O83-13AN ORDINANCE OF THE CITY OF BOYNTON
BEACH, FLORIDA, GRANTING A NON-EXCLUSIVE
LICENSE TO CENTEL CABLE TELEVISION
coMPAI~Y OF FLORIDA TO OPERATE A
COI~-~UNITY ANTENNA TELEVISION SYSTEM
WITHIN CERTAIN AP, EAS OF THE MUNICIPAL
LIMITS OF THE CITY OF BOYNTON BEACH;
PROVIDING THE TEPeeS OF SAID LICENSE;
PROVIDING FOR A REPEALING CLAUSE; PRO-
VIDING AN EFFECTIVE DATE; AND FOR OTHER
PURPOSES.
I~{EREAS, the CENTEL CABLE TELEVISION COMPANY OF
FLORIDA has requested a non-exclusive easement to fur{ish cable
television to certain areas in the City of Boynton Beach.
WHEREAS, the City Council of the City of Boynton
'Beach has therefore determined that it is the best interest to
the municipality authorizing installation of a community
antenna television system for the use of residence and inhabitants
of said city; and
~EREAS, the application attached to this Ordinance
Exhibit "A'~' has been reviewed by the City Council; and
WHEREAS, the City Council has determined that it
is in the best interest for the municipality to authorize
installation of a community antenna television system for the
use of residents and inhabitants of said city; and
WHEREAS, a review of the application is found to be
in conformity with the provisions of Chapter 7A of the codified
ordinances for the City of Boynton Beach, Florida.
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL
OF THE CITY OF BOYNTON BEACH, FLORIDA:
Section 1~ The CENTEL CABLE TELEVISION COMPANY OF
FLORIDA has submitted an application for the privilege of con-
ducting community antenna television systems within the City of
Boynton Beach (said application is attached hereto as Exhibit
"A" of said ordinances and made a part hereof by reference).
Said CENTEL CABLE TELEVISION COMPA~CY OF FLORIDA is hereby
granted and awarded a non-exclusive license to construct,
license, operate and maintain a community antenna television
system within certain area of municipal limits of the City of
Boynton Beach (as described in Exhibit "A" of this ordinance)
for a period of twenty (20) years from the effective date of
this ordinance, in strict accordance with the terms and pro-
visions of the aforedescribed application and in strict accord-
ance with the provision of Chapter 7 of the codified ordinance
of the Ciny of Boynton Beach, Florida: which provisions are
hereby also adopted by reference and made a part of this
ordinance and the license is hereby awarded.
Section 2. That all ordinances or parts of
ordinances in conflict herewith are hereby repealed.
Section 3. That should any section or provision
of this ordinanc~ or any portion hereof be declared by a Court
competent jurisdiction to be invalid, such decision shall not
the remainder of this ordinance.
Section 4. That this ordinance shall be effective
ately upon its passage.
Section 5. That authority is hereby granted to
codify this ordinance.
FIRST READING this /-~day °f ~ 1983.
SECOND READING AND FINAL PASSAGE this~day of
, 1983.
~it~ ~- -
(Corp. Seal)
CITY OF BOYNTON BEACH, FLORIDA
By~~
- 2 -
EXHIBIT
To ORDINANCE NOo ~83-13
APPLICATION
for
CATV FRANCHISE
CITY OF BOYNTON BEACH
March 25, 1983
EXHIBIT "A" _
NAME AND ADDRESS OF APPLICANT
Centel Cable Television Company of Florida
5384 South Florida Avenue
Lakeland, Florida 33803
813 644-2478
Centel's Lake Worth, Florida office:
305 964-0709
3959B Lake Worth Rd.,
Lake Worth, Fla. 33461
OFFICERS AND DIRECTORS
Centel Cable Television Company of Florida is a subsidiary of
Centel Communication Company, Centel Communication is an
operating unit of Centel Corporation.
Thomas G. Wehling - President
Centel Cable Television Company of Florida
5725 N. East River Road
Chicago, Illinois 60631
G. N. Hutton, IV - Vice President & General Manager
Centel Cable Television Company of Florida
5384 South Florida Avenue
Lakeland, Florida 33803
Earl Holtz - Secretary/Treasurer
Centel Cable Television Company of Florida
5725 N. East River Road
Chicago, ILlinois 60631
Dale I. Parker - Assisant Secretary/Treasurer
Centel Cable Televlszon Company of Florida
5384 South Florida Avenue
Lakeland, Florida 33803
David A. Bohmer - Vice President
Centel Cable Televzsmon Company of Florida
5725 N. East River Road
Chicago, Illinois 60631
Karl Berolzheimer - Director
Centel Cable TelevIsion Company of Florida
5384 South Florida Avenue
Chicago, Illinois 60631
Centel Corporation is listed on the New York Stock Exchange as well as the
Midwest Exchange. The company has over 26,000 shares of common stock outstanding.
To the best of our knowledge no person is the beneficial owner of more than 3%
of the common stock.
The applicant is proposing to extend its existing cable system now
operating in the Village of Golf.
This system is a 400 MHz system which is the latest "state of the art."
We propose to construct an extension following all Centel's practices
and the following:
a. The National Electrical Code, 1980 edition, the National Fire
Protection Association, the National Electrical Safety Code, 1977 edition,
American National Standards Institute ANSI-C2, and the National Bureau
of Standards Handbook ~81.
b. The safety and construction practices and procedures of local
utilities.
c. "The Standards and Practices Code" of the N.C.T.A.·
The proposed system as stated will be an extension of the Village of Golf.
The major components of this system are made up of the following:
The subscriber system is spaced for 400 MHz, which will allow up to
54 channels to be programmed. The aerial and underground cable will be
jacketed and flooded. All amplifying equipment is Gardiner and Phase Comm.
Trunk cable will be .750 O.D. Comscope with .500 O. D. for distribution.
There is a 5.6 meter Gardiner earth station with another to be added within
90 days. All cable used for trunk and feeder is of low loss variety.
Centel Cable Television Company of Florida has been selected by the Cable
Committee of Boynton Leisureville Unit #10 to provide them with service.
This area has several streets that are under the control of the City.
As of this date we feel that we would only be using these streets to
make crossing from one block to the next. Centel will, however, provide
a detailed layout before construction begins and also a set of as built
drawings when completed.
Attached is a copy of Centel Corporation's 1981 annual report.
As shown, Centel is a broad based communications company that owns and
operates several companies rela~ing to manufacturing, distribution
and service of communication related products and services
Our F~usiness
Cente~ [Central Telephone & Utilities Corpora-
~ tion] headquartered in Chicago provides~
thro~,gh ~s ~e~ephone operating compan~es~
distribution of telecommunications equipment
and ~aterials. In addition~ the company is a
nationat wholes~e distributor of co~muni-
cations e~uipment and supplies through its
sUpPlY d~sion. ~deo S~ces, through
its cable ;e]evision companies, sewes over
fl~,OOO households ~n six $~a~es. Through
Centet ~d~path. the company will provide a
e~or~ ~o int~rconnec; cable-W systems,
entel aJ~o has electric companies in Colorado
and ~ansas.
Annual Meeting
The annual meeting of shareholders will be held
at 10 a.m., Friday, April 30, 1982 at American
National E~an~: & Trust Company of Chicago,
Chicago~ Illinois. The notice of the annual meet-
lng, .proxy statement and pro~ will be mailed to
each shareholder on or about March 30~ 1982.
Form
A copy of Centel's fD~f Annua~. Report to the
Securities and Exchange Commi~ion on
For.~ 1O-K ~s a~aitabie to shareholders without
Vice ~res~dent and Sec~e~a~ Treasurer~ Cent~!
Telephone & U~iliti~ Co~=or~tion, 5725 ~. East
The Cover
Centel--a new image for ~ changing company.
Center's gro~h and e~pansion into communi-
cations-reta~ businesses ~n the last five years
has chan~ed the scope of our company. The
s~zed Cent~i on the cover is symbolic of the
co~pany's fresh~ new slance in communi-
our c~rr~n~ name or the news proposed name~
C~t~] Corpo~ation~ which ~ill be vo~ed on at
the ~ri~30 shareholders' meeting.
,Centra 'T&!ephone & Utilities Corporation
Highlights
~:?' .,venuses and Sales
Increase
1981 1980 (Decrease)
--'Telephone $ 634,432,000 $ 568,683,000 $ 65,749.000 11.6%
3ommunications 247,243,000 198,527,000 48,716,000 24.5
:-Iectric 138,701,000 128,048,000 10,653,000 8.3
rotal
$1,020,376,000 $ 895,258,000 $125,118,000 14.0%
Net Income
$ 92,940,000 $ 80,893,000 $ 12,047,000 14.9%
,.~ Telephone
3mmunlcatlons
10,752,000 8,779,000 1,973,000 22.5
Electric
10,243,000 9,215,000 1,028,000 11.2
Corporate and Eliminations
(9,413,000) (6,957,000) (2,456,000) (35.3)
Total
$ 104,522,000 $ 91,930,000 $ 12,592,000 :13.7~/,,
f~arnings Available for Common Shareh alders
$ 103,255,000 $ 90,635;000 $ 12,620,000 13.9%
werage Common Shares Outstanding
26,531,000 26,157,000 374,000 1.4%
Earnings Per Share
Primary $ 3.89 $ 3.46 $ .43 12.4%
Ful y Diluted $ 3.86 $ 3.43 $ .43 12.5%
)ividends Paid Per Common Share
$ 2.10 $ 2.00 $ .10 5.0%
3ommon Shareholders' Investment Per Sh are
$22.70 $20.84 $1.86 8.9%
~,onstruction Expenditures
250,652,000 $ 226,507,000 $ 24,145,000 10.7%
r~lant, Property and Equipment, net
$1,729,483,000 $1,613,333,000 $116,150,000 7.2%
Employees
13,779 13,153 626 4.8%
~.ta for 1980 have been restated (see Notes 2 and 9 of the Notes to Financial Statements).
Contents
Letter to the Shareholders 2
i.,~Telephone Operations 5
entel'Communications Company 9
.~usiness Systems 11
Communications Products 13
Video Services 15
_. ~Electric Operations 17
.~onsolidated Map of Operations 18
qnancial Matters and Operations 19
3onsotidated Statements of Income 22
;onsolidated Statements of Changes in Financial Position 23
Consolidated Balance Sheets 24
Consolidated Statements of Common Shareholders' Investment 25
Consolidated Statements of Long-Term Debt 26
/~ Notes to Financial ,Statements 27
~onsolidated Se ected F nancial Data 30
~esponsibility for Financial Statements 31
Report of Independent Public Accountants 31
Selected 1981 Financial Data Adjusted for Changing Prices 32
Five Year Comparison of Selected Supplementary Data
Adjusted for the Effects of Changin9 Prices 33
~,usiness Segment Information 34
,~estor Information 36
Directors 37
Corporate Officers 38
Organization Heads 39
--~ -Centel Operating Companies 40
· elephone Opera;ions
?Je, phone Operations Highlights
"":t'housand~ of Dollars 1981 1980 Increase
$ 267,453 $ 254,097 5.3%
- -~oll Service 334,319 287,046 16.5
r
vliscellaneous 32,660 27,540 18.6
.~otal $ 634,432 $ 568,683 11.6%
!xpenses $ 405,145 $ 352,307 15.0%
-'Net Income $ 92,940 $ 80,893 14.9%
Construction Expenditures $ 194,413 $ 192,278 1.1%
Toll Messages. including WATS (thousands) 195,476 180,593 8.2%
Lines Served
1,153,448 1.110,026 3.9%
Centel personnel check
computer printouts as they
complete test procedures for
cutover to a DMS-200
switching office. Last year,
~ ~h~2 digital central offices
~ere placed in service. With
'- the addition of 21 offices
scheduled for conversion
during 1982, Centel's num-
ber of customer lines served
· "'~*~'by digital systems will reach
~early 30 percent.
Served
I I I
Telephone operations showed steady gains during
1981. More successful marketing programs, acceler-
ated capital recovery through higher depreciation
rates, improved operating productivity, plant mod-
ernization and new service offerings were all con-
tributing factors. At year-end, however, growth in
demand was slackening as the national economy
dipped further into recession.
The 43,400 customer lines added by Centel compa-
nies during the year was somewhat below the prior
year growth rate. However, toll message volume,
up 8.2 percent, improved. Revenues benefitted sub-
stantially from both higher interstate long-distance
rates approved by the Federal Communications
Commission (FCC) at mid-year and increased local
servme rates which were granted in seven states.
Second Computer.lnquiry/AT&T Settlement
In October, the FCC modified its Second Computer
Inquiry ruling. The Commission delayed the effective
date for deregulation of new customer premises
terminal equipment from March 1, 1982 to January 1,
t983, and affirmed its decision to use a phased-in
approach to deregulation
However, the well-publicized settlement of the
antitrust litigation between the United States
Department of Justice and American Telephone &
Telegraph Company may affect the timing and
mn plementation of the Commission's order.
In either case, Centel's transition problems will be
minim ized in view of gu r wetl-establis h ed direct
sales programs and a 1979 policy decision to
remove certain terminal equipment from leased
service offerings in a number of states.
The agreement reached by AT&T and the Justice
Department makes a distinction and separation
between local distribution network functions and
the rest of the business while, at the same time, it
enhances competition in intercity services. We
do not believe the proposed settlement contains
major competitive implications which Centel had
not already contem plated. The Company will con-
tinue to reposition itself to take maximum advantage
of the new opportunities. We also will keep working
for passage of legislation which is necessary to
reestablish a clear and stable national telecommu-
nications policy and validate and clarify deregula-
tion actions taken by the FCC and other govem-
mental agencies.
Marketing
The Company expanded~ its residence terminal
equipment sales program during 1981 with excellent
results. More than 95,000 telephones were sold to
customers, representing 25 percent of all single-line
telephones placed in service by Centel during the
year. Moreover, 30,000 of the telephones sold were
refurbished sets--equipment which was formerly
leased under tariff and returned by customers who
moved or disconnected service.
The growing success of the direct s~les program has
brought faster recovery of c~pital investment and
significantly lowered new investment requirements.
Pick-A-Phone Centers continue to be an effective
marketing outlet for both products and services
and help reduce maintenance costs. Customer use
of the "Pick-up and Return" and "Return-for-Repair"
programs is increasing steadily as we convert more
of our residence teleph~ones to jack and plug con-
nections. Eighty-one percent of CenteFs residence
customers' premises are now modular equipped. In
1981, one out of five customers with modular equip-
ment repair problems brought their sets to a repair
center rather than have a repairman sent to their
home. Using Install-A-Phone kits introduced during
1981 customers can purchase, at a nominal price,
Contel aoae3 two, 900 pa~r
~'~bles bet¥:een Okaloosa
mc, and the mainland a~
__ Walton Beach FIoridato
meet the growing and future
rvmand for tole phone
~ce for the new condo-
-~m.m~ums. h~gmnse apad-
ams and second homes
the slant:. The cables
;re oiowec ~nto the bottom
Santa-Rosa Sound by a
~aue submarine sled.
?towing m" adds appre-
ciably [o the reliability of
telephone se,vice.
all the materials they need to wire and hook up their
phones.
Both the Company and its customers benefit from
these types of "do-it-yourself" programs. We send
out fewer repair and installation people, the work
is done at the customer's convenience and the
customer saves on installation charges.
New Technology for Effective Corn petition
Communications technology continues to evolve
rapidly, obsoleting products while opening up new
marketing opportunities with virtually each advance.
Centel views technology as the kay'to improving
customer serv~ ce and enhancing our competitive
position as a lower-cost provider of services.
A primary way the Company is improving and ex-
panding customer services is through conversion
of electromechanical central office switching equip-
ment to digital electronic systems. The digital offices
are more efficient, require lower initial capital
investment, need less maintenance and generate
additional revenues from custom services such as
call forwarding and conferencing.
Last year, the number of Centel's digital central
offices in service nearly doubled with the installation
of 32 new switching systems. At year-end, digital
electronic systems served 21 percent of our 1.2 mil-
lion customer lines, and analog electronic systems
an additional 14 percent. In 1982, the addition of 21
offices will raise the number of customer lines
served by digital systems to 29~5 percent.
Among the major digital conversions last year was
the installation of a DMS-200 Traffic Operator
Position System in Las Vegas. Equipped with 56
operator positions to handle toll calls, it is one of
the largest of its kind in operation.
The DMS-200 system's 2,000 trunks are capable of
processing 11,800 calls an hour. Contel companies
also installed new digital switching units last year in
Florida, Illinois, North Carolina and Texas.
Digital switching's compatibility with fiber-optic
cable technology led Contel to undertake a major
addition to transmission trunking facilities in Las
Vegas. Work began in December to link seven
central offices with a 90-megabit fiber optic system.
When completed in early 1982, the new system
will provide 9,400 separate voice channels over a
30-mile route, one of the largest in the country.
A single three-quarter-inch fiber optic cable with 15
hair-thin glass fibers carries as many calls as six
three-inch cables containing 3,000 copper wires
each. Fiber optic transmission is virtually noise-free
and vastly superior to wire cable for transmitting
high-speed data.
Local Measured Service
Contel continues to advocate the use of Local
Measured Service (LMS) pricing concepts through-
out its system in place of the historical flat-rate
method of charging for local service. LMS matches
cost with usage and produces revenues according
to demand, tn short, customers have more control
over charge, s for their local tel ephone service since
they are billed according to ~heir level of usage.
LMS studies or proposals are underway in six'of the
10 states Centel serves. After a year-tong experf-
ment, the Texas Public Utility Commission in 1981
authorized LMS pricing as a permanent offering
in the Kingwood exchange, our first regulatory
approval of the service outside of the Chicago -
metropolitan area. LMS pricing has since been
approved at Martinsville, Virginia.
Operating Improvements
Automation of all service order processing was ,
completed last year. It has reduced paperwork,
speeded up the internal flow of service orders and
provided m ore accurate records. The automated
system also laid the groundwork for a more versatile
computerized customer records program, which will
be pilot-tested in, 1982.
Regulatory Matters
Increases of $14.8 million in new annual local service
revenues were approved in 1981 of which S7.0
million was reflected in 1981 revenues. The interstate
rate increase which went into effect at midyear,
coupled with changes in the Belt System's operating
expenses and investment levels, generated an
additional $9.0 million in toll revenues.
In Florida, Centel made a one-time refund of $1.0
million in July 1981 after negotiations with the state
utility commission relative to the level of company
earnings.
A rate increase application pending at year-end in
Virginia was approved in January with an award of
$3.7 million in additional annual revenues. Rate
requests total ing $4.3 million an nually were pending
at year-end of which $1.5 million was being col-
lected subject to'refund.
Capital Recovery
Regulatory agencies authorized an additional $20.5
million in annual depreciation expense, of which
$13.6 million was reflected in 1981 business. Also
adopted were changes in accounting procedures
under which station connection costs are being
expensed currently rather than capitalized. Due to
the' change, 1981 expenses were increased by about
$2.0 million, or $7.1 million annually. Approvals for
higher depreciation rates have come as a result of
Centel's initiative to persuade'regulators that tech-
nology and market competition are shortening the
economically useful lives of the telecommunications
facilities in which we invest.
Consolidation of Operations
During 1981, operations in Iowa, Missouri and
Minnesota were grouped into one administrative
organization. Ohio and Illinois activities were also
consolidated. These internal changes will increase
operating efficiency through better utilization of
management personnel and reduced administrative
costs.
7
Contel Communications Company
3ommunications Group Highlights
Thousands of Dollars 1981 lg80 Increase.
_.Sales and Revenues
:_ ~,.~-~ -come,Before~ Interest and Taxes $247,243 $198,527 24.5%
· Construction Expenditures
$ 23,820 $ 19,375 22.9%
$ 24,825 $ 12,898 92.5%
Total Assets $209,900 $150,100 39.,R%
Employees 2,262 1,683 34.4%
Top Among the major
contracts negotiated by
Cente[ Business Systems
'~zas a $17.4 mil ion contract
)r the replacement of the
.elephone system at Fod
Hood, Texas. the largest
military post in the Free World.
Center Centel Supply
Company's new corn puter-
.~ized inventory and order
:ontrot system provides
as[er 0rocessing of gus-
tomer orders and continuous
~nventory control.
~Bottom Loca programming
~s proving to be one of the
most popular features in
Centel's franchise pack-
ages. Civic programs, local
soorts activities and other
ndividual community activi-
[[es are some of those
featured.
ri · I
To accommodate the growth and increasing impor-
tance of nonregulated businesses, Centel Commu-
nications Company was reorganized in March 1981.
Three operating units, each under a group vice
.president, were established: Business Systems,
Communications Products and Video Services.
The Business Systems group is responsible for
designing, rnarketing and servicing private business
telephone systems to customers through a distri-
bution organization with offices throughout the
United States.
The Communications Products group includes sub-
sidiaries which manufacture and distribute propri-
etary products to the communications market and a
supply company which warehouses and distributes
products to 3entel's telephone and cable television
operations, as well as unaffiliated companies. A third
element of tMs group provides construction and
engineering services to both affiliated and non-
affiliated customers.
The Video Services group was formed to capitalize
on a wide range of opportunities, including cable
television, satellite master antenna systems and
new video networks.
Each of Centel Com munications Company's
operating groups was strengthened by acquisitions
which expanded product lines or market base.
Centel Business Systems added four offices in
Tennessee with the purchase of General Communi-
cations &.Electronics, Inc. Based in Nashville, GC&E
had sales of about $6.0 million in 1981.
The Communications Products group added both
new products and broadened its line of supplies-
through the acquisition of Diamond Communication
Products, Garwood, New Jersey, a leading manu-
facturer of hardware for th e telecommunications
and cable television industries.
As in 1980, howeyer, the largest number of acqui-
sitions came in cable television. Seven new cable
systems joined Centel Video Services in 1981, and
since the beginning of this year four more systems
have been acquired. Agreements are pending for
two additional systems.
Acquisitions Completed or pending add some
36,000 subscribers to Centel's customer base. Our
efforts continue to be concentrated in five mid-
western and southern states--Illinois, Ohio,
Michigan, Kentuoky and Flodda.
Business Systems
~u~ines~, Systems Highlights
Thousands of Dollars 1981 1980 . increasn
Sales $112,081 $76,407' 46.7%
.~ ,~come Before Interest and Taxes $ 10,160 $ 6.972 45.7%
Order Backlog $ 51,731 $38,803 33.3%
Assets $ 81,063 $64,503 25.7%
Employees 1,197 910 31.5%
Cente~ Business Systems is
becoming recognized as the
~? .nation's leader in ous~ness
rhone sales through its
ales efforts and par~cipa-
--~on in leading communica-
tions exhibitions held
throughout the United
States. such as this one.
held in Chicago in 1981.
Centel Business Systems sales topped $112.0 million del phia. FMC projects the system Will cut annual
last year, up 47 percent from 1980 and ranking the
group among the nation's largest marketers and
distributors of business comm Unications systems
to the end user. It ended 1981 with a $51.7 million
backlog of orders, well above the earlier year's
$38.8 million backlog.
CenteI-Business Systems' organization strength-
ened last year with consolidation of all operating
units into a national marketing organization. New
sales offices opened in 1981 gave the group a total
of 56 offices in 20 states, Plans for 1982 call for 20
additional offices.
The group will begin marketing a proprietary line of
electronic key systems, the first product merchan-
dised under a Centel brand name label. Manufac-
tured by TIE Communications, it will be distributed
through Centel Supply Company. A supply agree-
ment with Northern Telecom, Inc. for digital elec-
tronic PBX systems is in its second year.
With an expanding network of sales and service
offices and a broad range of quality products,
Centel Business Systems expects to increase mar-
ket share again in 1982. Expertise in meeting the
specialized communications needs of hotels, the
health care and petrochemical industries and gov-
ernment installations is a strategical element.
Major Installations Completed in 1981
A $5.8 million communications network began
serving FMC Corporation. The nationwide, three-
node switched network provides communications
links between FMC's corporate headquarters in
Chicago and major divisions in San Jose and Phila-
communications costs as much as $3.0 million. ~
Centel Business Systems designed, engineered and
installed the 4,200-1ina system, which incorporates
state-of-the-art programming for automatic call
routing to 147 FMC network locations and a Com-
munications Mapagement Center for network
management and optimization.
Centel is installing a $4.2 million system for the
General Services Administration. It encompasses
the communications of all federal agencies in
Houston and several surrounding areas, serving
4,000 telephones from eight PBX locations.
Other major installations during 1981 included a
system at the Las Vegas Hilton providing 4,075 lines
and 18 operator stations, and a $5;0 million project
for Shell Oil Company in Houston.
Fort Hood Installatioh Begun
In August, Centel was awarded a $17.4 million con-
tract to replace the corem unications system at Fort
~Hood, Texas, the largest military post in the free
world. The project includes construction of a new
central office, rehabilitation of outside cable distri-
bution facilities and 11,000 new telephones. Corn ple-
tion is expected in early 1983.
Florida Power Signs Letter of Intent
tn early 1982, Florida Power & Light Company signed
a letter of intent to purchase a $5.0 million system
which will provide an integrated communications
network [or power generating stations*throughout
the state.
11'
Communications Products
Joi-nmunications Products Highlights
~F"Thousands of Dollars
Increase
1981 t980 (Decrease)
To Regut[ated Affiliates $ 59,871 $ 64.672 (7.4%)
To Other Customers 79,660 56,308 41.5%
Total $139,531 $120,980 15.3%
ncomeBeforelnterestandTa~'es $ 16,364 $ 14,674 11.5%
Assets $ 59,447 $ 41,305 43.9%
Em ptoyees 665 489 36.0%
completely new look in
:e!eonone ~3ooths ~s what[
:.ne Houston. Texas airport
architect wanted and
Acoustics Development
Corcoration delivered. Adco
oootns are m most of the
~" ation's largest airports as
eft as high-rise office
Cuitd;ngs, hospitals and
many other iocatiens all
:ve¢ '.ne Un,ted States and
r-, scme foreign countnes.
. es Offices
Continued market expansion and product develop-
ment by the Communications Products Group
should support higher earnings over the long-term.
In 1981, the group's three principal operating units--
Acoustics Development Corporation (ADCO),
Digitech Industries and Centel Supply Company--
posted a 13.6 percent increase in sales.
ADCO
^ pioneer in the development of acoustically
designed telephone booths, ADCO introduced
several new products in 1981. Production began on
a new enclosure which expands the outdoor line
and will ultimately replace ^DCO's pedestal booth.
The enclosure meets government guidelines for use
by handicapped persons and incorporates several
new features, including a recessed vandaPresistant
security pedestal which will become common to all
outdoor enclosures.
^ significant portion of ADCO's business is design
of public telephone calling centers in major airports.
Contracts completed in 1981 included the inter-
national air terminals in Chicago, San Francisco,
Houston and Washington, D.C.
A major expansion program was completed last
year with replacement of 50 percent of the manu-
facturing machinery at the St. Joseph, Missouri
plant anda'building addition which doubled pro-
duction capacity.
Digitech
As data processing communications systems
become more complex and sophisticated, Digitech
is keeping pace with a growing line of diagnostic
I I I
tools which incorporate the latest technology.
An important addition to Digitech's diagnostic hard-
ware line during 1981 was the ENCORE 200 portable
network analyzer. Improving on a model intro-
duced two years earlier, the ENCORE 200 makes it
easier to identify problems at a location other than a
network's central computer. More compact and
powerful, it can perform analysis at quicker speeds.
The newest software package diagnoses computer
protocol problems in the X.25 packet-switched net-
work, an international system widely used in Europe
and Canada. Digitech's introduction of the X.25
software package was timely in light of the growing
use of this network in the U.S.
Centel Supply
In the three years since it began marketing tele-
phone equipment and supplies to the interconnect
market, Centel Supply has built a substantia!
customer base. Sales last year to companies not
affiliated with Centel rose approximately two-
thirds. Contributing to the gains were new distribu-
tion centers in Moonachie, New Jersey and Dallas,
Texas and expansion of the national sales force.
Service capabilities were also improved by a new
computerized inventory and order control system.
Orders can now be shipped and billed the same day
they are received, n addition, affiliated companies
are able To order direct via computer terminals
linked to the system.
Wilco
Wilco provides expertise in the design and con-
struction of communications distribution networks.
Presently concentrated in TeX~s and surrounding
states, operations are being expanded for a lar-
ger share of the market for construction of new,
advanced communications systems as well as
demand for re-builds of older cable television
systems.
Diamond Acquisition
Diamond Communication Products is a well-estab-
lished company with annual sales of S12.0 million. Its
principal produotsare fasteners and other pole line
hardware used throughout the communications
industw. The one-piece Tap Bracket fastener is
widely used in constructing cable television systems.
Known for the high quality of its specialty fasteners,
Diamond's product lines were further strengthened
in 1981 by a new mechanical plating process which
galvanizes products with an im proved rustproof
zinc coating.
13
Video Services
Vi,cleo Services Highlights
Thousands Of Dollars
¢~._~ Revenues 1981 1980 Increase
income From Operations
$16,262 $ 8.457 92.3%
$ 4,750 $ 2.675 77.6%
Depreciation and Amortization $ 3,770 $ 2,298 64.1%
Income Before Interest and Taxes $ 980 $ 377
Assets $78,188 $30,117
ConsTruction Expenditures $19,818 $ 9,369
Employees 400 284 40.8%
Basic Subscribers 116,510 94,212 23.7%
Premium Subscribers 55,760 34,585 61.2%
excess of 100%
Centel brings a wide variety
of satellite programming to
condominium and apart-
ment residents, as well as
cable TV customers in
6 states.
Jer~,,ed
The activities of Centel Video Services during 1981
were concentrated in three major areas: cable tele-
vision; master amenna services; and a new venture
being pioneered by Centel named Videopath--a
microwave network to deliver programming and
advertising to and from Chicago-area cable tele-
vision systems.
Cable Television Expansion
Cable television operations continued to expand
rapidly through acquisitions, franchising activities
and marketing programs which stimulated internal
growth. In addition, 822 miles of new and acquired
plant were added to extend systems past more
homes, a 49 percent increase from 1980.
Franchise Activity
Franchising activity has been concentrated in
suburban Chicago, on the Rorida Gulf Coast and in
Kentucky and Ohio. With the 30 franchises awarded
during 1981, Centel now has cable TV franchises in
7.8 communities. At year-end, franchise applications
were pending in 19 communities with a potential
subscriber base of more than 150,000 homes.
-Most new systems built by Centel are designed to
accommodate a variety of two-way interactive
services, such as electronic banking, home
shopping and security.
New Services Added
. Locally-produced community programming was
expanded by many Centel systems during the year.
tn addition to local news, weather coverage and
interview programs, several features were intro-
duced on local origination channels. Much of this
programming--particularly coverage of high school
sports--has drawn support from local advertisers.
The advertising potential is expected to be an
important source of future revenues.
1~1981 Centel began experimenting with pay-per-
view programs such as major sports events. In the
past, these programs could only be seen by
attending live events or via closed-circuit television
coverage.
Satellite & Master Antenna Programming Service
One of Chicago's largest master antenna operators,
Coreco Electronics serves more than 10,000 cus-
tomers in multi-family residential highrise buildings
on Chicago's Gold Coast lakefront, as well as large
condominium and apartment complexes in the
suburbs. Comco also began offering satellite pro-
gramming services in 11 Chicago-area apartment
and condominium complexes.
Regional Cable Interconnect Network
Designed to operateover microwave radio links
with a two-way transmission capability, Videopath
will make Chicago and its suburbs the nation's first
major metropolitan area to routinely exchange cabie
programs and other broadband communications.
It is schedu led to begin operation in 1982.
Programming, advertising and other communica-
tions can be originated at the hub site (control
cemer) or from any of the participating cable TV
systems on the network and relayed by microwave
radio link to the hub site for (~istribution along the
network.
The two-way switching capability permits trans-
mission to a pre-selected number of head-end sites,
distribution to all points along the netwerk, or
discrete connections between as few as two points.
The earth station-satellite links at the hub site are
available for transmission to other facilities through-
out the country.
Videopath offers broad opportunities for local and
regional program distribution, regional advertising,
video conferencing, and data transmission along
a metropolitan network expected to eventuall'y
reach 2 mil ion homes. The versatility of the concept
anticipates the addition of new communications
applications and we expect to build comparable
systems in other cities.
15
Electric Operations Highlights
; h'ousands of Dollars 1981 1980 Increasn
~'~'~ :levenues $138,701 $128,048 8.3%
~:~:~-Expenses $ 32,989 $ 29,325 12.5%
FueICosts $ 36,329 $ 36,572 (0.7%)
Purchased Power Costs $ 42,461 $ 34,571 22.8%
; Net Income $ 10,243 $ 9,215 11.2%
Construction Expenditures $ 26,534 $ 20,889 27.0%
Customers 131,868 130,519 1.0%
;ou~hern Colorado Power's
frogramable Load Controfler.
installed in 1981. s the first
· to be insta! ed by a utility.
"" tt monitors oower use at two
substations, reports mai-
' functions and contros c~rcu t
,,.',, '~,breakers and disturbances
dfecting power lines·
Despite the combined effects of a cool summer and
mild weather in the final quarter, net income for 198t
showed a modest increase over 1980. Ki owatt-hour
sales were 7.2 percent below 1980, but critical rate
case decisions and close monitoring of expenses
offset the decline in demand.
Regulatory Matters
In order to restore earnings to an acceptable level,
the company stepped up efforts to obtain regulatory
approval of higher rates to cover increased costs and
improve the return on our investment in generating
plant and transmission facilities.
Final rate orders were received in three cases filed
during the 1980-81 period. Together, they are
expected to produce $t7.6 million in additional
annual revenues of which $5.7 million was collected
under bond in 1980, with $7.3 million of additional
revenue reflected in 1981. An additional $4.6 million
of the total will be reflected for the first time in
1982 revenues.
A wholesale rate increase of $1.2 million went into
effect, subject to refund, in February, 1982. After
year-end, the Colorado operating unit requested
increased rates to produce additional annual
revenues of about $7.3 million.
During 1981, several hearings held by the Kansas
State Corporation Commission focused on various
utility practices and policies required by the Public
Utility Regulatory Policies Act of 1978 (PURPA).
Rate-m aking standards, model bill format, utility
load management and control programs, and co-
generation and small power production were targets
of Commission study. The Company maintains
active partici patton in such forums to assure estab-
lishment of equitable policies.
Progress on New Plant Addition in Kansas
Construction of the third coal-fired generating unit
.at the Jeffrey Energy Center in Kansas is proceeding
on schedule. Approximately 45 percent cam pleted,
the 680-megawatt unit is scheduled to begin com-
mercial .operation in June, 1983. Unit 3 will boost
Jeffrey's total generating capacity to 2,040 mega-
watts, making it the largest power generating
complex inthe state.
The Company's eight percent ownership interest in
the Jeffrey Center significantly reduces our depen-
dence on gas and oil fuels for base-load power
generation. In addition, Centel has contracted
through 1993 to purchase 65 megawatts of power
ann ually from each of Jeffrey's first two operating
units.
A fourth 680-megawatt unit had been planned for
service in 1986. However, an assessment of currently
available generating capacity in Kansas, when
coupled with lower growth rates, indicates that
additional capacity is not needed at this time.
Therefore, construction of the fourth unit has been
deferred indefinitely.
Preliminary Solar Energy Study Complete
The feasibility of using solar energy to produce
about 50 percent of the 60-megawatt capacity at the
Company's Cimarron River generating plant near
Liberal, Kansas was considered during 1981. Prelim-
inary cost estimates of th e conceptual design study,.
initiated and funded by the Department of Energy,
indicate the project is not economically justifiable.
17
Telephone Network Service Areas
Centel provides telephone service
through its operating companies in 10
states. These operations comprise the
fifth largest telephone system in the
United States, serving 1,153,000
customer lines.
Centel Business Systems Sales Offices
Centel markets business communications
systems in the midwest, south and south-
west and through its operating telephone
companies in ten states. Together these
operations compdse 56 marketing and
service locations in 20 states.
oducts Group Sales Offices Cable Television Service Arenas·
Acoustics Development Corporation
(ADCO) designs and markets acoustical
public telephone enclosures. It is a
leader in its market and its products are
in use in over 100 domestic airports and
many major public buildings.
Digitech Industries designs and markets
test equipment for the data communica-
tions market. They are recognized as a
technical leader in the market.
Diamond Communication Products
manufactures fasteners and other pole
line hardware used throughout the
communications in dustry.
Cable Television service is provided to ~¢~
over 115,000 customers in 6 states. In
addition to existing cal~le television
service, Centel has been awarded 30 new
franchises. Contel is also actively seeking
new franchises in approximately 19 other
communities encompassing over
150,000 homes.
Electric Service Areas
Southern Colorado Power, headquartered
irt Pueblo, Colorado and Western Power
in 'Great Bend, Kansas provide electric
service to 131,800 commercial and
residential customers.
Centei Supply Distribution Centers
Centel Supply maintains warehouses in
seven states. Telecommunications mate-
rials and supplies are sold to affiliated
teleph one, busi ness systems and cable
television companies and to nonaffiliated
telecommunications companies.
Corporate Headquarters
Centel's corporate headquarters in
Chicago encompasses policy-making
strategic planning and corporate admin-
istrative functions.
Toronto
18
Financial Matters and Operations
'Consc~lidated Operations
The Company's earnings improved sub-
~stantially in 1981 despite weakened
economic cond tions, increases in oper-
ating expenses resulting from capital
recovery improvements authorized by
regulatory agencies and inflationary
pressures.
Earnings per share increased 12.4% in
1981 and 6.8% in 1980. Earnings for 1980
were restated to reflect an acquisition
in 1981 and the effect of recognizing the
costs of employee compensated
absences when they are earned rather
than when paid. Net income increased
13.7% in 1981 and 8.5% in 1980. Revenues
and sales increased 14.0% to over $1 bil-
lion in 1981 and 12.7% in 1980.
Telephone Operations
Telephone revenues increased 11.6%
in 1981 and 8.1% in t980. The growth in
revenues is attributable to increases in
customer lines served, increases in local
service rates and improvements in toll
revenues.
Increase in Net Investment
in Millions
$125
The number of customer lines served
increased 3.9% in 1981, 4.4% in 1980 and
4.8% in 1979. The rate of increase in
customer lines served diminished due to
the generally adverse economic climate.
Several of the telephone companies
obtained approval from their respective
state regulatory agencies to increase
local service rates to produce additional
annual revenues of $14.8 million in 1981,
$1.1 million in 1980 and $1.0 million in
1979. 1981 revenues include $7.0 million
of the amounts approved in 1@81, 1980
revenues include $753,000 of the
amounts approved in 1980, and 1979
revenues include $464,000 of the
amounts approved in 1979. An order was
received January 8, 1982, authorizing
additional annual revenues of $3.7 million.
Rate requests totaling $4.3 million annu-
ally were pending at year-end of which
$1.5 million was being collected subject
to refund.
The Company's Florida operating unit
made a one-time refund of $1.0 million in
1981 because it was earning a rate of
return higher than authorized by the state
regulatory agency.
The effects of competition in the terminal
equipment markets, predominately
business systems and business and resi-
Revenues and Sales
in Millions
$1200
1000
800
400
200
dential telephones, continue to erode
the growth rate in local service revenues.
This also resulted in reduced operating
expenses and capital investment require-
m ants for terminal equipment. Active
selling of terminal equipment by the tele-
phone companies hastens recovery of
the investment and reduces the risks of
changing technology. Revenues from
terminal equipment rentals decreased
5.2% from 1980 due primarily to customer
ownership. Revenues from network
access lines, measured telephone usa~ge
within local exchanges and serv~ ce
connections increased 8:5% in 1981. Due
in part to revenue recovery relating to
expensing of service connection costs,
service connection revenues increased
by 7.1% from 1980, accelerating to nearly
17% during the last half of 1981 over the
like period in 1980.
Toll revenues increased t6.5% in 1981,
9.6% in 1980 and 18.1% in 1979. In April,
1981, the Federal Communications Com-
mission approved increased interstate
long distance rates. This rate increase,
coupled with changes in the Bell
System's operating expenses and invest-
ment levels, increased the Company's
toll revenues by about $9.0 million.
Earnings and Dividends Paid
per Common Share
;977 1978 1979 1980 1981
CommUnications
0 1977 i978 1979 1980 1981 0
Communications
E,fectric
Telephone
'3.00
2.00
1.00
1977 1978 1979 1980 1981 0
Earnings
Dividends
19
C~anges in toll settlement' agreements in
several companies increased 1981 reve-
nues by $2.0 million. Adjustments to
estimates of prior years' toll revenues
increased toll revenues $4.1 million in
1981, decreased toll revenues $472,000 in
1980 and increased toll revenues $2.0
million in 1979.
Operating expenses increased due to
general inflationary pressures, a greater
volume of business and a change in cer-
tain jurisdictions in accounting for costs
related to service connections. Operating
expenses included increases in wages of
$7.9 million in 1981 and $6.7 million in
1980 largely resulting from wage adjust-
ments under union contracts. These
increases have been partially offset by
increased productivity as illustrated by
the continuing decrease in the number
of employees per 10,000 customer lines
served from 91.7 at December 31, 1979,
to 82.8 at December 31, 1981.
The accounting change for service con-
nection costs is to comply with regula-
tory agencies' rulings that these costs
be expensed rather than treated as
capital expenditures. Due to the change,
1981 expenses were increased by about
$2.0 million, or $7.1 million annually. The
1981 effect includes an increase in
' operating expense, mainly maintenance,
of $10.O million and a decrease in d epre-
clarion expense of $8.0 million. These
increases in expense have been sub-
stantially recovered through increases in
rates authorized by regulatory agencies.
Requests in other jurisdictions to expense
station connection costs, which will
increase annual operating expenses by
about $5.8 million, were approved in
January, 1982.
Because of growing competitive pres-
sures, the Company continues to ask
state regulatory agencies for higher
depreciation rates to insure timely
recovery of their capital investment.
Regulatory agencies granted increases
in depreciation rates, exclusive of [he
effect of the change in accounting for
service connection costs, to provide
annual increases in de preciation expense
of approximately $20.5 million in 1981,
$700,000 in 1980 and $14.8 million
in 1979. 1981 expenses include $13.6 mil-
lion of the amounts granted in 1981, 1980
expenses include the $700,000 granted
in 1980 and 1979 expenses include S12.6
million of the amount granted in 1979.
Communications Operations
Communications sales and raven ues
continued to increase at an annual rate
over 24% with a 24.5% increase in 1981
and a 24.2% increase in 1980. The ratio
to consolidated revenues and sales in-
creased to 24% in 1981 from 20% in 1979.
Sales of business communications sys-
tems increased 46.7% in 1981 to $112.1
million from $76.4 million in 1980 and
$54.5 million in 1979. Continued manage-
ment emphasis to expand in the busi-
ness systems market is the major reason
for this dramatic growth. Increased
customer acceptance of ownership of
business systems instead of leasing the
systems from tel ephone companies
and the introduction of more advanced
terminal equipment have also added to
the growth.
Sales of communications products in-
creased at a rate of about 15O/o in the past
two years principally due to increased
sales to unaffiliated telecommunications
customers. Sa!es to affiliated telephone
companies decreased 7.4% in 1981 and
5.7% in 1980 largely because of reduced
requirements for terminal equipment.
Cable television revenues increased
to $16.3 million in 1981 from $8.5 million
in 1980 and $2.7 million in 1979. The
number of subscribers increased to
116,510 at the end of 1981 from 26,617 in
1979 due to the acquisition of cable
tel evision companies and expansion of
the subscriber base in new and existing
areas. Premium service revenues
increased to $5.1 million in 198t from
$2.2 million in 1980 and $800,000 in 1979.
Operating expenses generally increased
because of the greater volume of busi-
ness. Th 9 costs of expanding the. central-
ized staff support groups, increased
marketing efforts and expanding the cable(
televisl'on operations had an increasing
effect on operating expenses.
Electric Operations -
The rate of growth in Electric revenues
slowed to 8.3% in 1981 from 18.6% in
1980. Growth in revehues is affected by
customer usage, rate increases and
recovery of energy costs through fuel
adjustment clauses. Kil owatt-hours sold
decreased 7.2% in 1981 partially due
to the reduction of energy and demand
requirements of a large wholesale custo-
mer, increased 10. 8% in 1980 largely due
to changes in weath er and decreased
2.7% in 1979 primarily due to conservation
by customers. Rate increases and fuel
adjustment clauses increased revenues
over th e preceding year by $16,7 million
in 1981, S7.9 million in 1980 and $2.4
million in 1979. In February, 1982, the
Federal Energy Regulatory Commission
authorized the Company to implement,
subject to refund, higher rates which will
produce additional annual revenues of
$1.2 million.
Increases in purchased power and fuel
costs continue to affect electric operating~
expenses; however, these increases are ~-~
substantially recovered through fuel
adjustments allowed by regulatory
agencies. Operating expenses included
increases in wages of $385,000 in 1981
and S380.000 in 1980 resulting from
wage adjustments under union contracts
and increases of $876,000 in 198t and
$734,000 in t980 resulting from opera-
tions of the Jeffrey Energy Center Unit
No. 2, completed in mid 1980. The wage
adjustments have been partially offset by
increased productivity as illustrated by
the decrease in the number of employees
per 10,000 meters from 60.2 at the end
of 1979 to 56.4, at Decamp)er 31, 1981.
2O
Capital Resources and Liquidity
.The major uses of the Company's capital
resour,ces are for expansion and modern-
ization of utility plant, communications
property and equipment and working
capital. While a growing percentage of
capital assets is being deployed into
higher growth communications-related
businesses, the Company will continue
to meet commitments to the telephone
and electric utility customers.
In 1982, the Corn pany expects to spend
approximately $265.6 million for replace-
ment, expansion and modernization, up
5.9% from 1981 capital expenditures of
S250.7 million. Over 90% of the 1982
capital outlays are expected to be
financed from internally generated funds.
The major changes in the Company's
financial position during 1981 were an
improvement in the ratio of equity to debt
and a reduction in cash and temporary
cash investments. Common share-
holders' investment increased to 41.4%
of total capital'including notes payable at
December 31, 1981, from 39.8% at the
end of 1979. This trend recognizes the
changing nature of the Company's
business.
Th ~ Company received $10.3 million in
· .~¢i~, new equity capital during 1981 cbmpared
~_~; v¢ th $8 9 mi lion in 1980 and $8 3 mil-
lion in 1979, principally from the issuance
of common stock under the dividend
reinvestment and employee stock plans.
Retained earnings also increased $46.7
million in 1981, $37.9 million in 1980 and
$37.5 million in 1979.
discontinue issuing new shares to satisfy
requirements of the above plans. Instead,
it will make systematic purchases Of
common stock in the open market.
Purchases m any one year are expected
to amount to less than 2% of the shares
outstanding. Since the shares purchased
will be reissued to the plans, the num-
bar of shares outstanding wilt remain
unchanged.
Long-term debt borrowings totaled $64.7
million in 198t of which $30.2 million
was used to replace maturing debt.
Long-term borrowings amounted to
$125.2 million in 1980 and $37.9 million
in 1979. At year-end, the Company
replaced most of its existing lines of
credit with a ,$101 million revolving credit
,.,,,~.agreement with a group of eight banks.
~'Borrowings under the revolving credit
agreement can be made through
December 31, 1984.
The first mortgage bonds of the Company
and its principal subsidiaries are rated A
to Aa by Moody's Investment Services
and A to A+ by Standard & Poor's.
Commercial paper of the Company and
Central Telephone Company is rated P-1
by Moody's and A-1 by Standard & Poor's,
the highest ratings attainable.
Internally generated funds continue to
provide the majority of financing for new
capital investment to construct tele-
phone, electric and cable television plant
facilities. Funds from internal sources
financed 88.8% of the 1981 construction
program, compared with 87.5% in 1980
and 89.7% in 1979.
Although inflation has adversely im-
pacted operating and capital costs, the
Company is achieving above-average
returns on common shareholders' invest-
ment. The Consolidated return on average
common, shareholders' investment in
1981 increased to 17.9% from 17.2% in
1980 and 17.4% in 1979. While the per-
centage of dividends declared relative to
earnings available to common share-
holders has remained fairly constant--
55% in 1981 versus 58% in 1980 and 55%
in 1979--consistent year-to-year gains in
earnings have allowed successive
increases in the dividend.
Dividends paid in 1981 amounted to
$2.10 per share, up from $2.00 in 1980
and $1.84 in 1979. In December, 1981, the
Board of Directors raised the quarterly
dividend to 55¢ per share, or an indicated
annual rate of $2.20 per share in 1982.
Impact of Inflation
The Selected 1981 Financial Data
Adjusted for Changing Prices included
elsewhere in this report discusses the
effects of inflation on the Company.
II
Year Ended December 31, 1981 1980
Central Telep hone & Utilities Corporation
Consolidated Statements of Income
Thousands of Dollars
(Note 2) (Note
Revenues and Sales
Telephone $ 634,432 $568,683 $526,192
Communications
Regulated Affiliates 59,871 64,672 68,55U
Other 187,372 133,855 91,31
Electric 138,701 128.048 107,99[
$1,020,376 ' $895,25~
Total Revenues and Sales
Expenses
Operating Expenses
$ 310,069 $263,405 $226,764
Cost of Products Sold
170,144 1-43;586 ' " 121,048
Maintenance 127,845 '106,171 100,87b
133,41{) 119,203 108,719'
46,584 44,265 39,24:~
Depreciation
Taxes, other than income taxes .
· $ 788,061
Total Expenses
Operating Income . . , ' , $ 232,315
Other Income
Allowance for Equity Funds Used During Construction
$ 2,048
'$676,630 $596,648
$218;628 "$19~,40~
$ 1,249 '-": $' i,50~
Miscellaneous, net 9,640. 5,821 ..... 2,15~
Total other Income ' $ 11,688 $ 7,070, $ 3,66~
Income Before Interest Expense and Income Taxes. $ 244,003 $225,~98 , '. ' ', $201,074
Interest Expense _
Long-Term Debt $ 61,310 $ 54,033 $ 48,17b
· Other 4,480 7,185
TOtal Interest Expense $ 65,790 $ 61,218 $ 52,49
Income Before IncomeTaxes $ 178,213 ' $164,480, ' "' $~481583
'Income Taxes
State $ 5,915 $ 5,673 $ 4,96
Federal 67,776 66,877, , 58,85~
Total income Taxes $ 73,691 $ 72.550 $ 63,82b
Net Income $ 104,522 $ 91,930 $ 84,75~
Preferred Stock Dividends
Earnings Available for Common Shareholders
Earnings Per Share
1,267 1,295 1,32~
$ 103,255' $ 90,635 $ 83,4~3z
Pdmary $3.89 $3.46 $3.24
Fully Diluted $3.86 $3,43 $3.21
The accompanying Notes to Financial Statements are an integral part of these statements.
22
Central Telephone & Utilities Corporation ..
Consotidrated Statements of Changes in Financial Position
Thousands of Dollars Year Ended December 31, 1981
1980 1979
(Note 2) (Note 2)
Sources of Funds .
Funds Generated Internally
Net lncome $104,522 $ 91,930 $ 84,758
Depreciation 133,419 119,203 108,719
Deferred Income Taxes and Investment Tax Credits. net 41,075 42,441 40,788
Allowance for Equity Funds Used During Construction (2,048) (1,249) . . (1~507).
,~'~" ~ Other 3,323 360 (1,197)
--unds Provided from Operations $280,291 $252,685 $231,561
'Dividends Declared on
Preferred Stock . .. (1,267) (1,295) (1,326)
Common Stock (56,470) (52,705) (45,806)
Net FUr~ds Generated Internally ·
Funds Obtained from OtherSources
Common Stock Issuances ". _ $ 10,295 $ 8,902 $ 8,328
$222,554. $198.685 $184,429
Long-Term Debt Borrowings-
64,651 125,235 37,916'
lncr, ease (Decrease,) in Notes Payable
Total Funds Obtained from Other Sources
Total Sc~urces of Funds
r
112 (30,354) 25,737
$ 75,058 $103,783 $ 71,981
· ' $297,612 $302,468 '- $256,410
Uses of Funds
Increase (Decrease)
$(34,997) $ 31,163 $ (1,259)
!~,~ .Cash and Temporary Cash Investments
. .
Accounts Receivable and Unbdled Revenue 18,711 18,101 22,389
Materials and Supplies and Product Inventories : ~'. 17,838 _ . - : [779)'. 17,833
Other Current Assets 5,887 3,775 6,400
Accounts Payable - 2,807 (15,756) (7,510)
Accrued Taxes and Interest 5,367 (10,156) 1,098
Advance Billings and Customers' Deposits
(1,711) (2,361) (1,284)
Accrued Compensated Absences
(3,302) (1.214) (1,076)
Other Current Liabilities
Net Increase in Working Capital
(5,822) ' , '(16,529) , , (12,,532)
4,778 $ 6,244 $ 24,059
Additions to Plant, Property and Equipment 250,652 226,507 205,073
Allowance for Equity Funds Used Dudng Construction /~';~;'~ · (2,048) (1,249) (1,507)
Net Amount Paid in Exchange for Telephone Properties ~: -~:-: -- 8,286 --
Acquisitions, net of working capital acquired 12,923 19,095 1'876
Convertible Secu riti es Exchanged for Corn mort Stock 1,554 1';,040 1,225
Retirements of Long-Term Debt and Preferred Stock 31,807 40,945 22,267
Other Uses (Sources) of Funds, net (2,054) 1,600 3,417
/~ Total Uses of Funds $297,612 $302.468 $256,410
The accompanying Notes to Financial Statements are an integral part of these statements.
23
Cerkral Telephone & Utilities Corporation
Consolidated Balance Sheets
I ] I ' I I
Thousands of Dollar~ December 31, 1981 1980
Asset=, iNote
Current Assets
Cash
S 1,684 $ 12,980
Temporary Cash investments
1,409 25,110
Accounts Receivable, net
106,030 89,187
Unbilled Revenue
24,59~ 22,726
Materials and Supplies, at average cost
25,248 21,444
Product Inventories 45,999 3 t ,965
Other
. , 25,522 19,635
'Utility Plant, at cost ' S 230,486'
$
223,047
T~ephone
$1,909,770 $1,785,525
Electric
320,296 294,874
$2,230,066 $21080,399
Less--Accumulated Depreciation 556,264 498,843
...... $1,673,802 $~1,581,556
Communications ' ' ' ' ' ' --
Property and Equipment . $ 66.632 $ 37,936
Less--Accumulated Depreciation 10,951 6,159
S 55,681 $ 31,777
:Fran(~hise Costs and Other int, angibles,
, 29,308 22.425
" $' 8~989 $ '~4,207
0therAssets ' '
S' 47,065 $ 40,20~
~abH~ies and Shareholders, Investment $2,036,342' $1,899,01 ~
Current Liabilities-
Long-Term Debt and Preferred Stockto be Retired Within One Year S 11,689 S 23,076
Notes Payable (Note 4) 1,266 1,154
Accounts Payable 62,995 65,802
Dividends Payable
15,123 13,992
. Accru ed, Taxes 25,316 31,335
Accrued Interest . 10,276 9,624
Advance Billings and Customers'~Deposits 18,196 16,485
Accrued Corn pensated Absences 14,021 10,719
Other ,, , 38,543 33,852
'Deferred Credits $ 197,425 ' , $ 20~',03R
Deferred Income Taxes S 282,860 $ 256,495
Investment Tax Credits 94,800 80.903
Other 7,381 6,536
Long-Term Debt [Note 4) $ 385,041 $ 343,93-6
$ 801,~2~ $ 752,343
Preferred Stock (Note 8)
Not Subject to Annual Redemption
16,456 $ 16,820
Subject to Annual Redemption . 28,951 30,512
$ 45,407 ~ '47,332
'CO~mon Sh,a.r,ehotders· inv,estment ' S. 606,643 $ 549,363,~..
$2,036,342 ~1,899,01~
The accompanying Notes to Financial Statements are an integral part of these balance sheets.
Centr~[ Telephone & Utilities Corporation
Consolidated Statements of Common Shareholders' Investment
~' -- nousar~ds of Dollars
Balances it Dece'mber'31,1978, as previously reported
Common Shares
Outstanding
25,356,187
Additional
Par Paid-In Retained
Value Capital Earnings Total
$63,390 $166,935 $229,107' $459,432
Effect of Acquisition Accounted for as a Pooling of Interests (Note 2) 189,998
475 450 ' 925
Accrual of Compensated Absences (Note 2)
Balances at December 31,1978, as restated
25,546,185
-- -- (3,566) ,(~,566)
$63,865 $167,385 $225,541 ' $456,791:~'
Earnings Available for Common Shareholders
Cash Divide nds Declared on Common Shares--S1.88 per share
-- -- -- 83,432 ' 83,43?
-- ' -- -- -(45,806) (45,'80R)
Common Shares Issued at Indicated Average Per Share Prices--
Dividend Reinvestment Plan, $25.46
Employees' Stocl~ Plans, $26.12
73,600 184 1,690
199,970 500 4,723
Transactions of PooledCompanies, $4.21
3,334
9 (8) : .... 14 ..... 15
Pooling of Interests
49,997 125 (120)
$18.88
64,894
party
Other
Balat~ce~"~t December 3:1, 1979 ·
EarningsAVaiiable for COmmon Shareholders
Cash DiVidends Declared on Common Share's--S2.025 per share
Common Shares Issued at Indicated Average Per Share Prices--
(2,698) (7)
25,935,282 $64,838
6 ~.~'' (126)
161 .-"-'= ~' (41)·
$174,900 $263,026.
- 90
- (52,705).
Dividend Reinvestment Ptan~ $24.36 84,347 211 1,843
Employees' Stock Plans, $24.67 206,! 46 516 4;571. - -., ~- --
Transactions of Pooled Companies, $7.94 90,840 227 . 494 ~-'~.. ~-i_.~ - -- .-T 721
Conversions of Securities, $21.60 48,150. 120 920. · :~' ---
~tirement of Shares by Pooled-Company - _
- (300) '-- (300)
' ':-- " '- 67 :*"'~" -- '-:'" .... 67 .... ;i','
Balances'at,December 31, ~1980 26,364,765 $65,912 $300,956 $549,363"
Esmings Available for Common Shareholders
-' $182,495
-- -- -- 103,255 103,255
Cash Di~dends Declared on Common Shares--S2.125 pershare (56,470) (56,470)
Common ShareslssuedatlndicatedAverage PerShare Prices--
Dividend Reinvestment Plan, $29.52 83,311
208 2,25~ -- 2,459
Employees' Stock Plans, $29.60
Conversions of Securities,
Other
- 212,248 '. - 531 5,751 : .~ ,
66,976-:". 167 " i,387 . '
· ' 252 ,---(5.2)
26,727,300 $66,818 $192,136 $347,689
6,28,
$606,642
Balances at December 31,1981 (Note 7)
There are 40,000,000 shares of $2.50 par value common stock authorized of which 198,318 shares are reserved for conversions of a
subsidiary's junior preferred stock, 59,588 shares are reserved for conversions of the Company's subordinated debentures and- : '~
57,930 shares are reserved for issuance under an employee stock purchase program.
The accompanying Notes to Financial Statements are an integral part of these, statements.
25
C~ntral Telephone & Utilities Corporation
Consolidated Statements of Long-Term Debt
Thousands of Dollars December 31, 1981
1980
' ' (Note ~
Central Telephone & Utilities Corporation
First Mortgage Bonds, due
1981 through 1989, 3% to 71/2% (average 5.32%) $ 18,498 $ 18,200
1990 through 1999, 41/2% to 8.10% (average 6.70%) 40,057 40,76g
2004 through 2007, 61/8% to 6.90% (average 6.50%) 11,681 11,624
Convertible Subordinated Debentures, due 1987, 4%% (convertible at $29.67) 1,768 2,95,9
Sinking Fund Notes, due
2002, 8.70% 30,000 30,000
2004, 111/4% 26,000 26,000
Sinking Fund Debentures, due 2005, 113/4% 40,000 40,000
.Other Notes, due
1981 to 1985, 91/2% to 9.60% '
1990~ 151/2% 15,000 25,000
Commercial Paper (Note 4) 20,000 20,000
Total ' 33,215
(a~verage 9.49% and 9.44%)
.... $214 5.~'
$236,219 ,
Subsidiaries
First M,)rtgage Bonds, due
1981 through 1989, 43/~% to 171/4% (average 7.77%) $ 64,463 $ 54,617
1994 through 1999, 2% to 103/4% (average 7.35%) 193,066 193,67 I
2000 through 2009, 7% to 123/8% (average 9.03%) 204,788 205,713
Sinki n Fund Debentures and Notes, due 1996 through 2000, 5% to 12%% (average 10.90%) 35,194 35,19 I
Other'l~ otes, due 1981 through 2007, 2% to 15.20% (average 11.01%) 63,900
CommErcial Paper (Note 4)
' 14,325
Total (a
Total Cz
,Less Ar
ferage 8.65% and 8.06%)
$575,736
~nsolidated (average 8.88% and 8.44%)
lounts Due Within One Year $811,955
10,129 21,516
Total L~ mg-Term Debt (average 8.89% and 8.46%) $801,826 $752,34,3
Maturities and Sinking Fund Requirements
70,11,~
' '$559,3t0
'" $773,850
Year Ended December 31, 2% to 53/4% 6% to 7.95% 8% to 10% 10.20% to 171/4% Total
1982 /'*' $ 3,630 $ 951 $ 3,110 $ 2,438 $ 10,12,9
1983 11,079 6,279 11,507 2,851 31,716
1984 5,540 1,610 6,227 17,277 30,65,1
1985 5,240 1,797 21,223 4,182 32,442
,1986. , 6,754 1,747 6,226 4,145 18,87;~
$ 32,243 $ 12,384 $ 48,293 ~ 30,893 $123,81,3
Due after 1986 73,940 140,032 301,483 172,687 688,14;,
$203,580 $811,95b
~)utstanding at December 31, 1981' $106,183 $152,416 $349,776
The total average interest rates do not include the effect of the Corem ercial Paper interest rates.
The accompanying Notes to Financial Statements are an integral part of these statements.
!26
r ~tral Telephone & Utilities Corporation
~es. to Financial Statements
'1: Summar~ of Accounting Policies
,~ Basis of consolidation. The financial statements include the
-~counts of all subsidiaries. Ail significant intercompany items
~"" "~'/e been eliminated except the net income frOm sales to regu-
;d affiliates by Contel Communications Company.
; telePhone companies purchase materials for construction
'poses from Contel Communications.Company at pdces which
.,~,,mpare favorably with those they could obtain individually from
other suppliers. Such purchases are included as additions to
.... an amount equal to the current income tax liability thus
!eliminated is paid to the tele.,phone companies in proportion to
their purchases. These payr~ents are added to the reserves for
deferred income taxes and amortized over the approximate lives
of the facilities in which the materials are used.
[?~roduct inventories. Inventories of the communications group
- telephone group merchandise held for resale are priced at
ThOusands of Dollars 1981
rage Cost $23,343
t-in, First-out 17,531
1980
$16,541
10,022
t-in, First-out 5,125 5,402
$45,999 $31,965
If the first-in, first-out methodhad been used instead of the last-
S, first-out methc~d, inventories would have been approximately
:~_~..~273,000 and 5"1,374,000 greater than reported at December
; )81 and 1980, respectively.:
c. ~epreciafi°n and maintenance..Depreciation is computed by
.applying the straight-tine method to the monthly balances of all
depreciable property. The average rates used were:
- 1981 1980 1979
:,. .phone 7.01% .6.80% 6.88%
Communications 9.64% 10.38% 9.81%
;n telephone and electdc properties are removed from
,ice, the original cost and cost Of removal .less salvage value
charged to accumulated depreciation: When other properties
sold, or otherwise disposed of, any resulting gain or loss is
.,uded in the determination of income. Replacements, renewals
and betterments of units of property are capitalized. Replace-
ments of items not considered units of property and all repairs
a~'-charged to maintenance expense.
~ owa~ce for funds used dudng construction and interest
c~talized. Allowance for funds used during construction repre-
sents the cost of funds used to finance the construction program
of the telephone and electric entities and is capitalized at rates
which are b~sed upon the cost of such funds for each entity.
.The weighted average pre-tax rates were 12.6%, 11.0% and 9.8%
~?~.the total allowance was $4,669,000, $3,217,000 and
~' ~1,000 in 1981, 1~80 and 1979, respectively. Corresponding
-~..ants of $2,620,000, $1,968,000 and $1,374,000 applicable
to the debt c. omponent are classified as a reduction of interest
on tong-term debt. In principle, regulatory agencies allow the
~.ffG.overy of such costs through annual provisiQns for deprecia-
and allow a return on the Undepreciated balance.
The cable television entities capitalized interest of $721,000 in
1981 applicable to amounts borrowed to finance the construction
of cable plant. .
e. Electric revenues and fuel used for electdc power generation.
During 1981 and 1980, revenues were recorded based on metered
customer usage. PriOr to 1980, revenues were recorded based
on amounts billed to customers. This change did not have a
significant effect on 1980 results.
Increases in fuel costs are recovered through fuel adjustments
allowed by regulatory authorities. Such increases are reflected
in revenues when the costs are incurred except that in Colorado
such increases are deferred and recognized in operating costs
when the related revenues are recognized
f. Telephone toll service revenues. In most states, revenues from
long-distance toll service are determined through participation
with connecting corn panies on the basis of estimates of current
operating costs and investments in facilities to provide such
service. Approximately $315,335,000, $260,376,000 and
$233,392,000 of toll revenues in 1981, 1980 and 1979, respec-
tively, were determined on this basis.. Several months following
the close of a fiscal yearare customarily required to determine
the final settlement of such reven, u~s, at which time any adjust-
ments are recorded in the current period.
g. Income recognition on sales of business communications
systems. Income on contracts for the sale of business commu-
nications systems is accounted for using the percentage-of-
completion method of accounting for all major contracts. This
method recognizes income based upo~ the proportion of labor
costs of each contract actually incurred to the total estimated
labor costs.
h. Federal income taxes. All significant~ncome tax deferral
methods available under the Internal Revenue Code are utilized
including accelerated depreciation methods, shorter useful lives
and the current deduction for tax purposes of the cost of removal
of retired assets, certain taxes, payroll related expenses and
certain costs of refinancing debt issues which are capitalized or
deferred for financial reporting purposes.-Deferred income taxes
are provided for all differences in timing of income and expense
recognition for financial reporting and income tax purposes
except where such deferred income taxes are not allowed by
regulatory agencies as an expense for rate-making purposes.
Investment tax credits are deferred when realized and amortized
to income over the life of the property giving rise to the credits.
The components of the provision for Federal income taxes are:
Thousands of Dollars 1981 1980 1979
Payable Currently $27,946 $27,406 $19,507
Deferred 23,600 28,980 27,210
Investment Tax Credits
Deferred 25,394 17,494 18,629
_ Amortized (9,164) (7,003) (6,488)
Total $67,776 $66,877 $58,858
The provision for Federal income taxes before amortization of
investment tax credits expressed as a percentage of income
before such taxes was 44.7%, 46.5% and 45.5% for 1981, 1980
and t979, respectively.
Central Telephone & Utilities Corporation
Notes to Financial Statements (continued)
/. 'Communications franchise costs and other intangibles. The
costs of obtaining new cable television franchises are amortized
over the lives of the franchises. Costs of unsuccessful attempts
to obtain franchises are expensed when the franchises are
denied. Other intangible costs, representing the excess of the
purchase price over the fair market value of the net assets of
acquired com parties, are amortized over 40 years.
j. Earnings per share. Primary earnings per common share are.
. ~omputed ~sing the'average shares outstan~ting p us shares
iesuable under stock plans reduced by the shares which could
be purchased with the assumed proceeds from such plans.
Fully diluted earnings per share are computed by adjusting
average shares oUtstanding to include shares which would have
::::' been issued if conversi°n rights on convertible securities had
been exercised at the beginning of the year and by increasing
earnings, available forcorrJi~-!on shareholders by the after-tax
interest cost of the convertible debentures and by the dividends
. paid. on the convertible Preferred stock ....
2; Acquisitiorr and Restatements
During 1981, the Company issued 189,998 Common shares for
the outstanding commor~.stock-of Troy Cable Communications,
i~ lnc~ (Troy),'an'Ohio based ~abietelevision company. The financial
'?!;~ statembn~s have. beer~ restated tO give effect to-this aCquisition
which was accounted: for asa pooling of interests.
Compensated: absences to be in compliance with Statement of
.~ Fihancial Accounting Standards No. 43 which requires the
recognition of the cost-ofemployee compensated absences
when they are earned rather than when paid. Also in 1981, the
~ Company is presenUng ~J~ results of selling residential tele-
phone equ[Pmentas a-comPOnent of Communications operating
results~ These operations were previously presented as a com-
ponent of telephone operating results in miscellaneous income,
net. Data for periods prier to 1981 have been retroactively
restated to reflect these changes.
Data previously reported for the years ended December 31, 1980
and 1979, are restated as follows:
Thousands of Dollars ~ 1980 1979
'Revenues'and Sales ' '
As Previously Reported $893,628 $792,647
Sales of Residential Telephone
Equipment 1,100 1,386
'~,s Restated $895,258' $794,056
Net Income
As Previously Reported $ 92,542 $ 85,321
Troy (38) (88)
Compensated Absences (574) (475)
AsRestated ' $ 91,930 $ 84,758
P~'imary Earnings Per Share
As Reported $3.51 $3.28
As Restated $3.46 $3.24
3. Commitments and Contingencies
Construction expenditures for 1982 are estimated at
$265,575,000.
Rents charged to operations aggregated $18,189,000,
$14,026,000 and $12,874,000 in 1981, 1980 and 1979, respec~
tively. Commitments under, noncance able leases are not
material to results of operations or financial position.
A subsidiary of the Company has contracted' to purchase key
telephone systems and equipment from a supplier amounting to
a minimum of $10,000,000 through October.of 1982. Remaining
commitments under this contract at December 31, 1981, are
$9,000,000. Under a contract to purchase digital business
communications equipment, the subsidiary is committed to pur~
chase $17,000,000 of such equipment in 1982.
The Company has an 8% interest in the development and own~
ship of the Jeffrey Energy Center, a coal-fired generating plant::
Units one and two were placed in s~rvice-in July, 1978, and May
1980, respectively. Addi{ional expenditures for the third unit are
estimated at $11,598,000, to be incurred over the next two year~;
Odginal plans to construct a fourth unit have been deferred. :-~
indefinitely. The Company has contracted to purchase power
from each of the first two units until 1993. Minimum charges:- ~
under the contracts are approximately $11,500,000 per year,:
Total costs incurred under these contractswere S21,31 6;000;~.~.
$15,871,000 and $9,453,000 in 1981, 1980 and 1979. respectivelY'.
The Company has contracted to purchase all power require;~
ments for its Colorado service area in excess of its present
erating capacity in that state until 1994. Purchases under
contract were $19,865,000, $16,416,000 and $13,691,000in t9~
1980 and 1979, respectively. --., :~ '~
In a case against Illinois Bell Telephone Company, ~ e
Court of Appeals, in an opinion dated March 28,1981, reverse~;.,.~
the finding of the Cook County Circuit Court that interstate t0il~;
revenue is subject tothe state messages tax. On June 1t 198~
the Illinois Supreme Court agreed to hear an appeal of the Court
of Appeals decision. If the circuit court decision is ultimately~'~'
sustained, final settlement of the matter for periods through. ':~:i~!
December 31, 1981, could reduce net income by aboQt $3;500,000
($.13 pershare). ': --'
In 1979, MCI Communications Corporation filed an antit~g{
against the Company, other major independent telephone ~
panies and the Bell System foralleged monopolization of the!i~
market for i ntercity telecommunications services. · .... ;.~:!;~
The Company cannot predict the ultimate outcome of the abti~s~
described in the two preceding paragraphs, but
will not have a material effect on financial position. .~ -'~
In 1973, prior to its acquisition by the Company,
phone Company of Texas, in cooperation with an unaffiliated ~
estate developer, filed an antitrust suil
refusal of Southwestern Bell Telephone Company to provide~;?~:
connecting lines. On November 2 1981 Central Tetephone.:?~I::'
Company of Texas entered into a ~ettle~ent with Southweste~
Bell, the effect Of which is immaterial to financial positi°n
results of operations of the Company.
28.
4. NoteS~Payable and Long'Term Debt
'~hort-term borrowings are in the form. of commercial paper or
otes to banks with which lines of credit have been arranged.
,ne lines of credit are maintained by the payment of fees and/or
with cash balances that are expressed as percentages of the
.~es. Following is a summary of information regarding short-term
:?-'~rrow~ngs: ' - .
'housands of Dollars 1981 1980 1979
)utstanding at End of Year $ 1,266 $ 1,154 $31,533
.~aily Average Borrowings '$ 12,958 $22,933 $19,881
Maximum Amount Outstanding
~. During the Year - -$ 48,806 $59,905 $50,508
./'~"~.~es of:Credit at End of Year $ 6,500 $63,500 $54,750
,volving Credit $101,000 $ -- $ --
-Cash Balance Requirements at
' - End of Year -~- $ 100 $ 1,020 $ 930
16.4% 12.1% 13.8%
For'the Year 15.5% 13.4% ' 12.6%
$t01,000,000 in the aggregate wi_th the option to convert the bor-
-~ ..... Towings to long-term loans. The agreement replaces substantially
I of the companies' lines.of credit and calls for a commitment
e of .375% applied to the unused commitm ant. Commercial
~per of $47,54(3,000 outstanding at December 31, 1981, is
assified as long-term debt reflecting the Company's intent to
~: ~;Onvert the commercial paper to'long-term loans.
~bstantiatly ali.of the utility plant is Subject to liens of mortgage
'-: ~dentures securing long-term debt.
=ension Plans' r'' : : :
: .....e company and its Subsidiaries have pension plans for sub-
.~'. stantiallyatl employees. Pension costs were $10,982,000, . .
~' $10,243,000 and $9,058,000 in 1981, 1980 and 1979, respectively.
:.': COsts are funded currently including the amortization of unfunded
. ,w~'~ service costs over 30 years.
anges in actuarial assumptions with respect to expected
· salary increases and rates of return on plan assets were approved
- :effective January 1,1981, to reflect more current assumptions of
~.'~ f~uture events and conditions. These changes decreased 1981
;nsion expense by approximately $1,800,000.
~e assets available for plan benefits for the Company's defined
;nefit plans at January1,1981, the date bf the latest actuarial '
udy, Were $111,981,000. The actuarial present values of accu-
-.,,~ulated plan benefits at that date were as follows:
For Determining
/~-~"- "' '- As Required Annual
!usan~ls of Dollars by FASB Pension Costs
vested . $40,819 $110,922
'Nonvested 4,658 14,961
$45,477 $125,88,3
The determination of the actuarial present values of accumulated
plan benefits, as required by the Financial Accounting Standards
Board (FASB), assumes no future wage increases and anticipates
that 10.4% will be earned on plan assets. The actuarial present
value of accumulated plan benefits used to determine annual
pension costs anticipates that pension benefits will be increased
because of future wage increases and that 6.25% Will be earned
on plan assets. -~ -. . ,: -
6. Jeffrey Energy Center '
Information concerning the Company's 8% ownership interest in
the Jeffrey Energy Center included in the financial statements is
as follows:· . ..... ' ';~i' ::i!i .:~-
Thousands of Dollars 1981, 1980
Plant in Service " $48,412 ' r $48,332
Accumulated Depreciation
$ 4,274 $ 2,549
Plant Under Construction . ' '. $21,862 ,:-: $8,752
Each participant must provide its own financing:The Company's
share of the direct expenses of operating the plant is included
in the corresponding expenses in the consolidated statements
of income. Long-term commitments relating to this plant are
-Provisions in the COmpany's note agreements, indentures,
Adicles of Incorporation and the revolving credit agreement
discussed in Note 4, restrict the payment of dividends. Under the
most restrictive of these provisions, dividends are limited to net
income accumulated since December 31,1978, plus $25,000,000,
less amounts paid for purchases of shares of capital stock of the
Company. Under this restriction, $145,495,000 of the Company's
retained earnings at December 3!, 1981, are available for the
payment of dividends. Approximately $70j?.79,000 of undistrib-
uted retained earnings of subsidiaries included in retained
earnings at December 31, 1981, are, because of vadous limita-
tions, restricted against use to pay cash dividends on common
stock:of said.subsidiaries. ..~.
8. Preferred Stock -
Information with respect to preferred stock is not significant to
consolidated financial position. L~ .. '
9. Business Segment Information - ~ : :-:" ~:. ' '
Revenues and sales, net operating revenues, idaC'tillable ass~S~'
depreciation expense and construction expenditures of the
Company's business Segments are set forth in the Business
Segment Information included elsewhere in this report. Data for --
periods prior to 1981 have been reclassified to present corporate
and elimination amounts separatelY from the results of opera-
tions of the individual operating segments and the results of
selling residential telephone equipment as part of the Com-
munications operating results. Corporate amounts include
interest expense, interest income and related income tax effects.
Ce?tral Telephone & Utilities Corporation
Notes to Financial Statements (concluded)
10. Interim Financial Data (Unaudited)
-Certain consolidated financial data for the four quarters of 1981 and 1980 are as follows:
December 31, September 30, June 30, Ma'rch ~
Thousands of Dollars 1981 1980 1981 1980 1981 1980 1981 198(~ ·
Revenues and Sales ,
Telephone $162,475 $147,684 $166,755 $142,680 $154,494 $141,492 $150,70~ $136,827
Communications 69,603 52,449 63,369 52,068 63,570 53,977 50,701 40,033
Electric
35,749 32,634 36,473 41,003 34,620 26,497. 31,859 27,91,1
$267,827 $232,767 $266,597 $235,751 $252,684 $221,966 $233,268 $204,77,1
Total
Operating Income
$ 56,902 $ 56,435 $ 62,128 $ 57,284 $ 59,773 $ 54,875 $ 53,512 $ 50,03,1
Netlncome $ 26,946 $ 23,112 $ 28,167 $ 23,504 $ 26,400 $ 23,947 $ 23,009 $ 21,367
Earnings Available For Common Sharehol ders $ 26,630 $ 22,789 $ 27,850 $ 23,179 $ 26,083 $ 23,625 $ 22,692 $ 21,04;,
Earnings per Share
Primary $1.00 $ .87 $1.05 $ .88 $ .99 $ .90 $ .86 $ .81
Fully Diluted $ .99 $ .86 $1.04 $ .88 $ .98 $ .90 $ .85 $ 18~
The above amounts have been restated for the accrual of compensated absences and the inclusion in Revenues and Sales
of the results of selling residential telephone equipment. The effect of the restatements on each quarter is insignificant.
Consolidated Selected Financial Data
Thousands of Dollars
I [ I
Revenues and Sales
Net Income
1981 1980 1979 1978 19;,/
$1,020,376 $ 895,258 $ 794,056 $ 677,810 - $ 588,31',,'l
$ 104,522 $ 91,930 $ 84,758 $ 75,500 $ 65, t~-~.~
$ 3.89 $ 2.~.~:-i
Primary Earnings per Share $ 3.46 $ 3.24 $ 2.94
Total Assets $2,036,342 $1,899,013 $1,702,676 $1,553,773 $1,41 9,69~
Long-Term Debt and Preferred Stock
Subject toAnnualRedemption $ 842,466 $ 805,931 $ 710,610 $ 695,384 $ 670;96~'~
Cash Dividends Declared per
Common Share $ 2.125 $ 2.025 $ 1.88 $ 1.72 $ 1.50
30¸
=~sponsibility For Financial Statements
· . Company is responsible for the financial statements included
· ai~ report which the Company believes have been prepared
in conformity with generally accepted accounting princi pies.
_Some of the amounts included in the financial statements are
~fimates baSed on currently available information and judgment
r example, toll service revenues are determined using esti-
~tes of current operating costs and investments in facilities
orovide such service. The Company maintains a system of
9rnal accounting policies, procedures and controls, supported
. an internal audit program, designed to provide reasonable,
but not absolute, assurance that assets are safeguarded from
toss or unauthorized use and that transactions are properly
.~orded. The system includes, among other things, the training
development of personnel, an organizational structure which
, .nits delegation of authofityand responsibilities, an organized
approach to documenting and evaluating the system of internal
controls, written standards b'f conduct and the application.of
uniform reporting standards and procedures.
The Company believes its accounting controls provide rea-
~aable assurance that errors and irregularities that could be
erial to.results of operat OhS or financial position are pre-
ted or would be detected within a timely period by employees
in the normal course of performing their assigned responsibilities.
However, it must be recognized that errors Or irregularities may
~-~e~,ertheless occur.
'~ Board of Directors pursues its responsibility for the financial
:ements through its Audit Committee, which is composed
;ly of outside directors. The Audit committee meets period-
ly with management, internal auditors and indePendent
,.public accou~ants to review_matters relating to financial
reporting, internal accounting controls and auditing. The Audit
i"~ommittee also meets separately with the
independent
public
~. ~'%untants to erasure their free access to the Audit Committee.
Report of Independent Public Accountants
To the Shareholder's of Central Telephone & Utilities Corporation:
We have examined the consolidated-balance sheets and state-
ments of long-term debt of Central Telephone & Utilities -
Corporation (a Kansas corporation) and subsidiaries as of
December 31, 1981 and 1980, and the related consolidated state-
ments of income, common shareholders' investment and
changes in financial position for each of the three years in the
period ended December 31, 1981. Our examinations were made.
in accordance with generally accepted auditing standards and,
accordi~ngly, included such tests of the accounting records and
such other auditing procedures as we considered necessary in
the circumstances.
In our opinion, the financial statements referred to above present
fairly the financial position of the companies as of December 31,
1981 and 1980, and the results of their operations and changes in
their financial position for each of the three years in the period
ended December 31, 1981, in conformity with generally accepted
accounting principles applied on a consistent basis after giving
retroactive effect tothe change (with which we concur) in the
math od of accoUnting for compe, nsated absences, as explained
in Note 2 of Notes to Financial Statements.
Chicago, Illinois,
February 12, 1982.
Arthur Andersen & Co.
31
Central TelephOne & Utilities C(~rporation
Selected 1981 Financial Data Adjusted for Changing Prices
(Unaudited)
Thousands of Dollars
As reported
Constant
Erosion of Common Shareholde~cause of Changing Price"~--'-
Cost in excess of the original cost of utility plant not recoverable in rates as depreciation-
Reportable as an additional provision for depreciation --
. ~ : ·: Reportable as a reduction to net recoverable cost
$103,2~5 $t03,25{
$103,435 $ 79,52~
ExceSSpdce CheXtges°f increase($164,307,000)~ -in the general level of prices ($215,565,000) over specific
Total not specifically recoverable in rates
Effect of inflation on communications operations
of debt and preferred stock financing
36,1~09 8,764
$139,544 $139,544
4,435 3,873
Common Shareholders, ~ . '$ 45,973 $ 45,411
,incl.uding the effect of debt and preferred stock financing2
.. . . $ 57,282 $ 57,844
plant, property and equipment, net of accumulated depreciation, was $2,710,698,000, and
e through depreciation was $1,729,483,000. The current cost and historical cost of product
$49,322,000 and $45,999,000, respectively.
for common sharehorl ders would be ($4,615,000) on a constant dollar basis and $20,180,000 on a current
table as an additional provision for depreciation and effect of increased prices on cost of products
reported amount of such earnings as permitted by Statement of Financial Accounting Standards No.
~'an~ia! stater~ents, based on historica~
~rices during timeS'of continuing
, prepared in aCcordance
Statement of FirmncialAccounting Standards No. 33,
' i in;the general price level (con- '"
specific prices (current cost).
as a~estimate of the effect of inflation rather
~ a precise measure-since both methods involve the use of
Constant dollar amounts represent historical costs stated in
terms of dollars of equal purchasing power as measured by the
Consumer Price Index ~or all Urban Consumers. The current cost
.of plant, prOPerty and equipment and product inventories reflects
:'prices from th~
During 1981, the Company was adversely affected by the com-:~.'
bined effects of inflation and historical cost rate-making. Current
~te-making practices effectively limit recovery of the Company's
~nvestment in telephone and electric facilities to the historical
cost of those facilities. However, the Company's obligations to ~
holders of debt and preferred stock are also limited to historical.?
cost. As a result, the impact of inflation on the cost of telephone
and electric facilities has been substantially reduced by the
effect of inflation on the Company's debt and preferred stock.
The net effect of inflation is borne by the Company's common
shareholders. Therefore, the Company has included the reduc-
tion to net recoverable cost and the effect of debt and preferred
stock financing: in the determination of earningsavailabie for
common shareholders.
. '. . ;- , pUr~
by applying Since only historical Costs are deductible for income'tax
.;.;~.,, to the indexed amounts, poses, income tax expense has not been adjusted for the effects
-'The Current cost Of telenorma'and eleCtric plant was determined of inflation. As a result, the effective tax rate before amortization
~ng the Handy-Whitman Index
3t cost amounts differ
:hat specific Prices
..... ' nore°r-tess rapidly than the general rate of
inflation. Current cOSt information is based on the Costs to
replace existing facilitieS With identical capacity and technology.
at year-end. Cost of products
Sold under current cost isthe estimated cost to replace inven-
tories at the time of sale. Cost of products sold for inventories
under the LIFO inventory method approximate current cost;
therefore, no adjustment.was made. Fuel inventories and the cost
of fuel used in power generation have not been restated from
historical cost ahd are not included in cost of products sold
The operation Of fuel adjustment clauses limits the recovery to
historical fuel cost. ~ .
of investment tax credits increased from 44.7% on a historical '
cost basis to 60.9% on a constant dollar basis and 60 6% on-a. .
current, cost basis. ' .. -~.':i' -~.
The Company believes that rate-making practices and income
tax policies should more explicitly recognize the serious eroding
effects of inflation, The regulatory process, based solely on
historical costs, is no longer an appropriate basis for determin-
ing the fairness and reas(~nableness ~f U[itity rates. It produces
cash flows which are inadequate tO replace utility plant or to
preserve the purchasing power of the capital invested. Current
rate-making practices and income tax policies must be modified
if utilities are to have a fair chance to recover the economic cost
of their productive facilities and to earn a fair return on their
investment in these facilities.
"-ntral Telephone & Utilities Corporation
Year Comparison of Selected Supplementary Data Adjusted for the Effects of Changing Prices
,,~naudite~l)
Dollars
:venues and Sales
Year· Ended December 31, 1981 1980 1979 1978 ~ 1977"
storical $1,020,376 $895,258 $794,056 $677,810 $588,319
adjusted* 1,020,376 988,122 994,944 944,909 882,965
Earnings Available for Common Shareholders
Historical $ 103,255 $ 90,635
f~. adjuSted for the net erosion of common shareholders' investment*i--
$ 83,432
57,282 34,895 44,090
;onstant dollar
." -'Current cost
57,844 36,534 44,400
· F--~rnings Per Share
- ' ";' ~ -" ' $ 3.89
:ommon shareholders' im/estment*~--
~-~wnmon Shareholders' Investment (Net Assets), at year-end
~oric~ $ 606,643 $549,363 $502,764
instantdolla~ 7~ 599,916 588,608 602,324~-:,
trrent cost* ~. 602,421 590,552 602,593
Changes* $ 51,258 $ 14,294 $ 72,028-
'~ act of Debt and Preferred Stock Financing*
·: Return on Average Common Shareholders' Investment
:.:" Historical ~-
$ 98,006 $138,167 $166,51
17.9% 17.2% 17.4%>-: . - ~'
:~S adjustea for the net erosion of common shareholders' investment--
9.9. · 6.6
-Historical
...... ~, adjusted*
2.111 2.212 2.33
$ : 1.72-:' $ 1.50 .-:
~rket Price Per Common Share, at ye~r-end
storical · " $ 33.125 $ 24.50 $ 25.375 $ 23.875 $ 25.00
As adjusted* . 32.054 25.83 30.066 " 32.053 36.59
/A~erage Consumer Price Index
272.4 246.8 217.4 195.4 181.~
ted in Average 1981 Dollars
~Adjusted 1981 earnings available for common shareholders would be ($4,615,000) (($.17) per share) on a constant dollar basis and
$20,180,000 ($.76 per share) on a current cost basis if only the amounts reportable as additional provision for depreciation and
effect of increased prices on cost of products sold were deducted from the reported amount of such earnings as permitted by
Statement.of Financial Accounting Standards No. 33. Corresponding amounts for 1980 and 1979, stated in average 1981 dollars,
would be $10,218,000 ($.39 per share) and $24,457,000 ($.95 per share) on a constant dollar basis and $30,240,000 ($1.15 per share)
/'~d $45,716,000, ($.1.77 per share) on'a current cost basis, respectively.
33
C~mtral Telephone & Utilities Corporation
Business Segment Information.
I II I III I . ·
Thousands of Dollars 1981 t980 1979 1978 1977
Telephone ~
Revenues
Local Service $ 267,453 $ 254,097 $ 241,087 $ 220,345 $ 204,76R
Toll Service 334,319 287,046 261,862 221,804 190,794
Miscellaneous 32,660 27,540 23,243 19,236 16,86,3.
Total Revenues $ 634,432 $ 568,683 $ 526,192 $ 461,385 $' 412,425
'~:xpenses ~ ' '
Operating Expenses $ 166,337 $ 145,240 '
$ 130,816 $ 113,427 $-102,014
Maintenance 119,689 99,493 95,157 79,177 70,357
Depreciation 119,119 107,574 99,449 79,711 70,664
~otafExpenses ' ' $ 405',:1~5 $ 352,307 $ 325,422 $ 272,3~5 ' $ 243,03,~
Net Operating Revenues ..... $ 229,287 $ '
216,376 $ 200,770 $ 189,070 S'169,~90
' Taxes 101,625 99,138 89~912 90,015 81,131
Net Operating ln~(~me ' ' $ 127,662 $ 1171238' '$'110,8'58 $ 99.055 .... $ 88,259
Other Income - 3,037 : 2,064 914 .... ~' 2,334 -' 1,727
Inc, om,e Deductions 37,759 38;409 38;368 37.280 ' ::' 33,409
~,etlncome ' $ 92,940 ~ 80,893' $ '73,404 $' 64.109 "$' '56,577
ConstructionE~3enditures ~ 194,413'-, $ 192,278 $ 178,987 $ 176;751 ' $ 168,688
Identifiable Assets $1,571,474 $1,483,818 $1,393.476 $1,293,688 $I ,198,209
' Customer Lines Served
1,153,448 1,110,026 1,063;254 · 1,014,779 962,39R
Communications
Sales .... - .... .~ ...... .,. .... .:.~ ~? ~.,,
Communications Products
$ 59,871 $ 64,672 $ 68,550 $ 67,707
To Regulated Affiliates
To Other Customers 79,660 56,308 35;780 ' 21,682 17,633
Business Communications Systems 112,081 76,407 54,537 24,894 14,350
Cable Television Revenues 16,262 8,457 2,661 1,486 1,033
Eliminations (20,631) (7,317) (1,661) --
Total $ 247,243 $ 198,527 $ 159,867 $ 115,769 $ 88,172
income Before Interest and Taxes "" '
$ . ' 5,48R
Communications Products
Business Comm unications~Systems
$ 16,364 $ 14,674
10,160 6,972
4,728 1,726
Cable Tel evision
Operations " ' ' 4,750 . 2,675 585 465
Depreciation and Amortization
(3,770) (2.298)
(3,001) - (2,407)
(477) · .~ (358) - ': (253)
(1;062) - (417) . .:': - (4)
Group Expenses, net
Ehmmabons (683) (241) -- .~ --
ncome Before Interest andTaxes $ 23,820 $ 19,375 $ 15,268 $ 10,81'4 $ 6,754
Interest Expense 3,199 1,12R
Income Taxes 9,869 :; .;-~ . 2,587
Net Income $ 10,752 $ 8,779 $ 7,424 $ 5,460 $ 3,038
ConstrUction Expenditures $ 24,825 $ 12,898 $ 6,641 $ 1,784 '$ 1,18R
Depreciation Expense $ 4,890 $ 2,849 $ 1,074 $ 749 $ 58(3
Identifiable Assets $ 209,884 $ 150,118 $ 88,337 $ 51,570 $ 34,355
~able Television Customers 116,510 94,212 26,617 12,163 9,861
1,825 ,,., 1,291
6,019" J ' .... ~4,063
34
Thousands of Dollars
1981 1980 1979 1978 19//
Residential and Rural $ 40,756 $ 38,940 $ 31,930 $ 29,490 $ 26,67?
Commercial and Industrial 65,793 58,586 50,924 45,341 41,21 ~
Other 32,152 30,522 25,143 25,825 19,83;_,
Total Revenues $ 138,701 $ 128,048 $ 10~,997 $ 100,656 $ 87,72;;
Costs 78,790 43~31 /
71,143 60,216 54,067
32;989 26,473 22,849 20,71~
Revenue $ $ 27,580 $ 21,308 $' ~3,740 $ 23,69~i
. , 11,361 11,702 9,331 11,585 11;911'
ncome $ 15,561 $ 15,878 $ 11,977 $ 12,155 $ 11,78d
934
~nstruction Expenditures
451 !, 389 1,156
6,252 7,114 6,584 4,309
$ 10,243 $ 9,215 $ 6,782 $ 9,002 '$
$ 26,534 $ 20,889 $ 18,222 $ 26,234 $
$ 9,410 $ 8,780 $ 8,196 -J $ 6,893 $
198,189 $
r __'.~ ~ilowatt Hours Sold (in thousands) 2,802,867 3,020,478 2,725,914 2,801,581
ustomers 131,868 130,519 129,169 126,786
orpo,-ate and Eliminations
1,58(~
4, I1 I
9,25;1
22,4/?
6,20,'~
178,62;'I
2,588,610
123~89;;'
;"0 ·
.~ nstruct~on E~penditures
!
(9,413) $ (6,957) $ (2,852) $ (3,071) $
16~958 - $ '38,239 $ 9,277 $ 1~,326 $
4,880 $ 442 $ 1,223 $ 424 $
(3,71 ,' ~)
8,50,' ~
41 ,' ',
35
C~qtral Telephone & Utilities Corporation
Investor Information
Stock Information
Central Telephone & Utilities' common stock is listed on the New
York and Midwest stock exchanges under the symbol "CTU" and
may be traded on any U.S. exchange through the Intermarket
Trading System. It is usually quoted as "Centel" in daily news-
paper stock table listings.
Total trading volume increased to 9,977,400 shares during 1981,
up 56% from ]980 and averaging 39,400 shares daily. Centel had
40,127 shareh ciders of record at year's end. As of January 31,
1982, there were 26,821,141 shares of common stock outstanding.
Central. Tetephrone Company, whose common stock is 100%
owned by the parent company, had 141,656 shares outstanding
of a $2 convertible junior preferred issue. Traded in the over-the-
counter market, each share is convertible to 1.4 shares of
Centel's common stock.
The ranges of clc sing s[ock prices and the dividends paid on
· the common and convertible junior preferred issues for the past
two years, by qu~ rters, are. shown in the tables below.
Two series of Ce~ ~tel's voting preferred stock, $25 par value per
share, are autsta~ Iding:~During the past two years, dividends of
30¢ per share we,e paid quarterly on the 4.8% series, which is
held by six insur~ nce companies; dividends of 311/4¢ per share
were paid quartel ly on the 5% series, which is publicly held but
not actively trade, ~.
'Centet intends to continue paying dividends Subject to the
restrictions discussed in Note 7 of the Notes to Financial State-
ments included elsewhere in thisreport.
In 1982 Centel will begin, systematic'purchases of its common
stock in the open market to satisfy the requirements of various
employee benefit and sharehol der dividend reinvestment plans.
· Those shares have previously been odginai issue.
Purchases in any one year'are expected to amount to less than
2% of the shares outstanding. Since the shares purchased will
be reissued to the ptans, the number of shares outstanding will
~.. remain unchanged.
Common Stock
Quarter 4th/ 3rd 2nd I st
'~981 High $35.75 '$32.875 $33.875 $27.375
Low 29.75 29.00 25.50 23.12,~
Dividends Paid. .525 .525 .525 .525
1980 High $25.375 $27.875 $25.875 $26.00
Low 21.875 23.50 22.25 21.25
Dividends Paid .50 .50 .50 .50
Central Telephone Company
Convertible Junior Preferred
Quarter 4th
3rd 2nd .. 1st _
1981 High (Bid) $48.50 $44.00 $45100 $35.5~11~,i
Low (Asked) 40.50 40.00 35.00 32.5L!~. ii
Dividends Paid ,50 .50 .50 ,50
1980 High (Bid) $33.50 $37.00 $35.00 $34.50
Low (Asked) 31.50 34.50 32.50 31.50
Dividends Paid .50 .50 .50 .50
Centel Dividend Reinvestment Plan
A dividend reinvestment plan has been available since 1974 to
provide common shareholders a convenient way to increase
investment in Centel.
Participants may elect to apply all or a portion of their quarterly
cash dividends to purchase additional shares. Shares may'also
be purchased on a monthly basis through optional cash pay-
ments, up to a total of S5,000 in any calendar quarter. There is
no service charge or brokerage commission.
Altogether, 6,710 shareholders were enroll ed in the Plan at the
end of 1981, or nearly 17% of Centel's owners of record. A total of
$2,459,000 of reinvested dividends and optional cash payments
were applied to purchase 83,311 shares. The average cost was
$29.52 per share.
The Plan is open to shareholders on a continuing basis, A pro-
spectus describing the Plan and enrollment information may be
obtained by wdting Shareholder Services, or by calling toll-freE
from outside Illinois, 800-323-2174, or, within Illinois (cOllect),
312-399-2500.
Corporate Headquarters
5725 N. East River Road
Chicago, Illinois 60631
Transfer Agents and Registrars.
for the Common Stock
The First National Bank of Chicago
Morgan Guaranty.Trust Company of New York
Transfer Agents for the Preferred Stocks
Company--The First National Bank of Chicago
Central Telephone Company--Harris Trust and
Savings Bank, Chicago
Trustees-Company
First Mortgage Bonds
Continental Illinois National Bank and Trust
Company of Chicago
Convertible Subordinated Debentures
The Northern Trust Company, Chicago
3'6
Directors
Robert P. Reuss
Chairman and Chief
Executive Officer
DuBose Ausley
Partner
Ausley, McMullen, McGehee,
Carothers & Proctor
law firm
Kenneth J. Douglas
Chairman and Chief
Executive Officer
Dean Foods Company
processor and distributor of
diversified food products
Wilson B. Garnett
Executive Vice President
Central Telephone & Utilities
Robert E. R. Huntley
President
Washington and Lee University
private undergraduate college
and school of law
George N. Hutton
President
G. N. Hutton Company
real estate development firm
Daniel J. Krumm
President and Chief
Executive Officer
The Maytag Company
manufacturer of residential and
commercial appliances
William G. Mitchell
President
Central Telephone & Utilities
Frank E. Reed
Senior Vice President
Morgan Guaranty Trust
Company of New York
commercial bank specializing in
services to corporate, govern-
mental and financial institutions
Russell T. Tutt
President
El Pomar Investment Company
investment management firm
President
Broadmoor Hotel, Inc.
convention and resort hotel
Robert H. Wellington
President and Chief
Executive Officer
Amsted Industries Incorporated
manufacturer of products
for industry, construction
and railroads
II
Directors Emeritus
John H. Burns, Jr.
Wichita, Kansas
Leonard D. Densmore
Lincoln, Nebraska
Erhart D. Edquist
Sun City, Arizona
Harry S. Petersen
Pueblo, Colorado
i I II
Board Committees
Executive Committee
Russell T. Tutt, Chairman
George N. Hutton, V. Chairman
Robert E. R. Huntley
William G. Mitchell
Robert P. Reuss
Audit Committee
George N. Hutton, Chairman
DuBose Ausley
Kenneth J. Douglas
Frank E. Reed
Robert H. Wellington
Executive Compensation
Committee
Daniel J. Krumm, Chairman
George N. Hutton
Russell T. Tutt
I
Finance Committee
Robert P. Reuss, Chairman
Kenneth J. Douglas
William G. Mitchell
Frank E. Reed
Russell T. Tuft
Pension and Benefits
Committee
Robert E. R. Huntley, Chairman
Wilson B. Garnett
Daniel J. Krumm
William G. Mitchell
Nominating Committee
Russell T. Tutt, Chairman
George N. Hutton, V. Chairman
Robert E. R. Huntley
Two new members were elected
to the Board of Directors,
effective January 1,1982.
DuBose Ausley is a partner in
the Tallahassee, Florida law
firm of Ausley, McMullen,
McGehee, Carothers and
Proctor. Mr. Ausley also is
chairman of Capital City
First National Bank and City
National Bank and a director of
four other Florida banks and
Vindale Corporation. He serves
as chairman of the Board of
Regents of the State University
System of Florida.
Mr. Ausley holds a B.S. degree
from Washington and Lee
University and a J.D. degree
from the University of Florida
College of Law.
Robert H. Wellington is presi-
dent and chief executive
officer of Amsted Industries
Incorporated, Chicago.
Mr. Welling[on serves asa
director of the L. E. Myers
Company, Signode Corporation
and Money Mart Assets, Inc.
Mr. Wellington earned a B.S.
degree from Northwestern
University and holds M.S. and
M.B.A. degrees from the
University of Chicago.
37
Corporate Officers
Chairman and Chief
Executive Officer
Robert P. Reuss
President
William G. Mitchell
Executive Vice President
Wilson B. Garnett
Vice President and Chief
Financial Officer
Thomas A. Owens, Jr.
Vice President and
General Counsel
Karl Berolzheimer
Vice President and Controller
Eugene H. Irminger
Vice President and
Secretary-Treasurer
Kenneth L. Poh Iman
Group Vice Presidents
John P. Frazee Jr.
William J. Laggett
Samuel E. Leftwich
James A. Lovell
IIi
We were saddened by the
death of Clarence Ross,
Centel~s former chairman and
chief executive officer.
Mr. Ross, who died May 14,
1981, provided leadership to
the Company during a key
transitional pedod.
Mr. Ross first became asso-
ciated with Centel in 1926 when
he served with the legal firm
that organized Central West
Public Service Co., the first
predecessor company of
Centel. He was elected a
director of the Company in
1943 and in 1968 was named
president, chairman and chief
executive officer.
i
Mr. Ross relinquished the
posts of president and chief
executive officer in 1972 but
remained as chairman of
the board until his retirement
in 1977. He continued
to serve Centel as a director
until April, 1980. Mr. Ross'
active pursuit of technological
improvements, his sound
financial judgment and his
emphasis on strong
management have had great
impact on the operations of
the Company.
Vice Presidents
Eugene P. Alfonsin
Lyle B. Fenstermaker
Kenneth A. Grobe
Richard L. Middleton
Richard M. Smith
J. Stephen Vanderwoude
i
~ 0
o -r
LLI
~-oo
o
o~
m~
'o ..o m ~>, ,.~
._ .~_.c_ :~;:: ,., ~.~ 0-Ia ~ 0_,- .,-.
.-
~t~§~ ,e o~-'-'F:o=_'~-o E_ ,--= .so ~.-°00
. c~ ~ ·
..... ~ C ~
C 0 ~ ~ ~ _ ~'~ O~'= ~0 0
~ ='~'- o
~o~ ~o~ ~ o°'°:°~--~'-~=~m =o-~ ;:eA ~ ~0~:--
~ o ¢ ~ o ~ °'~°~ ~"' ~ ~ ~
'-- ~ 0 -
Or. _n;.-_ation Heads
Tc;c~hone and Electric Operations
Vice Presidents--Staff
Charles P. Lamm
Edward A. McKee
Robert W. Mills
Controller
Richard S. Vanderwoude
Telephone Operations
Group Vice President
Samuel E. Leftwich
State Vice Presidents
Ishmael L. Grogan
Florida
George B. Kemple
North Carolina
Witford R. Mc~ r~ew
Nevada
William J. Nesbit
iowa, Minnesota, Missouri
Wayne K. Norris
Illinois, Ohio
James D.
Virginia
Lee Roy Whitney
Texas
Electric Operations
State Vice Presidents
Lyle B. Fenstermaker
Kansas
Kenneth A. Grobe
Colorado
Centei Communications Company
Business Systems
Group Vice President
James A. Lovell
Vice Presidents
Larry L Huber
A. Allan Kurtze
Operating Divisions
J. Thomas Brown--President
Southeast Division
John W. Hinkle--President
Fisk Division
Max E. Biller--Executive
Vice President
Midwest Division
Communications Products
Group Vice President
William J. Laggett
Vice President
Carl E. Agee
Centet Supply Company
Presidents of Operating
Cam parties
Charles J. Gardella
Acoustics Development
Corporation
George H. Lake
Digitech industries. Inc.
Robert W. Muir
Diamond Communication
Products, Inc.
Video Services
Group Vice President
Je hn P. Frazee, Jr.
Vice President--Special
Assignment
Robert W. Nichols
Vice President--Centel
Videopath, Inc.
James J. Hudey
Vice Presidents--Ceatel
Cable Television
Allan J. Adow
Thomas G. Wehling
39
Contel Operations
Telephone Operations
Central Telephone Company
Central Telephone Company--
Iowa
Foil Dodge, Iowa
Central. Telephone Company
Minnesota
Bumsville, Minnesota
Central Telephone Company--
Nevada
Las Vegas, Nevada
Central Telephone Corn party--
North Carolina
Hickory, North Carolina
Central Telephone Company
of Florida
Tallahassee, Florida
Central Telephone Company
of Illinois
Des Plaines, Illinois
Central Telephone Company
of Missouri
Jefferson City, Missouri
Central Telephone Company
of Virginia
Charlottesville, Virginia
Merchants and Farmers
Telephone Company
Central Telephone Company
of Texas
Kilteen Texas
Clifton Telephone Company
Garrison Teiephone Co., Inc.
Home Telephone Company
Mid-Slate Telephone Company
Mid-Texas Telephon.e Co.
United Telephone Co., Inc
Wise County Telephone Company~
Lorain Telephone Company
Lorain. Ohio
C~n~e; Co,~niimications Company
B~,=;nc-f~ Systems
Contel Business Systems--
Fisk Division
Houston, Texas
Contel Business Systems--
Midwest Division
Telecommun ications Service
Bureau, inc.
Bensenville, iltinois
Centel Business Systems--
Southeast Division
Tampa, Florida
Communications Products
Acoustics Development
Corporation
Northbrook, Illinois
Centel Supply Company
Lincoln, Nebraska
Digitech Industries, Inc.
Digitech International, Inc.
Ridgefieldr, Connecticut
Diamond Communication
Products, Inc.
Garwood, New Jersey
Wilco, Inc.
Killeen, Texas
Video Services
Cable Communications
Operations, Inc.
· Lima. Ohio
Centel Cable Television
Company of Illinois
Des Plaines. t~linois
Centel Videopath, inc.
Chicago, illinois
Coreco Electronics, lnc
Chicago, illinois
Lone Star Video, Inc.
Houston. Texas
Northside Cablevision, Inc.
Lak sland. Florida
OVC Telecommunications, Inc.
Richmond. Kentucky
Polk Cabtevision, Inc.
Lakeland, Florida
Rantoul CATV Company
RantouL ~llinois
Th omasboro CATV Company
Thomasboro. ttlino}s
Troy Cable Communications,
Inc.
Troy. Ohio
I
III
Electric Ope~ilons
Central Telephone & Utilities
Southern Colorado Power
Pueblo, Colorado
Western Power
Great Bend. Kansas
40
As mentioned in our response to Question 2, Centel will be serving
the proposed area from our headend located at the Village of Golf.*
The major components of this system are as follows:
Headend: Gardiner Modulators and Receivers, Phase Comm processors.
Trunk & Distribution: Comscope .750-trunk .500-disi~ribution
Dish: 5.6 Gardiner
* See map for location of headend.
Map of proposed area to be served.
See attached.
Centel will offer service to the residents of Boynton Leisureville
based on a final agreement with the Board of Directors of their
association.
We feel that, this being a basically private system, this is a
negotia%ed arrangement between the Homeowners and Centel.
Centel, as of this date, is not proposing to serve any area other
than what we have shown.
Centel does not now have contracts with any of the public utilities serving
the City of Boynton Beach. '
This is because the operating system that we have at Village of Golf was
built using all private easements or those granted under our franchise
with the Village of Golf.
Centel has been in contact with Florida Power and Light Corporation
regarding permits and pole attachment agreements to serve Boynton Leisure-
ville, should we be awarded a franchise.
o
Centel Cable Television Company of Florida, its parent company, Centel,
nor any of its subsidiaries have any agreements, written, oral, or
otherwise with any other firm, partnership, corporation or individual in
regard to this application or in the operation of it if we were to be
awarded same.
Centel is the sole owner and operator of all of its systems.
Attached you will find a copy of Centel's Revolving Credit Agreement.
This agreement is in force until December 31, 1984 in the amount of
$63 million dollars.
You will also note by Centel's annual report and 4th quarter report
that the company has over $2 billion dollars in assets.
Centel can assure you that we will have the funds to build, operate
and maintain any cable operation in the City of Boynton Beach.
CREDIT AGREEMENT
TO the Banks named on the signature pages hereof
Gentlemen:
The undersigned, Central Telephone & Utilities Corporation,
/ a Kansas corporation ("Cmn=el") , Central-Telephone Company, a
/'Delaware corporation ("Central Telephone") and Cmn=el Communications
Company, a Delaware corporation ("Communications," and collectively
with Cmn=m! and Central Telephone, the "Companies" and individually
each and all of the foregoing, the "Company"), apply to you for
your several commitments, subject to all the terms and conditions
hereof and on the basis of the representations and warranties
hereinafter se= forth, to make a revolving credit available to
each of the Companies, with the option on the part of each of the
Companies to convert the revolving credit into a term credit, all
as more-fully hereinafter se= forth. Each of you is hereinafter
referred to as "Bank", all of you are hereinafter referred to
collectively as "Banks", and Harris Trust and Savings Bank in its
capacity as agent hereunder is hereinafter referred to as Agent.
!. THE CREDIT.
1.1. The Revolvin~ C~edi=. (a) The aggregate principal
amount of Revolving Credit Loans made hereunder shall no= exceed
$101,000,000 a= any one time outstanding (the "Revolving Credit
Commitment") (or the amount to which the same is reduced pursuant
to Section 2.3 hereof) and shall be available to each of the
Companies by means of either Domestic Dollar Revolving Credit
Loans or Eurodollar Revolving Credit Loans, and may be availed of
by each of the Companies in their respective discretions from
time to t~m-, be repaid and used again, during the period from
the date hereof to and including December 31, 1984, at which time
the Revolving Credit Commitment and the respective commitments of
the Banks hereunder shall expire. Without limiting the foregoing,
to the ex=mn= t_ha= any one or more of the Companies borrows
hereunder, the outstanding amount of such borrowings shall reduce
the availability of ~the-Revolving Credit Commitment with regard
to borrowings which may be made thereafter by the other Companies.
The respective maximum aggregate principal amoun= of Revolving
Credit Loans at any one time outstanding which each Bank by its
a6ceptance hereof severally agrees to make available to the
Companies is set forth opposite the signature of such Bank hereto.
In order to borrow any Revolving Credit Loan hereunder there must
be outstanding to the borrowing Company, after giving effect to
-. ~3) '
~he proposed Revolving Credit Loan, Revolving Credit Loans in an
amount not less than $5,000,000. If the requirement of the
immediately preceding sen:ante is met then each Domestic Dollar
Revolving Credit Loan borrowed, continued or effected by conversion
by such borrowing Company shall be in an amount no: less than
$1,000,000 or a whole multiple thereof, or the then unused portion
of the Revolving Credit Commitment (as t_he same may be reduced
pursuant to Section 2.3 hereof). In order to borrow, continue or
effect by conversion any Eurodollar Revolving Credit Loan hereunder
there must be outstanding to the borrowinq Company, after qiving
effect to the proposed borrowing, continuation or conversion,
Eurodollar.Revolving Credit Loans in an amount not less than
$5,000,000. If the requirement of the immediately preceding
sentence is met each Eurodollar .Revolving Credit Loan borrowed,
continued or effected by conversion by such borrowing Company
shall be in an amount not less than $1,000,000 or a whole multiple
thereof, or the then unused portion of the Revolving Credit
Commitment (as the same may be reduced pursuant to Section 2.3
hereof). Each Revolving Credit Loan hereunder shall be made from
each Bank in proportion to its respective co~itment referred to
above.
(b) Each Bank's Domestic Dollar Revolving Credit Loans
shall be evidenced by a Note of the borrowing Company, substantially
in'the form (with appropriate insertions) attached hereto as
Exhibit A, each such Note to be payable to the order of such Bank
in the principal amount of its commitment and to be expressed to
mature on December 31, 1984. Each Domestic Dollar Revolving
Credit Loan shall bear interest (computed on the basis of a year
of 360 days and actual days elapsed) prior to t_he maturity
t-hereof on the unpaid principal amount thereof from time to time
outstanding at a rate per ann,~ equal to the greater of:
(i) the Prime Rate from time to time in effect;
(ii) the sum of (A) one-half of one pe, rc~nt (I/2 Of
1%) plus (B) the Average CD Rate from time to time in effect.
Such interest shall be'payable quarter-annually on the
last day of the months of March, June, September.~nd ~December in
each year, ccnvnencing on the first of such dates occurring after
the date hereof, and at ma=urity (whether by acceleration or
otherwise). Each Bank shall record on its books or records or on
a schedule to t_he-apprcpriate Note held by it-the-principal
amount of each Domestic Dollar Revolving Credit-Loan to each of
the Companies made or effected by conversion hereunder, together
with all payments of principal and interest and the principal
balances from time to time outstanding, provided that prior to
transfer of any such Note all such amounts shall be recorded on
the schedule to such Note. The record thereof, whether shown on
such. books or records or the schedule to the Note, shall be
rebuttably presumptive evidence of the same, provided, however,
aha: the failure of such Bank to record any of the foregoing
shall not limit or otherwise affec~ the obligation of the borrowing
Company to repay all Domestic Doll~r Revolving Credit Loans made
or effected by conversion hereunder together with accrued interest
thereon.
Exhibit Bi each such Note to be pay
in the principal amount of its comm
mature on December 31, 1984. Each
Loan made hereunder shall bear inte
a year of 360 days and actual days
thereof on the unpaid principal amo
outstanding at a rate per annum equ
eighths of one percent (3/8%) (the
Margin") plus (ii) the Adjusted LIB
Interest Payment Date applicabie th
by acceleration or otherwise). Each
books or records or on a schedule t
it the principal amount of each Eur
made, continued or effected by cony
Interest Period and interest rate a
with all payments of principal and
balances from,time to t~me outstand
(c) Each Bank's Edrodo!!ar Revolving Credit Loans
shall be evidenced by a Note of the borrowing Company substantially
in the form (with appropriate insertions) attached hereto as
able to the order of such Bank
itment and to be expressed to
Eurodollar Revolving Credit
rest (computed on the basis of
elapsed) prior to =h~ maturity
unt thereof from time to t~,
al to the sum of (i) three-
"Eurodollar Revolving Credit
OR Rate, payable on each
Ireto and at maturity (whether
Bank shall record on its
the appropriate Note held by
odol!ar Revolving Credit Loan
ersion hereunder and the
lplicable thereto, together
.nterest and the principal
lng, provided that prior to
transfer of any suoh Note all sUch amounts shall be recorded on
the schedule to such Note. The record thereof, whether shown on
such books or records or the schedule to t_he Note, shall be
rebuttably presumptive evidence of the same, provided, however,
t~hat the fa%lure of such Bank to re~ord.any of the foregoing
~hall not limit or otherwise affect the obligation of the borrowing
uompany to repay all Eurodollar RevOlving Credit Loans made,
continued or effected by conversion hereunder together with
accrued interest thereon.
(d) The borrowing Compan
any Eurodollar Revolving Credit Lot
only in an aggregate amoun~ suffici
of Section !.!(a) hereof) from any.
subsequent Interest Period which sh
for such current Interest Period, (
Day, in whole or in part (but only
to meet the requirements of Section
Dollar Revolving Credit Loan into a
Loan, or (iii) to convert, on the P
~ may elect (i) to continue
· , in whole or in par~ (but
=_nt to meet the requirements
.~rrent Interest Period into a
all begin on t. he Payment Date
ii) to convert, on any Banking
in an aggregate amount sufficient
1.i (a) hereof) any Domestic
Eurodollar Revolving Credit
· yment Date applicable
/~.t_he Companies' option, it being understood
.may-not be outstanding at t_he same time.
thereto, in whole or in par~ (but only in an amount sufficienu to
meen the requirements of Section 1.!(a) hereof) any Eurodollar'
Revolving Credit Loan into a Domestic Dollar Revolving Credit
~Loan. Absen= no=ice pursuant to Section 1.3 hereof of :he continuation
~of any Eurodollar Revolving Credit Loan or the Company's failure
to specify the Interes= Period applicable thereto, such Eurodollar
Revolving Credit Loan shall automatically be continued into a
subsequent Interest Period of .one month.
1.2. The Term Credit. (a) Each of the Companies
shall have the option on bu: not prior to 'December 31, 1984, to
....... convert all or any part (but, if in part, then as to each borrowing
Company in an amount no= less than $2,000,000 or a whole multiple
~hereof) of the then outstanding Revolving Credit Loans and/or __
the unused portion of the Revolving Credit Commitmen= (as it may
be reduced pursuant to Section 2.3) into Term Loans. i-k is
specifically understood that the conversion of any portion of the
Revolving Credit Commitment into a Term Loan by any of the Companies
reduces to the e~ent of such conversion the availability of t~he
other Companies to convert the Revolving Credit Commitment into a
Term Loan.' Each Bank by its acceptance hereof severally agrees
to make Term Loans to the Companies, available in one drawdown
per Company, in an amount in proportion to its respective co~,~,~tment
under t_he Revolving Credit Commitment but in no event in an
amount greater than such commitment (as reduced pursuant to
Section 2.3 hereof). The Term Loans shall be available by means
of either Domestic Dollar Term Loans or Eurodollar Term Loans, at
that such Term Loans
(b) Each Bank's Term Loans shall be evidenced by a
Note of the borrowing Company substantially in the form (with
appropriate insertions) attached hereto as Exhibit C, dated as of
t_he date of conversion and payable to the order of such Bank in
~"~ the principal amount of such Term Loan. The principal amount of
t_he Term Loan shall be payable in four consecutive annual installments
each in an amount equal' to 25% of the face amount of such Note,
with t_he first installment due and payable one year after the
date each Term Loan is made. '
(c) At any time a borrowing Company elects that a Term
Loan be made available to it by means of a Domestic Dollar Term
Loan, the same shall bear interes= (computed on the basis of a
year of 360 days and actual days elapsed) on the unpaid principal
amount thereof from time to time outstanding at a rate per annum
equal to ~he greater of:
(i) the sum of (A) one-quarter of one percent (1/4 of
1%) plus (B) the Prime Rate from time to time in effec-.; or
(ii) the sum of (A) three-quarters of one percent (3/4
of 1%) plus (B) the Average CD Rate from time to time in
effect.
Such interest shall be payabim quar~er-annuilly on
the last day of the months of March, June, September and December
in each year after ~the date of the Notes described in SectiOn
1.2 (b) hereof, commencing on March 31, 1985 and at maturity
(whether by acceleration or otherwise).
(d) At any time a borrowing Company elects that a Term
Loan be made available to it by means of a Eurodollar Term Loan
pursuant to t_he terms of this Agreement, the Term Loan shall bear
interest (computed on t. he basis of a year of 360 days and actual
days elapsed)'on the unpaid principal amount thereof from time to
time outstanding at a rate per ann~m equal Do: (i) during the
first two years thereof, the sum of (Z) one-half of one percent
(!/2%) plus (Y) t. he Adjusted LIBOR Rate; and (ii) thereafter, the
sum of (X) five-eighths of one percent (5/8%) plus (W) the Adjusted
Libor Rate. Said 1/2% and 5/8% during such periods are hereinafter
referred to as the "Eurodollar Term Loan Margin". Such interest
shall be payable on each Interest Payment Date applicable ~-hereto
and at maturity (whet_her by acceleration or otherwise).
(e) A borrowing Company may elect (subject to the
requirement stated in Section 1.2(a) hereof that both-Domestic
Dollar Term Loans and Eurodollar. Term Loans may not be outstanding
a= the same time hereunder) to convert, in whole but not in part,
(i) any Eurodollar-Term Loan to a Domestic Dollar Term Loan on
the Payment Date of the then applicable Interest Period and (ii)
to convert any Domestic Dollar Term Loan to a Eurodollar Term
Loan on any interest payment date applicable to the Domestic
Dollar Term Loan, which date shall be a Banking Day. In the
event the Company fails to give notice of any Interest Period
applicable to the Eurodollar Term Loan pursuant to Section 1.3
hereof, such Eurodollar Term Loan shall be continued into a
subsequent Interest Period of one month as defined in Section
4.24 hereof.
1.3. Manner of Borrowing. (a) The borrowing Company
shall give to the Agent by no later than 11:00 a.m. Chicago,
Illinois time at least three (3) Banking Days' prior telephonic,
telex or telegraphic notice (which notice shall be irrevocable
(7)
once given, and shall be prcmpt!y confirmed in writing) (i) cf
each Eurodollar Revolving Credit Loan which the Banks are requested
to make, continue or effect By means of conversion, (ii) of
conversion of any Eurodollar Revolving Credit Loan in~o a Domestic
Dollar Revolving Credit Loan, (iii) of the conversion of the then
outstanding Revolving Credit Loans and/or the unused portion of
the Revolving Credit Commitmen~ into a Term Loan where such Term
Loan is to be made available by means of a Eurodollar Term Loan,
(iv) of the conversion of the then outstanding Eurodollar Revolving
Credit Loans into a Domestic Dollar Term Loan; (v) of the conver'sion
of a Eurodollar Term Loan into a Domestic Dollar Term Loan or
vice versa and (vi) of each Interest Period applicable to a
~urodol!ar Loan. The borrowing Company shall give to t_he Agent
by no later than 10:00 a.m. Chicago, Illinois time at least three
(3) Business Days' prior telephonic, telex or telegraphic notice
(which notice shall be promptly confirmed in writing) (i) of each
Domestic Dollar Revolving Credit Loan which the Banks are requested
to make and (ii) the conversion of the then outstanding Domestic
Dollar Revolving Credit Loans and/or the unused portion of the
Revolving Credit Commitment into a Domestic Dollar Term Loan,
that in the event a Domestic Dollar Revolving
~rovided, however,
Credit ~oan is to be used by the borrowing Company to pay its
ou=standing commercial paper, and provided the Agent is specifically
notified by the borrowing Company that such is the purpose of the
borrowing, then' notwithstanding the foregoing the borrowing
Company may give to the Agent prior telephone, telex or telegraphic
notice (which notice shall be promptly confirmed in writing) by
no later than 10:00 a.m. Chicago, Illinois time on any Business
Day of each Domestic Dollar Revolving Credit Loan which the Banks
are requested to make in order to pay such co~erciai paper.
Each such notice shall specify the date of the Loan requested
(which shall he a Banking Day for Eurodollar Loans and a Business
Day for Domestic Dollar Loans), the amount of such Loans or t_he
amount to. be continued or converted, as the case may be, whet. her
t_he Loan is a Eurodollar or Domestic Dollar Loan and, if the Loan
is a Eurodollar Loan, the Interest Period applicable thereto. If
notices as aforesaid are received by the Agent from any Company
which would requ.ire that Eurodollar Term Loans and Domestic
Dollar Term Loans be outstanding a: the same time, the request
first received by the Agent shall be the controlling request and
the Agent shall immediately inform the Company'(s) whose request
cannot therefore be honored hereunder of the s~me. The notices
of the Company(s) which cannot be honored may be amended by such
Company(s) to provide for borrowings of the same type as the
borrowing .of the Company which was first received by the
~'he Companies agree that the Agent may rely on any such telephonic,
tm!ex or telegraphic notice given by any person it reasonably
believes is authorized to give such notice without the necessity
of independent investigation and in the event any notice by such
means conflicts with the written confirmation or if such written
confirmation-is never received, such notice shall govern if any
Bank has acted in reliance r/nereono
(b) The Agent shall glve prompt telephonic, ~elex or
~elegraphic notice of t_~e receipt of any notice required by
subparagraph (a) .above to each of r_he Banks and, if such notice
requests the Banks to make, continue or effect by conversion a
zurodoi!ar Loan, t_he Agent shall give notice to the borrowing
Company and each of the Banks by like means of t_be interest rate
applicable thereto (but, if such ~notice is given by teiephone,
the Agent shall confirm such rate in writing) promptly after the
Agent has made such determinat-ion. Subject to the provisions of
Section 6 hereof, =he proceeds of each Loan shall be made available
to the borrowing Company at the principal office of t. he Agent in
Chicago, Illinois, in immediately available funds, except (i) to
=he ex=mn= such Loan represents the continuation or conversion of
a Revolving Credit Loan previously made to the borrowing Company,
in which case each Bank shall record such continuation or conversion
on its books or records or on t_he schedule to the Notes held by
it, as appropriate or (ii) to the extent that such Loan hereunder
represents =he conversion of any Revolving Credit =cans into a
Term Loan, such Loan to such extent will be accomplished by
surrender, cancellation and return to t_he borrowing Company of
its Notes evidencing such Revolving Credit Loans. Not later than
I1:00 a.m. Chicago ~4me, on the date specified for any Loan to be
made hereunder, (except in t_he case of a Domestic Dollar Revolving
Credit Loan the proceeds of which are ~o be used to pay the
borrowing Company's outstanding commercial paper and notice of
which was given to the Agent by the Company pursuant t~ Section
1.3(a) hereof, in which event not later than I:00 p.m. Chicago
t.ime on the date specified for such loan to be made hereunder)
each Bank shall make available its portion of such Loan in funds
immediately available in Chicago, Illinois, at the principal
office of t_he Agent except as otherwise provided above, or to the
extent applicable shall deposit with the Agent such Notes held by
such Bank for surrender to the borrowing Company.
1.4. Chan~e of Law. Notwithstanding any other provision
of this Agreement or the Notes, if at any time any Bank shall
determine in good faith t_ha= any change in applicable law or
r~gula~ion or Ln the interpretation thereof makes it unlawful or
imprac~icabie for such B~nk to make or continue to maintain
Eurodollar Loans, such Bank shall promptly giv~ notice thereof to
the Companies and the Agent, and such Bank's obligation tm make,
continue or effect by conversion any Eurodollar Loans under 'this
Agreement shall terminate until it is no longer unlawful or
impracticable for such Bank to make Eurodollar Loans. The
Companies~ on demand, shall, prepay t.he outstanding principal
amounu of such Bank's Eurodollar Loans, together with all interest.
accrued thereon and all ot~er amounts payable to such Bank under
t~is Agreement, provided, however, the Companies may then e!ec-_
to borrow the prlnclpal amount of such Eurodollar Loans by means
of Domestic Dollar Loans, subject to the terms and conditions of
this Agreement. If such determination is made after a Eurodollar
Term Loan has been made and the Company elects to borrow the
amount outstanding thereon by means of a Domestic Dollar Term
Loan, the term of such Bank's Domestic Dollar Term Loan shall h~
equal to the balance of the term which was remaining on its
Eurodollar Term Loan, with the remainin_g installments of principal
to be paid on the same da~es and in the same amounts as specified
in the Note evidencing such Eurodollar Te=~- Loan.
1.5. Unavailability of Eurodollar Deposits or Inability
to Ascertain the Ad)usted LIBOR Ratp. Notwlthstanding any other
Provision of this Agreemen= or ~he Notes, if prior to the commence-
ment of any Interest Period any Bank shall detSrmine (i) that
United States Dollar deposits in the amount of any Eurodollar
Loan scheduled to be outstanding during such Interest Perio_d are
not available to one or more of the Banks in the London interbank
market or (ii) by reason of circumstances affecting the London
interbank market, adequate and reasonable means do not exist for
ascertaining the Adjusted LIBOR Rate, such 'Bank shall promptly
give no=ice thereof to the borrowing Company and the Agent,
and the obligations of t-he Banks to make, continue or effect
by conversion any Eurodollar Loan in such amount and for such
Interest Period shall terminate until United States Dollar
deposits in such amount and for the Interest Per/~d selected by
the borrowing Company shall again be readily available in the
ondon inter, b.ank market.and adequ_~e and reasonable means exist
or_asce.rtaln.l~, g _the Ad].usted LZBOR Rate. Upon the giving of
~uc.n.~o?.lce_, =ne c.o~anl, es my, o.n the ~a~ent Date of the then
p~cu~e ~nterest Per~cds, elect to either (i) pa~ or prepay,
as the case may be, such Eurodollar Loans or (ii) convert such
Eurodollar Loans to Domestic Dollar Loans, subject to t. he terms
and conditions of this Agreement.
1.6. Taxes and Increased Costs. With respect to the
Eurodol.lar .L.oan.s, if any Bank shall determine in good faith t_hat
any applica~£e law, treaty, regulation or guideline (including,
without limitation, Regulation D of the Board of Governors of the
Federal Reserve System) or any law, treaty, regulation or guideline,
or any interpretation of any of the foregoing by any governmpntal
authority charged with the administration thereof or any central
bank or other fiscal, monetary or other authority having jurisdiction
over such Bank or its lending branch or the Eurodollar Loans
contemplated by this Agreement (whether or not having the force
~i0) ..
of~ law) shall:
(a) impose, modify or deem applicable any reserve,
special deposit or similar requirements against assets
held by, or deposits in or for the account of, or loans
by, or any other acquisition of funds cr disbursements
by, such Bank;
(b) s~bject such Bank, the Eurodollar Loans or
the Notes evidencing Eurodollar Loans to any tax (including,
without limitation, any United States interest equa!izauion
tax or similar tax however named applicable to the
acquisition or holding of debt oblSgations and any
interest or penalties with respec= thereto), duty,
charge, stamp tax, fee, deduction or withholding in
respect of this Agreement, any Eurodollar Loan or any
Note evidencing a Eurodollar Loan, except such taxes as
may be measured by the overall net income of such Bank
or its lending branch and imposed by the jurisdiction,
or any ~olitical subdivision or taxing authority thereof,
in which such Bank's principal executive office or its
lending branch is located;
(c) change the basis of taxation of payments of
principal and interest due from the borrowing Company
to such Bank hereunder or under any Note evidencing a
EurOdollar Loan (other than by a change in taxation of
the overall net income of the Bank); or
(d) impose on such Bank any penalty with respect
to the foregoing or any other condition .regarding this
Agreement, its disbursement, any Eurodollar Loan or any
Note evidencing a Eurodollar Loan;
and such Bank shall determine that the result of any of the
foregoing is to increase the cost (whether by incurring a cost or
adding to a cos~) to such Bank of making or maintaining any
Eurodollar Loans hereunder or to reduce the amount of principal
or interest received by such Bank (without benefit of, or credit
for, any prorations, exemptions, credits or other offsets available
under any such laws, treaties, regulations, guidelines or interpretations
thereof), then the borrowing Company shall pay on demand to such
Bank from t~m- to t~me as specified by such Bank such additional
amounts as such Bank shall determine are sufficient to compensate
and indemnify such Bank for such increased cost or reduced amount.
If any Bank makes such a claim for compensation, it shall provide
to the borrowing Company a certificate executed by an officer of
such Bank setting forth such increased cost or reduced amount as
· a result of any even: mentioned herein (including an explanation
of =he basis for and the compute:ion of such increased cost or
reduced amount and a copy of =he applicable law, treaty, regulationu
quidline or interpre=ation ~o =he extent available) and such
certificate shall be rebuttably presumptive evidence of =he same.
1.7. Substitute Rate. (a) If prior to any interest
Period any Bank snell have de=ermined (which determination' shall
be conclusive and binding upon the Companies) that =he method of
computing the rate of interest applicable to any Eurodollar Loan
does not accurately reflect =he Cost to such Bank of making,
continuing or effecting by convemsion any such Eurodollar Loan,
such Bank shall give prompt ~eiephonic, telex or ~legraphic
not. ice of such determination ~o the Companies and the Agent.
During =he 30 calendar days next succeeding the giving of such
not.~ce, ~he Companies and any Banks so affected shall negotiate
in good faith in order to arrive at a mutually satisfactory
in=erest rate equal ~o (x) with respect ~o the Eurodollar Revolving
Credit Loans, the applicable Eurodollar Revolving Credit Mar~in
plus the cos: to each such Bank of maintaining its Eurodollar
Revolving Credit Loans hereunder to be substituted for the interest
rate sp. ecified in Section !.l(c) hereof or (y) with respect to
~he Eurodollar Term Loan, the applicable Eurodollar Term Loan
Margin plus t_he cost to each such Bank of maintainin~g its Eurodollar
erm Loan to be substituted for ~he interes= rate specified in
ection 1.2(d) hereof. If. within such 30 day period the Companies
and such Bazuks shall agree in writing upon a sL%bstituted interest
rate such su~stit-atm.d, interest ra~e shall be effective from t_he
first day of the teleran= Interest Period for such Eurodollar
(b) If the Companies and such Banks are unable
agree in. writ_tng upon a substitut~ rate within the above 30 day
pe.riod, %he Companies shall on demand either (i) prepay the
relevant Eurodollar Loans (including =he Eurodollar Loan of any
other Bank having t_he same Interes~ Period .upon the request of
such-Bank) in full or (ii) convert such Eurodollar Loans (including
t. he Eurodollar Loan of any otherBank having, the same In=erest
Period upon =he request of such B.~nk) into Domestic Dollar Loans
and, in either case, shall pay ail accrued interest thereon at
the rate per annum (rounded upward, if necessary, to =he nearest
whole multiple of one eighth of one percent (1/8%)) which is
eqUal to the sum of ~he effective cost as computed by each such
Bank of maintaining such Eurodoll~.r Loans from offshore United
States Dollar deposi=s plus (x) width respect to =he Revolving
Credit Loans, the applicable Eurodollar Revolving Credit Margin
or (y) with respect to =he Eur0do~lar Term Loans, ~,~e applicable
~urodollar Term Loan Margin toge~er with all other amounts
payabl~ to such Banks under this Agreement. A certificate
delivered to the Company and executed by an officer of such Bank
as ~o such effective cost (includl. ng an explanation cf t~he basis
for and the computation of such effective cost) shall be rebuttably
presumptive evidence of the same.
1.8. Fundin~ Indemnity. In ~he event any Bank s~ha!l
incur any loss, cos~ or expense (including, without limitation,
any loss of profit and any loss, ..~os~ or expense incurred by
reason of =he liquidation or re-employment of deposits or other
funds acquired by such Bank to fund or maintain any Eurodollar
Loan or the relending or reinvesting of such deposits or amounts
paid or prepaid to such Bank) as a result of:
(a) any prepayment of a Eurodollar Loan on a date
other than =he Payment Date of =he =hen appiica~ie
Interest Period,
(b) any failure by any of the Companies to borrow,
continue or effect by conversion a Eurodollar Loan on
the date specified in =he notice given pursuant to
Section 1.3 hereof,
(c) any failure by any of the Companies to prepay
a Eurodollar Loan on the date specified in the notice
given pursuant to Section 2.2(b) hereof,
(d) any failure by any of the Companies to make
any payment of principal or interest when due on any
Eurodollar Loan hereunder, whether at stated maturity,
by acceleration or otherwise, or
(e) any default under t_his Agreement;
then upon =he demand of such Bank, the relevant Company shall pay
to such Bank such amount as will reimburse such Bank for such
loss, cost or'expense to =he extent such loss, cost o~ expense is
not otherwise reimbursed by =he after maturity interest rate
specified in Section !.9 hereof, as appropriate. If any Bank
makes such a claim for compensation, it shall provide to such
Company a certificate executed bY an officer of such Bank setting
forth the amount of such loss, cost or expense in reasonable
detail (including an explanation of =he basis for and ~he compu-
tation of such loss, cost or expense) and such certificate shall
be r~buttably presumptive evidence of =he same.
·
1.9 Late Payment. (a) If any payment of principal on
any Domes=lc 6ollar Loan is not made when due, whet_her at stated
mat-/rity, By acceleration or otherwise, =he borrowing Company
shall on demand pay interest =hereon (computed on =he basis of a
year of 360 days and actual days elapsed) from and including =he
date such payment was due until paid in full at a rate per annum
equal to ~he sum of two percent (2%) plus the Prime Rate from
time to time in effac~.
(b) If any payment .of principal on any Eurodollar Loan
is not made when due, whether at stated maturity, b~ acceleration-
or otherwise, t_he borrowing Company shall on demand pay interes~
thereon for each day (computed on t_he basis of a year of 360 days
and actual days elapsed) from and including the date such payment
~--'was due until paid in full at a rate per annum equal =o the
.~higher of (i) the sum of one percent (1%) plus the rate of interest
applicable to such Eurodollar Loan immediately prior to its due
date or (ii) t_he sum of 1% plus the applicable Eurodollar Revolving
Credit Margin or EurodOllar Term Loan Margin, as t_he case may ~e,
plus a quotient, the numerator of which is equal to t_he rate of
interest per annum as determined by the Agent (rounded upwards,
if necessary, to the nearest whole multiple of one-eighth of one
percent (1/8%)) at which overnight or weekend deposits of United
States Dollars (or, if such amount due r~mains unpaid more than
three Banking Days, then for such other period of time not longer
t.han six months as the Required Banks may elect in their absolute
discretion) for delivery in immediately available and freely
transferable funds would be offered by t_he principal London
office cf the Agent to major ~anks in the London interbank market
upon request of such major banks for the applicable period as
determined above and in an amount comparable to the unpaid principal
amount of the Agent's Eurodollar Loans and the denominator of
which shall be equal to 100% minus the Reserve Percentage (if
United States Dollar deposits are not available in the London
inter~ank market, the numerator of such quotient shall be equal
to each Bank's cost of funds as reasonably de=ermined by such
Bank) .
1.10. Lending Branch... Each Bank may, at its option,
elect by written no=ice =o the Company and the Agent to make
or maintain its Loans hereunder at the branch or office specified
on t_he signature page hereto or such other of its branches or
offices as such Bank may from =//ne to time elect.
2. COMMITMENT FE~, PREPAYMENTS AND REDUCTIONS.
2.1. Commitment Fee. For t_he period from the date
hereof to a~nd including December 31, 1984, the Companies shall be
jointly and severally obligated to pay to =he Agent for the
account of the Banks a commitment fee at the rate of three-
eighths of' one percent (3/8%) per annum (computed on t_he basis of
a year of 360 days and actual days elapsed) on t_he average daily
unused pOrtion of the Revolving Credit Commitment available
hereunder, such fee to be payable on March 31, 1982, and quarter-
annually thereafter to and including December 31, 1984, unless
the Revolving Credit Commitment is terminated in whole on an
earlier date, in which event t_he commit_men= fee for the period =o
the date of such termination in whole sha.ll be paid on the date
such termination.
2.2. Voluntary~. Prepayments. (a) Each Company shall
have the privilege of prepaying without premium or penalty and in
whole or in part' (but, if in 9ar=, then: (i) in an amount not
less th~-~ $1,000,000 or a whole multiple of $i,000;000~. and (ii)
in an amount such that t.he minimum amounts required pursuant to
Section !.l{a) hereof remain outstanding) either its Domestic
Dollar Revolving Credit Loans or its Domestic Dollar Term Loan at
any time upon three Business Days' prior notice to =he Agent such
prepayment to be made by the payment of the principal amount to
be prepaid and accrued interest thereon to the date fixed for
prepayment. Any amount pre,aid on the Domestic Dollar Revolving
Credit Loans may, subject to =he terms and conditions hereof, be
borrowed, repaid and borrowed again. 9artiaI prepayments of any
Domestic Dollar Term Loan shall be applied to the several install-
ments thereof in the inverse order-of their maturity.
(b) Each Company may prepay wit~hout premium or penalty
in whole or in par~ (but, if in par~, then: (i) in an amount not
less tha~ $1,000,000 or a whole mu!tiple of $1,000,000~ and (ii)
in an a~ount such that the minimum amounts required pursuant to
Section !.l(a) hereof r~main outstanding) any Eurodollar Loan on
the Payment Date of the then applicable Interest Period, upon
three Banking Days' prior notice to the Agent (which notice shall
be irrevocable once given, must be received by =he Agent no later
than 11:G0 a.m. Chicago time on the third Banking Day preceding
the date of such prepayment and shall specify the principal
amount ~o be prepaid). Any amount prepaid on the Eurodollar
aev.olving Credit Loans may, sub~ect to the terms and conditions
hereof, be borrowed, repaid' and borrowed again. Partial prepay-
ments of the Eurodollar Term Loan shall be applied to the several
installments thereof in the inverse order of their maturity.
2.3. Terminations. The Companies shall have =he right
at any t/me and from time to time, upon three Business Days'
prior w-ri=ten notice to the Agent executed by all the-Companies,
to terminate without premium or penalty and in whole, or an par=,
the Revolving Credit Commitment, any partial termination to 'be in
an amount of $1,000,000 or a whole multiple thereof, (provided,
however,, that in the event of any such partial termination there
must re=ain outstanding as to each borrowing Company the minimum
amounts required pursuant to Section 1.1(a) hereof) and any
parnial termination to reduce ratably the respective commitments
of each Bank, provided that the Revolving Credit Commitment may
not be reduced to an amount less than the aggregate principal
amount of the Revolving Credit Loans t_hen outstanding. Any ter-
mination of the Revolving Credit Commitment pursuant to this
Section 2.3 may not be reinstated. _
· 3. PLACE AND APPLICATION 'OF PAi/~ENTS.
3.1. Place and Ap.~licati0n of Payments. Ail payments
of principal and'iint,e, rest and all ~ymen~s of commitment fees and
all other amounts payable under, this Agreement shall be made to
the Banks at the principal office of the Agent in Chicago, Illinois,
for ~he ratable benefit of the Bank:
any Notes. The Agent shall
ratable portion of such payment. A2
in lawful money of the United State:
available funds at the place of
and without r~duction for, and free
fur=re taxes, levies, imposts, duti~
wittlholdings, restrictions or condil
any government or any political su~c
thereof (but excluding any taxes
income of the Banks).
any other holder of
to each Bank its
payments shall be made
America, in immediately
without setoff or count~rc!aL~
any and all present or
fees, charges, deductions,
of any nature imposed by
sion or taxing authority
or mess=red by the net
4. DEFINITIONS.
4.1 'Adjusted LIBOR Rate' means a rate per annum
determined p=rsuant to the following formula:
Adjusted LIBOR Rate = LIBOR
100%-Rese.rve Percentage
'Reserve P.~rcentage" means the dail'
r~quirement imposed by the Board of'
Reserve Sys~m (or any successor)
liabilities (as such' t~rm is define~
applicable Interest Period, subject
reserve r~quirement by such Board
account any transitional ad]ustment~
F' ~rithmetic average reserve
Governors of the Federal
~der Regu!ation'D on Euroc=rrency
! ~ Regulation D) d=ring any
to any amendments of such
its successor, taking into
thereto. For p=rposes of
is definition,-the Loans shall be deemed to be Eurocurrency
iabilities as defined in Regu!atio~ D without benefit of or.
credit for prorations, exemptions or offsets under Regulation D.
4.2. 'Average CD Rate" ~
is to. be determined (which determ/~
Agent), the immediately ~receding d~
of secondary market offering Fates
day certificates of deposit of ma]o:
banks, on t/%e basis of such rates r~
deposit dealers to and published by
if such publication shall be suspen,
basis of quotations for such rates
three certificate of deposit dealer:
:ans as of each day the same
~tion shall be made by the
~Y'S reserve adjusted average
~.e United States for 30
United States money market
.~ported by certifica%e of
th~ Federal Reserve Bank or
ed or terminated, on the
ec~ived by the Agent from
of recognized standing.
4.3. "Banking Day" means a day on which the Banks are -
open for business in Chicago, Illinois, Houston, Texas, and New
York, New York, and dealing in United States Dollar deposits in
London, England.
4.4. ~Business Day" means, a day on which the Banks are
open for business in Chicago, Illinois, Houston, Texas, and New
York, New York.
4.5. 'Capital Lease' ~eans at any date any lease of
Property which in accordance with generally accepted accounting
principles at the time in effect would be required to be capitalized
on the balance sheet of the lessee. '
4.6. "Capitalized Lease Obligation' means the amount
of the liability as shown on the balance sheet in respect of a
Capital Lease as de=ermined at any date in accordance with generally
accepted accounting principles.
4.7. 'Communications' Consolidated Net Income" for any
peric~ means the sum of (a) net income (or loss) of Communications
and its Subsidiaries after eliminating all portions of ne=
income properly attributable to minority interests and after all
payments of or provisions for taxes on or in respect of income,
plus (b) all depreciation taken by Com~nications and its SUbsidiaries
in accordance with generally accepted principles of accounting
consistently applied during the period for which Communications'
Consolidated Net Income is being computed; but exc!udinq (on an
after tax basis):
(a) any gain or loss arising from the sale of capital
assets or any gain arising from any other extraordinary
item;
(b) any gain arising from any write-up of assets;
(c) any gain arising from the acquisition of any
Securities of Communications or its Subsidiaries other than
the acquisition of Indebtedness of Communications or its
Subsidiaries; and
(d) any restoration to net income of any contingency
or tax reserve except to =he extent that provision for such
r~serve was made out of net income during the period for
which Communications' Consolidated Net Income is being -
computed.
4.8. "Consolidated Funded Indebtedness," "Consolidauad
Ne~ Earnings," Consolidated Net Income Available for Dividends,"
and "Consolidated Total Capitalization" of the Company for which
such term is being determined and its Subsidiaries shall mean
Funded indebtedness, Net Earnings, Net Income Available for
Dividends or Total Capitalizat-%on, as the case may be, of such
Company and its Subsidiaries all consolidated in accordance with
generally accepted accoun=ing principles.
-"Consolidated Persons" is defined in Section 5.2
hereof.
4.10.
hereof.
"Controlled Group" is defined in Section 5.8
4.11. "Domestic Dollar Loan" or 'Domes=it Dollar
Loans" means and includes both the Domestic Dollar Revolving
Credit Loans and the Domestic Dollar Term Loans unless ~-~he context
in which such ~erm is used shall otherwise require.
4.11. "Domestic Dollar Revolving Credit Loan" or
"Domestic Dollar Revolving Credit Loans" means loans made on a
revolving credit basis and bearing interest as specified in
Sec=ion 1.!(b) hereof.
4.13. "Domestic Dollar Term Loan" or "Domestic Dollar
Term Loans" means loans made on a term credit basis and bearing
interest as specified in Section 1.2(c) hereof.
4.14. "Eurodollar Loan" or "Eurodollar Loans" means
and includes both the Eurodollar Revolving Credit Loans and the
Eurodollar Term Loans unless t_he context in which such term is
used otherwise requires.
4.15. "Eurodollar Revolving Credit Loan" or "Eurodollar
Revolving Credit Loans" means loans made on a revolving credit
basis and bear{ng_interes= as specified in Section l.i(c) hereof.
4.16. "Eurodollar Revolving Credit Margin" is defined
in Section 1.1lc) hereof.
4.17. "Eurodollar Term Loan" or "Eurodollar Term
Loans" means loans made on a term credit basis .and bearing
interest as specified in Section !.2(d) hereof.
4.18. "Eurodollar Term Loar~ Margin" is defined in
Section 1.2(d) hereof.
. 4.!~'. "Funded Indebtedness" of any corporation means
as of any date all Indebtedness which by its terms matures more
than one (1) year from the date of ~ts creation and any Indebtedness
ex=~dable,'at ~e pio of =he debtor, to a data ~yond one (i)
year from such date, ~cluding ~e present value of Capital
Leases.
4.20. "Guaranty" by any Person means any obligation of
such Person guaranteeing or in effect guaranteeing any Indebtedness,
dividend or other obligation of any other Person (t~he "Primary
Obligor") in any manner, whet_her directly or indirectly, including
obligations incurred through an agreement, contingent or ot~he~-~ise,
by such Person:'
(a) to purchase such Indebtedness or obligation or any
Property constituting security therefore;
(b) to advance or supply funds:
(i) for the purchase or payment of such Indebtedness
or obligation, or
(ii) to maintain working capital or any other
balance sheet or income statement condition, or o~he~-~ise
to advance or make available funds for =he purchase or
payment of such Indebtedness or obligation;
(c) to lease Property or to purchase Securities or
other Property or services primarily for ~he purpose of
assuring-=he owner of such Indebtedness or obligation of =he
ability of =he Primary Obligor to make payment of =he Indebtedness
or obligation; or
(d) otherwise to assure the owner of =he Indebtedness
or obligat, ion of t_he 'Primary Obligor against loss in respect
t_hereof. S
4.21. "Indebtedness" of any corporation includes (i)
all indebtedness created, assumed, incurred or guaranteed in any
manner by such corporation or for which such corporation is
otherwise responsible or liable (whet_her by Guaranty of indebtedness
of, or agreemen= to supply funds to or invest in, others) representing
money borrowed (which term includes, without limitation, obligations
on or~ with respect to letters of credit, bankers' acceptances and
other e~idences of indebtedness representing extensions of credit
whether or not representing obligations for money borrowed), (ii)
all indebtedness secured by any Lien upon Property owned by such
corporation, even though such corporation has not assumed or
become liable for the payment of such indebtedness and (iii)
Capitalized Lease Obligations; provided, however, that the term
"Indebtedness" shall not include any par~icuiar indebtedness if,
upon or prior to =he maturity 'thereof, there shall have been
deposited with the proper depository in trust money (or evidences
of such indebtedness if permitted by the inst_r'ument creating such
indebtedness) in the necessary amount to pay, redeem or satisfy
such i~.debtedness, and thereafter such money and evidences of
indebtedness so deposited shall not be included Ln any computation
of t~he assets of such corporation.
4.22. '"Indenture of Mcr=gage" means =he Indenture of
Cente! =o Continental IlIinois National Bank and T~--us= Company of
Chicago, M~J. Kruger and Donald W. Al_~vin, as Trustees, dated
July I, 1~45, as heretofore 'and hereafter amended and supplemented.
~.23. WInterest Payment Date" or "Interest Payment
Dates" means the last day of each Interest Period and, for
Interest P~ri.ods longer than three months, shall also mean the
date or'da~es occurring every three calendar months after t_he
commencement of such Interest Period.
. 4.14. 'Interes~ Periodw means with respect to the
Euro=ol!ar~Loans the period used for the computation of interest
and shall Commence on ~he date the relevant Eurodollar Loan is
made, cont~ued or effected by conversion and conclude on t_he
da~e eitherone, three or six months thereafter, at the Companies'
op ion, pr0vided,.however, that (i) no Interest Period for any
Eurodollar Revolving Credit Loan may extend beyond December 31,
1984 and (~.i) with respect to t_he Eurodollar Term Loan, ~he last
day of any Interest Period selected by any of =he Companies for
the period immediately preceding any scheduled principal payment
date shall be a date which is concurrent with such principal
payment date. For purposes of determining an Interest Period, a
month mean~ a period star~ing on one day in a calendar month and
ending on numerically corresponding day in the next calendar
month, pr~ided, however, if there is no numerically corresponding
day in the month in which an Inter,st Period is to end, then such
Interest P~ riod shall end on the last Banking Day of such month.
.25. 'LIBOR" means for each Interest Period the rate
of interest per annum as determined by the Agent (rounded upward,
if necessazy, =o the nearest whole multiple of one-eighth of one
percent (1/8%)) at which deposits of United States Dollars in
immediately available and fr~eIy transferable funds would be
offered at 11:00 a.m. London time two (2)-London Banking Days
prior to the commencement of. such Interest Period by the principal
London office of the Agent to major banks in the London interbank
market upon request by such major banks for a period equal to
such Interest Period and in an amount equal to the principal
amount of the Eurodollar Loan to be outstanding from the Agent
during such Interest Period. Each determination of LIBOR made by
=he Agent i
binding on
4
an obliga~i
owner of th
common law,
the securit
n accordance with this Section shall be conclusive and
t_he Companies except in the case of manifest error.
.26. "Lien" means any interest in Property securing
on owed to, or'a claim by,--a Person other than the
Property, whether such interes~ is based on the
statute or contract, including, but nco limited to,
interest lien arising from a mortgage, encumbrance,
(20)
pledge, conditional sale, security agreement or t----ust receipt, or
a lease, consignment or bailment for security ~urposes. The te=m
"Lien' shall also include rese_--zations, exceptions, encroac.~ments,
easements, rights of way, convenants, conditions, restrictions,
leases and other title exceptions and encumbrances affecting
Property. For t_he put.poses of t_his definition, a Company shall
be deemed to be the owner of any Property which it has acquired
or holds subject to a conditional sale agreement, Capital Lease
or other arrangement pursuant to which title to the Property has
been retained by or vested in some other Person for security
purposes, and such retention of title shall constitute a "Lien."
4.27. "Loan" or "Loans' means and includes both the
Eurodollar Loans and t_he Domestic Dollar Loans unless t_he context
in which such term is used shall othe=wise require.
4.28. "London Banking Day" means a day on which banks
are open for business and quoting interest rates for United
States Dollar deposits in the London interbank market.
4.29. "Net Earnings" means net income computed in
accordance with generally accepted accounting principles before
deducting (a) interest char~es or amortization of debt discount
and dividends on preferred stock of any Subsidiary of the Company
for which Net Earnings is being determined and . (b) income taxes:
provided, however, that (a) profits or losses from the sale of
Property or any amortization of intangibles shall not be taken
into account, and (b} if any Funded Indebtedness is created in
connection with the acquisition of any Proper~, then the net
earnings of the property so acquired, computed on the same basis,
may be included on a pro forma basis.
4.30. 'Net Income Available for Dividends" means net
income computed-in accordance with generally accepted accounting
principles; provided, however, profi_ts or losses from the sale or
disposition of Property, other than for cash, or any amortization
of intangibles shall be excluded. If any Subsidiary. of the
Company for which Net Lncome Available for Dividends is being
detsrmined enters into a subsequent loan agreement 'which restricts
=he payment of dividends, then only the net income of Subsidiaries
which may be applied to pay dividends under such restrictions may
be included.
4.31. "Net Tangible Assets' means (i) =he net_book
value (after deducting related reserves for depreciation, obsolesce:
and amortization) at which the Tangible Assets of the Company for
which' Net Tangible Asse.ts is befng determined .are shown on the
most recently available balance sheet of such Company, but excludinc
any amount applicable to write-ups of assets minus (ii) the
amcunt at which its liabilities and minority interests are shown
on such balance sheet.
4.32. 'Note' or 'Notes" means and includes t.he prcmissc~-!
notes of the Companies evidencing the Domestic Dollar Loans and
the Eurodollar Loans, unless the context in which such term is
used shall otherwise r~quire.
Period.
4.'33.
'Payment Date' means t_he last day of an Interest
4.34. 'Person" meanT an individual, partnership,
corpora=ion, association, trus~, unincorporated organizatio~ or
any other entity or organization, including a government or
agency or political subdivision thereon.
4.35. "Prime Rate' means th~ rate of interest announced
by Harris Trust and Savings Bank from ~ime to time as its prime
commercial rate with any chang~ in sai~ prime commercial rate to
be effective as of the day of. the.releVant change in said prime
commercial rate.
4.36. 'Plan' is defined in Section 7.1(e) hereof.
4.37. "Pro Forma Total Annuail Interest Charges" is
defined in Section 7.2(a) (ii) hereof as tO Centel and in 7.3(a)
(ii) .as to Central Telephone.
4.38. "Property" means any interest in any kind of
proper~y or asset, whether reall, personal or mixed, or tangible
or intangible whether now' owne~ or hereafter acquired.
4.39. 'Required Banks" means as of the date of determinatio
· thereof .t_hat number of the Banks holding at.least 75% of =he
outstanding principal balance ~f the Loans, or in the event =hat
no Loans are outstanding hereunder' those Banks holding at leas=
75% in aggregate principal amount of the commitments hereunder.
4.40. ,Revolving Credit Lc~n, or "Revolving Credit
Loans" means and includes both the Domestic Dollar Revolving
C~edit Loans and the E~rodollarI Revolving Credit Loans, unless
t_~e contex~ in which such term ks used Shall otherwise require.
4.41. 'Security" sha~l have the same meaning as in
Section 2(1). of the Securities Act of 1933, as amended.
4.42. 'Senior Indebtedness" means all Indebtedness.
which is not by its terms sub°rdi~ated to any other Indebtedness.
4.43.' 'Subordinated Indebtedness" means Funded Indebtedness
of the,Company for which Subordinated` Indebtedness is being
determined (a) the final maturi~_y .of which shall be after December
31, 1988, (b) as to which such Company shall not be required to
pay, prepay, or redeem any part of the principal amount =hereof
prior to the earlier of (i) the fifth (5th) anniversary of such
Company first being liable in respect =hereof, or (ii) ~le time
that the Notes shall have matured and all amounts payable in
respect of ~he principal of, premium, if-any, and interest on,
=he Notes shall have been paid in full, (c) as to which, during
any fiscal year of such Company ending after t~he earlier of such
fifth (Sth) anniversary or' t/:e time ~hat t. he Notes shall have
matured and all amounts payable in respect of =he principal of,
premium, if any, and interest on,-the Notes shall have been paid
in full, such Company shal! not be required to pay, prepay, or
r~deem any par~ of =he principal amount of any issue of Subordinated
Indebtedness which exceeds four percent (4%) of t_he largest
principal amount of any such issue at any time outstanding, and
(d) which is issued under an instrument or instruments which
contain subst~antially the following provisions with respect to
~he subordination of such Indebtedness to the Indebtedness evidenced
by =he Notes and to any other Indebtedness of such Company which
by its t~rms is not expressly subordinated to any other Indebtedness
of such Company (hereinafter referred to as 'Superior ~ndebtedness'):
(i) Subordinated Indebtedness shall be subordinate and
3,~m~or in right of payment, to =he extent and in =he manner
hereinafter set forth, to Superior Indebtedness:
(A) In the event of any insolvency or bankruptcy
proceedings, and any receivership, liquidation, reorganize=ion,
or other similar proceedings in connection =herewith,
relative to such Company or to its creditors, as such,
or to its proper~y, and in =he event of any proceedings
for voluntary liquidation, dissolution, or other winding
up of such Company, whet_her or not involving insolvency
or bankrupt=y, =hen =he holders of Superior Indebtedness
shall be entitled to receive payment in full of =he
principal of, premium, if any, and interest on, all
Superior Indebtedness before =he holders of Subordinated
Indebtedness shall be entitled to receive any payment
on account of principal, premium, or interest on Subordinated
Indebtedness, and to that end (but subject to =he power
of a cou~ of competent jurisdiction to make other
equitable provisions reflecting the rights conferred by
these provisions upon Superior Indebtedness and the
holders =hereof with respect to Subordinated Indebtedness
and =he holders =hereof by a lawful plan of reorganization
under applicable bankrup~y law), =he holders of Suuerior
Indebtedness shall be irrevocably authorized and ~m~owered
in =heir discretion to make and present for and on
behalf of =he holders of Subordinated Indebtedness such
proofs of claims against such Company in respec~ of
such Subordinated Indebtedness as the holders of Superior
Indebtedness may deem expedient or proper and to vote
such proofs of claims ~n any such proceedings in respect
of Subordinated Indebtedness and shall be enniUled =o
receive, for application in payment of Superior Indebtedness,
any payment or distribution, of any kind or character,
which may be payable or deliverable in any such proceediffgs
in respect of Subordinated Indebtedness, except securities
which are subordinated and junior in right of. payment
to t_he payment of Superior Indebtedness; and
(B) In ~,he event that any Subordinated Indebt-=~lness
is declared due and payable before its expressed maturity,
because of t_he occurrence of a default thereunder.
(under circumstances when =he provisions of the foregoing
clause (A) shall not be applicable), =hen t_he holders
of Superior Indebtedness outstanding at the time such
Subordinated Indebtedness so becomes due and payable,
because of such occurrence of a default thereunder,
shall be entitled to receive payment in full of the
principal of, premium, if any, and interest on, all
Superior Indebtedness before the holders of Subordinated
Indebtedness are entitled to receive any payment on
account of the principal of, premium, or interest upon
Su]:ordinated Indebtedness.
(ii) No present or future holder of Superior Indebtedness
shall be prejudiced in his right to enforce subordination of
Subordinated 'Indebtedness by any act or failure to act on
the part of such Company. The foregoing provisions as to
subordination are solely for =he purpose of defining t_he
relative rights of the holders of Superior Indebtedness on
the one hand and the holders of Subordinated Indebtedness on
the other hand, and none of such provisions shall impair, as
between such Company and any holder of Subordinated Indebtedness,
the obligations of such Company, which are unconditional and
absolute, to pay to such holder of Subordinated Indebtedness
the principal =hereof and premium, if any, and interest
thereon Ln accordance with its terms, nor shall any such
provision prevent any holder of Subordinated Indebtedness
from exercising all r~medies otherwise pe=~itted by applicable
law or under the terms of such Subordinated Indebtedness
upon a default thereunder, subject to the rights, if any,
under the foregoing provisions, of holders of Superior
Indebtedness to receive cash, property, or securities
otherwise payable or deliverable =o holders of Subordinated
Indebt ednes s.
(iii) No payment on account of the principal of,.
premium, or interest on Subordinated Indebtedness shall be
made (in cash or property, by setoff, or %r. herwis~), and no
holder of Subordinated Indebtedness shall be entitled to
demand or receive any such payment, if, at the time of such
payment, a default shall exist, or if, immediately after
giving effect to such payment, a default would exist, under
any Superior Indebtedness. -
(iv) These p~ovisions with respect ~o subordination
cannot be amended, modified, or waived without the prior
written consent of the Required Banks as defined in that
certain Credit Agreement between such Company, Harris Trust
and Savings Bank as Agent and others da=ed December 31, 1981
and such percentage of the holders of each class of Subordinated
Indebtedness and Superior Indebtedness other than t_he No=es
issued pursuant to said Credit Agreement a= the time outstandihg
as may be required by the instruments evidencing such indebtednes~
These provisions with respect =o subordination, and the
subordination effected hereby, shall not be affected by any
amendment of, or addition or supplement to, any Superior
Indebtedness or any instrument or agreement relating thereto.
(v) Such Company agrees, for =he benefit of the
holders of Superior Indebtedness, that in the event any
Subordinated Indebtedness is declared due and payable
before its expressed maturity, because of =he occurrence of
a default thereunder, then such Company (i) will give prompt
notice in writing of such happening =o =he holders of Superior
Indebtedness, and (ii) at 1 Superior Indebtedness shall
forthwith become ~mmediately due and payable, upon demand,
regardless of =he expressed maturity thereof.
4.44. "Subsidiary" means as ~o a particular parent
corporation, any corpora=ion of which more ~han fifty percent
(50%) of =he outstanding stock having ordinary voting power for
=he election of the Board of Directors of such corporation (irrespecti~
of whet_her or not, at the t/me, stock of any other class or
Classes of such corporation shall have or might have voting power
by reason of the happening of any contingency) is at =he t/me
directly or indirectly owned .by such parent corporation, by one
or more of its Subsidiaries, or by such parent corporation and
one or more of its Subsidiaries.
4.45. 'Superseding Mortgage" means any Indenture which
Centel may create or assume which r~places the Indenture of
Mortgage as the first lien (except for "permitted encumbrances"
and "prepaid liens" as defined in the Indenture of Mortgage, or
similar encumbrances or liens permitted by such Superseding
Mortgage) on the property of Centel constituting "bondable property"
as defined in =he Indenture of Mortgage, (other than property
subject to a mortgage, lien, or security interest, as described
in Section 7.2(b} (i)(B) hereof) which is used and useful as a
par= of its permanent and fixed investment and the conducn of
utility business and which provides for. the issuance of bonds to
be secured t_hereby and the release of property from the lien upon
terms no= substantially less restrictive than the terms of the
Indenture of Mortgage. -
4.46. "Tangible Assets" of any corporation means all
assets except:
(a) deferred expenses, other than prepaid
insurance and prepaid taxes;
(b) patents, copyrights, trademarks, trade
names, franchises, goodwill, experimental expense,
organizational expense and other similar intangibles; and
(c) unamortized debt discount and expenses.
4.47. "Term Loan" or "Term Loans" means and includes
both Domestic Dollar Term Loans and Eurodollar Term Loans, unless
the context in which such term is used shall otherwise r~quire.
4.48. "Total Capitalization" means =he sum of the
stated capital applicable to t_he outstanding capital stock of all
classes, the retained earnings and the additional paid-in capital,
whether or not available for t.he payment of dividends, and the
aggregated principal amount of all outstanding Funded Indebtedness,
net of any discount or premium; provided that, if a= the time of
computation of Total Capitalization, any capital stock is beinq
concurrently issued or retired or any Funded Indebtedness is
being concurrently incurred or retired, then effect shall be
given to such issue or retirement.
5. REPRESENTATION AND WARRANTIES. Each of.the Companies
severally represents and warrants as follows:
5.1. Such Company is duly organized and existing in
good standing under the laws of'the State of its incorporation;
has all necessary corporate power to carry on its present business;
and has full power, right and authority to enter into this Agreement,
to make the borrowing~ herein provided for, to issue (subject to
any necessary regulatory approval referred to in Section 5.6
hereof) its Notes and to perform each and all of the matters and
things herein provided for; and this Agreement does not, nor will
the performance or observance by such Company of any of the
matters and things herein provided for, contravene any provision
of law or any judgment or decree or any charter or bylaw provision
of such Company, or any covenant, indenture or agreement of or
affecting such Company or its properties.
5.2. All financial statements of such Company heretofore
delivered to the ~anks have been prepared in accordance with
generally accepted accounting principles on a basis consistent,
(26)
except as or_he=wise noted ~herein, witch that of the previous
fiscal year, and fairly present on a consolidated basis the
financial position of such Company and any Persons consolidated
with such Company therein (such Company's 'Consolidated Persons"),
or of such Company alone as to any unconsolidated financial
statement, as of the dates thereof, and t_he results of operations
for the periods covered thereby. The Company and its Consolidated
Persons have no material contingent liabilities other than those
disclosed in such financial statements referred to in this Section
or in comments or foot_notes ~.hereto or in any supplemental report
thereto heretofore furnished to t_he Banks.
5.3. Since the latest of the financial statements
referred to in Section 5.2 hereof, there has not been any change
in =he financial position of such Company and any Consolidated
Person of such Company which would materially advers-cly affect
the business and properties of t_he Company and its Consolidated
Persons on a. consolidated basis.
5.4. There is no litigation or governmental proceeding
pending, nor to the knowledge of such Company threatened, against
such Company or any Consolidated Person of such Company which
would materially adversely affect the business and properties of
t_he Company and its Consolidated Persons on a consolidated basis.
5.5. The United States income tax returns of 'Centel
and Centel's Consolidated Persons for the fiscal year ended. 1975,
and for all fiscal years ended prior to said date have been
examined by the Internal Revenue Service and have been approved
as filed, or any additional assessments in connection with any of
such years have been paid. No objections to or controversies in
respect of =he United States income tax returns of Centet' and
Centel's Consolidated Persons of a material nature to Centel and
Centel's Consolidated Persons on a consolidated basis for any
fiscal year ended after said date are pending nor to the knowledge
of such Company is any such objection or controversy threatened
other than those which are provided for by reserves 'which in the
opinion of Centel are adequate therefor.
5.6. Issuance of any Note by Centel pursuant to the
Agreement is subject to approval (a) by the Federal Energy Regulatory.
Commission if the Note by its terms matures not more than one (1)
year from the date of its issue, or (b) by the Colorado Public
Utilities Commission and =he Kansas State Corpora=ion Commission
if the Note by its terms matures more than one (1) year from =he
(27)
'-'-~..?date of its issue. Issuance of any Note pursuant to t_he Agreement
by Central Telephone is subject to approval by t_he North Carolina -
Utilities Commission if the Note by its terms mat'ares more than
two (2) years from t,he date of its issue. No governmental authorization,
consent or filing, whet_her federal, state or local, other than as
described in this Section 5.6, is required on t_he part of any or
all of the Companies with respect, to the lawful execution, delivery
and performance of t_he Agreement, t_he Notes and the making of t_he
loans evidenced thereby.
5.7. This Agreement is a legal, valid and binding
agreement of such Company, enforceable against such Company in
accordance with its terms, and, subject to any necessary regulatory
approval referred to in Sect. ion 5.6 hereof, the Notes when executed
and delivered, will be similarly legal, v~lid, binding and enforceable.
5.8. Such Company and each member of its Controlled
Group .("Controlled Group" to have t_he same meaning herein as in
Section 414(b) of t.he 1954 Internal Revenue Code, as amended) are
in compliance in all material respects with t~he Employee Retirement
Income Security Act of 1974 ("ERISA") to the extent applicable to
them and have received no notice to the contrary from the Pension
Benefit Guaranty Corporation or any other governmental entity or
agency and no reportable event (as defined in ERISA) which could
result in a material accumulated deficiency under ERISA or a
material liability to the Pension Benefit Guaranty Corporation
has occurred and is continuing.
5.9. Such Company is not a~ Investment Company as
defined under t_he Investment Company ~ot of 1940.
5.10. None of'the Companies nor any of their Subsidiaries
are engaged principally, or as one of their primary activities,
in the business of extending credit for the purpose of purchasing
or carrying margin stock ("margin stock" to have the same meaning
herein as in Regulation U of ~he Board of Governors of the
Federal Reserve System) and no part of the proceeds of any of t_he
Loans will be used, directly or indirectly to purchase or carry
any such margin stock or to extend credit to o~hers for the
purpose of purchasing or carrying any such margin stock except in
compliance with said Regulation U.
6. CONDITIONS PRECEDENT. The obligation of the Banks
to make-any Loan hereunder shall be subject to the following
conditions precedent:
6.1. Prior to the making of the initial Loan hereunder:
(a) The. Agent shall have received for each Bank =~e
favorable written opinipn of Messrs. Ross, Hardies, O'Keefe,
Babcock & Parsons special counsel for =he Companies, in
substantially the form as attached hereto as .Exhibit D and
of Mr. Karl Berolzheimer, Vice President and General Counsel
for the Companies, in substantially the form as
attached hereto as ~.~xhibit E, and otherwise in form and
substance satisfactory to the Banks and their special
counsel, Messrs. Chapman and Cutler.
(b) The Agent shall have received for each Bank t.he
favorable written opinion of Messrs. Chapman and Cutler,
special counsel for the Banks, in substantially the form as
attached hereto as Exhibit F.
(c) The Agent shall have received for each Bank copies
(executed or certified as may be appropriate) of all legal
documents or proceedings taken in connection with the execution
and delivery of this Agreement or t_he Notes to t_he
t. he Banks or said special counsel may reasonably request.
(d) The Agent shall have received for the account of
t_he Banks copies of: (i) Centel's Certificate of Incorporation
and all amendments thereto certified by the Secretary of
State of Kansas; (ii) Central Telephone's Certificate of
Incorporation and all amendments thereto certified by the
Secretary of State of Delaware; (iii) Communications' Certificate
of Incorporation and all amendments thereto certified by the
Secretary of State of Delaware; and (iv) each Companys'
bylaws, and all amendments thereto, certified by such Companys'
Secretary o~ Assistant Secretary.
(e) Such other showings as the Agent may reasonably
request
6.2. As of t_he time of the making continuation or
conversion of each Loan hereunder (including the initial Loan),
as t. he case may be:
(a) the Agent shall have received for the account of
t_he Banks the notice and the Notes hereinabove provided for,
as appropriate, together with appropriate Federal Reserve
Board Forms U-l, together with any other document required
'by Regulation U of the Board of Governors of the Federal
Reserve System, duly completed and' executed by the borrowing
Company, and said Loan shall otherwise be in compliance witch
said Regulation U;
each of the representations and warranties of all-
_ (b)
~he Companies set forth in Section 5 hereof (except for the
representation and warranty appearing in Section 5.3 hereof)
shall be and remain true and correct as of said time, except
to the extent that any such representation or warranty
relates solely to an earlier date; and
(c) all of the Companies shall be in full compliance
with all of the terms and conditions hereof, and no event of
default as defined in Section 8.1 hereof, and no event
(29) .......
which, with'the lapse of time =he giving of notice, or
both, would constitute such an event of default thereunder
shall have occurred and be continuing or will have occurred
as'a result of making such Loan;
(d) the Agent shall have received for the accoun~ of
the Banks a certificate-of the Chief Financial Officer of
the borrowing Company as to the matters specified in Sec-
tions 6.2(b) and (c).
6.3. (a) As of the time of the making of the first
Revolving Credit Loan hereunder, the Agent shall have received
for the account of the Banks certified copies (or other showings
satisfactory in form and substance to the Agent and the Bank's
special counsel, Messrs..Chapman and Cutler) of all approvals,
consents, exemptions or other actions by, or notices to or
filings witch, any governmental authority, whether federal, state
or local necessary in connection, with the execution, delivery,
performance or enforcement by all of the Companies of this
Agreement and the Notes which are provided for hereby to evidence
Domestic Dollar Revolving Credit Loans and Eurodollar Revolving
Credit Loans, all of which shall be in full force and effect as
of the date of the making of such first Revolving Credit Loan,
and each of said Notes shall be to the extent of the consid-
eration received therefor, the legal, valid, binding and en-
forceable oblige=ion of ~he Company obligated thereon (and a
request by a borrowing Company t_hat such first Revolving Credit
Loan be made shall be and constitute a representation and war-
ranty to the foregoing effect by the borrowing Company), together
with an opinion of outside counsel satisfactory to the Agent and
the Bank's special counsel, Messrs. Chapman and Cutler, to the
effect that: (i) such approvals, consents, exemptions, actions,
notices and filings constitute all approvals, consents, exemp-
tiOnsi or other actions by, or notices to or filing with, any
.governmental authority, whe%-her federal, state or_local, required
on the par~ of t_he Companies with respect to the lawful execu-
tion, delivery and performance of this Agreement, said Notes and
the making of the Revolving Credit LOans evidenced thereby; (ii)
the same are as of ~he date of borrowing in full force and
effect; and (iii) said Notes have been duly executed and de-
livered by the Companies and are to the extent of the consid-
eration rmceived therefor, the legal, valid, binding and en-
forceable obligations of the Companies.
(b). As of the time of the'making of t_he initial Term
Loan hereunder to each of the Companies, the ~gent shall have
received for the account of the Bank~ certified co~ies (or other
showings satisfactory in form and substance to the Agent and the
Bank's special counsel, Messrs Chapman and Cutler) of all
(3t)
EXHIB IT A
DOMESTIC DOLLAR REVOLVING CREDIT NOTE
U.S. $ , 19
FOR VALUE RECMIVED, t_he undersigned, . ,
a corporation (the "Company"), promises to pay to the
order of
(the "Bank") on December 31,
1984 at the principal office of Harris Trust and Savings Bank in
Chicago, Illinois, in immediately available funds, the principal
sum of
Dollars ($ ) or, if less, the aggregate unpaid
principal amount of all Domestic Dollar Revolving Credit Loans
made by the Bank to the Company or effected by conversion pursuant
to the Credit Agreement (as hereinafter defined) and remaining
unpaid on December 31, 1984, together with interest computed and
payable as provided in the Credit Agreement hereinafter referred
to.
The Bank shall record on its books or records or on the
scheduIe at~ached to ~his Note which is a part hereof each Domestic
Dollar Revolving Credit Loan made or effected by conversion
pursuant to said Credit Agreement, together with all payments of
principal and interest and the principal 'balances from time to
time outstanding, provided that prior to the transfer of =his
Note all such amounts shall be recorded on the schedule attached
to this Note. The record thereof, whether shown on such books or
records or on the schedu.le to ~his Note, shall be rebuttably
presumptive evidence of t.he same, provided, however, that the
failure of the Bank to record any of the foregoing shall not
limit or otherwise affect t_he obligation of t_he Company to repay
ali Domestic Dollar Revolving Credit Loans m_ade or effected by
conversion pursuant to the Credit Agreement toget~her with accrued
interest thereon.
This Domestic Dollar Revolving Credit Note is one of
the Notes referred to in and evidencing Domestic Dollar Revolving
Credit Loans made by the Bank to the Company or effected by
conversion pursuant to the Credit Agreement dated as of December
31, 1981, between the Company, Harris Trust and Savings. Bank as
Agent and others (the 'Credit Agreement"), and this Note and the
holder hereof are entitled, equally and ratably with the holders
of all other Notes outstanding under said Credit Agreement, to
all t_he benefits provided for ~h. er. eby of referred to t_herein, to
which Credit Agreement reference ls hereby made for a statement
thereof. Ail defined terms used in this Note, except terms
othe~-~ise defined herein, shall have =he same meaning as in t~he
Credit Agreement.
(32)
Prepayments may be made hereon and this Note may be
declared due prior to the expressed maturity hereof, all in the
events, on the terms and in the manner as provided for in said
Credit Agreement.
Its
(33)
EXHIB IT B
EURODOLLAR REVOLVING CREDIT NOTE
U.S. $ , '19
FOR VALUE RECEIVED, t_he undersigned, ,
a corporation (t_he "Company"), promises to pay to
the order of
(the ~Bank") on December 31, i984, a= t_he principal office of =he
Harris Trust and Savings Bank in Chicago, Illinois, in immediately
available 'funds, the principal sum of
Dollars ($ ) or, if less,
aggregate unpaid principal amount of all Eurodollar Revolving
Credit Loans made, continued or effected by conversion pursuant
to the Credit Agreement (as hereinafter defined) and remaining
unpaid on December 31, 1984, roger, her with interest computed and
payable as provided in t_he Credit Agreement hereinafter referred
The Bank shall record on its books or records or on t_he
schedule to t_his Note which is a par~ hereof =he principal amount
.of each Eurodollar Revolving Credit Loan made, continued or
effected by conversion pursuant to said Credit Agreement and the
Interest Period and interest rate applicable thereto, together
with all payments of principal and interest and t_he principal
balances from time to time outstanding provided =hat. prior to the
transfer of this Note all such amounts shall he recorded on the
schedule attached to this Note. The record t.hereof, whether
shown on such books or records or on the schedule to this Note,
shall be rebuttably presumptive evidence of t_he same, provided,
however, that the failure of the Bank to record any of the foregoing
shall not limit or otherwise affect the obligation of the Company
to repay all Eurodollar Revolving Credit Loans made, continued or
effected by conversion pursuant to the Credit Agreement together
with accrued interest thereon.
This Eurodolla~ Revolving Credit Note is one of the
Notes referred to in and evidencing Eurodollar Revolving Credit
Loans made, continued or effected by conversion pursuant to the
Credit Agreement dated as of December 31, 1981, between the
Company, Harris Trust and Savings Bank as Agent and others (the
"Credit Agreement"), and this Note 'and the holder hereof are
entitled, equally and ratably with the holders of all or, her Notes
outstanding under said Credit Agreement, to all the benefits
provided for thereby or referred to therein, to which Credit
Agreement reference is hereby made for a stateme'nt thereof. Ail ~
defined terms used in this Note, except terms ot_he~-~ise ~efined
herein, shall have the same meaning as in the Credit Agreement.
(34)
Prepayments may be made hereon and this Note may be
.?~-~declared due prior to the expressed maturity hereof, all in the
events, on the terms and in the manner as provided for in said
Credit Agreement.
By ,
Its
(35)
ENHIB IT C
TERM NOTE
U.S. $ , 19__
FOR VALUE RECEIVED, t_he undersigned,
a corporation (the "Company"), pro~ises to pay
in lawful money of t_he United States to the order of
(the ~ank" )
at the principal office of Harris Trust and Savings Bank in
Chicago, Illinois, in immediately available funds, the
principal sum of
Dollars ($ ) in four
consecutive annual installments payable as follows: $
on , 19 , $ , on
19 , $ on 19 , and a
fin-~l installment in t_he amount of $ o---n
19__, t_he date of the final maturity hereof.
The Company promises to pay to the holder hereof
interest at said office computed and payable as provided in
the Cr_-dit Agreement hereinafter referred to.
This Term Note is one of t_he Notes of the Company
referred to in and evidencing the Term Loan made by the Bank
to the Company pursuant to the Credit Agreemen= dated as of
December 31, 1981, between the Company, Harris Trust and
Savings Bank as Agent and others (the "Credit Agreement"),
and this Note and the holder hereof are entitled, equally
and ratably with t_he ho~lders of all other Notes outstanding
under said Credit Agreement to all of the benefits provided
for by the Credit Agreement or referred to therein, to which
Credit Agreement reference is hereby made for a statement
thereof. All defined terms used in this Note, except terms
othez-~ise defined herein, have the same meaning as in the
Credit Agreement:
-' Prepayments may be made hereon and this Note may
' be declared due prior to the expressed maturity hereof, all
in th~ events, on the terms, and in the manner and amounts
as provided in said Credit Agreement.
By.
Its
Harris Trust and Savings Bank
111 West .'4onroe Street
Chicago, Illinois 60690
As Agent for =he Banks named in the Credit
Agreement Dated as of December 31, 1981 with
Central ..Telephone & Utilities Corporation,
Central Telephone Company and Centel
Communica=ions Company
Gentlemen-.
We' have acted as counsel for Central Telephone & Utilities
Corporation, a Kansas corporation ("Centel ") Central Telephone
Company, a Delaware corpora=ion ( 'Central Telephone" ) and Cantel
Communications Company, a Delaware corporation ("Communications",
and collectively wi~h Centel and Central Telephone, =he "Companies" )
wi~h r~gard to the execution and delivery of =he Credit Agreement
dated as of December 31, 1981 between the Companies and you and
=he banks n~ed therein (the "Agreement"). Ail terms used and
not defined herein shall have the meanings assigned to them in
=he Agreement.
We are familiar with the actions taken with respect =o
the authorization of and the execution and delivery of the Agreement.
We have made such other investiga=ions of fact and have considered
such questions of law as we have deemed necessary for the purposes
of ~his opinion, which is delivered to you pursuant to Section
6.1(a) of the Agreement. Based on the foregoing, it is our
opinion that:
(i) Centel is duly organized and existing in good
s~anding under the laws of the State of Kansas; has all
necessary corporate power to carry on its present business;
and has full power, right and authority to enter into the
Agreement, to make the borrowings therein provided for, to
issue its Notes (subject to any necessary regulatory approval
referred to in paragraph (iv} herein) and to perform each
and all qf =he matters and things therein provided for.
(ii) Central Telephone is duly organized and emisting
in good standing under the laws of the State o.f De!awa~e;
has all necessary corporate .Dower to carry on its prgsent
business; and has full power, right and authority to et=er
into the Agreement, to make =he borrowings therein provided
for, =o issue its Notes (subject to any necessary regulato~I
approval referred to in paragraph (iv) herein) and =o perform
each and all of t_he manners and things ~erein provided for.
(37)
(iii) The Agreement is a legal, valid and binding
Agreement of ~he Companies, enforceable against them in
accordance with its terms and, subject to the regulatory
approval referred to in paragraph (iv) herein, the Notes
when executed and delivered, and upon receipt of consideration
therefore, will be similarly legal, valid, binding and
enforceable ·
(iv) Issuance of any Note by Centel pursuant to t. he
Agreement is subject to approval (a) by the Federal Energy
Regulatory Commission if =he Note by its terms matures
more t~an one (!) year from ~he date of its issue, or (b) by
the Colorado Public Utilities Commission and t_he Kansas
Sta~e Corporation Commission if the Note by its terms matures
more than one (1) year from the date of its issue. Issuance
of any Note pursuant to the Agreement by Central Telephone
is subject to approval by the North Carolina Utilities
Commission if ~he Note by its terms matures more than two
(2) years from the date of its issue. No governmen~a!
authorization, consent or filing, whet, her federal, state or
local, other than as described in this paragraph. (iv), is
required on =he part of any or all of the Companies with
respect to ~he lawful execution, delivery and performance of
t_he Agreement, =he Notes and the making of t_he loans evidenced
~her~by.
Respectfully submitted,
(38)
EXHIBIT E
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, Illinois 60690
As Agent for the Banks named in the Credit
Agreement Dated as of December 31, 1981, with
Central Telephone & Utilities Corporation,
Central Telephone Company and Cente!
Communications Company
Ge~t i emen:
I am Vice President and General Counsel of Central
Telephone a Utilities Corporation, a Kansas corporation ("Centel"),
Central Telephone Company, a Delaware corporation ("Central
Telephone") and Cen=el Communications Company, a Delaware corporation
("Communications", and collectively with Cen=el and Central
Telephone, the "Companies") and am familiar with the actions
taken with respect tm the authorization of the execution and
detivery of the Credit Agreement dated as of December 31, 1981
between the Companies and you and the banks named therein (t_he
"Agreement"). All ~ermS used and not defined herein shall have
the meanings assigned to them in the Agreement.
I have made such investigations of fact and have
considered such questions of law as I have deemed necessary for
the purposes of =his opinion, which is delivered to you pursuant
to Section 6.1(a} of the Agreement. Based on t_he foregoing, it
is my opinion that:
(i) Communications is duEy organized, and existing in
good standing under the laws of the State of Delaware; has
all necessary corporate power to carry on its present
business; and has full power, right and authority to enter
into the Agreement, =o make the borrowings therein provided
for, to issue its Notes and to perform each and all of the
matters and things therein provided for.
(ii) The Agreement does not, nor will the performance
or observance by any of the Companies of any of the-matters
and things therein provided for, contravene any provision of
law (subject to any necessary req_u!atory approval referred
to in Section 5.6 8f t~e Agreement) or any judgment or
decree or any charter' or bylaw provision of tine Companies,
or any covenant, indenture or agreement of or affecting tine
Companies or their properties of which I have knowledge.
(iii) There is no litigation or governmental proceeding
pending, or to my knowledge threatened, agains= any Company
or any Consol ida=ed Person of such Company which would
materially adversely affect t_he business and proper=les of
such Company and its Consolidated Persons on a consolida=ed
basis.
Respectful!y submitted,
.... [40 )
EXH!B IT F
· 1982
Harris Trust and Savings Bank
111 West Monroe Street
Chicago], I1 linois 60690
As! Agent for the Banks named in
the Credit Agreement Dated as of December 31, 1981
with Central Telephone & Utilities
corporation, Central Telephone Company
and Centel Communications Company.
Gentlemen:
We have acted as special counsel for you in connection
with the preparation of, and supervision of legal matters connected
with, the above referenced Agreement (the "Agreement"). Ail terms
used herein shall have the same meaning as in the Agreement. As
special counsel we~ have _examined:
(a) Counterparts of the Agreement executed by t_he
Companies and the Banks.
(b) Resolutions of the Finance Committees or the
Boards of Directors of the Companies authorizing and confirming
the execution and delivery of ~he Agreement and the transactions
contemplated =hereunder certified by =he respective Secretaries
of the Companies in a manner satisfactory to us.
(c} Opinions dated January 15, 1982, of Messrs. Ross,
Hardies, O'Keefe, Babcock & Parsons and of Mr. Karl Berolzheimer,
counsel for =he Companies, delivered' to =he Banks in response
to .requirements of Section 6.1(a.). of =he Agreement.
We are pleased to advise yo.u that t_~e Agreement is
in acceptable legal form and that the certified resolutions
and opinions delivered to you as required under the terms of
the Agreement are-substantially responsive ~o the requirements
of said Term Credit Agreement.
Respectfully submit-ted,
approvals, consents, exemptions or other actions' by, or notices
to or filings with, any governmental authority, whet, her federal,
state or local necessary in connection with the execution,
delivery, performance or enforcement by the borrowing Company of
this Agreement and the Notes which are provided for hereby to
evidence Domestic Dollar Term Loans and Eurodollar Term Loans of
the borrowing Company, all of which shall be in full force and
effect as of the date of the making of such initial Term Loan to
the borrowing Company, and said Notes shall be to =he extent of
the considera=ion received therefor, the legal, valid, binding
and enforceable obligations of the borrowing Company (and a
r~quest by the borrowing Company that such initial Term Loan be
made shall be and constitute a represen=ation to the foregoing
effect by the borrowing Company) ~ogether with an opinion of
outside counsel satisfactory to the Agent and the Bank-'s special
counsel, Messrs. Chapman and Cutler, to the effect that: (i)
such approvals, consen=s, exemptions, actions, notices and
filings constitute all approvals, consents, exemptions or other
actions by or notices to or filings with, any governmental
authority, whether federal, state or local, r~quired on the part
of the borrowing Company with respect to the lawful execution,
delivery and performance of this Agreement, said Notes
and the
making of the Term Loans evidenced thereby; (ii) the same are
of bor=owing ia full force and effect; and (iii)
a~ Notes ~ave been duly
Comply and are to the %%vered by the r=ow=g
~= u= nme consl=eration received
oftheref°rthe borrowing' the legalcompany., valid ' binding and enforceable obligations
6 ~ --= ,=, - ~o_~ ~=&=unuer in circumstances when
- - .. --- ~-~ =~wa~uau~e, all approvals, con-
s~n=s, exemp=~ons or other actions by, or notices · ..
w~=h, any governmental authority, w~.~- .=_..= .... to. or fll~_ngs
u= enzorcement o~ eh.~,,= a,,. ...... ~ .... tl_.., ~=~v=&y, perIormance
~_u~u~=ny, snal I ~ave been obta~n~ - ~ ~ ......
:o_rce an= efzect as of the t= ~w ~- --,-- .....
effectin= o~ ----= .... .d~._T ?.. ,..~.= ,,,a~.=ng, con:~nulng or . . _- ~ ~ .~uua ~o~n, cer~-~r~em cop~es (or other showings
the Note evidencin- ~=~ ~-~-=~-~-tufr~.e a.ccOunt of- the Banks and
~.=_~=.~v~u :nerezor, the. I ' · : __ . ~ =u~
ODl~,~ ....... ?gal, valid, binding and enforcea~
borrowing Corn an that s-'~ '""~=-~*-~' an= each r~ques= by the
P Y uch Loan b~ made, continued or effected
-by conversion shall be and constitute a representation and war-
ranty'to the foregoing effect by the borrowing Company.
6.4. Legal matters incident to the execution and
delivery of this Agreement and the Notes shall be satisfactory to
the Banks and =~eir special counsel, Messrs. Chapman and Cut!er.
the proceeds of other capital stock any shares of capital
stock of Communications, if the aggregate amount of such
declarations or payments made after December 31, 1980 would'
exceed the sum of (i) $5,000,000 plus (ii) fifty percent of
Communications' Consolidated Net Income after December 31,
1980 to the date of =he determination thereof.
(d) Current Ratio. Communications will not permit at
any time the ratio of its current assets =o its curren~
liabilities ~o be less than 1.5:1. Current assets and
current liabilities shall k~ determined in accordance witch
generally accepted accounting principles consistently applied.
(e) Limitation on Liens
create or permi= to exist any
including Securities issued b
owned or hereafter acquired b
for ~axes not ye= due or whic
faith by appropriate proceedi
to the conduct of Communica=i
of its Property which were nc
(i) Communications will not
Lien upon any of its Property,
any of its Subsidiaries, now
y Communications, except Liens
h are being contested in good
ngs and other Liens incidental
OhS' business or the ownership
t incurred in connection with
the' borrowing of money or obtaining of advances or
credit, and which do not in ~e aggregate materially detract
from =he value of Communications' Property or materially
impair the use thereof in the opera.t~]on, of i~s business or
materially affect Communications' ab~llty to perform its
ob liga~ions hereunder.
(ii) Wi~hout limiting any right or remedy otherwise
available to t_he Banks, if Communications shall create
or permit to exist any Lien in violation of this Section
7.4(e), t~hen it shall ~e effective provision whereby
=he Notes shall be equal !y and ratably secured with the
obligations secured
(f) Limitation on Mer~r and Sale of Assets. Communications
will no= sell, lease, transl,:r, or or_~erwise dispose of all
or subst~%ntially.all of its ]~roper=y and assets, or consolidate
wit/{ or merge in~o any other corporation, or permit any
other corporation to merge ~to 'Communications, nor will
Communications become a Subsidiary of another corporation,
unless:
(i) Al! of the !i~
Communications under it:
be expressly assumed in
(other than Communicati~
any such consolidation,
which shall have receiv,
o~2~erwise) all or subst.
assets of Communica:ion~
,hilities and obligations of
Notes and this Agreemen= shall
writing by 'the corporation
:ns) formed by or resut, tinq fro~
~r surviving any such merper or
.~d (by sale, lease, or merger or
~ntially all of ~.~e Property and
or as =o which Communications
(c) Payment of Notes and Maintenance of Office. Such
Company shall punctually pay or cause ~o be paid ~_~e prin-
cipal and interest (and premium, if any) due and to become
due in respecn of its Notes according to the terms hereof
and thereof and will maintain an office in the State of
Illinois where notices, presentations, and demands in
respect of this Agreemen~ or the Notes may be made upon it.
Such office shall be maintained a= O'Hare Plaza, 5725 N.
East River Road, Chicago, Illinois 60631, until such time
as such Company shall notify the holders of the Notes of any
change of location of such office within such Sta=e.
(d) Financial ReDorting. Each such Company shall and
shall cause its SUbsidiaries to permit each of =he Banks and
their respective employees and agents to inspect its and its
Subsidiaries books and records during reasonable business
hours, and shall furnish ~o each Bank':
(i) As soon as generally available and in any
event within forty-five (45) days (except in the case
of Communications in which case within ninety (90)
days) after the end of the first, second and third
quarterly account_%ng periods of each fiscal year, a
copy of the consolidated balance sheet as of t_he end of
such accounting period, and the related consolidated
statements of income, common shareholders' investment
and changes in financial position for such quarterly
period, and for that portion of such year ending a= the
close of such quarter,, accompanied by an opinion of an
authorized financial or accounting officer of the
Companies; provided, however, tha. t the Companies shal 1
be deemed to have complied with this r~quirement if
they shall furnish a copy of the Form 10-Q Report of
the Companies, as filed with the SEC for the applicable
quarter if said Report is prepared and includes such_
financial s~atements;
(ii) As soon as generally available and in any
event within ninety (90) days (except in the case of
Communications, in which case within one hundred eighty
(180) days) after the end of each fiscal year, a copy
of the consolidated balance sheet as of the end of such
fiscal year, and the related consolidated statements of
income, common shareholders' investment and changes in
financial position, for the fiscal year then ended, and
reported on by independent public accountants of_recognized
national standing,' selected by the Companies, whose
report shall be prepared .in accordance with generally
accepted auditing standards relating to reporting
(provided, however, ~hat the Companies shall be deemed
to have complied with this requirement if t.Ney shall
pre-tax income bears to net income for such period).
Centel's Pro Forms Total Annual Interest Charges shall
be interpreted to include =he annual interest charges
on Funded Indebtedness being incurred, but to exclude
=he annual interest charges on any Indebtedness being
simultaneously retired, and preferred stock dividend
requirements of'Cen=el's Subsidiaries (multiplied by
the ratio t,hat pre-tax income bears to net income for
such period) shall exclude such requirements on pre-
ferred stock of Cente!'s Subsidiaries being simui-
=anecusly retired.
(b) Limits=ion on Liens. (i) Can=el will not create
or permit ~o exist any Lien, upon any of its Property,
including Securities issued by any of its Subsidiaries now
owned or hereafter acquired by Can=el, except:
(A) The lien of its Indenture of Mcr=gage or any
Superseding MoL=gage;
(B) Liens, existing on or in Proper~y acquired by
Can=el after July 1, 1980 and which were in existence
prior to and at t_he date of acquisition t_hereof; pro-
vided =hat any such Lien shall not ex=end to any of
Cen=e!'s other Property other than =he Property subject
t. hereto at ~he date such Property was acquired by it
and additions, betterments, extensions, renewals, or
replacements to or of such Property;
(C) "Permitted encumbrances" or "prepaid liens,"
as defined as of the date hereof in the Indenture of
Mortgage; and
(D) Replacements of any of t_he foregoing.
wise
permit to exist any Lien, in violation of =his $
7.1(b), =hen i= shall make effective provision w.
=he Notes shall be equally and ratably secured w
obligations secured t_hereby .-
(ii) Without. limiting any right or remedy other-
available to =he Banks, if Centel shall create or
=_orion
~ereby
.ah =he
(c) Limitation on Dividends. Can=at will no= (
declare or pay any dividend (cuber than dividends pay
'stock) or make any other distribution on its capital stock,
or (ii) purchase or otherwise retire directly or indirectly
in any manner (other than in exchange for or from =Se proceeds
of other capital stock) any shares of capital stock of
Can=el, if the aggregate amount of such declarations or
payments made after December 31, 1978, would exceed Con-
solidated Nan Income Available for Dividends of Cannel and
(B) Liens, existing on or in Property acquired by
Central Telephone after December 31, 1981 and which
were in existence prio~ to and at the date of acquisition
thereof; 9rovided =_ha=any such Lien, shall not extend
to any of Cant. tel Tele?h0ne's or_her Property other t~han
t_he ProperTy subject thereto at t_he date such Property
was acquired by it and additions, betterments, extensions,
renewals, or replacements to or of such Property;
(C) "permitted ~encumbrances" or 'prepaid liens"
as defined as of the date hereof in the Central Telephone
Indenture of ~Mor~gage.
(D) Replacements of any of the foregoing.
(ii) Without limiting any right or remedy ot. hez-~ise
available to the Banks, if ~entrai Telephone shall create or
permit ~o axis= any Lien, ~.violation of this Section
7.3(b), then it shall make effective provision whereby =he
No~es shall be equally and ratably secured with t_he o~ligations
secured thereby.
(c) Limitation on Dividends. Central Telephone will
no= (i) declare or pay any dividend (other than dividends payable
in s~ock) or make any other distribution on its capital stock, or
(ii) purchase or otherwise retire directly or indirectly in any
manner (other t/Lan in exchange for or from the proceeds of other
capital stock) any shares of capital stock of Cantra! Telephone,
if the aggregate amount of such declarations or payments made
after December 31, 1978, would exceed Consolidated Net Income
Available for Dividends of Central Telephone and its Subsidiaries
accumulated after December 31, 1978, plus =he sum of $25,000,000.
Notwithstanding the foregoing, Central Telephone or any Subsidiary
may declare or pay dividends on its capital stock ranking senior
to its common stock upon dissolution or liquidation or as to
dividends and may purchase shares Of suchsenior stock necessary
to meet any sinking or purchase fund requirements, but amounts
expended for such purposes shallbe included in all subsequent
computations made pursuant to this Section 7.3(c).
(d) Limitation on Mer~er and Sale of Assets. Central
Telephone will no= sell, lease, ~r~nsfer, or o~her'~ise dispose of
all or substantially all of its ~roper~y and assets, or consolidate
with or merge into any or, her corporation, or permit any other
corporation to mer~e into Central ~elephone, nor will Central
Telephone become a Subsidiary of another corp0ra~ion, unless:
(i) Ail of the liabilities and .obligations of
Central Telephone underi=$ Noues and this Agre~men~
shall be expressly assUmed in wrifing by ~he corporation
would exceed sixty perce=
Capitalization of Cant_rat
or (B) =he Consolidated
Subsidiaries for a pe'ri=
calendar months within
immediately preceding
Indebtedness is to be crt
guaranteed shall have
sum of (Z) Central Telep!
Interest Charges (long
including interest on
imputed interest of capit
(i) Central Telephone will not directly or ihdirectly
create, issue, assume, o~ guaran=ee any unsecured
Funded Indebtedness ranking, senior to the Notes; and
(ii) Central Telephone will not directly or
indirectly create, issue~ assume, or guarantee any
unsecured Funded !ndebt~ness ranking equally witch or
3unior ~o =he Notes (excppt Subordinated Indebtedness)
if (A) =hereby the aggrec, ate principal amount of all
Consolidated ~unded Indet tsdness of Central Telephone
and its Subsidiaries (ot~ er than Central Telephone's
Subordinated !ndebtednes:~) whet_her secured or unsecured ~t (60%) of Consolidated Total
· Telephone and its Subsidiaries;
let Ear~ings of it and its
[ of twelve (12) consecutive
~e fifteen (15) calendar months
: month in which such Funded
tared, issued, assumed, or
.~n less than ~wo (2) =imes the
~one's Pro Forma Total Annual
.~rm and short term interest,
)Ordinated Indebtedness and =he
:al leases, if any), and (Y.)
preferred stock dividend rmquirements of Central Telephone's
Subsidiaries (multiplied by =he 'ratio that pre-tax
income bears to net income for such period).. Central
Telephone's Pro Forma Total Annual Interest Charges
shall be interpreted to .~clude =he annual interest
charges on Funded Indebt~ness being incurred, but to
.exclude =he annual inter,st charges on any Indebtedness
being simultaneously retired, and preferred stock
dividend requirements of Central Telephone's Subsidiaries
(multiplied by =he ratio that pre-tax income bears
net income for such period) shall exclude such requirements
_on preferred stock of Cent_~al Telephone's Subsidiaries
being simultaneously ret_ired.
(b) Limitation on Liens.
not create or permi: to exis=
ProperTy, including securitie:
now owned or hereafter acquir~
(A) The lien of Car.
Mortgage-to The First Nat
Grimes, as Trustees, date
and ,hereafter amended and
Telephone Indenture of Mc
(i) Central Telephone will
~y Lien, upon any of its
~ssued by any of its Subsidiaries
d by Central Telephone except:
.tral Telephone's Indenture of
.ional Bank of Chicago and J.R.
June !, 1944 as heretofore
Supplemented ~the "Central
r=gage").
business against such casualties and contingencies, of
such Types (including public liabiliTy, larceny, embezz!emen.n,
or other criminal m~sappropriation insurance), and in
such amounts as is ~ustomary in t~_e case of corporations
of est~ablished reputations engaged in the same or a
similar business and similarly situated, provided that
such Company and its Subsidiaries shall be en=it!ed to
maintain a-system of self-insurance witch respect to the
first $500,000 of loss arising from each such casualty
-. ' 4 further, that, with
and contingency, and ~rovlde ,
respect to each such casualty and contingency as to
which all losses in excess of $1,000,000 are fully
insured, without co-insdrance, such self-insurance
shall be permitted with respect to the first $1,000,000
of loss;
(iii) Keep its books and records in accordance
with generally accepted accounting principles consistently
applied;
(iv) Do or cause ~o be done all t.~ings necessary
(A) to preserve and keep in full force and effect its
corpora=e existence and its rights (statutory and
charter), and (B) to maintain each of its Subsidiaries
as a Subsidiary, provided that any Subsidiary may be
liquidated, disposed of, or merged into any other
Subsidiary or into its parent (provided that nothing
contained herein shall be deemed to waive Section
8.1(h) hereof) if in the opinion of the Board of Directors
of its parent such liquidation, disposition, or merger
is in the best .interests of such parent and if such
liquidation, disposition, or merger would not materially
adversely affect the business, prospects, profits,
properties, or condition ( financial or otherwise ) of
such Company and its Subsidiaries considered as a
whole; and
(v) Comply with all laws, ordinances, and governmental
rules and regulations to which it is subject and obtain
and ma'kntain in full force and effect all licenses,
permits, f=anchises, or other governmental aut~horizations
necessary to the ownership of its properties or to the
conduct of its business, the violation of which or
failure to so obtain and maintain might materially
adversel'y affect the business, prospects, profits,
properties, or condition (financial or otherwise) of
such Company and its Subsidiaries considered as a
whole, provided that ~ompliance w~h such laws, ordinances,
and governmental rules and r-~gulations shall not be
required so long as the validity or applicability
thereof is contested in good faith by appropriate
proceedings.
7. COVENANTS
7.1. Without limiting any covenant contained Ln
Section 7.2, 7.3 or 7.4 hereof, each Company covenants and agrees
that, so long as any Note of such Company is outstanding here-
under or any credit is available to or in use by such Company
hereunder, except to the extent compliance in any case is waived
in writing by ~he Required Banks;
(a) Pa .!men= of Taxes and Claims. It will pay and will
cause each Subsidiary to pay, before t_hey become delinquent:
(i) all lawful taxes, assessments, and govern-
mental charges or levies imposed upon it or its prop-
erty; and
(ii) all claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords, and other
like persons which, if unpaid, might result in the
creation of any Lien, upon its property,
provided, that items of the foregoing description need not
be paid so long as they are being contested in good faith by
appropriate proceedings and, if, in the opinion of t_he
independent public accountants of the contesting Person,
book reserves are required, then a~equate book reserves have
been established with respect thereto and the contesting
Person's title to, and its rig:h= to use, its property is not
materially adversely affected thereby. In the case of any
i~m of t_he foregoing description involving in excess of
$1,000,000, the appropriateness of t. he proceedings shall be
supported by an opinion of the independen= counsel res-
ponsible for such proceedings and the adequacy of such
reserves shall be supported by t. he opinion of the inde-
pendent public accountants of the contesting Company.
(b) Maintenance of Pro.De,ties and Corporate Existence.
will and will cause each S~sidiary to: ·
(i) Maintain its property in good condition and
make all necessary r~newal~, replacements, additions,
betterments, and improvements thereto, provided =hat
such Company and its Subsidiaries may abandon any of
~eir properties if the BOard of Directors of such
Company or such Subsidiary shall determine =hat such
abandonment is in the bes% interests of such Company or
such Subsidiary and if such abandonment shall no= be
detrimental to =he holders of =he Notes;
(ii) Maintain~ with financially sound and reputable
insurers, insurance with respect to i~s properties and
seek ~rminaticn of any such Plan or appointment of a
t_~ustee '~herefor. Such Company will, and will cause each
member of its Controlled Group to, notify the Agent of its
intention to terminate or withdraw from any Plan and will
not and will not permit any member cf its Controlled Group
to, terminate any such Plan or withdraw therefrom unless it
shall be in compliance with all the terms and conditions of
tJ~is Agreement after giving effect to any liability to t_he
Pension Benefit Guaranty Corporation resulting from
termination or wit~hdrawal.
(f) Regulation U. It shall not use any part of t_he
proceeds of any of t/~e Loans directly or indirectly to
purchase or carry any margin stock (as defined in Section
5.10 hereof) or ~o extend credit to others for =he purpose
of purchasing or carrying of such margin stock except in
compliance wit2~ Regula=ion U of the Board of Governors of
t_he Federal Reserve System.
7.2. Cente! covenants and agrees that, so long as any
of its No~s is outstanding hermunder or any credit is available
or in use by i= hereunder, except to the extent compliance is
waived in writing by the Required Banks:
(a)
Limitation on Incurrinq Indebtedness.
(i) Centel will not directly or indirectly
create, issue, assume, or guarantee any unsecured
Funded Indebtedness ranking senior to ~he Notes; and
(ii) Centei will not directly or indirectly
create, issue, assume, or guarantee any unsecured
Funded Indebtedness ranking equally with or junior to
t_he Notes (except Subordinated Indebtedness) if (A)
thereby the aggregate principal amount~ of all Consolidated
Funded Indebtedness of Centel and its Subsidiaries
(other ~han Centel' s Su3uordinated Indebtedness) whether
secured or unsecured would exceed sixty percent (60%)
of Consolidated Total Capi~a!ization of Centel and its
Subsidiaries; or (B) the Consolidated Net Earnings of
Cants! an~ its Subsidiaries for a period of T~elve (12)
consecutive calendar months within the fifteen (15)
calendar months immediately precedLn'g the month in
which such Funded -Indebtedness is to be created,
issued, assumed, or guaranteed shall have been less
than two (2). times t~he sum of (7.) Cenuel's Pro Pores
Total Annual InUerest Charges (long term and short ~erm
interest, including interest on Subordihated Indebt-
edness and the impuUed interest of capital leases, if
any), and (Y) preferred stock dividend requiremen=s of
Cen=el's Subsidiaries (multiplied by .~he ratio =has
its Subsidiaries accumulated after December 31, 1978, 'plus
the sum of $25,000,000. NoTwithstanding t_he foregoing,
Can=e! or any Subsidiary may declare or pay dividends on its
capital stock ranking senior tQ its common stock upon
dissolution or liquidation or as to dividends and may
purchase shares of such senior stock necessa!-t to meet. any
sinking or purchase fund raquimements, but amounts expended
for such purposes shall be inc~-uded in all subsequent
computations made pursuant ~o ~his Section 7.2(c).
(d) Limitation on Mer~er and Sale of Assets. Can=et
will no= s~!i', lease, %ransfer, or ot_~ea"~ise dispose of all
or substantially all of its Property and assets, or con-
solidate wit2~ or merge into any other corpora=ion, or permit
any other corporation ~o merge into Can=e!, nor will Can=el
become a Subsidiary of another corpora=ion, unless:
(i) Ail of' =he liabilities and obligations of
Cente! under its Notes and thls Agreement shall be
expressly assumed in writing by ~he corporation (other
'than Can=al) formed by or resulting from any such
consolidation or surviving any such merger or which-
shall have received (by sale, lease, or otherwise) all
or substantially all of We Property and assets of
Cantei or as to which Cent. el has become a Subsidiary
(hereinafter referred to in =his Section 7.2(d) as
"such successor corpora=ion");
(ii) Such successor corporation shall ~ a cor-
poration incorpora=md under =he laws of a state of, or
by, t_he United States of ~erica;
(iii) Immediately ~ter such ~ransaction, and
after giving effect =hereto, Cents! or such successor
corporation, as t_he case ~y be, could then have created,
issued, assumed, or guaranteed at least $1 of a~diticnal
~unded Indebtedness under Section 7.2(a) hereof, and
(iv) Immediately afper such transaction, and
after giving effect =hereto, no event of default under
Section 8.1 hereof shall 9xis= and no event shall exist
which with =he giving of ~0~ice or lapse of time would
constitute such an event o~ default.
~ 17.3. Central Telephone c?W..enan=s and agrees =hat, so
_ cng as any of its Notes is outstand.~ng hereunder or any credit
{ is available or in use by i= hereunder, except to the extent
· compliance is waived in writing by =he Required Banks:
(a) Limitation on Incurr~n~ Indebtedness.
(or_her than Cent_tel Telephone) formed by or resulting
from any such consolidation or surviving any such
merger or 'which shall have r~ceived (by sale, lease, or
ot-hez"~!se) all or substantially all of the Property and
assets of Central Telephone or as to which Central
Telephone has become a Subsidiary (hereinafter referred
to in ~his Sect_ion 7.3(d) as "such successor corporation");
(ii) Such successor corporation shall be a corporation
incorporated under the laws of a s~ate of, or by, the
United States of America;
(iii) Immediately after such transaction, and
after giving effect thereto, Central Telephone or such
successor corporation, as the case may be, could then
have created, issued, assumed, or guaranteed at leas=
$1 of a~ditional Funded IndeJotedness under Sec=ion
7.3(a) hereof; and
(iv) Im~ediate!y after such transaction, and
after giving effect thereto, no event of default under
Sec=ion 8.1 hereof shall exist and no event shall exist
which with the giving of notice or lapse of time would
constitute such. an even= of default.
7.4. Communications covenants and agrees that so long
as any of its Notes is outstanding hereunder or any credit is
available or in use by it hereunder, except to the ex=mn= compliance
is waived in writing by the Required Banks:
(a) Senior Indebtedness. Communications shall not
permit its' Senior Indebtedness to exceed 90% of its Net
Tangible Assets;
(b) Communications' Consolidated Net Incom~. Com-
munications shall no= permit Communications' Consolidated
Net Income for any of its fiscal years to be less than one
and one-half times the sum of (i) ~_he principal amount of
all its Indebtedness for borrowed money due within twelve
months of the end of such fiscal year, (ii) interest due
within twelve months of the end of such fiscal year on its
Indebtedness for- borrowed money, (iii) lease obligations due
within twelve months of the end of such fiscal year, and
(iv) imputed interest due within twelve months of the end of
such fiscal year on leases.
(c) Limitation on Dividends~ Communications will non
(i) declare or pay any dividend (other than dividends payable
in stock) or make any other distribution on ius capital
stock, or (ii) purchase or othez-~ise re=ire (directly or
indirectly in any manner) ct/let ~.~an in exchange for or from
has become a Subsidiary (hereinafter referred ~o in
this Section 7.4(f) as 'SuCh successor corporation");
(ii) Such successor corporation shall be a corporation
incorporated under the laws of a state of, or by,
United eta=es of America;
(iii) Immediately after such transaction, and
after giving effect thereto, Communications or such
successor corporation, as the case may be, could t_hen
have created, issued, assumed, or guaranteed at least
$1 of additional Senior Indebtedness under Sec=ion
7.4(a) hereof; and
(iv) Immediately after such transaction, and
after giving effect t_hereto, no event of default under
Section 8.1 hereof shall exist and no event shall exist
which with the giving of notice or lapse of time .would
constitute such an even= of default.
8. EVENTS OF DEFAULT AND REMEDIES.
8.1. Any one or more of %he following shall
an event of default:
(a) default in the payment when due of principal of or
interest on any Note, or any other amount payable by any of
the Companies hereunder, whet. her at the stated maturity
thereof or at any other t_tme provided in this Agreement;
(b) default by any Company to which any Loan is available
or ou=standing hereunder in =he observance or performance of
any covenant set forth in Sec=ions 7.1(a), 7.1(b)(ii), (iii)
or (iv), 7.1(c), 7.2, 7.3 or 7.4 hereof~
(c) default by any Company to which any Loan is available
or outstanding hereunder in the observance or performance of
any other provision hereof which is not remedied within 30
days after not. ice thereof =o such Company by %he Required
Banks;
(d) default shall occur in the payment when due of any
Indebtedness or any other Security of any of the Companies
or default shall occur undem any indenture,-agreement or
o~her instrument under which the same may be issued and 'such
default shall continue for a period of time sufficient to
permit any holder of such' Indebtedness or other Security or
trustee ~herefor to cause t_he acceleration of the maturity
of any such Indebtedness;
(e) any representation or warranty made herein by any
Company to which any Loan is available or outstanding hereunder,
or in any statement or certificate furnished pursuaDt hereto
by such Company, or in connection with any Loan made hereunder
to such Company proves untrue in any material respecn as of
t_be date of =he issuance or making thereof, and =be breach
of such representation or warranty is not cured within 30
days after notice t_hereof to 'such Company by t_he Required
Banks, provided t. hat such grace period shall not apply if
such breach is no= capable of being cured;
(f) any of the Companies shall (i) have entered involuntarily
against it an order for relief under the Bankruptcy Act of
1978, as amended, (ii) not pay, or admit in writing its
inability to pay, its debts generally as =hey become due,
(iii) make an assignment for the benefit of creditors, (iv)
apply for, seek, consent to, or acquiesce in, the appoint_men=
of a receiver, custodian, ~-usnee, examiner, liquidator or
similar official for it or any substantial par= of its
property, (v) institute any proceeding seeking to have.
entered against it an order for relief under t. be Bankruptcy
Ac~ of 1978, as amended, to adjudicate it insolvent, or
seeking dissolution, winding up, liquidation, reorganization,
arrangement, adjustment or composition of it or its debts
under any law relating ~o bankruptcy, insolvency or reorgani-
zation or relief of debtors or fail to file an answer or
other pleading denying the material allegations of any such
proceeding filed against it, or (vi) fail to contest in good
fait2~ any appointment or proceeding described in Sec=ion
8.1(g) hereof;
(g) a custodian, receiver, ~rustee, examiner, liquidator
or similar official shall be appointed for any of t_he Companies
or any substantial par= of any of their Proper=y, or a
proceeding described in Section 8.1(f)(v) shall be instituted
against any of the C~mpanies and such appoint_men= continues
undischarged or such proceeding continues undismissed or
unstayed for a period of 60 days;
(h) Central Telephone or Communications shall fail at
any time to be wholly owned Subsidiaries of Centel (except
for directors' qualifying shares);
(i) any Company shall fail within 30 days to pay, bond
or otherwise discharge any judgment or order for the payment
of money in excess of $!,000,000, which is not s=ayed on
appeal or otherwise being appropriately contested in good
faith.
8.2. When any event of default described in Sections
8.1(a) , (b) , (c), (d), (e) or (i) has occurred and is continuing,
the Required Banks may, by notice to all of t.Ne Companies to
which any Loan is t_hen available or outs=ending hereunder, take
either or both.of the following actions: (i) terminate t_he
remaining co_m_~itments of the Banks hereunder on =he date (which
may be the date thereof) slated in such notice, and (ii) declare
~f~he principal of and the accrued interest on all outstanding
~otes of all of the Companies to be forthwith due and payable and
thereupon all of said Notes, inc!udi~g both principal and interest,
shall be and become immediately due and payable together with all
or,her arno=nfs payable under this Agreement without further demand,
presentment, protest or no=ice of any kind. The Required Banks
giving not-ice ~o the Companies pursuant to Section 8.1 or this
Section 8.2 shall also promptly send a copy of such notice to the
other Banks and the Agent, but the failure to do so shall not
impair or annul the effect of such notice.
S.3. When any event of default described in subsections
(f), (g) or (h) of Section S.1 hereof has occurred and is continuing,
then all outstanding Notes shall immediately become due and
payable together with all other amounts payable under this Agreement
without presentment, demand, protest or notice of any kind, and
the obliger_ton of =he Banks ~o extend further credit pursuant'to
any of =he ~rms hereof shall immediately terminate.
8.4. The Companies jointly and severally agree to pay
to the Agent and each Bank or any other holder of any Note outstanding
hereunder, all expenses incurred or paid by the Agent and such
Bank or any such holder, including reasonable attorneys' fees and
court costs, in connection with any default by any of t_he Companies
hereunder or in connection with the enforcement of any of the
~.terms hereof or of the Notes.
9. THE AGENT.
9.1. Each Bank hereby irrevocably appoints Harris
Trust and Savings Bank its agent under this Agreement and hereby
authorizes the Agent to take such action as Agent on its behalf
and tu exer=ise sUch powers under this Agreement as are specifically
delegated to the Agent by the terms hereof, together with such
powers as are reasonably incidental thereto. T/:e Agent may
execute any of its duties hereunder, as Agent by or through agents
or employees and shall be entitled to re~ain counsel and =o act
in reliance upon the advice of such counsel concerning all matters
pertaining to the agencies hereby created and its duties as Agent
hereunder.
· 9.2. Neither the Agen= nor any of its directors,
officers, · employees, attorneys, agents or representatives shall
be liable for any action ~aken or omi=ted no be taken by it or
them under this Agreement or i/r connection herewith, except for
its or =heir own gross negligence or willful misconduct; nor
shall the Agenn or any Bank be responsible for the validi~y,
effectiveness or sufficiency of this Aqreemenu or any ~Noue furnished
pursuant hereto or in connection herewith.
9.3° The ~gen: shall be entitled to rely on any paper
or document believed by it to be genuine and correct and to have
been signed or senn by t_he proper person or persons. The Agen=
may also deem and treat ~he payees of any Notes as t_he owners
thereof for all purposes hereof unless and until a written notice
of =he assignment or transfer ~hereof shall have been filed
the Agent. With respect ~o =he Note or Notes issued to it, t_he
Agent shall have =he same rights and powers hereunder as any
other Bank and may exercise =he same as =hough it were no=
Agent. The Agent may accept deposits from, lend money to, and
generally engage zn any kind of banking or trust business with
the Companies as if it were not =he Agent.
9.4. Each Bank agrees =o reimburse the Agent on demand
for all out-of-pocket expenses incurred by the Agent and not
reimbursed by t_he Companies, pro rata according ~o =he outstanding
principal balance of =he No~es a= =he t_tme of the incurrence of
such expenses, and in =he event no principal balance is outstanding
hereunder at such time, according to the aggregate principal
amount of =he Revolving Credit Loans each of the Banks was commit=ed
to lend hereunder as of =he date hereof.
9.5. The Agent may resign as such at any t_tme upon at
least ten days' prior notice to =he Banks. in the event of any
such resignat_~on, .t_he Required Banks as promptly as practicable
shall appoint a successor agent, who shall be entitled ~o act as
agent in accordance with the terms of t_his Section 9.
10 . MISCELLANEOUS .
i0.i. No delay or failure on =he part of any Bank or
on the part of the holder or holders of any Note in =he exercise
of any power or right shall operate as a waiver thereof, nor as
an acquiescence in any default, nor shall any single or partial
- exercise thereof preclude any other or further exercise of any
of_her power or right, and t/le rights and remedies hereunder of
=he Banks and of the holder or holders of any Notes are cumulative
to, and not exclusive of, any rights or remedies which any of
them would otherwise have.
10.2. (a) If any payment of principal or interest on
any Domestic Dollar Loan shall fall due on a day which is not a
Business Day, interest at the rate such Domestic Dollar Loan
bears for %he period prior to maturity shall continue to accrue
on such principal from the stated due date thereof to and including
the next succeeding Business Day on which =he same is payable.
(b) If any payment of principal or interest on any
Eurodollar Loan shall fall due cna day which is not a Banking
Day, the Interest Payment Date or Payment Date thereof (as the
case may be) shall be extended to the next date which is a Banking
Day unless as a result thereof any Paymen~ Date 'would fall in
furnish a copy of the Form I0-K Report of thhe Companies,
as filed wi~h =ha SEC for such year, if said Report is
prepared and includes such financial statements) and a
statement that such accountants are familiar with ~e
terms of t. his Agree. men= and t. hat, in making the audit
necessary for such report or certificate, such accountants
have obtained no knowledge of an event of default under
Section 8.1 hereof or any event 'which with the giving
of notice or lapse of ~tme or both would constitute
such an event of default, or,' if in the opinion of such
accountants any such event of default or other event
shall exist, shall include a statement as to t_he nature
and status thereof (it being understood t_hat such
accountants shall not be liable, directly or indirectly,
for any non-negligent failure in the application of
generally accepted auditing st~andards to obta~_n knowledge
of any event of default or other event);
(iii) together with each of t_he financial state-
ments required hereunder, a certificate signed by its
Chief Financial Officer or Controller or Secretary-
Treasurer stating that no even= of default under
Section 8.1 hereof and no event which with the giving
of no~ice or lapse of time or both would constitute
such an event of default exists;
(iv) as soon as the same shall come to the notice
of any responsible officer of any of the Companies, a
certificate stating that an event of default under
Section 8 .I hereof exists, stat_%ng therein the na=ure
and sis=us thereof; and
(v) such other information (including non-fin-
ancial information) as any of =he Banks may from time
=o =_%me reasonably request.
(e) E~RiSA. Each Company will, and will cause each
member of its Controlled Group to promptly pay and discharge
all obligations and liabilities arising under ERISA of a
character which if unpaid or unperformed might result in the
imposition of a lien against any of its or their properties
or assets and will promptly notify the Agent of the oc-
currence of any reportable event (as defined in ERISA) which
might result in =he termination by the Pension Benefit
Guaranty Corporation cf any employee benefit plan covering
any officers or employees of the Company or any member of
Its controlled group, any benefits Of which are, or are
required to be, guaranteed by the Pension Benefit Guaranty
Corporation ("Plan") or of receipt of any notice from the
Pension Benefit Guaranty Corporation of its intention to
the next calendar month, in which case such Payment Dane shall be
the next preceding Banking Day and the relevan= In=ares= Period
shall be correspondingly abbreviated. In either case the' next
Interest period shall be measured from the Payment Date so adjusted.
10.3. The Companies jointly and severally agree t.ha=
they will pay such taxes, including interest and penalties, in
the even: any such taxes are assessed irrespective of when such
assessment is made and whether or not any credit is then in use
or available hereunder.
10.4. Ail representations and warranties made herein
or in certificates given pursuant hereto shall survive t.he execs=ion
and delivery of this Agreement and of the Notes, and shall continue
in full force and effect with respect to the date as o£ which
they were made as long as any credit is in use or available
hereunder.
10.5. Ail indemnities and all other provisions relative
to reim~ursement to the Banks of amounts sufficient to protect
the yield of the Banks with respect to the Loans, including, but
no= limited to, Sections 1.6 through 1.9 hereof, both inclusive,
shall survive the tarmination of this Agreement and the payment
of the Loans or the Notes.
10.6. Ail communications provided for herein shall be
in writing, except as otherwise specifically provided for hereinabove~
and shall be deemed to have been given or made when served personally
or when deposited in the United States mail (registered or certified'
if to the Companies) addressed ~o the Companies at O'Hare Plaza,
5725 N. Eas~ River Road, Chicago, Illinois, 60631 Att-n: Treasurer
and t.~e Banks to their respective addresses set forth opposite
their respective signs=utes hereto, or at such other address as
shall be designated by any party hereto in a written notice to
each other party pursuant ~o this Section 10.6.
10.7. The Companies jointly and severally agree to pay
the reasonable fees and all disbursements of Messrs. Chapman and
Cu=Ier, special counsel for the Banks, in connection with the
preparation of, and supervision of legal matters in connection
with, t_his Agreement~ whet_her or not the transactions contemplated
herein are consummated.
10.8. This Agreement may be execu=ed in any number of
counterparts, and by the different parties on different counterparts,
each of which when executed shall be deemed an original but all -
such counterparts taken together shall constitute one and the
same instrument.
10.9.. This Agreement shall be binding upon the Companies
-and their respective successors and assigns, and shall Lnure to
the benefit of each of the Banks and the' benefit of their respec
successors and assigns, including any subsequent holder of any
Note. This Agreement and =he rights and duties of t2~e parties
hereto, shall be construed and determined in accordance wit.~ t~ke
laws of the State of Illinois. This Agreement constiTates t. Se
et:ire understanding of t_he par=ies with respect =o-the subject
matter hereof and any prior aqreements, whether written or oral,
with respect =heret~ are superseded hereby. The Companies may
al ln°t ofassign~he Bankstheir. rights hereunder without the written consen~ of
· 10.i0. Any provision of this Agreement or the. Notes
may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed by (a) those Companies to
which Loans are then available or outstanding hereunder, (b) t_he
Required Banks, (c) if ~he rights or duties of the Agent_ are
affected thereby, the Agent; provided that:
(i) no amendment or waiver pursuant to this
Section shall (A) increase any Commitment of any Bank
without the consent of such Bank or (B) reduce the
amount of or Postpone the date for payment of any
principal of or interest on any Loan or any fee hereunder
without the. consent of the Bank to which such payment
is owing or which has committed to make such Loan
hereunder;
(ii) no amendment or waiver pursuant to this
Section shall, unless signed by each Bank, change the
provisions of this Section or the definition or Required
Banks6 hereof.Or any condition precedent set forth in Section
i0.11. The Agent shall use its best efforts to send to
the Companies and t_he Banks sta=ements detailing the amount of
~- interes= owed by each Company to each Bank prior to the due date
< of each interest payment and shall a.lso use its best efforts to
~ · forward to the Companies and the Banks within 30 days after each
borrowing hereunder a s~atemen: of the principal amoun= of the.
Loans owed by each Company to each of the Banks. It is specifically
understood the= the failure of the Agent to send such statements
shall not limit or otherwise affect the obligation of the borrowing
Company to repay all of the principal and interes~ of its Loans.
The .amount shown on such statements are purely for the administrative
convenience of the Companies and the Banks and-are not binding
upon either the Companies or the Banks.
10.i2. Article and section aeading~ used in this
"Agreementor this Agreement. are for reference only and shall not affect =he construction
Upon your acceptance hereof in the manner hereinafter
~'~set fort. h, tl~is Agreement shall be a contract between us for t.he
'"purposes hereinabove set forth.
~ DaUed as of December 31, 1981.
C~NTRAL TELEPHONE & 'UTILITIES CORPORATION
(Corporate Seal)
ATTEST:
By
Thomas A. Owens, Jr. /s/
Its Vice President
Dale Parker /s/
Assistant Secretary
(Corporat~ Seal)
ATTEST:
Dale Parker /s/
Assistant Secret~%ry
(Corporate Seal)
ATTEST:
Dale Parker /s/
Assistant Secreta~
CENTRAL TELEPHONE COMPANY
Thomas A. Owens, Jr. /s/
Its Vice President
C~AV~EL COMMUNICATIONS COMPANY
By
Thomas A. Owens, Jr. /s/
Its Vice President
Accepted and Agreed to as of the day and year last
above writ=an.
Eich Bank represents ~hat it has made and agrees that
ia shall continue =o make its own independent investigation of
the financial condition and affairs of the Companies and its own
appraisal of the credi~wort, hiness of the Companies in connection