10-K405
1
FORM 10-K
1
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: 0-18133
IDS/JONES GROWTH PARTNERS II, L.P.
(Exact name of registrant as specified in its charter)
Colorado 84-1060548
State of Organization (IRS Employer
Identification No.)
P.O. Box 3309, Englewood, Colorado 80155-3309 (303) 792-3111
(Address of principal executive office and Zip Code (Registrant's telephone no. including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Limited Partnership Interests
Indicate by check mark whether the registrant, (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes x No
----- -----
State the aggregate market value of the voting stock held by non-affiliates of
the registrant: N/A
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section.229.405) is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. x
-----
DOCUMENTS INCORPORATED BY REFERENCE: None
2
PART I.
ITEM 1. BUSINESS
THE PARTNERSHIP. IDS/Jones Growth Partners II, L.P. (the "Partnership")
is a Colorado limited partnership that was formed to acquire, own and operate
cable television systems in the United States. Jones Cable Corporation, a
Colorado corporation, is the managing general partner (the "Managing General
Partner") and IDS Cable II Corporation, a Minnesota corporation, is the
supervising general partner (the "Supervising General Partner") of the
Partnership. The Managing General Partner is a wholly owned subsidiary of Jones
Intercable, Inc. ("Intercable"), which is also a Colorado corporation and one of
the largest cable television system operators in the nation. The Supervising
General Partner is a wholly owned subsidiary of IDS Management Corporation, a
Minnesota corporation, which in turn is a wholly owned subsidiary of American
Express Financial Corporation, a Delaware corporation.
The Partnership and IDS/Jones Growth Partners 89-B, Ltd., an affiliated
Colorado limited partnership ("Growth Partners 89-B"), formed a Colorado general
partnership known as IDS/Jones Joint Venture Partners (the "Venture") for the
purpose of acquiring cable television systems. IDS Cable Corporation, a wholly
owned subsidiary of IDS Management Corporation, which is a wholly owned
subsidiary of American Express Financial Corporation, acts as Supervising
General Partner of Growth Partners 89-B. On December 15, 1991, Intercable made
an equity investment in the Venture in the amount of $2,872,000 and a loan of
$1,800,000 to the Venture. On that date, IDS Management Corporation also made an
equity investment of $2,872,000 in the Venture and a loan to the Venture in the
amount of $1,800,000. A portion of the $1,800,000 loan from IDS Management
Corporation was repaid in November 1994. See Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations. The loans from
Intercable and IDS Management Corporation are subordinate to the Venture's new
revolving credit and term loan. These loans matured in the fourth quarter of
1994. IDS Management Corporation extended its loan until December 5, 1995 and,
although Intercable has not formally extended its loan, it has not demanded
repayment. In the first quarter of 1994, Intercable agreed to subordinate to all
other Venture debt the $1,406,647 advance to the Venture outstanding at March
30, 1994 and IDS Management Corporation made an additional loan of $1,000,000 to
the Venture to fund principal repayments due on the Venture's then outstanding
term loan. In the second quarter of 1994, Intercable made a loan of $1,000,000
to the Venture to fund principal repayments due on the Venture's then
outstanding term loan. This loan was repaid with interest in November 1994.
The interest rates on the respective loans, which will vary from time to time,
with respect to IDS Management Corporation's loan, are at its cost of
borrowing, and, with respect to Intercable's loan, are at its weighted average
cost of borrowing. It is anticipated that the remaining loans will be repaid
over time with borrowings from the Venture's new revolving credit and term
loan. If the December 5, 1991 loans are not repaid, Intercable and IDS
Management Corporation will have the right, among other rights, to convert these
loans to equity in the Venture. As a result of their equity contributions to the
Venture, IDS Management Corporation and Intercable each have an approximate 5
percent equity interest in the Venture, the Partnership has a 66 percent
interest in the Venture, and Growth Partners 89-B has a 24 percent interest in
the Venture. If the December 5, 1991 loans are converted to equity, the
ownership percentages will be adjusted accordingly.
The Partnership does not directly own any cable television system. The
Venture owns the cable television systems serving the communities of Aurora,
North Aurora, Montgomery, Plano, Oswego, Sandwich, Yorkville and certain
unincorporated areas of Kendall and Kane Counties, all in the State of Illinois
(the "Aurora System"). See Item 2.
CABLE TELEVISION SERVICES. The Aurora System offers to its subscribers
various types of programming, which include basic service, tier service, premium
service, pay-per-view programs and packages including several of these services
at combined rates.
Basic cable television service usually consists of signals of all four
national television networks, various independent and educational television
stations (both VHF and UHF) and certain signals received from satellites. Basic
service also usually includes programs originated locally by the system, which
may consist of music, news,
2
3
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 Aurora System offers tier services on an optional basis to its
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 Aurora
System also offers a package that includes the basic service channels and the
tier services.
The Aurora System also offers premium services to its subscribers,
which consist of feature films, sporting events and other special features that
are presented without commercial interruption. The cable television operators
buy premium programming from suppliers such as HBO, Showtime, Cinemax or others
at a cost based on the number of subscribers the cable operator serves. Premium
service programming usually is significantly more expensive than the basic
service or tier service programming, and consequently cable operators price
premium service separately when sold to subscribers.
The Aurora System also offers to subscribers pay-per-view programming.
Pay-per-view is a service that allows subscribers to receive single programs,
frequently consisting of motion pictures that have recently completed their
theatrical exhibitions and major sporting events, and to pay for such service on
a program-by-program basis.
REVENUES. Monthly service fees for basic, tier and premium services
constitute the major source of revenue for the Aurora System. In addition,
advertising sales are becoming a significant source of revenue for the Aurora
System. As a result of the adoption by the FCC of new rules under the Cable
Television Consumer Protection and Competition Act of 1992 (the "1992 Cable
Act"), and several rate regulation orders, the Aurora System's rate structures
for cable programming services and equipment have been revised. See Regulation
and Legislation. At December 31, 1994, the Aurora System's monthly basic service
rates ranged from $10.54 to $10.62, monthly basic and tier ("basic plus")
service rates ranged from $21.00 to $21.08 and monthly premium services ranged
from $6.78 to $11.95 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 Aurora System's
pay-per-view programs and advertising fees generate revenues. Related charges
may include a nonrecurring installation fee that ranges from $1.99 to $42.45;
however, from time to time the Aurora System has followed the common industry
practice of reducing or waiving the installation fee during promotional periods.
Commercial subscribers such as hotels, motels and hospitals are charged a
nonrecurring connection fee that usually covers the cost of installation. Except
under the terms of certain contracts with commercial subscribers and residential
apartment and condominium complexes, the subscribers are free to discontinue the
service at any time without penalty. For the year ended December 31, 1994, of
the total fees received by the Aurora System, basic service and tier service
fees accounted for approximately 63% of total revenues, premium service fees
accounted for approximately 17% of total revenues, pay-per-view fees were
approximately 3% of total revenues, advertising fees were approximately 5% of
total revenues and the remaining 12% of total revenues came principally from
equipment rentals, installation fees and program guide sales. The Venture is
dependent upon the timely receipt of service fees to provide for maintenance and
replacement of plant and equipment, current operating expenses and other costs
of the Aurora System.
The Aurora System'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 its business. The Aurora System has had some subscribers
who later terminated the service. Terminations occur primarily because people
move to another home or to another city. In other cases, people terminate on a
seasonal basis or because they no longer can afford or are dissatisfied with the
service. The amount of past due accounts in the Aurora System is not
significant. The Managing General Partner's policy with regard to past due
accounts is basically one of disconnecting service before a past due account
becomes material.
3
4
The Aurora System 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 Aurora system has no
employees because all properties are managed by employees of Intercable.
Intercable has engaged in research and development activities relating to the
provision of new services but the amount of the Partnership's funds expended for
such research and development has never been material.
Compliance with Federal, state and local provisions that have been
enacted or adopted regulating the discharge of materials into the environment or
otherwise relating to the protection of the environment has had no material
effect upon the capital expenditures, earnings or competitive position of the
Partnership.
FRANCHISES. The Aurora System is 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 Aurora System's franchises require that franchise fees ranging from 3% to 5%
of gross revenues of the cable system be paid to the governmental authority that
granted the franchise, that certain channels be dedicated to municipal use, that
municipal facilities, hospitals and schools be provided cable service free of
charge and that any new cable plant be substantially constructed within specific
periods. (See Item 2 for a range of franchise expiration dates of the Aurora
System.)
The responsibility for franchising of cable television systems
generally is left to state and local authorities. There are, however, several
provisions in the Communications Act of 1934, as amended, that govern the terms
and conditions under which cable television systems provide service, including
the standards applicable to cable television operators seeking renewal of a
cable television franchise. In addition, the 1992 Cable Act also made several
procedural changes to the process under which a cable operator has not
substantially complied with the material terms of the franchise, has not
provided reasonable service in light of the community's needs, does not have the
financial, legal and technical ability to provide the services being proposed
for the future, or has not presented a reasonable proposal for future service. A
final decision of non-renewal by the franchising authority is appealable in
court. The Managing General Partner and its affiliates recently have experienced
lengthy negotiations with some franchising authorities for the granting of
franchise renewals and transfers. Some of the issues involved in recent renewal
negotiations include rate reregulation, customer service standards, cable plant
upgrade or replacement and shorter terms of franchise agreements. The inability
of the Venture to renew a franchise, or lengthy negotiations or litigation
involving the renewal process could have an adverse impact on the business of
the Venture.
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 Aurora System has not lost a significant number of
subscribers, nor a significant amount of revenue, to MMDS operators.
DBS operators deliver premium channel services and specialized
programming to subscribers by high-powered DBS satellites on a wide-scale basis,
and two major companies began operations in 1994. Subscribers are able to
receive DBS services virtually anywhere in the United States with a rooftop or
wall-mounted antenna. In some instances, DBS systems may serve as a complement
to cable television operations by enabling cable television operators to offer
additional channels of programming without the construction of additional cable
plant. DBS companies use video compression technology to increase the channel
capacity of their satellite systems to provide a wide variety of program
services that are competitive with those of cable television systems.
4
5
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 Managing General Partner
believes that there are not any current fully operational LMDS systems.
Although the Aurora System has not yet encountered competition from a
telephone company entering into the business of providing video services to
subscribers, the Aurora System could potentially face competition from telephone
companies doing so. A Federal cross-ownership restriction has historically
limited entry into the cable television business by potentially strong
competitors such as telephone companies. This restriction, which is contained in
the 1984 Cable Act, has generally prohibited telephone companies from owning or
operating cable television systems within their own telephone service areas, but
several recent court decisions have eliminated this restriction. In addition,
the FCC is authorizing telephone companies to provide video dialtone service
within their service areas. Legislation is also pending in Congress that would
permit telephone companies to provide video programming through separate
subsidiaries. The Managing General Partner cannot predict at this time to what
extent current restrictions will be modified to permit telephone companies to
provide cable television services within their own service areas in competition
with cable television systems. See Regulation and Legislation, Ownership and
Market Structure for a description of the potential participation of the
telephone industry in the delivery of cable television services. Entry into the
market by telephone companies as direct competitors of the Aurora System could
adversely impact the profitability of the Aurora System. If a telephone company
were to become a direct competitor of the Venture in an area served by the
Aurora System, the Venture could be at a competitive disadvantage because of the
relative financial strength of a telephone company compared to the Venture.
Depending on a number of factors, such competition could also result in cable
television systems providing the same types of services now provided by the
telephone industry.
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 Intercable, hold or have requested experimental licenses from the
FCC to test PCS technology. The FCC has established spectrum auctioning
procedures for PCS licenses and the licenses are being auctioned in a series of
auction events.
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 Aurora System currently faces no direct competition from other cable
television operators.
COMPETITION FOR SUBSCRIBERS IN THE AURORA SYSTEM. Following is a
summary of competition from DBS, MMDS, SMATV and TVRO operators in the Aurora
System's franchise areas: There is one MMDS operator in the Aurora System's
service area that provides over 30 channels at a price comparable to the Aurora
System's rates. However, at this time this MMDS operator is providing minimal
competition. DBS was offered in 1994 to all the homes passed in the Aurora
System's service area providing over 100 channels at competitive prices. The
initial cost for equipment and installation is approximately $800 to $1,200. To
date, the Aurora System has lost very few customers to DBS. However, the
Managing General Partner believes that the DBS operator represents potential
significant competition in the Aurora System. Ameritech has announced plans to
build a cable television system in the Naperville, Illinois area and to extend
into several other communities within
5
6
the next few years. Ameritech is the major provider of telephone services in the
Naperville, Illinois area, and it has substantially greater financial resources
than the Partnership. The Managing General Partner is uncertain at this time
whether Ameritech's plans include any of the communities located in the Aurora
System.
REGULATION AND LEGISLATION. The cable television industry is regulated
through a combination of the Federal Communications Commission ("FCC"), some
state governments, and most local governments. In addition, the Copyright Act of
1976 imposes copyright liability on all cable television systems. Cable
television operations are subject to local regulation insofar as systems operate
under franchises granted by local authorities.
Cable Television Consumer Protection and Competition Act of 1992. On
October 5, 1992, Congress enacted the Cable Television Consumer Protection and
Competition Act of 1992 (the "1992 Cable Act"), which became effective on
December 4, 1992. This legislation has caused significant changes to the
regulatory environment in which the cable television industry operates. The 1992
Cable Act generally allows for a greater degree of regulation of the cable
television industry. Under the 1992 Cable Act's definition of effective
competition, nearly all cable television systems in the United States, including
those owned and managed by Intercable, are subject to rate regulation of basic
cable services. In addition, the 1992 Cable Act allows the FCC to regulate rates
for non-basic service tiers other than premium services in response to
complaints filed by franchising authorities and/or cable subscribers. In April
1993, the FCC adopted regulations governing rates for basic and non-basic
services. The FCC's rules became effective on September 1, 1993.
In compliance with these rules, the Venture reduced rates charged for
certain regulated services effective September 1, 1993. These reductions
resulted in some decrease in revenues and operating income before depreciation
and amortization; however, the decrease was not as severe as originally
anticipated. The Managing General Partner has undertaken actions to mitigate a
portion of these reductions primarily through (a) new service offerings in some
systems, (b) product re-marketing and re-packaging and (c) marketing efforts
directed at non-subscribers.
On February 22, 1994, however, the FCC adopted several additional rate
orders including an order which revised its earlier-announced regulatory scheme
with respect to rates. The FCC's new regulations generally require rate
reductions, absent a successful cost-of-service showing, of 17% of September 30,
1992 rates, adjusted for inflation, channel modifications, equipment costs, and
increases in programming costs. However, the FCC held rate reductions in
abeyance in certain systems. The new regulations became effective on 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
Venture elected to file cost-of-service showings for the Aurora System. The
Managing General Partner thus anticipates no further reduction in revenues or
operating income before depreciation and amortization resulting from the FCC's
rate
6
7
regulations. At this time, however, the regulatory authorities have not
approved the cost-of-service showings, and there can be no assurance that the
Venture'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 1994 rate
orders was the treatment of packages of a la carte channels. The FCC in its rate
regulations adopted April 1, 1993, exempted from rate regulation the price of
packages of a la carte channels upon the fulfillment of certain conditions. On
November 10, 1994, the FCC reversed its policy regarding rate regulation of
packages of a la carte services. A la carte services that are offered in a
package will now be subject to rate regulation by the FCC, although the FCC
indicated that it cannot envision circumstances in which any price for a
collective offering of premium channels that have traditionally been offered on
a per-channel basis would be found to be unreasonable.
On November 10, 1994, the FCC also announced a revision to its
regulations governing the manner in which cable operators may charge subscribers
for new cable programming services. In addition to the present formula for
calculating the permissible rate for new services, the FCC instituted a
three-year flat fee mark-up plan for charges relating to new channels of cable
programming services. Commencing on January 1, 1995, operators may charge for
new channels of cable programming services added after May 14, 1994 at a rate of
up to 20 cents per channel, but may not make adjustments to monthly rates
totaling more than $1.20 plus an additional 30 cents for programming license
fees per subscriber over the first two years of the three-year period for these
new services. Operators may charge an additional 20 cents in the third year only
for channels added in that year plus the costs for the programming. Operators
electing to use the 20 cent per channel adjustment may not also take a 7.5%
mark-up on programming cost increases, which is permitted under the FCC's
current rate regulations. The FCC has requested further comment as to whether
cable operators should continue to receive the 7.5% mark-up on increases in
license fees on existing programming services.
The FCC also announced that it will permit operators to offer a "new
product tier" ("NPT"). Operators will be able to price this tier as they elect
so long as, among other conditions, other channels that are subject to rate
regulation are priced in conformity with applicable regulations and operators do
not remove programming services from existing tiers and offer them on the NPT.
There have been several lawsuits filed by cable operators and
programmers in Federal court challenging various aspects of the 1992 Cable Act,
including provisions relating to mandatory broadcast signal carriage,
retransmission consent, access to cable programming, rate regulations,
commercial leased channels and public 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
7
8
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 Intercable nor the Managing General Partner has any
direct or indirect ownership, operation, control or interest in a television
broadcast station, or a telephone company, and they are thus presently
unaffected by the cross-ownership rules.
The Cable Communications Policy Act of 1984 (the "1984 Cable Act") and
FCC regulations generally prohibit the common operation of a cable television
system and a telephone company within the same service area. Until recently, a
provision of a Federal court antitrust consent decree also prohibited the
regional Bell operating companies ("RBOCs") from engaging in cable television
operations. This prohibition was recently removed when the court retaining
jurisdiction over the consent decree ruled that the RBOCs could provide
information services over their facilities. This decision permits the RBOCs to
acquire or construct cable television systems outside of their own service
areas.
The 1984 Cable Act prohibited local exchange carriers, including the
RBOCs, from providing video programming directly to subscribers within their
local exchange telephone service areas, except in rural areas or by specific
waiver of FCC rules. Several Federal district courts have struck down the 1984
Cable Act's telco/cross-ownership provision as facially invalid and inconsistent
with the First Amendment. The United States 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 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
8
9
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 Aurora System was acquired by the Venture in May 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 Aurora system. The monthly basic
service rates set forth herein represent, with respect to systems with multiple
headends, the basic service rate charged to the majority of the subscribers
within the system. While the charge for basic plus service may have increased in
1993 in some cases as a result of the FCC's rate regulations, overall revenues
may have decreased due to the elimination of charges for additional outlets and
certain equipment. In cable television systems, basic subscribers can subscribe
to more than one pay TV service. Thus, the total number of pay services
subscribed to by basic subscribers are called pay units. As of December 31,
1994, the Aurora System operated approximately 700 miles of cable plant, passing
approximately 62,000 homes, representing an approximate 60% penetration rate.
Figures for numbers of subscribers, miles of cable plant and homes passed are
compiled from the Managing General Partner's records and may be subject to
adjustments.
At December 31,
-------------------------------------------------------
AURORA, ILLINOIS 1994 1993 1992
---------------- ----------- ----------- -----------
Monthly basic plus service rate $ 21.08 $ 21.08 $ 21.45
Basic subscribers 40,666 37,426 35,194
Pay units 27,856 28,283 27,912
Franchise expiration dates range from August 1995 to November 2008. Any
franchises expiring in 1995 are in the process of renewal.
PROGRAMMING SERVICES
Programming services provided by the Aurora System include local
affiliates of the national broadcast networks, local independent broadcast
channels, the traditional satellite services (e.g., American Movie Classics,
Arts & Entertainment, Black Entertainment Network, C-SPAN, The Discovery
Channel, Lifetime, Entertainment Sports Network, Home Shopping Network, Mind
Extension University, Music Television, Nickelodeon, Turner Network Television,
The Nashville Network, Video Hits One, and superstations WOR, WGN and TBS. The
Venture'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).
9
10
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 6,950.
10
11
ITEM 6. SELECTED FINANCIAL DATA
For the Year Ended December 31,
-----------------------------------------------------------------------------------
1994 1993 1992 1991 1990
----------- ----------- ----------- ----------- -----------
Revenues $15,388,489 $15,196,068 $14,486,583 $13,196,389 $ 7,126,678
Depreciation and Amortization 10,596,340 10,883,845 10,507,110 10,474,319 8,761,878
Operating Loss (5,883,025) (5,816,179) (5,481,821) (6,105,858) (6,234,497)
Minority Interest in Net Loss 3,061,563 2,836,367 2,827,893 3,178,872 3,806,620
Net Loss (5,838,329) (5,408,884) (5,392,724) (6,979,500) (5,704,464)
Net Loss per Limited
Partnership Unit (33.15) (30.71) (30.62) (49.39) (89.95)
Weighted Average Number of Limited
Partnership Units Outstanding 174,343 174,343 174,343 139,901 62,750
General Partners' Deficit (295,821) (237,438) (183,349) (129,422) (59,627)
Limited Partners' Capital 8,256,913 14,036,859 19,391,654 24,730,451 18,599,372
Total Assets 57,752,046 64,595,970 73,796,057 80,534,496 86,603,937
Debt 43,566,064 41,604,580 43,678,543 41,825,847 52,957,545
Managing General Partner Advances 933,949 1,056,828 345,839 486,652 284,398
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
IDS/JONES GROWTH PARTNERS II, L.P.
Results of Operations
All of the operations of IDS/Jones Growth Partners II, L.P. (the
"Partnership"), a Colorado limited partnership, are represented exclusively by
its approximate 66 percent interest in IDS/Jones Joint Venture Partners (the
"Venture"). Refer to Management's Discussion and Analysis of Financial Condition
and Results of Operations for the Venture for details pertaining to its
operations.
Financial Condition
The Partnership owns an approximate 66 percent interest in the Venture.
The Partnership's interest in the Venture decreased $5,838,329 to $7,960,592 at
December 31, 1994. This decrease represents the Partnership's proportionate
share of losses generated by the Venture in 1994. Such losses are anticipated to
continue. Refer to Management's Discussion and Analysis of Financial Condition
and Results of Operations for the Venture for details pertaining to its
financial condition.
11
12
IDS/JONES JOINT VENTURE PARTNERS
Results of Operations
1994 Compared to 1993
Revenues of the Venture's Aurora System increased $192,421, or
approximately 1 percent, from $15,196,068 in 1993 to $15,388,489 in 1994. An
increase in the subscriber base primarily accounted for the increase in
revenues. Basic subscribers increased 3,240, or approximately 9 percent, from
37,426 at December 31, 1993 to 40,666 at December 31, 1994. The increase in
revenues would have been greater but for the reduction in basic rates due to
basic rate regulations issued by the FCC in April 1993 with which the Venture
complied effective September 1993. See Regulation and Legislation discussed
below. No other individual factor was significant to the increase in revenues.
Operating, general and administrative expense increased $545,609, or
approximately 7 percent, from $8,109,395 in 1993 to $8,655,004 in 1994.
Increases in programming expenses, due in part to the increase in the subscriber
base, were primarily responsible for the increase in operating, general and
administrative expense. No other individual factors contributed significantly to
the increase. Operating, general and administrative expense represented 53
percent of revenue in 1993 and 56 percent in 1994. Management and supervision
fees and allocated overhead from the General Partners increased $1,163, less
than 1 percent, from $2,019,007 in 1993 to $2,020,170 in 1994 due primarily to
the increase in revenues, upon which management and supervision fees and
allocated overhead are based. The increase was partially offset by a decrease in
allocated expenses from the Managing General Partner resulting from a change in
allocation methods effective December 1, 1993.
Depreciation and amortization expense decreased $287,505, or
approximately 3 percent, from $10,883,845 in 1993 to $10,596,340 in 1994 due to
the maturation of a portion of the Venture's intangible asset base.
Operating loss increased $66,846, or approximately 1 percent, from
$5,816,179 in 1993 to $5,883,025 in 1994 due to the increases in operating,
general and administrative expense and management and supervision fees from the
General Partners exceeding the increase in revenues and the decrease in
depreciation and amortization expense.
Operating income before depreciation and amortization decreased
$354,351, or approximately 7 percent, from $5,067,666 in 1993 to $4,713,315 in
1994 due to the increases in operating, general and administrative expense and
management and supervision fees from the General Partners exceeding the increase
in revenues. The decrease in operating income before depreciation and
amortization reflects the current operating environment of the cable television
industry. The FCC rate regulations under the 1992 Cable Act have caused revenues
to increase more slowly than otherwise would have been the case. In turn, this
has caused certain expenses which are a function of revenue, such as franchise
fees, copyright fees and management fees, to increase more slowly than in prior
years. However, other operating costs such as programming fees, salaries and
benefits, and marketing costs as well as other costs incurred by Jones
Intercable, Inc. which are allocated to the Venture, 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 Venture and Jones Intercable, Inc. incur cost increases (due to, among other
things, programming fees, reregulation and competition) that exceed increases in
revenue. Jones Intercable, Inc. 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 directed at non-subscribers.
Interest expense increased $611,733, or approximately 27 percent, from
$2,250,106 in 1993 to $2,861,839 in 1994 due to higher effective interest rates
and higher outstanding balances on interest bearing obligations. Consolidated
loss increased $654,641, or approximately 8 percent, from $8,245,251 in 1993 to
$8,899,892 in 1994. This loss is due to the factors discussed above and are
expected to continue in the future.
1993 Compared to 1992
Revenues of the Venture increased $709,485, or approximately 5 percent,
from $14,486,583 in 1992 to $15,196,068 in 1993. An increase in the basic
subscriber base accounted for approximately 64 percent of the increase in
revenues. Basic subscribers increased 2,232, or approximately 6 percent, from
35,194 at December 31, 1992 to 37,426 at December 31, 1993. Basic service rate
adjustments accounted for approximately 14 percent of the increase in revenues.
The increase in revenues would have been greater but for the reduction in basic
rates due to basic rate regulations issued by the FCC in April 1993 with which
the Venture complied effective September 1, 1993. No other individual factor was
significant to the increases in revenues.
12
13
Operating, general and administrative expense increased $540,008, or
approximately 7 percent, from $7,569,387 in 1992 to $8,109,395 in 1993.
Operating, general and administrative expense represented 52 percent of revenue
in 1992 and 53 percent in 1993. Increases in programming expenses, personnel
related expense and system plant related expense were primarily responsible for
the increase in operating, general and administrative expense. No other
individual factor contributed significantly to the increase. Management fees and
allocated overhead from the General Partners increased $127,100, or
approximately 7 percent, from $1,891,907 in 1992 to $2,019,007 in 1993 due to
the increase in revenues, upon which such fees and allocations are based, and an
increase in allocated expenses from Jones Intercable, Inc.
Depreciation and amortization expense increased $376,735, or
approximately 4 percent, from $10,507,110 in 1992 to $10,883,845 in 1993. This
increase was due to capital additions during 1992 and 1993.
Operating loss increased $334,358, or approximately 6 percent, from
$5,481,821 in 1992 to $5,816,179 in 1993. This increase was due to the increases
in operating, general and administrative expenses, management and supervision
fees and allocated overhead from the General Partners and depreciation and
amortization expenses exceeding the increase in revenues.
Operating income before depreciation and amortization increased
$42,377, or approximately 1 percent, from $5,025,289 in 1992 to $5,067,666 in
1993. This increase was due to the increase in revenues exceeding the increases
in operating, general and administrative expense and management and supervision
fees and allocated overhead from the General Partners.
Interest expense decreased $372,893, or approximately 14 percent, from
$2,622,999 in 1992 to $2,250,106 in 1993 due to lower effective interest rates
and lower outstanding balances on interest bearing obligations. Other expense
increased $63,169, or approximately 55 percent, from $115,797 in 1992 to
$178,966 in 1993. Such expense primarily represents allocated depreciation from
related entities that provide advertising sales, warehouse and converter repair
services to the Venture. Net loss increased $24,634, or less than 1 percent,
from $8,220,617 in 1992 to $8,245,251 in 1993. Such losses are due to the
factors discussed above.
Financial Condition
During 1994, the Venture expended approximately $3,588,000 on capital
expenditures. Approximately 37 percent of the expenditures related to
construction of service drops to subscriber homes. Approximately 37 percent of
the expenditures related to plant extensions. Approximately 12 percent of the
expenditures related to system rebuilds and upgrades. The remainder of the
expenditures was used for various enhancements in the Aurora System. Funding for
these expenditures was provided by cash on hand, cash generated from operations,
advances from the General Partners and borrowings from its credit facility.
Budgeted capital expenditures for 1995 are approximately $3,255,000.
Approximately 51 percent of the expenditures are for plant extensions.
Approximately 29 percent of the expenditures are for construction of service
drops to subscriber homes. Approximately 12 percent of the anticipated capital
expenditures are for system rebuilds and upgrades. The remainder are for various
enhancements in the Aurora System. Funding for the expenditures is expected to
be provided by cash generated from operations and, if available, borrowings
under the Venture's credit facility, as discussed below.
On December 5, 1991, Jones Intercable, Inc. ("Intercable") made an
equity investment in the Venture in the amount of $2,872,000 and a loan of
$1,800,000 to the Venture. On that date, IDS Management Corporation also made an
equity investment of $2,872,000 in the Venture and a loan to the Venture in the
amount of $1,800,000. A portion of the $1,800,000 loan from IDS Management
Corporation was repaid in November 1994. See discussion below. The loans from
Intercable and IDS Management Corporation are subordinate to the Venture's new
revolving credit and term loan. These loans matured in the fourth quarter of
1994. IDS Management Corporation extended its loan until December 5, 1995 and,
although Intercable has not formally extended its loan, it has not demanded
repayment. In the first quarter of 1994, Intercable agreed to subordinate to all
other Venture debt the $1,406,647 advance to the Venture outstanding at March
30, 1994 and IDS Management Corporation made an additional loan of $1,000,000 to
the Venture to fund principal repayments due on the Venture's then-outstanding
term loan. In the second quarter of 1994, Intercable made a loan of $1,000,000
to the Venture to fund principal repayments due on the Venture's
then-outstanding term loan. This loan was repaid with interest in November
1994. The interest rates on the respective loans, which will vary from time to
time, with respect to IDS Management Corporation's loan, are at its cost of
borrowing, and, with respect to Intercable's loan, are at its weighted average
cost of borrowing. It is anticipated that the remaining loans will be repaid
over time with borrowings from the Venture's new revolving credit and term
loan, as discussed below. If the December 5, 1991 loans are not repaid,
Intercable and IDS Management Corporation will have the right, among other
rights, to convert these loans to equity in the Venture.
13
14
In November 1994, the Venture entered into a new revolving credit and
term loan agreement with a commercial bank. The new credit facility has a
maximum amount available of $40,000,000 through March 31, 1995, at which time
the maximum amount available will increase to $45,000,000. At December 31, 1994,
$38,300,000 was outstanding under this agreement. Borrowings from this new
credit facility were used to repay the balance of the Venture's previous term
loan of $36,000,000, to repay to Intercable the $1,000,000 advanced by
Intercable to fund the Venture's second quarter debt repayment plus interest, to
repay to IDS Management Corporation $880,000 of principal plus interest on the
$1,800,000 loan from IDS Management Corporation dated December 5, 1991 and to
pay certain fees incurred in obtaining the new credit facility. The revolving
credit period expires December 31, 1996, at which time the then-outstanding
balance converts to a term loan payable in 28 consecutive quarterly
installments. Interest on the new credit facility is at the Venture's option of
the Base rate plus .75 percent, LIBOR plus 1.75 percent or the CD rate plus
1.875 percent. The Venture anticipates repaying the remaining notes outstanding
to related parties with borrowings from this new credit facility. As borrowings
become available, subject to leverage covenants, the related parties' notes will
be repaid including accrued interest in the following order: first, to IDS
Management Corporation the remaining $920,000 of the $1,800,000 note dated
December 5, 1991; second, to Intercable the $1,800,000 note dated December 5,
1991; third, to IDS Management Corporation the $1,000,000 note dated March 30,
1994; and fourth, to Intercable the $1,406,647 outstanding advance.
As a result of their equity contributions to the Venture, IDS
Management Corporation and Intercable each have an approximate 5 percent equity
interest in the Venture, the Partnership has a 66 percent interest and IDS/Jones
89-B has a 24 percent interest. If any portion of the December 5, 1991 loans are
converted to equity, the ownership percentages will be adjusted accordingly.
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 Venture has filed a cost-of-service showing for its Aurora System
and thus anticipates no further reductions in rates. The cost-of-service showing
has not yet received final approval from franchising authorities, however, and
there can be no assurance that the Venture's cost-of-service showing will
prevent further rate reductions in that system until such final approval is
received. See Item 1 for further discussion of the provisions of the 1992 Cable
Act and the FCC regulations promulgated thereunder.
14
15
Item 8. Financial Statements
IDS/JONES GROWTH PARTNERS II
CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1994 and 1993
INDEX
Page
----
Report of Independent Public Accountants 16
Consolidated Balance Sheets 17
Consolidated Statements of Operations 19
Consolidated Statements of Partners' Capital (Deficit) 20
Consolidated Statements of Cash Flows 21
Notes to Consolidated Financial Statements 22
15
16
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of IDS/Jones Growth Partners II, L.P.:
We have audited the accompanying consolidated balance sheets of
IDS/JONES GROWTH PARTNERS II, L.P. (a Colorado limited partnership) as of
December 31, 1994 and 1993, and the related consolidated 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 Partners' 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 IDS/Jones Growth
Partners II, L.P. as of December 31, 1994 and 1993, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1994, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Denver, Colorado,
March 8, 1995.
16
17
IDS/JONES GROWTH PARTNERS II, L.P.
(A Limited Partnership)
CONSOLIDATED BALANCE SHEETS
December 31,
---------------------------------
ASSETS 1994 1993
------ ------------ ------------
CASH $ 57,284 $ 81,997
TRADE RECEIVABLES, less allowance for
doubtful receivables of $50,993 and $34,993 at
December 31, 1994 and 1993, respectively 403,428 365,509
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 34,508,868 30,921,229
Less- accumulated depreciation (14,180,482) (10,370,393)
------------ ------------
20,328,386 20,550,836
Franchise costs, net of accumulated amortization
of $31,231,579 and $25,699,750 at December 31, 1994
and 1993, respectively 27,335,542 32,867,371
Subscriber lists, net of accumulated amortization
of $4,951,136 and $3,884,274 at December 31, 1994
and 1993, respectively 2,668,367 3,735,229
Costs in excess of interests in net assets
purchased, net of accumulated amortization
of $859,836 and $672,276 at December 31, 1994
and 1993, respectively 6,651,535 6,839,095
------------ ------------
Total investment in cable television properties 56,983,830 63,992,531
DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 307,504 155,933
------------ ------------
Total assets $ 57,752,046 $ 64,595,970
============ ============
The accompanying notes to consolidated financial statements
are an integral part of these consolidated balance sheets.
17
18
IDS/JONES GROWTH PARTNERS II, L.P.
(A Limited Partnership)
CONSOLIDATED BALANCE SHEETS
December 31,
----------------------------------
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) 1994 1993
------------------------------------------- ------------ ------------
LIABILITIES:
Debt $ 43,566,064 $ 41,604,580
Accounts payable-
Trade - 9,570
Managing General Partner 933,949 1,056,828
Accrued liabilities 1,195,393 979,721
Subscriber prepayments 54,863 43,602
------------ ------------
Total liabilities 45,750,269 43,694,301
------------ ------------
COMMITMENTS AND CONTINGENCIES (Note 7)
MINORITY INTEREST IN JOINT VENTURE 4,040,685 7,102,248
------------ ------------
PARTNERS' CAPITAL (DEFICIT):
General Partners-
Contributed capital 500 500
Accumulated deficit (296,321) (237,938)
------------ ------------
(295,821) (237,438)
------------ ------------
Limited Partners-
Net contributed capital (174,343 units
outstanding at December 31, 1994 and 1993) 37,256,546 37,256,546
Accumulated deficit (28,999,633) (23,219,687)
------------ ------------
8,256,913 14,036,859
------------ ------------
Total liabilities and partners'
capital (deficit) $ 57,752,046 $ 64,595,970
============ ============
The accompanying notes to consolidated financial statements
are an integral part of these consolidated balance sheets.
18
19
IDS/JONES GROWTH PARTNERS II, L.P.
(A Limited Partnership)
CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31,
---------------------------------------------------------
1994 1993 1992
----------- ----------- -----------
REVENUES $15,388,489 $15,196,068 $14,486,583
COSTS AND EXPENSES:
Operating, general and
administrative 8,655,004 8,109,395 7,569,387
Management and supervision
fees and allocated overhead
from General Partners 2,020,170 2,019,007 1,891,907
Depreciation and amortization 10,596,340 10,883,845 10,507,110
----------- ----------- -----------
OPERATING LOSS (5,883,025) (5,816,179) (5,481,821)
----------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (2,861,839) (2,250,106) (2,622,999)
Other, net (155,028) (178,966) (115,797)
----------- ----------- -----------
Total other income (expense) (3,016,867) (2,429,072) (2,738,796)
----------- ----------- -----------
CONSOLIDATED LOSS (8,899,892) (8,245,251) (8,220,617)
MINORITY INTEREST IN CONSOLIDATED
LOSS 3,061,563 2,836,367 2,827,893
----------- ----------- -----------
NET LOSS $(5,838,329) $(5,408,884) $(5,392,724)
=========== =========== ===========
ALLOCATION OF NET LOSS:
General Partners $ (58,383) $ (54,089) $ (53,927)
=========== =========== ===========
Limited Partners $(5,779,946) $(5,354,795) $(5,338,797)
=========== =========== ===========
NET LOSS PER LIMITED PARTNERSHIP
UNIT $ (33.15) $ (30.71) $ (30.62)
============ ============ ============
WEIGHTED AVERAGE NUMBER OF LIMITED
PARTNERSHIP UNITS OUTSTANDING 174,343 174,343 174,343
============ =========== ===========
Theaccompanying notes to consolidated financial statements
are an integral part of these consolidated statements.
19
20
IDS/JONES GROWTH PARTNERS II, L.P.
(A Limited Partnership)
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
Year Ended December 31,
---------------------------------------------------------
1994 1993 1992
------------- ------------- -------------
GENERAL PARTNERS:
Jones Cable Corporation
Balance, beginning of year $ (118,719) $ (91,675) $ (64,711)
Net loss for year (29,192) (27,044) (26,964)
----------- ------------ ------------
Balance, end of year $ (147,911) $ (118,719) $ (91,675)
=========== ============ ============
IDS Cable II Corporation
Balance, beginning of year $ (118,719) $ (91,674) $ (64,711)
Net loss for year (29,191) (27,045) (26,963)
----------- ------------ ------------
Balance, end of year $ (147,910) $ (118,719) $ (91,674)
=========== ============ ============
Total
Balance, beginning of year $ (237,438) $ (183,349) $ (129,422)
Net loss for year (58,383) (54,089) (53,927)
----------- ------------ ------------
Balance, end of year $ (295,821) $ (237,438) $ (183,349)
=========== ============ ============
LIMITED PARTNERS:
Balance, beginning of year $14,036,859 $ 19,391,654 $ 24,730,451
Net loss for year (5,779,946) (5,354,795) (5,338,797)
----------- ------------ ------------
Balance, end of year $ 8,256,913 $ 14,036,859 $ 19,391,654
=========== ============ ============
The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements.
20
21
IDS/JONES GROWTH PARTNERS II, L.P.
(A Limited Partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
-------------------------------------------------------
1994 1993 1992
------------ ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (5,838,329) $(5,408,884) $(5,392,724)
Adjustments to reconcile net
loss to net cash provided by
operating activities:
Depreciation and amortization 10,596,340 10,883,845 10,507,110
Minority interest in consolidated loss (3,061,563) (2,836,367) (2,827,893)
Amortization of interest rate protection contract - - 29,997
Decrease (increase) in trade receivables (37,919) 15,099 (29,549)
Decrease (increase) in deposits, prepaid expenses
and deferred charges (151,571) 11,335 53,179
Increase (decrease) in trade accounts
payable, accrued liabilities and
subscriber prepayments 217,363 408,138 (229,705)
Increase (decrease) in advances from
Managing General Partner (122,879) 710,989 (140,813)
------------ ----------- -----------
Net cash provided by
operating activities 1,601,442 3,784,155 1,969,602
------------ ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (3,587,639) (2,997,575) (2,489,949)
------------ ----------- -----------
Net cash used in investing activities (3,587,639) (2,997,575) (2,489,949)
------------ ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 40,900,085 - 2,129,607
Repayment of debt (38,938,601) (2,073,963) (276,911)
------------ ----------- -----------
Net cash provided by (used in)
financing activities 1,961,484 (2,073,963) 1,852,696
------------ ----------- -----------
Increase (decrease) in cash (24,713) (1,287,383) 1,332,349
Cash, beginning of year 81,997 1,369,380 37,031
------------ ----------- -----------
Cash, end of year $ 57,284 $ 81,997 $ 1,369,380
============ =========== ===========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 2,516,358 $ 2,069,821 $ 2,674,761
============ ============ ===========
The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements.
21
22
IDS/JONES GROWTH PARTNERS II, L.P.
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) ORGANIZATION AND PARTNERS' INTERESTS
Formation and Business
IDS/Jones Growth Partners II, L.P. (the "Partnership"), a Colorado
limited partnership, was formed on November 9, 1989, pursuant to a public
offering. The Partnership was formed to acquire, develop and operate cable
television systems. Jones Cable Corporation, a Colorado corporation, is the
"Managing General Partner" and manager of the Partnership. IDS Cable II
Corporation, a Minnesota corporation, is the "Supervising General Partner" of
the Partnership. IDS Cable Corporation is the "Supervising General Partner" of
IDS/Jones Growth Partners 89-B, Ltd. ("IDS/Jones 89-B"). Jones Intercable,
Inc. ("Intercable"), the parent of Jones Cable Corporation, manages the cable
television system purchased by IDS/Jones Joint Venture Partners
(the "Venture"). Intercable and its subsidiaries also own and operate cable
television systems as well as manage cable television systems for other
limited partnerships for which it is general partner and, also, for affiliated
entities. The Managing General Partner and the Supervising General Partners
are referred to as the "General Partners".
Contributed Capital, Commissions and Syndication Costs
The capitalization of the Partnership is set forth in the accompanying
consolidated statements of partners' capital (deficit). No limited partner is
obligated to make any additional contributions to partnership capital.
The Managing General Partner and the Supervising General Partner
purchased their interests in the Partnership by contributing $250 each to
partnership capital.
All profits and losses of the Partnership are allocated 99 percent to
the limited partners, 1/2 percent to the Managing General Partner and 1/2
percent to the Supervising General Partner, except for income or gain from the
sale or disposition of cable television properties, which will be allocated to
the partners based upon the formula set forth in the partnership agreement and
interest income earned prior to the first acquisition by the Partnership of a
cable television system, which was allocated 100 percent to the limited
partners.
Formation of Joint Venture
On May 30, 1990, the Partnership and IDS/Jones 89-B formed the
Venture. The Partnership's offering closed on September 30, 1991 with limited
partner subscriptions totalling $43,585,750, of which $37,592,709 was
contributed to the Venture. In the fourth quarter of 1991, due to the
necessity for additional funding for the Venture, Intercable and IDS Management
Corporation each made equity investments of $2,872,000 in the Venture under the
joint venture agreement between the joint venture partners. Profits, losses,
and distributions of the Venture will be shared in proportion to total capital
contributions made by the individual venture partners. In addition, on December
5, 1991, Intercable and IDS Management Corporation made subordinated loans to
the Venture each in the principal amount of $1,800,000. See Note 5 for further
information about the status of such loans. As a result of their equity
contributions to the Venture described above, ownership percentages of the
Venture are detailed below:
The Partnership 66%
IDS/Jones 89-B 24%
Intercable 5%
IDS Management Corporation 5%
-----
100%
If any of the December 5, 1991 loans discussed in Note 5 are converted
to equity, the ownership percentages will be adjusted accordingly.
22
23
The Venture was formed for the purpose of acquiring the cable
television system serving the communities of Aurora, North Aurora, Montgomery,
Plano, Oswego, Sandwich, Yorkville and certain unincorporated areas of Kendall
and Kane Counties, all in the state of Illinois (the "Aurora System").
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Records
The accompanying consolidated financial statements have been prepared
on the accrual basis of accounting in accordance with generally accepted
accounting principles. The Partnership's tax returns are also prepared on the
accrual basis.
Principles of Consolidation
The accompanying consolidated financial statements include 100 percent
of the accounts of the Partnership and those of the Venture, reduced by the
minority interest in the Venture. All inter-partnership accounts and
transactions have been eliminated.
Allocation of Cost of Purchased Cable Television Systems
The total purchase price of the Aurora System purchased by the Venture
was allocated 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. Acquisition
fees paid to affiliates of the General Partners and other acquisition costs were
capitalized and charged to intangible assets.
Property, Plant and Equipment
Depreciation of property, plant and equipment is provided primarily
using the straight-line method over the following estimated service lives:
Cable distribution systems 5 - 15 years
Equipment and tools 5 years
Office furniture and equipment 5 years
Buildings 10 - 20 years
Vehicles 3 years
Replacements, renewals and improvements are capitalized and
maintenance and repairs are charged to expense as incurred.
Intangible Assets
Costs assigned to franchises, subscriber lists and costs in excess of
interests in net assets purchased will be amortized using the straight-line
method over their remaining estimated useful lives.
Franchise costs 6 years
Subscriber lists 3 years
Costs in excess of interests in
net assets purchased 36 years
Revenue Recognition
Subscriber prepayments will be initially deferred and recognized as
revenue when earned.
23
24
(3) TRANSACTIONS WITH THE GENERAL PARTNERS AND AFFILIATES
Management Fees, Supervision Fees, Distribution Ratios and
Reimbursements
Intercable manages the Venture and receives a fee for its services
equal to 5 percent of the gross revenues of the Venture, excluding revenues from
the sale of cable television systems or franchises. Management fees paid by the
Venture to Intercable during the years ended December 31, 1994, 1993 and 1992
were $769,424, $759,803 and $724,329, respectively.
The Supervising General Partners participate in certain management
decisions of the Venture and receive a fee for their services equal to 1/2
percent of the gross revenues of the Venture, excluding revenues from the sale
of cable television systems or franchises. Supervision fees paid by the Venture
to the Supervising General Partners during the years ended December 31, 1994,
1993 and 1992 were $76,942, $75,980 and $72,433, respectively.
The Venture reimburses Intercable for certain allocated overhead and
administrative expenses. These expenses represent the salaries and related
benefits paid for corporate personnel, rent, data processing services and other
corporate related facilities costs. Such personnel provide engineering,
marketing, administrative, accounting, legal and investor relations services to
the Venture. Allocations of personnel costs are based on actual time spent by
employees of Intercable with respect to each partnership managed. Remaining
overhead costs are allocated primarily based on revenues and/or the costs of
partnership assets managed. Systems owned by Intercable and all other systems
owned by partnerships for which Intercable or affiliates are the general
partners are also allocated a proportionate share of these expenses. 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. Intercable believes that the methodology used in allocating
overhead and administrative expenses is reasonable. Reimbursements made to
Intercable by the Venture for allocated overhead and administrative expenses
during the years ended December 31, 1994, 1993 and 1992 were $1,173,804,
$1,183,224 and $1,095,145, respectively. The Supervising General Partners may
also be reimbursed for certain expenses incurred on behalf of the Venture.
There were no reimbursements made to the Supervising General Partners by the
Venture for allocated overhead and administrative expenses during the years
ended December 31, 1994, 1993 and 1992.
During 1994, the Venture was charged interest by Intercable at an
average interest rate of 10 percent on amounts due Intercable and on the
subordinated loans from Intercable, which approximated Intercable's weighted
average cost of borrowing. Total interest charged to the Venture by Intercable
during the years ended December 31, 1994, 1993 and 1992 was $386,257, $192,746
and $230,032, respectively.
The Venture was charged interest on the subordinated loans from IDS
Management Corporation at an average interest rate of 5.69 percent, which
approximated IDS Management Corporation's cost of borrowing. Total interest
charged to the Venture by IDS Management Corporation during 1994, 1993, and 1992
was $113,458, $65,653 and $76,112, respectively.
Any Partnership distributions made from cash flow (defined as cash
receipts derived from routine operations, less debt principal and interest
payments and cash expenses) are allocated 99 percent to the limited partners,
1/2 percent to the Managing General Partner and 1/2 percent to the Supervising
General Partner. 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 100 percent of the amount initially contributed to the
Partnership by the limited partners; second, to the General Partners in an
amount which, together with all prior distributions, will equal the amount
contributed to the capital of the partnership by the General Partners; third, to
the limited partners in an amount which, together with all prior distributions,
will equal a 6 percent per annum cumulative and noncompounded return on the
capital contributions of the limited partners; the balance, 75 percent to the
limited partners, 12-1/2 percent to the Managing General Partner and 12-1/2
percent to the Supervising General Partner.
Payments to/from Affiliates for Programming Services
The Venture receives programming from Product Information Network,
Superaudio, The Mind Extension University and Jones Computer Network,
affiliates of Intercable. Payments to Superaudio totaled $23,558, $22,627 and
$22,066, respectively, in 1994, 1993 and 1992. Payments to The Mind Extension
University totaled $21,347, $13,168 and $12,643, respectively, in 1994, 1993
and 1992. Payments to Jones Computer Network, which initiated service in 1994,
totaled $12,421 in 1994. The Venture 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 Venture totaling $11,442 in 1994.
24
25
(4) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment as of December 31, 1994 and 1993,
consisted of the following:
1994 1993
----------- -----------
Cable distribution systems $33,355,717 $29,996,667
Equipment and tools 560,606 569,391
Office furniture and equipment 180,163 184,056
Vehicles 270,382 171,115
----------- -----------
34,366,868 30,921,229
Less- accumulated depreciation (14,180,482) (10,370,393)
----------- -----------
$20,186,386 $20,550,836
=========== ===========
(5) DEBT
Debt consists of the following: December 31,
---------------------------
1994 1993
----------- -----------
Lending institutions-
Revolving credit agreement $38,300,000 $38,000,000
Affiliated entities-
Subordinated loans 5,126,647 3,600,000
Capital lease obligations 139,417 4,580
----------- -----------
$43,566,064 $41,604,580
========== ==========
On December 5, 1991, Intercable made an equity investment in the
Venture in the amount of $2,872,000 and a loan of $1,800,000 to the Venture. On
that date, IDS Management Corporation also made an equity investment of
$2,872,000 in the Venture and a loan to the Venture in the amount of
$1,800,000. A portion of the $1,800,000 loan from IDS Management Corporation
was repaid in November 1994. See discussion below. The loans from Intercable
and IDS Management Corporation are subordinate to the Venture's new revolving
credit and term loan. These loans matured in the fourth quarter of 1994. IDS
Management Corporation extended its loan until December 5, 1995 and, although
Intercable has not formally extended its loan, it has not demanded repayment.
In the first quarter of 1994, Intercable agreed to subordinate to all other
Venture debt the $1,406,647 advance to the Venture outstanding at March 30,
1994 and IDS Management Corporation made an additional loan of $1,000,000 to
the Venture to fund principal repayments due on the Venture's then-outstanding
term loan. In the second quarter of 1994, Intercable made a loan of $1,000,000
to the Venture to fund principal repayments due on the Venture's
then-outstanding term loan. This loan was repaid with interest in November
1994. The interest rates on the respective loans, which will vary from time to
time, with respect to IDS Management Corporation's loan, are at its cost of
borrowing, and, with respect to Intercable's loan, are at its weighted average
cost of borrowing. It is anticipated that the remaining loans will be repaid
over time with borrowings from the Venture's new revolving credit and term
loan, as discussed below. If the December 5, 1991 loans are not repaid,
Intercable and IDS Management Corporation will have the right, among other
rights, to convert these loans to equity in the Venture.
In November 1994, the Venture entered into a new revolving credit and
term loan agreement with a commercial bank. The new credit facility has a
maximum amount available of $40,000,000 through March 31, 1995, at which time
the maximum amount available will increase to $45,000,000. At December 31, 1994,
$38,300,000 was outstanding under this agreement. Borrowings from this new
credit facility were used to repay the balance of the Venture's previous term
loan of $36,000,000, to repay to Intercable the $1,000,000 advanced by
Intercable to fund the Venture's second quarter debt repayment plus interest, to
repay to IDS Management Corporation $880,000 of principal plus interest on the
$1,800,000 loan from IDS Management Corporation dated December 5, 1991 and to
pay certain fees incurred in obtaining the new credit facility. The revolving
credit period expires December 31, 1996, at which time the then-outstanding
balance converts to a term loan payable in 28 consecutive quarterly
installments. Interest on the new credit facility is at the Venture's option of
the Base rate plus .75 percent, LIBOR plus 1.75 percent or the CD rate plus
1.875 percent. The Venture anticipates repaying the remaining notes outstanding
to related parties with borrowings from this new credit facility. As borrowings
become available, subject to leverage covenants, the related parties' notes will
be repaid including accrued interest in the following order: first, to IDS
Management Corporation the remaining
25
26
$920,000 of the $1,800,000 note dated December 5, 1991; second, to Intercable
the $1,800,000 note dated December 5, 1991; third, to IDS Management Corporation
the $1,000,000 note dated March 30, 1994; and fourth, to Intercable the
$1,406,647 outstanding advance.
On December 7, 1991, the Venture entered into an interest rate
protection contract covering outstanding debt obligations of $20,000,000. The
Venture paid a fee of $37,000. The agreement protected the Venture from LIBOR
interest rates that exceeded 7 percent and expired December 1993. The fee was
charged to interest expense over the life of the agreement using the
straight-line method.
Installments due on debt principal for each of the five years in the
period ending December 31, 1999 and thereafter, respectively, are: $5,168,472,
$41,825, $1,956,825, $3,843,942, $4,596,000 and $27,959,000.
(6) INCOME TAXES
Income taxes have not been recorded in the accompanying financial
statements because they accrue directly to the partners. The Federal and state
income tax returns of the Partnership are prepared and filed by the Managing
General Partner. There are no significant differences between taxable income and
the loss reported in the statements of operations.
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 or loss reported by the partners is different from that
reported in the statements of operations due to the difference in depreciation
recognized under generally accepted accounting principles and the expense
allowed for tax purposes under the Modified Accelerated Cost Recovery System
(MACRS). There are no other significant differences between taxable loss and the
net loss reported in the statements of operations.
(7) COMMITMENTS AND CONTINGENCIES
On October 5, 1992, Congress enacted the Cable Television Consumer
Protection and Competition Act of 1992 (the "1992 Cable Act"), which became
effective on December 4, 1992. The 1992 Cable Act generally allows for a greater
degree of regulation of the cable television industry. In April 1993, 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, however, the FCC adopted several additional rate
orders including an order which revised its earlier-announced regulatory scheme
with respect to rates. The Venture has filed a cost-of-service showing in its
Aurora System and therefore anticipates no further reductions in rates. The
cost-of-service showing has not-yet received final approval from franchising
authorities, however, and there can be no assurance that the Venture's
cost-of-service showing will prevent further rate reductions until such final
approval is received.
The Venture rents office and other facilities under various long-term
lease arrangements. Rent paid under such lease arrangements totalled $60,313,
$106,840 and $86,417, 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:
1995 $18,830
1996 16,730
1997 16,730
1998 16,730
1999 16,730
Thereafter 1,394
-------
$87,144
=======
26
27
(8) SUPPLEMENTARY PROFIT AND LOSS INFORMATION
Supplementary profit and loss information for the respective years is
presented below:
Year Ended December 31,
----------------------------------------
1994 1993 1992
---------- ---------- ----------
Maintenance and repairs $ 133,849 $ 115,863 $ 82,923
========== ========== ==========
Taxes, other than income and payroll taxes $ 11,949 $ 25,485 $ 37,954
========== ========== ==========
Advertising $ 423,866 $ 346,457 $ 357,594
========== ========== ==========
Depreciation of property, plant and equipment $3,810,089 $3,467,318 $3,091,691
========== ========== ==========
Amortization of intangible assets $6,786,251 $7,416,527 $7,415,419
========== ========== ==========
27
28
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Partnership itself has no officers or directors. Certain
information concerning the directors and executive officers of the Managing
General Partner is set forth below.
Name Age Positions with the Managing General Partner
------------------- --- -------------------------------------------------
Glenn R. Jones 65 Chairman of the Board and Chief Executive Officer
James B. O'Brien 45 President
Kevin P. Coyle 43 Vice President of Finance
Elizabeth M. Steele 43 Vice President and Secretary
Mr. Glenn R. Jones has been Chairman of the Board of the Managing
General Partner since its formation in October 1986. Mr. Jones served as
President of the Managing General Partner until September of 1990 at which time
he was elected Chief Executive Officer. Mr. Glenn R. Jones has served as
Chairman of the Board of Directors and Chief Executive Officer of Jones
Intercable, Inc. since its formation in 1970, and he was President from June
1984 until April 1988. Mr. Jones is the sole shareholder, President and Chairman
of the Board of Directors of Jones International, Ltd. He is also Chairman of
the Board of Directors of the subsidiaries of Jones Intercable, Inc. and of
certain other affiliates of Jones Intercable, Inc. Mr. Jones has been involved
in the cable television business in various capacities since 1961, is a past and
present member of the Board of Directors of the National Cable Television
Association, and is a former member of its Executive Committee. Mr. Jones is a
past director and member of the Executive Committee of C-Span. Mr. Jones has
been the recipient of several awards including the Grand Tam Award in 1989, the
highest award from the Cable Television Administration and Marketing Society;
the Chairman's Award from the Investment Partnership Association, which is an
association of sponsors of public syndications; the cable television industry's
Public Affairs Association President's Award in 1990, the Donald G. McGannon
award for the advancement of minorities and women in cable; the STAR Award from
American Women in Radio and Television, Inc. for exhibition of a commitment to
the issues and concerns of women in television and radio; and the Women in Cable
Accolade in 1990 in recognition of support of this organization. Mr. Jones is
also a founding member of the James Madison Council of the Library of Congress
and is on the Board of Governors of the American Society of Training and
Development.
Mr. James B. O'Brien was elected President of the Managing General
Partner in September of 1990. Mr. O'Brien joined Jones Intercable, Inc. in
January 1982. Mr. O'Brien was elected President and a Director of Jones
Intercable, Inc. in December 1989. Prior to being elected President and a
Director of Jones Intercable, Inc., 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 is a board member of Cable Labs,
Inc., the research arm of the 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.
Mr. Kevin P. Coyle was elected Vice President of Finance of the
Managing General Partner in February 1989. Mr. Coyle is the principal financial
and accounting officer of the Managing General Partner. Mr. Coyle joined The
Jones Group, Ltd. in July 1981 as Vice President/Financial Services. He was
elected Treasurer of Jones Intercable, Inc. in August 1987, Vice
President/Treasurer in April 1988 and Group Vice President/Finance in October
1990.
28
29
Ms. Elizabeth M. Steele has served as Secretary of the Managing General
Partner since August 1987 and Vice President since February 1989. Ms. Steele
joined Jones Intercable, Inc. in August 1987 as Vice President/General Counsel
and Secretary. Until joining Jones Intercable, Inc., Ms. Steele was an
associate and then a partner at the Denver law firm of Davis, Graham & Stubbs,
which serves as counsel to Jones Intercable, Inc.
Certain information concerning directors and executive officers of the
Supervising General Partner is set forth below:
Name Age Positions with the Supervising General Partner
------------------- --- ----------------------------------------------
Janis E. Miller 43 President and Director
Morris Goodwin, Jr. 43 Vice President and Treasurer
Lori J. Larson 36 Vice President and Director
Ronald W. Powell 50 Vice President
Juanita M. Costa 46 Vice President and Director
Bradley C. Nelson 30 Vice President
Louis C. Fornetti 45 Director
Ms. Janis E. Miller has served as Vice President of Variable Assets of
American Express Financial Corporation since December 1993. From June 1990 to
November 1993, Ms. Miller held the position of Vice President of Mutual
Funds/Limited Partnership Product Development and Marketing with American
Express Financial Corporation.
Mr. Morris Goodwin, Jr. has served as Vice President and Treasurer of
American Express Financial Corporation since July 1989. From January 1988 to
July 1989, he had been the Chief Financial Officer and Treasurer of IDS Bank &
Trust Company. From January 1980 to January 1988, he was a Vice President with
Morgan Stanley, an investment banking business headquartered in New York.
Ms. Lori J. Larson has been employed by American Express Financial
Corporation since 1981 and currently holds the title of Vice President.
Since August 1988, she has been responsible for day-to-day management of
vendor relationships, due diligence review, and operational aspects for
various limited partnerships distributed by American Express Financial
Advisors Inc. In addition, Ms. Larson is responsible for product development
of the publicly offered mutual funds in the IDS Mutual Fund Group.
Mr. Ronald W. Powell has held the position of Vice President and
Assistant General Counsel with American Express Financial Corporation since
November 1985. He has been a member of the IDS law department since 1975.
Ms. Juanita M. Costa has served as Director of Financial Education
Services ("FES") for American Express Financial Corporation since January 1994.
She is responsible for marketing FES programs to corporate clients. Ms. Costa
has served as Vice President of Investment Services with IDS Trust Company since
October 1991. From April 1987 to mid-1991, Ms. Costa was Vice President-Limited
Partnership Operations. From June 1984 to April 1987, she was a Vice President
of L.F. Rothschild and, from January 1980 to June 1984, she was an Assistant
Vice President at Prudential Bache Securities.
Mr. Bradley C. Nelson joined American Express Financial Corporation in
1991 as an Investment Department analyst following his graduation from Cornell
University's Johnson Graduate School of Management where he earned an MBA with a
concentration in finance.
Mr. Louis C. Fornetti has been employed with American Express Financial
Corporation since 1985 as Corporate Controller. He has been on the board of
directors of American Express Financial Corporation since 1988 and assumed the
role of Chief Financial Officer and Senior Vice President in 1993.
29
30
ITEM 11. EXECUTIVE COMPENSATION
The Partnership has no employees; however, various personnel are
required to operate cable television systems owned by the Partnership. Such
personnel are employed by Intercable and, pursuant to the terms of the
Partnership's limited partnership agreement, the cost of such employment is
charged by the Managing General Partner to the Partnership as a direct
reimbursement item. See Item 13.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGERS
No person or entity owns more than 5 percent of the limited partnership
interests of the Partnership.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Managing General Partner and its affiliates engage in certain
transactions with the Partnership as contemplated by the limited partnership
agreement of the Partnership. The Managing General Partner believes that the
terms of such transactions are generally as favorable as could be obtained by
the Partnership from unaffiliated parties. This determination has been made by
the Managing General Partner in good faith, but none of the terms were or will
be negotiated at arm's-length and there can be no assurance that the terms of
such transactions have been or will be as favorable as those that could have
been obtained by the Partnership from unaffiliated parties.
The Supervising General Partner and its affiliates engage in certain
transactions with the Partnership as contemplated by the limited partnership
agreement of the Partnership. The Supervising General Partner believes that the
terms of such transactions, which are set forth in the Partnership's limited
partnership agreement, are generally as favorable as could be obtained by the
Partnership from unaffiliated parties. This determination has been made by the
Supervising General Partner in good faith, but none of the terms were or will be
negotiated at arm's-length and there can be no assurance that the terms of such
transactions have been or will be as favorable as those that could have been
obtained by the Partnership from unaffiliated parties.
The Managing General Partner charges a management fee, and Intercable,
the parent of the Managing General Partner, is reimbursed for certain allocated
overhead and administrative expenses. 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.
Allocations of personnel costs are based primarily on actual time spent by
employees with respect to each partnership managed. Remaining overhead costs are
allocated based on revenues and/or the costs of assets managed. Systems owned by
Intercable and all other systems owned by partnerships for which Intercable
serves as general partner, are also allocated a proportionate share of these
expenses. The Supervising General Partner, IDS Cable II Corporation, charges for
supervision fees.
Intercable, the parent of the Managing General Partner, also advances
funds and charges interest on the balance payable. The interest rate charged
approximates Intercable's weighted average cost of borrowing.
The Aurora System receives stereo audio programming from Superaudio, a
joint venture owned 50% by an affiliate of the Managing General Partner and 50%
by an unaffiliated party, educational video programming from Mind Extension
University, Inc., an affiliate of the Managing General Partner, and computer
video programming from Jones Computer Network, Ltd., an affiliate of the
Managing General Partner, for fees based upon the number of subscribers
receiving the programming.
Product Information Network ("PIN"), an affiliate of the Managing
General Partner, provides advertising time for third parties on the Aurora
System. In consideration, the revenues generated from the third parties are
30
31
shared two-thirds and one-third between PIN and the Venture. During the year
ended December 31, 1994, the Venture received revenues from PIN of $11,442.
The activities of the Partnership are limited to its equity ownership
in the Venture. The charges to the Venture for related party transactions are as
follows for the periods indicated:
At December 31,
-------------------------------------------------------
1994 1993 1992
------------- ---------- ----------
Management fees $ 769,424 $ 759,803 $ 724,329
Supervision fees 76,942 75,980 72,433
Allocation of expenses 1,173,804 1,183,224 1,095,145
Interest expense 386,257 258,399 306,144
Amount of notes and advances outstanding 933,949 1,056,828 345,839
Highest amount of notes and advances outstanding 1,040,406 1,056,828 462,447
Programming fees:
Superaudio 23,558 22,627 22,066
Mind Extension University 21,347 13,168 12,643
Jones Computer Network 12,421 -0- -0-
31
32
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)1. See index to financial statements for list of financial
statements and exhibits thereto filed as part of this
report.
3. The following exhibits are filed herewith:
4.1 Limited Partnership Agreement for IDS/Jones Growth Partners
II, L.P. (1)
10.1.1 Copy of franchise and related documents granting a cable
television system franchise for the City of Aurora,
Illinois (IDS/Jones Joint Venture Partners). (2)
10.1.2 Copy of franchise and related documents granting a cable
television system franchise for Kane County, Illinois
(IDS/Jones Joint Venture Partners). (3)
10.1.3 Resolution No. 91-49 dated March 12, 1991 of Kane County
extending the term of the franchise. (3)
10.1.4 Franchise Extension Agreement dated March 29, 1991 of Kane
County extending the term of the franchise. (3)
10.1.5 Resolution No. 92-54 dated March 12, 1991 of Kane County
extending the term of the franchise. (3)
10.1.6 Ordinance No. 92-133 dated June 9, 1992 of Kane County
renewing the franchise. (3)
10.1.7 Copy of franchise and related documents granting a cable
television system franchise for Kendall County, Illinois
(IDS/Jones Joint Venture Partners). (2)
10.1.8 Copy of franchise and related documents granting a cable
television system franchise for the Village of Montgomery,
Illinois (IDS/Jones Joint Venture Partners). (2)
10.1.9 Copy of franchise and related documents granting a cable
television system franchise for the Village of North Aurora,
Illinois (IDS/Jones Joint Venture Partners). (2)
10.1.10 Copy of franchise and related documents granting a cable
television system franchise for the Village of Oswego,
Illinois (IDS/Jones Joint Venture Partners). (2)
10.1.11 Copy of franchise and related documents granting a cable
television system franchise for the City of Plano, Illinois
(IDS/Jones Joint Venture Partners). (2)
10.1.12 Copy of franchise and related documents granting a cable
television system franchise for the City of Sandwich,
Illinois (IDS/Jones Joint Venture Partners). (2)
10.1.13 Copy of franchise and related documents granting a cable
television system franchise for the Village of Yorkville,
Illinois (IDS/Jones Joint Venture Partners). (2)
10.2.1 Credit Agreement dated as of November 3, 1994 among the
Venture, IDS/Jones 89-B, Growth Partners II and Shawmut Bank
Connecticut, N.A., as agent for various lenders.
10.2.2 Two Promissory Notes both dated December 5, 1991, each in
the principal amount of $1,800,000 from the Venture, payable
to the order, respectively, of IDS Management Corporation
and Jones Intercable, Inc. (4)
32
33
27 Financial Data Schedule
----------
(1) Incorporated by reference from the Partnership's Form 8-A
(Commission File No. 0-18133).
(2) Incorporated by reference from the Annual Report on Form
10-K of IDS/Jones Growth Partners II (Commission File No.
0-18133) for fiscal year ended December 31, 1990.
(3) Incorporated by reference from the Annual Report on Form
10-K of IDS/Jones Growth Partners II (Commission File No.
0-18133) for fiscal year ended December 31, 1992.
(4) Incorporated by reference from the Annual Report on Form
10-K of IDS/Jones Growth Partners II (Commission File No.
0-18133) for fiscal year ended December 31, 1991.
(b) Reports on Form 8-K
None.
33
34
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.
IDS/JONES GROWTH PARTNERS II, L.P.
a Colorado limited partnerships
By Jones Cable Corporation,
their Managing General Partner
By: /s/ Glenn R. Jones
---------------------------------
Glenn R. Jones
Chairman of the Board and
Dated: March 27, 1995 Chief Executive Officer
By IDS Cable II Corporation,
their Supervising General Partner
By: /s/ Janis E. Miller
---------------------------------
Janis E. Miller
Dated: March 27, 1995 President and Director
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OFFICERS AND DIRECTORS OF JONES CABLE CORPORATION:
By: /s/ Glenn R. Jones
--------------------------------
Glenn R. Jones
Chairman of the Board and
Chief Executive Officer
Dated: March 27, 1995 (Principal Executive Officer)
By: /s/ Kevin P. Coyle
--------------------------------
Kevin P. Coyle
Vice President/Finance
(Principal Financial and
Dated: March 27, 1995 Accounting Officer)
34
35
OFFICERS AND DIRECTORS OF IDS CABLE II CORPORATION:
By: /s/ Janis E. Miller
------------------------
Janis E. Miller
President and Director
Dated: March 27, 1995 (Principal Executive Officer)
By: /s/ Morris Goodwin, Jr.
------------------------
Morris Goodwin, Jr.
Vice President and Treasurer
(Principal Financial and
Dated: March 27, 1995 Accounting Officer)
By: /s/ Lori J. Larson
------------------------
Lori J. Larson
Dated: March 27, 1995 Vice President and Director
By: /s/ Juanita M. Costa
------------------------
Juanita M. Costa
Dated: March 27, 1995 Vice President and Director
By: /s/ Louis C. Fornetti
------------------------
Dated: March 27, 1995 Louis C. Fornetti, Director
35
36
EXHIBIT INDEX
Exhibit Page
------- ----
4.1 Limited Partnership Agreement for IDS/Jones Growth Partners
II, L.P. (1)
10.1.1 Copy of franchise and related documents granting a cable
television system franchise for the City of Aurora,
Illinois (IDS/Jones Joint Venture Partners). (2)
10.1.2 Copy of franchise and related documents granting a cable
television system franchise for Kane County, Illinois
(IDS/Jones Joint Venture Partners). (3)
10.1.3 Resolution No. 91-49 dated March 12, 1991 of Kane County
extending the term of the franchise. (3)
10.1.4 Franchise Extension Agreement dated March 29, 1991 of Kane
County extending the term of the franchise. (3)
10.1.5 Resolution No. 92-54 dated March 12, 1991 of Kane County
extending the term of the franchise. (3)
10.1.6 Ordinance No. 92-133 dated June 9, 1992 of Kane County
renewing the franchise. (3)
10.1.7 Copy of franchise and related documents granting a cable
television system franchise for Kendall County, Illinois
(IDS/Jones Joint Venture Partners). (2)
10.1.8 Copy of franchise and related documents granting a cable
television system franchise for the Village of Montgomery,
Illinois (IDS/Jones Joint Venture Partners). (2)
10.1.9 Copy of franchise and related documents granting a cable
television system franchise for the Village of North Aurora,
Illinois (IDS/Jones Joint Venture Partners). (2)
10.1.10 Copy of franchise and related documents granting a cable
television system franchise for the Village of Oswego,
Illinois (IDS/Jones Joint Venture Partners). (2)
10.1.11 Copy of franchise and related documents granting a cable
television system franchise for the City of Plano, Illinois
(IDS/Jones Joint Venture Partners). (2)
10.1.12 Copy of franchise and related documents granting a cable
television system franchise for the City of Sandwich,
Illinois (IDS/Jones Joint Venture Partners). (2)
10.1.13 Copy of franchise and related documents granting a cable
television system franchise for the Village of Yorkville,
Illinois (IDS/Jones Joint Venture Partners). (2)
10.2.1 Credit Agreement dated as of November 3, 1994 among the
Venture, IDS/Jones 89-B, Growth Partners II and Shawmut Bank
Connecticut, N.A., as agent for various lenders.
10.2.2 Two Promissory Notes both dated December 5, 1991, each in
the principal amount of $1,800,000 from the Venture, payable
to the order, respectively, of IDS Management Corporation
and Jones Intercable, Inc. (4)
37
Exhibit Page
------- ----
27 Financial Data Schedule
----------
(1) Incorporated by reference from the Partnership's Form 8-A
(Commission File No. 0-18133).
(2) Incorporated by reference from the Annual Report on Form
10-K of IDS/Jones Growth Partners II (Commission File No.
0-18133) for fiscal year ended December 31, 1990.
(3) Incorporated by reference from the Annual Report on Form
10-K of IDS/Jones Growth Partners II (Commission File No.
0-18133) for fiscal year ended December 31, 1992.
(4) Incorporated by reference from the Annual Report on Form
10-K of IDS/Jones Growth Partners II (Commission File No.
0-18133) for fiscal year ended December 31, 1991.
EX-10.2.1
2
$45,000,000 CREDIT AGREEMENT DATED 11/3/94
1
$45,000,000
CREDIT AGREEMENT
dated as of November 3, 1994
among
IDS/JONES JOINT VENTURE PARTNERS
as the Borrower
and
VARIOUS FINANCIAL INSTITUTIONS
as the Lenders,
and
SHAWMUT BANK CONNECTICUT, N.A.,
as Agent for the Lenders.
2
TABLE OF CONTENTS
ARTICLE I PAGE
DEFINITIONS AND ACCOUNTING TERMS . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2. Use of Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 1.3. Cross-References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 1.4. Accounting and Financial Determinations . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES AND NOTES . . . . . . . . . . . . . . . . 19
SECTION 2.1. Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 2.1.1. Revolving Loan Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 2.1.2. Lenders Not Permitted or Required to Make
Revolving Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 2.2. Reduction of Commitment Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 2.3. Borrowing Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 2.4. Continuation and Conversion Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.5. Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.6. Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE III
CONVERSION, REPAYMENTS, PREPAYMENTS . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.1. Conversion, Repayments and Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.2. Excess Cash Flow Recapture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.3. Interest Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.3.1. Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.3.2. Post-Maturity Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.3.3. Payment Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.4. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.4.1. Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.4.2. Agent's Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE IV
CERTAIN CD RATE, LIBO RATE AND OTHER PROVISIONS . . . . . . . . . . . . . . 26
SECTION 4.1. Fixed Rate Lending Unlawful . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.2. Deposits Unavailable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.3. Increased Fixed Rate Loan Costs, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.4. Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.5. Increased Capital Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.6. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.7. Payments, Computations, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 4.8. Sharing of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 4.9. Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE V
CONDITIONS TO BORROWING . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.1. Initial Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3
-ii-
SECTION 5.1.1. Partnerships' Managing General Partner and
Partnership Venturer's Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.1.2. Corporate Venturers' Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.1.3. Delivery of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.1.4. Payment of Outstanding Indebtedness, etc. . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.1.5. Security Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.1.6. Subordination Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.1.7. Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.1.8. Closing Date CertifiCate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.1.9. Payoff Letter; Disbursement Instructions . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.1.10. Closing Fees, Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.1.11. Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.2. All Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.2.1. Compliance with Warranties, No Default, etc. . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.2.2. Borrowing Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 5.2.3. Satisfactory Legal Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE VI
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . 34
SECTION 6.1. Organization, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 6.2. Due Authorization, Non-contravention, etc. . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 6.3. Government Approval, Regulation, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 6.4. Validity, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 6.5. Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 6.6. No Material Adverse Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 6.7. Litigation, Labor Controversies, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 6.8. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 6.9. Ownership of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.10. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.11. Pension and Welfare Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.12. Environmental Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.13. Regulations G, U and X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.14. Accuracy of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.15. Cable Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.16. FCC Registration and Regulatory Compliance . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 6.17. Franchises, Copyrights and Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 6.18. Communications Act Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 6.19. Partnership Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 6.20. The Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 6.21. Absence of Financing Statements, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE VII
COVENANTS . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 7.1. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 7.1.1. Financial Information, Reports, Notices, etc. . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 7.1.2. Compliance with Laws, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 7.1.3. Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 7.1.4. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 7.1.5. Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4
-iii-
SECTION 7.1.6. Environmental Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 7.1.7. Copyright Act Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 7.1.8. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 7.1.9. Hedging Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 7.2. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 7.2.1. Business Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 7.2.2. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 7.2.3. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 7.2.4. Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 7.2.5. Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 7.2.6. Restricted Payments, ect. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 7.2.8. Consolidation, Merger, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 7.2.9. Asset Dispositions, ect. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 7.2.10. Modification of Certain Agreements . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 7.2.11. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 7.2.12. Negative Pledges, Restrictive Agreements, ect. . . . . . . . . . . . . . . . . . 47
SECTION 7.2.13. No Creation Of Pension Plans . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 7.2.14. Acquisition of Real Property Interests . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE VIII
EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . 48
SECTION 8.1. Listing of Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 8.1.1. Non-Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 8.1.2. Breach of Warranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 8.1.3. Non-Performance of Certain Covenants and Obligations . . . . . . . . . . . . . . . 48
SECTION 8.1.4. Non-Performance of the Other Covenants and Obligations . . . . . . . . . . . . . . 49
SECTION 8.1.5. Default on Other Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 8.1.6. Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 8.1.7. Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 8.1.8. Bankruptcy, Insolvency, ect. . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 8.1.9. Partnership Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 8.1.10. Impairment of Security, ect. . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 8.1.11. Failure to Obtain Or Cessation of Authorization, etc. . . . . . . . . . . . . . . 50
SECTION 8.1.12. Franchise Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 8.2. Action if Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 8.3. Action if Other Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE IX
THE AGENT . . . . . . . . . . . . . . . . . . . . 51
SECTION 9.1. Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 9.2. Funding Reliance, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 9.3. Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 9.4. Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
5
-iv-
SECTION 9.5. Loans by Shawmut . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 9.6. Credit Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 9.7. Defaulting Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 9.8. Holders of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 9.9. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 9.10. Assignee or Participant Affiliated with the Borrower . . . . . . . . . . . . . . . . . . . 54
SECTION 9.11. Copies, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE X
MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . 54
SECTION 10.1. Waivers, Amendments, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 10.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 10.3. Payment of Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 10.4. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 10.5. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 10.6. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 10.7. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 10.8. Execution in Counterparts, Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 10.9. Governing in Law; Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 10.10. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 10.11. Sale and Transfer of Loans and Notes; Participations in Loans and Notes . . . . . . . . . 58
SECTION 10.11.1. Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 10.11.2. Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 10.12. Other Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 10.13. Nonrecourse Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 10.14. Consent to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 10.15. Waiver of Jury, Trial, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 10.16. Prejudgment Remedy Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
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
6
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of November 3, 1994, is made among
IDS/JONES JOINT VENTURE PARTNERS, a Colorado general 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
$65,000,000 Loan Agreement, dated as of May 31, 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 The
Bank of Nova Scotia ("SCOTIABANK"), 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
Agreements, from time to time to repay advances made by the General
Partners 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
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
Supervising General Partners and Partners II and Partners II's Affiliates,
including Jones Intercable and the Partnerships' Managing General Partner to
compensate such Person 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:
Applicable Margin
Leverage Ratio Base Rate Loans LIBO Rate Loans CD Rate Loans
-------------- --------------- ------------------ -------------
5.50:1 or greater 0.75% 1.75% 1.875%
8
3
4.50:1 or greater but
less than 5.50:1 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%
"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 Partnerships'
Managing General Partner, acting as the managing general partner of Partners
II, acting as the managing general partner of the Borrower, whose signatures
and incumbency shall have been certified to the Agent and the Lenders pursuant
to Section 5.1.1.
"BASE RATE LOAN" means a Loan bearing interest at a fluctuating rate
determined by reference to the Alternate Base Rate.
"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 less 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.
"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.
9
4
"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 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:
10
5
(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-1 by Standard & Poor's Corporation or P-1
by Moody's Investors Service, Inc.; or
(ii) any Lender (or its holding company);
(c) any certificate of deposit or bankers acceptance
maturing not more than one year after such time, which is issued by
either:
(i) a commercial banking institution that is a
member of the Federal Reserve System and has 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 revenues of the
Borrower for such period, less the sum of (i) operating expenses of the
Borrower for such period and (ii) general and administrative expenses of the
Borrower for such period (excluding Management Fees and Allocated Overhead for
such period, if any, included in clauses (i) and (ii)).
"CATV" 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).
"CD RATE (RESERVE ADJUSTED)" is defined in Section 3.3.1.
"CD RESERVE REQUIREMENT" is defined in Section 3.3.1.
11
6
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.
"CHANGE IN CONTROL" means the failure of the General Partners to own,
free and clear of all Liens or other encumbrances, 100% of the outstanding
partnership interests in the Borrower (other than as a result of any transfer
by either Corporate Venturer to its respective Affiliate as permitted under
Section IX of the Partnership Agreement).
"CLOSING DATE CERTIFICATE" means a certificate of the General
Partners, 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, $40,000,000, 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.
"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.
12
7
"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.
"CORPORATE VENTURERS" means, collectively, Jones Intercable and IDS.
"DEBT SERVICE RATIO" means, at any time, the ratio, computed on a
consolidated basis, of:
(a) 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) 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.
13
8
"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 Borrower during such period, less (c) Capital Expenditures made during
such period and which are permitted under the terms of this Agreement, 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 $5,000,000.
"EXISTING CREDIT AGREEMENT" is defined in the first recital.
"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.
14
9
"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, minus the aggregate amount of General Partner
Advances made during such 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
(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.
"FRANCHISE" means any franchise, permit, license or other
authorization granted by any Official Body, including all laws, regulations and
ordinances relating thereto, for the
15
10
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 PARTNERS" means collectively, the Partnership Venturers and
the Corporate Venturers until such time as any is replaced in accordance with
the terms of this Agreement by another Person as a 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 a 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 any General Partner, the Supervising General
Partners, the Partnerships' Managing General Partner or any previous general
partner of the Borrower (collectively, the "AFFILIATE PROVIDERS"), (iii)
reimbursements to any Affiliate Provider for documented expenses incurred by
such Affiliate Provider 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
(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.
16
11
"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.
"IDS" means IDS Management Corporation, a Minnesota corporation.
"IDS CABLE" means IDS Cable Corporation, a Minnesota corporation.
"IDS CABLE II" means IDS Cable II Corporation, a Minnesota corporation.
"IDS SUBORDINATION AGREEMENT" means the Subordination Agreement
executed and delivered by IDS 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).
"IDS CABLE SUBORDINATION AGREEMENT" means the Subordination Agreement
executed and delivered by IDS Cable 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).
"IDS CABLE II SUBORDINATION AGREEMENT" means the Subordination
Agreement executed and delivered by IDS Cable I 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).
17
12
"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 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 which 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.
18
13
"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 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
19
14
(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.
"JONES INTERCABLE SUBORDINATION AGREEMENT" means the Subordination
Agreement executed and delivered by Jones Intercable 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).
"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.
20
15
"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 Agreements, 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 Partners II during such period for management services
provided to the Borrower pursuant to the Partnership Agreement, and the fee
payable to the Supervising General Partners pursuant to Section 4 of Article
VII of 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 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.
21
16
"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 Amended and Restated Joint Venture
Agreement of the Borrower, dated as of December 2, 1991 (as the same may be
amended, restated or otherwise modified from time to time).
"PARTNERS II" means IDS/Jones Growth Partners II, L.P., a Colorado
limited partnership.
"PARTNERS II SUBORDINATION AGREEMENT" means the Subordination Agreement
executed and delivered by Partners II pursuant to Section 5.1.5 hereof,
substantially in the form of Exhibit F hereto (as the same may be amended,
restated or otherwise modified from time to time).
"PARTNERSHIPS' MANAGING GENERAL PARTNER" means Jones Cable
Corporation, a Colorado corporation.
"PARTNERSHIPS' MANAGING GENERAL PARTNER SUBORDINATION AGREEMENT" means
the Subordination Agreement executed and delivered by the Partnerships'
Managing General Partner 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).
"PARTNERSHIP VENTURERS" means, collectively, 89-B and Partners II.
"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 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.
22
17
"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).
"SHAWMUT" is defined in the Preamble.
"SMATV" means satellite master antenna television.
"STATED MATURITY DATE" means December 31, 2003.
"SUBORDINATION AGREEMENTS" means collectively, the Jones Intercable
Subordination Agreement, the IDS Subordination Agreement, the Partners II
Subordination Agreement, the 89-B Subordination Agreement, the Partnerships'
Managing General Partner Subordination Agreement, IDS Cable Subordination
Agreement and the IDS Cable II Subordination Agreement.
"SUPERVISING GENERAL PARTNERS" means collectively IDS Cable and IDS
Cable II.
23
18
"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.
"89-B" means IDS/Jones Growth Partners 89-B, Ltd., a Colorado Limited
Partnership.
"89-B SUBORDINATION AGREEMENT" means the Subordination Agreement
executed and delivered by 89-B pursuant to Section 5.1.5, substantially in the
form of Exhibit F hereto (as the same may be amended, restaged or otherwise
modified from time to time).
SECTION 1.2. Use of Defined Terms. Unless otherwise defined or the
context otherwise requires, terms for which meanings are provided in this
Agreement shall have such meanings when used in the Disclosure Schedule and in
each Note, Borrowing Request, Continuation/Conversion Notice, Loan Document,
notice and other communication delivered from time to time in connection with
this Agreement or any other Loan Document.
SECTION 1.3. Cross-References. Unless otherwise specified,
references in this Agreement and in each other Loan Document to any Article or
Section are references to such Article or Section of this Agreement or such
other Loan Document, as the case may be, and, unless otherwise specified,
references in any Article, Section or definition to any clause are references
to such clause of such Article, Section or definition.
24
19
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 $1,000,000 and in an integral multiple
of $100,000.
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
25
20
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 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.
26
21
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:
Percentage (%) of Conversion Date Amount
Calendar Year to be Repaid at End of Calendar Year
------------------------------------------------------------------------------------------------------------
1997 5.00%
1998 10.00%
1999 12.00%
2000 15.00%
2001 17.50%
2002 22.50%
2003 18.00%
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;
(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;
(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
27
22
(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;
(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.
28
23
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 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.
29
24
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
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;
30
25
(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 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.
31
26
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.
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:
32
27
(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 loss or expense. Such written
notice (which shall include calculations in reasonable detail) shall, in the
absence of manifest error, be conclusive and binding on 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 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
33
28
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 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
34
29
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 one Business Day 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 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
35
30
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. Partnerships' Managing General Partner and
Partnership Venturers' Certificates. The Agent shall have received a
certificate of the Secretary or an Assistant Secretary of the Partnerships'
Managing 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) each Partnership Venturer's and the Partnerships'
Managing 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 legal existence for
each Partnership Venturer and a certificate of good standing for the
Partnerships' Managing General Partner issued by the jurisdiction in
which each is organized, and each 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 each Partnership Venturer, as the general partners of the Borrower,
and by the Partnerships' Managing General Partner, respectively,
together with copies of all resolutions to such effect attached
thereto; and
(d) the incumbency and signatures of those partners of
each Partnership Venturer and those officers of the Partnerships'
Managing General Partner authorized to act on behalf of and bind such
Partnership Venturers and the Partnerships' Managing General Partner,
in their capacities as general partners of the Borrower and as the
36
31
managing general partner of the Partnership Venturers, respectively,
with respect to this Agreement, the Note and each other Loan Document
to which they are parties.
which certificate each Lender may conclusively rely upon until it shall have
received a further certificate from the General Partners canceling or amending
such prior certificates.
SECTION 5.1.2. Corporate Venturers' Certificates. The Agent
shall have received a certificate of the Secretary or an Assistant Secretary of
each Corporate Venturer, dated the date of the initial Borrowing, as to:
(a) such Corporate Venturer'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 such Corporate Venturer issued by the jurisdiction in
which each is organized, and each dated as of a date reasonably close
to the date of the initial Borrowing;
(b) all action necessary for the execution, delivery and
performance of this Agreement, the Note, and each other Loan Document
by such Corporate Venturer, as a general partner of the Borrower,
together with copies of all resolutions to such effect attached
thereto; and
(c) the incumbency and signatures of those officers of
such Corporate Venturer authorized to act on behalf of and bind such
Corporate Venturer, in its capacity as a general partner of the
Borrower, with respect to this Agreement, the Note and each other Loan
Document to which it is a party.
which certificate each Lender may conclusively rely upon until it shall have
received a further certificate from the General Partners canceling or amending
such prior certificates.
SECTION 5.1.3. Delivery of Notes. The Agent shall have
received each Lender's Note, in each case, duly executed and delivered by the
Borrower.
SECTION 5.1.4. Payment of Outstanding Indebtedness, etc. All
Indebtedness identified in Item 7.2.2(b) ("INDEBTEDNESS TO BE PAID") of the
Disclosure Schedule, together with all interest, 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 Scotiabank 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 5.1.5. 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
37
32
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).
SECTION 5.1.6. Subordination Agreements. The Agent shall have
received duly executed counterparts of the Subordination Agreements, dated as
of the date hereof.
SECTION 5.1.7. 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 5.1.8. 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 5.1.9. Payoff Letter; Disbursement Instructions. (a)
The Agent shall have received a payoff letter from Scotiabank, indicating the
amount of the loan obligations of the Borrower to Scotiabank to be discharged
on the Closing Date and an acknowledgment by Scotiabank 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
38
33
all mortgages, deeds of trust and security interests granted by the Borrower or
any of its Subsidiaries in favor of Scotiabank.
(b) The Agent shall have received disbursement
instructions from the Borrower, indicating that a portion of the
proceeds of the Loans, in an amount equal to the aggregate loan
obligations of the Borrower to IDS, are paid to IDS.
(c) The Agent shall have received disbursement
instructions from the Borrower, indicating that a portion of the
proceeds of the Loans, in an amount equal to the aggregate loan
obligations of the Borrower to Jones Intercable, are paid to Jones
Intercable.
SECTION 5.1.10. Closing Fees. Expenses.
(a) The Borrower, shall have paid to the Agent, for the
account of each Lender, 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 5.1.11. Compliance Certificate. The Agent shall have
received a Compliance Certificate, duly executed and completed by the Borrower,
with any calculations with respect to debt being made as of the Effective Date
and any calculations with respect to cash flow being made 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.
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 any 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
39
34
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.
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 each 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 general
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.
40
35
(c) Each Corporate Venturer is a corporation duly
organized, validly existing and in good standing under the laws of its
state of incorporation. Each Partnership Venturer is a limited
partnership duly organized, validly existing and in good standing
under the laws of its state of organization. Each 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 Borrower).
(d) The Borrower and each 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 Partners are the sole general partners of
the Borrower and own 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 of
Jones Intercable and the Partnerships' Managing General Partner to
receive certain distributions from the Borrower and which are pledged
to NationsBank of Texas, N.A. ("NATIONSBANK"), as Collateral Agent
for certain secured parties, pursuant to those certain Security
Agreements, each dated as of December 8, 1992, between (a) Jones
Intercable and NationsBank, as Collateral Agent and (b) the
Partnerships' Managing General Partner and NationsBank, as Collateral
Agent.
(f) Partners II is the managing general partner of the
Borrower and the Partnerships' Managing General Partner is the
managing general partner of Partners II.
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
each General Partner's powers, have been duly authorized by all necessary
action, and do not
(i) contravene the Borrower's, any General
Partner's or the Partnerships' Managing General Partner's
Organic Documents;
(ii) contravene (x) any law or governmental
regulation or court decree or order binding on or affecting
the Borrower, any General Partner or the Partnerships'
Managing General Partner or (y) any contractual restriction
binding on or affecting any General Partner, the Partnerships'
Managing 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
41
36
(iii) result in, or require the creation or
imposition of, any Lien on any of the Borrower's, any General
Partner's or the Partnerships' Managing 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 any General Partner or the Partnerships' Managing General
Partner of its respective 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 each of the Subordination Agreements
constitutes the legal, valid and binding obligation of each General Partner
which is a party thereto, enforceable in accordance with its terms.
SECTION 6.5. Financial Information. The balance sheet of the
Borrower as at June 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 any General Partner, which if adversely determined is
reasonably 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 Agent and 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,
42
37
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, any
General Partner or the Partnerships' Managing 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, any General Partner or the Partnerships' Managing
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, incomplete by
omitting to slate 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
43
38
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.
Sections 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 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
44
39
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. Each of the General Partners 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. Sections 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 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 Expenses 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.
45
40
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
Partnerships' Managing 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 Partnerships' Managing 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 Partnerships'
Managing 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;
(d) prior to the payment of any General Partner Advances,
a Compliance Certificate, executed by the Partnerships' Managing
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
Partnerships' Managing General Partner,
46
41
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 Partners; and
all quarterly reports on Form 10-Q and annual reports on Form 10-K
which either Partnership Venturer or Jones Intercable files with the
Securities 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 filed 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 (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, any General Partner or the
47
42
Partnerships' Managing 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 general
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
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
48
43
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 request 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 7.2.8).
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.
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.
49
44
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 $2,000,000;
(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 $2,000,000;
(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 Agreements;
provided, however, no Indebtedness otherwise permitted by clause (d), (e), (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:
(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;
50
45
(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:
Period Maximum Leverage Ratio
------ ----------------------
Effective Date - 6/30/95 6.00:1
7/1/95 - 12/31/95 5.75:1
1/1/96-12/31/96 5.50:1
1/1/97 - 12/31/97 4.75:1
1/1/98-12/31/98 4.00:1
1/1/99 and thereafter 3.75:1
(b) Its Interest Coverage Ratio at any time to be less
than 2.50: 1.
(c) Its Debt Service Ratio at any time to be less than
1.50: 1.
51
46
(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
pursuant to Section 7.2.7; 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 any 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 any Subordination Agreement. All such amounts may be accrued and
paid by the Borrower to the Person to which they are owed upon the payment in
full by the Borrower of all of the Obligations.
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,
52
47
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 the resulting
transaction is not a Material Disposition. Furthermore, the Borrower may not
engage in any transaction permitted pursuant to this section if, after giving
effect thereto, the number of Basic Subscribers would decrease by 35% or more
from the number of Basic Subscribers immediately prior to such transaction.
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 any Subordination Agreement.
SECTION 7.2.11. Transactions with Affiliates. Except for
Management Fees, Allocated Overhead and General Partner Advances, payable in
accordance with Section 7.2.8 and the terms of the Subordination Agreements,
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 Limited
Partnership Agreements of the Partnership Venturers (and incorporated by
reference in Section 2 of Article XII of the Partnership Agreement, and any
such 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.
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
53
48
(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 VII
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.
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 any
General Partner or the Partnerships' Managing General Partner in any
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
54
49
under Section 7.1.2(a) (with respect only to maintenance and preservation of
partnership existence) or Section 7.2 or the Borrower, any General Partner or
the Partnerships' Managing General Partner shall default in the due performance
and observance of theft respective obligations under the Subordination
Agreements 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 career) 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, any General Partner or the Partnerships' Managing
General Partner shall:
(a) become insolvent or generally fail to pay, or admit
in writing its inability or unwillingness to pay, debts as they become
due;
(b) apply for, consent to, or acquiesce in, the
appointment of a trustee, receiver, sequestrator or other custodian
for the Borrower, any of its Subsidiaries, any General Partner or the
Partnerships' Managing 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
55
50
the Borrower, any of its Subsidiaries, any General Partner or the
Partnerships' Managing 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, each General Partner and the
Partnerships' Managing 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, any General Partner or the Partnerships' Managing
General Partner, and, if any such cage or proceeding is not commenced
by the Borrower, such Subsidiary or such General Partner, such case or
proceeding shall be consented to or acquiesced in by the Borrower,
such Subsidiary or such General Partner or shall result in the entry
of an order for relief or shall remain for 60 days undissmissed,
provided that the Borrower, each Subsidiary and each 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. etc. Any Loan
Document (or, in the case of any General Partner, the Partnerships' Managing
General Partner or any Supervising General Partner, any 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 any Subordination Agreement, of any General Partner, the
Partnerships' Managing General Partner or either Supervising General Partner),
the Borrower, any General Partner, the Partnerships' Managing General Partner,
either Supervising 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 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
56
51
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 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
57
52
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, at the rate of interest then
applicable for Base Rate Loans.
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 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
58
53
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, 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
59
54
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.
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
60
55
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 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).
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:
61
56
(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);
(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
62
57
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 Partners 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, each 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, each
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 the entire understanding
among the parties hereto with respect to the subject matter here of 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:
63
58
(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 rights of sale, assignment and transfer of the
Lenders are subject to Section 10.11.
SECTION 10.11. Sale and Transfer of Loans and Notes; Participations
in Loans and Notes. Each Lender may assign, or sell participations in, its
Loans and Commitments to one or more other Persons in accordance with this
Section 10.11.
SECTION 10.11.1. Assignments. 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 $12,500,000 multiplied by a fraction the
numerator of which is equal to $45,000,000 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 $45,000,000, (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 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
64
59
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
(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
Section 4.3, 4.4, 4.5, 4.6, 4.8, 4.9, 10.3 and 10,4, shall be considered a
Lender
65
60
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 any
General Partner (other than distributions to the General Partners made in
violation of Section 7.2.6 or 7.2.8 hereof), and the liability of the General
Partners for any amounts due under this Agreement, the Notes and the other Loan
Documents shall be limited to the interest of each 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 7.2.8.
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 PARTNERS 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 OFTEN, IN TIE 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 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
66
61
OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR
TO JUDGEMENT, 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 LIGATION
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-APPF. ALLIABLE FINDING THAT SUCH CLAIM AROSE AS A RESULT OF THE AGENT'S
AND/OR LENDERS' NEGLIGENCE OR WILLFUL MISCONDUCT AND, IN TIE CASE OF SUCH A
FENDING, 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 BEEN INDUCED TO THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS TO WHICH THEY ARE A PARTY BY, AMONGOTHER THINGS,
THE WAIVERS AND CERTIFICATIONS CONTAINED HEREIN.
SECTION 10.16. Prejudgment Remedy Waiver. THE B0RR0WER ACKNOWLEDGES
THAT THE FINANCING EVIDENCED HEREBY IS A COMMERCIAL TRANSACTION WITHIN THE
MEANING OF CHAPTER 903a OF THE CONNECTICUT GENERAL STATUTES. THE BORROWER HEREBY
VARIES ITS RIGHT TO NOTICE AND PRIOR COURT HEARING OR COURT ORDERED UNDER
CONNECTICUT 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, THE 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.
67
62
THE BORROWER ACKNOWLEDGES AND RESERVES ITS RIGHT TO NOTICE AND A HEARING
SUBSEQUENT TO THE ISSUANCE OF A WRIT FOR PREJUDGEMENT 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 IDS/JONES JOINT VENTURE PARTNERS
In the Presence Of:
By: IDS/Jones Growth Partners H, L.P.,
Its Managing General Partner
By: Jones Cable Corporation Its
Managing General Partner
By: /s/ KEVIN P. COYLE
Name: Kevin P. Coyle
Address: 9697 E. Mineral Avenue
ENGLEWOOD, CO 80112
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
EX-27
3
FINANCIAL DATA SCHEDULE
5
12-MOS
DEC-31-1994
JAN-01-1994
DEC-31-1994
57284
0
403428
50993
0
0
34508868
14180482
57752046
2184205
43566064
0
0
0
7961092
57752046
0
15388489
0
21271514
2906535
0
2861839
5838329
0
5838329
0
0
0
5838329
33.15
33.15