion, Repayments and Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 3.2. Excess Cash Flow Recapture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.3. Interest Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.3.1. Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.3.2. Post-Maturity Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 3.3.3. Payment Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.4. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.4.1. Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.4.2. Agent's Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE IV
CERTAIN CD RATE, LIBO RATE AND OTHER PROVISIONS . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 4.1. Fixed Rate Lending Unlawful . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 4.2. Deposits Unavailable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 4.3. Increased Fixed Rate Loan Costs, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 4.4. Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.5. Increased Capital Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.6. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.7. Payments, Computations, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 4.8. Sharing of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 4.9. Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE V
CONDITIONS TO BORROWING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 5.1. Initial Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 5.1.1. General Partner's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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SECTION 5.1.2. Delivery of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.1.3. Payment of Outstanding Indebtedness, etc . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.1.4. Security Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.1.5. Subordination Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.1.6. Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.1.7. Closing Date Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.1.8. Payoff Letter; Disbursement Instructions . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.1.9. Closing Fees, Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.1.10. Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.2. All Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.2.1. Compliance with Warranties, No Default, etc . . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.2.2. Borrowing Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.2.3. Satisfactory Legal Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE VI
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 6.1. Organization, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 6.2. Due Authorization, Non-contravention, etc . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 6.3. Government Approval, Regulation, etc . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 6.4. Validity, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 6.5. Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 6.6. No Material Adverse Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 6.7. Litigation, Labor Controversies, etc . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 6.8. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 6.9. Ownership of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 6.10. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 6.11. Pension and Welfare Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 6.12. Environmental Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 6.13. Regulations G, U and X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 6.14. Accuracy of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 6.15. Cable Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 6.16. FCC Registration and Regulatory Compliance . . . . . . . . . . . . . . . . . . . . . 36
SECTION 6.17. Franchises, Copyrights and Licenses . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.18. Communications Act Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.19. Partnership Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.20. No Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.21. Absence of Financing Statements, etc . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE VII
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 7.1. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 7.1.1. Financial Information Reports, Notices, etc . . . . . . . . . . . . . . . . . . . . . 38
SECTION 7.1.2. Compliance with Laws, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 7.1.3. Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 7.1.4. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 7.1.5. Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 7.1.6. Environmental Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 7.1.7. Copyright Act Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 7.1.8. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
</TABLE>
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SECTION 7.1.9. Hedging Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 7.2. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 7.2.1. Business Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 7.2.2. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 7.2.3. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 7.2.4. Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 7.2.5. Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 7.2.6. Restricted Payments, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 7.2.8. Consolidation, Merger. etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 7.2.9. Asset Dispositions, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 7.2.10. Modification of Certain Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 7.2.11. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 7.2.12. Negative Pledges, Restrictive Agreements, etc . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 7.2.13. No Creation of Pension Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 7.2.14. Acquisition of Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE VIII
EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 8.1. Listing of Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 8.1.1. Non-Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 8.1.2. Breach of Warranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 8.1.3. Non-Performance of Certain Covenants and Obligations . . . . . . . . . . . . . . . . . . . 47
SECTION 8.1.4. Non-Performance of the Other Covenants and Obligations . . . . . . . . . . . . . . . . . . 47
SECTION 8.1.5. Default on Other Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 8.1.6. Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 8.1.7. Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 8.1.8. Bankruptcy, Insolvency, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 8.1.9. Partnership Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 8.1.10. Impairment of Security, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 8.1.11. Failure to Obtain or Cessation of Authorization, etc . . . . . . . . . . . . . . . . . . . 48
SECTION 8.1.12. Franchise Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 8.2. Action if Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 8.3. Action if Other Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE IX
THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 9.1. Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 9.2. Funding Reliance, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 9.3. Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 9.4. Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 9.5. Loans by Shawmut . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 9.6. Credit Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 9.7. Defaulting Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 9.8. Holder of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 9.9. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 9.10. Assignee or Participant Affiliated with the Borrower . . . . . . . . . . . . . . . . . . . 52
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SECTION 9.11. Copies, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE X
MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 10.1. Waivers, Amendments, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 10.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 10.3. Payment of Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 10.4. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 10.5. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 10.6. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 10.7. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 10.8. Execution in Counterparts, Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 10.9. Governing in Law; Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 10.10. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 10.11. Sale and Transfer of Loans and Notes; Participations in Loans and Notes . . . . . . . . . . 56
SECTION 10.11.1. Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 10.11.2. Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 10.12. Other Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 10.13. Nonrecourse Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 10.14. Consent to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 10.15. Waiver of Jury Trial, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 10.16. Prejudgment Remedy Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SCHEDULES
SCHEDULE I Disclosure Schedule
SCHEDULE II Cable Schedule
EXHIBITS
EXHIBIT A Form of Note
EXHIBIT B Form of Borrower Request
EXHIBIT C Form of Continuation/Conversion Notice
EXHIBIT D Form of Lender Assignment Agreement
EXHIBIT E Form of Security Agreement
EXHIBIT F Form of Subordination Agreement
EXHIBIT G Form of Opinion of General Counsel to
Borrower and General Partners
EXHIBIT H Form of Opinion of Local Illinois
Counsel to Borrower
EXHIBIT I Form of Opinion of FCC Counsel
to Borrower
EXHIBIT J Form of Compliance Certificate
EXHIBIT K Form of Closing Date Certificate
</TABLE>
<PAGE> 6
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of November 21, 1994, is made among
CABLE TV FUND 15-A, LTD., a Colorado limited Partnership (the "BORROWER"), the
various financial institutions as are or may become parties hereto
(collectively, the "LENDERS"), and SHAWMUT BANK CONNECTICUT, N.A. ("SHAWMUT"),
as agent for the Lenders (in such capacity, the "AGENT").
WITNESSETH:
WHEREAS, the Borrower is currently the obligor under that certain
$72,000,000 Loan Agreement, dated as of September 28, 1990 (as amended,
restated or otherwise modified prior hereto, the "EXISTING CREDIT AGREEMENT"),
among the Borrower, the various financial institutions which are parties
thereto, and Nationsbank of North Carolina, N.A., formerly known as NCNB
National Bank of North Carolina ("NCNB"), as a lender and as agent for the
lenders
WHEREAS, the Borrower desires to obtain Loans from the Lenders to:
(i) repay, in full, all of the loans outstanding under
the Existing Credit Agreement;
(ii) finance certain working capital requirements of the
Borrower; and
(iii) subject to Section 7.2.7 and the Subordination
Agreement, from time to time to repay advances made by the General
Partner to the Borrower; and
WHEREAS, the Lenders are willing, on the terms and subject to the
conditions hereinafter set forth, to extend such Loans to the Borrower.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. Defined Terms. The following terms when used in this
Agreement, including its preamble and recitals, shall, except where the context
otherwise requires, have the following meanings (such meanings to be equally
applicable to the singular and plural forms thereof):
"AFFILIATE" means, with respect to any Person, any other Person which,
directly or indirectly, controls, is controlled by or is under common control
with, such Person (excluding any trustee under, or any committee with
responsibility for administering, any Plan). A Person shall be deemed to
"CONTROL" another Person if such Person possesses, directly or indirectly, the
power
<PAGE> 7
2
(a) to vote 10% or more of the securities of such other Person
(on a fully diluted basis) having ordinary voting power for the
election of directors or managing general partners or
(b) to direct or cause the direction of the management and
policies of such other Person whether by contract or otherwise.
"AGENT" is defined in the preamble and includes each other Person as
shall have subsequently been appointed as the successor Agent pursuant to
Section 9.4.
"AGREEMENT" means, on any date, this Credit Agreement as originally in
effect on the Effective Date and as thereafter from time to time amended,
restated or otherwise modified and in effect on such date.
"ALLOCATED OVERHEAD" means, for any period, the fees payable (without
regard to the Borrower's right to defer or limit actual payment) to the General
Partner to compensate the General Partner for that portion of its general
overhead and administrative expenses, including all of its direct and indirect
expenses, allocable to the operation of the Borrower's business, including, but
not limited to, home office rent, supplies, telephone, travel and copying
charges, and salaries of full and part-time employees.
"ALTERNATE BASE RATE" means, on any date and with respect to all Base
Rate Loans, a fluctuating rate of interest per annum equal to the higher of
(a) the rate of interest most recently established by the
Agent at its Domestic Office as its base rate for Dollar loans and
(b) the Federal Funds Rate most recently determined by the
Agent plus 1/2 of 1%.
The Alternate Base Rate is not necessarily intended to be the lowest rate of
interest determined by the Agent in connection with extensions of credit.
Changes in the rate of interest on that portion of any Loans maintained as Base
Rate Loans will take effect simultaneously with each change in the Alternate
Base Rate. The Agent will give notice promptly to the Borrower and the Lenders
of changes in the Alternate Base Rate.
"ANNUALIZED CASH FLOW" means, at any time, Cash Flow for the
immediately preceding Fiscal Quarter times four.
"APPLICABLE MARGIN" means, at any time during which the Borrower's
Leverage Ratio falls within the ranges set forth below, the amounts set forth
below opposite such ranges for each type of Loans:
<PAGE> 8
3
<TABLE>
<CAPTION>
Applicable Margin
Leverage Ratio Base Rate Loans LIBO Rate Loans CD Rate Loans
-------------- --------------- --------------- -------------
<S> <C> <C> <C>
4.50:1 or greater 0.50% 1.50% 1.625%
4.00:1 or greater but
less than 4.50:1 0.25% 1.25% 1.375%
less than 4.00:1 0.00% 1.00% 1.125%
</TABLE>
"ASSESSMENT RATE" is defined in Section 3.3.1.
"ASSIGNEE LENDERS" is defined in Section 10.11.1.
"AUTHORIZED OFFICER" means those officers of the General Partner whose
signatures and incumbency shall have been certified to the Agent and the
Lenders pursuant to Section 5.1.1.
"BARRINGTON CABLE SYSTEM" means the Cable System owned by the Borrower
and located in and around the communities listed on the Cable Schedule under
the caption "Barrington/Lake Zurich, Illinois System."
"BASE RATE LOAN" means a Loan bearing interest at a fluctuating rate
determined by reference to the Alternate Base Rate.
"BASIC PENETRATION RATE" means, at any time, a percentage derived from
a fraction, the numerator of which is the number of Basic Subscribers at such
time, and the denominator of which is the number of Homes Passed at such time.
"BASIC SUBSCRIBER RATE" means the minimum standard monthly fees and
charges for "basic service" (as such term is commonly understood in the cable
television industry) charged to customers of the Cable Systems.
"BASIC SUBSCRIBERS" means, at any time, the total number of
subscribers subscribing to the Cable Systems (excluding "second connections" as
such term is commonly understood in the cable television industry) who (i) pay
the Basic Subscriber Rate for service, and (ii) are not more than 60 days past
due in payment. In the case of commercial buildings, such as hotels or motels,
or in the case of multiple residential dwellings, such as apartment houses and
multifamily homes, which do not obtain reduced bulk service rates, each
separate guest unit or dwelling unit receiving such services shall be counted
as one subscriber. The number of subscribers in a commercial building or in a
multiple residential dwelling which obtains a reduced bulk service rate shall
be obtained by dividing (x) the aggregate dollar amount of monthly subscribers'
fees paid on account of such commercial building or multiple residential
dwelling for basic service by (y) the Basic Subscriber Rate. Except for
discounts to senior citizens less than 20% of the otherwise applicable rate,
residential households (other than in a multiple residential dwelling) paying
the Basic Subscriber Rate on a discounted basis or under any form of deferred
payment arrangement shall not be included.
"BORROWER" is defined in the Preamble.
<PAGE> 9
4
"BORROWING" means the Loans of the same type and, in the case of
Fixed Rate Loans, having the same Interest Period made by all Lenders on
the same Business Day and pursuant to the same Borrowing Request in
accordance with Section 2.3.
"BORROWING REQUEST" means a loan request and certificate duly
executed by an Authorized Officer, substantially in the form of Exhibit B
hereto.
"BUSINESS DAY" means
(a) any day which is not a Saturday, a Sunday or a day
on which banks are authorized or required by law to be closed in New
York City, New York or Hartford, Connecticut; and
(b) relative to the making, continuing, prepaying or
repaying of any LIBO Rate Loans, any day on which dealings in
Dollars are carried on in the London interbank market.
"CABLE FRANCHISES" is defined in Section 6.15.
"CABLE SCHEDULE" means the Cable Schedule attached hereto as Schedule
II, as it may be amended, supplemented or otherwise modified from time to time
by the Borrower with the written consent of the Agent.
"CABLE SYSTEM" means the assets constituting a CATV or 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, conduit occupancy rights,
utility easements and all other property owned or used in connection with
the services provided pursuant to, and all other interests of the holder
thereof to receive revenues from, or pursuant to, said licenses, franchises
and permits) listed on the Cable Schedule and all assets constituting such a
system hereafter acquired by the Borrower serving subscribers within a
geographical area covered by one or more Franchises from the same Head
End facility or by two or more related Head End facilities.
"CAPITAL EXPENDITURES" means, for any period, the sum of
(a) the aggregate amount of all expenditures of the
Borrower and its Subsidiaries for fixed or capital assets made
during such period which, in accordance with GAAP, would be
classified as capital expenditures; and
(b) the aggregate amount of all Capitalized Lease
Liabilities incurred during such period.
"CAPITALIZED LEASE LIABILITIES" means all monetary obligations of the
Borrower or any of its Subsidiaries under any leasing or similar arrangement
which, in accordance with GAAP, would be classified as capitalized, leases,
and, for purposes of this Agreement and each other Loan Document, the amount
of such obligations shall be the capitalized amount thereof, determined in
accordance with GAAP, and the stated maturity thereof shall be the date of the
<PAGE> 10
5
last payment of rent or any other amount due under such lease prior to the
first date upon which such lease may be terminated by the lessee without
payment of a penalty.
"CASH EQUIVALENT INVESTMENT" means, at any time:
(a) any evidence of Indebtedness, maturing not more
than one year after such time, issued or guaranteed by the United
States Government;
(b) commercial paper, maturing not more than nine months
from the date of issue, which is issued by:
(i) a corporation (other than an Affiliate of
the Borrower) organized under the laws of any state of the
United States or of the District of Columbia and whose
long-term debt is rated at least A-I by Standard & Poor's
Corporation or P-I by Moody's Investors Service, Inc.; or
(ii) any Lender (or its holding company);
(c) any certificate of deposit or bankers acceptance
maturing not more than one year after such time, which is issued by
either:
(i) a commercial banking institution that is a
member of the Federal Reserve System and has combined
capital, surplus and undivided profits of not less than
$1,000,000,000; or
(ii) any Lender; or
(d) any repurchase agreement entered into with any
Lender (or any other commercial banking institution of the stature
referred to in clause (c) (i)) which:
(i) is secured by a fully perfected security
interest in any obligation of the type described in any of
clauses (a) through (c); and
(ii) has a market value at the time such
repurchase agreement is entered into of not less than 100%
of the repurchase obligation of such Lender (or other
commercial banking institution) thereunder.
"CASH FLOW" means, for any period, total consolidated operating
revenues of the Borrower for such period, less the sum of (i) consolidated
operating expenses of the Borrower for such period and (ii) general and
administrative expenses of the Borrower for such period (excluding
Management Fees and Allocated Overhead for such period, if any, included in
clauses (i) and (ii)).
"CATV" means community antenna television.
"CD RATE" is defined in Section 3.3.1.
"CD RATE LOAN" means a Loan bearing interest, at all times during an
Interest Period applicable to such Loan, at a rate determined by reference to
the CD Rate (Reserve Adjusted).
<PAGE> 11
6
"CD RATE (RESERVE ADJUSTED)" is defined in Section 3.3.1.
"CD RESERVE REQUIREMENT" is defined in Section 3.3.1.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.
"CHANGE IN CONTROL" means the occurrence of either or both of the
following:
(a) the failure of Jones Intercable to own, free and
clear of all Liens or other encumbrances, 100% of the outstanding general
partnership interests in the Borrower other than the Liens described in
Section 6.1(e) or similar Liens which would be incurred in any refinancing of
Jones Intercable's debt; or
(b) the failure of Jones Intercable to be the sole
general partner of the Borrower; provided, however, that if Jones Intercable
ceases to be the sole general partner of the Borrower but with in ninety
(90) days thereafter a replacement general partner acceptable to the
Required Lenders in their sole discretion shall have been appointed, then no
Change in Control shall be deemed to have occurred.
"CLOSING DATE CERTIFICATE" means a certificate of the General
Partner, substantially in the form of Exhibit K hereto.
"CODE" means the Internal Revenue Code of 1986, as amended, reformed
or otherwise modified from time to time.
"COMMITMENT" means, relative to any Lender, such Lender's
obligation to make Revolving Loans pursuant to Section 2.1.1.
"COMMITMENT AMOUNT" means an amount equal to (a) during the period
beginning on the Effective Date and ending on March 31, 1995, $70,000,000, as
such amount may be reduced from time to time pursuant to Section 2.2, and (b)
during the period beginning April 1, 1995 and ending on the Commitment
Termination Date, the Commitment Amount in effect on March 31, 1995 plus the
Excess Commitment Amount, as such amount may be reduced from time to time,
pursuant to Section 2.2.
"COMMITMENT TERMINATION DATE" means the earliest of
(a) the Conversion Date
(b) the date on which the Commitment Amount is
terminated in full or reduced to zero pursuant to Section 2.2; and
(c) the date on which any Commitment Termination Event
occurs.
Upon the occurrence of any event described in clause (b) or (c), the
Commitments shall terminate automatically and without any further action.
<PAGE> 12
7
"COMMITMENT TERMINATION EVENT" means
(a) the occurrence of any Default described in
clauses (a) through (d) of Section 8.1.8 with respect to the
Borrower or any Subsidiary of the Borrower; or
(b) the occurrence and continuance of any other Event of
Default and either:
(i) the declaration of the Loans to be due and
payable pursuant to Section 8.3; or
(ii) in the absence of such declaration, the
giving of notice by the Agent, acting at the direction of
the Required Lenders, to the Borrower that the Commitments
have been terminated.
"COMMUNICATIONS ACT" means the Communications Act of 1934 and the
rules and regulations issued thereunder, as amended, reformed or otherwise
modified from time to time.
"COMPLIANCE CERTIFICATE" means a certificate duly executed by an
Authorized Officer, substantially in the form of Exhibit J hereto.
"CONTINGENT LIABILITY" means any agreement, undertaking or arrangement
by which any Person guarantees, endorses or otherwise becomes or is
contingently liable upon (by direct or indirect agreement, contingent or
otherwise, to provide funds for payment, to supply funds to, or otherwise to
invest in, a debtor, or otherwise to assure a creditor against loss) any
indebtedness, obligation or other liability of any other Person (other
than by endorsements of instruments in the course of collection), or
guarantees the payment of dividends or other distributions upon the
securities or other equity interests of any other Person. The amount of any
Person's obligation under any Contingent Liability shall (subject to any
limitation set forth therein) be deemed to be the outstanding principal
amount (or maximum principal amount, if larger) of the debt, obligation or
other liability guaranteed thereby.
"CONTINUATION\CONVERSION NOTICE" means a notice and certificate
duly executed by an Authorized Officer, substantially in the form of Exhibit
C hereto.
"CONTROLLED GROUP" means all members of a controlled group of
corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control which, together with the
Borrower, are treated as a single employer under Section 414(b) or 414(c) of
the Code or Section 4001 of ERISA.
"CONVERSION DATE" means January 1, 1997.
"CONVERSION DATE AMOUNT" is defined in Section 3.1.
"DEBT SERVICE RATIO" means, at any time, the ratio, computed on a
consolidated basis, of:
(a) Annualized Cash Flow; to
<PAGE> 13
8
(b) the sum for the twelve calendar month period
ending on the last day of the immediately preceding Fiscal Quarter
of
(i) all scheduled payments of principal of
Indebtedness of the Borrower and its Subsidiaries
whether or not paid; plus
(ii) Interest Expense.
"DEFAULT" means any Event of Default or any condition, occurrence or
event which, after notice or lapse of time or both, would constitute an Event
of Default.
"DISCLOSURE SCHEDULE" means the Disclosure Schedule attached
hereto as Schedule I, as it may be amended, supplemented or otherwise
modified from time to time by the Borrower with the written consent of the
Agent.
"DOLLAR" and the sign "$" mean lawful money of the United States.
"DOMESTIC OFFICE" means, relative to any Lender, the office of
such Lender designated as such below its signature hereto or, if
applicable, designated in such Lender's Lender Assignment Agreement, or such
other office of a Lender (or any successor or assign of such Lender) within
the United States as may be designated from time to time by notice from such
Lender, as the case may be, to the Borrower and the Agent. A Lender may have
separate Domestic Offices for purposes of making, maintaining or continuing, as
the case may be, Base Rate Loans and CD Rate Loans.
"EFFECTIVE DATE" means the date this Agreement becomes effective
pursuant to Section 10.8.
"ENVIRONMENTAL LAWS" means all applicable federal, state or local
statutes, laws, ordinances, codes, rules, regulations and guidelines
(including consent decrees and administrative orders) relating to the
protection of the environment.
"ERISA" means the Employee Retirement Income Security Act of
1974, and the rules and regulations issued thereunder, as amended, reformed
or otherwise modified from time to time. References to sections of ERISA also
refer to any successor sections.
"EVENT OF DEFAULT" as defined in Section 8.1.
"EXCESS CASH FLOW" means, for any period, an amount (if positive)
equal to (a) Cash Flow for such period less (b) cash payments for all taxes
paid by the Borrower during such period, less (c) Capital Expenditures made
during such period, less (d) scheduled payments of principal of Indebtedness
during such period, less (e) all Interest Expense paid during such period,
less (f) any General Partner Advances repaid by the Borrower in cash during
such period and which are permitted under the terms of this Agreement.
"EXCESS COMMITMENT AMOUNT" means an amount equal to $10,000,000.
"EXISTING CREDIT AGREEMENT" is defined in the first recital.
<PAGE> 14
9
"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 CATV or SMATV systems, community antenna relay systems,
microwave systems, earth stations and business and other two-way radios.
"FEDERAL FUNDS RATE" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to:
(a) the weighted average of the rates on overnight
federal funds transactions with members of the Federal Reserve System
arranged by federal funds brokers, as published for such day (or, if
such day is not a Business Day, for the immediately preceding Business
Day) by the Federal Reserve Bank of New York; or
(b) if such rate is not so published for any day
which is a Business Day, the average of the quotations for such
day on such transactions received by the Agent from three
federal funds brokers of recognized standing selected by it.
"FEE LETTER" means that certain confidential fee letter, dated of
even date herewith from Shawmut to the Borrower relating to the payment of
fees in connection with this Agreement.
"FISCAL QUARTER" means any quarter of a Fiscal Year.
"FISCAL YEAR" means any period of twelve consecutive calendar
months ending on December 31; references to a Fiscal Year with a number
corresponding to any calendar year (e.g., the "1994 Fiscal Year") refer to
the Fiscal Year ending on the December 31 occurring during such calendar year.
"FIXED CHARGE COVERAGE RATIO" means, at any time of determination, the
ratio, computed on a consolidated basis of:
(a) the sum of:
(i) cash on the consolidated balance sheet of
the Borrower at the beginning of the immediately preceding
Fiscal Quarter; plus
(ii) Annualized Cash Flow; to
(b) the sum for the twelve calendar month period
ending on the last day of the immediately preceding Fiscal
Quarter of:
(i) Interest Expense; plus
(ii) all scheduled payments of principal of
Indebtedness of the Borrower and its Subsidiaries
whether or not paid; plus
<PAGE> 15
10
(iii) Capital Expenditures; plus
(iv) all state, local and federal income taxes
paid or payable in cash.
"FIXED RATE LOAN" means any CD Rate Loan or any LIBO Rate Loan.
"FRANCHISE" means any franchise, permit, license or other
authorization granted by any Official Body, including all laws, regulations
and ordinances relating thereto, for the construction, operation and
maintenance of a CATV or SMATV system and the reception and transmission of
signals by microwave, and shall include, without limitation, all FCC Licenses
and all certificates of compliance and cable television registration
statements which are required to be issued by or filed with the FCC.
"FRANCHISE AGREEMENT" 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.
"F.R.S. BOARD" means the Board of Governors of the Federal Reserve
System or any successor thereto.
"GAAP" is defined in Section 1.4.
"GENERAL PARTNER" means Jones Intercable until such time as Jones
Intercable is replaced in accordance with the terms of this Agreement by
another Person as the general partner of the Borrower, at which time, "General
Partner" shall mean such other Person. Whenever the term "General Partner" is
used herein, such term shall mean any such Person in its capacity as the
general partner of the Borrower.
"GENERAL PARTNER ADVANCES" means (i) all amounts representing
deferred Management Fees and deferred Allocated Overhead, (ii) all amounts
representing the Borrower's obligation to repay cash advances or loans made
to the Borrower or any of its Subsidiaries by the General Partner or any
previous general partner of the Borrower actually used and accounted for by
the Borrower for the purpose of paying the Borrower's Indebtedness,
Capital Expenditures or other obligations, (iii) reimbursements to the
General Partner for documented expenses incurred by the General Partner for the
account of the Borrower on a month-to-month basis in the ordinary course of
Borrower's business and consistent with past practices (and not for borrowed
money), and (iv) any interest accrued on any of the foregoing amounts.
"HAZARDOUS MATERIAL" means
(a) any "hazardous substance", as defined by CERCLA;
(b) any "hazardous waste", as defined by the Resource
Conservation and Recovery Act, as amended;
(c) any petroleum product; or
<PAGE> 16
11
(d) any pollutant or contaminant or hazardous, dangerous
or toxic chemical, material or substance within the meaning of any
other applicable federal, state or local law, regulation, ordinance
or requirement (including consent decrees and administrative orders)
relating to or imposing liability or standards of conduct concerning
any hazardous, toxic or dangerous waste, substance or material, all as
amended or hereafter amended.
"HEAD END" means the antenna site, the tower and the antenna, the
microwave communications equipment, the earth station and the head end
facilities, equipment, leaseholds or other real estate and leasehold
improvements relating thereto.
"HEDGING OBLIGATIONS" means, with respect to any Person, all
liabilities of such Person under interest rate swap, interest rate cap, and
interest rate collar agreements, and all other agreements or arrangements
designed to protect such Person against fluctuations in interest rates or
currency exchange rates.
"HEREIN", "HEREOF", "HERETO", "HEREUNDER" and similar terms
contained in this Agreement or any other Loan Document refer to this
Agreement or such other Loan Document, as the case may be, as a whole and not
to any particular Section, paragraph or provision of this Agreement or such
other Loan Document.
"HOMES PASSED" means the actual number of residential dwellings
which can be connected to a Cable 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 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 by (b) the applicable Basic Subscriber 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.
"IMPERMISSIBLE QUALIFICATION" means, relative to the opinion or
certification of any independent public accountant as to any financial
statement of the Borrower, any qualification or exception to such
opinion or certification:
(a) which is of a "going concern" or similar nature;
(b) which relates to the limited scope of examination
of matters relevant to such financial statement; or
(c) which relates to the treatment or classification of
any item in such financial statement and which, as a condition to
its removal, would require an adjustment to such
<PAGE> 17
12
item the effect of which would be to cause the Borrower to be in
default of any of its obligations under Section 7.2.4.
"INCLUDING" means including without limiting the generality of any
description preceding such term, and, for purposes of this Agreement and each
other Loan Document, the parties hereto agree that the rule of ejusdem generis
shall not be applicable to limit a general statement, which is followed by or
referable to an enumeration of specific matters, to matters similar to the
matters specifically mentioned.
"INDEBTEDNESS" of any Person means, without duplication:
(a) all obligations of such Person for borrowed money
and all obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments;
(b) all obligations, contingent or otherwise, relative
to the face amount of all letters of credit, whether or not drawn,
and banker's acceptances issued for the account of such Person;
(c) all obligations of such Person as lessee under
leases which have been or should be, in accordance with GAAP,
recorded as Capitalized Lease Liabilities;
(d) all Contingent Liabilities of such Person;
(e) net liabilities of such Person under all Hedging
Obligations;
(f) whether or not so included as liabilities in
accordance with GAAP, all obligations of such Person to pay the
deferred purchase price of property or services, and indebtedness
(excluding prepaid interest thereon) secured by a Lien on property
owned or being purchased by such Person (including indebtedness
arising under conditional sales or other title retention
agreements), whether or not such indebtedness shall have been assumed
by such Person or is limited in recourse; and
(g) all other items which, in accordance with GAAP,
would be included as liabilities on the liability side of the
balance sheet of such Person (including any footnotes thereto) as
of the date at which Indebtedness is to be determined.
"INDEMNIFIED LIABILITIES" is defined in Section 10.4.
"INDEMNIFIED PARTIES" is defined in Section 10.4.
"INTEREST COVERAGE RATIO" means, at any time of determination, the
ratio, computed on a consolidated basis, of:
(a) Cash Flow for the immediately preceding Fiscal
Quarter; to
(b) Interest Expense for such Fiscal Quarter.
"INTEREST EXPENSE" means, for any period, the interest expense of
the Borrower for such period, including, (whether or not includable under
GAAP) all net amounts payable with respect
<PAGE> 18
13
to Hedging Obligations, commitment fees owed with respect to the Commitments
and the portion of any Capitalized Lease Liabilities of the Borrower
allocable to interest expense, in each case paid or payable during such period.
"INTEREST PERIOD" means, relative to any Fixed Rate Loan, the period
beginning on (and including) the date on which such Fixed Rate Loan is made or
continued as, or converted into, a Fixed Rate Loan pursuant to Section 2.3 or
2.4 and ending on (but excluding) the day which is, in the case of a CD
Rate Loan, 30, 60, 90, 180 or, if the Agent determines that a 360 day rate
is available, 360 days thereafter, or which, in the case of a LIBO Rate Loan,
numerically corresponds to such date one, two, three, six or, if the Agent
determines that a twelve month rate is available, twelve months thereafter (or,
if such month has no numerically corresponding day, on the last Business Day
of such month), in each case as the Borrower may select in its relevant notice
pursuant to Section 2.3 or 2.4; provided, however, that
(a) the Borrower shall not be permitted to select
Interest Periods to be in effect at any one time which have expiration
dates occurring on more than six different dates;
(b) Interest Periods commencing on the same date for
Loans comprising part of the same Borrowing shall be of the same
duration;
(c) if any Interest Period would otherwise end on a day
which is not a Business Day, such Interest Period shall end on the
next following Business Day (unless, if such Interest Period applies
to LIBO Rate Loans, such next following Business Day is the
first Business Day of a calendar month, in which case such
Interest Period shall end on the Business Day immediately preceding
such numerically corresponding day); and
(d) no Interest Period may end later than the Stated
Maturity Date.
"INVESTMENT" means relative to any Person,
(a) any loan or advance made by such Person to any
other Person (excluding (i) commission, travel and similar advances to
officers and employees made in the ordinary course of business and
(ii) trade credit made available to or loans or advances made to
subcontractors or suppliers on customary terms and in the ordinary
course of the Borrower's business);
(b) any Contingent Liability of such Person; and
(c) any ownership or similar interest held by such Person
in any other Person.
The amount of any Investment shall be the original principal or capital amount
thereof less all returns of principal or equity thereon (and without
adjustment by reason of the financial condition of such other Person) and
shall, if made by the transfer or exchange of property other than cash, be
deemed to have been made in an original principal or capital amount equal to
the fair market value of such property.
"JONES INTERCABLE" means Jones Intercable, Inc., a Colorado
corporation.
<PAGE> 19
14
"LENDER ASSIGNMENT AGREEMENT" means a Lender Assignment Agreement
substantially in the form of Exhibit D hereto.
"LENDERS" is defined in the preamble.
"LEVERAGE RATIO" means, at any time of determination, the ratio,
computed on a consolidated basis, of:
(a) Total Debt at such time; to
(b) Annualized Cash Flow.
"LIBO RATE" is defined in Section 3.3.1.
"LIBO RATE LOAN" means a Loan beating interest at all times during an
Interest Period applicable to such Loan, at a rate of interest determined by
reference to the LIBO Rate (Reserve Adjusted).
"LIBO RATE (RESERVE ADJUSTED)" is defined in Section 3.3.1.
"LIBOR OFFICE" means, relative to any Lender, the office of such
Lender designated as such below its signature hereto or, if applicable,
designated in such Lender's Lender Assignment Agreement or such other office
of a Lender (or any successor or assign of such Lender) as designated from
time to time by notice from such Lender to the Borrower and the Agent,
whether or not outside the United States, which shall be making or maintaining
LIBO Rate Loans of such Lender hereunder.
"LIBOR RESERVE PERCENTAGE" is defined in Section 3.3.1.
"LIEN" means any security interest, mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien
(statutory or otherwise), charge against or interest in property to secure
payment of a debt or performance of an obligation or other priority or
preferential arrangement of any kind or nature whatsoever.
"LOAN" means, as the context may require, either a Revolving Loan or a
Term Loan of any type.
"LOAN DOCUMENT" means this Agreement, the Notes, the Security
Agreement, the Subordination Agreement, the Mortgage, the Fee Letter, each
agreement evidencing Hedging Obligations of the Borrower, and each other
agreement, document or instrument delivered in connection with this Agreement.
"MANAGEMENT FEES" means, for any period, the management fees payable
by the Borrower to the General Partner during such period for management
services provided to the Borrower pursuant to the Partnership Agreement.
"MATERIAL ACQUISITION" means a purchase by the Borrower of all or
substantially all of the assets constituting a CATV and SMATV system or all or
substantially all of the assets of another Person, or the acquisition by the
Borrower of another Person through merger, if, in any
<PAGE> 20
15
case, the total consideration to be paid by the Borrower in respect thereof
(x) exceeds $500,000, or (y) when added together with the total
consideration paid by the Borrower in respect of all other similar
transactions during the term of this Agreement, exceeds $2,000,000 in the
aggregate.
"MATERIAL AGREEMENT" is defined in Section 8.1.12.
"MATERIAL DISPOSITION" means a sale, transfer, lease or any other type
of disposition by the Borrower of all or a portion of the assets constituting
a Cable System or all or a portion of any other of its assets or properties
(or rights with respect thereto) if the aggregate fair market value of such
Cable System, assets or properties (x) exceeds $500,000 or (y) when added
together with the aggregate fair market value of all other Cable
Systems, assets or properties disposed of by the Borrower in similar
transactions during the term of this Agreement, exceeds $2,000,000 in the
aggregate.
"NON-EXCLUDED TAXES" is defined in Section 4.6.
"NOTE" means a promissory note of the Borrower payable to the order
of any Lender, in the form of Exhibit A hereto (as such promissory note may
be amended, endorsed or otherwise modified from time to time), evidencing (i)
prior to the Conversion Date, the aggregate Indebtedness of the Borrower to
such Lender resulting from outstanding Revolving Loans, and (ii) on and after
the Conversion Date, the principal amount of such Lender's Term Loan, and
also means all other promissory notes accepted from time to time in
substitution therefor or renewal thereof.
"OBLIGATIONS" means all obligations (monetary or otherwise) of the
Borrower arising under or in connection with this Agreement, the Notes and each
other Loan Document.
"OFFICIAL BODY" means any Federal, state or local government or
political subdivision or any agency, authority, bureau, central bank
commission, department or instrumentality of either, or any court,
tribunal, grand jury or arbitrator, in each case whether foreign or domestic.
"ORGANIC DOCUMENT" means, relative to any Person, as applicable,
its certificate of incorporation and its by-laws or its certificate of
partnership and partnership agreement, and all shareholder agreements, voting
trusts and similar arrangements applicable to any of its authorized shares of
capital stock or partnership interests, as the case may be.
"PARTICIPANT" is defined in Section 10.11.2.
"PARTNERSHIP AGREEMENT" means the Limited Partnership Agreement of the
Borrower, dated as of February 9, 1989 (as the same may be amended, restated
or otherwise modified from time to time).
"PAY TO BASIC RATIO" means, at any time, a percentage derived from
a fraction, the numerator of which is the number of Pay Units at such time,
and the denominator of which is the number of Basic Subscribers at such time.
"PAY UNIT" means a cable programming service subscribed to by any
subscriber of a Cable System at an additional charge in excess of the amount
paid by any such subscriber for
<PAGE> 21
16
basic or expanded basic service, which subscription is not more than 60 days
past due. The number of Pay Units in the case of subscribers receiving a
reduced bulk 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 standard rate for the pay programming services
received.
"PENSION PLAN" means a "pension plan", as such term is defined in
Section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a
multi-employer plan as defined in Section 4001 (a) (3) of ERISA), and to
which the Borrower or any corporation, trade or business that is, along with
the Borrower, a member of a Controlled Group, may have liability, including
any liability by reason of having been a substantial employer within the
meaning of Section 4063 of ERISA at any time during the preceding five years,
or by reason of being deemed to be a contributing sponsor under Section 4069
of ERISA.
"PERCENTAGE" means, relative to any Lender, the percentage set
forth opposite its signature hereto or, if applicable, set forth in such
Lender's Lender Assignment Agreement, as such percentage may be adjusted from
time to time pursuant to Lender Assignment Agreement(s) executed by such
Lender and its Assignee Lender(s) and delivered pursuant to Section 10.11.1.
"PERSON" means any natural person, corporation, partnership, firm,
association, trust, government, governmental agency or any other entity,
whether acting in an individual, fiduciary or other capacity.
"PLAN" means any Pension Plan or Welfare Plan.
"POLE AGREEMENT" means any conduit occupancy rights, pole agreement,
pole rental, pole use, access or similar agreement with any telephone
company, public authority, public utility or other entity pursuant to which
the coaxial, fiber optic or other type of sale and local distribution units of
a cable television system are extended.
"QUARTERLY PAYMENT DATE" means the last day of each March, June,
September, and December or, if any such day is not a Business Day, the next
succeeding Business Day.
"RELEASE" means a "RELEASE", as such term is defined in CERCLA.
"REQUIRED LENDERS" means, at any time, Lenders holding at least 66 and
2/3% of the then aggregate outstanding principal amount of the Notes then
held by the Lenders, or, if no such principal amount is then outstanding,
Lenders having at least 66 and 2/3% of the Commitments.
"RESOURCE CONSERVATION AND RECOVERY ACT" means the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., and the
rules and regulations issued thereunder, as amended, reformed or otherwise
modified from time to time.
"REVOLVING LOAN" is defined in Section 2.1.1.
"SECURITY AGREEMENT" means the Security Agreement executed and
delivered pursuant to Section 5.1.4, substantially in the form of Exhibit E
hereto (as the same may be amended, restated or otherwise modified from time
to time).
<PAGE> 22
17
"SHAWMUT" is defined in the Preamble.
"SMATV" means satellite master antenna television.
"SOUTH SUBURBAN CABLE SYSTEM" means the Cable System owned by the
Borrower and located in and around the communities listed on the Cable
Schedule under the caption "South Suburban, Illinois System."
"STATED MATURITY DATE" means December 31, 2002.
"SUBORDINATION AGREEMENT" means the Subordination Agreement executed
and delivered pursuant to Section 5.1.5, substantially in the form of Exhibit
F hereto (as the same may be amended, restated or otherwise modified from
time to time.
"SUBSIDIARY" means any corporation, association, trust, or other
business entity of which the designated parent shall at any time own directly
or indirectly through a Subsidiary or Subsidiaries at least a majority (by
number of votes) of the outstanding Voting Stock.
"TAXES" is defined in Section 4.6.
"TAX TRANSFEREE" is defined in Section 4.6.
"TERM LOAN" is defined in Section 3.1.
"TOTAL DEBT" means all Indebtedness of the Borrower other than
Indebtedness of the type described in clauses (e) and (h) of Section 7.2.2.
"TRADE NAME CERTIFICATE" means a certificate of assumed or trade name
with respect to the Borrower filed with the Department of Revenue of the State
of Colorado.
"TYPE" means, relative to any Loan, the portion thereof, if any,
being maintained as a Base Rate Loan, a CD Rate Loan or a LIBO Rate Loan.
"UNITED STATES" or "U.S." means the United States of America, its fifty
states and the District of Columbia.
"VOTING STOCK" means stock or similar interests, of any class or
classes (however designated), the holders of which are at the time entitled,
as such holders, to vote for the election of a majority of the directors
(or persons performing similar functions) of the corporation, association,
trust or other business entity involved, whether or not the right so to vote
exists by reason of the happening of a contingency.
"WELFARE PLAN" means a "welfare plan", as such term is defined in
Section 3(1) of ERISA.
SECTION 1.2. Use of Defined Terms. Unless otherwise defined or
the context otherwise requires, terms for which meanings are provided in this
Agreement shall have such meanings when used in the Disclosure Schedule and in
each Note, Borrowing Request,
<PAGE> 23
18
Continuation/Conversion Notice, Loan Document, notice and other communication
delivered from time to time in connection with this Agreement or any other Loan
Document.
SECTION 1.3. Cross-References. Unless otherwise specified,
references in this Agreement and in each other Loan Document to any Article or
Section are references to such Article or Section of this Agreement or such
other Loan Document, as the case may be, and, unless otherwise specified,
references in any Article, Section or definition to any clause are references
to such clause of such Article, Section or definition.
SECTION 1.4. Accounting and Financial Determinations. Unless
otherwise specified, all accounting terms used herein or in any other Loan
Document shall be interpreted, all accounting determinations and computations
hereunder or thereunder (including under Section 7.2.4) shall be made,
and all financial statements required to be delivered hereunder or
thereunder shall be prepared in accordance with, those generally accepted
accounting principles (" GAAP) applied in the preparation of the financial
statements referred to in Section 6.5.
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES AND NOTES
SECTION 2.1. Commitments. On the terms and subject to the
conditions of this Agreement, each Lender severally agrees to make Loans
pursuant to the Commitment described in this Section 2.1.
SECTION 2.1.1. Revolving Loan Commitment. From time to
time on any Business Day occurring prior to the Commitment Termination Date,
each Lender will make loans (relative to such Lender, its "Revolving Loans")
to the Borrower equal to such Lender's Percentage of the aggregate amount of
the Borrowing of Revolving Loans requested by the Borrower to be made on such
day. The Commitment of each Lender described in this Section 2.1.1 is herein
referred to as its "Commitment." On the terms and subject to the conditions
hereof, the Borrower may, from time to time, prior to the Commitment
Termination Date borrow, repay and reborrow the Revolving Loans.
SECTION 2.1.2. Lenders Not Permitted or Required to
Make Revolving Loans. No Lender shall be permitted or required to make any
Revolving Loan if, after giving effect thereto, the aggregate outstanding
principal amount of all Revolving Loans:
(i) of all the Lenders would exceed the
Commitment Amount; or
(ii) of such Lender would exceed such Lender's
Percentage of the Commitment Amount.
SECTION 2.2. Reduction of Commitment Amount. The Borrower may,
from time to time, on any Business Day occurring after the Effective Date,
voluntarily reduce the Commitment Amount; provided, however, that all
such reductions shall require at least three Business Days' prior notice to
the Agent and shall be permanent, and any partial reduction of the Commitment
Amount shall be in a minimum amount of $500,000 and in an integral multiple of
$100,000.
<PAGE> 24
19
SECTION 2.3. Borrowing Procedure. By delivering a Borrowing
Request to the Agent on or before 12:00 noon, Hartford, Connecticut time, on
a Business Day, the Borrower may from time to time irrevocably request, in
the case of Fixed Rate Loans, on not less than three nor more than five
Business Days' notice, or, in the case of Base Rate Loans, on not less than
one nor more than five Business Days' notice, that a Borrowing be made in a
minimum amount of $500,000 and an integral multiple of $100,000, or in the
unused amount of the then applicable Commitment Amount. Upon receipt of a
Borrowing Request, the Agent shall promptly notify the other Lenders on
the same day of the Borrowing requested thereby. On the terms and subject to
the conditions of this Agreement, each Borrowing shall be comprised of the
type of Loans, and shall be made on the Business Day, specified in such
Borrowing Request. On or before 2:00 p.m., Hartford, Connecticut time, on
such Business Day, each Lender shall deposit with the Agent same day funds
in an amount equal to such Lender's Percentage of the requested Borrowing.
Such deposit will be made to an account which the Agent shall specify from
time to time by notice to the Lenders. To the extent funds are received from
the Lenders, the Agent shall make such funds available to the Borrower by
wire transfer to the accounts the Borrower shall have specified in its
Borrowing Request. No Lender's obligation to make any Loan shall be affected
by any other Lender's failure to make any Loan.
SECTION 2.4. Continuation and Conversion Elections. By
delivering a Continuation/Conversion Notice to the Agent on or before 12:00
noon, Hartford, Connecticut time, on a Business Day, the Borrower may from
time to time irrevocably elect, on not less than three nor more than five
Business Days' notice, that all, or any portion in an aggregate minimum
amount of $500,000 and an integral multiple of $100,000, of any Loans be,
in the case of Base Rate Loans, converted into Fixed Rate Loans of either
type or, in the case of Fixed Rate Loans of either type, be converted into a
Base Rate Loan or a Fixed Rate Loan of the other type or continued as a
Fixed Rate Loan of such type (in the absence of delivery of a
Continuation/Conversion Notice with respect to any Fixed Rate Loan at least
three Business Days before the last day of the then current Interest Period
with respect thereto, such Fixed Rate Loan shall, on such last day,
automatically convert into a Base Rate Loan); provided, however, that (x)
each such conversion or continuation shall be pro rated among the
applicable outstanding Loans of all Lenders, and (y) no portion of the
outstanding principal amount of any Loans may be continued as, or be converted
into, Fixed Rate Loans when any Default has occurred and is continuing. Upon
receipt of a Continuation/Conversion Notice, the Agent shall promptly notify
the other Lenders on the same day of the continuation or conversion requested
thereby.
SECTION 2.5. Funding. Each Lender may, if it so elects, fulfill
its obligation to make, continue or convert Fixed Rate Loans hereunder by
causing one of its foreign branches or Affiliates (or an international
banking facility created by such Lender) to make or maintain such Fixed Rate
Loan; provided, however, that such Fixed Rate Loan shall nonetheless be
deemed to have been made and to be held by such Lender, and the obligation of
the Borrower to repay such Fixed Rate Loan shall nevertheless be to such
Lender for the account of such foreign branch, Affiliate or international
banking facility. In addition, the Borrower hereby consents and agrees that,
for purposes of any determination to be made under Section 4.1, 4.2, 4.3 or
4.4, it shall be conclusively assumed that each Lender elected to fund all
Fixed Rate Loans by purchasing, as the case may be, Dollar certificates of
deposit in the U.S. or Dollar deposits in its LIBOR Office's interbank
eurodollar market.
SECTION 2.6. Notes. Each Lender's Loans shall be evidenced by a
Note payable to the order of such Lender in a maximum principal amount equal
to such Lender's Percentage
<PAGE> 25
20
of the original applicable Commitment Amount. The Borrower hereby irrevocably
authorizes each Lender to make (or cause to be made) appropriate notations on
the grid attached to such Lender's Note (or on any continuation of such
grid), which notations, if made, shall evidence, inter alia, the date of, the
outstanding principal of, and the interest rate and Interest Period
applicable to, the Loans evidenced thereby. Such notations shall be
conclusive and binding on the Borrower absent manifest error; provided,
however, that the failure of any Lender to make any such notations shall not
limit or otherwise affect any Obligations of the Borrower.
ARTICLE III
CONVERSION, REPAYMENTS, PREPAYMENTS,
INTEREST AND FEES
SECTION 3.1. Conversion, Repayments and Prepayments. On the
Conversion Date, the aggregate outstanding principal amount of each Lender's
Revolving Loans (with respect to each Lender, the "Conversion Date Amount")
shall automatically convert into a term loan (with respect to each Lender,
its "Term Loan"). Thereafter, the Borrower shall repay the outstanding
principal amount of each Lender's Term Loan in successive quarterly
installments on each Quarterly Payment Date beginning with March 31, 1997 and
ending on the Stated Maturity Date. The amount of each installment in each
calendar year shall be equal, and the aggregate principal amount of all
installments made in each calendar year shall be equal to an amount that,
when subtracted from the Conversion Date Amount of each Lender's Term Loan,
shall result in the Conversion Date Amount at the end of such calendar year
being reduced by a percentage at least equal to the percentage set forth
below opposite such year:
<TABLE>
<CAPTION>
Percentage (%) of Conversion Date Amount
Calendar Year to be Repaid at End of Calendar Year
<S> <C>
1997 7.50%
1998 10.00%
1999 12.50%
2000 17.50%
2001 22.50%
2002 30.00%
</TABLE>
The remaining unpaid principal amount of all Term Loans shall be
repaid by the Borrower on the Stated Maturity Date.
Prior to the Stated Maturity Date, the Borrower:
(a) may, from time to time on any Business Day, make a
voluntary prepayment, in whole or in part, of the outstanding
principal amount of any Term Loans; provided, however, that:
(i) any such prepayment shall be made pro
rata among Loans of the same type and, if applicable,
having the same Interest Period of all Lenders;
<PAGE> 26
21
(ii) no such prepayment of any Fixed Rate Loan
may be made on any day other than the last day of the
Interest Period for such Loan unless the Borrower shall have
paid directly to any Lender any amounts required under Section
4.4;
(iii) all such voluntary prepayments shall
require at least three but no more than five Business Days'
prior notice to the Agent in the case of Fixed Rate Loans,
and at least one but no more than five Business Days' prior
notice to the Agent in the case of Base Rate Loans; and
(iv) all such voluntary partial prepayments
shall be in an aggregate minimum amount of $500,000 and an
integral multiple of $100,000.
(b) shall, on each date when any reduction in the
Commitment Amount shall become effective, including pursuant to
Section 2.2, make a mandatory prepayment of all Revolving Loans equal
to the excess, if any, of the aggregate outstanding principal
amount of all Revolving Loans over the Commitment Amount as so
reduced; and
(c) shall, immediately upon any acceleration of the
Stated Maturity Date of any Loans pursuant to Section 8.2 or Section
8.3, repay all Loans, unless, pursuant to Section 8.3, only a portion
of all Loans is so accelerated.
Each voluntary prepayment of Term Loans made pursuant to clause (a) shall be
applied, to the extent of such prepayment, in the inverse order of the
scheduled repayments of Term Loans set forth in this Section 3.1. Each
prepayment of any Term Loans made pursuant to this Section shall be (i)
without premium or penalty and (ii) made together with any amounts required to
be paid under Section 4.4. No voluntary prepayment of principal of any
Revolving Loans shall cause a reduction in the Commitment Amount.
SECTION 3.2. Excess Cash Flow Recapture. In addition to
any and all scheduled repayments of the Term Loans as set forth in Section
3.1 above, the Borrower shall, within one hundred twenty (120) days after the
end of each Fiscal Year of the Borrower, commencing with the end of the 1996
Fiscal Year, pay to the Agent an amount equal to seventy-five percent (75%)
of Excess Cash Flow of the Borrower for the immediately preceding Fiscal
Year. Such prepayments of Excess Cash Flow shall be applied to the payment of
installments of the outstanding principal amount of each Lender's Term Loans
(including, without limitation, the installment due and payable on the Stated
Maturity Date) due and payable hereunder in inverse order of maturity.
SECTION 3.3. Interest Provisions. Interest on the
outstanding principal amount of Loans shall accrue and be payable in
accordance with this Section 3.3.
SECTION 3.3.1. Rates. Pursuant to an
appropriately delivered Borrowing Request or Continuation/Conversion
Notice, the Borrower may elect that Loans comprising a Borrowing accrue
interest at a rate per annum:
(a) on that portion maintained from time to time
as a Base Rate Loan, equal to the sum of the Alternate Base
Rate from time to time in effect plus the Applicable Margin;
<PAGE> 27
22
(b) on that portion maintained as a CD Rate
Loan, during each Interest Period applicable thereto, equal
to the sum of the CD Rate (Reserve Adjusted) for such
Interest Period plus the Applicable Margin; and
(c) on that portion maintained as a LIBO Rate
Loan, during each Interest Period applicable thereto, equal
to the sum of the LIBO Rate (Reserve Adjusted) for such
Interest Period plus the Applicable Margin.
The Applicable Margin for each type of Loan shall change automatically on the
date a Compliance Certificate is delivered in accordance with Section 7.1.1 (b)
and (c) indicating a change in the then existing Leverage Ratio mandating a
change in such margins; provided, however, that if such Compliance
Certificate is not delivered within the time required by such Section, such
change in such margins shall, upon ultimate delivery of such Compliance
Certificate, be deemed nevertheless to have been effective on and as of the
date on which such Compliance Certificate was required to be delivered
pursuant to such Section.
The "CD Rate (Reserve Adjusted)" means, relative to any Loan to
be made, continued or maintained as, or converted into, a CD Rate Loan for
any Interest Period, a rate per annum (rounded upwards, if necessary, to the
nearest 1/16 of 1%) determined pursuant to the following formula:
CDR (RA) = CDR + AR
--------------
(1.00 - CDRR)
where:
CDR (RA) = CD Rate (Reserve Adjusted)
CDR = CD Rate
CDRR = CD Reserve Requirement
AR = Assessment Rate
The CD Rate (Reserve Adjusted) for any Interest Period for CD Rate Loans will
be determined by the Agent on the basis of the CD Reserve Requirement and
Assessment Rate in effect on, and the applicable rates furnished to and
received by the Agent from Shawmut, on the first day of such Interest Period.
"CD RATE" means, relative to any Interest Period for CD Rate Loans,
the rate of Interest determined by the Agent to be the arithmetic average
(rounded upwards, if necessary, to the nearest 1/16 of 1%) of the prevailing
rates per annum bid at 10:00 a.m., New York City time (or as soon
thereafter as practicable), on the first day of such Interest Period by two
or more certificate of deposit dealers of recognized standing located in New
York City for the purchase at face value from Shawmut of its certificates of
deposit in an amount approximately equal to the CD Rate Loan being made or
maintained by Shawmut to which such Interest Period applies and having a
maturity approximately equal to such Interest Period.
The "CD Reserve Requirement" means, relative to any Interest Period
for CD Rate Loans, a percentage (expressed as a decimal) equal to the maximum
aggregate reserve requirements (including all basic, supplemental, marginal and
other reserves and taking into account any traditional adjustments or
other scheduled changes in reserve requirements), specified under regulations
issued from time to time by the F.R.S. Board and then applicable
<PAGE> 28
23
to the class of banks of which Shawmut is a member, on deposits of the type
used as a reference in determining the CD Rate and having a maturity
approximately equal to such Interest Period.
The "Assessment Rate" means, for any Interest Period for CD Rate
Loans, the net annual assessment rate (rounded upwards, if necessary, to the
next higher 1/100 of 1%) estimated by Shawmut to be the then current annual
assessment payable by Shawmut to the Federal Deposit Insurance Corporation (or
any successor) for insuring time deposits at offices of Shawmut in the United
States.
The "LIBO Rate (Reserve Adjusted)" means, relative to any Loan to
be made, continued or maintained as, or converted into, a LIBO Rate Loan
for any Interest Period, a rate per annum (rounded upwards, it necessary,
to the nearest 1/16 of 1%) determined pursuant to the following formula:
LIBO Rate = LIBO Rate
(Reserve Adjusted) -----------------------------------
1.00 - LIBOR Reserve Percentage
The LIBO Rate (Reserve Adjusted) for any Interest Period for LIBO Rate
Loans will be determined by the Agent on the basis of the LIBOR Reserve
Percentage in effect on, and the applicable rates furnished to and received
by the Agent from Shawmut, two Business Days before the first day of such
Interest Period.
"LIBO RATE" means, relative to any Interest Period for LIBO Rate
Loans, the rate of interest equal to the average (rounded upwards, if
necessary, to the nearest 1/16 of 1%) of the rates per annum at which Dollar
deposits in immediately available funds are offered to Shawmut's LIBOR Office
in the London interbank market as at or about 11:00 a.m. London time two
Business Days prior to the beginning of such Interest Period for delivery on
the first day of such Interest Period, and in an amount approximately equal
to the amount of Shawmut's LIBO Rate Loan and for a period approximately
equal to such Interest Period.
"LIBOR RESERVE PERCENTAGE" means, relative to any Interest Period for
LIBO Rate Loans, the reserve percentage (expressed as a decimal) equal to
the maximum aggregate reserve requirements (including all basic,
emergency, supplemental, marginal and other reserves and taking into
account any transitional adjustments or other scheduled changes in reserve
requirements) specified under regulations issued from time to time by the
F.R.S. Board and then applicable to assets or liabilities consisting of and
including "Eurocurrency Liabilities", as currently defined in Regulation D
of the F.R.S. Board, having a term approximately equal or comparable to such
Interest Period.
All Fixed Rate Loans shall bear interest from and including the first
day Of the applicable Interest Period to (but not including) the last day of
such Interest Period by reference to the interest rate determined as
applicable to such Fixed Rate Loans.
SECTION 3.3.2. Post-Maturity Rates. After the date any
principal amount of any Loan is due and payable (whether on the Stated
Maturity Date, in connection with any mandatory reduction of the Commitment
Amount or mandatory prepayment hereunder, upon acceleration or otherwise), or
after any other monetary Obligation of the Borrower shall have become due and
payable, the Borrower shall pay, but only to the extent not prohibited by
<PAGE> 29
24
applicable law, interest (after as well as before judgment) on such amounts at
a rate per annum equal to the Alternate Base Rate plus 2.0%.
SECTION 3.3.3. Payment Dates. Interest accrued on each
Loan shall be payable without duplication:
(a) on the Conversion Date with respect to Revolving
Loans, and on the Stated Maturity Date with respect to Term Loans;
(b) on the date of any optional or required payment
or prepayment, in whole or in part, of principal outstanding on
such Loan;
(c) with respect to Base Rate Loans, on each Quarterly
Payment Date occurring after the Effective Date;
(d) with respect to CD Rate Loans, on the last day of
each applicable Interest Period (and, if such Interest Period shall
exceed 90 days, on the 90th day of such Interest Period and each
90th day thereafter during such Interest Period);
(e) with respect to any LIBO Rate Loans, on the last day
of each applicable Interest Period (and, if such Interest Period
shall exceed 3 months, on the last calendar day of the 3rd month
of such Interest Period and the last calendar day of each subsequent
3rd month of such Interest Period thereafter);
(f) with respect to any Base Rate Loans converted into
Fixed Rate Loans on a day when interest would not otherwise have
been payable pursuant to clause (c), on the date of such conversion;
and
(g) on that portion of any Loans the Stated Maturity
Date of which is accelerated pursuant to Section 8.2 or Section 8.3
immediately upon such acceleration.
Interest accrued on Loans or other monetary Obligations arising under this
Agreement or any other Loan Document after the date such amount is due and
payable (whether on the Stated Maturity Date, in connection with any mandatory
reduction of the Commitment Amount or mandatory prepayment hereunder, upon
acceleration or otherwise) shall be payable upon demand.
SECTION 3.4. Fees. The Borrower agrees to pay the fees set forth
in this Section 3.4. All such fees shall be nonrefundable.
SECTION 3.4.1. Commitment Fee. The Borrower agrees to
pay to the Agent for the account of each Lender, for the period (including
any portion thereof when any of its Commitments are suspended by reason
of the Borrower's inability to satisfy any condition of Article V) commencing
on the Effective Date and continuing through the Commitment Termination Date,
a commitment fee at the rate of 3/8 of 1% per annum on such Lender's
Percentage of the sum of the average daily unused portion of the Commitment
Amount and 1/8 of 1% on the Excess Commitment Amount until April 1, 1995,
and thereafter at the rate of 3/8 of 1% on the average daily unused portion
of the Commitment Amount. Such commitment fees
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25
shall be payable by the Borrower in arrears on each Quarterly Payment Date,
commencing with the first such day following the Effective Date, and on the
Commitment Termination Date.
SECTION 3.4.2. Agent's Fee. The Borrower agrees to
timely pay to the Agent, for the Agent's own account, the fees provided for
in the Fee Letter.
ARTICLE IV
CERTAIN CD RATE, LIBO RATE AND OTHER PROVISIONS
SECTION 4.1. Fixed Rate Lending Unlawful. If any Lender shall
determine (which determination shall, upon notice thereof to the Borrower and
the other Lenders, be conclusive and binding on the Borrower) that the
introduction of or any change in or in the interpretation of any law makes
it unlawful, or any central bank or other governmental authority asserts that
it is unlawful, for such Lender to make, continue or maintain any Loan as, or
to convert any Loan into, a Fixed Rate Loan of a certain type, the
obligations of all Lenders to make, continue, maintain or convert into any
such Loans shall, upon such determination, forthwith be suspended until such
Lender shall notify the Agent that the circumstances causing such suspension no
longer exist, and all Fixed Rate Loans of such type shall automatically
convert into Base Rate Loans at the end of the then current Interest Periods
with respect thereto or sooner, if required by such law or assertion.
SECTION 4.2. Deposits Unavailable. If the Agent shall have
determined, or shall be informed by a Lender, that
(a) Dollar certificates of deposit or Dollar deposits,
as the case may be, in the relevant amount and for the relevant
Interest Period are not available to Shawmut or such Lender in its
relevant market; or
(b) by reason of circumstances affecting such relevant
market, adequate means do not exist for ascertaining the interest
rate applicable hereunder to Fixed Rate Loans of such type,
then, upon notice from the Agent to the Borrower and the Lenders of such
fact, the obligations of all Lenders under Sections 2.3 and Section 2.4 to
make or continue any Loans as, or to convert any Loans into, Fixed Rate
Loans of such type shall forthwith be suspended until the Agent shall
determine, or be informed, that and, in either case, shall give notice to the
Borrower and the other Lenders that, the circumstances causing such suspension
no longer exist.
SECTION 4.3. Increased Fixed Rate Loan Costs. etc. The Borrower
agrees to reimburse each Lender for any increase in the cost to such Lender
of, or any reduction in the amount of any sum, receivable by such Lender in
respect of, making, continuing or maintaining (or of its obligation to
make, continue or maintain) any Loans as, or of converting (or of its
obligation to convert) any Loans into, Fixed Rate Loans. Such Lender shall,
within ninety (90) days of its actual knowledge of such event, notify the
Agent and the Borrower in writing of the occurrence of any such event, such
notice to state, in reasonable detail, the reasons therefor and the
additional amount required fully to compensate such Lender for such
increased cost or reduced amount. Such additional amounts shall be payable
by the Borrower directly to such Lender within five days of its receipt of
such notice, and such notice shall, in the absence of manifest error, be
conclusive and binding on the Borrower.
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SECTION 4.4. Funding Losses. In the event any Lender shall incur
any loss or expense (including any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such
Lender to make, continue or maintain any portion of the principal amount
of any Loan as, or to convert any portion of the principal amount of any
Loan into, a Fixed Rate Loan) as a result of:
(a) any conversion or repayment or prepayment of the
principal amount of any Fixed Rate Loans on a date other than the
scheduled last day of the Interest Period applicable thereto, whether
pursuant to Section 3.1 or otherwise;
(b) any Loans not being made as Fixed Rate Loans
in accordance with the Borrowing Request therefor; or
(c) any Loans not being continued as, or converted
into, Fixed Rate Loans in accordance with the Continuation/Conversion
Notice therefor,
then, upon the written notice of such Lender to the Borrower (with a copy to
the Agent), the Borrower shall, within five days of its receipt thereof, pay
directly to such Lender such amount as will (in the reasonable determination
of such Lender) reimburse such Lender for such toss or expense. Such
written notice (which shall include calculations in reasonable detail)
shall, in the absence of manifest error, be conclusive and binding on the
Borrower.
SECTION 4.5. Increased Capital Costs. If any change in, or
the introduction, adoption, effectiveness, interpretation, reinterpretation
or phase-in of, any law or regulation, directive, guideline, decision or
request (whether or not having the force of law) of any court, central bank,
regulator or other governmental authority affects or would affect the amount
of capital required or expected to be maintained by any Lender or any Person
controlling such Lender, and such Lender determines (in its sole and
absolute discretion) that the rate of return on its or such controlling
Person's capital as a consequence of its Commitments or the Loans made by
such Lender is reduced to a level below that which such Lender or such
controlling Person could have achieved but for the occurrence of any
such circumstance, then, in any such case upon notice from time to time by
such Lender to the Borrower, the Borrower shall, within five (5) days after
receipt of such notice, pay directly to such Lender additional amounts
sufficient to compensate such Lender or such controlling Person for such
reduction in rate of return. A statement of such Lender as to any such
additional amount or amounts (including calculations thereof in reasonable
detail) shall, in the absence of manifest error, be conclusive and binding
on the Borrower. In determining such amount, such Lender may use any
reasonable method of averaging and attribution that it shall deem applicable.
SECTION 4.6. Taxes. All payments by the Borrower of principal of,
and interest on, the Loans and all other amounts payable hereunder shall be
made free and clear of and without deduction for any present or future
income, excise, stamp or franchise taxes and other taxes, fees, duties,
withholdings or other charges of any nature whatsoever imposed by any taxing
authority ("Taxes"), but excluding (i) Taxes imposed on any Lender's net
income (including, without limitation, any Taxes imposed on branch profits)
and franchise Taxes imposed on any Lender by the jurisdiction under the laws
of which such Lender is organized or any political subdivision thereof or by
the jurisdiction of such Lender's lending office, (ii) any Taxes that are in
effect and that would apply to a payment to such Lender as of the Effective
Date, (iii) if any Person acquires any interest in this Agreement or any Note
pursuant to the
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27
provisions hereof, including without limitation a participation (whether or
not by operation of law), or a foreign Lender changes the office in which
its 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 to
the extent that they are in effect and would apply to a payment to such Tax
Transferee as of the date of the acquisition of such interest or change in
office, as the case may be, and (iv) Taxes which are otherwise included in
any amounts otherwise payable by the Borrower pursuant to any other provision
of this Agreement (all such non-excluded Taxes being hereinafter referred to
as "Non-Excluded Taxes"). In the event that any withholding or deduction from
any payment to be made by the Borrower hereunder is required in respect of any
Non-Excluded Taxes pursuant to any applicable law, rule or regulation, then the
Borrower will:
(a) pay directly to the relevant authority the full
amount required to be so withheld or deducted;
(b) promptly forward to the Agent an official receipt
or other documentation satisfactory to the Agent evidencing such
payment to such authority; and
(c) pay to the Agent for the account of the Lenders
such additional amount or amounts as is necessary to ensure that
the net amount actually received by each Lender will equal the full
amount such Lender would have received had no such withholding or
deduction been required.
Moreover, if any Non-Excluded Taxes are directly asserted against
the Agent or any Lender with respect to any payment received by the Agent or
such Lender hereunder, the Agent or such Lender may, but is not obligated to,
pay such Non-Excluded Taxes and the Borrower will promptly pay such
additional amount (including any penalties, interest or expenses) as is
necessary in order that the net amount received by such Person after the
payment of such Non-Excluded Taxes (including any Non-Excluded Taxes on
such additional amount) shall equal the amount such Person would have
received had not such Non-Excluded Taxes been asserted. Within 30 days
after the date that any Lender or any Tax Transferee receives a refund of
any Non-Excluded Taxes for which it has been paid by the Borrower pursuant
to the indemnification provisions of this Section, such Lender or Tax
Transferee, as the case may be, shall pay to the Borrower such refund of
Non-Excluded Taxes along with any interest received with respect thereto.
If the Borrower fails to pay any Non-Excluded Taxes, when due to
the appropriate taxing authority or fails to remit to the Agent, for the
account of the respective Lenders, the required receipts or other required
documentary evidence, the Borrower shall indemnify the Lenders for any
incremental Non-Excluded Taxes, interest or penalties that may become
payable by any Lender as a result of any such failure. For purposes of
this Section 4.6. a disbursement hereunder by the Agent or any Lender to or
for the account of any Lender shall be deemed a Borrowing by the Borrower.
Upon the request of the Borrower and/or the Agent, each Lender
that is organized under the laws of a jurisdiction other than the United
States shall, prior to the due date of any payments under the Notes,
execute and deliver to the Borrower and/or the Agent on or about the first
scheduled payment date in each Fiscal Year, one or more (as the Borrower or
the Agent may reasonably request) United States Internal Revenue Service Forms
4224 or Forms 1001 or such other forms or documents (or successor forms or
documents), appropriately completed, as may
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be applicable to establish the extent, if any, to which a payment to such
Lender is exempt from withholding or deduction of Non-Excluded Taxes.
SECTION 4.7. Payments, Computations, etc. Unless otherwise
expressly provided, all payments by the Borrower pursuant to this Agreement,
the Notes or any other Loan Document shall be made by the Borrower to the
Agent for the pro rata account of the Lenders entitled to receive such
payment. All such payments required to be made to the Agent shall be made,
without setoff, deduction or counterclaim, not later than 12:00 noon,
Hartford, Connecticut time, on the date due, in same day or immediately
available funds, to such account as the Agent shall specify from time to time
by notice to the Borrower. Funds received after that time shall be
deemed to have been received by the Agent on the next succeeding Business
Day. The Agent shall promptly remit in same day funds to each Lender its
share, if any, of such payments received by the Agent for the account of
such Lender (provided, that, any such funds remitted after the date received
shall be remitted with interest accrued thereon at the Federal Funds Rate).
All interest and fees shall be computed on the basis of the actual number of
days (including the first day but excluding the last day) occurring during the
period for which such interest or fee is payable over a year comprised of 360
days (or, in the case of interest on a Base Rate Loan (other then when such
interest is calculated with respect to the Federal Funds Rate), 365 days or,
if appropriate, 366 days). Whenever any payment to be made shall otherwise
be due on a day which is not a Business Day, such payment shall (except as
otherwise required by clauses (c) or (d) of the definition of the term
"Interest Period") be made on the next succeeding Business Day and such
extension of time shall be included in computing interest and fees, if any, in
connection with such payment.
SECTION 4.8. Sharing of Payments. If any Lender shall obtain
any payment or other recovery (whether voluntary, involuntary, by application
of setoff or otherwise) on account of any Loan (other than pursuant to the
terms of Sections 4.3, 4.4, 4.5 and 4.6) in excess of its pro rata share
of payments then or therewith obtained by all Lenders, such Lender shall
purchase from the other Lenders such participations in Loans made by them
as shall be necessary to cause such purchasing Lender to share the excess
payment or other recovery ratably with each of them; provided, however, of
that if all or any portion of the excess payment or other recovery is
thereafter recovered from such purchasing Lender, the purchase shall be
rescinded and each Lender which has sold a participation to the purchasing
Lender shall repay to the purchasing Lender the purchase price to the ratable
extent of such recovery together with an amount equal to such selling Lender's
ratable share (according to the proportion of
(a) the amount of such selling Lender's required
repayment to the purchasing Lender; to
(b) total amount so recovered from the purchasing Lender)
of any interest or other amount paid or payable by the purchasing Lender in
respect of the total amount so recovered. The Borrower agrees that any
Lender so purchasing a participation from another Lender pursuant to this
Section may, to the fullest extent permitted by law, exercise all its rights
of payment (including pursuant to Section 4.9) with respect to such
participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation. If under any applicable
bankruptcy, insolvency or other similar law, any Lender receives a secured
claim in lieu of a setoff to which this Section applies, such Lender shall,
to the extent practicable, exercise its rights in respect of such secured claim
in a manner consistent
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29
with the rights of the Lenders entitled under this Section to share in the
benefits of any recovery on such secured claim.
SECTION 4.9. Setoff. Each Lender shall, upon the occurrence
of any Default described in clauses (a) through (d) of Section 8.1.8 or,
with the consent of the Required Lenders, upon the occurrence of any other
Event of Default, have the right to appropriate and apply to the payment of
the Obligations owing to it (whether or not then due), and (as security for
such Obligations) the Borrower hereby grants to each Leader a continuing
security interest in, any and all balances, credits, deposits accounts or
moneys of the Borrower then or thereafter maintained with or otherwise held
by such Lender; provided, however, that any such appropriation and
application shall be subject to the provisions of Section 4.8. Each Lender
agrees promptly to notify the Borrower and the Agent after any such setoff
and application made by such Lender; provided, however, that the failure to
give such notice shall not affect the validity of such setoff and
application. The rights of each Lender under this Section are in addition
to other rights and remedies (including other rights of setoff under
applicable law or otherwise) which such Lender may have.
ARTICLE V
CONDITIONS TO BORROWING
SECTION 5.1. Initial Borrowing. The obligations of the Lenders
to fund the initial Borrowing shall be subject to the prior or concurrent
satisfaction of each of the conditions precedent set forth in this Section 5.1.
SECTION 5.1.1. General Partner's Certificate. The
Agent shall have received from the General Partner, a certificate of the
Secretary or an Assistant Secretary of the General Partner, dated the date of
the initial Borrowing, as to:
(a) the Borrower's Organic Documents, in each case,
as in effect on the date of the initial Borrowing, copies of which
shall be attached thereto, together with (x) a certificate of good
standing for the Borrower issued by the jurisdiction in which it is
organized, and dated as of a date reasonably close to the date of the
initial Borrowing, and (y) the most recently filed Trade Name
Certificate;
(b) the General Partner's Organic Documents, in each
case, as in effect on the date of the initial Borrowing, copies of
which shall be attached thereto, together with a certificate of
good standing for the General Partner issued by the jurisdiction in
which it is organized, and dated as of a date reasonably close to the
date of the initial Borrowing;
(c) all action necessary for the execution, delivery and
performance of this Agreement, the Note, and each other Loan
Document by the General Partner, as the general partner of the
Borrower, together with copies of all resolutions to such effect
attached thereto; and
(d) the incumbency and signatures of those officers of
the General Partner authorized to act on behalf of and bind the
General Partner, in its capacity as the general
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30
partner of the Borrower, with respect to this Agreement, the Note and
each other Loan Document.
which certificate each Lender may conclusively rely upon until it shall have
received a further certificate from the General Partner canceling or amending
such prior certificates.
SECTION 5.1.2. Delivery of Notes. The Agent shall have
received each Lender's Note, in each case, duly executed and delivered by the
Borrower.
SECTION 5.1.3. Payment of Outstanding Indebtedness,
etc. All Indebtedness identified in Item 7.2.2(b) ("Indebtedness to be
Paid") of the Disclosure Schedule, together with all interest, prepayment
premiums and other amounts due and payable with respect thereto, shall have
been paid in full (including, to the extent necessary, from proceeds of the
initial Borrowing); all Liens securing payment of any such Indebtedness shall
have been released; and the Agent shall have received all Uniform Commercial
Code Form UCC-3 termination Statements or other instruments as may be
necessary or appropriate to release such Liens (including the Lien held by
NCNB in its capacity as Agent under the Existing Credit Agreement), in each
case, duly executed and completed by the holders of such Liens and in a
form suitable for filing.
SECTION 5.1.4. Security Agreement. The Agent shall
have received executed counterparts of the Security Agreement, dated as of
the date hereof, duly executed by the Borrower, together with
(a) acknowledgment copies of properly filed Uniform
Commercial Code financing statements (Form UCC-I), or such other
evidence of filing as may be acceptable to the Agent, naming the
Borrower as the debtor and the Agent as the secured party, as agent
and for the benefit of the Lenders, or other similar instruments or
documents, as may be necessary or, in the opinion of the Agent,
desirable to perfect the security interest of the Agent pursuant to
the Security Agreement.
(b) executed copies of proper Uniform Commercial Code
Form UCC-3 termination statements, if any, necessary to release all
Liens and other rights of any Person in any collateral described
the Security Agreement previously granted by any Person (other than
with respect to collateral subject to Capitalized Leases and purchase
money Liens permitted hereunder) together with such other Uniform
Commercial Code Form UCC-3 termination statements as the Agent may
reasonably request; and
(c) certified copies of Uniform Commercial Code Requests
for Information or Copies (Form UCC-11), or a similar search report
certified by a party acceptable to the Agent, dated a date
reasonably near to the date of the initial Borrowing, listing all
effective financing statements which name the Borrower (under its
present name and any previous names) as the debtor and which are
filed in the jurisdictions in which filings were made pursuant to
clause (a) above, together with copies of such financing statements
(none of which (other than those described in clause (a)) if such
Form UCC-11 or search report, as the case may be, is current enough to
list such financing statements described in clause (a)) shall cover
any collateral described in the Security Agreement or with respect
to assets subject to Capitalized Leases or purchase money Liens, in
each ease as permitted hereunder).
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SECTION 5.1.5. Subordination Agreement. The Agent shall
have received duly executed counterparts of the Subordination Agreement, dated
as of the date hereof, executed and delivered by the Borrower and Jones
Intercable.
SECTION 5.1.6. Opinions of Counsel. The Agent shall
have received opinions, dated the date of the initial Borrowing and addressed
to the Agent and all Lenders, from:
(a) Elizabeth M. Steele, general counsel to Jones
Intercable, substantially in the form of Exhibit G hereto; and
(b) McDermott, Will & Emery, local counsel to the
Borrower in the State of Illinois, substantially in the form of Exhibit
H hereto; and
(c) Dow, Lohnes & Albertson, FCC counsel to the
Borrower, substantially in the form of Exhibit I hereto.
SECTION 5.1.7. Closing Date Certificate. The Agent shall
have received a Closing Date Certificate, dated the date of the initial
borrowing, and duly executed and completed by the Borrower.
SECTION 5.1.8. Payoff Letter; Disbursement
Instructions. The Agent shall have received a payoff letter from NCNB,
indicating the amount of the loan obligations of the Borrower to NCNB to be
discharged on the Closing Date and an acknowledgment by NCNB that upon receipt
of such funds it will forthwith execute and deliver to the Agent for filing
all termination statements and take such other actions as may be necessary to
discharge all mortgages, deeds of trust and security interests granted by the
Borrower or any of its Subsidiaries in favor of NCNB.
SECTION 5.1.9. Closing Fees, Expenses.
(a) The Borrower, shall have paid to the Agent all of
the fees then due and owing under the Fee Letter;
(b) The Agent shall have received for its own account,
or for the account of each Lender, as the case may be, all fees,
costs and expenses due and payable pursuant to Sections 3.4 and 10.3,
if then invoiced.
SECTION 5.1.10. Compliance Certificate. The Agent shall
have received a Compliance Certificate, duly executed and completed by the
Borrower, with any calculations being made with respect to the debt as of
the Effective Date and any calculations being made with respect to cash
flow as of the end of the immediately preceding Fiscal Quarter.
SECTION 5.2. All Borrowings. The obligation of each Lender to
fund any Loan on the occasion of any Borrowing (including the initial
Borrowing) shall be subject to the satisfaction of each of the conditions
precedent set forth in this Section 5.2.
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SECTION 5.2.1. Compliance with Warranties, No Default,
etc. Both before and after giving effect to any Borrowing (but, if any Default
of the nature referred to in Section 8.1.5 shall have occurred with respect
to any other Indebtedness, without giving effect to the application,
directly or indirectly, of the proceeds thereof) the following statements
shall be true and correct:
(a) the representations and warranties set forth in
Article VI shall be true and correct with the same effect as if
then made (unless stated to relate solely to an earlier date,
in which case such representations and warranties shall be true and
correct as of such earlier date);
(b) except as disclosed by the Borrower to the Agent and
the Lenders pursuant to Section 6.7:
(i) no labor controversy, litigation,
arbitration or governmental investigation or proceeding
shall be pending or, to the knowledge of the Borrower,
threatened against the Borrower, any of its Subsidiaries or
the General Partner which, if adversely determined, is
reasonably likely to materially adversely affect the
Borrower's consolidated business, operations, assets,
revenue, properties or prospects (with respect to the
Borrower's ability to pay or repay the Obligations) or which
purports to affect the legality, validity or enforceability
of this Agreement, the Notes or any other Loan Document; and
(ii) no development shall have occurred in any
labor controversy, litigation, arbitration or governmental
investigation or proceeding disclosed pursuant to Section
6.7 which, if adversely determined, is reasonably likely to
materially adversely affect the Borrower's consolidated
business, operations, assets, revenues, properties or
prospects (with respect to the Borrower's ability to pay or
repay the Obligations); and
(c) no Default shall have then occurred and be
continuing, and neither the Borrower, nor any of its Subsidiaries
are in material violation of any law or governmental regulation or
court order or decree.
SECTION 5.2.2. Borrowing Request. The Agent shall
have received a Borrowing Request for such Borrowing. Each of the delivery
of a Borrowing Request and the acceptance by the Borrower or the proceeds
of such Borrowing shall constitute a representation and warranty by the
Borrower that on the date of such Borrowing (both immediately before and
after giving effect to such Borrowing and the application of the proceeds
thereof) the statements made in Section 5.2.1 are true and correct.
SECTION 5.2.3. Satisfactory Legal Form. All documents
executed or submitted pursuant hereto by or on behalf of the Borrower or any
of its Subsidiaries shall be satisfactory in form and substance to the Agent
and its counsel; the Agent and its counsel shall have received all
information, approvals, opinions, documents or instruments as the Agent or its
counsel may reasonably request.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders and the Agent to enter into this
Agreement and to make Loans hereunder, each of the Borrower and the General
Partner represents and warrants to the Agent and each Lender as set forth in
this Article VI.
SECTION 6.1. Organization, etc. (a) The Borrower is a limited
partnership duly organized and validly existing under the laws of the State
of Colorado and is duly qualified to do business in the States of Colorado
and Illinois, the only other jurisdiction(s) in which the conduct or
contemplated conduct of its business or the ownership or lease of its assets
requires such qualification (except where the failure to do so would not have
a material adverse effect on the business, operations or financial condition
of the Borrower). A Trade Name Certificate is on file in the office of the
Colorado Department of Revenue, and no other filing, recording, publishing or
other act with an Official Body is necessary or appropriate in connection with
the existence or the business of the Borrower.
(b) Each Subsidiary of the Borrower is a corporation
duly organized, validly existing and in good standing under the laws
of the jurisdiction of incorporation, and is duly qualified to do
business in each jurisdiction in which the conduct of its business
or the ownership or lease of its assets would require such
qualification.
(c) The General Partner is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Colorado. The General Partner is duly qualified and in
good standing in all jurisdictions in which the conduct of its
business or the ownership or lease of its assets requires such
qualification (except where the failure to do so would not have a
material adverse effect on the business, operations or financial
condition of the General Partner).
(d) The Borrower and the General Partner, and each
of the Borrower's Subsidiaries, has full partnership or corporate
power and authority, respectively, and holds all requisite
governmental licenses, permits and other approvals to enter into
and perform its respective Obligations under this Agreement, the
Notes and each other Loan Document to which it is a party and
holds all requisite material governmental licenses, permits and
other approvals to own and hold under lease its property and to
conduct its business substantially as currently conducted by it.
(e) The General Partner is the sole general partner of
the Borrower and owns 100% of the outstanding general partnership
interests in the Borrower, free and clear of all Liens or other
encumbrances other than those interests which represent the
rights to receive certain distributions from the Borrower to
Jones Intercable and which are pledged to NationsBank of Texas,
N.A., as Collateral Agent for certain secured parties, pursuant to
that certain Security Agreement, dated as of December 8, 1992, among
Jones Intercable and NationsBank of Texas, N.A..
SECTION 6.2. Due Authorization, Non-contravention, etc. The
execution, delivery and performance by and on behalf of the Borrower of this
Agreement, the Notes and each other Loan Document are within the Borrower's
and the General Partner's powers, have been duly authorized by all necessary
action, and do not
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(i) contravene the Borrower's or the General
Partner's Organic Documents;
(ii) contravene (x) any law or governmental
regulation or court decree or order binding on or affecting
the Borrower or the General Partner or (y) any contractual
restriction binding on or affecting the General Partner or
the Borrower which contravention is reasonably likely to
have a material adverse effect on the Borrower's
consolidated business, operations, assets, revenues,
properties or prospects (with respect to the Borrower's
ability to pay or repay the Obligations); or
(iii) result in, or require the creation or
imposition of, any Lien on any of the Borrower's or the
General Partner's properties (other than the Lien of the
Security Agreement).
SECTION 6.3. Government Approval, Regulation, etc. Other than as
set forth in Item 6.3 of the Disclosure Schedule or those which have been
obtained and are in full force and effect, no authorization or approval or
other action by, and no notice to or filing with, any governmental authority
or regulatory body or other Person is required for the due execution,
delivery or performance by the General Partner of its Subordination Agreement
or by the Borrower of this Agreement, the Notes or any other Loan
Document. Neither the Borrower nor any of its Subsidiaries is an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, or a "holding company", or a "subsidiary company" of a "holding
Company", or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company", within the meaning of the Public Utility
Holding Company Act Of 1935, as amended.
SECTION 6.4. Validity, etc. This Agreement constitutes, and the
Notes and each other Loan Document executed by the Borrower will, on the due
execution and delivery thereof, constitute, the legal, valid and binding
obligations of the Borrower, enforceable in accordance with their respective
terms. The Partnership Agreement and the Subordination Agreement constitute
the legal, valid and binding obligations of the General Partner enforceable
in accordance with their respective terms.
SECTION 6.5. Financial Information. The balance sheet of the
Borrower as at September 30, 1994, and the related statements of operations,
cash flow and partners' capital, copies of which have been furnished to the
Agent and each Lender, have been prepared in accordance with GAAP consistently
applied, and present fairly the financial condition of the Borrower as at the
dates thereof and the results of its operations for the periods then ended.
SECTION 6.6. No Material Adverse Changes. Since the date of the
financial statements described in Section 6.5, there has been no material
adverse change in the Borrower's business, assets, properties, revenue,
financial condition, operations or prospects (with respect to the Borrower's
ability to pay or repay the Obligations).
SECTION 6.7. Litigation, Labor Controversies, etc. Except as
disclosed in Item 6.7 ("Litigation") of the Disclosure Schedule, there is
no pending or, to the knowledge of the Borrower, threatened litigation,
action, proceeding, or labor controversy affecting the Borrower, any of its
Subsidiaries or the General Partner which, if adversely determined, is
reasonably
<PAGE> 40
35
likely to materially adversely affect the business, assets, properties,
revenue, financial condition, operations or prospects (with respect to the
Borrower's ability to pay or repay the Obligations) of the Borrower, or any
Subsidiary, or which purports to affect the legality, validity or
enforceability of this Agreement, the Notes or any other Loan Document.
SECTION 6.8. Subsidiaries. The Borrower has no Subsidiaries
except those Subsidiaries, if any, which the Required Lenders have permitted
the Borrower to acquire after the Effective Date.
SECTION 6.9. Ownership of Properties. The Borrower and each of
its Subsidiaries owns good and marketable title to all of its properties
and assets, real and personal, tangible and intangible, of any nature
whatsoever (including patents, trademarks, trade names, service marks and
copyrights), free and clear of all Liens, charges or claims (including
infringement claims with respect to patents, trademarks, copyrights and the
like) except as permitted pursuant to Section 7.2.3.
SECTION 6.10. Taxes. Each of the Borrower and its
Subsidiaries has filed all tax returns and reports required by law to have
been filed by it and has paid all taxes and governmental charges thereby
shown to be owing, except any such taxes or charges which are being
diligently contested in good faith by appropriate proceedings and for which
adequate reserves in accordance with GAAP shall have been set aside on its
books.
SECTION 6.11. Pension and Welfare Plans. Neither the Borrower,
nor any Subsidiary of the Borrower, nor any member of a Controlled Group has
established or maintained, has ever made or been obligated to make
contributions to, or is obligated to make contributions to, any Plan or
multiemployer Plan.
SECTION 6.12. Environmental Warranties. To the best of the
Borrower's knowledge, all facilities and property (including underlying
groundwater) owned or leased by the Borrower and its Subsidiaries, have
been, and continue to be, owned or leased by the Borrower and its
Subsidiaries, in material compliance with all Environmental Laws.
SECTION 6.13. Regulations G, U and X. The Borrower is not
engaged in the business or extending credit for the purpose of purchasing or
carrying margin stock, and no proceeds of any Loans will be used for a
purpose which violates, or would be inconsistent with, F.R.S. Board
Regulations G, U or X. Terms for which meanings are provided in F.R.S. Board
Regulation G, U or X or any regulations substituted therefor, as from time to
time in effect, are used in this Section with such meanings.
SECTION 6.14. Accuracy of Information.
(a) All factual information heretofore or
contemporaneously furnished by or on behalf of the Borrower or the
General Partner in writing to the Agent or any Lender for purposes
of or in connection with this Agreement or any transaction
contemplated hereby is, and all other such factual information
hereafter furnished by or on behalf of the Borrower or the General
Partner in writing to the Agent or any Lender will be, true and
accurate in every material respect on the date as of which such
information is dated or certified and as of the date of execution
and delivery of this Agreement by the Agent and such Lender, and
such information is not, or shall not be, as the case may be,
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36
incomplete by omitting to state any material fact necessary to make
such information not misleading.
(b) All of the information set forth in the Disclosure
Schedule and the Cable Schedule is true and accurate in every
material respect as of the Effective Date.
SECTION 6.15. Cable Authorizations. The Cable Schedule
accurately and completely lists all CATV and SMATV systems currently owned by
the Borrower, and all Franchises issued or granted to the Borrower (such
Franchises, together with all renewals and extensions thereof, are referred to
collectively as the "Cable Franchises"). The Cable Franchises constitute the
only material Franchises required or advisable in connection with the
conduct by the Borrower of its business as presently conducted. All of the
Cable Franchises are duly issued in the name of the Borrower (or are issued in
some other name but have been duly and validly assigned to the Borrower), the
Borrower has full power and authority to operate thereunder, and each such
Cable Franchise will expire on the date set forth for such Cable Franchise in
the Cable Schedule. All assets of the Cable Systems and all Cable
Franchises, contracts, agreements and other things necessary or advisable in
connection with the present or proposed operation of the Cable Systems shall
at all times be owned (or leased on terms and conditions permitted
hereunder) and held by the Borrower. The Cable Schedule accurately and
completely lists all agreements, if any, which are presently in effect with
public utilities for the use of public utility facilities in connection with
the Cable Systems. The Borrower has the right and authority (contractual, by
law or otherwise) to provide pay television and related services to
subscribers. The Cable Schedule accurately and completely lists (i) all
deeds, leases, leaseholds and other interests in real property held by the
Borrower, together with accurate legal descriptions of all such real property
owned or leased by the Borrower, and (ii) all Pole Agreements and wire line
crossing agreements to which the Borrower is a party. Other than the Cable
Franchises, no Franchise has been granted with respect to the territory
covered by the Cable Franchises, nor, to the best of the Borrower's
knowledge, is any application for any such Franchise pending. As of the date
of this Agreement, there is no overbuilding of any territory covered by the
Cable Systems.
SECTION 6.16. FCC Registration and Regulatory Compliance. With
respect to each of the Cable Systems, there is a registration statement on
file with the FCC which fully complies with all applicable requirements of 47
C.F.R. Part 76, Subpart B. The Borrower is the holder of each of the FCC
Licenses listed on the Cable Schedule, each of which has the effective and
expiration dates noted on the Cable Schedule, and is, to the best of the
Borrower's knowledge, lawfully issued (and continues to exist) pursuant to
the rules and regulations of the FCC. The Borrower is presently in compliance
in all material respects with all terms and conditions of all FCC Licenses
covering the Cable Systems, all Federal, state and local laws, all rules,
regulations and administrative orders of the FCC (other than with respect to
compliance with regulations promulgated by the FCC regarding rates and
codified at 47 C.F.R. section 76.922-76.924, with which, to the Borrower's
knowledge, it is in compliance in all material respects) and all state and
local commissions or authorities which are applicable to the Borrower or the
operation of the Cable Systems (including, without limitation, those regarding
signal leakage), and the foregoing permit any contemplated and continued
operation of the Cable Systems without the obtaining of any further
approvals, covenants, modifications or the taking of any other action of any
kind or nature whatsoever. The Borrower has received no notice that any fact
or any past, present or threatened occurrence would preclude or impair its
ability to obtain any FCC
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37
License or other Franchise necessary for the operation or proposed expansion of
the Cable Systems.
SECTION 6.17. Franchises, Copyrights and Licenses. The Borrower
possesses, or has the right to use, all FCC Licenses and all other Franchises,
all copyrights, all licenses (including all cable television or broadcast
licenses), all rights under agreements with public utilities and microwave
transmission companies, Pole Agreements, and all utility easements and other
rights, the absence of which is reasonably likely to have a material adverse
effect on the business, properties, operations or conditions, financial or
otherwise, or prospects (with respect to the Borrower's ability to pay or
repay the Obligations) of the Borrower, each of which is in full force and
effect and with which the Borrower is in compliance in all material respects,
with no known conflict with the rights of others which could affect or impair
in any material manner the businesses, properties, operations or condition,
financial or otherwise, or prospects (with respect to the Borrower's ability
to pay or repay the Obligations) of the Borrower. The General Partner or any
other Affiliate of the Borrower providing services to the Borrower, has
obtained all licenses, permits, authorizations and Franchises necessary for
the ownership of its properties used in providing services to the Cable
Systems, the conduct of its businesses in connection with the Cable Systems
and any proposed expansions of the Cable Systems, in all instances in which
the failure to have obtained such licenses, permits, authorizations and
Franchises could have a material adverse impact on the businesses,
properties, operations or condition, financial or otherwise, of the Borrower.
To the best of the Borrower's knowledge, no event has occurred which permits,
or after the giving of notice or the lapse of time, or both, would permit,
the revocation or termination of any Cable Franchise, or any copyright,
license, permit, authorization or other right of the FCC so as to adversely
affect in any material manner the businesses, properties, operations or
condition, financial or otherwise, or prospects (with respect to the
Borrower's ability to pay or repay the Obligations) of the Borrower.
SECTION 6.18. Communications Act Filings. The Borrower has
duly and timely filed all cable television registration statements and other
filings which are required to be filed under the Communications Act, and has
complied in all other material respects with the Communications Act (other
than with respect to compliance with regulations promulgated by the FCC
regarding rates and codified at 47 C.F.R. Section 76.922-76.924, with which,
to the best of Borrower's knowledge, it is in compliance in all material
respects), including, without limitation, the rules and regulations of the FCC
relating to the carriage of television signals. The Borrower has recorded or
deposited with and paid to the United States Copyright Office, the Register
of Copyrights and the Copyright Royalty Tribunal, all notices, statements of
account, royalty fees and other documents, instruments and amounts required
under the Copyright Act, and is not liable to any person for copyright
infringement under the Copyright Act.
SECTION 6.19. Partnership Agreement. The Partnership Agreement is
in full force and effect and no default or event which, with the passage of
time or notice or both, would constitute a default has occurred and is
continuing thereunder.
SECTION 6.20. No Event of Default. No Default or Event of Default
has occurred and is continuing.
SECTION 6.21. Absence Of Financing Statements, Etc.. Except
with respect to Liens permitted hereunder, there is no financing statement,
security agreement, chattel mortgage, real estate mortgage or other document
filed or recorded with any filing records, registry or
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38
other public office, that purports to cover, affect or give notice of any
present or possible future lien on, or security interest in, any assets or
property of the Borrower or any of its Subsidiaries or any rights relating
thereto.
SECTION 6.22. Management Fees, Allocated Overhead and General
Partner Advances. Except as set forth in Item 6.22 of the Disclosure
Schedule, there are no Management Fees, Allocated Overhead and/or General
Partner Advances outstanding as of September 30, 1994.
ARTICLE VII
COVENANTS
SECTION 7.1. Affirmative Covenants. The Borrower agrees with
the Agent and each Lender that, until all Commitments have terminated and
all Obligations have been paid and performed in full, the Borrower will
perform the obligations set forth in this Section 7.1.
SECTION 7.1.1. Financial Information, Reports, Notices,
etc. The Borrower will furnish, or will cause to be furnished, to each Lender
and the Agent copies of the following financial statements, reports, notices
and information:
(a) as soon as available and in any event within 60 days
after the end of each of the first three Fiscal Quarters of each
Fiscal Year of the Borrower, consolidated balance sheets of the
Borrower and its Subsidiaries as of the end of such Fiscal Quarter
and consolidated statements of operations or income (as
appropriate), partners' equity or stockholder's equity (as
appropriate), and cash flow of the Borrower and its Subsidiaries for
such Fiscal Quarter and for the period commencing at the end of the
previous Fiscal Year and ending with the end of such Fiscal Quarter,
certified by the president, chief financial Authorized Officer or
Treasurer of the General Partner;
(b) as soon as available and in any event within 105
days after the end of each Fiscal Year of the Borrower, a copy of
the annual audit report for such Fiscal Year for the Borrower
and its Subsidiaries, including therein consolidated balance sheets
of the Borrower and its Subsidiaries as of the end of such Fiscal
Year and consolidated statements of operations or income (as
appropriate), partners' equity, or stockholders' equity (as
appropriate), and cash flow of the Borrower and its Subsidiaries for
such Fiscal Year, in each case certified (without any Impermissible
Qualification) by an independent public accounting firm acceptable
to the Agent and the Required Lenders and accompanied by a
Compliance Certificate, executed by the General Partner, showing (in
reasonable detail and with appropriate calculations and computations
in all respects satisfactory to the Agent) compliance with the
financial covenants set forth in Section 7.2.4 and the resulting
Applicable Margin;
(c) as soon as available and in any event within 60 days
after the end of each of the first three Fiscal Quarters of each
Fiscal Year, a Compliance Certificate executed by the General
Partner, showing (in reasonable detail and with appropriate
calculations and computations in all respects satisfactory to the
Agent) compliance with the financial covenants set forth in Section
7.2.4 and the resulting Applicable Margin;
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39
(d) prior to the payment of any General Partner
Advances, a Compliance Certificate, executed by the General Partner,
showing (in reasonable detail and with appropriate calculations and
computations in all respects satisfactory to the Agent) compliance,
both before the payment of such General Partner Advance and after
giving effect thereto, with the financial covenants set forth
in Section 7.2.4 and the resulting Applicable Margin;
(e) as soon as possible and in any event within three
days after the occurrence of each Default, a statement of the General
Partner, setting forth details of such Default and the action which
the Borrower has taken and proposes to take with respect thereto:
(f) as soon as possible and in any event within
three days after (x) becoming aware of the occurrence of any
adverse development with respect to any litigation, action,
proceeding, or labor controversy described in Section 6.7 or (y)
becoming aware of the commencement of any labor controversy,
litigation, action, proceeding of the type described in Section
6.7, notice thereof and copies of all documentation relating
thereto;
(g) promptly after the sending or filing thereof,
copies of all reports which the Borrower sends to the General
Partner, and all quarterly reports on Form 10-Q and annual reports
on Form 10-K which the General Partner files with the Securities and
Exchange Commission or any national securities exchange;
(h) as soon as practicable, and in any event within 60
days after the end of each Fiscal Quarter, a subscriber report setting
forth for each Cable System as of the end of such Fiscal Quarter (i)
the number of Basic Subscribers and Pay Units as of the end of such
Fiscal Quarter, (ii) the Basic Subscriber Rate charged to subscribers
during such Fiscal Quarter, (iii) the number of Homes Passed, the
Basic Penetration Rate and Pay to Basic Ratio as of the end of such
Fiscal Quarter, (iv) upon request of the Agent or any Lender, the
number of subscribers initiating and terminating Cable Systems service
during such Fiscal Quarter and (v) upon request by the Agent or any
Lender, an aging of the Borrower's accounts receivable as of the end
of such Fiscal Quarter, which report shall also include a description
of any Cable Systems sold during such Fiscal Quarter and the
consideration received therefor;
(i) promptly after the occurrence of (i) any lapse or
other termination of any Franchise issued to the Borrower or any of its
Subsidiaries, which lapse or termination may have a material adverse
effect on the business, operations, financial condition or prospects
(with respect to the Borrower's ability to pay or repay the
Obligations) of the Borrower or any of its Subsidiaries, (ii) any
refusal by any Official Body to renew or extend any such Franchise, or
(iii) any dispute between the Borrower or any of its Subsidiaries and
any Official Body which, if adversely determined, is reasonably likely
to have a material adverse effect on the business, operations,
financial condition or prospects (with respect to the Borrower's
ability to pay or repay the Obligations) of the Borrower or any of its
Subsidiaries, notice thereof;
(j) promptly upon their becoming available to the
Borrower, copies of (i) any periodic or special report files by the
Borrower or any of its Subsidiaries with the FCC or with any other
Official Body regulating the Cable Systems if (A) such report indicates
any material adverse changes in the business, operations, financial
condition or prospects
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(with respect to the Borrower's ability to pay or repay the
Obligations) of the Borrower or any of its Subsidiaries, or (B) a
copy thereof is requested by any Lender, and (ii) any material notice
or other material communication from the FCC or from any other
Official Body regulating cable systems which specifically relates to
the operation of the Cable Systems; and
(k) such other information respecting the condition or
operations, financial or otherwise, of the Borrower, any of its
Subsidiaries or the General Partner, as any Lender through the Agent
may from time to time reasonably request.
SECTION 7.1.2. Compliance with Laws, etc. The
Borrower will, and will cause each of its Subsidiaries to, comply in all
material respects with all applicable laws, rules, regulations and
orders, such compliance to include (without limitation):
(a) the maintenance and preservation of its existence
and qualification as a foreign corporation or foreign limited
partnership, as the case may be;
(b) the maintenance in full force and effect of
all material Cable Franchises, consents, approvals, exemptions
and other actions by, and all registrations, qualifications,
designations and declarations and other filings with, each
Official Body necessary or advisable in connection with the
execution, delivery and performance of this Agreement, the Notes and
the other Loan Documents and the ownership and operation of the Cable
Systems; and
(c) the payment, before the same become delinquent, of
all taxes, assessments and governmental charges imposed upon it or
upon its property except to the extent being diligently contested in
good faith by appropriate proceedings and for which adequate
reserves in accordance with GAAP shall have been set aside on its
books.
SECTION 7.1.3. Maintenance of Properties. The
Borrower will, and will cause each of its Subsidiaries to, maintain,
preserve, protect and keep its properties in good repair, working order
and condition (ordinary wear and tear excepted), and to make necessary and
proper repairs, renewals and replacements so that its business carried on in
connection therewith may be properly conducted at all times unless the
Borrower determines in good faith that the continued maintenance of any of its
properties is no longer economically desirable.
SECTION 7.1.4. Insurance. The Borrower will, and will
cause each of its Subsidiaries to, maintain or cause to be maintained with
responsible insurance companies insurance with respect to its properties and
business (including business interruption insurance) against such casualties
and contingencies and of such types and in such amounts as is customary in
the case of partnerships or other entities engaged in similar businesses
and will, upon request of the Agent, furnish to each Lender at reasonable
intervals (and at least annually) a certificate of insurance with respect to
all insurance maintained by the Borrower and its Subsidiaries in accordance
with this Section.
SECTION 7.1.5. Books and Records. The Borrower will, and
will cause each of its Subsidiaries to, keep books and records which
accurately reflect all of its business affairs and transactions and permit
the Agent and each Lender or any of their respective representatives, at
reasonable times and intervals and upon reasonable notice, to visit all of its
offices, to discuss
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its financial matters with its officers and independent public accountants
(and the Borrower hereby authorizes such independent public accountant to
discuss the Borrower's financial matters with each Lender or its
representatives with or without a representative of the Borrower being
present so long as the Borrower has been given a reasonable opportunity
to have a representative present) and to examine (and, at the expense of the
Borrower, photocopy extracts from) any of its books or other corporate
records. The Borrower shall pay any fees of such independent public
accountants incurred in connection with the Agent's or, during any period that
a Default has occurred and is continuing, any Lender's exercise of its rights
pursuant to this Section.
SECTION 7.1.6. Environmental Covenants. The Borrower will,
and will cause each of its Subsidiaries to,
(a) use and operate all of its facilities and
properties in material compliance with all Environmental Laws,
keep all necessary permits, approvals, certificates, licenses and
other authorizations relating to environmental matters in effect
and remain in material compliance therewith, and handle all
Hazardous Materials in material compliance with all applicable
Environmental Laws;
(b) immediately notify the Agent and provide copies
upon receipt of all written claims, complaints, notices or
inquiries relating to the condition of its facilities and properties
or compliance with Environmental Laws, and shall timely defend
any actions and proceedings relating to compliance with
Environmental Laws; and
(c) provide such information and certifications the Agent
may reasonably equest from time to time to evidence compliance with
this Section 7.1.6.
SECTION 7.1.7. Copyright Act Filings. The Borrower will
timely from time to time in accordance with applicable law record or deposit
with and pay to the United States Copyright Office, the Register of
Copyrights and/or the Copyright Royalty Tribunal all notices, statements of
account, royalty fees and other documents, instruments and amounts required
under the Copyright Act of the United States.
SECTION 7.1.8. Use of Proceeds. The Borrower shall use
the proceeds of the initial Borrowing First to repay, in full, all amounts
outstanding under the Existing Credit Agreement, and, second, for such general
corporate purposes as the Borrower may determine appropriate (including
payments of General Partner Advances permitted under Section 7.2.7).
Thereafter, the Borrower shall use the proceeds of all additional Borrowings,
if any, for such general corporate purposes as the Borrower may determine
appropriate. No proceeds of any Borrowing will be used to purchase or carry
any "margin stock", as defined in F.R.S. Board Regulation U.
SECTION 7.1.9. Hedging Obligations. Within ninety (90)
days after the Effective Date, the Borrower shall enter into and maintain
agreements evidencing Hedging Obligations in form and substance satisfactory
to the Agent, to insure that the maximum annual interest rate applicable to
fifty percent (50%) of the outstanding principal amount of the Loans shall not
exceed a rate satisfactory to the Agent.
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SECTION 7.2. Negative Covenants. The Borrower agrees with the
Agent and each Lender that, until all Commitments have terminated and all
Obligations have been paid and performed in full, the Borrower will comply
with the obligations set forth in this Section 7.2.
SECTION 7.2.1. Business Activities. The Borrower
will not, and will not permit any of its Subsidiaries to, engage in any
business activity, except for the ownership and operation of the Cable
Systems and such activities as may be incidental or related thereto.
SECTION 7.2.2. Indebtedness. The Borrower will not, and
will not permit any of its Subsidiaries to, create, incur, assume or suffer
to exist or otherwise become or be liable in respect of any Indebtedness,
other than, without duplication, the following:
(a) Indebtedness in respect of the Loans and other
Obligations;
(b) until the date of the initial Borrowing, the
Indebtedness identified in Item 7.2.2(b) ("Indebtedness to be
Paid") of the Disclosure Schedule;
(c) Indebtedness existing as of the Effective Date which
is identified in Item 7.2.2(c) ("Ongoing Indebtedness") of the
Disclosure Schedule;
(d) Indebtedness incurred by the Borrower or any of its
Subsidiaries to a vendor of any assets to finance its acquisition of
such assets which, when added to the aggregate principal amount of
Indebtedness permitted pursuant to clause (f) of this Section 7.2.2,
does not exceed $4,000,000;
(e) unsecured Indebtedness incurred in the ordinary
course of business (including open accounts extended by suppliers
on normal trade terms in connection with purchases of goods and
services, but excluding any Indebtedness incurred through the
borrowing of money or in the form of Contingent Liabilities);
(f) Indebtedness in respect of Capitalized Lease
Liabilities which, when added to the aggregate principal amount of
Indebtedness permitted pursuant to clause (d) of this Section
7.2.2, does not exceed $4,000,000;
(g) Indebtedness of the Borrower in respect of
Hedging Obligations arising under agreements entered into with the
Agent or any other Lender; and
(h) Indebtedness in the form of General Partner Advances
which are at all times subordinate to the Loans and all other amounts
due to the Lenders hereunder pursuant to the terms of the
Subordination Agreement;
provided, however, no Indebtedness otherwise permitted by clause (d), (f) or
(g) shall be incurred if, before or after giving effect to the incurrence
thereof, any Default shall have occurred and be continuing.
SECTION 7.2.3. Liens. The Borrower will not, and will
not permit any of its Subsidiaries to, create, incur, assume or suffer to
exist any Lien upon any of its property, revenues or assets, whether now
owned or hereafter acquired, except:
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(a) Liens securing payment of the Obligations, granted
pursuant to any Loan Document;
(b) Until the date of the initial Borrowing, Liens
securing payment of the Indebtedness of the type permitted and
described in clause (b) of Section 7.2.2;
(c) Liens described in Item 7.2.3(c) of the Disclosure
Schedule which were granted prior to the Effective Date to secure
payment of the Indebtedness of the type permitted and described in
clause (c) of Section 7.2.2;
(d) Liens granted to secure payment of the Indebtedness
of the type permitted and described in clause (d) of Section 7.2.2
and covering only those assets acquired with the proceeds of such
Indebtedness;
(e) Liens for taxes, assessments or other
governmental charges or levies not at the time delinquent or
thereafter payable without penalty or being diligently contested in
good faith by appropriate proceedings and for which adequate reserves
in accordance with GAAP shall have been set aside on its books;
(f) Liens of carriers, warehousemen, mechanics,
materialmen and landlords incurred in the ordinary course of business
for sums not overdue or being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance
with GAAP shall have been set aside on its books;
(g) Liens incurred in the ordinary course of business
in connection with workmen's compensation, unemployment insurance or
other forms of governmental insurance or benefits, or to secure
performance of tenders, statutory obligations, leases and
contracts (other than for borrowed money) entered into in the
ordinary course of business or to secure obligations on surety or
appeal bonds; and
(h) Judgment Liens in existence less than 30 days after
the entry thereof or with respect to which execution has been stayed
or the payment of which is covered in full (subject to a customary
deductible) by insurance maintained with responsible insurance
companies.
SECTION 7.2.4. Financial Condition. The Borrower will not
permit:
(a) Its Leverage Ratio at any time during the periods set
forth below to be greater than the ratio set forth opposite such
periods:
<TABLE>
<CAPTION>
Period Maximum Leverage Ratio
------ ----------------------
<S> <C>
Effective Date - 6/30/95 5.50:1
7/1/95-12/31/95 5.25:1
1/1/96-12/31/96 4.75:1
1/1/97-12/31/97 4.25:1
1/1/98 and thereafter 3.75:1
</TABLE>
<PAGE> 49
44
(b) Its Interest Coverage Ratio at any time to be less
than 2.00: 1.
(c) Its Debt Service Ratio at any time to be less than
1.50:1.
(d) Its Fixed Charge Coverage Ratio at any time after
December 31, 1996 to be less than 1.05 to 1.0.
SECTION 7.2.5. Investments. The Borrower will not, and
will not permit any of its Subsidiaries to, make, incur, assume or suffer to
exist any Investment in any other Person, except (without duplication):
(a) the Investments existing on the Effective Date
and described in Item 7.2.5(a) ("Ongoing Investments") of the
Disclosure Schedule;
(b) Investments permitted as Capital Expenditures; and
(c) Cash Equivalent Investments.
provided, however, that any Investment which when made complies with the
requirements of the definition of the term "Cash Equivalent Investment" may
continue to be held notwithstanding that such Investment if made thereafter
would not comply with such requirements.
SECTION 7.2.6. Restricted Payments, etc. On and at all
times after the Effective Date:
(a) the Borrower will not, and will not permit any of
its Subsidiaries to, declare, pay or make any dividend or
distribution (in cash, property or obligations) with respect to any
partnership interest of the Borrower or stock of the Subsidiaries or
on account of the purchase, redemption, retirement or acquisition of
any partnership interest of the Borrower or stock of the Subsidiaries;
and
(b) the Borrower will not, and will not permit any of
its Subsidiaries to, make any deposit for any of the foregoing
purposes.
SECTION 7.2.7. Management Fees. Allocated Overhead and
General Partner Advances. The Borrower will not, and will not permit any of
its Subsidiaries to, pay any amounts with respect to (a) prior to the
Conversion Date, Management Fees, Allocated Expenses or General Partner
Advances if, either before or after giving effect to such payments, a
Default shall have occurred and be continuing, or if such payments violate
the terms of the Subordination Agreement, and (b) during the period
beginning on the Conversion Date and continuing until all of the Obligations
are paid in full, Management Fees, Allocated Overhead or General Partner
Advances; provided, that, notwithstanding the foregoing, from and after the
Conversion Date, the Borrower may repay General Partner Advances of the type
described in clause (iii) of the definition of General Partner Advances,
together with interest thereon, so long as either before or after giving
effect to any such payments, no Default shall have occurred and be continuing,
and so long as such payment does not violate the terms of the Subordination
Agreement. All such amounts may be accrued by the Borrower and paid to the
General Partner upon the payment in full by the Borrower of all of the
Obligations.
<PAGE> 50
45
SECTION 7.2.8. Consolidation, Merger, etc. The Borrower
will not, and will not permit any of its Subsidiaries to, liquidate or
dissolve, consolidate with, or merge into or with, any other corporation, or
purchase or otherwise acquire all or substantially all of the assets of any
Person (or of any division thereof) except
(a) any such Subsidiary may liquidate or dissolve
voluntarily into, and may merge with and into, the Borrower or any
other Subsidiary, and the assets or stock of any Subsidiary may be
purchased or otherwise acquired by the Borrower or any other
Subsidiary; and
(b) so long as no Default has occurred and is
continuing or would occur after giving effect thereto, the
Borrower or any of its Subsidiaries may purchase all or
substantially all of the assets of any Person, or acquire such
Person by merger, provided that such purchase or acquisition (i)
is not a Material Acquisition, and (ii) involves a Person or assets
of a Person engaged in the CATV or SMATV business.
SECTION 7.2.9. Asset Dispositions, etc. The Borrower
will not, and will not permit any of its Subsidiaries to, sell, transfer,
lease, contribute or otherwise convey, or grant options, warrants or other
rights with respect to, all or any portion of its assets (including accounts
receivable and capital stock of any Subsidiaries) to any Person, unless:
(a) the resulting transaction is not a Material
Disposition; or
(b) the resulting transaction consists of a sale of
the Barrington Cable System or the South Suburban Cable System
and, after giving effect to such transaction (and, if necessary,
to the repayment of Loans with the proceeds thereof), the Borrower's
Leverage Ratio in effect after such disposition is less than (i)
during the period beginning on the Effective Date and ending on
December 31, 1997, 4.0:1 and (ii) during the period beginning on
January 1, 1998 and at any time thereafter, 3.75:1.
Furthermore, the Borrower may not engage in any transaction permitted
pursuant to clauses (a) or (b) if, after giving effect thereto, the Borrower
would no longer own free and clear of all Liens, except those permitted under
clause (a) of Section 7.2.3., either the Barrington Cable System or the South
Suburban Cable System.
SECTION 7.2.10. Modification of Certain Agreements. The
Borrower will not consent to any amendment, supplement or other modification
of any of the terms or provisions contained in, or applicable to, its
Partnership Agreement or the Subordination Agreement.
SECTION 7.2.11. Transactions with Affiliates. Except for
Management Fees, Allocated Overhead and General Partner Advances, payable in
accordance with Section 7.2.7 and the terms of the Subordination Agreement,
the Borrower will not, and will not permit any of its Subsidiaries to, enter
into, or cause, suffer or permit to exist any arrangement or contract with any
of its Affiliates other than those permitted by Section 2.2(n) of the
Partnership Agreement, and any arrangement or contract which is fair and
equitable to the Borrower or such Subsidiary and is an arrangement or contract
of the kind which would be entered into by a prudent Person in the position of
the Borrower or such Subsidiary with a Person which is not one of its
Affiliates.
<PAGE> 51
46
SECTION 7.2.12. Negative Pledges. Restrictive
Agreements, etc. The Borrower will not, and will not permit any of its
Subsidiaries to, enter into any agreement (excluding this Agreement, any
other Loan Document and any agreement governing any Indebtedness permitted by
clause (d) of Section 7.2.2 as to the assets financed with the proceeds of
such Indebtedness) prohibiting:
(a) the creation or assumption of any Lien upon
properties, revenues or assets, whether now owned or hereafter
acquired, or the ability of the Borrower to amend or otherwise modify
this Agreement or any other Loan Document; or
(b) the ability of any Subsidiary to make any payments,
directly or indirectly, to the Borrower by way of dividends,
advances, repayments of loans or advances, reimbursements of
management and other intercompany charges, expenses and accruals
or other returns on investments, or any other agreement or
arrangement which restricts the ability of any such Subsidiary to
make any payment, directly or indirectly, to the Borrower.
SECTION 7.2.13. No Creation of Pension Plans. The Borrower
will not, and will not permit any of its Subsidiaries to, establish or
maintain or become obligated to make contributions to any Plan or multiemployer
Plan.
SECTION 7.2.14. Acquisition of Real Property Interests.
At any time on or after the Effective Date, the Borrower will not, and will
not permit its Subsidiaries to, acquire (i) any fee or leasehold interest
in real property with a fair market value in excess of $2,000,000, or (ii) any
fee or leasehold interest in real property if the fair market value of such
interest when added together with the fair market value of all other such
interests, would exceed $2,000,000; unless prior to or contemporaneous with
such acquisition, the Borrower, at is own cost and expense, takes all steps
necessary to grant the Agent, for the benefit of the Lenders, a first
priority mortgage Lien thereon and, in the case of real property, the
Borrower also obtains title insurance coverage in an amount, containing such
terms and exceptions and issued by an insurance company, acceptable to the
Agent in the Agent's reasonable discretion, with respect to such property and
such legal opinions with respect thereto as the Agent may reasonably request.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1. Listing of Events of Default. Each of the following
events or occurrences described in this Section 8.1 shall constitute an "Event
of Default".
SECTION 8.1.1. Non-Payment of Obligations. The Borrower
shall default in the payment or prepayment when due of any principal of any
Loan, or the Borrower shall default (and such default shall continue
unremedied for a period of three Business Days or more) in the payment
when due of any interest on any Loan, or the Borrower shall default (and
such default shall continue unremedied for a period of five days or more) in
the payment when due of any commitment fee or any other Obligation.
<PAGE> 52
47
SECTION 8.1.2. Breach of Warranty. Any representation or
warranty of the Borrower made or deemed to be made hereunder or in any other
Loan Document or any other writing or certificate furnished by or on behalf
of the Borrower to the Agent or any Lender for the purposes of or in
connection with this Agreement or any such other Loan Document (including
any certificates delivered pursuant to Article V) or any representation or
warranty made by the General Partner in the Subordination Agreement is or
shall be incorrect when made in any material respect.
SECTION 8.1.3. Non-Performance of Certain Covenants and
Obligations. The Borrower shall default in the due performance and observance
of any of its obligations under Section 7.1.2(a) (with respect only to
maintenance and preservation of partnership existence) or Section 7.2 or the
Borrower or the General Partner shall default in the due performance and
observance of their respective obligations under the Subordination Agreement
or Section 4.1 of the Security Agreement.
SECTION 8.1.4. Non-Performance of the Other Covenants
and Obligations. The Borrower shall default in the due performance and
observance of any other agreement contained herein or in any other Loan
Document, and such default shall continue unremedied for a period of 30 days
after notice thereof shall have been given to the Borrower by the Agent or any
Lender.
SECTION 8.1.5. Default On Other Indebtedness. A
default shall occur in the payment when due (subject to any applicable
grace period), whether by acceleration or otherwise, of any Indebtedness
(other than Indebtedness described in Section 8.1.1) having, individually
or in the aggregate, a principal amount in excess of $250,000 of the
Borrower or any of its Subsidiaries, or a default shall occur in the
performance or observance of any obligation or condition with respect to such
Indebtedness if the effect of such default is to accelerate the maturity of
any such Indebtedness or such default shall continue unremedied for any
applicable period of time sufficient to permit the holder or holders of such
Indebtedness, or any trustee or agent for such holders, to cause such
Indebtedness to become due and payable prior to its expressed maturity.
SECTION 8.1.6. Judgments. Any judgment or order for
the payment of money in excess of $100,000 (unless fully covered by insurance
(subject to a reasonable and customary deductible) where liability has been
admitted by the applicable insurance carrier) shall be rendered against the
Borrower or any of its Subsidiaries and either
(a) enforcement proceedings shall have been commenced by
any creditor upon such judgment or order or
(b) there shall be any period of 30 consecutive days
during which a stay of enforcement of such judgment or order, by
reason of a pending appeal or otherwise, shall not be in effect.
SECTION 8.1.7. Change in Control. Any Change in Control
shall occur.
SECTION 8.1.8. Bankruptcy, Insolvency, etc. The
Borrower, any of its Subsidiaries or the General Partner shall:
<PAGE> 53
48
(a) become insolvent or generally fail to pay, or admit
in writing its inability or unwillingness to pay, debts as they
become due;
(b) apply for, consent to, or acquiesce in, the
appointment of a trustee, receiver, sequestrator or other custodian
for the Borrower, any of its Subsidiaries or the General Partner
or any property of any thereof, or make a general assignment for the
benefit of creditors;
(c) in the absence of such application, consent or
acquiescence, permit or suffer to exist the appointment of a
trustee, receiver, sequestrator or other custodian for the Borrower,
any of its Subsidiaries or the General Partner or for a substantial
part of the property of any thereof, and such trustee, receiver,
sequestrator or other custodian shall not be discharged within 60
days, provided that the Borrower, each Subsidiary and the General
Partner hereby expressly authorizes the Agent and each Lender to
appear in any court conducting any relevant proceeding during such
60-day period to preserve, protect and defend their rights under the
Loan Documents;
(d) permit or suffer to exist the commencement of any
bankruptcy, reorganization, debt arrangement or other case or
proceeding under any bankruptcy or insolvency law, or any
dissolution, winding up or liquidation proceeding, in respect of the
Borrower, any of its Subsidiaries or the General Partner, and, if any
such cage or proceeding is not commenced by the Borrower, such
Subsidiary or the General Partner, such case or proceeding shall be
consented to or acquiesced in by the Borrower, such Subsidiary or
the General Partner or shall result in the entry of an order for
relief or shall remain for 60 days undismissed, provided that the
Borrower, each Subsidiary and the General Partner hereby expressly
authorizes the Agent and each Lender to appear in any court
conducting any such case or proceeding during such 60 day period to
preserve, protect and defend their rights under the Loan Documents;
or
(e) take any partnership or corporate action
authorizing, or in furtherance of, any of the foregoing.
SECTION 8.1.9. Partnership Agreement. There shall
occur any default under the Partnership Agreement.
SECTION 8.1.10. Impairment of Security, etc. Any Loan
Document (or, in the case of the General Partner, the Subordination
Agreement), or any Lien granted thereunder, shall (except in accordance with
its terms), in whole or in part, terminate, cease to be effective or cease to
be the legally valid, binding and enforceable obligation of the Borrower (or,
in the case of the Subordination Agreement, the General Partner), the Borrower,
the General Partner or any other party shall, directly or indirectly, contest
in any manner such effectiveness, validity, binding nature or enforceability,
or any Lien securing any Obligation shall, in whole or in part, cease to be a
perfected first priority Lien, subject only to those exceptions expressly
permitted by such Loan Document.
SECTION 8.1.11. Failure to Obtain or Cessation of
Authorization, etc. Any consent, approval, exemption, registration,
qualification, designation, declaration, filing, or other action or
undertaking now or hereafter obtained in connection with this Agreement
(other than matters referred to in Section 8.1.12 hereof), the Notes or the
other Loan Documents or any
<PAGE> 54
49
such action or undertaking now or hereafter necessary or advisable to make
this Agreement, the Notes or the other Loan Documents legal, valid,
enforceable and admissible in evidence is not obtained or shall have ceased to
be in full force and effect or shall have been modified or amended or shall
have been held to be illegal or invalid and the Borrower shall have been
unsuccessful in curing such illegality or invalidity within a reasonable time
and the Required Lenders shall have determined in good faith (which
determination shall be conclusive) that such event or occurrence may have a
material adverse effect on the Agent's or the Lenders' rights under this
Agreement, any Note or any other Loan Document.
SECTION 8.1.12. Franchise Agreement. Any Franchise Agreement(s)
pursuant to which the Borrower serves more than 5% of the Basic
Subscribers or any other license, permit, lease, easement, conduit
occupancy right, Pole Agreement, certificate, consent, approval,
authorization or agreement granted by the FCC or by any other Official Body
with jurisdiction over the Cable Systems or by any public utility or third
party lessor, whether presently existing or hereafter granted to or obtained
by the Borrower, the cancellation or termination of which would have a
material adverse effect on the Borrower or the continued operation of the
Cable Systems viewed as a whole (collectively, for purposes of this Section
8.1.12, "Material Agreement"), shall expire without renewal or shall be
suspended or revoked, and shall not be replaced, or the Borrower shall become
subject to any injunction or other order with respect to, such Franchise
Agreement or Material Agreement that materially adversely affects or which is
reasonably likely to materially adversely affect (both in the sole reasonable
judgment of the Required Lenders) the business, operations, financial
condition or prospects (with respect to the Borrower's ability to pay or repay
the Obligations) of the Borrower.
SECTION 8.2. Action if Bankruptcy. If any Event of Default
described in clauses (a) through (d) of Section 8.1.8 shall occur, the
Commitments (if not theretofore terminated) shall automatically terminate
and the outstanding principal amount of all outstanding Loans and all other
Obligations shall automatically be and become immediately due and payable,
without notice or demand.
SECTION 8.3. Action if Other Event of Default. If any Event of
Default (other than any Event of Default described in clauses (a) through
(d) of Section 8.1.8) shall occur for any reason, whether voluntary or
involuntary, and be continuing, the Agent, upon the direction of the Required
Lenders, shall by notice to the Borrower declare all or any portion of the
outstanding principal amount of the Loans and other Obligations to be due
and payable and/or the Commitments (if not theretofore terminated) to be
terminated, whereupon the full unpaid amount of such Loans and other
Obligations which shall be so declared due and payable shall be and become
immediately due and payable, without further notice, demand or presentment,
and/or, as the case may be, the Commitments shall terminate.
ARTICLE IX
THE AGENT
SECTION 9.1. Actions. Each Lender hereby appoints Shawmut as
its Agent under and for purposes of this Agreement, the Notes and each
other Loan Document. Each Lender authorizes the Agent to act on behalf of
such Lender under this Agreement, the Notes and each other Loan Document and,
in the absence of other written instructions from the Required
<PAGE> 55
50
Lenders received from time to time by the Agent (with respect to which the
Agent agrees that it will comply, except as otherwise provided in this Section
or as otherwise advised by counsel), to exercise such powers hereunder and
thereunder as are specifically delegated to or required of the Agent by the
terms hereof and thereof, together with such powers as may be reasonably
incidental thereto. Each Lender hereby indemnifies (which indemnity shall
survive any termination of this Agreement) the Agent, pro rata according to
such Lender's Percentage, from and against any and all liabilities,
obligations, losses, damages, claims, costs or expenses of any kind or
nature whatsoever which may at any time be imposed on, incurred by, or
asserted against, the Agent in any way relating to or arising out of this
Agreement, the Notes and any other Loan Document, including reasonable
attorneys' fees; provided, however, that no Lender shall be liable for the
payment of any portion of such liabilities, obligations, losses, damages,
claims, costs or expenses which are determined by a court of competent
jurisdiction in a final proceeding to have resulted solely from the Agent's
gross negligence or willful misconduct. The Agent shall not be required to
take any action hereunder, under the Notes or under any other Loan Document,
or to prosecute or defend any suit in respect of this Agreement, the Notes or
any other Loan Document, unless it is indemnified hereunder to its
satisfaction. If any indemnity in favor of the Agent shall be or become, in
the Agent's determination, inadequate, the Agent may call for additional
indemnification from the Lenders and cease to do the acts indemnified against
hereunder until such additional indemnity is given.
SECTION 9.2. Funding Reliance, etc. Unless the Agent shall have
been notified by telephone, confirmed in writing, by any Lender by 5:00 p.m.,
Hartford, Connecticut time, on the day prior to a Borrowing that such Lender
will not make available the amount which would constitute its Percentage of
such Borrowing on the date specified therefor, the Agent may assume that such
Lender has made such amount available to the Agent and, in reliance upon such
assumption, may make available to the Borrower a corresponding amount. If and
to the extent that such Lender shall not have made such amount available to
the Agent, such Lender and the Borrower severally agree to repay the Agent
forthwith on demand such corresponding amount together with interest
thereon, for each day from the date the Agent made such amount available
to the Borrower to the date such amount is repaid to the Agent, in the case
of the Borrower, at the rate of interest then applicable for Base Rate Loans,
and in the case of any Lender, at the Federal Funds Rate.
SECTION 9.3. Exculpation. Neither the Agent nor any of its
directors, officers, employees or agents shall be liable to any Lender for
any action taken or omitted to be taken by it under this Agreement or any
other Loan Document, or in connection herewith or therewith, except for
its own willful misconduct or gross negligence, nor responsible for any
recitals or warranties herein or therein, nor for the effectiveness,
enforceability, validity or due execution of this Agreement or any other
Loan Document, nor for the creation, perfection or priority of any liens
purported to be created by any of the Loan Documents, or the validity,
genuineness, enforceability, existence, value or sufficiency of any collateral
security, nor to make any inquiry respecting the performance by the
Borrower of its obligations hereunder or under any other Loan Document. Any
such inquiry which may be made by the Agent shall not obligate it to make
any further inquiry or to take any action. The Agent shall be entitled to rely
upon advice of counsel concerning legal matters and upon any notice, consent,
certificate, statement or writing which the Agent believes to be genuine and
to have been presented by a proper Person.
SECTION 9.4. Successor. The Agent may resign as such at any
time. If the Agent at any time shall resign, the Borrower may appoint another
Lender as a successor Agent
<PAGE> 56
51
which shall thereupon become the Agent hereunder, provided, however, that the
appointment of any Lender which was not a Lender on the Effective Date shall
be subject to the prior written approval of the Required Lenders, which
approval shall not be unreasonably withheld. If no successor Agent shall have
been so appointed by the Borrower, and shall have accepted such appointment,
within 30 days after the retiring Agent's giving notice of resignation, then
the retiring Agent may, on behalf of the Borrower, appoint a successor
Agent, which shall be one of the Lenders or a commercial banking institution
organized under the laws of the U.S. (or any State thereof) or a U.S.
branch or agency of a commercial banking institution, and having combined
capital, surplus and undivided profits of at least $500,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall be entitled to receive from the retiring Agent such
documents of transfer and assignment as such successor Agent may reasonably
request, and shall thereupon succeed to and become vested with all rights,
powers, privileges and duties of the retiring Agent, and the retiring Agent
shall be discharged from its duties and obligations under this Agreement.
After any retiring Agent's resignation hereunder as the Agent, the provisions
of
(a) this Article IX shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was the Agent
under this Agreement; and
(b) Section 10.3 and Section 10.4 shall continue to inure
to its benefit.
SECTION 9.5. Loans by Shawmut. Shawmut shall have the same rights
and powers with respect to (x) the Loans made by it or any of its Affiliates,
and (y) the Notes held by it or any of its Affiliates as any other Lender and
may exercise the same as if it were not the Agent. Shawmut and its Affiliates
may accept deposits from, lend money to, and generally engage in any kind of
business with, the Borrower or any Subsidiary or Affiliate of the Borrower as
if Shawmut were not the Agent hereunder.
SECTION 9.6. Credit Decisions. Each Lender acknowledges that it
has, independently of the Agent and each other Lender, and based on such
Lender's review of the financial information of the Borrower, this Agreement,
the other Loan Documents (the terms and provisions of which being
satisfactory to such Lender) and such other documents, information and
investigations as such Lender has deemed appropriate, made its own credit
decision to extend its Commitments. Each Lender also acknowledges that it
will, independently of the Agent and each other Lender, and based on such
other documents, information and investigations as it shall deem appropriate
at any timer continue to make its own credit decisions as to exercising or
not exercising from time to time any rights and privileges available to it
under this Agreement or any other Loan Document.
SECTION 9.7. Defaulting Lenders. Notwithstanding anything to the
contrary contained in this Agreement or any of the other Loan Documents, any
Lender that fails (i) to make available to the Agent its pro rata share of any
Loan or (ii) to comply with the provisions of Section 4.8 with respect to
making dispositions and arrangements with the other Lenders, where such
Lender's share of any payment received, whether by setoff or otherwise, is in
excess of its pro rata share of such payments due and payable to all of the
Lenders, in each case as, when and to the full extent required by the
provisions of this Credit Agreement, shall be deemed delinquent (a
"Delinquent Lender") and shall be deemed a Delinquent Lender until such time
as such delinquency is satisfied. A Delinquent Lender shall be deemed to have
assigned any and all payments due to it from the Borrower, whether on account
of outstanding Loans, interest,
<PAGE> 57
52
fees or otherwise, to the remaining nondelinquent Lenders for application
to, and reduction of, their respective pro rata shares of all outstanding
Loans. The Delinquent Lender hereby authorizes the Agent to distribute such
payments to the nondelinquent Lenders in proportion to their respective pro
rata shares of all outstanding Loans. A Delinquent Lender shall be deemed to
have satisfied in full a delinquency when and if, as a result of application
of the assigned payments to all outstanding Loans of the nondelinquent
Lenders, the Lenders' respective pro rata shares of all outstanding Loans
have returned to those in effect immediately prior to such delinquency and
without giving effect to the nonpayment causing such delinquency.
SECTION 9.8. Holders of Notes. The Agent may deem and treat the
payee of any Note as the absolute owner or purchaser thereof for all purposes
hereof until it shall have been furnished in writing with a different name
by such payee or by a subsequent holder, assignee or transferee.
SECTION 9.9. Disclosure. The Borrower agrees that in addition
to disclosures made in accordance with standard and customary banking
practices any Lender may disclose information obtained by such Lender
pursuant to this Agreement to assignees or participants and potential
assignees or participants hereunder; provided that such assignees or
participants or potential assignees or participants shall agree (a) to treat
in confidence such information unless such information otherwise becomes
public knowledge, (b) not to disclose such information to a third party,
except as required by law or legal process and (c) not to make use of such
information for purposes of transactions unrelated to such contemplated
assignment or participation.
SECTION 9.10. Assignee or Participant Affiliated with the
Borrower. If any assignee Lender is an Affiliate of the Borrower, then any
such assignee Lender shall have no right to vote as a Lender hereunder or
under any of the other Loan Documents for purposes of granting consents or
waivers or for purposes of agreeing to amendments or other modifications to
any of the Loan Documents or for purposes of making requests to the Agent
pursuant to Section 8.3, and the determination of the Required Lenders shall
for all purposes of this Agreement and the other Loan Documents be made
without regard to such assignee Lender's interest in any of the Loans. If any
Lender sells a participating interest in any of the Loans to a participant,
and such participant is the Borrower or an Affiliate of the Borrower, then
such transferor Lender shall promptly notify the Agent of the sale of such
participation. A transferor Lender shall have no right to vote as a Lender
hereunder or under any of the other Loan Documents for purposes of
granting consents or waivers or for purposes of agreeing to amendments or
modifications to any of the Loan Documents or for purposes of making
requests to the Agent pursuant to Section 8.3 to the extent that such
participation is beneficially owned by the Borrower or any Affiliate of the
Borrower, and the determination of the Required Lenders shall for all
purposes of this Agreement and the other Loan Documents be made without regard
to the interest of such transferor Lender in the Loans to the extent of such
participation.
SECTION 9.11. Copies. etc. The Agent shall give prompt notice
to each Lender of each notice or request required or permitted to be given
to the Agent by the Borrower pursuant to the terms of this Agreement
(unless concurrently delivered to the Lenders by the Borrower). The Agent
will distribute to each Lender each document or instrument received for its
account and copies of all other communications received by the Agent from the
Borrower for distribution to the Lenders by the Agent in accordance with the
terms of this Agreement.
<PAGE> 58
53
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. Waivers, Amendments, etc. The provisions of this
Agreement and of each other Loan Document may from time to time be amended,
modified or waived, if such amendment, modification or waiver is in
writing and consented to by the Borrower and the Required Lenders; provided,
however, that no such amendment, modification or waiver which would:
(a) modify any requirement hereunder that any particular
action be taken by all the Lenders or by the Required Lenders shall
be effective unless consented to by each Lender;
(b) modify this Section 10.1, change the definition of
"REQUIRED LENDERS", increase any Commitment Amount or change the
Percentage of any Lender, reduce any fees described in Article III,
release any collateral security, except as otherwise specifically
provided in any Loan Document or extend any Commitment Termination
Date shall be made without the consent of each Lender and each holder
of a Note;
(c) extend the due date for, or reduce the amount of,
any scheduled reduction of the Commitment Amount or any scheduled
repayment or prepayment of principal of or interest on any Loan
(or reduce the principal amount of or rate of interest on any Loan)
shall be made without the consent of the holder of that Note
evidencing such Loan; or
(d) affect adversely the interests, rights or
obligations of the Agent qua the Agent shall be made without consent
of the Agent
No failure or delay on the part of the Agent, any Lender or the holder of
any Note in exercising any power or right under this Agreement or any other
Loan Document shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power or right preclude any other or further
exercise thereof or the exercise of any other power or right. No notice to or
demand on the Borrower in any case shall entitle it to any notice or demand
in similar or other circumstances. No waiver or approval by the Agent, any
Lender or the holder of any Note under this Agreement or any other Loan
Document shall, except as may be otherwise stated in such waiver or
approval, be applicable to subsequent transactions. No waiver or approval
hereunder shall require any similar or dissimilar waiver or approval
thereafter to be granted hereunder.
SECTION 10.2. Notices. All notices and other communications
provided to any party hereto under this Agreement or any other Loan
Document shall be in writing or by Telex or by facsimile and addressed,
delivered or transmitted to such party at its address, Telex or facsimile
number set forth below its signature hereto or, if applicable, set forth in
such Lender's Lender Assignment Agreement or at such other address, Telex or
facsimile number as may be designated by such party in a notice to the other
parties. Any notice, if mailed and properly addressed with postage prepaid or
if properly addressed and sent by prepaid courier service, shall be deemed
given when received; any notice, if transmitted by Telex or facsimile, shall
be deemed given when transmitted (answerback confirmed in the case of
Telexes).
<PAGE> 59
54
SECTION 10.3. Payment of Costs and Expenses. The Borrower agrees
to pay on demand all reasonable expenses of the Agent (including the fees and
reasonable out-of-pocket expenses of counsel to the Agent and of local
counsel) in connection with:
(a) the negotiation, preparation, syndication,
execution and delivery of this Agreement and of each other Loan
Document, including schedules and exhibits, and any amendments,
waivers, consents, supplements or other modifications to this
Agreement or any other Loan Document as may from time to time
hereafter be required, whether or not the transactions contemplated
hereby are consummated;
(b) the filing, recording, refiling or rerecording of
the Security Agreement and any Uniform Commercial Code financing
statements relating thereto and all amendments, supplements and
modifications to any thereof and any and all other documents or
instruments of further assurance required to be filed or recorded or
refiled or rerecorded by the terms hereof or of the Security
Agreement; and
(c) the preparation and review of the form of any
document or instrument relevant to this Agreement or any other Loan
Document.
The Borrower further agrees to pay, and to save the Agent and the Lenders
harmless from all liability for, any stamp or other taxes which may be
payable in connection with the execution or delivery of this Agreement,
the borrowings hereunder, or the issuance of the Notes or any other Loan
Documents. The Borrower also agrees to reimburse the Agent and each Lender
upon demand for all reasonable out-of-pocket expenses (including
reasonable attorneys' fees and disbursements) incurred by the Agent or
such Lender in connection with (x) the negotiation of any restructuring or
"work-out", whether or not consummated, of any Obligations and (y) the
enforcement of any Obligations.
SECTION 10.4. Indemnification. In consideration of the
execution and delivery of this Agreement by each Lender and the extension of
the Commitments, the Borrower hereby indemnifies, exonerates and holds the
Agent and each Lender and each of their respective officers, directors,
employees and agents (collectively, the "Indemnified Parties") free and
harmless from and against any and all actions, causes of action, suits,
losses, costs, liabilities and damages, and expenses incurred in connection
therewith (irrespective of whether any such Indemnified Party is a party to
the action for which indemnification hereunder is sought), including
reasonable attorneys' fees and disbursements (collectively, the
"Indemnified Liabilities"), incurred by the Indemnified Parties or any of
them as a result of, or arising out of, or relating to:
(a) any transaction financed or to be financed in whole
or in part, directly or indirectly, with the proceeds of any Loan;
(b) the entering into and performance of this Agreement
and any other Loan Document by any of the Indemnified Parties
(including any action brought by or on behalf of the Borrower
as the result of any determination by the Required Lenders pursuant
to Article V not to fund any Borrowing);
<PAGE> 60
55
(c) any investigation, litigation or proceeding
related to any environmental cleanup, audit, compliance or other
matter relating to the protection of the environment or the Release
by the Borrower or any of its Subsidiaries of any Hazardous Material;
or
(d) the presence on or under, or the escape, seepage,
leakage, spillage, discharge, emission, discharging or releases from,
any real property owned or operated by the Borrower or any of its
Subsidiaries of any Hazardous Material (including any losses,
liabilities, damages, injuries, costs, expenses or claims asserted
or arising under any Environmental Law), regardless of whether
caused by, or within the control of, the Borrower or such
Subsidiaries,
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party solely by reason of the relevant Indemnified
Party's gross negligence or willful misconduct. If and to the extent that
the foregoing undertaking may be unenforceable for any reason, the Borrower
hereby agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law.
SECTION 10.5. Survival. The Obligations of the Borrower under
Sections 4.3, 4.4, 4.5, 4.6, 10.3 and 10.4, and the obligations of the
Lenders under Section 9 shall in each case survive any termination of this
Agreement, the payment in full of all of the Obligations and the
termination of all of the Commitments. The representations and warranties
made by the Borrower and the General Partner in this Agreement and in each
other Loan Document shall survive the execution and delivery of this Agreement
and each such other Loan Document.
SECTION 10.6. Severability. Any provision of this Agreement or
any other Loan Document which is prohibited or unenforceable in any
jurisdiction shall, as to such provision and such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating
the remaining provisions of this Agreement or such Loan Document or
affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 10.7. Headings. The various headings of this Agreement
and of each other Loan Document are inserted for convenience only and shall not
affect the meaning or interpretation of this Agreement or such other Loan
Document or any provisions hereof or thereof.
SECTION 10.8. Execution in Counterparts, Effectiveness. This
Agreement may be executed by the parties hereto in several counterparts, by
hand or facsimile signatures, each of which shall be deemed to be an original
and all of which, when taken together, shall constitute one and the same
agreement. This Agreement shall become effective when counterparts hereof
executed on behalf of the Borrower, the General Partner and each Lender
(or notice thereof satisfactory to the Agent) shall have been received by the
Agent and notice thereof shall have been given by the Agent to the Borrower,
the General Partner and each Lender.
SECTION 10.9. Governing in Law; Entire Agreement. THIS
AGREEMENT, THE NOTES AND EACH OTHER LOAN DOCUMENT SHALL EACH BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
CONNECTICUT WITHOUT GIVING EFFECT TO THE CHOICE OF LAW PROVISIONS THEREOF. This
Agreement, the Notes and the other Loan Documents constitute
<PAGE> 61
56
the entire understanding among the parties hereto with respect to the
subject matter hereof and supersede any prior agreements, written or oral,
with respect thereto.
SECTION 10.10. Successors and Assigns. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns provided, however, that:
(a) the Borrower may not assign or transfer its rights
or obligations hereunder without the prior written consent of the
Agent and all Lenders; and
(b) the fights of sale, assignment and transfer of the
Lenders are subject to Section 10.11.
SECTION 10.11. Sale and Transfer of Loans and Notes;
Participations in Loans and Notes. Each Lender may assign, or sell
participations in, its Loans and Commitments to one or more other Persons
in accordance with this Section 10.11.
SECTION 10.11.1. Assignments. Any Lender may at any
time assign and delegate to one or more commercial banks or other
financial institutions (each Person to whom such assignment and delegation
is to be made, being hereinafter referred to as an "Assignee Lender"), a
percentage of such Lender's total Loans and Commitments (which assignment and
delegation shall be of a constant, and not a varying, percentage of the
assigning Lender's Loans and Commitments); provided, that, (i) the aggregate
principal amount of Loans and Commitments to be assigned at any one time is
at least equal to $5,000,000, (ii) after giving effect to any such
assignment, in the case of the Agent, the Agent shall continue to be the
registered holder of an aggregate principal amount of Loans and Commitments
at least equal to $20,000,000 multiplied by a fraction the numerator of which
is equal to $80,000,000 minus the aggregate principal amount of scheduled
repayments of Loans made by the Borrower as of the time of the assignment and
the denominator of which is $80,000,000, (iii) the Agent shall never hold an
aggregate principal amount of Loans and Commitments which is less than any
other lender holds and (iv), in the case of a Lender, such Lender shall
continue to be the registered holder of at least fifty percent (50%) of the
aggregate principal amount of Loans and Commitments originally held by such
Lender. Each Assignee Lender must furnish if applicable, the withholding
tax exemption forms required under Section 4.6. Additionally, the Borrower
and the Agent shall be entitled to continue to deal solely and directly with
such Lender in connection with the interests so assigned and delegated to an
Assignee Lender until:
(a) written notice of such assignment and
delegation, together with payment instructions, addresses and
related information with respect to such Assignee Lender, shall have
been given to the Borrower and the Agent by such Lender and such
Assignee Lender;
(b) such Assignee Lender shall have executed and
delivered to the Borrower and the Agent a Lender Assignment
Agreement, accepted by the Agent; and
(c) the processing fees described below shall have been
paid.
From and after the date that the Agent accepts a Lender Assignment Agreement,
(x) the Assignee Lender thereunder shall be deemed automatically to have become
a party hereto and
<PAGE> 62
57
to the extent that rights and obligations hereunder have been assigned
and delegated to such Assignee Lender in connection with such Lender
Assignment Agreement, shall have the rights and obligations of a Lender
hereunder and under the other Loan Documents; and (y) the assigning Lender,
to the extent that rights and obligations hereunder have been assigned and
delegated by it in connection with such Lender Assignment Agreement, shall be
released from its obligations hereunder and under the other Loan Documents.
Within five Business Days after its receipt of notice that the Agent has
received an executed Lender Assignment Agreement, the Borrower shall execute
and deliver to the Agent (for delivery to the relevant Assignee Lender) new
Notes evidencing such Assignee Lender's assigned Loans and Commitments and,
if the assigning Lender has retained Loans and Commitments hereunder,
replacement Notes in the principal amount of the Loans and Commitments
retained by the assigning Lender hereunder (such Notes to be in exchange
for, but not in payment of, those Notes then held by the assigning Lender).
Each such Note shall be dated the date of the predecessor Notes. The
assigning Lender shall mark the predecessor Notes "exchanged" and deliver them
to the Borrower. Accrued interest on that part of the predecessor Notes
evidenced by the new Notes, and accrued fees, shall be paid as provided in
the Lender Assignment Agreement. Accrued interest on that part of the
predecessor Notes evidenced by the replacement Notes shall be paid to the
assigning Lender. Accrued interest and accrued fees shall be paid at the same
time or time provided in the predecessor Notes and in this Agreement. The
assigning Lender or the Assignee Lender must also pay a processing fee to the
Agent upon delivery of any Lender Assignment Agreement in the amount of
$2,500. Any attempted assignment and delegation not made in accordance with
this Section 10.11.1 shall be null and void. Nothing in this Section
10.11.1 shall prevent or prohibit any Lender from pledging its rights (but
not its obligations to make Loans) under this Agreement and/or its Loans
and/or its Notes hereunder to a Federal Reserve Bank in support of
borrowings made by such Lender from such Federal Reserve Bank.
SECTION 10.11.2. Participations. Any Lender may at any
time sell to one or more commercial banks or other Persons (each of such
commercial banks and other Persons being herein called a "Participant")
participating interests in any of the Loans, Commitments, or other interests of
such Lender hereunder; provided, however, that:
(a) no participation contemplated in this Section
10.11.2 shall relieve such Lender from its Commitments or its
other obligations hereunder or under any other Loan Document;
(b) such Lender shall remain solely responsible for the
performance or its Commitments and such other obligations;
(c) the Borrower and the Agent shall continue to deal
solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement and each of the
other Loan Documents;
(d) no Participant, unless such Participant is an
Affiliate of such Lender, or is itself a Lender, shall be entitled to
require such Lender to take or refrain from taking any action
hereunder or under any other Loan Document, except that such Lender
may agree with any Participant that such Lender will not, without
such Participant's consent, take any action of the type described in
clause (b) or (c) of Section 10.1; and
<PAGE> 63
58
(e) the Borrower shall not be required to pay any
amount under Section 4.6 that is greater than the amount which it
would have been required to pay had no participating interest been
sold.
The Borrower acknowledges and agrees that each Participant, for purposes of
Sections 4.3, 4.4, 4.5, 4.6, 4.8, 4.9, 10.3 and 10.4, shall be considered a
Lender
SECTION 10.12. Other Transactions. Nothing contained herein
shall preclude the Agent or any other Lender from engaging in any
transaction, in addition to those contemplated by this Agreement or any other
Loan Document, with the Borrower or any of its Affiliates in which the
Borrower or such Affiliate is not restricted hereby from engaging with any
other Person.
SECTION 10.13. Nonrecourse Obligations. Anything contained in
this Agreement, the Notes or the other Loan Documents to the contrary
notwithstanding, in any action or proceeding brought on this Agreement, the
Notes, the other Loan Documents or the Indebtedness evidenced by the Notes, no
deficiency judgment shall be enforced against the separate assets of the
General Partner (other than distributions to the General Partner made in
violation of Section 7.2.6 or 7.2.7 hereof), and the liability of the
General Partner for any amounts due under this Agreement, the Notes and the
other Loan Documents shall be limited to the interest of the General Partner
in the collateral described in the Loan Documents, its interest in any other
assets of the Borrower and any distributions made in violation of Section
7.2.6 or 7.2.7. Subject to the preceding sentence, the Agent may join any
present or future general partners of the Borrower in their capacities as
general partners, as defendants in any legal action it undertakes to enforce
the Agent's and the Lenders' rights and remedies under this Agreement,
the Notes and the other Loan Documents. Notwithstanding the foregoing,
nothing set forth herein shall be deemed to prohibit the Agent and the Lenders
from taking legal action(s) and enforcing any judgment arising therefrom
against a present or future general partner of the Borrower arising by reason
of any fraud or intentional misconduct of such general partner.
SECTION 10.14. Consent to Jurisdiction. THE BORROWER HEREBY AGREES
THAT ANY LITIGATION BROUGHT BY THE AGENT OR THE LENDERS AND BASED HEREON, OR
ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
ORAL OR WRITTEN) OR ACTIONS OF THE AGENT, THE LENDERS, THE GENERAL PARTNER OR
THE BORROWER SHALL BE BROUGHT AND MAINTAINED IN THE COURTS OF THE STATE OF
CONNECTICUT OR IN THE UNITED STATES DISTRICT COURT FOR CONNECTICUT; PROVIDED,
HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER
PROPERTY MAY BE BROUGHT, AT THE AGENT'S OPTION, IN THE COURTS OF ANY
JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE
BORROWER HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE
COURTS OF THE STATE OF CONNECTICUT AND OF THE UNITED STATES DISTRICT COURT
FOR CONNECTICUT FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE
AND IRREVOCABLY AGREES TO BE BOUND BY ANY NON-APPEALABLE JUDGMENT RENDERED
THEREBY IN CONNECTION WITH SUCH LITIGATION. THE BORROWER FURTHER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY
PERSONAL SERVICE TO THE
<PAGE> 64
59
BORROWER'S ADDRESS PROVIDED HEREIN. THE BORROWER HEREBY EXPRESSLY AND
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION
WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH
LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY
SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT
THAT THE BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION
OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE,
ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE)
WITH RESPECT TO ITSELF OR ITS PROPERTY, THE BORROWER HEREBY IRREVOCABLY
WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS.
SECTION 10.15. Waiver of Jury Trial, etc. THE AGENT, THE
LENDERS AND THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE
OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE AGENT,
THE LENDERS, THE GENERAL PARTNER OR THE BORROWER. THE BORROWER ACKNOWLEDGES
AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS
PROVISION (AND EACH OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT
IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENT
AND THE LENDERS ENTERING INTO THIS AGREEMENT AND EACH SUCH OTHER LOAN
DOCUMENT. EXCEPT AS PROHIBITED BY LAW, THE BORROWER HEREBY WAIVES ANY RIGHT
IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION REFERRED TO IN THE FIRST
SENTENCE OF THIS SECTION 10.15 ANY SPECIAL, EXEMPLARY, PUNITIVE, OR
CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES IN THE ABSENCE OF A COURT OF COMPETENT JURISDICTION'S FINAL
NON-APPEALABLE FINDING THAT SUCH CLAIM AROSE SOLELY AS A DIRECT RESULT OF
THE AGENT'S AND/OR LENDERS' NEGLIGENCE OR WILLFUL MISCONDUCT AND, IN THE
CASE OF SUCH A FINDING, THE AGENT OR LENDERS, AS THE CASE MAY BE, SHALL
PAY ALL REASONABLE ATTORNEY'S FEES AND COSTS INCURRED BY THE BORROWER IN
CONNECTION WITH SUCH FINDINGS. THE BORROWER (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF THE AGENT OR THE LENDERS HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT THE AGENT OR THE LENDERS WOULD NOT SEEK TO
ENFORCE THE FOREGOING WAIVERS AND (B) ACKNOWLEDGES THAT THE AGENT AND THE
LENDERS HAVE INDUCED TO ENTER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS TO
WHICH THEY ARE A PARTY BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS
CONTAINED HEREIN.
SECTION 10.16. Prejudgment Remedy Waiver. THE BORROWER
ACKNOWLEDGES THAT THE FINANCING EVIDENCED HEREBY IS A COMMERCIAL TRANSACTION
WITHIN THE MEANING OF CHAPTER 903a OF THE CONNECTICUT GENERAL STATUTES. THE
BORROWER HEREBY WAIVES ITS RIGHT TO NOTICE AND PRIOR COURT HEARING OR
COURT ORDERED UNDER CONNECTICUT
<PAGE> 65
60
GENERAL STATUTES SECTIONS 52-a ET. SEQ. AS AMENDED OR UNDER ANY OTHER STATE
OR FEDERAL LAW WITH RESPECT TO ANY AND ALL PREJUDGMENT REMEDIES THE
AGENT AND/OR LENDERS MAY EMPLOY TO ENFORCE THEIR RIGHTS AND REMEDIES
HEREUNDER MORE SPECIFICALLY, BORROWER ACKNOWLEDGES THAT THE AGENT'S AND/OR
LENDERS' ATTORNEY MAY, PURSUANT TO CONNECTICUT GENERAL STATUTES SECTION
52-278f, ISSUE A WRIT FOR A PREJUDGMENT REMEDY WITHOUT SECURING A COURT
ORDER. THE BORROWER ACKNOWLEDGES AND RESERVES ITS RIGHT TO NOTICE AND A
HEARING SUBSEQUENT TO THE ISSUANCE OF A WRIT FOR PREJUDGMENT REMEDY AS
AFORESAID AND THE AGENT AND LENDERS ACKNOWLEDGES BORROWER'S RIGHT TO SAID
HEARING SUBSEQUENT TO THE ISSUANCE OF SAID WRIT.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed on the day and year first above written.
Signed, Sealed and Delivered
In the Presence Of: CABLE TV FUND 15-A, LTD.
By: Jones Intercable, Inc.,
Its General Partner
By: /s/ J. ROY POTTLE
Name: J. Roy Pottle
Title: Treasurer
Address: 9697 East Mineral Avenue
Englewood, CO 80112
Facsimile: (303) 790-7324
SHAWMUT BANK CONNECTICUT, N.A.,
Individually and as Agent
By: /s/ ROBERT F. WEST
Name: Robert F. West
Title: Director
Address: 777 Main Street
Hartford, CT 06115
Facsimile: (203) 986-5367
<PAGE> 66
61
CREDIT LYONNAIS CAYMAN ISLAND
BRANCH
By: /s/ BRUCE M. YEAGER
Name: Bruce M. Yeager
Address: c/o Credit Lyonnais New York Branch
1301 Avenue of the Americas
New York, NY 10019
Facsimile: (212) 261-3421
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<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
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